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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 26, 1997
Prudential Securities Secured Financing Corporation
(Exact name of registrant as specified in its charter)
Delaware 333-16511 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) 214-7435
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 Mortgage Loans
Prudential Securities Secured Financing Corporation, as Depositor (the
"Depositor"), has registered issuances of securities backed by mortgage loans,
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. 333-16511) (as amended, the "Registration Statement").
The Depositor formed the Emergent Home Equity Loan Trust 1997-1 (the "Trust"),
pursuant to a Pooling and Servicing Agreement, dated as of March 1, 1997 (the
"Pooling and Servicing Agreement"), among the Depositor, Emergent Mortgage
Corp., as servicer (the "Servicer") and First Union National Bank of North
Carolina, as trustee (the "Trustee"). Pursuant to the Registration Statement,
the Trust issued $75,000,000 in aggregate principal amount of its Emergent Home
Equity Loan Pass-Through Certificates, Class A (the "Certificates"), on March
26, 1997. 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
senior classes, the Class A-1 Certificates, the Class A-2 Certificates and the
Class A-3 Certificates, together the "Class A Certificates" and the Class R
Certificates. Only the Class A Certificates were issued pursuant to the
Registration Statement.
The assets of the Trust consist of a segregated pool of mortgage loans (the
"Mortgage Loans"), together with the Mortgage Files relating thereto, and
together with all collections thereon or in respect thereof after the Cut-off
Date (including amounts due on or before the Cut-off Date but received after the
Cut-off Date), any REO Property, together with all collections thereon and
proceeds thereof, the Trustee's rights with respect to the Mortgage Loans under
the insurance policies required to be maintained pursuant to the Pooling and
Servicing Agreement and any proceeds thereof, the Depositor's rights under the
Unaffiliated Seller's Agreement (including any security interest created
thereby), the Collection Account, the Distribution Account, any REO Account and
the Expense Account and such assets that are deposited therein from time to time
and any investments thereof and the Trustee's rights under the Policy, together
with any and all income, proceeds and payments with respect thereto (all such
capitalized terms as defined in the Pooling and Servicing Agreement). On and
prior to March 26, 1997 (the "Closing Date"), Emergent Mortgage Corp. (the
"Originator") transferred the Mortgage Loans and the related assets to Emergent
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Mortgage Holdings Corporation (the "Seller") pursuant to the Purchase Agreement
and Assignment, dated as of March 1, 1997, attached hereto as Exhibit 10.2,
between the Originator, the Seller and Emergent Group, Inc. On the Closing Date,
the Seller transferred the Mortgage Loans and the related assets to the
Depositor pursuant to the Unaffiliated Seller's Agreement, dated as of March 1,
1997, attached hereto as Exhibit 10.1, among the Seller, Emergent Group, Inc.
and the Depositor. The Depositor, in turn, then transferred the Mortgage Loans
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
Certificate Principal Balance for the related Class A Certificates and the
applicable Pass-Through Rate. The Class A-1 Pass-Through Rate will be 6.91% per
annum; the Class A- 2 Pass-Through Rate will be 7.30% per annum; and the Class
A-3 Pass-Through Rate will be 7.725% per annum. The Class A-1 Certificates have
an initial Class A-1 Certificate Principal Balance of $44,788,000; the Class A-2
Certificates have an initial Class A-2 Certificate Principal Balance of
$11,336,000; and the Class A-3 Certificates have an initial Class A-3
Certificate Principal Balance of $18,876,000.
As of the Closing Date, the Mortgage Loans generally possessed the
characteristics described in the Prospectus dated December 4, 1996 and the
Prospectus Supplement dated March 21, 1997 filed pursuant to Rule 424(b) of the
Act on March 25, 1997.
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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 21, 1997, between Prudential
Securities Secured Financing Corporation and Prudential Securities Incorporated.
1.2 Indemnification Agreement, dated as of March 1, 1997 among Financial
Security Assurance Inc., Prudential Securities Secured Financing Corporation,
Emergent Group, Inc., Emergent Mortgage Holdings Corporation, Emergent Mortage
Corp. and Prudential Securities Incorporated.
4.1 Pooling and Servicing Agreement, dated as of March 1, 1997, among
Prudential Securities Secured Financing Corporation, as depositor, Emergent
Mortgage Corp., as servicer and First Union National Bank of North Carolina, as
trustee.
4.2 Form of Certificate Insurance Policy and Endorsement No. 1 thereto
dated March 26, 1997.
4.3 Unaffiliated Seller's Agreement, dated as of March 1, 1997, among
Prudential Securities Secured Financing Corporation, Emergent Group, Inc. and
Emergent Mortgage Holdings Corporation.
4.4 Purchase Agreement and Assignment, dated as of March 1, 1997, between
the Originator, Emergent Mortgage Holdings Corporation and Emergent Group, Inc.
23.1 Consent of Coopers & Lybrand dated March 25, 1997.
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EXHIBIT INDEX
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Exhibit No. Description Page No.
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1.1 Underwriting Agreement, dated March
21, 1997 between Prudential
Securities Secured Financing
Corporation and Prudential
Securities Incorporated.
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1.2 Indemnification Agreement, dated as
of March 1, 1997 among Financial
Security Assurance Inc., Prudential
Securities Secured Financing
Corporation, Emergent Group, Inc.,
Emergent Mortgage Corp., Emergent
Mortgage Holdings Corporation. and
Prudential Securities Incorporated.
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4.1 Pooling and Servicing Agreement,
dated as of March 1, 1997, among
Prudential Securities Secured
Financing Corporation, as
depositor, Emergent Mortage Corp.,
as servicer, and First Union
National Bank of North Carolina, as
trustee.
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4.2 Form of Certificate Insurance
Policy and Endorsement No. 1
thereto dated March 26, 1997.
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4.3 Unaffiliated Seller's Agreement,
dated as of March 1, 1997, among
Prudential Securities Secured
Financing Corporation, Emergent
Mortgage Holdings Corporation and
Emergent Group, Inc.
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4.4 Purchase Agreement and Assignment,
dated as of March 1, 1997, between
Emergent Mortgage Holdings
Corporation, Emergent Mortgage
Corp. and Emergent Group, Inc.
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23.1 Consent of Coopers & Lybrand dated
March 25, 1997.
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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.
Prudential Securities Secured
Financing Corporation, as
Depositor
By: /s/ Norman Chaleff
--------------------------------
Name: Norman Chaleff
Title: Vice President
Dated: April 3, 1997
Execution Copy
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION TRUST
HOME EQUITY LOAN PASS-THROUGH CERTIFICATES
SERIES 1997-1
UNDERWRITING AGREEMENT
March 21, 1997
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UNDERWRITING AGREEMENT
PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza, 17th Floor
New York, New York 10292
March 21, 1997
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 21, 1997 (the "Standard
Provisions"), between the Depositor and Prudential Securities Incorporated, to
issue and sell to you (the "Underwriter") the Securities specified in Schedule I
hereto (the "Offered Securities"). 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 Offered Securities (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 to the Underwriter
and in the manner set forth in Schedule I hereto, the entire original principal
balance of the Offered Securities.
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If the foregoing is in accordance with your understanding, please sign and
return to us two counterparts hereof, and upon acceptance hereof by 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:
Title:
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SCHEDULE I
Title of Offered
Securities: Emergent Home Equity Loan Pass- Through Certificates,
Series 1997-1, Class A-1, Class A-2 and Class A-3
(together, the "Class A Certificates.")
Terms of Offered
Securities: The Offered Securities shall have the terms set forth
in the Prospectus and shall conform in all material
respects to the descrip- tions thereof contained
therein, and shall be issued pursuant to a Pooling
and Servicing Agreement to be dated as of the Closing
Date among the Depositor, Emergent Mortgage Corp., as
servicer, and First Union National Bank of North
Carolina, as trustee.
Purchase Price: The purchase price for the Class A-1 Certificates
shall be $44,496,979 plus accrued interest at the
rate of 6.91% per annum from March 1, 1997 to the
date of payment thereof. The purchase price for the
Class A-2 Certificates shall be $11,258,773.50 plus
accrued interest at the rate of 7.30% per annum from
March 1, 1997 to the date of payment thereof. The
purchase price for the Class A-3 Certificates shall
be $18,750,356.63 plus accrued interest at the rate
of 7.725% per annum from March 1, 1997 to the date of
payment thereof. Total accrued interest on the Class
A-1, Class A-2 and Class A-3 Certificates is
$373,649.29.
Specified funds for
payment of
Purchase Price: Federal Funds (immediately available funds).
Required Rating: Aaa by Moody's Investors Service, Inc.
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AAA by Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, Inc.
Closing Date: On or about March 26, 1997 at 12:00 noon eastern
standard time or at such other time as the Depositor
and the Underwriter shall agree.
Closing Location: Offices of Dewey Ballantine, 1301 Avenue of the
Americas, New York, New York.
Name and address of
Representative: Designated Representative: Prudential Securities
Incorporated.
Address for Notices,
etc.: One New York Plaza, 17th Floor
New York, New York 10292
Attn: Glen Stein.
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STANDARD PROVISIONS TO UNDERWRITING AGREEMENT
March 21, 1997
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 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 Offered Securities. The Depositor proposes to sell pursuant to the
applicable Underwriting Agreement to the several Underwriters named therein home
equity loan pass-through certificates (the "Securities") representing beneficial
ownership interests in a trust, the trust property of which consists of a pool
of Mortgage Loans and certain related property. The Securities will be issued
pursuant to a pooling and servicing agreement (the "Pooling and Servicing
Agreement") by and among the Depositor, Emergent Mortgage Corp. (the "Servicer")
and First Union National Bank of North Carolina, as trustee (the "Trustee").
The terms and rights of any particular issuance of Securities shall be as
specified in the Underwriting Agreement relating thereto and in or pursuant to
the Pooling and
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Servicing Agreement identified in such Underwriting Agreement. The Securities
which are the subject of any particular Underwriting Agreement into which this
Agreement is incorporated are herein referred to as the "Offered Securities."
The Depositor has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No. 333-16511),
including a prospectus relating to the Securities 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 Offered Securities, as first
filed with the Commission pursuant to Rule 424. The term "Preliminary
Prospectus" means a preliminary prospectus supplement specifically relating to
the Offered Securities together with the Basic Prospectus.
2. Offering by the Underwriters. Upon the execution of the Underwriting
Agreement applicable to any Offered Securities and the authorization by the
Representative of the release of such Offered Securities, the several
Underwriters propose to offer for sale to the public the Offered Securities at
the prices and upon the terms set forth in the Prospectus.
3. Purchase, Sale and Delivery of the Offered Securities. Unless otherwise
specified in the Underwriting Agreement, payment for the Offered Securities
shall be made by certified or official bank check or checks payable to the order
of the Depositor in immediately available or next day funds, at the time and
place set forth in the Underwriting Agreement, upon delivery to the
Representative for the respective accounts of the several Underwriters of the
Offered Securities 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 Offered Securities 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
material respects of the statements of the officers of the Depositor and the
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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
Offered Securities 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 Exchange shall have been
suspended or any material limitation in trading in securities
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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 Offered Securities 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 Offered Securities and
confirming that, unless otherwise specified in the Underwriting Agreement,
the Offered Securities 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 Dewey Ballantine, special 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.
(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.
(g) 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
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opinions substantially to the effect set forth in Exhibit C hereto.
(h) 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
Offered Securities, 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.
(i) The Representative shall have received, on or prior to the date of
first use of the prospectus supplement relating to the Offered Securities,
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.
(j) 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;
(k) The Servicer shall have furnished or caused to be furnished to the
Representative on the Closing Date a certificate of officers of such
Servicer in form and substance reasonably satisfactory to the
Representative;
(l) The 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.
(m) 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
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opinions substantially to the effect set forth in Exhibit D hereto.
(n) 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.
(o) There shall not have occurred any change, or any development involving
a prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations, since December 31, 1994, 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 Offered Securities on the terms and in the manner contemplated
in the Prospectus.
(p) 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 Underwriting 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.
(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 Offered
Securities covered thereby, the price at which the Offered Securities 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 Offered Securities are to be sold will be determined, the
selling concessions and
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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 Offered Securities, 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 Offered Securities 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 Offered
Securities 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 or suspending the use of any Preliminary Prospectus or the
Prospectus, or the suspension of the qualification of the Offered
Securities 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
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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 Offered Securities 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 their 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 Offered Securities 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 Offered Securities 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 Offered Securities 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.
(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
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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 Offered Securities 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 Offered Securities 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 Offered Securities 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
Offered Securities mailed to the holders of such Securities, and (iv) from
time to time, such other information concerning such Securities 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
Securities 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 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 Offered Securities 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
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deemed to have supplemented the Basic Prospectus only with respect to the
Offered Securities 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.
(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.
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(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, the Pooling and
Servicing Agreement and, if applicable, the Custodial 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
Offered Securities; 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 Offered Securities have been duly authorized, and when the Offered
Securities are issued and delivered pursuant to the Underwriting Agreement,
the Offered Securities 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 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
16
<PAGE>
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
Offered Securities 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 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
17
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and distribution of the Offered Securities 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) Each of the Offered Securities will, when issued, be a "mortgage
related security" as such term is defined in Section 3(a)(41) of the 1934
Act.
(n) At the Closing Date each of the Mortgage Loans which is a subject of
the Pooling and Servicing Agreement and all such Mortgage Loans 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 such date.
(o) At the time of execution and delivery of the Pooling and Servicing
Agreement, the Depositor will have good and marketable title to the
Mortgage Loans being transferred to the Trustee pursuant to the Pooling and
Servicing Agreement, free and clear of any lien, mortgage, pledge, charge,
encumbrance, adverse claim or other security interest (collectively
"Liens"), and will not have assigned
18
<PAGE>
to any person any of its right, title or interest in such Mortgage Loans or
in such Pooling and Servicing Agreement or the Offered Securities being
issued pursuant thereto, the Depositor will have the power and authority to
transfer such Mortgage Loans to the Trustee and to transfer the Offered
Securities 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 Offered Securities, the Trustee will have good and
marketable title to the Mortgage Loans and each of the Underwriters will
have good and marketable title to the Offered Securities, in each case free
and clear of any Liens.
(p) The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as amended, and the Trust Fund (as
defined in the Pooling and Servicing Agreement) is not required to be
registered under the Investment Company Act of 1940, as amended.
(q) 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 Offered Securities
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 fact required to
be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter and each such
19
<PAGE>
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 Mortgage Loans except to the extent that the Depositor has been
indemnified by the Servicer. 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
Offered Securities, 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 incurred by the Depositor or any such director, officer
or controlling person in connection with investigating or defending any
such
20
<PAGE>
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
"Plan of Distribution" 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
represented by separate counsel, and in that event the fees and expenses of
such separate counsel shall be paid by the Depositor (it being
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<PAGE>
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) 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 Offered
Securities (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 Offered Securities
purchased by such Underwriter under 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
22
<PAGE>
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.
(e) The parties hereto agree that the first sentence of Section 5 of the
Indemnification Agreement (the "Indemnification Agreement") dated as of the
Closing Date among the Certificate Insurer, the Servicer, 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.
(f) Each Underwriter agrees to provide the Depositor no later the date on
which the Prospectus Supplement is required to be filed pursuant to Rule
424 with a copy of its Derived Information (defined below) for filing with
the Commission on Form 8-K.
(g) Each Underwriter severally 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
23
<PAGE>
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 an Underwriter under this Section 8(E) shall be in addition
to any liability which such Underwriter may otherwise have.
The procedures set forth in Section 8(C) shall be equally applicable to
this Section 8(E).
For purposes of this Section 8, the term "Derived Information" means such
portion, if any, of the information delivered to the Depositor pursuant to
Section 8(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.
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 Offered Securities.
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
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<PAGE>
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 Offered Securities which it or they have
agreed to purchase under the Underwriting Agreement and the aggregate principal
amount of the Offered Securities 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 Offered Securities 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
Offered Securities which such defaulting Underwriter or Underwriters agreed but
failed to purchase. If any Underwriter or Underwriters so defaults or default
and the aggregate principal amount of the Offered Securities 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
Offered Securities 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 Offered Securities 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. 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
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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 Offered Securities and
proposing to purchase and purchasing the Offered Securities 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 certificates for the
Offered Securities.
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 Offered Securities and proposing to purchase and purchasing
the Offered Securities 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 Offered Securities.
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, 199 Water Street, 26th
Floor, New York, New York 10292, Attention: Director-Mortgage 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.
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13. Representative of Underwriters. Any Represen- tative identified in the
Underwriting Agreement will act for the Underwriters of the Offered Securities
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
Offered Securities 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.
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.
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Exhibit A
Opinions of Dewey Ballantine,
special counsel for the Depositor
(i) Each of the Documents constitutes the valid, legal and binding
agreement of the Depositor, and is enforceable against the Depositor in
accordance with its terms.
(ii) The Certificates, assuming the due execution by the Trustee and due
authentication by the Trustee and payment therefor pursuant to the Underwriting
Agreement, are validly issued and outstanding and are entitled to the benefits
of the Pooling and Servicing Agreement.
(iii) No consent, approval, authorization or order of, registration or
filing with, or notice to, any governmental authority or court is required under
federal laws or the laws of the State of New York for the execution, delivery
and performance of the Documents or the offer, issuance, sale or delivery of the
Certificates or the consummation of any other transaction contemplated thereby
by the Depositor, except such which have been obtained.
(iv) The Registration Statement and the Prospectus (other than the
financial and statistical data included therein, as to which we are not called
upon to express any opinion), at the time the Registration Statement became
effective, as of the date of execution of the Underwriting Agreement and as of
the date hereof comply as to form in all material respects with the requirements
of the Securities Act of 1933, as amended, and the rules and regulations
thereunder, and the Exchange Act and the rules and regulations thereunder, and
we do not know of any amendment to the Registration Statement required to be
filed, or of any contracts, indentures or other documents of a character
required to be filed as an exhibit to the Registration Statement or required to
be described in the Registration Statement or the Prospectus, which has not been
filed or described as required.
(v) Neither the qualification of the Pooling and Servicing Agreement under
the Trust Indenture Act of 1939, as amended, nor the registration of the Trust
Fund created by the Pooling and Servicing Agreement under the Investment Company
Act of 1940 is required.
(vi) The statements in the Prospectus Supplement set forth under the
caption "DESCRIPTION OF THE CERTIFICATES," to the extent such statements purport
to summarize certain provisions of the Certificates or of the Pooling and
Servicing
<PAGE>
Agreement or of the Unaffiliated Seller's Agreement, are fair and accurate in
all material respects.
A-2
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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 and
is qualified to transact business in the State of South Carolina.
(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.
(iii) The Pooling and Servicing Agreement has been duly and validly
authorized, executed and delivered by the Servicer, all requisite corporate
action having been taken with respect thereto, and constitutes the valid, legal
and binding agreement of the Servicer, and is enforceable against the Servicer
in accordance with its respective terms.
(iv) The execution, delivery or performance by the Servicer of the Pooling
and Servicing Agreement does not (A) conflict or will not conflict with or
result or will result in a breach of, or constitute or will constitute a default
under or violate 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)
result in, or will result in the creation or imposition of any lien, charge or
encumbrance upon the Trust Fund or upon the Certificates, except as otherwise
contemplated by the Pooling and Servicing Agreement.
(v) 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
or the consummation of any other transaction contemplated thereby by the
Servicer, except such which have been obtained.
<PAGE>
(vi) 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's equity or results of operations of
the Servicer; or (ii) the Servicer's ability to perform its obligations under,
or the validity or enforceability of the Pooling and Servicing Agreement; 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.
B-2
<PAGE>
Exhibit C
Opinions of Counsel to
the Trustee
(i) The Trustee is a national banking association 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 D
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 Policy and
perform its obligations under the 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 Policy,
the Insurance and Indemnity Agreement and the Indemnification Agreement are
within the corporate power of the Certificate Insurer and has been authorized by
all necessary corporate action on the part of the Certificate Insurer; the
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 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 Insurance and Indemnity Agreement, and each 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 Policy; to the extent required by applicable legal requirements that
would adversely affect validity or enforceability of the Policy, the form of the
Policy has been filed with, and approved by, all governmental authorities having
jurisdiction over the Certificate Insurer in connection with such Policy.
<PAGE>
(v) To the extent the 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 INSURER" in the
Prospectus insofar as such statements constitute a description of the Policy,
accurately summarizes the Policy.
D-2
- --------------------------------------------------------------------------------
INDEMNIFICATION AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
EMERGENT MORTGAGE HOLDINGS CORPORATION,
EMERGENT MORTGAGE CORP.,
EMERGENT GROUP, INC.,
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
and
PRUDENTIAL SECURITIES INCORPORATED
Dated as of March 1, 1997
Emergent Home Equity Loan Pass-Through
Certificates, Series 1997-1
$75,000,000 Class A Certificates
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
Section 1. Definitions..................................................... 1
Section 2. Representations, Warranties and Agreements of Financial Security 3
Section 3. Representations, Warranties and Agreements of the Underwriter... 5
Section 4. Indemnification................................................. 6
Section 5. Indemnification Procedures...................................... 6
Section 6. Contribution.................................................... 7
Section 7. Miscellaneous................................................... 8
EXHIBIT
Exhibit A Opinion of General Counsel
<PAGE>
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT dated as of March 1, 1997, among FINANCIAL
SECURITY ASSURANCE INC. ("Financial Security"), PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION (the "Depositor"), EMERGENT GROUP, INC. (the "Company"),
EMERGENT MORTGAGE HOLDINGS CORPORATION (the "Seller"), EMERGENT MORTGAGE CORP.
(the "Originator") 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.
"Company Party" means any of the Company, 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.
"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.
"Financial Security Agreements" means this 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 4 hereof.
"Indemnifying Party" means any party required to provide indemnification
pursuant to Section 4 hereof.
"Insurance Agreement" means the Insurance and Indemnity Agreement, dated as
of March 1, 1997, by and among Financial Security, the Depositor, the Company,
the Originator and the Seller.
<PAGE>
-2-
"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 actual expenses reasonably 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 5 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 Circular" means the Prospectus dated December 4, 1996, including
the Prospectus Supplement thereto dated March 21, 1997, relating to the
Securities, including, without limitation, Derived Information, as defined in
the Underwriting Agreement (which includes but is not limited to any
Computational Materials).
"Offering Document" means the Offering Circular and any amendments or
supplements thereto and any other material or documents delivered by the
Underwriter to any Person in connection with the offer or sale of the
Securities.
"Originator Party" means any of the Originator, 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.
"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 delivered by
Financial Security with respect to the Securities.
"Securities" means the Class A-1 Certificates, Class A-2 Certificates and
the Class A-3 Certificates issued pursuant to a Pooling and Servicing Agreement,
dated as of March 1, 1997 by and among, the Depositor, the Originator and First
Union National Bank of North Carolina, as trustee.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Seller Party" means any of the Seller, 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.
<PAGE>
-3-
"Underwriting Agreement" means the Underwriting Agreement dated as of March
21, 1997, between the Depositor and the Underwriter in respect of the
Securities.
"Underwriter Information" has the meaning provided in Section 3(c) hereof.
"Underwriter Party" means any of the Underwriter, 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.
Section 2. Representations, Warranties and Agreements of Financial
Security. Financial Security represents, warrants and agrees, as of the date
hereof and as of the Closing Date, as follows:
(a) Organization, Etc. Financial Security is a stock insurance company duly
organized, validly existing, in good standing 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 legal, 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 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).
<PAGE>
-4-
(f) Financial Information. The consolidated balance sheets of Financial
Security as of December 31, 1995 and December 31, 1994 and the related
consolidated statements of income, changes in shareholder's equity and cash
flows for the fiscal years then ended and the interim consolidated balance sheet
of Financial Security as of September 30, 1996, and the related statements of
income, changes in shareholder's equity and cash flows for the interim period
then ended, furnished by Financial Security for use in the Offering Circular,
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 except as noted therein
(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.
(g) Financial Security Information. The information in the Offering
Circular set forth under the caption "The 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 Circular 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 light of
the circumstances under which they were made, not misleading.
(h) Additional Information. Financial Security will furnish to the
Underwriter, the Company, the Originator or the Depositor, upon request of the
Underwriter, the Company, the Originator 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); provided, however, that, if the Underwriter,
the Company, the Seller, the Originator or the Depositor shall require a
manually signed report or consent of Financial Security's auditors in connection
with such financial statements, such report or consent shall be at the expense
of the Underwriter, the Company, the Originator, the Seller or the Depositor, as
the case may be. In addition, if the delivery of an Offering Circular relating
to the Securities is required at any time prior to the expiration of nine months
after the time of issue of the Offering Circular in connection with the offering
or sale of the Securities, the Depositor or the Underwriter will notify
Financial Security of such requirement to deliver an Offering Circular and
Financial Security will promptly provide the Underwriter and the Depositor with
any revisions to the Financial Security Information that are in the judgment of
Financial Security necessary to prepare an amended Offering Circular or a
supplement to the Offering Circular which will correct such statement or
omission.
<PAGE>
-5-
(i) Opinion of Counsel. Financial Security will furnish to the Seller, the
Originator, the Depositor, the Underwriter and the Company on the closing date
for the sale of the Securities an opinion of its Associate General Counsel, to
the effect set forth in Exhibit A attached hereto, dated such closing date and
addressed to the Seller, the Originator, the Depositor, the Underwriter and the
Company.
(j) Consents and Reports of Independent Accountants. Financial Security
will furnish to the Underwriter, the Company, the Originator and the Depositor,
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 Circular, 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 Standard & Poor's Ratings Services or Moody's Investors Service, Inc.
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 Circular 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, as of the date hereof and as of
the Closing Date, 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
Circular.
(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 information in
respect of Financial Security included in the Offering Circular. 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".
(c) Underwriting Information. All material provided by the Underwriter for
inclusion in the Offering Documents, insofar as such information relates to the
Underwriter, and any Derived Information (as defined in the Underwriting
Agreement) (as revised from time to time, collectively the "Underwriter
Information") is true and correct in all material respects. In respect of the
<PAGE>
-6-
Offering Documents, the Underwriter Information is limited to the information
set forth under the caption "Plan of Distribution" in the Offering Documents.
Section 4. Indemnification. (a) Financial Security agrees, upon the terms
and subject to the conditions provided herein, to indemnify, defend and hold
harmless each Depositor Party, each Company Party, each Seller Party, each
Originator 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, Company Party, Seller Party, Originator
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 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 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.
(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 5. Indemnification Procedures. Except as provided below in Section
6 with respect to contribution or in Section 7(e), the indemnification provided
herein by an 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. 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
<PAGE>
-7-
cooperation with, and with the reasonable cooperation of, the Indemnified Party.
The Indemnified Party will have the right to employ its own counsel in any such
action in addition to the counsel of the Indemnifying Party, but the fees and
expenses of such counsel will be at the expense of such Indemnified Party,
unless (a) the employment of counsel by the Indemnified Party at its expense has
been authorized in writing by the Indemnifying Party, (b) the Indemnifying Party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, or (c)
the named parties to any such action or proceeding (including any impleaded
parties) include both the Indemnifying Party and one or more Indemnified
Parties, and the Indemnified Parties shall have been advised by counsel that
there may be one or more legal defenses available to them which are different
from or additional to those available to the Indemnifying 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 Underwriter Parties, one such firm for
all Company Parties, one such firm for all Seller Parties, one such firm for all
Originator 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 the Underwriter in respect of the
Underwriter Parties, by the Company in respect of the Company Parties, by the
Seller in respect of the Seller Parties, by the Originator in respect of the
Originator Parties and by Financial Security in respect of the Financial
Security Parties), in each of which cases the fees and expenses of counsel will
be at the expense of the Indemnifying Party and all such fees and expenses will
be reimbursed promptly as they are incurred. 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 6. 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 in such proportion as is appropriate to reflect (i) the benefits
received by such Indemnifying Party relative to the benefits received by the
Indemnified Party or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Indemnifying Party on the one hand and the Indemnified Party on the
other in connection with such Loss; 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.
<PAGE>
-8-
(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, the Underwriter shall be solely
responsible for the Underwriter Information and that, as and to the extent
provided in the Insurance Agreement, the balance of the Offering Document shall
be the responsibility of the Company, the Originator, the Seller and the
Depositor.
(d) Notwithstanding anything in this Section 6 to the contrary, the
Underwriter shall not be required to contribute an amount greater than the
excess, if any, of (x) the purchase prices paid by investors to the Underwriter
for the Certificates over (y) the purchase price paid by the Underwriter for the
Certificates.
(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.
(g) The provisions relating to contribution set forth in this Section 6 do
not limit the rights of any party to indemnification under Section 4.
Section 7. 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, NY 10022
Attention: Surveillance Department
Re: Emergent Home Equity Loan
Pass-Through Certificates, Series 1997-1
<PAGE>
-9-
<PAGE>
-10-
If to the Depositor: Prudential Securities Secured Financing Corporation
One New York Plaza, 15th Floor
Attention: Managing Director, Asset-Backed Finance
Group
If to the Company: Emergent Group, Inc.
15 South Main Street, Suite 750
Greenville, South Carolina 29606
Attention: Kevin J. Mast
If to the Underwriter: Prudential Securities Incorporated
One New York Plaza, 15th Floor
New York, New York 10292
Attention: Manager-Asset Finance Group
If to the Seller: Emergent Mortgage Holdings Corporation
44 East Camperdown Way
Greenville, South Carolina 29601
Attention: William P. Crawford, Jr.
If to the Originator: Emergent Mortgage Corp.
50 Datastream Plaza, Suite 201
Greenville, South Carolina 29605
(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 Company, the Depositor, the Seller, the Originator, Financial
Security or the Underwriter under the Underwriting Agreement or the Insurance
Agreement, as applicable.
<PAGE>
-11-
(f) Counterparts. This Agreement may be executed in counterparts by the
parties hereto, and all such counterparts shall constitute one and the same
instrument.
<PAGE>
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/ Maryanne Mathes
---------------------------------------
Name: Maryanne Mathes
Title: Authorized Officer
EMERGENT MORTGAGE HOLDINGS
CORPORATION
By /s/ Kevin J. Mast
---------------------------------------
Name: Kevin J. Mast
Title: VP, CFO & Treasurer
EMERGENT GROUP, INC.
By /s/ Kevin J. Mast
---------------------------------------
Name:Kevin J. Mast
Title: VP, CFO & Treasurer
EMERGENT MORTGAGE CORP.
By /s/ Kevin J. Mast
---------------------------------------
Name: Kevin J. Mast
Title: VP & Treasurer
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By /s/ Glen Stein
---------------------------------------
Name: Glen Stein
Title: VP
PRUDENTIAL SECURITIES
INCORPORATED
By /s/ Glen Stein
---------------------------------------
Name: Glen Stein
Title: VP
<PAGE>
EXHIBIT A
OPINION OF 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 Agreements have been duly authorized, executed and
delivered by Financial Security.
3. The Policy and the 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 Agreements, nor the performance by Financial Security of its obligations
thereunder, will conflict with any provision of the certificate of incorporation
or the by-laws of Financial Security or, to the best of my knowledge, 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, 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).
In addition, please be advised that I have reviewed the description of
Financial Security under the caption "The Insurer" in the Prospectus Supplement
dated March __, 1997 (the "Offering Document") of the Depositor 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
<PAGE>
under the Act in connection with a public offering 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 referred to therein).
EXECUTION COPY
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
Depositor
EMERGENT MORTGAGE CORP.,
Servicer
and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
Trustee
--------------------
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 1997
--------------------
Emergent Home Equity Loan Pass-Through Certificates
Series 1997-1
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS...................................................... 2
SECTION 1.01. Defined Terms......................................... 2
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL
ISSUANCE OF CERTIFICATES......................................... 33
SECTION 2.01. Conveyance of Mortgage Loans.......................... 33
SECTION 2.02. Acceptance by Trustee................................. 35
SECTION 2.03. Repurchase or Substitution of Mortgage Loans.......... 37
SECTION 2.04. Representations and Warranties of the Depositor....... 39
SECTION 2.05. Representations, Warranties and Covenants of the
Servicer.............................................. 41
SECTION 2.06. Issuance of Certificates.............................. 43
ARTICLE III ADMINISTRATION AND SERVICING OF THE TRUST
FUND.......................................................... 43
SECTION 3.01. Servicer to Act as Servicer........................... 43
SECTION 3.02. Sub-Servicing Agreements Between Servicer and
Sub-Servicers......................................... 45
SECTION 3.03. Successor Sub-Servicers............................... 46
SECTION 3.04. Liability of the Servicer............................. 47
SECTION 3.05. No Contractual Relationship Between Sub-Servicers and
Trustee or Certificateholders......................... 47
SECTION 3.06. Assumption or Termination of Sub-Servicing
Agreements by Trustee................................. 47
SECTION 3.07. Collection of Certain Mortgage Loan Payments.......... 48
SECTION 3.08. Sub-Servicing Accounts................................ 48
SECTION 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.................................... 48
SECTION 3.10. Collection Account and Distribution Account........... 49
SECTION 3.11. Withdrawals from the Collection Account and
Distribution Account.................................. 51
SECTION 3.12. Investment of Funds in the Investment Accounts........ 53
SECTION 3.13. [intentionally omitted]............................... 54
SECTION 3.14. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage....................... 54
SECTION 3.15. Enforcement of Due-On-Sale Clauses, Assumption
Agreements............................................ 56
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SECTION 3.16. Realization Upon Defaulted Mortgage Loans............ 57
SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files...... 59
SECTION 3.18. Servicing Compensation............................... 60
SECTION 3.19. Reports to the Trustee; Collection
Account Statements................................... 61
SECTION 3.20. Statement as to Compliance........................... 61
SECTION 3.21. Independent Public Accountants' Servicing Report..... 62
SECTION 3.22. Access to Certain Documentation...................... 62
SECTION 3.23. Title, Management and Disposition of REO Property.... 63
SECTION 3.24. Obligations of the Servicer in Respect of Prepayment
Interest Shortfalls.................................. 66
SECTION 3.25. Expense Account...................................... 66
SECTION 3.26. Obligations of the Servicer in Respect of Monthly
Payments............................................. 67
SECTION 3.27. Interest Coverage Account; Redemption Account........ 67
ARTICLE IV PAYMENTS TO CERTIFICATEHOLDERS............................... 68
SECTION 4.01. Distributions........................................ 68
SECTION 4.02. Statements to Certificateholders..................... 72
SECTION 4.03. [Reserved]; Monthly Advances......................... 76
SECTION 4.04. Determination of Realized Losses..................... 78
SECTION 4.05. Compliance with Withholding Requirements............. 78
ARTICLE V THE CERTIFICATES............................................... 78
SECTION 5.01. The Certificates..................................... 78
SECTION 5.02. Registration of Transfer and Exchange
of Certificates...................................... 80
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.... 85
SECTION 5.04. Persons Deemed Owners................................ 86
SECTION 5.05. Certain Available Information........................ 86
ARTICLE VI THE DEPOSITOR AND THE SERVICER................................ 87
SECTION 6.01. Liability of the Depositor and the Servicer.......... 87
SECTION 6.02. Merger or Consolidation of the Depositor or the
Servicer............................................. 87
SECTION 6.03. Limitation on Liability of the Depositor, the
Servicer and Others.................................. 87
SECTION 6.04. Limitation on Resignation of the Servicer............ 88
SECTION 6.05. Rights of the Depositor and Others in Respect of the
Servicer............................................. 89
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ARTICLE VII DEFAULT...................................................... 90
SECTION 7.01. Servicer Events of Default........................... 90
SECTION 7.02. Trustee to Act; Appointment of Successor............. 93
SECTION 7.03. Notification to Certificateholders................... 94
SECTION 7.04. Waiver of Servicer Events of Default................. 95
ARTICLE VIII CONCERNING THE TRUSTEE...................................... 95
SECTION 8.01. Duties of Trustee.................................... 95
SECTION 8.02. Certain Matters Affecting the Trustee................ 97
SECTION 8.03. Trustee Not Liable for Certificates
or Mortgage Loans.................................... 98
SECTION 8.04. Trustee May Own Certificates......................... 99
SECTION 8.05. Trustee's Fees and Expenses.......................... 99
SECTION 8.06. Eligibility Requirements for Trustee................. 100
SECTION 8.07. Resignation and Removal of the Trustee............... 100
SECTION 8.08. Successor Trustee.................................... 101
SECTION 8.09. Merger or Consolidation of Trustee................... 102
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee........ 102
SECTION 8.11. Appointment of Office or Agency...................... 103
SECTION 8.12. Representations and Warranties of the Trustee........ 103
ARTICLE IX CERTAIN MATTERS REGARDING THE CERTIFICATE
INSURER...................................................... 104
SECTION 9.01. Rights of the Certificate Insurer To Exercise Rights of
Class A Certificateholders........................... 104
SECTION 9.02. Trustee To Act Solely with Consent of the Certificate
Insurer.............................................. 105
SECTION 9.03. Trust Fund and Accounts Held for Benefit of the
Certificate Insurer.................................. 106
SECTION 9.04. Claims Upon the Policy; Policy Payments Account...... 106
SECTION 9.05. Effect of Payments by the Certificate Insurer;
Subrogation.......................................... 108
SECTION 9.06. Notices to the Certificate Insurer................... 108
SECTION 9.07. Third-Party Beneficiary.............................. 109
SECTION 9.08. Trustee to Hold the Policy........................... 109
SECTION 9.09. Termination of the Servicer.......................... 109
ARTICLE X TERMINATION................................................... 109
SECTION 10.01. Termination Upon Repurchase or Liquidation of All
Mortgage Loans....................................... 109
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SECTION 10.02. Additional Termination Requirements.................. 112
ARTICLE XI REMIC PROVISIONS............................................... 112
SECTION 11.01. REMIC Administration................................. 112
SECTION 11.02. Prohibited Transactions and Activities............... 115
SECTION 11.03. Servicer and Trustee Indemnification................. 116
ARTICLE XII MISCELLANEOUS PROVISIONS..................................... 116
SECTION 12.01. Amendment............................................ 116
SECTION 12.02. Recordation of Agreement; Counterparts............... 118
SECTION 12.03. Limitation on Rights of Certificateholders........... 119
SECTION 12.04. GOVERNING LAW........................................ 120
SECTION 12.05. Notices.............................................. 120
SECTION 12.06. Severability of Provisions........................... 121
SECTION 12.07. Notice to Rating Agencies and Certificate Insurer.... 121
SECTION 12.08. Article and Section References....................... 122
SECTION 12.09. Confirmation of Intent............................... 122
Exhibit A-1 Form of Class A-1 Certificate
Exhibit A-2 Form of Class A-2 Certificate
Exhibit A-3 Form of Class A-3 Certificate
Exhibit A-4 Form of Class R Certificate
Exhibit B Form of Financial Guaranty Insurance Policy
Exhibit C-1 Form of Trustee's Initial Certification
Exhibit C-2 Form of Trustee's Final Certification
Exhibit D Form of Unaffiliated Seller's Agreement
Exhibit E-1 Form of Temporary Request for Release of Mortgage File
Exhibit E-2 Form of Permanent Request for Release of Mortgage File
Exhibit F-1 Form of 144A Transfer Letter
Exhibit F-2 Form of Transfer Affidavit and Agreement
Schedule 1 Mortgage Loan Schedule
iv
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This Pooling and Servicing Agreement, is dated and effective as of March 1, 1997
among PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, as Depositor,
EMERGENT MORTGAGE CORP., as Servicer, and FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, as Trustee.
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates (collectively, the
"Certificates"), to be issued hereunder in multiple classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder.
As provided herein, the Trustee will elect to treat the segregated pool of
assets consisting of the Mortgage Loans and certain other related assets subject
to this Agreement as a real estate mortgage investment conduit (a "REMIC") for
federal income tax purposes. The Class R Certificates will be the sole class of
"residual interests" in the REMIC for purposes of the REMIC Provisions. The
Class A Certificates will be the "regular interests" in the REMIC.
The following table irrevocably sets forth the Pass-Through Rates, initial
Certificate Principal Balance and "latest possible maturity date" for the
Certificates.
Initial Certificate Latest Possible
Description Pass-Through Rate Principal Balance Maturity Date(1)
- ----------- ----------------- ----------------- ----------------
Class A-1 6.91% $44,788,000 2/20/2012
Class A-2 7.30% 11,336,000 2/20/2012
Class A-3 7.725% 18,876,000 3/20/2027
Class R N/A 0 N/A
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for the Class A Certificates.
As of the Cut-off Date, the Mortgage Loans had an aggregate principal
balance equal to $77,526,089.80.
In consideration of the mutual agreements herein contained, the Depositor,
the Servicer and the Trustee agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, including, without limitation, in the
Preliminary Statement hereto, the following words and phrases, unless the
context otherwise requires, shall have the meanings specified in this Article.
Unless otherwise specified, all calculations described herein shall be made on
the basis of a 360-day year consisting of twelve 30-day months.
"Accrued Certificate Interest": With respect to each Distribution Date and
any Class A Certificate, interest accrued during the related Interest Accrual
Period at the applicable Pass-Through Rate for such Class A Certificate for such
Distribution Date on the Certificate Principal Balance of such Class A
Certificate immediately prior to such Distribution Date. All distributions of
interest on the Class A Certificates will be calculated on the basis of a
360-day year consisting of twelve 30-day months. Accrued Certificate Interest
with respect to each Distribution Date, as to any Class A Certificate, shall be
reduced by an amount equal to the portion allocable to such Certificate of the
aggregate amount of any Relief Act Interest Shortfall, if any, for such
Distribution Date.
"Additional Mortgage Loans": Any Mortgage Loans included in the Mortgage
Pool but not identified by the Originator before the opening of business on
March 1, 1997, but excluding any Qualified Substitute Mortgage Loans.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under 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 direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
"Assignment": An assignment of Mortgage, notice of transfer or equivalent
instrument, in recordable form, which is sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage.
"Available Distribution Amount": With respect to any Distribution Date, an
amount equal to the excess of (i) the sum of (a) the aggregate of the Monthly
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Payments, Liquidation Proceeds, Insurance Proceeds, Principal Prepayments and
other unscheduled recoveries of principal and interest in respect of the
Mortgage Loans received during or with respect to the related Collection Period,
(b) the aggregate of any amounts received in respect of an REO Property
withdrawn from any REO Account and deposited in the Distribution Account for
such Distribution Date pursuant to Section 3.23, (c) the aggregate of any
amounts deposited in the Distribution Account by the Servicer in respect of
Prepayment Interest Shortfalls for such Distribution Date pursuant to Section
3.24, (d) the aggregate of any Monthly Advances made by the Servicer for such
Distribution Date pursuant to Section 4.03, (e) the aggregate of any advances
made by the Trustee for such Distribution Date pursuant to Section 7.02, (f) the
Stated Principal Balance of any Mortgage Loan that was purchased during the
related Collection Period pursuant to or as contemplated by Sections 2.03,
3.16(c) or 10.01 and the amount of any shortfall deposited into the Collection
Account in connection with the substitution of a Deleted Mortgage Loan pursuant
to Section 2.03 during the related Collection Period and (g) the aggregate of
any amounts deposited into the Distribution Account by the Trustee from the
Interest Coverage Account and the Redemption Account over (ii) the sum of (a)
amounts reimbursable or payable to the Depositor, the Servicer, the Trustee, the
Seller or any Sub-Servicer pursuant to Section 3.11 or Section 3.12 or otherwise
payable in respect of extraordinary Trust Fund expenses, (b) Stayed Funds, (c)
amounts deposited in the Collection Account or the Distribution Account, as the
case may be, in error, (d) amounts reimbursable to the Trustee for an advance
made pursuant to Section 7.02(b) which advance the Trustee has determined to be
nonrecoverable from the Stayed Funds in respect of which it was made, (e) the
Certificate Insurer Premium payable to the Certificate Insurer pursuant to
Section 3.25(b), and (f) the Trustee Fee payable from the Distribution Account
pursuant to Section 8.05.
"Balloon Mortgage Loan": A Mortgage Loan that provides for the payment of
the unamortized principal balance of such Mortgage Loan in a single payment at
the maturity of such Mortgage Loan that is substantially greater than the
preceding monthly payment.
"Balloon Payment": The final payment due on a Balloon Mortgage Loan.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of the
United States Code), as amended.
"Book-Entry Certificate": The Class A Certificates for so long as such
Certificates shall be registered in the name of the Depository or its nominee.
"Business Day": Any day other than a Saturday, a Sunday or a day on which
banking or savings and loan institutions in the State of South Carolina, or in
the city in which the Certificate Insurer or the Corporate Trust Office of the
Trustee is located, are authorized or obligated by law or executive order to be
closed.
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"Cash-Out Refinancing": A Refinanced Mortgage Loan the proceeds of which
were more than $1000 in excess of the principal balance of any existing first
mortgage or subordinate mortgage on the related Mortgaged Property and related
closing costs.
"Certificate": Any one of the Emergent Home Equity Loan Pass- Through
Certificates, Series 1997-1, Class A or Class R, issued under this Agreement.
"Certificate Factor": With respect to any Class of Regular Certificates as
of any Distribution Date, a fraction, expressed as a decimal carried to six
places, the numerator of which is the Class Certificate Balance of such Class of
Certificates on such Distribution Date (after giving effect to any distributions
of principal in reduction of the Class Certificate Balance of such Class of
Certificates to be made on such Distribution Date), and the denominator of which
is the initial Class Certificate Balance of such Class of Certificates as of the
Closing Date.
"Certificate Insurer": Financial Security Assurance, Inc. a stock insurance
company organized and created under the laws of the State of New York, and any
successors thereto.
"Certificate Insurer Default": The existence and continuance of any of the
following:
(a) The Certificate Insurer fails to make a payment required under the
Policy in accordance with its terms; or
(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, the New York State Insurance Law 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, the New
York State Insurance Law or any other similar federal or state law relating
to insolvency, bankruptcy, rehabilitation, liquidation, or reorganization
that is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or any 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 of all or any material portion of its property.
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"Certificate Insurer Premium": The Policy premium payable pursuant to
Section 3.25(b) hereof.
"Certificate Insurer Premium Rate": 0.27% per annum.
"Certificateholder" or "Holder": The Person in whose name a Certificate is
registered in the Certificate Register, and the Certificate Insurer to the
extent of Cumulative Insurance Payments, except that a "disqualified
organization" (as defined in Section 860E(e)(5) of the Code) or a Non-United
States Person shall not be a Holder of a Residual Certificate for any purposes
hereof and, solely for the purposes of giving any consent pursuant to this
Agreement, any Certificate registered in the name of the Servicer or any
Affiliate thereof shall be deemed not to be outstanding and the Voting Rights to
which it is entitled shall not be taken into account in determining whether the
requisite percentage of Voting Rights necessary to effect any such consent has
been obtained, except as otherwise provided in Section 12.01. The Trustee may
conclusively rely upon a certificate of the Servicer in determining whether a
Certificate is held by an Affiliate thereof. All references herein to "Holders"
or "Certificateholders" shall reflect the rights of Certificate Owners as they
may indirectly exercise such rights through the Depository and participating
members thereof, except as otherwise specified herein; provided, however, that
the Trustee shall be required to recognize as a "Holder" or "Certificateholder"
only the Person in whose name a Certificate is registered in the Certificate
Register.
"Certificate Owner": With respect to a Book-Entry Certificate, the Person
who is the beneficial owner of such Certificate as reflected on the books of the
Depository or on the books of a Depository Participant or on the books of an
indirect participating brokerage firm for which a Depository Participant acts as
agent.
"Certificate Principal Balance": With respect to each Class A Certificate
as of any date of determination, the Certificate Principal Balance of such Class
A Certificate on the Distribution Date immediately prior to such date of
determination, minus all distributions allocable to principal made thereon on
such immediately prior Distribution Date (or, in the case of any date of
determination up to and including the first Distribution Date, the initial
Certificate Principal Balance of such Class A Certificate, as stated on the face
thereof). With respect to each Class R Certificate, as of any date of
determination, an amount equal to the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Stated Principal
Balance of the Mortgage Loans over (B) the then aggregate Certificate Principal
Balance of all Class A Certificates then outstanding.
"Certificate Register" and "Certificate Registrar": The register maintained
and the registrar appointed pursuant to Section 5.02.
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"Class": Collectively, all of the Certificates bearing the same class
designation.
"Class A Certificateholder": Any Holder of a Class A-1, Class A-2 or Class
A-3 Certificate.
"Class A Certificate Principal Balance": The sum of the Class A-1
Certificate Principal Balance, the Class A-2 Certificate Principal Balance and
the Class A-3 Certificate Principal Balance.
"Class A-1 Certificate": Any one of the Class A-1 Certificates executed by
the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-1 and evidencing a Regular
Interest in the REMIC Trust for purposes of the REMIC Provisions.
"Class A-1 Certificate Principal Balance": The Class Certificate Balance
for the Class A-1 Certificates.
"Class A-1 Interest Distribution Amount": On any Distribution Date, the
amount equal to the aggregate Accrued Certificate Interest on the Class A-1
Certificates.
"Class A-1 Pass-Through Rate": A rate per annum equal to 6.91%.
"Class A-2 Certificate": Any one of the Class A-2 Certificates executed by
the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in the REMIC Trust for purposes of the REMIC Provisions.
"Class A-2 Certificate Principal Balance": The Class Certificate Balance
for the Class A-2 Certificates.
"Class A-2 Interest Distribution Amount": On any Distribution Date, the
amount equal to the aggregate Accrued Certificate Interest on the Class A-2
Certificates.
"Class A-2 Pass-Through Rate": A rate per annum equal to 7.30%.
"Class A-3 Certificate": Any one of the Class A-3 Certificates executed by
the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-3 and evidencing a Regular
Interest in the REMIC Trust for purposes of the REMIC Provisions.
"Class A-3 Certificate Principal Balance": The Class Certificate Balance
for the Class A-3 Certificates.
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"Class A-3 Interest Distribution Amount": On any Distribution Date, the
amount equal to the aggregate Accrued Certificate Interest on the Class A-3
Certificates.
"Class A-3 Pass-Through Rate": A rate per annum equal to 7.725%.
"Class Certificate Balance": As to any Class of Certificates and any date
of determination, the aggregate of the Certificate Principal Balances of all
Certificates of such Class as of such date of determination.
"Class R Certificate": Any one of the Class R Certificates executed by the
Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-4 and evidencing the
Residual Interest in the REMIC Trust for purposes of the REMIC Provisions.
"Closing Date": March 26, 1997.
"Code": The Internal Revenue Code of 1986.
"Collection Account": The account or accounts created and maintained by the
Servicer pursuant to Section 3.10(a), which shall be entitled "Emergent Mortgage
Corp., as Servicer for First Union National Bank of North Carolina, as Trustee,
in trust for (A) registered holders of Emergent Home Equity Loan Pass-Through
Certificates, Series 1997-1, and (B) Financial Security Assurance, Inc." and
which must be an Eligible Account.
"Collection Period": With respect to any Distribution Date, the calendar
month preceding the calendar month in which such Distribution Date occurs.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at 230 South Tryon Street, 8th
Floor, Charlotte, North Carolina 28288-1179, Attention: Corporate Trust
Department, or at such other address as the Trustee may designate from time to
time by notice to the Certificateholders, the Depositor, the Servicer and the
Certificate Insurer.
"Cumulative Insurance Payments": As of any time of determination, the
aggregate of all Insurance Payments previously made by the Certificate Insurer
plus interest thereon from the date such amount became due until paid in full,
at a rate of interest calculated as provided in the Insurance Agreement minus
all payments previously made to the Certificate Insurer pursuant to Section 4.01
hereof as reimbursement for such amounts.
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"Cumulative Loss Percentage": For any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is aggregate amount of Realized
Losses incurred from and including the first Collection Period to and including
the most recently ended Collection Period, and the denominator of which is the
Original Pool Balance.
"Cut-off Date": With respect to each Initial Mortgage Loan, the opening of
business on March 1, 1997 and with respect to each Additional Mortgage Loan, the
respective origination date. With respect to all Qualified Substitute Mortgage
Loans, A the first day of the calendar month in which the substitution occurs.
References herein to the "Cut-off Date," when used with respect to more than one
Mortgage Loan, shall be to the respective Cut-off Dates for such Mortgage Loans.
"Debt Service Reduction": With respect to any Mortgage Loan, a reduction in
the scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction
resulting from a Deficient Valuation.
"Deficiency Amount": With respect to the Class A Certificates as of any
Distribution Date (i) any shortfall in amounts available in the Distribution
Account to pay the Interest Distribution Amount, net of any Relief Act Interest
Shortfalls and Prepayment Interest Shortfalls allocated to the Class A
Certificates, (ii) the Remaining Overcollateralization Deficit, if any, for such
Distribution Date and (iii) without duplication of the amount specified in
clause (ii), the Class A Certificate Principal Balance to the extent unpaid on
the final Distribution Date or earlier termination of the Trust Fund pursuant to
the terms of this Agreement.
"Deficiency Event": The inability of the Trustee to make the Guaranteed
Distribution on any Distribution Date due to a shortage of funds for such
purpose then held in the Distribution Account and the failure of the Certificate
Insurer to pay in full a claim made in accordance with Policy with respect to
such Distribution Date.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation of
the related Mortgaged Property by a court of competent jurisdiction in an amount
less than the then outstanding principal balance of the Mortgage Loan, which
valuation results from a proceeding initiated under the Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.01(b).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by a
Qualified Substitute Mortgage Loan.
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"Delinquent": A Mortgage Loan is Delinquent if the Monthly Payment due on a
Due Date is not paid on or before the next succeeding Due Date, at which time,
such Mortgage Loan is 30 days Delinquent. If the Monthly Payment due on a Due
Date is not paid on or before the second or third succeeding Due Date,
respectively, such Mortgage Loan is 60 or 90 days Delinquent, as the case may
be.
"Delinquency Percentage": As of the last day of any Collection Period, the
percentage equivalent of a fraction, the numerator of which equals the aggregate
Stated Principal Balances of all Mortgage Loans that are 60 or more days
Delinquent, in foreclosure or converted to REO Properties as of such last day of
such Collection Period, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of such Collection
Period.
"Depositor": Prudential Securities Secured Financing Corporation, a
Delaware corporation, or its successor in interest.
"Depository": The Depository Trust Company, or any successor Depository
hereafter named. The nominee of the initial Depository, for purposes of
registering those Certificates that are to be Book-Entry Certificates, is CEDE &
Co. The Depository shall at all times be a "clearing corporation" as defined in
Section 8-102(3) of the Uniform Commercial Code of the State of New York and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended.
"Depository Institution": Any depository institution or trust company,
including the Trustee, that (a) is incorporated under the laws of the United
States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations (or,
in the case of a depository institution that is the principal subsidiary of a
holding company, such holding company has unsecured commercial paper or other
short-term unsecured debt obligations) that are rated at least P-1 by Moody's
and A-1 by S&P (or comparable ratings if Moody's and S&P are not the Rating
Agencies).
"Depository Participant": A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date": With respect to each Distribution Date, the fifth
Business Day prior to such Distribution Date.
"Directly Operate": With respect to any REO Property, the furnishing or
rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a
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trade or business conducted by the Trust Fund other than through an Independent
Contractor; provided, however, that the Trustee (or the Servicer on behalf of
the Trustee) shall not be considered to Directly Operate an REO Property solely
because the Trustee (or the Servicer on behalf of the Trustee) establishes
rental terms, chooses tenants, enters into or renews leases, deals with taxes
and insurance, or makes decisions as to repairs or capital expenditures with
respect to such REO Property.
"Disqualified Organization": Any of the following: (i) the United States,
any State or political subdivision thereof, any possession of the United States,
or any agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are subject to
tax and, except for the FHLMC, a majority of its board of directors is not
selected by such governmental unit), (ii) any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of the Code on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code and (v) any other
Person so designated by the Trustee based upon an Opinion of Counsel that the
holding of an Ownership Interest in a Residual Certificate by such Person may
cause the Trust Fund or any Person having an Ownership Interest in any Class of
Certificates (other than such Person) to incur a liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the Transfer
of an Ownership Interest in a Residual Certificate to such Person. The terms
"United States," "State" and "international organization" shall have the
meanings set forth in Section 7701 of the Code or successor provisions.
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.10(b) which shall be entitled
"First Union National Bank of North Carolina, as Trustee, in trust for (A)
registered holders of Emergent Home Equity Loan Pass-Through Certificates,
Series 1997-1, and (B) Financial Security Assurance, Inc." and which must be an
Eligible Account.
"Distribution Date": The 20th day of any month, or if such 20th day is not
a Business Day, the Business Day immediately following such 20th day, commencing
in April 1997.
"Due Date": With respect to each Distribution Date, the day of the month on
which the Monthly Payment is due on a Mortgage Loan during the related
Collection Period, exclusive of any days of grace.
"Eligible Account": Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term
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unsecured debt obligations of such holding company) are rated at least P-1 by
Moody's and A-1 by S&P (or comparable ratings if Moody's and S&P are not the
Rating Agencies) at the time any amounts are held on deposit therein, (ii) an
account or accounts the deposits in which are fully insured by the FDIC or (iii)
a trust account or accounts maintained with the trust department of a federal or
state chartered depository institution or trust company acting in its fiduciary
capacity. Eligible Accounts may bear interest.
"Escrow Payments": As defined in Section 3.09.
"Estate in Real Property": A fee simple estate in a parcel of land.
"Excess Subordinated Amount": With respect to the Class A Certificates and
any Distribution Date, the excess, if any, of (i) the Subordinated Amount for
such Distribution Date over (ii) the Required Subordinated Amount for such
Distribution Date.
"Expense Account": The account established and maintained pursuant to
Section 3.25.
"FDIC": Federal Deposit Insurance Corporation or any successor thereto.
"FHLMC": Federal Home Loan Mortgage Corporation or any successor thereto.
"Final Recovery Determination": With respect to any defaulted Mortgage Loan
or any REO Property (other than a Mortgage Loan or REO Property purchased by the
Seller, the Depositor, the Servicer or the Certificate Insurer pursuant to or as
contemplated by Section 2.03, 3.16(c) or 10.01), a determination made by the
Servicer that all Insurance Proceeds, Liquidation Proceeds and other payments or
recoveries which the Servicer, in its reasonable good faith judgment, expects to
be finally recoverable in respect thereof have been so recovered. The Servicer
shall maintain records, prepared by a Servicing Officer, of each Final Recovery
Determination made thereby.
"FNMA": Federal National Mortgage Association or any successor thereto.
"Guaranteed Distribution": As defined in the Policy.
"Independent": When used with respect to any specified Person, any such
Person who (a) is in fact independent of the Depositor, the Servicer and their
respective Affiliates, (b) does not have any direct financial interest in or any
material indirect financial interest in the Depositor or the Servicer or any
Affiliate thereof, and
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(c) is not connected with the Depositor or the Servicer or any Affiliate thereof
as an officer, employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions; provided, however, that a Person shall not
fail to be Independent of the Depositor or the Servicer or any Affiliate thereof
merely because such Person is the beneficial owner of 1% or less of any class of
securities issued by the Depositor or the Servicer or any Affiliate thereof, as
the case may be.
"Independent Contractor": Either (i) any Person (other than the Servicer)
that would be an "independent contractor" with respect to the REMIC Trust within
the meaning of Section 856(d)(3) of the Code if the REMIC Trust were a real
estate investment trust (except that the ownership tests set forth in that
section shall be considered to be met by any Person that owns, directly or
indirectly, 35 percent or more of any Class of Certificates), so long as the
REMIC Trust does not receive or derive any income from such Person and provided
that the relationship between such Person and the Trust Fund is at arm's-length,
all within the meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any
other Person (including the Servicer) if the Trustee has received an Opinion of
Counsel to the effect that the taking of any action in respect of any REO
Property by such Person, subject to any conditions therein specified, that is
otherwise herein contemplated to be taken by an Independent Contractor will not
cause such REO Property to cease to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code (determined without regard to the
exception applicable for purposes of Section 860D(a) of the Code), or cause any
income realized in respect of such REO Property to fail to qualify as Rents from
Real Property.
"Initial Mortgage Loan": Any Mortgage Loan identified by the Originator as
of the opening of business on March 1, 1997, which Mortgage Loans will have a
Cut-off Date of March 1, 1997.
"Insurance Agreement": The Insurance and Indemnity Agreement, dated as of
March 1, 1997, among the Depositor, the Servicer, the Seller, Emergent Group,
Inc. and the Certificate Insurer, as amended or supplemented in accordance with
the provisions thereof.
"Insurance Payment": Any payment made by the Certificate Insurer under the
Policy with respect to the Class A Certificates.
"Insurance Proceeds": Proceeds of any title policy, hazard policy or other
insurance policy covering a Mortgage Loan, to the extent such proceeds are not
to be applied to the restoration of the related Mortgaged Property or released
to the Mortgagor in accordance with the procedures that the Servicer would
follow in servicing mortgage loans held for its own account, subject to the
terms and conditions of the related Mortgage Note and Mortgage.
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"Interest Accrual Period": With respect to any Distribution Date and the
Class A Certificates, the calendar month immediately preceding the month in
which such Distribution Date occurs.
"Interest Coverage Account": As defined in Section 3.27.
"Interest Distribution Amount": With respect to any Distribution Date and
the Class A Certificates, the aggregate Accrued Certificate Interest on the
Class A Certificates for such Distribution Date.
"Investment Account": As defined in Section 3.12.
"Late Collections": With respect to any Mortgage Loan, all amounts received
subsequent to the Determination Date immediately following any Collection
Period, whether as late payments of Monthly Payments or as Insurance Proceeds,
Liquidation Proceeds or otherwise, which represent late payments or collections
of principal and/or interest due (without regard to any acceleration of payments
under the related Mortgage and Mortgage Note) but delinquent for such Collection
Period and not previously recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan, or (iii) such Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03, Section 3.16(c) or Section
10.01. With respect to any REO Property, either of the following events: (i) a
Final Recovery Determination is made as to such REO Property; or (ii) such REO
Property is removed from the Trust Fund by reason of its being purchased
pursuant to Section 10.01.
"Liquidation Proceeds": The amount (other than Insurance Proceeds or
amounts received in respect of the rental of any REO Property prior to REO
Disposition) received by the Servicer in connection with (i) the taking of all
or a part of a Mortgaged Property by exercise of the power of eminent domain or
condemnation and (ii) the liquidation of a defaulted Mortgage Loan by means of a
trustee's sale, foreclosure sale or otherwise.
"Loan-to-Value Ratio": As of any date of determination, the fraction,
expressed as a percentage, the numerator of which is the principal balance of
the related Mortgage Loan at such date and the denominator of which is the Value
of the related Mortgaged Property.
"Lost Note Affidavit": With respect to any Mortgage Loan as to which the
original Mortgage Note has been permanently lost or destroyed and has not been
replaced, an affidavit from the Seller certifying that the original Mortgage
Note has
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been lost, misplaced or destroyed (together with a copy of the related Mortgage
Note).
"Majority Class R Certificateholder": Any single Holder of Class R
Certificates representing a greater than 50% Percentage Interest in such Class.
"Monthly Advance": As to any Mortgage Loan or REO Property, any advance
made by the Servicer in respect of any Distribution Date pursuant to Section
4.03.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled monthly
payment of principal and interest on such Mortgage Loan which is payable by the
related Mortgagor from time to time under the related Mortgage Note, determined:
(a) after giving effect to (i) any Deficient Valuation and/or Debt Service
Reduction with respect to such Mortgage Loan and (ii) any reduction in the
amount of interest collectible from the related Mortgagor pursuant to the Relief
Act; (b) without giving effect to any extension granted or agreed to by the
Servicer pursuant to Section 3.07; and (c) on the assumption that all other
amounts, if any, due under such Mortgage Loan are paid when due.
"Moody's": Moody's Investors Service, Inc. or its successor in interest.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on, or first priority security interest in, a Mortgaged Property
securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan transferred and assigned to the Trustee
pursuant to Section 2.01 or Section 2.03(d) as from time to time held as a part
of the Trust Fund, the Mortgage Loans so held being identified in the Mortgage
Loan Schedule.
"Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in the Trust Fund on such date. The Mortgage Loan Schedule shall set
forth following information with respect to each Mortgage Loan:
1. the Seller's Mortgage Loan identifying number;
2. the Mortgagor's name;
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3. the street address of the Mortgaged Property including the state and zip
code;
4. a code indicating whether the Mortgaged Property is owner-occupied;
5. the type of Residential Dwelling constituting the Mortgaged Property;
6. the original months to maturity;
7. the remaining months to stated maturity from the Cut-off Date based on
the original amortization schedule;
8. the Loan-to-Value Ratio at origination;
9. (A) the date on which the first Monthly Payment was due on the Mortgage
Loan and, (B) if such date is not consistent with the Due Date currently in
effect, such Due Date;
10. the stated maturity date;
11. the amount of the Monthly Payment due on the first Due Date on or after
the Cut-off Date;
12. the last Due Date on which a Monthly Payment was actually applied to
the unpaid Stated Principal Balance;
13. the original principal amount of the Mortgage Loan;
14. the outstanding principal balance of the Mortgage Loan as of the close
of business on the Cut-off Date;
15. a code indicating the purpose of the Mortgage Loan (i.e., purchase
financing, Rate/Term Refinancing, Cash-Out Refinancing);
16. the Mortgage Rate;
17. a code indicating the documentation style program;
18. the risk grade;
19. the Value of the Mortgaged Property;
20. the sale price of the Mortgaged Property, if applicable;
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21. whether the Mortgage Loan has a due-on-sale clause; and
22. the program code.
The Mortgage Loan Schedule shall set forth the following information, as of
the Cut-off Date with respect to the Mortgage Loans in the aggregate: (1) the
number of Mortgage Loans; (2) the current principal balance of the Mortgage
Loans; (3) the weighted average Mortgage Rate of the Mortgage Loans; and (4) the
weighted average maturity of the Mortgage Loans. The Mortgage Loan Schedule
shall be amended from time to time by the Servicer in accordance with the
provisions of this Agreement.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on the Mortgage
Loan Schedule from time to time, and any REO Properties acquired in respect
thereof.
"Mortgage Rate": With respect to each Mortgage Loan, the annual rate at
which interest accrues on such Mortgage Loan in accordance with the provisions
of the related Mortgage Note.
"Mortgaged Property": The underlying property securing a Mortgage Loan,
including any REO Property, consisting of an Estate in Real Property.
"Mortgagor": The obligor on a Mortgage Note.
"Net Monthly Excess Cashflow": With respect to any Distribution Date, an
amount equal to the excess of (x) the Available Distribution Amount for such
Distribution Date over (y) the sum for such Distribution Date of (A) the amount
described in Section 4.01(a)(i) hereof and (B) the amount described in clauses
(b)(i)-(iii) of the definition of Principal Distribution Amount minus the amount
of any Subordination Reduction Amount for the Class A Certificates for such
Distribution Date.
"Net Mortgage Rate": With respect to any Mortgage Loan (or the related REO
Property), as of any date of determination, a per annum rate of interest equal
to the then applicable Mortgage Rate for such Mortgage Loan minus the Servicing
Fee Rate.
"New Lease": Any lease of REO Property entered into on behalf of the Trust
Fund, including any lease renewed or extended on behalf of the Trust Fund if the
Trust Fund has the right to renegotiate the terms of such lease.
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"Nonrecoverable Monthly Advance": Any Monthly Advance or Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the Servicer, will not or,
in the case of a proposed Monthly Advance, would not be ultimately recoverable
from related late payments, Insurance Proceeds or Liquidation Proceeds on such
Mortgage Loan or REO Property as provided herein.
"Non-United States Person": Any Person other than a United States Person.
"Officers' Certificate": A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President or a vice president (however
denominated), or by the Treasurer, the Secretary, or one of the assistant
treasurers or assistant secretaries of the Servicer, the Seller or the
Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be salaried counsel for the Depositor or the Servicer acceptable to
the Trustee and the Certificate Insurer, except that any opinion of counsel
relating to (a) the qualification of the Trust Fund as a REMIC or (b) compliance
with the REMIC Provisions must be an opinion of Independent counsel.
"Original Pool Balance": An amount equal to the aggregate of the Stated
Principal Balances of the Mortgage Loans as of the Cut-off Date.
"Originator": Emergent Mortgage Corp.
"Overcollateralization Deficit": With respect to any Distribution Date, the
excess, if any, of (i) the Class A Certificate Principal Balance, after taking
into account the distribution of the Principal Distribution Amount (other than
any portion thereof constituting the Overcollateralization Deficit or the
Subordination Increase Amount) over (ii) the sum of the aggregate Stated
Principal Balances of the Mortgage Loans then outstanding.
"Ownership Interest": As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
"Pass-Through Rate": With respect to the Class A-1 Certificates, the Class
A-1 Pass-Through Rate, with respect to the Class A-2 Certificates, the Class A-
2 Pass-Through Rate and with respect to the Class A-3 Certificates, the Class
A-3 Pass-Through Rate.
"Percentage Interest": With respect to Class A-1 Certificates, the Class
A-2 Certificates and the Class A-3 Certificates, the undivided percentage
ownership in
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the related Class evidenced by such Certificate, expressed as a percentage, the
numerator of which is the initial Certificate Principal Balance represented by
such Certificate and the denominator of which is the initial aggregate
Certificate Principal Balance of such Class. The Class A Certificates are
issuable only in minimum Percentage Interests corresponding to minimum initial
Certificate Principal Balances of $1,000 and increments of $1,000 in excess
thereof. With respect to any Class R Certificate, the undivided percentage
ownership in such Class evidenced by such Certificate, as set forth on the face
of such Class R Certificate. The Class R Certificates are issuable only in
minimum Percentage Interests of 25%.
"Permitted Investments": Any one or more of the following obligations or
securities acquired at a purchase price of not greater than par, regardless of
whether issued by the Depositor, the Servicer, the Trustee or any of their
respective Affiliates:
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided such obligations are backed by
the full faith and credit of the United States; provided, however, that any
obligation of, or guaranteed by, FHLMC or FNMA, other than a senior debt or
a mortgage participation or pass-through certificate guaranteed by FHLMC or
FNMA shall be a Permitted Investment only if, at the time of investment,
such investment is acceptable to the Certificate Insurer.
(ii) demand and time deposits in, certificates of deposit of, or
bankers' acceptances issued by, any Depository Institution;
(iii) repurchase obligations with respect to any security described in
clause (i) above entered into with a Depository Institution (acting as
principal);
(iv) securities bearing interest or sold at a discount that are issued
by any corporation incorporated under the laws of the United States of
America or any State thereof and that are rated by each Rating Agency in
its highest long-term unsecured rating categories at the time of such
investment or contractual commitment providing for such investment;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than 30 days after the date of acquisition thereof)
that is rated by each Rating Agency in its highest short-term unsecured
debt rating available at the time of such investment;
(vi) units of money market funds that have been rated "Aaa" by Moody's
and "AAA" by S&P; and
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(vii) if previously confirmed in writing to the Trustee, any other
demand, money market or time deposit, or any other obligation, security or
investment, as may be acceptable to the Rating Agencies and the Certificate
Insurer as a permitted investment of funds backing securities that have
been rated "Aaa" by Moody's and "AAA" by S&P;
provided that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provide a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any Transferee of a Residual Certificate other than
a Disqualified Organization or Non-United States Person.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Policy": The Financial Guaranty Insurance Policy (No. 50571-N) issued by
the Certificate Insurer relating to the Class A Certificates, including any
endorsements thereto, attached hereto as Exhibit B.
"Policy Payments Account": The account established pursuant to Section 9.04
hereof.
"Prepayment Assumption": The Prepayment Assumption assumes that the pool of
loans prepays in the first month at a constant prepayment rate of 1.8% and
increases by an additional 1.8% each month thereafter until the tenth month,
where it remains at a constant prepayment rate equal to 18%.
"Prepayment Interest Shortfall": With respect to any Distribution Date, for
each Mortgage Loan that was during the related Collection Period the subject of
a Principal Prepayment in full or in part that was applied by the Servicer to
reduce the outstanding principal balance of such loan on a date preceding the
Due Date in the succeeding Collection Period, an amount equal to the excess of
(i) interest at the applicable Net Mortgage Rate on the amount of such Principal
Prepayment for the number of days commencing on the date on which the prepayment
is applied and ending on the last day of the related Collection Period over (ii)
the amount, if any, of the interest paid by the Mortgagor in connection with
such Principal Prepayment. The obligations of the Servicer in respect of any
Prepayment Interest Shortfall are set forth in Section 3.24.
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"Principal Distribution Amount": With respect to any Distribution Date, the
lesser of:
(a) the excess of the Available Distribution Amount over the amount
payable on the Class A Certificates pursuant to Section 4.01 (a)(i); and
(b) the sum of:
(i) the principal portion of each Monthly Payment due during the
related Collection Period, to the extent received, on each Mortgage
Loan;
(ii) the Stated Principal Balance of any Mortgage Loan that was
purchased during the related Collection Period pursuant to or as
contemplated by Section 2.03, 3.16(c) or 10.01 and the amount of any
shortfall deposited in the Collection Account in connection with the
substitution of a Deleted Mortgage Loan pursuant to Section 2.03
during the related Collection Period;
(iii) the principal portion of all other unscheduled collections
(including, without limitation, Principal Prepayments, Insurance
Proceeds, Liquidation Proceeds, payments pursuant to Section 3.26 and
REO Principal Amortization) received during the related Collection
Period, net of any portion thereof that represents a recovery of
principal for which an advance was made by the Servicer pursuant to
Section 4.03 in respect of a preceding Distribution Date, and deposits
into the Distribution Account from the Redemption Account pursuant to
Section 3.27, if any;
(iv) the amount of any Overcollateralization Deficit for such
Distribution Date; and
(v) the amount of any Subordination Increase Amount for the Class
A Certificates for such Distribution Date; minus:
(vi) the amount of any Subordination Reduction Amount for the
Class A Certificates for such Distribution Date.
"Principal Prepayment": Any payment of principal made by the Mortgagor on a
Mortgage Loan which is received in advance of its scheduled Due Date and which
is not accompanied by an amount of interest representing the full amount of
scheduled interest due on any Due Date in any month or months subsequent to the
month of prepayment.
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"Purchase and Assignment Agreement": The Agreement dated as of March 1,
1997 between the Originator and the Seller providing for the sale of the
Mortgage Loans from the Originator to the Seller.
"Purchase Price": With respect to any Mortgage Loan or REO Property to be
purchased pursuant to or as contemplated by Section 2.03, 3.16(c) or 10.01, and
as confirmed by an Officers' Certificate from the Servicer to the Trustee, an
amount equal to the sum of (i) 100% of the Stated Principal Balance thereof as
of the date of purchase (or such other price as provided in Section 10.01), (ii)
in the case of (x) a Mortgage Loan, accrued interest on such Stated Principal
Balance at the applicable Net Mortgage Rate in effect from time to time from the
Due Date as to which interest was last covered by a payment by the Mortgagor or
an advance by the Servicer, which payment or advance had as of the date of
purchase been distributed pursuant to Section 4.01, through the end of the
calendar month in which the purchase is to be effected, and (y) an REO Property,
the sum of (1) accrued interest on such Stated Principal Balance at the
applicable Net Mortgage Rate in effect from time to time from the Due Date as to
which interest was last covered by a payment by the Mortgagor or an advance by
the Servicer through the end of the calendar month immediately preceding the
calendar month in which such REO Property was acquired, plus (2) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such purchase is to be effected, net of the total of all
net rental income, Insurance Proceeds, Liquidation Proceeds and Monthly Advances
that as of the date of purchase had been distributed as or to cover REO Imputed
Interest pursuant to Section 4.01, (iii) any unreimbursed Servicing Advances and
Monthly Advances and any unpaid Servicing Fees allocable to such Mortgage Loan
or REO Property, (iv) any amounts previously withdrawn from the Collection
Account in respect of such Mortgage Loan or REO Property pursuant to Sections
3.11(ix) and 3.16(b), and (v) in the case of a Mortgage Loan required to be
purchased pursuant to Section 2.03, expenses reasonably incurred or to be
incurred by the Servicer or the Trustee in respect of the breach or defect
giving rise to the purchase obligation.
"Qualified Substitute Mortgage Loan": A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on the
date of such substitution, (i) have a Stated Principal Balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of the outstanding principal
balance of the Deleted Mortgage Loan as of the Due Date in the calendar month
during which the substitution occurs, (ii) have a Mortgage Rate not less than
(and not more than one percentage point in excess of) the Mortgage Rate of the
Deleted Mortgage Loan, (iii) have a remaining term to maturity not greater than
(and not more than one year less than) that of the Deleted Mortgage Loan, (iv)
have the same Due Date as the Due Date on the Deleted Mortgage Loan, (v) have a
Loan-to-Value Ratio as of the date of substitution equal to or lower than the
Loan-to-Value Ratio of the Deleted Mortgage
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Loan as of such date, (vi) have a risk grading determined by the Seller, with
the approval of the Certificate Insurer, at least equal to the risk grading
assigned on the Deleted Mortgage Loan, (vii) is a "qualified mortgage" as
defined in the REMIC Provisions and (viii) conform to each representation and
warranty set forth in the Unaffiliated Seller's Agreement applicable to the
Deleted Mortgage Loan. In the event that one or more mortgage loans are
substituted for one or more Deleted Mortgage Loans, the amounts described in
clause (i) hereof shall be determined on the basis of aggregate principal
balances, the Mortgage Rates described in clause (ii) hereof shall be determined
on the basis of weighted average Mortgage Rates, the risk gradings described in
clause (vi) hereof shall be satisfied as to each such mortgage loan, the terms
described in clause (iii) hereof shall be determined on the basis of weighted
average remaining term to maturity, the Loan-to-Value Ratios described in clause
(v) hereof shall be satisfied as to each such mortgage loan and, except to the
extent otherwise provided in this sentence, the representations and warranties
described in clause (viii) hereof must be satisfied as to each Qualified
Substitute Mortgage Loan or in the aggregate, as the case may be.
"Rate/Term Refinancing": A Refinanced Mortgage Loan, the proceeds of which
are not more than $1000 in excess of the existing first mortgage loan and any
subordinate mortgage loan on the related Mortgaged Property and related closing
costs, and were used exclusively (except for up to $1000) to satisfy the then
existing first mortgage loan and any subordinate mortgage loan of the Mortgagor
on the related Mortgaged Property and to pay related closing costs.
"Rating Agency or Rating Agencies": Moody's and S&P or their successors. If
such agencies or their successors are no longer in existence, "Rating Agencies"
shall be such nationally recognized statistical rating agencies, or other
comparable Persons, designated by the Depositor and the Certificate Insurer,
notice of which designation shall be given to the Trustee and Servicer.
"Realized Loss": With respect to each Mortgage Loan as to which a Final
Recovery Determination has been made an amount (not less than zero) equal to (i)
the unpaid principal balance of such Mortgage Loan as of the commencement of the
calendar month in which the Final Recovery Determination was made, plus (ii)
accrued interest from the Due Date as to which interest was last paid by the
Mortgagor through the end of the calendar month in which such Final Recovery
Determination was made, calculated in the case of each calendar month during
such period (A) at an annual rate equal to the annual rate at which interest was
then accruing on such Mortgage Loan and (B) on a principal amount equal to the
Stated Principal Balance of such Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) any amounts
previously withdrawn from the Collection Account in respect of such Mortgage
Loan pursuant to Sections 3.11(ix) and 3.16(b), minus (iv) the proceeds, if any,
received in respect of such Mortgage Loan during the calendar month in which
such Final Recovery
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Determination was made, net of amounts that are payable therefrom to the
Servicer with respect to such Mortgage Loan pursuant to clause (iii) of Section
3.11.
With respect to any REO Property as to which a Final Recovery Determination
has been made an amount (not less than zero) equal to (i) the unpaid principal
balance of the related Mortgage Loan as of the date of acquisition of such REO
Property on behalf of the Trust Fund, plus (ii) accrued interest from the Due
Date as to which interest was last paid by the Mortgagor in respect of the
related Mortgage Loan through the end of the calendar month immediately
preceding the calendar month in which such REO Property was acquired, calculated
in the case of each calendar month during such period (A) at an annual rate
equal to the annual rate at which interest was then accruing on the related
Mortgage Loan and (B) on a principal amount equal to the Stated Principal
Balance of the related Mortgage Loan as of the close of business on the
Distribution Date during such calendar month, plus (iii) REO Imputed Interest
for such REO Property for each calendar month commencing with the calendar month
in which such REO Property was acquired and ending with the calendar month in
which such Final Recovery Determination was made, plus (iv) any amounts
previously withdrawn from the Collection Account in respect of the related
Mortgage Loan pursuant to Sections 3.11(ix) and 3.16(b), minus (v) the aggregate
of all Monthly Advances made by the Servicer in respect of such REO Property or
the related Mortgage Loan for which the Servicer has been or, in connection with
such Final Recovery Determination, will be reimbursed pursuant to Section 3.23
out of rental income, Insurance Proceeds and Liquidation Proceeds received in
respect of such REO Property, minus (vi) the total of all net rental income,
Insurance Proceeds and Liquidation Proceeds received in respect of such REO
Property that has been, or in connection with such Final Recovery Determination,
will be transferred to the Distribution Account pursuant to Section 3.23.
With respect to each Mortgage Loan which has become the subject of a
Deficient Valuation, the difference between the principal balance of the
Mortgage Loan outstanding immediately prior to such Deficient Valuation and the
principal balance of the Mortgage Loan as reduced by the Deficient Valuation.
With respect to each Mortgage Loan which has become the subject of a Debt
Service Reduction, the portion, if any, of the reduction in each affected
Monthly Payment attributable to a reduction in the Mortgage Rate imposed by a
court of competent jurisdiction. Each such Realized Loss shall be deemed to have
been incurred on the Due Date for each affected Monthly Payment.
"Record Date": With respect to each Distribution Date, the last Business
Day of the month immediately preceding the month in which such Distribution Date
occurs.
"Redemption Account": As defined in Section 3.27.
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"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which were not
used to purchase the related Mortgaged Property.
"Regular Certificate": Any Class A Certificate.
"Regular Interest": A "regular interest' in a REMIC within the meaning of
Section 860G(a)(l) of the Code.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
"Relief Act Interest Shortfall": With respect to any Distribution Date and
any Mortgage Loan, any reduction in the amount of interest collectible on such
Mortgage Loan for the most recently ended calendar month as a result of the
application of the Relief Act.
"Remaining Overcollateralization Deficit": With respect to any Distribution
Date, the excess, if any, of (i) the Overcollateralization Deficit for such
Distribution Date over (ii) the Net Monthly Excess Cashflow for such
Distribution Date.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Section 860A-860G of
the Code, and related provisions, and proposed, temporary and final regulations
and published rulings, notices and announcements promulgated thereunder, as the
foregoing may be in effect from time to time.
"REMIC Trust": The segregated pool of assets comprising the Trust Fund
excluding the Policy.
"Remittance Report": As defined in Section 4.02.
"Rents from Real Property": With respect to any REO Property, gross income
of the character described in Section 856(d) of the Code as being included in
the term "rents from real property."
"REO Account": The account or accounts maintained by the Servicer in
respect of an REO Property pursuant to Section 3.23.
"REO Disposition": The sale or other disposition of an REO Property on
behalf of the Trust Fund.
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"REO Imputed Interest": As to any REO Property, for any calendar month
during which such REO Property was at any time part of the Trust Fund, one
month's interest at the applicable Net Mortgage Rate on the Stated Principal
Balance of such REO Property (or, in the case of the first such calendar month,
of the related Mortgage Loan if appropriate) as of the close of business on the
Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO Property, for any
calendar month, the excess, if any, of (a) the aggregate of all amounts received
in respect of such REO Property during such calendar month, whether in the form
of rental income, sale proceeds (including, without limitation, that portion of
the Termination Price paid in connection with a purchase of all of the Mortgage
Loans and REO Properties pursuant to Section 10.01 that is allocable to such REO
Property) or otherwise, net of any portion of such amounts (i) payable pursuant
to Section 3.23(c) in respect of the proper operation, management and
maintenance of such REO Property or (ii) payable or reimbursable to the Servicer
pursuant to Section 3.23(d) for unpaid Servicing Fees in respect of the related
Mortgage Loan and unreimbursed Servicing Advances and Monthly Advances in
respect of such REO Property or the related Mortgage Loan, over (b) the REO
Imputed Interest in respect of such REO Property for such calendar month.
"REO Property": A Mortgaged Property acquired by the Servicer on behalf of
the Trust Fund through foreclosure or deed-in-lieu of foreclosure, as described
in Section 3.23.
"Request for Release": A release signed by a Servicing Officer, in the form
of Exhibit E-1 or Exhibit E-2 attached hereto.
"Required Subordinated Amount": With respect to any Distribution Date, an
amount equal to 6.50% of the Original Pool Balance, subject to the following:
(i) if the Step Up Trigger has occurred with respect to such Distribution Date,
the Required Subordinated Amount for such Distribution Date will be an amount
equal to the entire aggregate Stated Principal Balance of the Mortgage Loans as
of such Distribution Date, (ii) if the Step Down Trigger has occurred, the
Required Subordinated Amount for such Distribution Date will be an amount equal
to the greater of (A) 0.50% of the Original Pool Balance and (B) the lesser of
(x) 6.50%, of the Original Pool Balance and (y) the Stepped Down Required
Subordinated Percentage of the aggregate Stated Principal Balance of the
Mortgage Loans as of such Distribution Date.
"Residential Dwelling": Any one of the following: (i) a detached one-family
dwelling, (ii) a detached two- to four-family dwelling, (iii) a one-family
dwelling unit in a FNMA eligible condominium project, (iv) a detached one-family
dwelling in a planned unit development or (v) a manufactured home treated as
real
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property under local law, none of which is a co-operative, mobile or
manufactured home (as defined in 42 United States Code, Section 5402(6)).
"Residual Certificate": Any one of the Class R Certificates.
"Residual Interest": The sole class of "residual interests" in a REMIC
within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee, any officer
of the Corporate Trust Department of the Trustee, including any Senior Vice
President, any Assistant Vice President, any Assistant Secretary, any Trust
Officer or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers to whom, with
respect to a particular matter, such matter is referred.
"Rolling Delinquency Percentage": For any Distribution Date, the average of
the Delinquency Percentages as of the last day of each of the three (or one or
two, in the case of the first and second Distribution Dates) most recently ended
Collection Periods.
"Rolling Loss Percentage": As of any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate amount of
Realized Losses incurred during the preceding twelve Collection Periods, and the
denominator of which is the aggregate Stated Principal Balance of the Mortgage
Loans as of the first day of the twelfth preceding Collection Period.
"Seller": Emergent Mortgage Holdings Corporation, or its successor-
in-interest, in its capacity as seller under the Unaffiliated Seller's
Agreement.
"Servicer": Emergent Mortgage Corp., a South Carolina corporation, or any
successor servicer appointed as herein provided, in its capacity as Servicer
hereunder.
"Servicer Event of Default": One or more of the events described in Section
7.01.
"Servicer Extension Notice": As described in Section 7.01.
"Servicer Remittance Date": With respect to any Distribution Date, 12:00
noon New York time on the fourth Business Day prior to such Distribution Date.
"Servicing Account": The account or accounts created and maintained pursuant to
Section 3.09.
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"Servicing Advances": The reasonable "out-of-pocket" costs and expenses
incurred by the Servicer in connection with a default, delinquency or other
unanticipated event by the Servicer in the performance of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of a Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, in respect of a particular
Mortgage Loan, (iii) the management (including reasonable fees in connection
therewith) and liquidation of any REO Property, and (iv) the performance of its
obligations under Sections 3.01, 3.09, 3.14, 3.16 and 3.23. The Servicer shall
not be required to make any Servicing Advance in respect of a Mortgage Loan or
REO Property that, in the good faith business judgment of the Servicer, would
not be ultimately recoverable from related Insurance Proceeds or Liquidation
Proceeds on such Mortgage Loan or REO Property as provided herein.
"Servicing Fee": With respect to each Mortgage Loan and for any calendar
month, an amount equal to one month's interest (or in the event of any payment
of interest which accompanies a Principal Prepayment in full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on the same principal amount
on which interest on such Mortgage Loan accrues for such calendar month. A
portion of such Servicing Fee may be retained by any Sub-Servicer as its
servicing compensation.
"Servicing Fee Rate": 0.50% per annum.
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of Mortgage Loans, whose name
and specimen signature appear on a list of servicing officers finished by the
Servicer to the Trustee and the Certificate Insurer and the Depositor on the
Closing Date, as such list may from time to time be amended.
"Single Certificate": With respect to any Class of Certificates (other than
the Residual Certificates), a hypothetical Certificate of such Class evidencing
a Percentage Interest for such Class corresponding to an initial Certificate
Principal Balance of $1,000. With respect to the Residual Certificates, a
hypothetical Certificate of such Class evidencing a 100% Percentage Interest in
such Class.
"S&P": Standard & Poor's Ratings Services, a division of McGraw-Hill Inc.,
or its successor in interest.
"Startup Day": The day designated as such pursuant to Section 11.01(b)
hereof.
"Stated Principal Balance": With respect to any Mortgage Loan: (a) as of
any date of determination up to but not including the Distribution Date on which
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the proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan
would be distributed, the outstanding principal balance of such Mortgage Loan as
of the Cut-off Date, as shown in the Mortgage Loan Schedule, minus the sum of
(i) the principal portion of each Monthly Payment due on a Due Date subsequent
to the Cut-off Date, to the extent received from the Mortgagor or included in a
Monthly Advance and distributed pursuant to Section 4.01 on or before such date
of determination, (ii) all Principal Prepayments received after the Cut-off
Date, to the extent distributed pursuant to Section 4.01 on or before such date
of determination, (iii) all Liquidation Proceeds and Insurance Proceeds applied
by the Servicer as recoveries of principal in accordance with the provisions of
Section 3.16, to the extent distributed pursuant to Section 4.01 on or before
such date of determination, and (iv) any Realized Loss incurred with respect
thereto coinciding with or preceding such date of determination; and (b) as of
any date of determination coinciding with or subsequent to the Distribution Date
on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, zero. With respect to any REO Property: (a)
as of any date of determination up to but not including the Distribution Date on
which the proceeds, if any, of a Liquidation Event with respect to such REO
Property would be distributed, an amount (not less than zero) equal to the
Stated Principal Balance of the related Mortgage Loan as of the date on which
such REO Property was acquired on behalf of the Trust Fund, minus the aggregate
amount of REO Principal Amortization in respect of such REO Property for all
previously ended calendar months, to the extent distributed pursuant to Section
4.01 on or before such date of determination, and (b) as of any date of
determination coinciding with or subsequent to the Distribution Date on which
the proceeds, if any, of a Liquidation Event with respect to such REO Property
would be distributed, zero.
"Stayed Funds": As defined in Section 7.02(b).
"Step Down Cumulative Loss Test": The Step Down Cumulative Loss Test will
be met with respect to a Distribution Date as follows: (i) for the 36th through
the 47th Distribution Dates, if the Cumulative Loss Percentage for such
Distribution Date is 1.75% or less, (ii) for the 48th through the 59th
Distribution Dates, if the Cumulative Loss Percentage for such Distribution Date
is 2.25% or less, (iii) for the 60th through the 71st Distribution Dates, if the
Cumulative Loss Percentage for such Distribution Date is 2.65% or less and (iv)
for 72nd Distribution Date and any Distribution Date thereafter, if the
Cumulative Loss Percentage for such Distribution Date is 3.00% or less.
"Step Down Rolling Delinquency Test": The Step Down Rolling Delinquency
Test will be met with respect to a Distribution Date if the Rolling Delinquency
Percentage for such Distribution Date is 8.00% or less.
"Step Down Rolling Loss Test": The Step Down Rolling Loss Test will be met
with respect to a Distribution Date if the Rolling Loss Percentage for such
Distribution Date is less than 1.00%.
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"Step Down Trigger": For any Distribution Date after the 30th Distribution
Date, the Step Down Trigger will have occurred if each of the Step Down
Cumulative Loss Test, the Step Down Rolling Delinquency Test and the Step Down
Rolling Loss Test is met. In no event will the Step Down Trigger be deemed to
have occurred for the 30th Distribution Date or any preceding Distribution Date.
"Stepped Down Required Subordinated Percentage": For any Distribution Date
for which the Step Down Trigger has occurred, a percentage equal to (i) the
percentage equivalent of a fraction, the numerator of which is 6.50% of the
Original Pool Balance, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans as of such Distribution Date, minus (ii)
the percentage equivalent of a fraction, the numerator of which is the product
of (A) the percentage calculated under clause (i) above minus 13.0%, multiplied
by (B) the number of consecutive Distribution Dates through and including the
Distribution Date for which the Stepped Down Required Subordinated Percentage is
being calculated, up to a maximum of six, for which the Step Down Trigger has
occurred, and the denominator of which is six.
"Step Up Cumulative Loss Test": The Step Up Cumulative Loss Test will be
met with respect to a Distribution Date as follows (i) for the 1st through the
12th Distribution Dates, if the Cumulative Loss Percentage for such Distribution
Date is more than 0.75%, (ii) for the 13th through the 24th Distribution Dates,
if the Cumulative Loss Percentage for such Distribution Date is more than 1.25%,
(iii) for the 25th through the 36th Distribution Dates, if the Cumulative Loss
Percentage for such Distribution Date is more than 1.90%, (iv) for the 37th
through the 48th Distribution Dates, if the Cumulative Loss Percentage for such
Distribution Date is more than 2.40% and (v) for the 49th Distribution Date and
any Distribution Date thereafter, if the Cumulative Loss Percentage for such
Distribution Date is more than 3.0%.
"Step Up Rolling Delinquency Test": The Step Up Rolling Delinquency Test
will be met with respect to a Distribution Date if the Rolling Delinquency
Percentage for such Distribution Date is more than 9.00%.
"Step Up Rolling Loss Test": The Step Up Rolling Loss Test will be met with
respect to a Distribution Date if the Rolling Loss Percentage for such
Distribution Date is 1.25% or more.
"Step Up Trigger": For any Distribution Date, the Step Up Trigger will have
occurred if any one of the Step Up Cumulative Loss Test, the Step Up Rolling
Delinquency Test or the Step Up Rolling Loss Test is met with respect to such
Distribution Date.
"Subordinated Amount": With respect to any Distribution Date, the excess,
if any, of (a) the aggregate Stated Principal Balances of the Mortgage Loans
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immediately following such Distribution Date over (b) the Class A Certificate
Principal Balance as of such Distribution Date (after taking into account the
payment of the amounts described in clauses (b)(i) through (iv) of the
definition of Principal Distribution Amount on such Distribution Date).
"Subordination Deficiency Amount": With respect to any Distribution Date,
the excess, if any, of (a) the Required Subordinated Amount applicable to such
Distribution Date over (b) the Subordinated Amount applicable to such
Distribution Date prior to taking into account the payment of any Subordination
Increase Amounts on such Distribution Date.
"Subordination Increase Amount": With respect to any Distribution Date, the
lesser of (a) the Subordination Deficiency Amount as of such Distribution Date
(after taking into account the payment of the Principal Distribution Amount, on
such Distribution Date, exclusive of the payment of any Subordination Increase
Amount) and (b) the amount of Net Monthly Excess Cashflow on such Distribution
Date as reduced by any Cumulative Insurance Payments or payments allocated to
the Overcollateralization Deficit.
"Subordination Reduction Amount": With respect to any Distribution Date, an
amount equal to the lesser of (a) the Excess Subordinated Amount and (b) the sum
of the amounts available for distribution specified in clauses (b)(i) through
(iii) of the definition of Principal Distribution Amount.
"Sub-Servicer": Any Person with which the Servicer has entered into a
Sub-Servicing Agreement and which meets the qualifications of a Sub-Servicer
pursuant to Section 3.02.
"Sub-Servicing Account": An account established by a Sub-Servicer which
meets the requirements set forth in Section 3.08 and is otherwise acceptable to
the Servicer.
"Sub-Servicing Agreement": The written contract between the Servicer and a
Sub-Servicer relating to servicing and administration of certain Mortgage Loans
as provided in Section 3.02.
"Substitution Shortfall Amount": As defined in Section 2.03(d).
"Tax Returns": The federal income tax return on Internal Revenue Service
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return,
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed
on behalf of the Trust Fund due to its classification as a REMIC under the REMIC
Provisions, together with any and all other information reports or returns that
may be required to be furnished to the Certificateholders or filed with the
Internal
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Revenue Service or any other governmental taxing authority under any applicable
provisions of federal, state or local tax laws.
"Termination Price": As defined in Section 10.01.
"Terminator": As defined in Section 10.01.
"Transfer": Any direct or indirect transfer, sale, pledge, hypothecation,
or other form of assignment of any Ownership Interest in a Certificate.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.
"Trust Fund": The segregated pool of assets subject hereto, constituting
the primary trust created hereby and to be administered hereunder, consisting
of: (i) such Mortgage Loans as from time to time are subject to this Agreement,
together with the Mortgage Files relating thereto, and together with all
collections thereon and proceeds thereof, (ii) any REO Property, together with
all collections thereon and proceeds thereof, (iii) the Trustee's rights with
respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof, (iv) the
Depositor's rights under the Unaffiliated Seller's Agreement (including any
security interest created thereby), (v) the Collection Account, the Distribution
Account, any REO Account and the Expense Account and such assets that are
deposited therein from time to time and any investments thereof and (vi) the
Trustee's rights under the Policy, together with any and all income, proceeds
and payments with respect thereto. Notwithstanding the foregoing, however, the
Trust Fund specifically excludes all payments and other collections of principal
and interest on the Mortgage Loans received on or before the Cut-off Date.
"Trustee": First Union National Bank of North Carolina, a national banking
association, or its successor-in-interest, or any successor trustee appointed as
herein provided.
"Trustee's Fee": The amount payable to the Trustee on each Distribution
Date pursuant to Section 8.05 as compensation for all services rendered by it in
the execution of the trust hereby created and in the exercise and performance of
any of the powers and duties of the Trustee hereunder, which amount shall equal
one twelfth of the product of (i) the Trustee's Fee Rate, multiplied by (ii) the
aggregate Stated Principal Balance of the Mortgage Loans and any REO Properties
as of the preceding Distribution Date (or, in the case of the initial
Distribution Date, as of the Cut-off Date).
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"Trustee's Fee Rate": 0.015% per annum.
"Unaffiliated Seller's Agreement": The agreement dated as of March 1, 1997
between the Seller and the Depositor and providing for the transfer of Mortgage
Loans from the Seller to the Depositor.
"Uninsured Cause": Any cause of damage to a Mortgaged Property such that
the complete restoration of such property is not fully reimbursable by the
hazard insurance policies required to be maintained pursuant to Section 3.14.
"United States Person": A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States. The
term "United States" shall have the meaning set forth in Section 7701 of the
Code.
"Value": With respect to any Mortgaged Property, the lesser of (i) the
lesser of (a) the value thereof as determined by an appraisal made for the
originator of the Mortgage Loan at the time of origination of the Mortgage Loan
by an appraiser who met the minimum requirements of FNMA and FHLMC, and (b) the
value thereof as determined by a review appraisal conducted by the Seller in the
event any such review appraisal determines an appraised value ten percent or
more lower than the value thereof as determined by the appraisal referred to in
clause (i)(a) above and (ii) the purchase price paid for the related Mortgaged
Property by the Mortgagor with the proceeds of the Mortgage Loan; provided,
however, in the case of a Refinanced Mortgage Loan, such value of the Mortgaged
Property is based solely upon the lesser of (1) the value determined by an
appraisal made for the originator of such Refinanced Mortgage Loan at the time
of origination of such Refinanced Mortgage Loan by an appraiser who met the
minimum requirements of FNMA and FHLMC and (2) the value thereof as determined
by a review appraisal conducted by the Seller in the event any such review
appraisal determines an appraised value ten percent or more lower than the value
thereof as determined by the appraisal referred to in clause (ii)(l) above.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. With respect to any date of
determination, the percentage of all the Voting Rights allocated among Holders
of each Class of Certificates shall be the fraction, expressed as a percentage,
the numerator of which is the aggregate Certificate Principal Balance of all the
Certificates of such Class then outstanding and the denominator of which is the
aggregate Stated Principal Balance of the Mortgage Loans then outstanding. The
Voting Rights allocated to each Class of Certificate shall be allocated among
Holders
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of each such Class in accordance with their respective Percentage Interests as
of the most recent Distribution Date.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse for the benefit of the Certificateholders and the Certificate
Insurer all the right, title and interest of the Depositor, including any
security interest therein for the benefit of the Depositor, in and to the
Mortgage Loans identified on the Mortgage Loan Schedule, the rights of the
Depositor under the Unaffiliated Seller's Agreement, and all other assets
included or to be included in the Trust Fund. Such assignment includes all
interest and principal received by the Depositor or the Servicer on or after the
Cut-off Date with respect to the Mortgage Loans.
In connection with such transfer and assignment, the Depositor will cause
the Seller to deliver to, and deposit with, the Trustee the following documents
or instruments with respect to each Mortgage Loan (a "Mortgage File") so
transferred and assigned:
(i) the original Mortgage Note, endorsed in the following form: "Pay
to the order of First Union National Bank of North Carolina, as Trustee for
the registered holders of Emergent Home Equity Loan Pass-Through
Certificates, Series 1997-1, without recourse", with all prior and
intervening endorsements showing a complete chain of endorsement from the
originator to the Person so endorsing to the Trustee;
(ii) the original Mortgage with evidence of recording thereon, and the
original recorded power of attorney, if the Mortgage was executed pursuant
to a power of attorney, with evidence of recording thereon or, if such
Mortgage or power of attorney has been submitted for recording but has not
been returned form the applicable public recording office or is not
otherwise available, a copy of such Mortgage or power of attorney, as the
case may be, certified by the Servicer to be a true and complete copy of
the original submitted for recording with the recorded original to be
delivered by the Servicer to the Trustee promptly after receipt thereof;
(iii) an original Assignment of the Mortgage executed in the following
form: "First Union National Bank of North Carolina, as Trustee for
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the registered holders of Emergent Home Equity Loan Pass-Through
Certificates, Series 1997-1";
(iv) the original recorded Assignment or Assignments of the Mortgage
showing a complete chain of assignment from the originator to the Person
assigning the Mortgage to the Trustee as contemplated by the immediately
preceding clause (iii) or, if any such Assignment has been submitted for
recording but has not been returned from the applicable public recording
office or is not otherwise available, a copy of such Assignment certified
by the Servicer to be a true and complete copy of the original submitted
for recording with the recorded original to be delivered by the Servicer to
the Trustee promptly after receipt thereof;
(v) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any; and
(vi) the original lender's title insurance policy, together with all
endorsements or riders that were issued with or subsequent to the issuance
of such policy, insuring the priority of the Mortgage as a first lien on
the Mortgaged Property represented therein as a fee interest vested in the
Mortgagor, or in the event such original title policy is unavailable, a
written commitment or uniform binder or preliminary report of title issued
by the title insurance or escrow company.
(b) The Depositor shall cause the Seller to promptly (and in no event later
than five Business Days following the Closing Date) submit or cause to be
submitted for recording, at no expense to the Trust Fund, the Trustee or the
Certificate Insurer, in the appropriate public office for real property records,
each Assignment referred to in Sections 2.01(iii) and (iv) above. In the event
that any such Assignment is lost or returned unrecorded because of a defect
therein, the Depositor shall promptly prepare or cause to be prepared a
substitute Assignment or cure or cause to be cured such defect, as the case may
be, and thereafter cause each such Assignment to be duly recorded.
(c) If any original Mortgage Note referred to in Section 2.01(i) cannot be
located, the obligations of the Depositor to cause the Seller to deliver such
documents shall be deemed to be satisfied upon delivery to the Trustee of a
photocopy of the original of such Mortgage Note, with a Lost Note Affidavit to
follow within one Business Day. If any of the documents referred to in Sections
2.01(ii), (iii) or (iv) above has as of the Closing Date been submitted for
recording but either (x) has not been returned from the applicable public
recording office or (y) such public recording office has retained the original
of such document, the obligations of the Depositor to cause the Seller to
deliver such documents shall be deemed to be satisfied upon (1) delivery to the
Trustee of a copy of each such document certified by the Seller in the case of
(x) above or the applicable public recording office in the case
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of (y) above to be a true and complete copy of the original that was submitted
for recording and (2) if such copy is certified by the Seller, delivery to the
Trustee promptly upon receipt thereof of either the original or a copy of such
document certified by the applicable public recording office to be a true and
complete copy of the original. Notice shall be provided to the Trustee, the
Certificate Insurer and the Rating Agencies by the Seller if delivery pursuant
to clause (2) above will be made more than 180 days after the Closing Date. If
the original lender's title insurance policy was not delivered pursuant to
Section 2.01(vi) above, the Depositor shall cause the Seller to deliver to the
Trustee, promptly after receipt thereof, the original lender's title insurance
policy. The Depositor shall cause the Seller to deliver to the Trustee promptly
upon receipt thereof any other original documents constituting a part of a
Mortgage File received with respect to any Mortgage Loan, including, but not
limited to, any original documents evidencing an assumption or modification of
any Mortgage Loan.
(d) All original documents relating to the Mortgage Loans that are not
delivered to the Trustee are and shall be held by or on behalf of the Seller,
the Depositor or the Servicer, as the case may be, in trust for the benefit of
the Trustee on behalf of the Certificateholders and the Certificate Insurer. In
the event that any such original document is required pursuant to the terms of
this Section to be a part of a Mortgage File, such document shall be delivered
promptly to the Trustee. Any such original document delivered to or held by the
Depositor or the Seller that is not required pursuant to the terms of this
Section to be a part of a Mortgage File, shall be delivered promptly to the
Servicer.
(e) The Depositor herewith delivers to the Trustee an executed copy of the
Unaffiliated Seller's Agreement. In addition to the foregoing, the Depositor
shall cause the Certificate Insurer to deliver the Policy to the Trustee for the
benefit of the Certificateholders.
SECTION 2.02. Acceptance by Trustee.
(a) The Trustee acknowledges receipt of the Policy and, subject to the
provisions of Section 2.01 and subject to the review described below and any
exceptions noted on the exception report described in the next paragraph below,
the documents referred to in Section 2.01 (other than such documents described
in Section 2.01(v)) above and all other assets included in the definition of
"Trust Fund" (to the extent of amounts deposited into the Collection Account)
and declares that it holds and will hold such documents and the other documents
delivered to it constituting a Mortgage File, and that it holds or will hold all
such assets and such other assets included in the definition of "Trust Fund" in
trust for the exclusive use and benefit of all present and future
Certificateholders and the Certificate Insurer.
(b) The Trustee agrees, for the benefit of the Certificateholders, to
review each Mortgage File within 30 days after the Closing Date and to certify
in
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substantially the form attached hereto as Exhibit C-1 that, as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan which
has been certified as having been paid in full or any Mortgage Loan specifically
identified in the exception report annexed thereto as not being covered by such
certification), (i) all documents constituting part of such Mortgage File
required to be delivered to it pursuant to this Agreement are in its possession,
(ii) such documents have been reviewed by it and appear regular on their face
and relate to such Mortgage Loan, (iii) based on its examination and only as to
the foregoing, the information set forth in the Mortgage Loan Schedule that
corresponds to items (1) through (3), (6), (9)(A), (10), (13) and (16) of the
definition of "Mortgage Loan Schedule" accurately reflects information set forth
in the Mortgage File. It is herein acknowledged that, in conducting such review,
the Trustee was under no duty or obligation (i) to inspect, review or examine
any such documents, instruments, certificates or other papers to determine that
they are genuine, enforceable, or appropriate for the represented purpose or
that they have actually been recorded or that they are other than what they
purport to be on their face, or (ii) to determine whether any Mortgage File
should include any of the documents specified in clause (v) of Section 2.01.
(c) Prior to the first anniversary date of this Agreement the Trustee shall
deliver to the Depositor, the Servicer and the Certificate Insurer a final
certification in the form annexed hereto as Exhibit C-2 evidencing the
completeness of the Mortgage Files, with any applicable exceptions noted
thereon.
(d) If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the certifications referred to above, the Trustee
finds any document or documents constituting a part of a Mortgage File to be
missing or defective in any material respect, at the conclusion of its review
the Trustee shall so notify the Depositor, the Servicer and the Certificate
Insurer. In addition, upon the discovery by the Depositor, the Servicer or the
Trustee of a breach of any of the representations and warranties made by the
Seller in the related Unaffiliated Seller's Agreement or by the Originator in
the Purchase and Assignment Agreement in respect of any Mortgage Loan which
materially adversely affects such Mortgage Loan or the interests of the related
Certificateholders in such Mortgage Loan, the party discovering such breach
shall give prompt written notice to the other parties and the Certificate
Insurer.
SECTION 2.03. Repurchase or Substitution of Mortgage Loans.
(a) Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing from, a Mortgage File or of the
breach by the Seller of any representation, warranty or covenant under the
Unaffiliated Seller's Agreement or by the Originator in the Purchase and
Assignment Agreement in respect of any Mortgage Loan which materially adversely
affects the value of such Mortgage Loan or the interest therein of the
Certificateholders, the Trustee or the Originator, as the case may be, shall
promptly notify the Originator, the Seller, the Servicer, the
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Depositor and the Certificate Insurer of such defect, missing document or breach
and request that the Seller and the Originator deliver such missing document or
cure such defect or breach within 60 days from the date the Seller and the
Originator were notified of such missing document, defect or breach, and if the
Seller or the Originator does not deliver such missing document or cure such
defect or breach in all material respects during such period, the Trustee shall
enforce the Seller's obligation under the Unaffiliated Seller's Agreement and
the Originator's obligation under the Purchase and Assignment Agreement (i) in
connection with any such breach that could not reasonably have been cured within
such 60 day period, if the Seller or the Originator shall have commenced to cure
such breach within such 60 day period, to proceed thereafter diligently and
expeditiously to cure the same within the period provided under the Unaffiliated
Seller's Agreement or the Purchase and Assignment Agreement and (ii) in
connection with any such breach (subject to clause (i) above) or in connection
with any missing document defect, to repurchase such Mortgage Loan from the
Trust Fund at the Purchase Price within 60 days after the date on which it was
notified (subject to Section 2.03(e)) of such missing document, defect or
breach, if and to the extent that the Seller is obligated to do so under the
Unaffiliated Seller's Agreement and the Originator is obligated to do so under
the Purchase and Assignment Agreement. The Purchase Price for the repurchased
Mortgage Loan shall be deposited in the Collection Account and the Trustee, upon
receipt of written certification from the Servicer of such deposit, shall
release the related Mortgage File to the Seller or the Originator, as the case
may be, and shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as the Seller or the Originator shall
furnish to it and as shall be necessary to vest in the Seller or the Originator,
as the case may be, any Mortgage Loan released pursuant hereto and the Trustee
shall have no further responsibility with regard to such Mortgage File. In lieu
of repurchasing any such Mortgage Loan as provided above, if so provided in the
Purchase and Assignment Agreement, the Originator may cause such Mortgage Loan
to be removed from the Trust Fund (in which case it shall become a Deleted
Mortgage Loan) and substitute one or more Qualified Substitute Mortgage Loans in
the manner and subject to the limitations set forth in Section 2.03(d). It is
understood and agreed that the obligation of the Seller and the Originator to
cure or to repurchase (or to substitute for) any Mortgage Loan as to which a
document is missing, a material defect in a constituent document exists or as to
which such a breach has occurred and is continuing shall constitute the sole
remedy respecting such omission, defect or breach available to the Trustee on
behalf of the Certificateholders and the Certificate Insurer.
(b) [Reserved]
(c) [Reserved]
(d) Any substitution of Qualified Substitute Mortgage Loans for Deleted
Mortgage Loans made pursuant to Section 2.03(a), must be effected prior to the
date which is two years after the Startup Day for the Trust Fund.
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As to any Deleted Mortgage Loan for which the Originator substitutes a
Qualified Substitute Mortgage Loan or Loans, such substitution shall be effected
by the Originator delivering to the Trustee, for such Qualified Substitute
Mortgage Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the
Trustee, and such other documents and agreements, with all necessary
endorsements thereon, as are required by Section 2.01, together with an
Officers' Certificate providing that each such Qualified Substitute Mortgage
Loan satisfies the definition thereof and specifying the Substitution Shortfall
Amount (as described below), if any, in connection with such substitution. The
Trustee shall acknowledge receipt for such Qualified Substitute Mortgage Loan or
Loans and, within ten Business Days thereafter, review such documents as
specified in Section 2.02 and deliver to the Depositor, the Servicer and the
Certificate Insurer, with respect to such Qualified Substitute Mortgage Loan or
Loans, a certification substantially in the form attached hereto as Exhibit C-1,
with any applicable exceptions noted thereon. Within one year of the date of
substitution, the Trustee shall deliver to the Depositor, the Servicer and the
Certificate Insurer a certification substantially in the form of Exhibit C-2
hereto with respect to such Qualified Substitute Mortgage Loan or Loans, with
any applicable exceptions noted thereon. Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in the month of substitution are not part of
the Trust Fund and will be retained by the Originator. For the month of
substitution, distributions to Certificateholders will reflect the collections
and recoveries in respect of such Deleted Mortgage Loan in the Collection Period
preceding the month of substitution and the Originator shall thereafter be
entitled to retain all amounts subsequently received in respect of such Deleted
Mortgage Loan. The Servicer shall amend the Mortgage Loan Schedule to reflect
the removal of such Deleted Mortgage Loan from the terms of this Agreement and
the substitution of the Qualified Substitute Mortgage Loan or Loans and shall
deliver a copy of such amended Mortgage Loan Schedule to the Trustee. Upon such
substitution, such Qualified Substitute Mortgage Loan or Loans shall constitute
part of the Mortgage Pool and shall be subject in all respects to the terms of
this Agreement and, in the case of a substitution effected by the Originator,
the Purchase and Assignment Agreement, including, in the case of a substitution
effected by the Originator all applicable representations and warranties thereof
included in the Purchase and Assignment Agreement as of the date of
substitution.
For any month in which the Originator substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer
will determine the amount (the "Substitution Shortfall Amount"), if any, by
which the aggregate Purchase Price of all such Deleted Mortgage Loans exceeds
the aggregate, as to each such Qualified Substitute Mortgage Loan, of the Stated
Principal Balance thereof as of the related Cut-Off Date, together with one
month's interest on such principal balance at the applicable Net Mortgage Rate.
On the date of such substitution, the Originator will deliver or cause to be
delivered to the Servicer for deposit in the Collection Account an amount equal
to the Substitution Shortfall Amount, if any, and the Trustee, upon receipt of
the related Qualified Substitute Mortgage Loan or Loans and certification by the
Servicer of such deposit, shall
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release to the Originator the related Mortgage File or Files and shall execute
and deliver such instruments of transfer or assignment, in each case without
recourse, as the Originator shall deliver to it and as shall be necessary to
vest therein any Deleted Mortgage Loan released pursuant hereto.
In addition, the Originator shall obtain at its own expense and deliver to
the Trustee and the Certificate Insurer an Opinion of Counsel to the effect that
such substitution will not cause (a) any federal tax to be imposed on the REMIC
Trust, including, without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(l) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code, or (b) the REMIC Trust
to fail to qualify as a REMIC at any time that any Certificate is outstanding.
(e) Upon discovery by the Depositor, the Originator, the Seller, the
Servicer, the Trustee or the Certificate Insurer that any Mortgage Loan does not
constitute a "qualified mortgage" within the meaning of Section 860G(a)(3) of
the Code, the party discovering such fact shall within two Business Days give
written notice thereof to the other parties and the Certificate Insurer. In
connection therewith, the Originator and the Seller shall be obligated to
repurchase or, subject to the limitations set forth in Section 2.03(d),
substitute one or more Qualified Substitute Mortgage Loans for the affected
Mortgage Loan within 90 days of the earlier of discovery or receipt of such
notice with respect to such affected Mortgage Loan. Any such repurchase or
substitution shall be made in the same manner as set forth in Section 2.03(a).
The Trustee shall reconvey to the Seller or the Originator, as the case may be,
the Mortgage Loan to be released pursuant hereto in the same manner, and on the
same terms and conditions, as it would a Mortgage Loan repurchased for breach of
a representation or warranty.
SECTION 2.04. Representations and Warranties of the Depositor.
(a) The Depositor hereby represents and warrants to the Trustee for the
benefit of the Certificateholders and the Certificate Insurer that as of the
Closing Date the assignment of the Depositor's rights, but none of its
obligations, under the Unaffiliated Seller's Agreement is valid, enforceable and
effective to permit the Trustee to enforce the obligations of the Seller
thereunder.
(b) It is understood and agreed that the representations and warranties set
forth in this Section 2.04 shall survive delivery of the Mortgage Files to the
Trustee and shall inure to the benefit of the Certificateholders and the
Certificate Insurer notwithstanding any restrictive or qualified endorsement or
assignment. Upon discovery by any of the Depositor, the Servicer or the Trustee
of a breach of any of the foregoing representations and warranties which
materially and adversely affects the value of any Mortgage Loan or the interests
therein of the Certificateholders and the Certificate Insurer, the party
discovering such breach shall
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give prompt written notice to the other parties, and in no event later than two
Business Days from the date of such discovery.
(c) The Depositor is duly organized, validly existing and in good standing
as a corporation under the laws of the state of its incorporation.
(d) The Depositor has the full power and authority to conduct its business
as presently conducted by it and to execute, deliver and perform, and to enter
into and consummate, all transactions contemplated by this Agreement. The
Depositor has duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered this Agreement, and this Agreement,
assuming due authorization, execution and delivery by the Depositor and the
Trustee, constitutes a legal, valid and binding obligation of the Depositor,
enforceable against it in accordance with its terms except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity.
(e) The execution and delivery of this Agreement by the Depositor and the
performance of and compliance with the terms of this Agreement will not (a)
violate the Depositor's charter or by-laws or any law, rule, regulation, order,
judgment, award, administrative interpretation, injunction, writ, decree or the
like affecting the Depositor or by which the Depositor is bound or (b) result in
a breach of or constitute a default under any indenture or other material
agreement to which the Depositor is a party or by which the Depositor is bound,
which in the case of either clause (a) or (b) will have a material adverse
effect on the Depositor's ability to perform its obligations under this
Agreement.
(f) There are no actions or proceedings against, investigations known to it
of, the Depositor before any court, administrative or other tribunal (A) that
might prohibit its entering into this Agreement, (B) seeking to prevent the
consummation of the transactions contemplated by this Agreement or (C) that
might prohibit or materially and adversely affect the performance by the
Depositor of its obligations under, or validity or enforceability of, this
Agreement.
(g) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with, this
Agreement or the consummation of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations or orders, if
any, that have been obtained prior to the Closing Date.
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SECTION 2.05. Representations, Warranties and Covenants of the Servicer.
The Servicer hereby represents, warrants and covenants to the Trustee, for
the benefit of each of the Trustee, the Certificateholders, the Certificate
Insurer and to the Depositor that as of the Closing Date or as of such date
specifically provided herein:
(i) The Servicer is duly organized, validly existing and in good
standing as a corporation under the laws of the state of its incorporation
and is and will remain duly licensed under and in compliance with the laws
of each state in which any Mortgaged Property is located to the extent
necessary to ensure the enforceability of each Mortgage Loan and the
servicing of the Mortgage Loan in accordance with the terms of this
Agreement;
(ii) The Servicer has the full power and authority to conduct its
business as presently conducted by it and to execute, deliver and perform,
and to enter into and consummate, all transactions contemplated by this
Agreement. The Servicer has duly authorized the execution, delivery and
performance of this Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization, execution and
delivery by the Depositor and the Trustee, constitutes a legal, valid and
binding obligation of the Servicer, enforceable against it in accordance
with its terms except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity;
(iii) The execution and delivery of this Agreement by the Servicer and
the performance of and compliance with the terms of this Agreement will not
(a) violate the Servicer's charter or by-laws or any law, rule, regulation,
order, judgment, award, administrative interpretation, injunction, writ,
decree or the like affecting the Servicer or by which the Servicer is bound
or (b) result in a breach of or constitute a default under any indenture or
other material agreement to which the Servicer is a party or by which the
Servicer is bound, which in the case of either clause (a) or (b) will have
a material adverse effect on the Servicer's ability to perform its
obligations under this Agreement;
(iv) [reserved];
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(v) The Servicer does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant of it
contained in this Agreement;
(v) With respect to each Mortgage Loan, the Servicer will deliver
possession of a complete Mortgage File, except for such documents as have
been delivered to the Trustee;
(vi) There are no actions or proceedings against, investigations known
to it of, the Servicer before any court, administrative or other tribunal
(A) that might prohibit its entering into this Agreement, (B) seeking to
prevent the consummation of the transactions contemplated by this Agreement
or (C) that might prohibit or materially and adversely affect the
performance by the Servicer of its obligations under, or validity or
enforceability of, this Agreement; and
(vii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of, or compliance by the Servicer with, this
Agreement or the consummation of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations or orders,
if any, that have been obtained prior to the Closing Date.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.05 shall survive delivery of the Mortgage
Files to the Trustee and shall inure to the benefit of the Trustee, the
Depositor, the Certificateholders and the Certificate Insurer. Upon discovery by
any of the Depositor, the Servicer or the Trustee of a breach of any of the
foregoing representations, warranties and covenants which materially and
adversely affects the value of any Mortgage Loan or the interests therein of the
Certificateholders and the Certificate Insurer, the party discovering such
breach shall give prompt written notice (but in no event later than two Business
Days following such discovery) to the Trustee and the Certificate Insurer.
SECTION 2.06. Issuance of Certificates.
The Trustee acknowledges the assignment to it of the Mortgage Loans and the
delivery to it of the Mortgage Files, subject to the provisions of Sections 2.01
and 2.02, together with the assignment to it of all other assets included in the
Trust Fund, receipt of which is hereby acknowledged. Concurrently with such
assignment and delivery and in exchange therefor, the Trustee, pursuant to the
written request of the Depositor executed by an officer of the Depositor, has
executed, authenticated and delivered to or upon the order of the Depositor, the
Certificates in authorized
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denominations. The interests evidenced by the Certificates constitute the entire
beneficial ownership interest in the Trust Fund.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
SECTION 3.01. Servicer to Act as Servicer.
The Servicer shall service and administer the Mortgage Loans on behalf of
the Trustee and in the best interests of and for the benefit of the
Certificateholders and the Certificate Insurer (as determined by the Servicer in
its reasonable judgment) in accordance with the terms of this Agreement and the
respective Mortgage Loans and, to the extent consistent with such terms, in the
same manner in which it services and administers similar mortgage loans for its
own portfolio, giving due consideration to customary and usual standards of
practice of prudent mortgage lenders and loan servicers administering similar
mortgage loans but without regard to:
(i) any relationship that the Servicer, any Sub-Servicer or any
Affiliate of the Servicer or any Sub-Servicer may have with the related
Mortgagor;
(ii) the ownership of any Certificate by the Servicer or any Affiliate
of the Servicer;
(iii) the Servicer's obligation to make Monthly Advances or Servicing
Advances; or
(iv) the Servicer's or any Sub-Servicer's right to receive
compensation for its services hereunder or with respect to any particular
transaction.
To the extent consistent with the foregoing, the Servicer shall also seek to
maximize the timely and complete recovery of principal and interest on the
Mortgage Notes. Subject only to the above-described servicing standards and the
terms of this Agreement and of the respective Mortgage Loans, the Servicer shall
have full power and authority, acting alone or through Sub-Servicers as provided
in Section 3.02, to do or cause to be done any and all things in connection with
such servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing, the Servicer in its own name
or in the name of a Sub-Servicer is hereby authorized and empowered by the
Trustee when the Servicer believes it reasonably necessary in its best judgment
in order to comply with its servicing duties hereunder, to execute and deliver,
on behalf of the Certificateholders
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and the Trustee or any of them, and upon notice to the Trustee, 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 Mortgage
Loans and the Mortgaged Properties and to institute foreclosure proceedings or
obtain a deed-in-lieu of foreclosure so as to convert the ownership of such
properties, and to hold or cause to be held title to such properties, on behalf
of the Trustee and Certificateholders. The Servicer shall service and administer
the Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors any reports required to be provided to them thereby.
The Servicer shall also comply in the performance of this Agreement with all
reasonable rules and requirements of each insurer under any standard hazard
insurance policy. Subject to Section 3.17, the Trustee shall execute, at the
written request of the Servicer, and furnish the Servicer and any Sub-Servicer
any special or limited powers of attorney and other documents necessary or
appropriate to enable the Servicer or any Sub-Servicer to carry out their
servicing and administrative duties hereunder and the Trustee shall not be
liable for the actions of the Servicer or any Sub-Servicers under such powers of
attorney.
In accordance with the standards of the preceding paragraph, the Servicer
shall advance or cause to be advanced funds as necessary for the purpose of
effecting the timely payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.09, and further as
provided in Section 3.11. Any cost incurred by the Servicer or by Sub-Servicers
in effecting the timely payment of taxes and assessments on a Mortgaged Property
shall not, for the purpose of calculating the Stated Principal Balance of a
Mortgage Loan or distributions to Certificateholders, be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit.
Notwithstanding anything in this Agreement to the contrary, the Servicer
may not make any future advances with respect to a Mortgage Loan and the
Servicer shall not (unless the Mortgagor is in default with respect to the
Mortgage Loan or such default is, in the judgment of the Servicer, reasonably
foreseeable) permit any modification with respect to any Mortgage Loan that
would change the Mortgage Rate, reduce or increase the principal balance (except
for reductions resulting from actual payments of principal) or change the final
maturity date on such Mortgage Loan or any modification, waiver or amendment of
any term of any Mortgage Loan that would both (A) effect an exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code (or final,
temporary or proposed Treasury regulations promulgated thereunder) and (B) cause
the REMIC Trust to fail to qualify as a REMIC under the Code or the imposition
of any tax on "prohibited transactions" or "contributions after the startup
date" under the REMIC Provisions.
The Servicer may delegate its responsibilities under this Agreement;
provided, however, that no such delegation shall release the Servicer from the
responsibilities or liabilities arising under this Agreement.
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SECTION 3.02. Sub-Servicing Agreements Between Servicer and Sub-Servicers.
(a) The Servicer may enter into Sub-Servicing Agreements (provided that the
Servicer shall have obtained the consent of the Certificate Insurer and provided
such agreements would not result in a withdrawal or a downgrading by any Rating
Agency of the rating or any shadow rating on any Class of Certificates) with
Sub-Servicers, for the servicing and administration of the Mortgage Loans.
Each Sub-Servicer shall be (i) authorized to transact business in the state
or states where the related Mortgaged Properties it is to service are situated,
if and to the extent required by applicable law to enable the Sub-Servicer to
perform its obligations hereunder and under the Sub-Servicing Agreement, (ii) an
institution approved as a mortgage loan originator by the Federal Housing
Administration or an institution the deposit accounts in which are insured by
the FDIC and (iii) a FHLMC or FNMA approved mortgage servicer. Each
Sub-Servicing Agreement must impose on the Sub-Servicer requirements conforming
to the provisions set forth in Section 3.08 and provide for servicing of the
Mortgage Loans consistent with the terms of this Agreement. The Servicer will
examine each Sub-Servicing Agreement and will be familiar with the terms
thereof. The terms of any Sub-Servicing Agreement will not be inconsistent with
any of the provisions of this Agreement. The Servicer and the Sub-Servicers may
enter into and make amendments to the Sub-Servicing Agreements or enter into
different forms of Sub-Servicing Agreements; provided, however, that any such
amendments or different forms shall be consistent with and not violate the
provisions of this Agreement, and that no such amendment or different form shall
be made or entered into which could be reasonably expected to be materially
adverse to the interests of the Certificateholders, without the consent of the
Certificate Insurer. Any variation without the consent of the Certificate
Insurer from the provisions set forth in Section 3.08 relating to insurance or
priority requirements of Sub-Servicing Accounts, or credits and charges to the
Sub-Servicing Accounts or the timing and amount of remittances by the
Sub-Servicers to the Servicer, are conclusively deemed to be inconsistent with
this Agreement and therefore prohibited. The Servicer shall deliver to the
Trustee and the Certificate Insurer copies of all Sub-Servicing Agreements, and
any amendments or modifications thereof, promptly upon the Servicer's execution
and delivery of such instruments.
(b) As part of its servicing activities hereunder, the Servicer, for the
benefit of the Trustee, the Certificateholders and the Certificate Insurer,
shall enforce the obligations of each Sub-Servicer under the related
Sub-Servicing Agreement and of the Seller under the Unaffiliated Seller's
Agreement, including, without limitation, any obligation to make advances in
respect of delinquent payments as required by a Sub-Servicing Agreement, or to
purchase a Mortgage Loan on account of missing or defective documentation or on
account of a breach of a representation, warranty or covenant, as described in
Section 2.03(a). Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Sub-Servicing Agreements,
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and the pursuit of other appropriate remedies, shall be in such form and carried
out to such an extent and at such time as the Servicer, in its good faith
business judgment, would require were it the owner of the related Mortgage
Loans. The Servicer shall pay the costs of such enforcement at its own expense,
and shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement, to the extent, if any, that such recovery exceeds all amounts
due in respect of the related Mortgage Loans, or (ii) from a specific recovery
of costs, expenses or attorneys' fees against the party against whom such
enforcement is directed. Enforcement of the Unaffiliated Seller's Agreement
against the Seller shall be effected by the Servicer to the extent it is not the
Seller, otherwise by the Trustee, in accordance with the foregoing provisions of
this paragraph.
SECTION 3.03. Successor Sub-Servicers.
The Servicer shall be entitled to terminate any Sub-Servicing Agreement and
the rights and obligations of any Sub-Servicer pursuant to any Sub-Servicing
Agreement in accordance with the terms and conditions of such Sub-Servicing
Agreement but only with the prior consent of the Certificate Insurer. In the
event of termination of any Sub-Servicer, all servicing obligations of such
Sub-Servicer shall be assumed simultaneously by the Servicer without any act or
deed on the part of such Sub-Servicer or the Servicer, and the Servicer either
shall service directly the related Mortgage Loans or shall enter into a
Sub-Servicing Agreement with a successor Sub-Servicer which qualifies under
Section 3.02.
Any Sub-Servicing Agreement shall include the provision that (i) such
agreement may be immediately terminated by the Trustee without fee, in
accordance with the terms of this Agreement, in the event that the Servicer
shall, for any reason, no longer be the Servicer (including termination due to a
Servicer Event of Default) or (ii) clearly and unambiguously states that any
termination fee is the sole responsibility of the Servicer and none of the
Trustee, the Certificateholders or the Certificate Insurer, has any liability
therefor, regardless of the circumstances surrounding such termination.
SECTION 3.04. Liability of the Servicer.
Notwithstanding any Sub-Servicing Agreement, any of the provisions of this
Agreement relating to agreements or arrangements between the Servicer and a
Sub-Servicer or reference to actions taken through a Sub-Servicer or otherwise,
the Servicer shall remain obligated and primarily liable to the Trustee, the
Certificateholders and the Certificate Insurer for the servicing and
administering of the Mortgage Loans in accordance with the provisions of Section
3.01 without diminution of such obligation or liability by virtue of such
Sub-Servicing Agreements or arrangements or by virtue of indemnification from
the Sub-Servicer and to the same extent and under the same terms and conditions
as if the Servicer alone were servicing and administering the Mortgage Loans.
The Servicer shall be entitled to
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enter into any agreement with a Sub-Servicer for indemnification of the Servicer
by such Sub-Servicer and nothing contained in this Agreement shall be deemed to
limit or modify such indemnification.
SECTION 3.05. No Contractual Relationship Between Sub-Servicers and Trustee
or Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any transactions
or services relating to the Mortgage Loans involving a Sub-Servicer in its
capacity as such shall be deemed to be between the Sub-Servicer and the Servicer
alone, and the Trustee and Certificateholders or the Certificate Insurer shall
not be deemed parties thereto and shall have no claims, rights, obligations,
duties or liabilities with respect to the Sub-Servicer except as set forth in
Section 3.06. The Servicer shall be solely liable for all fees owed by it to any
Sub-Servicer, irrespective of whether the Servicer's compensation pursuant to
this Agreement is sufficient pay such fees.
SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements by
Trustee.
In the event the original Servicer shall for any reason no longer be the
servicer (including by reason of the occurrence of a Servicer Event of Default),
the Trustee or its designee shall thereupon assume all of the rights and
obligations of the Servicer under each Sub-Servicing Agreement that the Servicer
may have entered into, unless the Trustee elects to terminate any Sub-Servicing
Agreement in accordance with its terms as provided in Section 3.03. Upon such
assumption, the Trustee, its designee or the successor servicer for the Trustee
appointed pursuant to Section 7.02 shall be deemed, subject to Section 3.03, to
have assumed all of the Servicer's interest therein and to have replaced the
Servicer as a party to each Sub-Servicing Agreement to the same extent as if
each Sub-Servicing Agreement had been assigned to the assuming party, except
that the Servicer shall not thereby be relieved of any liability or obligations
under any Sub-Servicing Agreement.
The Servicer at its expense shall, upon request of the Trustee, deliver to
the assuming party all documents and records relating to each Sub-Servicing
Agreement and the Mortgage Loans then being serviced and an accounting of
amounts collected and held by or on behalf of it, and otherwise use its best
efforts to effect the orderly and efficient transfer of the Sub-Servicing
Agreements to the assuming party.
SECTION 3.07. Collection of Certain Mortgage Loan Payments.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Mortgage Loans, and shall, to the
extent such procedures shall be consistent with this Agreement, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the
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Mortgage Loans and held for its own account. Consistent with the foregoing, the
Servicer may in its discretion (i) waive any late payment charge or, if
applicable, penalty interest, (ii) extend the due dates for the Monthly Payments
due on a Mortgage Note for a period of not greater than 90 days or (iii) if the
Servicer provides prior written notice to the Certificate Insurer to which the
Certificate Insurer does not object within two Business Days, extend the due
dates for Monthly Payments due on a Mortgage Loan for a period of not greater
than 180 days; provided, that any extension pursuant to clause (ii) or clause
(iii) above shall not affect the amortization schedule of any Mortgage Loan for
purposes of any computation hereunder, and provided, further, that no more than
two such extensions shall be granted with respect to any single Mortgage Loan.
SECTION 3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage Loan pursuant
to a Sub-Servicing Agreement, the Sub-Servicer will be required to establish and
maintain one or more accounts (collectively, the "Sub-Servicing Account"). The
Sub-Servicing Account shall be an Eligible Account and shall comply with all
requirements of this Agreement relating to the Collection Account. The
Sub-Servicer will be required to deposit into the Sub-Servicing Account no later
than the first Business Day after receipt all proceeds of Mortgage Loans
received by the Sub-Servicer, less its servicing compensation to the extent
permitted by the Sub-Servicing Agreement and to remit such proceeds to the
Servicer for deposit in the Collection Account not later than the first Business
Day thereafter. For purposes of this Agreement, the Servicer shall be deemed to
have received payments on the Mortgage Loans when the Sub-Servicer receives such
payments.
SECTION 3.09. Collection of Taxes, Assessments and Similar Items; Servicing
Accounts.
The Servicer shall establish and maintain one or more accounts (the
"Servicing Accounts"), into which all collections from the Mortgagors (or
related advances from Sub-Servicers) for the payment of taxes, assessments,
hazard insurance premiums, and comparable items for the account of the
Mortgagors ("Escrow Payments") shall be deposited and retained. Servicing
Accounts shall be Eligible Accounts. The Servicer shall deposit in the clearing
account in which it customarily deposits payments and collections on mortgage
loans in connection with its mortgage loan servicing activities on a daily
basis, and in no event more than one Business Day after the Servicer's receipt
thereof, all Escrow Payments collected on account of the Mortgage Loans and
shall thereafter deposit such Escrow Payments in the Servicing Account, in no
event more than one Business Day after the deposit of such Escrow Payments, for
the purpose of effecting the timely payment of any such items as required under
the terms of this Agreement. Withdrawals of amounts from a Servicing Account may
be made only to (i) effect timely payment of taxes, assessments, hazard
insurance premiums, and comparable items; (ii) reimburse the
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Servicer (or a Sub-Servicer to the extent provided in the related Sub-Servicing
Agreement) out of related collections for any advances made pursuant to Section
3.01 (with respect to taxes and assessments) and Section 3.14 (with respect to
hazard insurance); (iii) refund to Mortgagors any sums as may be determined to
be overages; (iv) pay interest, if required and as described below, to
Mortgagors on balances in the Servicing Account; or (v) clear and terminate the
Servicing Account at the termination of the Servicer's obligations and
responsibilities in respect of the Mortgage Loans under this Agreement in
accordance with Article X. As part of its servicing duties, the Servicer or
Sub-Servicers shall pay to the Mortgagors interest on funds in Servicing
Accounts, to the extent required by law and, to the extent that interest earned
on funds in the Servicing Accounts is insufficient, to pay such interest from
its or their own funds, without any reimbursement therefor. Notwithstanding the
foregoing, neither the Servicer nor any Sub-Servicer shall be obligated to
collect Escrow Payments if the related Mortgage Loan does not require such
payments but the Servicer and each Sub-Servicer shall nevertheless be obligated
to make Servicing Advances as provided in Section 3.01.
SECTION 3.10. Collection Account and Distribution Account.
(a) On behalf of the Trust Fund, the Servicer shall establish and maintain
one or more accounts (such account or accounts, the "Collection Account"), held
in trust for the benefit of the Trustee, the Certificateholders and the
Certificate Insurer. On behalf of the Trust Fund, the Servicer shall deposit or
cause to be deposited in the clearing account in which it customarily deposits
payments and collections on mortgage loans in connection with its mortgage loan
servicing activities on a daily basis, and in no event more than one Business
Day after the Servicer's receipt therof, and shall thereafter deposit in the
Collection Account, in no event more than one Business Day after the deposit of
such payments into such clearing account, the following payments and collections
received or made by it on or subsequent to the Cut-off Date:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest (net of the related Servicing
Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds and Liquidation Proceeds (other than
proceeds collected in respect of any particular REO Property and amounts
paid by the Servicer in connection with a purchase of Mortgage Loans and
REO Properties pursuant to Section 10.01);
(iv) any amounts required to be deposited pursuant to Section 3.12 in
connection with any losses realized on Permitted Investments with respect
to funds held in the Collection Account;
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(v) any amounts required to be deposited by the Servicer pursuant to
the second paragraph of Section 3.14(a) in respect of any blanket policy
deductibles; and
(vi) any Purchase Price or Substitution Shortfall Amount delivered to
the Servicer.
For purposes of the immediately preceding sentence, the Cut-off Date with
respect to any Qualified Substitute Mortgage Loan shall be deemed to be the date
of substitution.
The foregoing requirements for deposit in the Collection Accounts shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of prepayment or late payment charges
or assumption fees need not be deposited by the Servicer in the Collection
Account. In the event the Servicer shall deposit in the Collection Account any
amount not required to be deposited therein, it may at any time withdraw such
amount from the Collection Account, any provision herein to the contrary
notwithstanding.
(b) On behalf of the Trust Fund, the Trustee shall establish and maintain
one or more accounts (such account or accounts, the "Distribution Account"),
held in trust for the benefit of the Certificateholders and the Certificate
Insurer. On behalf of the Trust Fund, the Servicer shall deliver to the Trustee
in immediately available funds for deposit in the Distribution Account on or
before 3:00 p.m. New York time (i) on the Servicer Remittance Date, that portion
of the Available Distribution Amount for the related Distribution Date then on
deposit in the Collection Account, and (ii) on each Business Day as of the
commencement of which the balance on deposit in the Collection Account exceeds
$75,000 following any withdrawals pursuant to the next succeeding sentence, the
amount of such excess, but only if the Collection Account constitutes an
Eligible Account solely pursuant to clause (ii) of the definition of "Eligible
Account." If the balance on deposit in the Collection Account exceeds $75,000 as
of the commencement of business on any Business Day and the Collection Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of "Eligible Account," the Servicer shall, on or before 3:00 p.m. New York time
on such Business Day, withdraw from the Collection Account any and all amounts
payable or reimbursable to the Depositor, the Servicer, the Trustee, the Seller
or any Sub-Servicer pursuant to Section 3.11 and shall pay such amounts to the
Persons entitled thereto.
(c) Funds in the Collection Account and the Distribution Account may be
invested in Permitted Investments in accordance with the provisions set forth in
Section 3.12. The Servicer shall give notice to the Trustee and the Certificate
Insurer of the location of the Collection Account maintained by it when
established and prior to any change thereof. The Trustee shall give notice to
the Servicer, the
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Depositor and the Certificate Insurer of the location of the Distribution
Account when established and prior to any change thereof.
(d) Funds held in the Collection Account at any time may be delivered by
the Servicer to the Trustee for deposit in the Distribution Account. In the
event the Servicer shall deliver to the Trustee for deposit in the Distribution
Account any amount not required to be deposited therein, it may at any time
request that the Trustee withdraw such amount from the Distribution Account and
remit to it any such amount, any provision herein to the contrary
notwithstanding. In addition, the Servicer shall deliver to the Trustee from
time to time for deposit the amounts set forth in clauses (i) through (v) below,
and the Trustee shall deposit such amounts in the Distribution Account:
(i) any Monthly Advances, as required pursuant to Section 4.03;
(ii) any amounts required to be deposited pursuant to Section 3.23(d)
or (f) in connection with any REO Property;
(iii) any amounts to be paid by the Terminator in connection with a
purchase of Mortgage Loans and REO Properties pursuant to Section 10.01;
(iv) any amounts required to be deposited pursuant to Section 3.24 in
connection with any Prepayment Interest Shortfalls; and
(v) any Stayed Funds, as soon as permitted by the federal bankruptcy
court having jurisdiction in such matters.
(e) Promptly upon receipt of any Stayed Funds, whether from the Servicer, a
trustee in bankruptcy, or federal bankruptcy court or other source, the Trustee
shall deposit such funds in the Distribution Account, subject to withdrawal
thereof pursuant to Section 7.02(b) or as otherwise permitted hereunder. In
addition, the Servicer shall deposit in the Distribution Account any amounts
required to be deposited pursuant to Section 3.12 in connection with losses
realized on Permitted Investments with respect to funds held in the Distribution
Account.
SECTION 3.11. Withdrawals from the Collection Account and Distribution
Account.
The Servicer shall, from time to time, make withdrawals from the Collection
Account for any of the following purposes or as described in Section 4.03:
(i) to remit to the Trustee for deposit in the Distribution Account
the amounts required to be so remitted pursuant to Section
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3.10(b) or permitted to be so remitted pursuant to the first sentence of
Section 3.10(d);
(ii) subject to Section 3.16(d), to reimburse the Servicer for Monthly
Advances, but only to the extent of amounts received which represent Late
Collections (net of the related Servicing Fees) of Monthly Payments on
Mortgage Loans with respect to which such Monthly Advances were made in
accordance with the provisions of Section 4.03;
(iii) subject to Section 3.16(d), to pay the Servicer or any
Sub-Servicer any unpaid Servicing Fees and reimburse any unreimbursed
Servicing Advances with respect to each Mortgage Loan, but only to the
extent of any Liquidation Proceeds and Insurance Proceeds received with
respect to such Mortgage Loan;
(iv) to pay to the Servicer as servicing compensation (in addition to
the Servicing Fee) on the Servicer Remittance Date any interest or
investment income earned on funds deposited in the Collection Account;
(v) to pay to the Servicer, the Depositor or the Seller, as the case
may be, with respect to each Mortgage Loan that has previously been
purchased or replaced pursuant to Section 2.03 or Section 3.16(c) all
amounts received thereon not included in the Purchase Price or the
Substitution Shortfall Amount;
(vi) to reimburse the Servicer for any Monthly Advance or Servicing
Advance previously made which the Servicer has determined to be a
Nonrecoverable Monthly Advance in accordance with the provisions of Section
4.03;
(vii) to reimburse the Servicer or the Depositor for expenses incurred
by or reimbursable to the Servicer or the Depositor, as the case may be,
pursuant to Section 6.03;
(viii) to reimburse the Servicer or the Trustee, as the case may be,
for expenses reasonably incurred in respect of the breach or defect giving
rise to the purchase obligation under Section 2.03 or Section 2.04 of this
Agreement that were included in the Purchase Price of the Mortgage Loan,
including any expenses arising out of the enforcement of the purchase
obligation;
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(ix) to pay, or to reimburse the Servicer for advances in respect of,
expenses incurred in connection with any Mortgage Loan pursuant to Section
3.16(b); and
(x) to clear and terminate the Collection Account pursuant to Section
10.01.
In addition to the foregoing, the Trustee shall be entitled to withdraw
amounts from the Distribution Account and to transfer funds to the Expense
Account on the Business Day immediately preceding each Distribution Date
pursuant to Section 3.25(b) prior to any payments as required pursuant to
Section 4.01. The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (v), (vi), (viii) and (ix) above. The
Servicer shall provide written notification to the Trustee, on or prior to the
next succeeding Servicer Remittance Date, upon making any withdrawals from the
Collection Account pursuant to subclauses (vi) and (vii) above.
SECTION 3.12. Investment of Funds in the Investment Accounts.
(a) The Servicer may direct any depository institution maintaining the
Collection Account, the Expense Account and the Distribution Account, (each, for
purposes of this Section 3.12, an "Investment Account"), to invest the funds in
such Investment Account in one or more Permitted Investments bearing interest or
sold at a discount, and maturing, unless payable on demand, (i) no later than
the Business Day immediately preceding the date on which such funds are required
to be withdrawn from such account pursuant to this Agreement, if a Person other
than the Trustee is the obligor thereon, and (ii) no later than the date on
which such funds are required to be withdrawn from such account pursuant to this
Agreement, if the Trustee is the obligor thereon. All such Permitted Investments
shall be held to maturity, unless payable on demand. Any investment of funds in
an Investment Account shall be made in the name of the Trustee (in its capacity
as such) or in the name of a nominee of the Trustee. The Trustee shall be
entitled to sole possession over each such investment and the income thereon,
and any certificate or other instrument evidencing any such investment shall be
delivered directly to the Trustee or its agent, together with any document of
transfer necessary to transfer title to such investment to the Trustee or its
nominee. In the event amounts on deposit in an Investment Account are at any
time invested in a Permitted Investment payable on demand, the Trustee shall at
the direction of the Servicer:
(x) consistent with any notice required to be given thereunder, demand
that payment thereon be made on the last day such Permitted Investment may
otherwise mature hereunder in an amount equal to the lesser of
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(1) all amounts then payable thereunder and (2) the amount required to be
withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly upon
determination by a Responsible Officer of the Trustee that such Permitted
Investment would not constitute a Permitted Investment in respect of funds
thereafter on deposit in the Investment Account.
(b) All income and gain realized from the investment of funds deposited in
the Collection Account, the Expense Account and the Distribution Account held by
or on behalf of the Servicer or the Trustee, shall be for the benefit of the
Servicer and shall be subject to its withdrawal in accordance with Section 3.11.
The Servicer shall deposit in the Collection Account, the Expense Account or the
Distribution Account, as applicable, the amount of any loss incurred in respect
of any such Permitted Investment made with funds in such accounts immediately
upon realization of such loss.
(c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee may and, subject to Section 8.01 and Section 8.02(a)(v),
upon the request of the Certificate Insurer, take such action as may be
appropriate to enforce such payment or performance, including the institution
and prosecution of appropriate proceedings.
SECTION 3.13. [intentionally omitted]
SECTION 3.14. Maintenance of Hazard Insurance and Errors and Omissions and
Fidelity Coverage.
(a) The Servicer shall cause to be maintained for each Mortgaged Property
fire and hazard insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the lesser of the current
principal balance of such Mortgage Loan and the amount necessary to fully
compensate for any damage or loss to the improvements which are a part of such
property on a replacement cost basis, in each case in an amount not less than
such amount as is necessary to avoid the application of any coinsurance clause
contained in the related hazard insurance policy. The Servicer shall also cause
to be maintained fire and hazard insurance with extended coverage on each REO
Property in an amount which is at least equal to the lesser of (i) the maximum
insurable value of the improvements which are a part of such property and (ii)
the outstanding principal balance of the related Mortgage Loan at the time it
became an REO Property, plus accrued interest at the Mortgage Rate and related
Servicing Advances. The Servicer will comply in the performance of this
Agreement with all reasonable rules and requirements of each insurer under any
such hazard policies. Any amounts to be collected by the Servicer
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under any such policies (other than amounts to be applied to the restoration or
repair of the property subject to the related Mortgage or amounts to be released
to the Mortgagor in accordance with the procedures that the Servicer would
follow in servicing loans held for its own account, subject to the terms and
conditions of the related Mortgage and Mortgage Note) shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 3.11, if received
in respect of a Mortgage Loan, or in the REO Account, subject to withdrawal
pursuant to Section 3.23, if received in respect of an REO Property. Any cost
incurred by the Servicer in maintaining any such insurance shall not, for the
purpose of calculating distributions to Certificateholders and the Certificate
Insurer, be added to the unpaid principal balance of the related Mortgage Loan,
notwithstanding that the terms of such Mortgage Loan so permit. It is understood
and agreed that no earthquake or other additional insurance is to be required of
any Mortgagor other than pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance. If
the Mortgaged Property or REO Property is at any time in an area identified in
the Federal Register by the Federal Emergency Management Agency as having
special flood hazards, the Servicer will cause to be maintained a flood
insurance policy in respect thereof. Such flood insurance shall be in an amount
equal to the lesser of (i) the unpaid principal balance of the related Mortgage
Loan and (ii) the maximum amount of such insurance available for the related
Mortgaged Property under the national flood insurance program (assuming that the
area in which such Mortgaged Property is located is participating in such
program).
In the event that the Servicer shall obtain and maintain a blanket policy
with an insurer having a General Policy Rating of A:X or better in Best's Key
Rating Guide insuring against hazard losses on all of the Mortgage Loans, it
shall conclusively be deemed to have satisfied its obligations as set forth in
the first two sentences of this Section 3.14, it being understood and agreed
that such policy may contain a deductible clause, in which case the Servicer
shall, in the event that there shall not have been maintained on the related
Mortgaged Property or REO Property a policy complying with the first two
sentences of this Section 3.14, and there shall have been one or more losses
which would have been covered by such policy, deposit to the Collection Account
from its own funds the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Servicer agrees to prepare
and present, on behalf of itself, the Trustee, Certificateholders and the
Certificate Insurer, claims under any such blanket policy in a timely fashion in
accordance with the terms of such policy.
(b) The Servicer shall keep in force during the term of this Agreement a
policy or policies of insurance covering errors and omissions for failure in the
performance of the Servicer's obligations under this Agreement, which policy or
policies shall be in such form and amount that would meet the requirements of
FNMA or FHLMC if it were the purchaser of the Mortgage Loans. The Servicer shall
also maintain a fidelity bond in the form and amount that would meet the
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requirements of FNMA or FHLMC, unless the Servicer has obtained a waiver of such
requirements from FNMA or FHLMC. The Servicer shall be deemed to have complied
with this provision if an Affiliate of the Servicer has such errors and
omissions and fidelity bond coverage and, by the terms of such insurance policy
or fidelity bond, the coverage afforded thereunder extends to the Servicer. Any
such errors and omissions policy and fidelity bond shall by its terms not be
cancelable without thirty days' prior written notice to the Trustee. The
Servicer shall also cause each Sub-Servicer to maintain a policy of insurance
covering errors and omissions and a fidelity bond which would meet such
requirements.
SECTION 3.15. Enforcement of Due-On-Sale Clauses, Assumption Agreements.
The Servicer will, to the extent it has knowledge of any conveyance or
prospective conveyance of any Mortgaged Property by any Mortgagor (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under the
"due-on-sale" clause, if any, applicable thereto; provided, however, that the
Servicer shall not exercise any such rights if prohibited by law from doing so.
If the Servicer reasonably believes it is unable under applicable law to enforce
such "due-on-sale" clause, or if any of the other conditions set forth in the
proviso to the preceding sentence apply, the Servicer will enter into an
assumption and modification agreement from or with the person to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon. The Servicer is also
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
person is substituted as the Mortgagor and becomes liable under the Mortgage
Note, provided that no such substitution shall be effective unless such person
satisfies the underwriting criteria of the Servicer and has a credit risk rating
at least equal to that of the original Mortgagor. In connection with any
assumption or substitution, the Servicer shall apply such underwriting standards
and follow such practices and procedures as shall be normal and usual in its
general mortgage servicing activities and as it applies to other mortgage loans
owned solely by it. The Servicer shall not take or enter into any assumption and
modification agreement, however, unless (to the extent practicable in the
circumstances) it shall have received confirmation, in writing, of the continued
effectiveness of any applicable hazard insurance policy. Any fee collected by
the Servicer in respect of an assumption or substitution of liability agreement
will be retained by the Servicer as additional servicing compensation. In
connection with any such assumption, no material term of the Mortgage Note
(including but not limited to the related Mortgage Rate and the amount of the
Monthly Payment) may be amended or modified, except as otherwise required
pursuant to the terms thereof. The Servicer shall notify the Trustee that any
such substitution or assumption agreement has been completed by forwarding to
the Trustee the executed
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original of such substitution or assumption agreement, which document shall be
added to the related Mortgage File and shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatever. For purposes of this Section 3.15, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.
SECTION 3.16. Realization Upon Defaulted Mortgage Loans.
(a) The Servicer shall use its best efforts, consistent with the servicing
standard set forth in Section 3.01, to foreclose upon or otherwise comparably
convert the ownership of properties securing such of the Mortgage Loans as come
into and continue in default and as to which no satisfactory arrangements can be
made for collection of delinquent payments pursuant to Section 3.07. The
Servicer shall be responsible for all costs and expenses incurred by it in any
such proceedings; provided, however, that such costs and expenses will be
recoverable as Servicing Advances by the Servicer as contemplated in Section
3.11 and 3.23. The foregoing is subject to the provision that, in any case in
which Mortgaged Property shall have suffered damage from an Uninsured Cause, the
Servicer shall not be required to expend its own funds toward the restoration of
such property unless it shall determine in its discretion that such restoration
will increase the proceeds of liquidation of the related Mortgage Loan after
reimbursement to itself for such expenses.
(b) Notwithstanding the foregoing provisions of this Section 3.16 or any
other provision of this Agreement, with respect to any Mortgage Loan as to which
the Servicer has received actual notice of, or has actual knowledge of, the
presence of any toxic or hazardous substance on the related Mortgaged Property,
the Servicer shall not, on behalf of the Trustee, either (i) obtain title to
such Mortgaged Property as a result of or in lieu of foreclosure or otherwise,
or (ii) otherwise acquire possession of, or take any other action with respect
to, such Mortgaged Property, if, as a result of any such action, the Trustee,
the Certificateholders or the Certificate Insurer would be considered to hold
title to, to be a "mortgagee-in-possession" of, or to be an "owner" or
"operator" of such Mortgaged Property within the meaning of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended from
time to time, or any comparable law, unless the Servicer has also previously
determined, based on its reasonable judgment and a prudent report prepared by a
Person who regularly conducts environmental audits using customary industry
standards, that:
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(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Trust Fund to take such actions as are necessary to bring
the Mortgaged Property into compliance therewith; and
(2) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous substances,
hazardous materials, hazardous wastes or petroleum-based materials for
which investigation, testing, monitoring, containment, clean-up or
remediation could be required under any federal, state or local law or
regulation, or that if any such materials are present for which such action
could be required, that it would be in the best economic interest of the
Trust Fund to take such actions with respect to the affected Mortgaged
Property.
The cost of the environmental audit report contemplated by this Section
3.16 shall be advanced by the Servicer, subject to the Servicer's right to be
reimbursed therefor from the Collection Account as provided in Section 3.11(ix),
such right of reimbursement being prior to the rights of Certificateholders to
receive any amount in the Collection Account received in respect of the affected
Mortgage Loan or other Mortgage Loans.
If the Servicer determines, as described above, that it is in the best
economic interest of the Trust Fund to take such actions as are necessary to
bring any such Mortgaged Property into compliance with applicable environmental
laws, or to take such action with respect to the containment, clean-up or
remediation of hazardous substances, hazardous materials, hazardous wastes, or
petroleum-based materials affecting any such Mortgaged Property, then the
Servicer shall take such action as it deems to be in the best economic interest
of such Trust Fund. The cost of any such compliance, containment, cleanup or
remediation shall be advanced by the Servicer, subject to the Servicer's right
to be reimbursed therefor from the Collection Account as provided in Section
3.11 (ix), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans.
(c) The Servicer may at its option purchase from the Trust Fund any
Mortgage Loan that is 90 days or more delinquent, which the Servicer determines
in good faith will otherwise become subject to foreclosure proceedings (evidence
of such determination to be delivered in writing to the Trustee and the
Certificate Insurer prior to purchase), at a price equal to the Purchase Price.
The Purchase Price for any Mortgage Loan purchased hereunder shall be deposited
in the Collection Account, and the Trustee, upon receipt of written
certification from the Servicer of such deposit, shall release or cause to be
released to the Servicer the related Mortgage File and shall execute and deliver
such instruments of transfer or assignment, in each case
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without recourse, as the Servicer shall furnish and as shall be necessary to
vest in the Servicer title to any Mortgage Loan released pursuant hereto.
(d) Proceeds received in connection with any Final Recovery Determination,
as well as any recovery resulting from a partial collection of Insurance
Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan, will be
applied in the following order of priority: first, to reimburse the Servicer or
any Sub-Servicer for any related unreimbursed Servicing Advances and Monthly
Advances, pursuant to Section 3.11(ii) or (iii); second, to accrued and unpaid
interest on the Mortgage Loan, to the date of the Final Recovery Determination,
or to the Due Date prior to the Distribution Date on which such amounts are to
be distributed if not in connection with a Final Recovery Determination; and
third, as a recovery of principal of the Mortgage Loan. If the amount of the
recovery allocated to interest is less than the full amount of accrued and
unpaid interest due on such Mortgage Loan, the amount of such recovery will be
allocated by the Servicer as follows: first, to unpaid Servicing Fees; and
second, to the balance of the interest then due and owing. The portion of the
recovery so allocated to unpaid Servicing Fees shall be reimbursed to the
Servicer or any Sub-Servicer pursuant to Section 3.11(iii). The portion of the
recovery allocated to interest (net of unpaid Servicing Fees) and the portion of
the recovery allocated to principal of the Mortgage Loan shall be applied as
follows: first, to reimburse the Servicer for any related unreimbursed Monthly
Advances in accordance with Section 3.11 (ii), and second, as part of the
amounts to be transferred to the Distribution Account in accordance with Section
3.10(b).
SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full shall be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Trustee
and the Certificate Insurer by a certification in the form of Exhibit E-2 (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the Collection Account pursuant to Section 3.10 have been or will
be so deposited) of a Servicing Officer and shall request delivery to it of the
Mortgage File. Upon receipt of such certification and request, the Trustee shall
promptly release the related Mortgage File to the Servicer. No expenses incurred
in connection with any instrument of satisfaction or deed of reconveyance shall
be chargeable to the Collection Account or the Distribution Account.
Subject to the following sentence from time to time and as appropriate for
the servicing or foreclosure of any Mortgage Loan, including, for this purpose,
collection under any insurance policy relating to the Mortgage Loans, the
Trustee shall, upon request of the Servicer and delivery to the Trustee of a
Request for Release in the form of Exhibit E-1, release the related Mortgage
File to the Servicer, and the Trustee shall, at the direction of the Servicer,
execute such documents as shall
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be necessary to the prosecution of any such proceedings. Such Request for
Release shall obligate the Servicer to return each and every document previously
requested from the Mortgage File to the Trustee when the need therefor by the
Servicer no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds no longer exist, unless the Mortgage Loan has been
liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the Collection Account or the Mortgage File or such document has
been delivered to an attorney, or to a public trustee or other public official
as required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
nonjudicially, and the Servicer has delivered to the Trustee a certificate of a
Servicing Officer certifying as to the name and address of the Person to which
such Mortgage File or such document was delivered and the purpose or purposes of
such delivery. Upon receipt of a certificate of a Servicing Officer stating that
such Mortgage Loan was liquidated and that all amounts received or to be
received in connection with such liquidation that are required to be deposited
into the Collection Account have been so deposited, or that such Mortgage Loan
has become an REO Property, a copy of the Request for Release shall be released
by the Trustee to the Servicer.
Upon written certification of a Servicing Officer, the Trustee shall
execute and deliver to the Servicer, with copies to the Certificate Insurer to
be delivered by the Servicer, any court pleadings, requests for trustee's sale
or other documents necessary to the foreclosure or trustee's sale in respect of
a Mortgaged Property or to any legal action brought to obtain judgment against
any Mortgagor on the Mortgage Note or Mortgage or to obtain a deficiency
judgment, or to enforce any other remedies or rights provided by the Mortgage
Note or Mortgage or otherwise available at law or in equity. Each such
certification shall include a request that such pleadings or documents be
executed by the Trustee and a statement as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate or otherwise affect the lien of the Mortgage, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale.
SECTION 3.18. Servicing Compensation.
As compensation for the activities of the Servicer hereunder, the Servicer
shall be entitled to the Servicing Fee with respect to each Mortgage Loan
payable solely from payments of interest in respect of such Mortgage Loan,
subject to Section 3.24. In addition, the Servicer shall be entitled to recover
unpaid Servicing Fees out of Insurance Proceeds or Liquidation Proceeds to the
extent permitted by Section 3.11(iii) and out of amounts derived from the
operation and sale of an REO Property to the extent permitted by Section 3.23.
The right to receive the Servicing Fee may not be transferred in whole or in
part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement; provided, however, that
the Servicer may pay any fee to a Sub-Servicer out of the Servicing Fee.
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Additional servicing compensation in the form of late payment charges or
otherwise shall be retained by the Servicer (subject to Section 3.24) only to
the extent such fees or charges are received by the Servicer. The Servicer shall
also be entitled pursuant to Section 3.11(iv) to withdraw from the Collection
Account, pursuant to Section 3.25 to withdraw from the Expense Account, and
pursuant to Section 3.23(b) to withdraw from any REO Account, as additional
servicing compensation, interest or other income earned on deposits therein,
subject to Section 3.12 and Section 3.24. The Servicer shall be required to pay
all expenses incurred by it in connection with its servicing activities
hereunder (including premiums for the insurance required by Section 3.14, to the
extent such premiums are not paid by the related Mortgagors or by a
Sub-Servicer, servicing compensation of each Sub-Servicer, and to the extent
provided herein in Section 8.05, the fees and expenses of the Trustee) and shall
not be entitled to reimbursement therefor except as specifically provided
herein.
SECTION 3.19. Reports to the Trustee; Collection Account Statements.
Not later than fifteen days after each Distribution Date, the Servicer
shall forward to the Trustee, the Certificate Insurer and the Depositor a
statement prepared by the Servicer setting forth the status of the Collection
Account as of the close of business on such Distribution Date and showing, for
the period covered by such statement, the aggregate amount of deposits into and
withdrawals from the Collection Account of each category of deposit specified in
Section 3.10(a) and each category of withdrawal specified in Section 3.11. Such
statement may be in the form of the then current FNMA Monthly Accounting Report
for its Guaranteed Mortgage Pass-Through Program with appropriate additions and
changes, and shall also include information as to the aggregate of the
outstanding principal balances of all of the Mortgage Loans as of the last day
of the calendar month immediately preceding such Distribution Date. Copies of
such statement shall be provided by the Trustee to any Certificateholder and to
any Person identified to the Trustee as a prospective transferee of a
Certificate, upon request at the expense of the requesting party, provided such
statement is delivered by the Servicer to the Trustee.
SECTION 3.20. Statement as to Compliance.
The Servicer will deliver to the Trustee, the Certificate Insurer and the
Depositor not later than 90 days following the end of the fiscal year of the
Servicer, which as of the Closing Date ends on the last day in December, an
Officers' Certificate stating, as to each signatory thereof, that (i) a review
of the activities of the Servicer during the preceding year and of performance
under this Agreement has been made under such officers' supervision and (ii) to
the best of such officers' knowledge, based on such review, the Servicer has
fulfilled all of its obligations under this Agreement throughout such year, or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer
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and the nature and status thereof. Copies of any such report shall be provided
by the Trustee to any Certificateholder and to any Person identified to the
Trustee as a prospective transferee of a Certificate, upon request at the
expense of the requesting party, provided such report is delivered by the
Servicer to the Trustee.
SECTION 3.21. Independent Public Accountants' Servicing Report.
Not later than 90 days following the end of each fiscal year of the
Servicer, the Servicer, at its expense, shall cause a nationally recognized firm
of independent certified public accountants to furnish to the Servicer a report
stating that (i) it has obtained a letter of representation regarding certain
matters from the management of the Servicer which includes an assertion that the
Servicer has complied with certain minimum residential mortgage loan servicing
standards, identified in the Uniform Single Audit Program for Mortgage Bankers
established by the Mortgage Bankers Association of America, with respect to the
servicing of residential mortgage loans during the most recently completed
fiscal year and (ii) on the basis of an examination conducted by such firm in
accordance with standards established by the American Institute of Certified
Public Accountants, such representation is fairly stated in all material
respects, subject to such exceptions and other qualifications that may be
appropriate. In rendering its report such firm may rely, as to matters relating
to the direct servicing of residential mortgage loans by Sub-Servicers, upon
comparable reports of firms of independent certified public accountants rendered
on the basis of examinations conducted in accordance with the same standards
(rendered within one year of such report) with respect to those Sub-Servicers.
Immediately upon receipt of such report, the Servicer shall furnish a copy of
such report to the Trustee, the Certificate Insurer and each Rating Agency.
Copies of such report shall be provided by the Trustee to any Certificateholder
upon request at the Servicer's expense, provided that such report is delivered
by the Servicer to the Trustee and such report does not prohibit such delivery.
SECTION 3.22. Access to Certain Documentation.
The Servicer shall provide to the Office of Thrift Supervision, the FDIC,
and any other federal or state banking or insurance regulatory authority that
may exercise authority over any Certificateholder, access to the documentation
regarding the Mortgage Loans required by applicable laws and regulations. Such
access shall be afforded without charge, but only upon reasonable request and
during normal business hours at the offices of the Servicer designated by it. In
addition, access to the documentation regarding the Mortgage Loans will be
provided to any Certificateholder, the Certificate Insurer, the Trustee and to
any Person identified to the Servicer as a prospective transferee of a
Certificate, upon reasonable request during normal business hours at the offices
of the Servicer designated by it at the expense of the Person requesting such
access.
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SECTION 3.23. Title, Management and Disposition of REO Property.
(a) The deed or certificate of sale of any REO Property shall be taken in
the name of the Trustee, or its nominee, on behalf of the Certificateholders and
the Certificate Insurer. The Servicer, on behalf of the Trust Fund, shall either
sell any REO Property within two years after the Trust Fund acquires ownership
of such REO Property for purposes of Section 860(a)(8) of the Code or request
from the Internal Revenue Service, more than 60 days before the day on which the
two-year grace period would otherwise expire an extension of the two-year grace
period, unless the Servicer had delivered to the Trustee an Opinion of Counsel,
addressed to the Trustee, the Depositor and the Certificate Insurer, to the
effect that the holding by the Trust Fund of such REO Property subsequent to two
years after its acquisition will not result in the imposition on the REMIC Trust
of taxes on "prohibited transactions" thereof, as defined in Section 860F of the
Code, or cause the REMIC Trust to fail to qualify as a REMIC under Federal law
at any time that any Certificates are outstanding. The Servicer shall manage,
conserve, protect and operate each REO Property for the Certificateholders
solely for the purpose of its prompt disposition and sale in a manner which does
not cause such REO Property to fail to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code or result in the receipt by the
REMIC Trust of any "income from non-permitted assets" within the meaning of
Section 860F(a)(2)(B) of the Code, or any "net income from foreclosure property"
which is subject to taxation under the REMIC Provisions.
(b) The Servicer shall segregate and hold all funds collected and received
in connection with the operation of any REO Property separate and apart from its
own funds and general assets and shall establish and maintain with respect to
REO Properties an account held in trust for the Trustee for the benefit of the
Certificateholders and the Certificate Insurer (the "REO Account"), which shall
be an Eligible Account. The Servicer shall be permitted to allow the Collection
Account to serve as the REO Account, subject to separate ledgers for each REO
Property. The Servicer shall be entitled to retain or withdraw any interest
income paid on funds deposited in the REO Account.
(c) The Servicer shall have full power and authority, subject only to the
specific requirements and prohibitions of this Agreement, to do any and all
things in connection with any REO Property as are consistent with the manner in
which the Servicer manages and operates similar property owned by the Servicer
or any of its Affiliates, on such terms and for such period as the Servicer
deems to be in the best interests of Certificateholders. In connection
therewith, the Servicer shall deposit, or cause to be deposited, on a daily
basis in the REO Account all revenues received by it with respect to an REO
Property and shall withdraw therefrom funds necessary for the proper operation,
management and maintenance of such REO Property including, without limitation:
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(i) all insurance premiums due and payable in respect of such REO
Property;
(ii) all real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien thereon; and
(iii) all costs and expenses necessary to maintain such REO Property.
To the extent that amounts on deposit in the REO Account with respect to an REO
Property are insufficient for the purposes set forth in clauses (i) through
(iii) above with respect to such REO Property, the Servicer shall advance from
its own funds such amount as is necessary for such purposes if, but only if, the
Servicer would make such advances if the Servicer owned the REO Property and if
in the Servicer's judgment, the payment of such amounts will be recoverable from
the rental or sale of the REO Property.
Notwithstanding the foregoing, the Servicer shall not:
(i) permit the Trust Fund to enter into, renew or extend any New Lease
with respect to any REO Property, if the New Lease by its terms will give
rise to any income that does not constitute Rents from Real Property;
(ii) permit any amount to be received or accrued under any New Lease
other than amounts that will constitute Rents from Real Property;
(iii) authorize or permit any construction on any REO Property, other
than the completion of a building or other improvement thereon, and then
only if more than ten percent of the construction of such building or other
improvement was completed before default on the related Mortgage Loan
became imminent, all within the meaning of Section 856(e)(4)(B) of the
Code; or
(iv) allow any Person to Directly Operate any REO Property on any date
more than 90 days after its date of acquisition by the Trust Fund;
unless, in any such case, the Servicer has obtained an Opinion of Counsel,
provided to the Trustee and the Certificate Insurer, to the effect that such
action will not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code at any time that
it is held by the Trust Fund, in which case the Servicer may take such actions
as are specified in such Opinion of Counsel.
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The Servicer may contract with any Independent Contractor for the operation
and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall not be
inconsistent herewith;
(ii) any such contract shall require, or shall be administered to
require, that the Independent Contractor pay all costs and expenses
incurred in connection with the operation and management of such REO
Property, including those listed above and remit all related revenues (net
of such costs and expenses) to the Servicer soon as practicable, but in no
event later than thirty days following the receipt thereof by such
Independent Contractor;
(iii) none of the provisions of this Section 3.23(c) relating to any
such contract or to actions taken through any such Independent Contractor
shall be deemed to relieve the Servicer of any of its duties and
obligations to the Trustee on behalf of the Certificateholders and the
Certificate Insurer with respect to the operation and management of any
such REO Property; and
(iv) the Servicer shall be obligated with respect thereto to the same
extent as if it alone were performing all duties and obligations in
connection with the operation and management of such REO Property.
The Servicer shall be entitled to enter into any agreement with any Independent
Contractor performing services for it related to its duties and obligations
hereunder for indemnification of the Servicer by such Independent Contractor,
and nothing in this Agreement shall be deemed to limit or modify such
indemnification. The Servicer shall be solely liable for all fees owed by it to
any such Independent Contractor, irrespective of whether the Servicer's
compensation pursuant to Section 3.18 is sufficient to pay such fees, subject to
the Servicer's rights under Section 3.23(c)(iii).
(d) In addition to the withdrawals permitted under Section 3.23(c), the
Servicer may from time to time make withdrawals from the REO Account for any REO
Property: (i) to pay itself or any Sub-Servicer unpaid Servicing Fees in respect
of the related Mortgage Loan; and (ii) to reimburse itself or any Sub-Servicer
for unreimbursed Servicing Advances and Monthly Advances made in respect of such
REO Property or the related Mortgage Loan. On the Servicer Remittance Date, the
Servicer shall withdraw from each REO Account maintained by it and deposit into
the Distribution Account in accordance with Section 3.10(d)(ii), for
distribution on the related Distribution Date in accordance with Section 4.01,
the income from the related
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REO Property received during the prior calendar month, net of any withdrawals
made pursuant to Section 3.23(c) or this Section 3.23(d).
(e) Subject to the time constraints set forth in Section 3.23(a), each REO
Disposition shall be carried out by the Servicer at such price and upon such
terms and conditions as the Servicer shall deem necessary or advisable, as shall
be normal and usual in its general servicing activities and as are in accordance
with general FNMA guidelines.
(f) The proceeds from the REO Disposition, net of any amount required by
law to be remitted to the Mortgagor under the related Mortgage Loan and net of
any payment or reimbursement to the Servicer or any Sub-Servicer as provided
above, shall be deposited in the Distribution Account in accordance with Section
3.10(d)(ii) on the Servicer Remittance Date in the month following the receipt
thereof for distribution on the related Distribution Date in accordance with
Section 4.01. Any REO Disposition shall be for cash only (unless changes in the
REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration).
(g) The Servicer shall file information returns with respect to the receipt
of mortgage interest received in a trade or business, reports of foreclosures
and abandonments of any Mortgaged Property and cancellation of indebtedness
income with respect to any Mortgaged Property as required by Sections 6050H,
6050J and 6050P of the Code, respectively. Such reports shall be in form and
substance sufficient meet the reporting requirements imposed by such Sections
6050H, 6050J and 6050P of the Code.
SECTION 3.24. Obligations of the Servicer in Respect of Prepayment Interest
Shortfalls.
The Servicer shall deliver to the Trustee for deposit into the Distribution
Account on or before 3:00 p.m. New York time on the Servicer Remittance Date
from its own funds an amount equal to the lesser of (i) the aggregate of the
Prepayment Interest Shortfalls for the related Distribution Date resulting
solely from Principal Prepayments during the related Collection Period and (ii)
the total amount of its Servicing Fee for the most recently ended calendar
month.
SECTION 3.25. Expense Account.
(a) The Trustee shall establish and maintain in its name, for the benefit
of the Trustee in trust for (1) the Certificateholders and (2) the Certificate
Insurer, the Expense Account. The Expense Account shall be an Eligible Account,
and funds on deposit therein shall be held separate and apart from, and shall
not be commingled with, any other moneys, including, without limitation, other
moneys of the Trustee held pursuant to this Agreement.
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(b) On the Business Day immediately preceding each Distribution Date, the
Trustee shall withdraw from the Distribution Account and deposit into the
Expense Account an amount equal to the product of (i) l/12 of the Certificate
Insurer Premium Rate and (ii) the Class A Certificate Principal Balance after
giving effect to distributions of principal on such Distribution Date.
(c) The Trustee shall make withdrawals from the Expense Account to pay the
Certificate Insurer Premium on each Distribution Date.
(d) Funds in the Expense Account may be invested in Permitted Investments
in accordance with the provisions set forth in Section 3.12. Any earnings on
such amounts shall be payable to the Servicer as additional servicing
compensation, and the Servicer shall deposit in the Expense Account the amount
of any loss incurred in respect of any such Permitted Investments made with
funds in the Expense Account immediately upon the realization of such loss. The
Trustee shall give notice to the Depositor and the Certificate Insurer of the
location of the Expense Account on the Closing Date and prior to any change
thereof.
(e) Upon termination of the Trust Fund in accordance with Section 10.01,
any amounts remaining in the Expense Account following the payment of all unpaid
Certificate Insurer Premiums shall be released to the Servicer as additional
servicing compensation.
SECTION 3.26. Obligations of the Servicer in Respect of Monthly Payments.
In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments to
Monthly Payments or Stated Principal Balances that were made by the Servicer in
a manner not consistent with the terms of the related Mortgage Note and this
Agreement, the Servicer, upon discovery or receipt of notice thereof,
immediately shall deliver to the Trustee for deposit in the Distribution Account
from its own funds the amount of any such shortfall and shall indemnify and hold
harmless the Trust Fund, the Trustee, the Certificate Insurer, the Depositor and
any successor servicer in respect of any such liability. Such indemnities shall
survive the termination or discharge of this Agreement.
SECTION 3.27. Interest Coverage Account; Redemption Account.
(a) On behalf of the Trust Fund, the Trustee shall establish and maintain
an account (the "Interest Coverage Account") into which cash will be deposited
by the Seller in the amount of $85,994.72 on the Closing Date. On the initial
Distribution Date, the Trustee shall deposit $85,994.72 (the amount of interest
accruing at the weighted average Pass-Through Rate of all Class A Certificates
on the amount by which the aggregate Class A Certificate Principal Balance as of
the
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Closing Date exceeds the aggregate Stated Principal Balance of the Initial
Mortgage Loans as of the Cut-off Date) from the Interest Coverage Account into
the Distribution Account. The Trustee shall invest amounts on deposit in the
Interest Coverage Account in Eligible Investments. The Trustee shall pay any
amounts remaining in the Interest Coverage Account after the initial
Distribution Date to the Seller. The Trustee shall terminate the Interest
Coverage Account immediately following the first Distribution Date.
The Interest Coverage Account will not be an asset of the REMIC.
(b) On the Closing Date, $0 will be deposited by the Seller in an account
which will be in the name of, and maintained by, the Trustee on behalf of the
Trust Fund (the "Redemption Account"). On the initial Distribution Date, the
Trustee will transfer the amount (other than the reinvestment income described
below) on deposit in the Redemption Account into the Distribution Account. The
Trustee shall invest amounts on deposit in the Redemption Account in Eligible
Investments. The Trustee shall pay any reinvestment income earned on amounts on
deposit in the Redemption Account to the Seller. The Trustee shall terminate the
Redemption Account immediately after the first Distribution Date and such
account will not be an asset of the REMIC.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.
(a) On each Distribution Date, the Trustee shall, based solely on
information contained in the Remittance Report for such Distribution Date,
withdraw from the Distribution Account an amount equal to the Available
Distribution Amount and distribute to the following parties the following
amounts, in the following order of priority:
(i) concurrently: (x) the Holders of the Class A-1 Certificates an
amount equal to (A) the Class A-1 Interest Distribution Amount for such
Distribution Date, plus (B) any undistributed amount described in the
immediately preceding clause (A) from any previous Distribution Date for
which no Insurance Payment has been previously paid to Holders of the Class
A-1 Certificates;
(y) the Holders of the Class A-2 Certificates an amount equal to
(A) the Class A-2 Interest Distribution Amount for such Distribution
Date, plus (B) any undistributed amount
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described in the immediately preceding clause (A) from any previous
Distribution Date for which no Insurance Payment has been previously
paid to Holders of the Class A-2 Certificates;
(z) the Holders of the Class A-3 Certificates an amount equal to
(A) the Class A-3 Interest Distribution Amount for such Distribution
Date, plus (B) any undistributed amount described in the immediately
preceding clause (A) from any previous Distribution Date for which no
Insurance Payment has been previously paid to Holders of the Class A-3
Certificates;
(ii) to the Holders of the Class of Class A Certificates then entitled
to receive payment of principal, as provided in paragraph (b) below, a
distribution of principal in an amount equal to the Principal Distribution
Amount (except for any portion thereof consisting of any related
Subordination Increase Amount);
(iii) to the Certificate Insurer, to reimburse the Certificate Insurer
for claims under the Policy, to the extent of Cumulative Insurance
Payments;
(iv) to the Holders of the Class of Class A Certificates then entitled
to receive payment of principal, as provided in paragraph (b) below, a
distribution of principal in an amount equal to the portion of the
Principal Distribution Amount consisting of any Subordination Increase
Amount;
(v) to the Certificate Insurer, any amounts remaining due to the
Certificate Insurer under the terms of the Insurance Agreement; and
(vi) to the Holders of the Class A Certificates, payable from the
remaining Net Monthly Excess Cashflow, an amount equal to any Relief Act
Interest Shortfalls that were allocated to such holders and therefore not
distributed pursuant to clause (i) above or this clause (vi) for all prior
Distribution Dates;
(vii) to the Holders of the Class R Certificates, the balance, if any,
of the amount in the Distribution Account for such Distribution Date;
provided, however, that if a Certificate Insurer Default shall have
occurred and be continuing, the distributions with respect to clause (ii)
above shall be made pro-rata to the Class A-1 Certificateholders, the
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Class A-2 Certificateholders and the Class A-3 Certificateholders on such
Distribution Date.
(b) All references above to the Certificate Principal Balance of any Class
of Certificates shall be to the Certificate Principal Balance of such Class
immediately prior to the relevant Distribution Date. All principal distributed
with respect to the Class A Certificates pursuant to Sections 4.01(a)(ii),
4.01(a)(iv) and 4.01(a)(vi) shall be distributed in the following sequential-pay
order: first, to the Holders of the Class A-1 Certificates, to reduce the Class
A-1 Certificate Principal Balance to zero; second, to the Holders of the Class
A-2 Certificates, to reduce the Class A-2 Certificate Principal Balance to zero;
and third, to the Holders of the Class A-3 Certificates, to reduce the Class A-3
Principal Balance to zero. In addition to making the distributions required
pursuant to Section 4.01(a), on each Distribution Date for which there exists a
Deficiency Amount, the Trustee shall withdraw from the Distribution Account any
amount therein that was transferred from the Policy Payments Account to the
Distribution Account pursuant to Section 9.04 and distribute to the Holders of
the Class A Certificates (i) an amount equal to any amount required to be paid
to such Class pursuant to Section 4.01(a)(i) for such Distribution Date
remaining unpaid after giving effect to all distributions made pursuant to
Section 4.01(a) for such Distribution Date, (ii) an amount equal to any
Remaining Overcollateralization Deficit on such Distribution Date after giving
effect to all distributions made pursuant to Section 4.01(a) for such
Distribution Date and (iii) without duplication, any other amount constituting a
Deficiency Amount.
(c) Each Holder of a Certificate, by its acceptance of such Certificate,
hereby agrees that, in the event any distribution is made to any Holder of a
Class A Certificate from amounts paid under the Policy, (i) the Certificate
Insurer shall be subrogated in the manner herein provided to the rights of the
Holder of such Class A Certificate to receive from amounts on deposit in the
Distribution Account the distributions allocable to principal and interest that
would have been distributable to such Holder if no such distribution to such
Holder had been made from amounts paid under the Policy; and (ii) in addition to
the rights of the Class A Certificateholders that the Certificate Insurer may
exercise in accordance with the provisions of Section 9.01, the Certificate
Insurer may exercise any option, vote, right, power or the like with respect to
each Class A Certificate for which Cumulative Insurance Payments are
outstanding.
(d) All distributions made with respect to each Class of Certificates on
each Distribution Date shall be allocated pro rata among the outstanding
Certificates in such Class based on their respective Percentage Interests.
Payments in respect of each Class of Certificates on each Distribution Date will
be made to the Holders of the respective Class of record on the related Record
Date (except as otherwise provided in Section 4.01(f) or Section 10.01
respecting the final distribution on such Class), based on the aggregate
Percentage Interest represented by their respective Certificates. So long as the
Book-Entry Certificates are registered in the
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name of the Depository or its nominee, the Trustee shall make all distributions
on such Certificates by wire transfers of immediately available funds to the
Depository or its nominee. In the case of Certificates issued in
fully-registered, certificated form, distributions shall be made by wire
transfer of immediately available funds to the account of any such Holder at a
bank or other entity having appropriate facilities therefor, if such Holder
shall have so notified the Trustee in writing at least five Business Days prior
to the Record Date immediately prior to such Distribution Date and is the
registered owner of Certificates having an initial aggregate Certificate
Principal Balance that is in excess of the lesser of (i) $5,000,000 or (ii)
two-thirds of the initial Class Certificate Balance (or, in the case of the
Class R Certificates, a 66% Percentage Interest) of such Class of Certificates,
or otherwise by check mailed by first class mail to the address of such Holder
appearing in the Certificate Register. The Trustee may deduct a reasonable wire
transfer fee from any payment made by wire transfer. The final distribution on
each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the Corporate Trust Office or such other
location specified in the notice to Certificateholders of such final
distribution. Payments to the Certificate Insurer on any Distribution Date will
be made by wire transfer of immediately available funds to the account
designated by the Certificate Insurer.
Each distribution with respect to a Book-Entry Certificate shall be paid to
the Depository, as Holder thereof, and the Depository shall be responsible for
crediting the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the
Certificate Registrar, the Depositor or the Servicer shall have any
responsibility therefor except as otherwise provided by this Agreement or
applicable law.
(e) The rights of the Certificateholders to receive distributions in
respect of the Certificates, and all interests of the Certificateholders in such
distributions, shall be as set forth in this Agreement. Neither the Holders of
any Class of Certificates nor the Trustee nor the Servicer shall in any way be
responsible or liable to the Holders of any other Class of Certificates in
respect of amounts properly previously distributed on the Certificates.
(f) Except as otherwise provided in Section 10.01, whenever the Trustee
expects that the final distribution with respect to any Class of Certificates
will be made on the next Distribution Date, the Trustee shall, no later than
three (3) Business Days after the related Determination Date, mail to each
Holder on such date of such Class of Certificates and to the Certificate Insurer
a notice to the effect that:
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(i) the Trustee expects that the final distribution with respect to
such Class of Certificates will be made on such Distribution Date but only
upon presentation and surrender of such Certificates at the office of the
Trustee therein specified, and
(ii) no interest shall accrue on such Certificates from and after the
end of the related Interest Accrual Period.
Any funds not distributed to any Holder or Holder of Certificates of such Class
on such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held in trust
and credited to the account of the appropriate non-tendering Holder or Holders.
If any Certificate as to which notice has been given pursuant to this Section
4.01(f) shall not have been surrendered for cancellation within six months after
the time specified in such notice, the Trustee shall mail a second notice to the
remaining non-tendering Certificateholders to surrender their Certificates for
cancellation in order to receive the final distribution with respect thereto. If
within one year after the second notice all such Certificates shall not have
been surrendered for cancellation, the Trustee shall, directly or through an
agent, contact the remaining non-tendering Certificateholders concerning
surrender of their Certificates in the manner reasonably specified to the
Trustee by the Servicer in writing. The costs and expenses of maintaining the
funds in trust and of contacting such Certificateholders shall be paid out of
the assets so held in trust for such Certificateholders. If in one year after
the second notice any such Certificates shall not have been surrendered for
cancellation, the Servicer shall pay to the Certificate Insurer any amount of
such funds that were paid by the Certificate Insurer under the Policy but shall
continue to hold any remaining funds for the benefit of the non-tendering
Certificateholders, and such Certificateholders shall thereafter look solely to
the Servicer for payment thereof, and all liability of the Certificate Insurer
with respect to such trust funds shall thereupon cease. No interest shall accrue
or be payable to any Certificateholder on any amount held in trust by the
Servicer as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section
4.01(f).
SECTION 4.02. Statements to Certificateholders.
On each Servicer Remittance Date, the Servicer shall deliver to the Trustee
and the Certificate Insurer by telecopy (or by such other means as the Servicer
the Trustee or the Certificate Insurer, as the case may be, may agree from time
to time) a report prepared by the Servicer as to the distributions to be made on
the related Distribution Date and shall forward to the Trustee by overnight mail
a computer readable magnetic tape or diskette of such report. Both reports (each
a "Remittance Report") shall contain the following information:
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1. the amount of the distribution to be made on such Distribution Date to
the Holders of each class of Class A Certificates allocable to principal;
2. the amount of the distribution to be made on such Distribution Date to
the Holders of each class of Class A Certificates allocable to interest;
3. the aggregate amount of servicing compensation received by the Servicer
during the related Collection Period and such other customary information
within the knowledge of the Trustee as the Trustee deems necessary or
desirable, or which a Certificateholder reasonably requests, to enable
Certificateholders to prepare their tax returns;
4. the Guaranteed Distribution for such Distribution Date and the
respective provisions thereof allocable to principal and interest;
5. the Available Distribution Amount for such Distribution Date;
6. the amount, if any, by which the Guaranteed Distribution for such
Distribution Date exceeds the Available Distribution Amount expected to be
on deposit in the Distribution Account on such Distribution Date;
7. the amount of Monthly Advances to be made by the Servicer in respect of
the related Distribution Date, the aggregate amount of Monthly Advances
outstanding after giving effect to such Monthly Advances, and the aggregate
amount of Nonrecoverable Monthly Advances in respect of such Distribution
Date;
8. with respect to any reimbursement to be made to the Certificate Insurer
on such Distribution Date pursuant to Section 4.01(a)(iv), (xi) and (xvi),
the amount, if any, allocable to principal and the amount allocable to
interest;
9. Cumulative Insurance Payments after giving effect to the distributions
to be made on such Distribution Date;
10. the Delinquency Percentage for the related Collection Period;
11. the Cumulative Loss Percentage for such Distribution Date;
12. the amount of any Insurance Payment to be made to Class A
Certificateholders on such Distribution Date, the amount of any
reimbursement payment to be made to the Certificate Insurer on such
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Distribution Date pursuant to Section 4.01(a)(iii) and the amount of
Cumulative Insurance Payments after giving effect to any such Insurance
Payment to Class A Certificateholders or any such reimbursement payment to
the Certificate Insurer;
13. the aggregate Stated Principal Balance of the Mortgage Loans and any
REO Properties at the close of business on such Distribution Date;
14. the number, aggregate principal balance, weighted average remaining
term to maturity and weighted average Mortgage Rate of the Mortgage Loans
as of the related Due Date;
15. the number and aggregate unpaid principal balance of Mortgage Loans (a)
30 days past due, (b) 60 days past due, (c) 90 or more days past due and
(d) as to which foreclosure proceedings have been commenced;
16. with respect to any Mortgage Loan that became an REO Property during
the preceding calendar month, the loan number of such Mortgage Loan, the
unpaid principal balance and the Stated Principal Balance of such Mortgage
Loan as of the date it became an REO Property;
17. the book value of any REO Property as of the close of business on the
last Business Day of the calendar month preceding the Distribution Date;
18. the aggregate amount of Principal Prepayments made during the related
Collection Period;
19. the aggregate amount of Realized Losses incurred during the related
Collection Period;
20. the aggregate amount of extraordinary Trust Fund expenses withdrawn
from the Collection Account or the Distribution Account for such
Distribution Date;
21. the Class A-1 Certificate Principal Balance, Class A-2 Certificate
Principal Balance and Class A-3 Certificate Principal Balance, after giving
effect to the distributions to be made on such Distribution Date;
22. the Certificate Factor for each such Class of Certificates applicable
to such Distribution Date;
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23. the Interest Distribution Amount in respect of the Class A Certificates
for such Distribution Date and the respective portions thereof, if any,
paid under the Policy or (in the event of a Deficiency Event) remaining
unpaid following the distributions to be made in respect of such
Certificates on such Distribution Date;
24. the aggregate amount of any Prepayment Interest Shortfalls for such
Distribution Date, to the extent not covered by payments by the Servicer
pursuant to Section 3.24;
25. the aggregate amount of Relief Act Interest Shortfalls for such
Distribution Date;
26. the Required Subordinated Amount for such Distribution Date;
27. the Subordination Increase Amount, if any, for such Distribution Date;
28. the Subordination Reduction Amount, if any, for such Distribution Date;
and
29. the amount of the distribution to be made on such Distribution Date to
the Holders of the Class R Certificates.
In the case of information furnished pursuant to clauses (1) through (3)
above, the amounts shall be expressed as a dollar amount per Single Certificate
of the relevant Class.
The Trustee shall forward such Remittance Report to each Holder of the
Class A Certificates on each Distribution Date. To the extent that there are
inconsistencies between the telecopy of the Remittance Report and the hard copy
thereof and information set forth in the computer tape or other media provided
by the Servicer hereunder, the Trustee shall be entitled to rely upon the
telecopy.
Within a reasonable period of time after the end of each calendar year, the
Servicer shall furnish to the Trustee, and the Trustee shall forward to each
Person who at any time during the calendar year was a Holder of a Regular
Certificate (a) a statement containing the information set forth in clauses (1)
through (3) above, aggregated for such calendar year or applicable portion
thereof during which such person was a Certificateholder and (b) such
information contained in the Remittance Reports as required to enable the
Holders of the Regular Certificates to prepare their tax returns. Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the Code as from time to time are in force.
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On each Distribution Date, the Trustee shall forward to the Depositor, to
each Holder of a Residual Certificate, to the Certificate Insurer and to the
Servicer, a copy of the reports forwarded to the Class A Certificateholders on
such Distribution Date and, if different from the amounts stated in the
Remittance Report, a statement setting forth the amounts, if any, actually
distributed with respect to the Residual Certificates, respectively, on such
Distribution Date.
Within a reasonable period of time after the end of each calendar year, the
Servicer shall furnish to the Trustee, and the Trustee shall forward to each
Person who at any time during the calendar year was a Holder of a Residual
Certificate a statement setting forth the amount, if any, actually distributed
with respect to the Residual Certificates, as appropriate, aggregated for such
calendar year or applicable portion thereof during which such Person was a
Certificateholder.
Upon request, the Servicer shall furnish to the Trustee, and the Trustee
shall forward to each Certificateholder, during the term of this Agreement, such
periodic, special, or other reports or information, whether or not provided for
herein, as shall be reasonable with respect to the Certificateholder, or
otherwise with respect to the purposes of this Agreement, all such reports or
information to be provided at the expense of the Certificateholder in accordance
with such reasonable and explicit instructions and directions as the
Certificateholder may provide. For purposes of this Section 4.02, the Trustee's
duties are limited to the extent that the Trustee receives timely reports as
required from the Servicer.
SECTION 4.03. [Reserved]; Monthly Advances.
(a) [Reserved]
(b) The amount of Monthly Advances to be made by the Servicer for any
Distribution Date shall equal, subject to Section 4.03(d), the sum of (i) the
aggregate amount of Monthly Payments allocable to interest (with each interest
portion thereof net of the related Servicing Fee), due during the related
Collection Period in respect of the Mortgage Loans, which Monthly Payments were
delinquent as of the close of business on the related Determination Date and
(ii) with respect to each REO Property, which REO Property was acquired during
or prior to the related Collection Period and as to which REO Property an REO
Disposition did not occur during the related Collection Period, an amount equal
to the excess, if any, of the REO Imputed Interest on such REO Property for the
most recently ended calendar month, over the net income from such REO Property
transferred to the Distribution Account pursuant to Section 3.23 for
distribution on such Distribution Date. For purposes of the preceding sentence,
the Monthly Payment on each Balloon Mortgage Loan with a delinquent Balloon
Payment is equal to the assumed monthly interest payment that would have been
due on the related Due Date based on the original principal amortization
schedule for such Balloon Mortgage Loan.
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On or before 3:00 p.m. New York time on the Servicer Remittance Date, the
Servicer shall remit in immediately available funds to the Trustee for deposit
in the Distribution Account an amount equal to the aggregate amount of Monthly
Advances, if any, to be made in respect of the Mortgage Loans and REO Properties
for the related Distribution Date either (i) from its own funds or (ii) from the
Collection Account, to the extent of funds held therein for future distribution
(in which case it will cause to be made an appropriate entry in the records of
the Collection Account that amounts held for future distribution have been, as
permitted by this Section 4.03, used by the Servicer in discharge of any such
Monthly Advance) or (iii) in the form of any combination of (i) and (ii)
aggregating the total amount of Monthly Advances to be made by the Servicer with
respect to the Mortgage Loans and REO Properties. Any amounts held for future
distribution and so used shall be appropriately reflected in the Servicer's
records and replaced by the Servicer by deposit in the Collection Account on or
before any future Servicer Remittance Date to the extent that the Available
Distribution Amount for the related Distribution Date (determined without regard
to Monthly Advances to be made on the Servicer Remittance Date) shall be less
than the total amount that would be distributed to the Classes of
Certificateholders pursuant to Section 4.01 on such Distribution Date if such
amounts held for future distributions had not been so used to make Monthly
Advances. The Trustee will provide notice to the Servicer and the Certificate
Insurer by telecopy by the close of business on any Servicer Remittance Date in
the event that the amount remitted by the Servicer to the Trustee on such date
is less than the Monthly Advances required to be made by the Servicer for the
related Distribution Date.
(c) The obligation of the Servicer to make such Monthly Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan or REO Property, shall
continue until a Final Recovery Determination in connection therewith or the
removal thereof from the Trust Fund pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section.
(d) Notwithstanding anything herein to the contrary, no Monthly Advance or
Servicing Advance shall be required to be made hereunder by the Servicer if such
Monthly Advance or Servicing Advance would, if made, constitute a Nonrecoverable
Monthly Advance or Servicing Advance. The determination by the Servicer that it
has made a Nonrecoverable Monthly Advance or that any proposed Monthly Advance,
if made, would constitute a Nonrecoverable Monthly Advance, shall be evidenced
by an Officers' Certificate of the Servicer delivered to the Depositor, the
Trustee and the Certificate Insurer.
(e) If, at the close of business on the third Business Day prior to any
Distribution Date, the funds on deposit in the Distribution Account are less
than the Guaranteed Distribution for such Distribution Date, the Trustee shall
give notice by telephone or telecopy of the amount of such deficiency, confirmed
in writing in the
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form set forth as Exhibit A to the Policy, to the Certificate Insurer and the
Fiscal Agent (as defined in the Policy), if any, at or before 10:00 a.m., New
York time, on the second Business Day prior to such Distribution Date.
SECTION 4.04. Determination of Realized Losses.
(a) Prior to each Determination Date, the Servicer shall determine as to
each Mortgage Loan and REO Property, the total amount of Realized Losses, if
any, incurred in connection with any Final Recovery Determinations made during
the related Collection Period. Prior to each Determination Date, the Servicer
shall also determine as to each Mortgage Loan: (i) the total amount of Realized
Losses, if any, incurred in connection with any Deficient Valuations made during
the related Collection Period; and (ii) the total amount of Realized Losses, if
any, incurred in connection with Debt Service Reductions in respect of Monthly
Payments due during the related Collection Period. Such information shall be
evidenced by an Officers' Certificate delivered to the Trustee and the
Certificate Insurer by the Servicer prior to the Determination Date immediately
following the end of the Collection Period during which any such Realized Loss
was incurred.
SECTION 4.05. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Trustee shall
comply with all federal withholding requirements respecting payments to
Certificateholders of interest or original issue discount that the Trustee
reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee does withhold any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall indicate the amount withheld to such
Certificateholders.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
(a) The Certificates in the aggregate will represent the entire beneficial
ownership interest in the Mortgage Loans and all other assets included in the
Trust Fund. At the Closing Date, the Class A Certificate Principal Balance will
be less than the aggregate principal balance of the Mortgage Loans in the
Mortgage Pool as of the Cut-off Date.
The Certificates will be substantially in the forms annexed hereto as
Exhibits A-1 through A-4. The Certificates of each Class will be issuable in
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registered form only, in denominations of authorized Percentage Interests as
described in the definition thereof. Each Certificate will share ratably in all
rights of the related Class.
Upon original issue, the Certificates shall be executed and delivered by
the Trustee and the Trustee shall cause the Certificates to be authenticated by
the Certificate Registrar to or upon the order of the Depositor. The
Certificates shall be executed by manual or facsimile signature on behalf of the
Trustee by an authorized signatory. Certificates bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Trustee shall bind the Trustee to the authentication and delivery of such
Certificates, notwithstanding that such individuals or any of them have ceased
to hold such offices 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 provided herein
executed by the Certificate Registrar by manual signature, and such certificate
of authentication shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
(b) The Class A Certificates shall initially be issued as one or more
Certificates registered in the name of the Depository or its nominee and, except
as provided below, registration of such Certificates may not be transferred by
the Trustee except to another Depository that agrees to hold such Certificates
for the respective Certificate Owners with Ownership Interests therein. The
Certificate Owners shall hold their respective Ownership Interests in and to
such Certificates through the book-entry facilities of the Depository and,
except as provided below, shall not be entitled to definitive, fully registered
Certificates ("Definitive Certificates") in respect of such Ownership Interests.
All transfers by Certificate Owners of their respective Ownership Interests in
the Book-Entry Certificates shall be made in accordance with the procedures
established by the Depository Participant or brokerage firm representing such
Certificate Owner. Each Depository Participant shall only transfer the Ownership
Interests in the Book-Entry Certificates of Certificate Owners it represents or
of brokerage firms for which it acts as agent in accordance with the
Depository's normal procedures.
The Trustee, the Servicer, the Depositor and the Certificate Insurer may
for all purposes (including the making of payments due on the Book-Entry
Certificates) deal with the Depository as the authorized representative of the
Certificate Owners with respect to the Book-Entry Certificates for the purposes
of exercising the rights of Certificateholders hereunder. The rights of
Certificate Owners with respect to the Book-Entry Certificates shall be limited
to those established by law and agreements between such Certificate Owners and
the Depository Participants and brokerage firms representing such Certificate
Owners. Multiple requests and directions from, and votes of, the Depository as
Holder of the
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Book-Entry Certificates with respect to any particular matter shall not be
deemed inconsistent if they are made with respect to different Certificate
Owners. The Trustee may establish a reasonable record date in connection with
solicitations of consents from or voting by Certificateholders and shall give
notice to the Depository of such record date.
If (i)(A) the Depositor or the Depository advises the Trustee in writing
that the Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the Depository
or (iii) after the occurrence of a Servicer Event of Default, Certificate Owners
representing in the aggregate not less than 51% of the Ownership Interests of
the Book-Entry Certificates advise the Trustee through the Depository, in
writing, that the continuation of a book-entry system through the Depository is
no longer in the best interests of the Certificate Owners, the Trustee shall
notify all Certificate Owners, through the Depository, of the occurrence of any
such event and of the availability of Definitive Certificates to Certificate
Owners requesting the same. Upon surrender to the Trustee of the Book-Entry
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration of transfer, the Trustee shall issue the
Definitive Certificates. Such Definitive Certificates will be issued in minimum
denominations of $1,000. None of the Depositor, the Servicer or the Trustee
shall be liable for any delay in the delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates all references herein to
obligations imposed upon or to be performed by the Depository shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates, and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
SECTION 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at one of the offices or agencies to
be appointed by the Trustee in accordance with the provisions of Section 8.11 a
Certificate Register for the Certificates in which, subject to such reasonable
regulations as it may prescribe, the Trustee shall provide for the registration
of Certificates and of transfers and exchanges of Certificates as herein
provided. The Trustee will initially serve as Certificate Registrar for the
purpose of registering Certificates and transfers and exchanges of Certificates
as herein provided. The Certificate Registrar may appoint, by a written
instrument delivered to the Servicer and the Depositor, any other bank or trust
company to act as Certificate Registrar under such conditions as the predecessor
Certificate Registrar may prescribe, provided that the predecessor Certificate
Registrar shall not be relieved of any of its duties or responsibilities
hereunder by reason of such appointment. If the Trustee shall at any time not be
the Certificate Registrar, the Trustee shall have and maintain the right to
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inspect the Certificate Register or to obtain a copy thereof at all reasonable
times, and to rely conclusively upon a certificate of the Certificate Registrar
as to the information set forth in the Certificate Register.
(b) No transfer of any Residual Certificate shall be made unless that
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and effective registration
or qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of a Residual Certificate is to be made without
registration or qualification, the Trustee and the Certificate Registrar shall
each require receipt of: (i) if such transfer is purportedly being made in
reliance upon Rule 144A under the 1933 Act, written certifications from the
Certificateholder desiring to effect the transfer and from such
Certificateholder's prospective transferee, substantially in the forms attached
hereto as Exhibit F-1; and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration
under the 1933 Act (which Opinion of Counsel shall not be an expense of the
Trust Fund or of the Depositor, the Trustee or the Servicer in its capacity as
such), together with copies of the written certification(s) of the
Certificateholder desiring to effect the transfer and/or such
Certificateholder's prospective transferee upon which such Opinion of Counsel is
based, if any. None of the Depositor, the Certificate Registrar or the Trustee
is obligated to register or qualify the Residual Certificates under the 1933 Act
or any other securities laws or to take any action not otherwise required under
this Agreement to permit the transfer of such Certificates without registration
or qualification. Any Certificateholder desiring to effect the transfer of a
Residual Certificate shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Certificate Registrar, the Servicer and the Certificate Insurer
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.
(c) No transfer of a Residual Certificate or any interest therein shall be
made unless the prospective transferee of any Residual Certificate certifies
that it is not (i) an employee benefit plan or other retirement arrangement,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested, that is subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the Code (each, a "Plan") or (ii)
a Person who is directly or indirectly purchasing the Residual Certificate or
interest therein on behalf of, as named fiduciary of, as trustee of, or with
assets of a Plan.
(d) (i) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably authorized the Trustee or its designee under clause (iii)(A)
below to deliver payments to a Person other than such Person and to negotiate
the terms of
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any mandatory sale under clause (iii)(B) below and to execute all instruments of
Transfer and to do all other things necessary in connection with any such sale.
The rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:
(A) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any Ownership
Interest in a Residual Certificate, the Trustee shall require delivery
to it, and shall not register the Transfer of any Residual Certificate
until its receipt of, an affidavit agreement (a "Transfer Affidavit
and Agreement" attached hereto as Exhibit F-2) from the proposed
Transferee, in form and substance satisfactory to the Trustee,
representing and warranting, among other things, that such Transferee
is a Permitted Transferee, that it is not acquiring its Ownership
Interest in the Residual Certificate that is the subject of the
proposed Transfer as a nominee, trustee or agent for any Person that
is not a Permitted Transferee, that for so long as it retains its
Ownership Interest in a Residual Certificate, it will endeavor to
remain a Permitted Transferee, and that it has reviewed the provisions
of this Section 5.02(d) and agrees to be bound by them.
(C) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (B) above, if a
Responsible Officer of the Trustee who is assigned to this transaction
has actual knowledge that the proposed Transferee is not a Permitted
Transferee, no Transfer of an Ownership Interest in a Residual
Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall agree (x) to require a Transfer Affidavit
and Agreement (in the form attached hereto as Exhibit F-2) from any
other Person to whom such Person attempts to transfer its Ownership
Interest in a Residual Certificate and (y) not to transfer its
Ownership Interest unless it provides a Transferor Affidavit (in the
form attached hereto as Exhibit F-2) to the Trustee stating that,
among other things, it has no actual knowledge that such other Person
is not a Permitted Transferee.
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(E) Each Person holding or acquiring an Ownership Interest in a
Residual Certificate, by purchasing an Ownership Interest in such
Certificate, agrees to give the Trustee written notice that it is a
"pass through interest holder" within the meaning of temporary
Treasury regulation Section 1.67-3T(a)(2)(i)(A) immediately upon
acquiring an Ownership Interest in a Residual Certificate, if it is,
or is holding an Ownership Interest in a Residual Certificate on
behalf of, a "pass-through interest holder."
(ii) The Trustee will register the Transfer of any Residual
Certificate only if it shall have received the Transfer Affidavit Agreement
and all of such other documents as shall have been reasonably required by
the Trustee as a condition to such registration. In addition, no Transfer
of a Residual Certificate shall be made unless the Trustee shall have
received a representation letter from the Transferee of such Certificate to
the effect that such Transferee is a Permitted Transferee.
(iii) (A) If any purported Transferee shall become a Holder of a
Residual Certificate in violation of the provisions of this Section
5.02(d), then the last preceding Permitted Transferee shall be restored, to
the extent permitted by law, to all rights as holder thereof retroactive to
the date of registration of such Transfer of such Residual Certificate. The
Trustee shall be under no liability to any Person for any registration of
Transfer of a Residual Certificate that is in fact not permitted by this
Section 5.02(d) or for making any payments due on such Certificate to the
holder thereof or for taking any other action with respect to such holder
under the provisions of this Agreement.
(B) If any purported Transferee shall become a holder of a
Residual Certificate in violation of the restrictions in this Section
5.02(d) and to the extent that the retroactive restoration of the
rights of the holder of such Residual Certificate as described in
clause (iii)(A) above shall be invalid, illegal or unenforceable, then
the Trustee shall have the right, without notice to the holder or any
prior holder of such Residual Certificate, to sell such Residual
Certificate to a purchaser selected by the Trustee on such terms as
the Trustee may choose. Such purported Transferee shall promptly
endorse and deliver each Residual Certificate in accordance with the
instructions of the Trustee. Such purchaser may be the Trustee itself
or any Affiliate of the Trustee. The proceeds of such sale, net of the
commissions (which may include commissions payable to the Trustee or
its Affiliates), expenses and taxes due,
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if any, will be remitted by the Trustee to such purported Transferee.
The terms and conditions of any sale under this clause (iii)(B) shall
be determined in the sole discretion of the Trustee, and the Trustee
shall not be liable to any Person having an Ownership Interest in a
Residual Certificate as a result of its exercise of such discretion.
(iv) The Trustee shall make available to the Internal Revenue Service
and those Persons specified by the REMIC Provisions all information
necessary to compute any tax imposed (A) as a result of the Transfer of an
Ownership Interest in a Residual Certificate to any Person who is a
Disqualified Organization, including the information described in Treasury
regulations sections 1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to the
"excess inclusions" of such Residual Certificate and (B) as a result of any
regulated investment company, real estate investment trust, common trust
fund, partnership, trust, estate or organization described in Section 1381
of the Code that holds an Ownership Interest in a Residual Certificate
having as among its record holders at any time any Person which is a
Disqualified Organization. Reasonable compensation for providing such
information may be accepted by the Trustee.
(v) The provisions of this Section 5.02(d) set forth prior to this
subsection (v) may be modified, added to or eliminated, provided that there
shall have been delivered to the Trustee at the expense of the party
seeking to modify, add to or eliminate any such provision the following:
(A) written notification from each Rating Agency to the effect
that the modification, addition to or elimination of such provisions
will not cause such Rating Agency to downgrade its then-current
ratings of any Class of Certificates; and
(B) an Opinion of Counsel, in form and substance satisfactory to
the Trustee, to the effect that such modification of, addition to or
elimination of such provisions will not cause the REMIC Trust to cease
to qualify as a REMIC and will not cause the REMIC Trust to be subject
to an entity-level tax caused by the Transfer of any Residual
Certificate to a Person that is not a Permitted Transferee or (y) a
Person other than the prospective transferee to be subject to a
REMIC-tax caused by the Transfer of a Residual Certificate to a Person
that is not a Permitted Transferee.
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(e) Subject to the preceding subsections, upon surrender for registration
of transfer of any Certificate at any office agency of the Trustee maintained
for such purpose pursuant to Section 8.11, the Trustee shall execute and the
Certificate Registrar shall authenticate and deliver, in the name of the
designated Transferee or Transferees, one or more new Certificates of the same
Class of a like aggregate Percentage Interest.
(f) At the option of the Holder thereof, any Certificate may be exchanged
for other Certificates of the same Class with authorized denominations and a
like aggregate Percentage Interest, upon surrender of such Certificate to be
exchanged at any office or agency of the Trustee maintained for such purpose
pursuant to Section 8.11. Whenever any Certificates are so surrendered for
exchange the Trustee shall execute and cause the Certificate Registrar to
authenticate and deliver the Certificates which the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
transfer or exchange shall (if so required by the Trustee) be duly endorsed by,
or be accompanied by a written instrument of transfer in the form satisfactory
to the Trustee and the Certificate Registrar duly executed by, the Holder
thereof or his attorney duly authorized in writing.
(g) No service charge to the Certificateholders shall be made for any
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange shall be
canceled and destroyed by the Certificate Registrar in accordance with its
customary procedures.
(i) The Trustee will cause the Certificate Registrar (unless the Trustee is
acting as Certificate Registrar) to provide notice to the Trustee of each
transfer of a Certificate and to provide the Trustee with an updated copy of the
Certificate Register on the first Business Day in January and June of each year,
commencing January 1998.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee or the
Certificate Registrar, or the Trustee and the Certificate Registrar receive
evidence to their satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee and the Certificate
Registrar such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of actual knowledge by the Trustee or the
Certificate Registrar that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a
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new Certificate of the same Class and of like denomination and Percentage
Interest. Upon the issuance of any new Certificate under this Section, the
Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Certificate Registrar)
connected therewith. Any replacement Certificate issued pursuant to this Section
shall constitute complete and indefeasible evidence of ownership in the Trust
Fund created hereunder, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
SECTION 5.04. Persons Deemed Owners.
The Depositor, the Servicer, the Trustee, the Certificate Registrar, the
Certificate Insurer and any agent of any of them 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 4.01 and for all other
purposes whatsoever, and none of the Depositor, the Servicer, the Trustee, the
Certificate Registrar or any agent of any of them shall be affected by notice to
the contrary.
SECTION 5.05. Certain Available Information.
The Trustee shall maintain at its Corporate Trust Office and make available
free of charge during normal business hours for review by any Holder of a
Certificate or any Person identified to the Trustee as a prospective transferee
of a Certificate, originals or copies of the following items: (A) this Agreement
and any amendments hereof entered into pursuant to Section 12.01, (B) all
monthly statements required to be delivered to Certificateholders of the
relevant Class pursuant to Section 4.02 since the Closing Date, and all other
notices, reports, statements and written communications delivered to the
Certificateholders of the relevant Class pursuant to this Agreement since the
Closing Date, (C) all certifications delivered by a Responsible Officer of the
Trustee since the Closing Date pursuant to Section 11.01(h), (D) any and all
Officers' Certificates delivered to the Trustee by the Servicer since the
Closing Date to evidence the Servicer's determination that any Monthly Advance
or Servicing Advance was, or if made, would be a Nonrecoverable Monthly Advance
and (E) any and all Officers' Certificates delivered to the Trustee by the
Servicer since the Closing Date pursuant to Section 4.04(a). Copies and mailing
of any and all of the foregoing items will be available from the Trustee upon
request at the expense of the Person requesting the same.
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ARTICLE VI
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Liability of the Depositor and the Servicer.
The Depositor and the Servicer each shall be liable in accordance herewith
only to the extent of the obligations specifically imposed by this Agreement and
undertaken hereunder by the Depositor and the Servicer herein.
SECTION 6.02. Merger or Consolidation of the Depositor or the Servicer.
Subject to the following paragraph, the Depositor will keep in full effect
its existence, rights and franchises as a corporation under the laws of the
jurisdiction of its incorporation. Subject to the following paragraph, the
Servicer will keep in full effect its existence, rights and franchises as a
corporation under the laws of the jurisdiction of its incorporation. The
Depositor and the Servicer each will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
The Depositor or the Servicer may be merged or consolidated with or into
any Person, or transfer all or substantially all of its assets to any Person, in
which case any Person resulting from any merger or consolidation to which the
Depositor or the Servicer shall be a party, or any Person succeeding to the
business of the Depositor or the Servicer, shall be the successor of the
Depositor or the Servicer, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however, that
(i) the successor or surviving Person to the Servicer shall be qualified to
service mortgage loans on behalf of FNMA or FHLMC, (ii) that the Rating Agencies
ratings and shadow ratings of the Class A Certificates in effect immediately
prior to such merger or consolidation will not be qualified, reduced or
withdrawn as a result thereof (as evidenced by a letter to such effect from the
Rating Agencies) and (iii) in the case of the Servicer, the Certificate Insurer
delivers its written consent to such successor.
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer and
Others.
None of the Depositor, the Servicer or any of the directors, officers,
employees or agents of the Depositor or the Servicer shall be under any
liability to the Trust Fund or the Certificateholders for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in
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judgment; provided, however, that this provision shall not protect the
Depositor, the Servicer or any such person against any breach of warranties,
representations or covenants made herein, or against any specific liability
imposed on the Servicer pursuant hereto, or against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the case of the Depositor, and wilful misfeasance, bad faith or
negligence in the case of the Servicer, in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder. The Depositor,
the Servicer and any director, officer, employee or agent of the Depositor or
the Servicer may rely in good faith on any document of any kind which, prima
facie, is properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor, the Servicer and any director, officer,
employee or agent of the Depositor or the Servicer shall be indemnified and held
harmless by the Trust Fund against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement or the Certificates,
other than any loss, liability or expense relating to any specific Mortgage Loan
or Mortgage Loans (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) or any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or gross negligence
in the case of the Depositor, and willful misfeasance, bad faith or negligence
in the case of the Servicer, in the performance of duties hereunder or by reason
of reckless disregard of obligations and duties hereunder. Neither the Depositor
nor the Servicer shall be under any obligation to appear in, prosecute or defend
any legal action unless such action is related to its respective duties under
this Agreement and, in its opinion, does not involve it in any expense or
liability; provided, however, that each of the Depositor and the Servicer may in
its discretion undertake any such action which it may deem necessary or
desirable with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder. In such
event, unless the Depositor or the Servicer acts without the consent of the
Certificate Insurer prior to a Certificate Insurer Default or without the
consent of Holders of Certificates entitled to at least 51% of the Voting Rights
after a Certificate Insurer Default, the legal expenses and costs of such action
and any liability resulting therefrom (except any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or gross negligence in the
case of the Depositor, and willful misfeasance, bad faith or negligence in the
case of the Servicer, in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder) shall be expenses, costs
and liabilities of the Trust Fund, and the Depositor and the Servicer shall be
entitled to be reimbursed therefor from the Collection Account as and to the
extent provided in Section 3.11, any such right of reimbursement being prior to
the rights of the Certificateholders to receive any amount in the Collection
Account.
SECTION 6.04. Limitation on Resignation of the Servicer.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination pursuant to the
preceding
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sentence permitting the resignation of the Servicer shall be evidenced by an
Opinion of Counsel to such effect obtained at the expense of the Servicer and
delivered to the Trustee. No resignation of the Servicer shall become effective
until the Trustee or a successor servicer shall have assumed the Servicer's
responsibilities, duties, liabilities (other than those liabilities arising
prior to the appointment of such successor) and obligations under this
Agreement.
Except as expressly provided herein, the Servicer shall not assign or
transfer any of its rights, benefits or privileges hereunder to any other
Person, or delegate to or subcontract with, or authorize or appoint any other
Person to perform any of the duties, covenants or obligations to be performed by
the Servicer hereunder. If, pursuant to any provision hereof, the duties of the
Servicer are transferred to a successor servicer, the entire amount of the
Servicing Fee and other compensation payable to the Servicer pursuant hereto
shall thereafter be payable to such successor servicer.
SECTION 6.05. Rights of the Depositor and Others in Respect of the
Servicer.
The Servicer shall afford the Depositor, the Trustee and the Certificate
Insurer, upon reasonable notice, during normal business hours, access to all
records maintained by the Servicer in respect of its rights and obligations
hereunder and access to officers of the Servicer responsible for such
obligations. Upon request, the Servicer shall furnish to the Depositor, the
Trustee and the Certificate Insurer its most recent financial statements and
such other information relating to its capacity to perform its obligations under
this Agreement it possesses. To the extent such information is not otherwise
available to the public, the Depositor, the Trustee and the Certificate Insurer
shall not disseminate any information obtained pursuant to the preceding two
sentences without the Servicer's written consent, except as required pursuant to
this Agreement or to the extent that it is appropriate to do so (i) in working
with legal counsel, auditors, taxing authorities or other governmental agencies
or (ii) pursuant to any law, rule, regulation, order, judgment, writ, injunction
or decree of any court or governmental authority having jurisdiction over the
Depositor, the Trustee, the Certificate Insurer or the Trust Fund, and in either
case, the Depositor, the Certificate Insurer or the Trustee, as the case may be,
shall use its best efforts to assure the confidentiality of any such
disseminated non-public information. The Depositor may, but is not obligated to,
enforce the obligations of the Servicer under this Agreement and may, but is not
obligated to, perform, or cause a designee to perform, any defaulted obligation
of the Servicer under this Agreement or exercise the rights of the Servicer
under this Agreement; provided that the Servicer shall not be relieved of any of
its obligations under this Agreement by virtue of such performance by the
Depositor or its designee. The Depositor shall not have any responsibility or
liability for any action or failure to act by the Servicer and is not obligated
to supervise the performance of the Servicer under this Agreement or otherwise.
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ARTICLE VII
DEFAULT
SECTION 7.01. Servicer Events of Default.
"Servicer Event of Default," wherever used herein, means any one of the
following events:
(i) any failure by the Servicer to remit to the Trustee for
distribution to the Certificateholders any payment (other than a Monthly
Advance required to be made from its own funds on any Servicer Remittance
Date pursuant to Section 4.03) required to be made under the terms of the
Certificates and this Agreement which continues unremedied for the later of
(x) a period of one Business Day after the date upon which written notice
of such failure, requiring the same to be remedied, shall have been given
to the Servicer by the Depositor, the Certificate Insurer or the Trustee
(in which case notice shall be provided by telecopy), or to the Servicer,
the Depositor, the Certificate Insurer and the Trustee by the Holders of
Certificates entitled to at least 25% of the Voting Rights or (y) 5 days;
or
(ii) any failure (other than a failure identified in clause (vi)
below) on the part of the Servicer duly to observe or perform in any
material respect any other of the covenants or agreements on the part of
the Servicer contained in the Certificates or in this Agreement which
continues unremedied for a period of 30 days (or 10 days in the case of a
failure to maintain any insurance policy on any of the Mortgage Loans or
Mortgaged Properties) after the earlier of (i) the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Servicer by the Depositor, the Certificate Insurer or the
Trustee, or to the Servicer, the Depositor, the Certificate Insurer and the
Trustee by the Holders of Certificates entitled to at least 25% of the
Voting Rights and (ii) actual knowledge of such failure by a Servicing
Officer of the Servicer; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises in an involuntary case under any
present or future federal or state bankruptcy, insolvency or similar law or
the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceeding, or for the winding-up or liquidation of its affairs,
shall have been entered against the Servicer
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and such decree or order shall have remained in force undischarged or
unstayed for a period of 90 days; or
(iv) the Servicer shall consent 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 it or of
or relating to all or substantially all of its property; or
(v) the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(vi) any failure of the Servicer to make any Monthly Advance on any
Servicer Remittance Date required to be made from its own funds pursuant to
Section 4.03 or failure to make any payment required pursuant to Section
3.24 which continues unremedied until 3:00 p.m. New York time on the
Business Day immediately following the Servicer Remittance Date; or
(vii) any breach of a representation or warranty of the Servicer
relating to such Servicer's authority to enter into, and its ability to
perform its obligations under, this Pooling and Servicing Agreement; or
(viii) the occurrence of a Performance Test Violation (as defined in
the Insurance Agreement).
Subject to Article IX, if a Servicer Event of Default described in clauses (i)
through (v) and (vii) and (viii) of this Section shall occur, then, and in each
and every such case, so long as such Servicer Event of Default shall not have
been remedied, the Depositor, the Certificate Insurer or the Trustee may, and at
the written direction of the Holders of Certificates entitled to at least 25% of
Voting Rights (with the consent of the Certificate Insurer to the extent there
is no Certificate Insurer Default), the Trustee shall, by notice in writing to
the Servicer (and to the Depositor and the Certificate Insurer if given by the
Trustee or to the Trustee if given by the Depositor or the Certificate Insurer),
terminate all of the rights and obligations of the Servicer in its capacity as
Servicer under this Agreement, to the extent permitted by law, and in and to the
Mortgage Loans and the proceeds thereof. If a Servicer Event of Default
described in clause (vi) hereof shall occur, the Trustee shall, by notice in
writing to the Servicer, the Certificate Insurer and the Depositor, terminate
all of the rights and obligations of the Servicer in its capacity as Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds thereof.
On or after the receipt by the
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Servicer of such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Certificates (other than as a Holder
of any Certificate) or the Mortgage Loans or the Policy or otherwise, shall pass
to and be vested in the Trustee pursuant to and under this Section, and, without
limitation, the Trustee is hereby authorized and empowered, as attorney-in-fact
or otherwise, to execute and deliver, on behalf of and at the expense of the
Servicer, 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 or
assignment of the Mortgage Loans and related documents, or otherwise. The
Servicer agrees promptly (and in any event no later than ten Business Days
subsequent to such notice) to provide the Trustee with all documents and records
requested by it to enable it to assume the Servicer's functions under this
Agreement, and to cooperate with the Trustee in effecting the termination of the
Servicer's responsibilities and rights under this Agreement, including, without
limitation, the transfer within one Business Day to the Trustee for
administration by it of all cash amounts which at the time shall be or should
have been credited by the Servicer to the Collection Account held by or on
behalf of the Servicer, the Distribution Account, the Policy Payments Account or
any REO Account or Servicing Account held by or on behalf of the Servicer or
thereafter be received with respect to the Mortgage Loans or any REO Property
serviced by the Servicer (provided, however, that the Servicer shall continue to
be entitled to receive all amounts accrued or owing to it under this Agreement
on or prior to the date of such termination, whether in respect of Monthly
Advances or otherwise, and shall continue to be entitled to the benefits of
Section 6.03 notwithstanding any such termination). For purposes of this Section
7.01, the Trustee shall not be deemed to have knowledge of a Servicer Event of
Default unless a Responsible Officer of the Trustee assigned to and working in
the Trustee's Corporate Trust Office has actual knowledge thereof or unless
written notice of any event which is in fact such a Servicer Event of Default is
received by the Trustee and such notice references the Certificates, the Trust
Fund or this Agreement.
The Servicer hereby covenants and agrees to act as the Servicer under this
Agreement for an initial term, commencing on the Closing Date and ending on June
26, 1997, which term shall be extendable by the Certificate Insurer for
successive terms of three calendar months thereafter, until the termination of
the Trust Fund pursuant to Article X. Each such notice of extension (a "Servicer
Extension Notice") shall be delivered by the Certificate Insurer to the Trustee
and the Servicer. The Servicer hereby agrees that, upon its receipt of any such
Servicer Extension Notice, the Servicer shall become bound for the duration of
the term covered by such Servicer Extension Notice to continue as the Servicer
subject to and in accordance with the other provisions of this Agreement. The
Trustee agrees that if as of the fifteenth (15th) 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 (5)
days thereafter, give written notice of such non-receipt to the Certificate
Insurer and the Servicer. The failure of the Certificate Insurer to
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deliver a Servicer Extension Notice by the end of a calendar term shall result
in the termination of the Servicer. The foregoing provisions of this paragraph
shall not apply to the Trustee in the event the Trustee succeeds to the rights
and obligations of the Servicer and the Trustee shall continue in such capacity
until the earlier of the termination of this Agreement pursuant to Article X or
the appointment of a successor servicer.
SECTION 7.02. Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of termination or
the Servicer's term is not extended pursuant to Section 7.01, the Trustee shall
be the successor in all respects to the Servicer in its capacity as Servicer
under this Agreement and the transactions set forth or provided for herein and
shall be subject to all the responsibilities, duties and liabilities relating
thereto and arising thereafter placed on the Servicer (except for any
representations or warranties of the Servicer under this Agreement and its
obligation to deposit amounts in respect of losses pursuant to Section 3.12) by
the terms and provisions hereof including, without limitation, the Servicer's
obligations to make Monthly Advances pursuant to Section 4.03; provided,
however, that if the Trustee is prohibited by law or regulation from obligating
itself to make advances regarding delinquent mortgage loans, then the Trustee
shall not be obligated to make Monthly Advances pursuant to Section 4.03 or to
make payments in respect of Prepayment Interest Shortfalls pursuant to Section
3.24; and provided, further, that any failure to perform such duties or
responsibilities caused by the Servicer's failure to provide information
required by Section 7.01 shall not be considered a default by the Trustee as
successor to the Servicer hereunder. As compensation therefor, the Trustee shall
be entitled to the Servicing Fees and all funds relating to the Mortgage Loans
to which the Servicer would have been entitled if it had continued to act
hereunder. Notwithstanding the above, the Trustee may, if it shall be unwilling
to so act, or shall, if it is unable to so act or if it is prohibited by law
from making advances regarding delinquent mortgage loans or if the Certificate
Insurer or if the Holders of Certificates entitled to at least 51% of the Voting
Rights so request in writing to the Trustee, promptly appoint, with the consent
of the Certificate Insurer, or petition a court of competent jurisdiction to
appoint, an established mortgage loan servicing institution acceptable to each
Rating Agency and the Certificate Insurer and having a net worth of not less
than $15,000,000 and which is a FNMA and FHLMC approved Seller/Servicer, as the
successor to the Servicer under this Agreement in the assumption of all or any
part of the responsibilities, duties or liabilities of the Servicer under this
Agreement. No appointment of a successor to the Servicer under this Agreement
shall be effective until the assumption by the successor of all of the
Servicer's responsibilities, duties and liabilities hereunder. In connection
with such appointment and assumption described herein, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Servicer as such
hereunder. The Depositor, the Trustee and such successor shall take such action,
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consistent with this Agreement, as shall be necessary to effectuate any such
succession. Pending appointment of a successor to the Servicer under this
Agreement, the Trustee shall act in such capacity as hereinabove provided.
(b) If the Servicer fails to remit to the Trustee for distribution to the
Certificateholders any payment required to be made under the terms of the
Certificates and this Agreement (for purposes of this Section 7.02(b), a
"Remittance") because the Servicer is the subject of a proceeding under the
federal Bankruptcy Code and the making of such Remittance is prohibited by
Section 362 of the federal Bankruptcy Code, the Trustee shall upon notice of
such prohibition, regardless of whether it has received a notice of termination
under Section 7.01, advance the amount of such Remittance by depositing such
amount in the Distribution Account on the related Distribution Date. The Trustee
shall be obligated to make such advance only if (i) such advance, in the good
faith judgment of the Trustee, can reasonably be expected to be ultimately
recoverable from funds which are in the custody of the Servicer, a trustee in
bankruptcy or a federal bankruptcy court and should have been the subject of
such Remittance absent such prohibition (the "Stayed Funds") and (ii) the
Trustee is not prohibited by law from making such advance or obligating itself
to do so. Upon remittance of the Stayed Funds to the Trustee or the deposit
thereof in the Distribution Account by the Servicer, a trustee in bankruptcy or
a federal bankruptcy court, the Trustee may recover the amount so advanced,
without interest, by withdrawing such amount from the Distribution Account;
provided, however, that nothing in this Agreement shall be deemed to affect the
Trustee's rights to recover from the Servicer's own funds interest at the prime
rate (as set forth in the Wall Street Journal) as of the date of such advance on
the amount of any such advance. If the Trustee at any time makes an advance
under this subsection which it later determines in its good faith judgment will
not be ultimately recoverable from the Stayed Funds with respect to which such
advance was made, the Trustee shall be entitled to reimburse itself for such
advance, without interest, by withdrawing from the Distribution Account, out of
amounts on deposit therein, an amount equal to the portion of such advance
attributable to the Stayed Funds. The Servicer shall pay the Trustee, from the
Servicer's own funds, interest on any advance made by the Trustee pursuant to
this paragraph at a rate equal to the prime rate (as set forth in the Wall
Street Journal) as of the date of such advance.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of the Servicer pursuant to Section 7.01 above or
any appointment of a successor to the Servicer pursuant to Section 7.02 above,
the Trustee shall give prompt written notice thereof to Certificateholders at
their respective addresses appearing in the Certificate Register.
(b) Not later than the later of 60 days after the occurrence of any event,
which constitutes or which, with notice or lapse of time or both, would
constitute a Servicer Event of Default or five days after a Responsible Officer
of the
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Trustee becomes aware of the occurrence of such an event, the Trustee shall
transmit by mail to all Holders of Certificates notice of each such occurrence,
unless such default or Servicer Event of Default shall have been cured or
waived.
SECTION 7.04. Waiver of Servicer Events of Default.
The Holders representing at least 66% of the Voting Rights evidenced by all
Classes of Certificates affected by any default or Servicer Event of Default
hereunder, with the written consent of the Certificate Insurer, may waive such
default or Servicer Event of Default; provided, however, that a default or
Servicer Event of Default under clause (i) or (vi) of Section 7.01 may be waived
only by all of the Holders of the Regular Certificates with the written consent
of the Certificate Insurer. Upon any such waiver of a default or Servicer Event
of Default, such default or Servicer Event of Default shall cease to exist and
shall be deemed to have been remedied for every purpose hereunder. No such
waiver shall extend to any subsequent or other default or Servicer Event of
Default or impair any right consequent thereon except to the extent expressly so
waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Event of Default and
after the curing of all Servicer Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. During a Servicer Event of Default, the Trustee shall
exercise such of the rights and powers vested in it by this Agreement, and use
the same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs. Any permissive right of the Trustee enumerated in this Agreement shall
not be construed as a duty.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to conform to the requirements of this Agreement in a material manner, the
Trustee shall take such action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to the Trustee's satisfaction,
the Trustee will provide notice thereof to the Certificateholders and the
Certificate Insurer.
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No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own gross negligent action, its own gross negligent
failure to act or its own misconduct; provided, however, that:
(i) Prior to the occurrence of a Servicer Event of Default, and after
the curing of all such Servicer Events of Default which may have occurred,
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 that conform to the requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Certificate Insurer or Holders of
Certificates entitled to at least 25% of the Voting Rights (with the
consent of the Certificate Insurer) relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement;
(iv) In the absence of actual knowledge of a Servicer Event of Default
(which knowledge shall be presumed in the case of Sections 7.01(i) and
(vi)), the Trustee shall not be required to take notice or be deemed to
have notice or knowledge of any default or Servicer Event of Default unless
the Trustee shall be specifically notified in writing by the Servicer, the
Certificate Insurer or any of the Certificateholders. In the absence of
actual knowledge or receipt of such notice, the Trustee may conclusively
assume that there is no default or Servicer Event of Default;
(v) The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability for the performance of any of its
duties hereunder or the exercise of any of its rights or powers if there is
reasonable ground for believing that the repayment of such
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funds or adequate indemnity against such risk or liability is not
reasonably assured to it; and
(vi) In the event the Trustee serves as successor to the Servicer
hereunder, no implied duties or obligations shall be imposed on the Trustee
as successor Servicer and the terms and conditions of this Agreement and
the performance thereof by the Trustee in its conformity as successor to
the Servicer shall not create any additional fiduciary duty on the Trustee
to the Certificateholders, the Certificate Insurer, the Servicer or any
other person. In the event the Trustee serves as successor to the Servicer
hereunder, the Trustee agrees to serve as Servicer pursuant to the terms of
the Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officers'
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document reasonably believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any advice of counsel
shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and in
accordance with such advice of counsel;
(iii) The Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request, order
or direction of any of the Certificateholders, pursuant to the provisions
of this Agreement, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; nothing contained
herein shall, however, relieve the Trustee of the obligation, upon the
occurrence of a Servicer Event of Default (which has not been cured or
waived), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs;
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(iv) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
(v) Prior to the occurrence of a Servicer Event of Default hereunder
and after the curing of all Servicer Events of Default which may have
occurred, the Trustee shall not be bound to make any investigation into the
facts or 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 Holders of Certificates entitled to at least
25% of the Voting Rights (with the consent of the Certificate Insurer as
long as there is no Certificate Insurer Default); 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 such Certificateholders or the Certificate Insurer, the
Trustee may require reasonable indemnity against such expense, or liability
from such Certificateholders or the Certificate Insurer as a condition to
taking any such action;
(vi) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys; and
(vii) The Trustee shall not be personally liable for any loss
resulting from the investment of funds held in any Investment Account at
the direction of the Servicer pursuant to Section 3.12.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
signature of the Trustee, the authentication of the Certificate Registrar on the
Certificates, the acknowledgments of the Trustee contained in Article II and the
representations and warranties of the Trustee in Section 8.12) shall be taken as
the
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statements of the Depositor and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations or warranties as to the
validity or sufficiency of this Agreement (other than as specifically set forth
in Section 8.12) or of the Certificates (other than the signature of the Trustee
and authentication of the Certificate Registrar on the Certificates) or of any
Mortgage Loan or related document. 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 Depositor or the Servicer in respect of the Mortgage Loans or deposited
in or withdrawn from the Collection Account by the Servicer, other than any
funds held by or on behalf of the Trustee in accordance with Section 3.10.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual capacity or any other capacity may become the
owner or pledges of Certificates with the same rights it would have if it were
not Trustee.
SECTION 8.05. Trustee's Fees and Expenses.
The Trustee shall withdraw from the Distribution Account on each
Distribution Date and pay to itself the Trustee's Fee and, to the extent that
the funds therein are at anytime insufficient for such purpose, the Servicer
shall pay such fees. The Trustee and any director, officer, employee or agent of
the Trustee shall be indemnified by the Trust Fund and held harmless against any
loss, liability or expense (not including expenses, disbursements and advances
incurred or made by the Trustee, including the compensation and the expenses and
disbursements of its agents and counsel, in the ordinary course of the Trustee's
performance in accordance with the provisions of this Agreement) incurred by the
Trustee arising out of or in connection with the acceptance or administration of
its obligations and duties under this Agreement, other than any loss, liability
or expense (i) resulting from the Servicer's actions or omissions in connection
with the Agreement and the Mortgage Loans (but only to the extent the Trustee is
actually indemnified by the Servicer pursuant hereto), (ii) that constitutes a
specific liability of the Trustee pursuant to Section 11.01(c) or (iii) any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or gross negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder or as a result of a
breach of the Trustee's obligations under Article XI hereof. The Servicer agrees
to indemnify the Trustee from, and hold it harmless against, any loss, liability
or expense arising in respect of such Servicer's acts or omissions in connection
with this Agreement and the Mortgage Loans serviced by such Servicer. Such
indemnity shall survive the termination or discharge of this Agreement and the
resignation or removal of the Trustee. Any indemnity payment hereunder made by
the Servicer to the Trustee shall be from the Servicer's own funds, without
reimbursement from the Trust Fund therefor.
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SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or an association
organized and doing business under the laws of any state or the United States of
America, 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. If such corporation or association
publishes reports of conditions at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section the combined capital and surplus of such corporation or
association shall be deemed to be its combined capital and surplus as set forth
in its most recent report of conditions so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign immediately in the manner and with the effect
specified in Section 8.07.
SECTION 8.07. Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trust hereby
created by giving written notice thereof to the Depositor, the Certificate
Insurer, the Servicer and to the Certificateholders. Upon receiving such notice
of resignation, the Servicer shall, with the written consent of the Certificate
Insurer, promptly appoint a successor trustee by written instrument, in
duplicate, which instrument shall be delivered to the resigning Trustee and to
the successor trustee. A copy of such instrument shall be delivered to the
Certificateholders, the Certificate Insurer, and the Servicer by the Depositor.
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.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.06 and shall fail to resign after written request
therefor by the Servicer or the Certificate Insurer, or if at any time the
Trustee shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation or to charge the situs of the Trust Fund for state-tax reasons, then
the Depositor may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, which instrument shall be delivered to the Trustee so
removed and to the successor trustee. A copy of such instrument shall be
delivered to the Certificateholders, the Certificate Insurer and the Servicer by
the Depositor.
The Certificate Insurer or the Holders of Certificates entitled to at least
51% of the Voting Rights (excluding any Certificates registered in the name of
the Depositor or the Servicer or any affiliate thereof), with the written
consent of the
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Certificate Insurer, may at any time remove the Trustee and appoint a successor
trustee by written instrument or instruments, in triplicate, signed by the
Certificate Insurer or such Holders or their attorneys-in-fact duly authorized,
one complete set of which instruments shall be delivered to the Depositor, one
complete set to the Trustee so removed and one complete set to the successor so
appointed. A copy of such instrument shall be delivered to the
Certificateholders, the Certificate Insurer and the Servicer by the Depositor.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor trustee as provided
in Section 8.08.
SECTION 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 shall execute,
acknowledge and deliver to the Depositor, the Certificate Insurer and to its
predecessor trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The predecessor trustee shall deliver to the successor
trustee all Mortgage Files and related documents and statements, as well as all
moneys, held by it hereunder, and the Depositor and the predecessor trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for more 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
unless at the time of such acceptance such successor trustee shall be eligible
under the provisions of Section 8.06 and the appointment of such successor
trustee shall not result in a downgrading or withdrawal of the rating of any
Class of Class A Certificates (including any shadow rating thereof) by either
Rating Agency, as evidenced by a letter from each Rating Agency.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Depositor shall mail notice of the succession of such trustee
hereunder to the Certificate Insurer, the Rating Agencies and to all Holders of
Certificates 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.
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Notwithstanding anything to the contrary contained herein, so long as no
Certificate Insurer Default has occurred and is continuing, the appointment of
any successor trustee pursuant to any provision of this Agreement will be
subject to the prior written consent of the Certificate Insurer.
SECTION 8.09. Merger or Consolidation of Trustee.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated or any corporation or association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or association succeeding to the business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation or association shall be eligible under the provisions of Section
8.06, without the execution or filing of any paper or any further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose
of meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall 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 Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
8.10, such powers, duties, obligations, rights and trusts as the Servicer and
the Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in case a Servicer Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06 hereunder and no notice to
Holders of Certificates of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 8.08 hereof.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 8.10 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, 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 (whether as Trustee hereunder or as
successor to a defaulting Servicer hereunder), 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 Fund or any
portion thereof in any such
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jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.
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 VIII. Each separate trustee and co-trustee, upon its acceptance
of the trust 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.
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 8.11. Appointment of Office or Agency.
The Trustee will maintain or appoint an office or agency where the
Certificates may be surrendered for registration of transfer or exchange, and
presented for final distribution, and where notices and demands to or upon the
Trustee in respect of the Certificates and this Agreement may be served.
SECTION 8.12. Representations and Warranties of the Trustee.
The Trustee hereby represents and warrants to the Servicer, the Depositor
and the Certificate Insurer, as of the Closing Date, that:
(i) The Trustee is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States.
(ii) The execution and delivery of this Agreement by the Trustee,
and the performance and compliance with the terms of this Agreement by
the Trustee, will not violate the Trustee's charter or bylaws or
constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or result in the breach
of, any material agreement or other instrument to which it is a party
or which is applicable to it or any of its assets.
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(iii) The Trustee has the full power and authority to enter into
and consummate all transactions contemplated by this Agreement, has
duly authorized the execution, delivery and performance of this
Agreement, and has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by the Servicer and the Depositor, constitutes a valid, legal
and binding obligation of the Trustee, enforceable against the Trustee
in accordance with the terms hereof, subject to (A) applicable
bankruptcy, insolvency, receivership, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights generally,
and (B) general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law.
(v) The Trustee is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with the
terms of this Agreement will not constitute a violation of, any law,
any order or decree of any court or arbiter, or any order, regulation
or demand of any federal, state or local governmental or regulatory
authority, which violation, in the Trustee's good faith and reasonable
judgment, is likely to affect materially and adversely either the
ability of the Trustee to perform its obligations under this Agreement
or the financial condition of the Trustee.
(vi) No litigation is pending or, to the best of the Trustee's
knowledge, threatened against the Trustee which would prohibit the
Trustee from entering into this Agreement or, in the Trustee's good
faith reasonable judgment, is likely to materially and adversely
affect either the ability of the Trustee to perform its obligations
under this Agreement or the financial condition of the Trustee.
ARTICLE IX
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
SECTION 9.01. Rights of the Certificate Insurer To Exercise Rights of Class
A Certificateholders.
Each of the Depositor, the Servicer and the Trustee, and by accepting its
Certificate, each Class A Certificateholder, agrees that unless a Certificate
Insurer Default has occurred and is continuing, the Certificate Insurer shall
have the right to exercise all rights of the Class A Certificateholders under
this Agreement (including all Voting Rights) (except as provided in clause (i)
of the second paragraph of Section
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12.01) without any further consent of the Class A Certificateholders, including,
without limitation:
(a) the right to direct foreclosures upon Mortgage Loans upon
failure of the Servicer to do so;
(b) the right to require the Seller to repurchase, or substitute
for, Mortgage Loans pursuant to Section 2.03;
(c) the right to give notices of breach or to terminate the
rights and obligations of the Servicer as Servicer pursuant to Section
7.01;
(d) the right to direct the actions of the Trustee during the
continuance of a Servicer Event of Default pursuant to Sections 7.01
and 7.02;
(e) the right to consent to or direct any waivers of Servicer
Event of Defaults pursuant to Section 7.04;
(f) the right to direct the Trustee to investigate certain
matters pursuant to Section 8.02(a)(v); and
(g) the right to remove the Trustee pursuant to Section 8.07
hereof.
In addition, each Class A Certificateholder agrees that, unless a
Certificate Insurer Default has occurred and is continuing, the rights
specifically set forth above may be exercised by the Class A Certificateholders
only with the prior written consent of the Certificate Insurer.
SECTION 9.02. Trustee To Act Solely with Consent of the Certificate
Insurer.
Unless a Certificate Insurer Default has occurred and is continuing, the
Trustee shall not:
(a) agree to any amendment pursuant to Section 12.01;
(b) undertake any litigation pursuant to Section 8.02(a)(iii); or
(c) terminate the Servicer pursuant to Section 7.01
without the prior written consent of the Certificate Insurer which consent shall
not be unreasonably withheld.
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SECTION 9.03. Trust Fund and Accounts Held for Benefit of the Certificate
Insurer.
The Trustee shall hold the Trust Fund and the Mortgage Files for the
benefit of the Certificateholders and the Certificate Insurer and all references
in this Agreement (including, without limitation, in Sections 2.01 and 2.02) and
in the Certificates to the benefit of Holders of the Certificates shall be
deemed to include the Certificate Insurer. The Trustee shall cooperate in all
reasonable respects with any reasonable request by the Certificate Insurer for
action to preserve or enforce the Certificate Insurer's rights or interests
under this Agreement and the Certificates.
The Servicer hereby acknowledges and agrees that it shall service and
administer the Mortgage Loans and any REO Properties, and shall maintain the
Collection Account and any REO Account, for the benefit of the
Certificateholders and for the benefit of the Certificate Insurer, and all
references in this Agreement (including, without limitation, in Sections 3.01
and 3.10) to the benefit of or actions on behalf of the Certificateholders shall
be deemed to include the Certificate Insurer. Unless a Certificate Insurer
Default has occurred and is continuing, the Servicer shall not terminate any
Sub-Servicing Agreements without cause without the prior consent of the
Certificate Insurer. Unless a Certificate Insurer Default has occurred and is
continuing, neither the Servicer nor the Depositor shall undertake any
litigation pursuant to Section 6.03 (other than litigation to enforce their
respective rights hereunder) without the prior consent of the Certificate
Insurer. The Trustee and the Servicer shall provide such information as may be
reasonably requested by, and shall otherwise cooperate with all reasonable
requests of the Certificate Insurer with respect to the Mortgage Loans or the
Certificates; provided that such information is within the control of or
reasonably accessible to such party without undue expense.
SECTION 9.04. Claims Upon the Policy; Policy Payments Account.
(a) If, by the close of business on the third Business Day prior to a
Distribution Date, the Trustee determines, based on the Remittance Report, that
a Deficiency Amount for any Distribution Date is greater than zero, then the
Trustee shall give notice to the Certificate Insurer by telephone or telecopy of
the amount of such Deficiency Amount. Such notice of such Deficiency Amount
shall be confirmed in writing in the form set forth as Exhibit A to the Policy
to the Certificate Insurer and the Fiscal Agent (as defined in the Policy), if
any, at or before 10:00 a.m., New York time, on the second Business Day prior to
such Distribution Date. Following receipt by the Certificate Insurer of such
notice in such form, the Certificate Insurer will pay any amount payable under
the Policy on the later to occur of (i) 12:00 noon, New York time, on the second
Business Day following such receipt and (ii) 12:00 noon, New York time, on the
Distribution Date to which such deficiency relates, as provided in Exhibit A to
the Policy.
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(b) The Trustee shall establish a separate special purpose trust account
for the benefit of Holders of the Class A Certificates and the Certificate
Insurer referred to herein as the "Policy Payments Account" over which the
Trustee shall have exclusive control and sole right of withdrawal. The Trustee
shall deposit any amount paid under the Policy in the Policy Payments Account
and distribute such amount only for purposes of payment to Holders of Class A
Certificates of the Guaranteed Distribution for which a claim was made and such
amount may not be applied to satisfy any costs, expenses or liabilities of the
Servicer, the Trustee or the Trust Fund. Amounts paid under the Policy shall be
transferred to the Distribution Account in accordance with the next succeeding
paragraph and disbursed by the Trustee to Holders of Class A Certificates in
accordance with Section 4.01(b) or Section 10.01, as applicable. It shall not be
necessary for such payments to be made by checks or wire transfers separate from
the checks or wire transfers used to pay the Guaranteed Distribution with other
funds available to make such payment. However, the amount of any payment of
principal of or interest on the Class A Certificates to be paid from funds
transferred from the Policy Payments Account shall be noted as provided in
paragraph (c) below in the Certificate Register and in the statement to be
furnished to Holders of the Class A Certificates and Residual Certificates
pursuant to Section 4.02. Funds held in the Policy Payments Account shall not be
invested.
On any Distribution Date with respect to which a claim has been made under
the Policy, the amount of any funds received by the Trustee as a result of any
claim under the Policy, to the extent required to make the Guaranteed
Distribution on such Distribution Date, shall be withdrawn from the Policy
Payments Account and deposited in the Distribution Account and applied by the
Trustee, together with the other funds to be withdrawn from the Distribution
Account pursuant to Section 4.01(b) or Section 10.01, as applicable, directly to
the payment in full of the Guaranteed Distribution due on the Class A
Certificates. Funds received by the Trustee as a result of any claim under the
Policy shall be deposited by the Trustee in the Policy Payments Account and used
solely for payment to the Holders of the Class A Certificates and may not be
applied to satisfy any costs, expenses or liabilities of the Servicer, the
Trustee or the Trust Fund. Any funds remaining in the Policy Payments Account on
the first Business Day following a Distribution Date shall be remitted to the
Certificate Insurer, pursuant to the instructions of the Certificate Insurer, by
the end of such Business Day.
(c) The Trustee shall keep a complete and accurate record of the amount of
interest and principal paid in respect of any Class A Certificate from moneys
received under the Policy. The Certificate Insurer shall have the right to
inspect such records at reasonable times during normal business hours upon one
Business Day's prior notice to the Trustee.
(d) The Trustee shall promptly notify the Certificate Insurer and Fiscal
Agent of any proceeding or the institution of any action, of which a Responsible
Officer the Trustee has actual knowledge, seeking the avoidance as a
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preferential transfer under applicable bankruptcy, insolvency, receivership or
similar law (a "Preference Claim") of any distribution made with respect to the
Class A Certificates. Each Class A Certificateholder, by its purchase of Class A
Certificates, the Servicer and the Trustee hereby agree that the Certificate
Insurer (so long as no Certificate Insurer Default has occurred and is
continuing) 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 such Preference Claim and (ii) the posting of any surety,
supersedeas or performance bond pending any such appeal. In addition and without
limitation of the foregoing, the Certificate Insurer shall be subrogated to the
rights of the Servicer, the Trustee and each Class A Certificateholder in the
conduct of any such 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 9.05. Effect of Payments by the Certificate Insurer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect
to principal of or interest on any of the Class A Certificates which is made
with moneys received pursuant to the terms of the Policy shall not be considered
payment of such Class A Certificates from the Trust Fund and shall not result in
the payment of or the provision for the payment of the principal of or interest
on such Class A Certificates within the meaning of Section 4.01. The Depositor,
the Servicer and the Trustee acknowledge, and each Holder by its acceptance of a
Certificate agrees, that without the need for any further action on the part of
the Certificate Insurer, the Depositor, the Servicer, the Trustee or the
Certificate Registrar (a) to the extent the Certificate Insurer makes payments,
directly or indirectly, on account of principal of or interest on any Class A
Certificates to the Holders of such Certificates, the Certificate Insurer will
be fully subrogated to the rights of such Holders to receive such principal and
interest from the Trust Fund and (b) the Certificate Insurer shall be paid such
principal and interest but only from the sources and in the manner provided
herein for the payment of such principal and interest.
The Trustee and the Servicer shall cooperate in all respects with any
reasonable request by the Certificate Insurer for action to preserve or enforce
the Certificate Insurer's rights or interests under this Agreement without
limiting the rights or affecting the interests of the Holders as otherwise set
forth herein.
SECTION 9.06. Notices to the Certificate Insurer.
All notices, statements, reports, certificates or opinions required by this
Agreement to be sent to any other party hereto or to any of the
Certificateholders shall also be sent to the Certificate Insurer.
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SECTION 9.07. Third-Party Beneficiary.
The Certificate Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if a party hereto.
SECTION 9.08. Trustee to Hold the Policy.
The Trustee will hold the Policy in trust as agent for the Holders of the
Class A Certificates for the purpose of making claims thereon and distributing
the proceeds thereof. The Policy, prior to any distributions thereon deposited
into the Policy Payments Account, will not constitute part of the Trust Fund or
assets of the REMIC Trust created by this Agreement. Each Holder of Class A
Certificates, by accepting its Class A Certificates, appoints the Trustee as
attorney-in-fact for the purpose of making claims on the Policy.
SECTION 9.09. Termination of the Servicer.
Notwithstanding anything this Agreement to the contrary, the Certificate
Insurer may terminate or refuse to renew the term of the Servicer at such time
as permitted under any separate agreements between them so long as no
Certificate Insurer Default has occurred and is continuing.
ARTICLE X
TERMINATION
SECTION 10.01. Termination Upon Repurchase or Liquidation of All Mortgage
Loans.
Subject to Section 10.02, the respective obligations and responsibilities
under this Agreement of the Depositor, the Servicer and the Trustee (other than
the obligations of the Servicer to the Trustee pursuant to Section 8.05 and of
the Servicer to provide for and the Trustee to make payments to
Certificateholders as hereafter set forth) shall terminate upon payment to the
Certificateholders and the deposit of all amounts held by or on behalf of the
Trustee and required hereunder to be so paid or deposited on the Distribution
Date coinciding with or following the earlier to occur (i) the purchase by the
Terminator (as defined below) of all Mortgage Loans and each REO Property
remaining in the Trust Fund at a price equal to the greater of (A) the aggregate
Purchase Price of all the Mortgage Loans included in the Trust Fund, plus the
appraised value of each REO Property, if any, included in the Trust Fund, such
appraisal to be conducted by an appraiser mutually agreed upon by the Terminator
and the Trustee in their reasonable discretion (and approved by the Certificate
Insurer in its reasonable discretion) and (B) the aggregate fair market value of
all of the assets of the Trust Fund (as determined by the Terminator, the
Certificate Insurer (to the
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extent the Certificate Insurer is not the Terminator) and the Trustee, as of the
close of business on the third Business Day next preceding the date upon which
notice of any such termination is furnished to Certificateholders pursuant to
the third paragraph of this Section 10.01) (the "Termination Price") and (ii)
the later of the final payment or other liquidation (or any advance with respect
thereto) of the last Mortgage Loan or REO Property remaining in the Trust Fund;
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James, living on the date hereof.
Subject to this Section 10.01, the Majority Class R Certificateholder and
the Certificate Insurer shall have the right (the "Terminator"), to purchase all
of the Mortgage Loans and each REO Property remaining in the Trust Fund pursuant
clause (i) of the preceding paragraph no later than the Determination Date in
the month immediately preceding the Distribution Date on which the Certificates
will be retired; provided, however, that the Terminator may elect to purchase
all of the Mortgage Loans and each REO Property remaining in the Trust Fund
pursuant to clause (i) above only if the aggregate Stated Principal Balance of
the Mortgage Loans and each REO Property remaining in the Trust Fund at the time
of such election is equal to or less than 10%, in the case of the Majority Class
R Certificateholder, and 5% or less, in the case of the Certificate Insurer, of
the Original Pool Balance and provided, further, that such purchase is evidenced
by receipt of an Opinion of Counsel that such purchase (x) will be part of a
"qualified liquidation" or other evidence as defined in Code Section
860F(a)(4)(A), (y) will not otherwise subject the Trust Fund to tax and (z) will
not cause the Trust Fund to fail to qualify as a REMIC.
Notice of any termination shall be given promptly by the Trustee by letter
to Certificateholders and the Certificate Insurer mailed (a) in the event such
notice is given in connection with the purchase of the Mortgage Loans and each
REO Property by the Terminator, not earlier than the 15th day and not later than
the 20th day of the month next preceding the month of the final distribution on
the Certificates or (b) otherwise during the month of such final distribution on
or before the Determination Date in such month, in each case specifying (i) the
Distribution Date upon which the Trust Fund will terminate and final payment of
the Certificates will be made upon presentation and surrender of Certificates at
the office of the Trustee therein designated, (ii) the amount of any such final
payment, (iii) that no interest shall accrue in respect of the Certificates from
and after the Interest Accrual Period relating to the final Distribution Date
therefor and (iv) 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. 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 in connection with the purchase of all of the
Mortgage Loans and each REO Property remaining in the Trust Fund by the
Terminator, the Terminator shall deliver to the Trustee for deposit in the
Distribution Account not later than the last Business Day of the month next
preceding
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the month of the final distribution on the Certificates an amount in immediately
available funds equal to the above described purchase price. Upon certification
to the Trustee by a Servicing Officer (a copy of which certification shall be
delivered to the Certificate Insurer) of the making of such final deposit, the
Trustee shall promptly release to the Terminator the Mortgage Files for the
remaining Mortgage Loans, and the Trustee shall execute all assignments,
endorsements and other instruments necessary to effectuate such transfer.
Upon presentation of the Certificates by the Certificateholders on the
final Distribution Date, the Trustee shall distribute to each Certificateholder
so presenting and surrendering its Certificates the amount otherwise
distributable on such Distribution Date in accordance with Section 4.01 in
respect of the Certificates so presented and surrendered. Any funds not
distributed to any Holder or Holder of Certificates of such Class on such
Distribution Date because of the failure of such Holder or Holders to tender
their Certificates shall, on such date, be set aside and held in trust and
credited to the account of the appropriate non-tendering Holder or Holders. If
any Certificate as to which notice has been given pursuant to this Section 10.01
shall not have been surrendered for cancellation within six months after the
time specified in such notice, the Trustee shall mail a second notice to the
remaining non-tendering Certificateholders to surrender their Certificates for
cancellation in order to receive the final distribution with respect thereto. If
within one year after the second notice all such Certificates shall not have
been surrendered for cancellation, the Trustee shall, directly or through an
agent, contact the remaining non-tendering Certificateholders concerning
surrender of their Certificates in the manner reasonably specified to the
Trustee by the Servicer in writing. The costs and expenses of maintaining the
funds in trust and of contacting such Certificateholders shall be paid out of
the assets so held in trust for such Certificateholders. If in one year after
the second notice any such Certificates shall not have been surrendered for
cancellation, the Servicer shall pay to the Certificate Insurer any amount of
such funds that were paid by the Certificate Insurer under the Policy but shall
continue to hold any remaining funds for the benefit of the non-tendering
Certificateholders, and such Certificateholders shall thereafter look solely to
the Servicer for payment thereof, and all liability of the Certificate Insurer
with respect to such trust funds shall thereupon cease. No interest shall accrue
or be payable to any Certificateholder on any amount held in trust by the
Servicer as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section 10.01.
No such termination shall be permitted without the prior written consent of
the Certificate Insurer if it would result in a draw under the Policy or in any
outstanding Cumulative Insurance Payment or other amounts remaining due under
the Insurance Agreement.
Immediately following the deposit of funds in trust hereunder in respect of
the Certificates, the Trust Fund shall terminate.
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SECTION 10.02. Additional Termination Requirements.
(a) In the event that the Terminator purchases all the Mortgage Loans and
each REO Property or the final payment on or other liquidation of the last
Mortgage Loan or REO Property remaining in the Trust Fund pursuant to Section
10.01, the Trust Fund shall be terminated in accordance with the following
additional requirements:
(i) The Trustee shall specify the first day in the 90-day
liquidation period in a statement attached to the Trust Fund's final
Tax Return pursuant to Treasury regulation Section 1.860F-1 and shall
satisfy all requirements of a qualified liquidation under Section 860F
of the Code and any regulations thereunder, as evidenced by an Opinion
of Counsel obtained at the expense of the Terminator;
(ii) During such 90-day liquidation period, and at or prior to
the time of making of the final payment on the Certificates, the
Trustee shall sell all of the assets of the Trust Fund to the
Terminator for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute, credit, or cause to be
distributed or credited, to the Holders of the Residual Certificates
all cash on hand in the Trust Fund (other than cash retained to meet
claims), and the Trust Fund shall terminate at that time.
(b) The Majority Class R Certificateholder shall prepare the documentation
required in connection with the adoption of a plan of liquidation of a Trust
Fund pursuant to this Section 10.02.
(c) By their acceptance of Certificates, the Holders thereof hereby agree
to authorize the Trustee to specify the 90-day liquidation period for the Trust
Fund, which authorization shall be binding upon all successor
Certificateholders.
ARTICLE XI
REMIC PROVISIONS
SECTION 11.01. REMIC Administration.
(a) The Trustee shall elect to treat the REMIC Trust as a REMIC under the
Code and, if necessary, under applicable state law. Such election will be made
on Form 1066 or other appropriate federal tax or information return or any
appropriate state return for the taxable year ending on the last day of the
calendar
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year in which the Certificates are issued. For the purposes of the REMIC
election in respect of the REMIC Trust, the Class A Certificates shall be
designated as the Regular Interests in the REMIC and the Residual Certificates
shall be designated as the single class of Residual Interest in the REMIC. The
Trustee shall not permit the creation of any "interests" in the REMIC (within
the meaning of Section 860G of the Code) other than the interests represented by
the Certificates.
(b) The Closing Date is hereby designated as the "Startup Day" of the REMIC
Trust within the meaning of Section 860G(a)(9) of the Code.
(c) The Trustee shall pay out of its own funds, without any right of
reimbursement, any and all expenses (not including taxes) relating to any tax
audit of the Trust Fund (including, but not limited to, any professional fees or
any administrative or judicial proceedings with respect to the Trust Fund that
involve the Internal Revenue Service or state tax authorities), other than the
expense of obtaining any tax related Opinion of Counsel except as specified
herein. The Trustee, as agent for the Trust Fund's tax matters person, shall (i)
act on behalf of the Trust Fund in relation to any tax matter or controversy
involving the Trust Fund and (ii) represent the Trust Fund in any administrative
or judicial proceeding relating to an examination or audit by any governmental
taxing authority with respect thereto. The holder of the largest Percentage
Interest of the Residual Certificates shall be designated, in the manner
provided under Treasury regulations section 1.860F-4(d) and temporary Treasury
regulations section 301.6231(a)(7)-IT, as the tax matters person of the Trust
Fund. By their acceptance thereof, the holder of the largest Percentage Interest
of the Residual Certificates hereby agrees to irrevocably appoint the Trustee or
an Affiliate as its agent to perform all of the duties of the tax matters person
for the Trust Fund.
(d) The Trustee shall prepare, sign and file all of the Tax Returns in
respect of the REMIC created hereunder. The expenses of preparing and filing
such returns shall be borne by the Trustee without any right of reimbursement
therefor. The Servicer shall provide on a timely basis to the Trustee or its
designee such information with respect to the assets of the Trust Fund as is in
its possession or within its control to obtain and reasonably required by the
Trustee to enable it to perform its obligations under this Article.
(e) The Trustee shall perform on behalf of the Trust Fund all reporting and
other tax compliance duties that are the responsibility of the REMIC under the
Code, the REMIC Provisions or other compliance guidance issued by the Internal
Revenue Service or any state or local taxing authority. Among its other duties,
as required by the Code, the REMIC Provisions or other such compliance guidance,
the Trustee shall provide (i) to any Transferor of a Residual Certificate such
information as is necessary for the application of any tax relating to the
transfer of a Residual Certificate to any Person who is not a Permitted
Transferee, (ii) to the Certificateholders such information or reports as are
required by the Code or the REMIC Provisions including reports relating to
interest, original issue discount and
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market discount or premium (using the Prepayment Assumption as required) and
(iii) to the Internal Revenue Service the name, title, address and telephone
number of the person who will serve as the representative of the Trust Fund. The
Servicer shall provide on a timely basis to the Trustee such information with
respect to the assets of the Trust Fund, including, without limitation, the
Mortgage Loans, as is in its possession or within its control to obtain and
reasonably required by the Trustee to enable it to perform its obligations under
this subsection. In addition, the Depositor shall provide or cause to be
provided to the Trustee, within ten (10) days after the Closing Date, all
information or data that the Trustee reasonably determines to be relevant for
tax purposes as to the valuations and issue prices of the Certificates,
including, without limitation, the price, yield, prepayment assumption and
projected cash flow of the Certificates.
(f) The Trustee shall take such action and shall cause the REMIC created
hereunder to take such action as shall be necessary to create or maintain the
status thereof as a REMIC under the REMIC Provisions (and the Servicer shall
assist it, to the extent reasonably requested by it). The Trustee shall not take
any action, cause the Trust Fund to take any action or fail to take (or fail to
cause to be taken) any action that, under the REMIC Provisions, if taken or not
taken, as the case may be, could (i) endanger the status of the REMIC Trust as a
REMIC or (ii) result in the imposition of a tax upon the REMIC Trust (including
but not limited to the tax on prohibited transactions as defined in Section
860F(a)(2) of the Code and the tax on contributions to a REMIC set forth in
Section 860G(d) of the Code) (either such event, an "Adverse REMIC Event")
unless the Trustee has received an Opinion of Counsel, addressed to the Trustee
and the Certificate Insurer (at the expense of the party seeking to take such
action but in no event at the expense of the Trustee) to the effect that the
contemplated action will not, with respect to the REMIC Trust created hereunder,
endanger such status or result in the imposition of such a tax, nor shall the
Servicer take or fail to take any action (whether or not authorized hereunder)
as to which the Trustee has advised it in writing that it has received an
Opinion of Counsel to the effect that an Adverse REMIC Event could occur with
respect to such action. In addition, prior to taking any action with respect to
the Trust Fund or the assets of the Trust Fund, or causing the Trust Fund to
take any action, which is not expressly permitted under the terms of this
Agreement, the Servicer will consult with the Trustee or its designee, in
writing, with respect to whether such action could cause an Adverse REMIC Event
to occur with respect to the REMIC Trust, and the Servicer shall not take any
such action or cause the Trust Fund to take any such action as to which the
Trustee has advised it in writing that an Adverse REMIC Event could occur. The
Trustee may consult with counsel to make such written advice, and the cost of
same shall be borne by the party seeking to take the action not permitted by
this Agreement, but in no event shall such cost be an expense of the Trustee. At
all times as may be required by the Code, upon notice or discovery that
substantially all of the assets of the REMIC Trust created hereunder do not
consist of "qualified mortgages" as defined in Section 860G(a)(3) of the Code
and "permitted investments" as defined in Section 860G(a)(5) of the Code, the
Trustee shall take such action as
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shall be necessary to maintain the status of the REMIC as a REMIC under the
REMIC Provisions.
(g) In the event that any tax is imposed on "prohibited transactions" of
the REMIC Trust created hereunder as defined in Section 860F(a)(2) of the Code,
on the "net income from foreclosure property" of the REMIC Trust as defined in
Section 860G(c) of the Code, on any contributions to the REMIC Trust after the
Startup Day therefor pursuant to Section 860G(d) of the Code, or any other tax
is imposed by the Code or any applicable provisions of state or local tax laws,
such tax shall be charged (i) to the Trustee pursuant to Section 11.03 hereof,
if such tax arises out of or results from a breach by the Trustee of any of its
obligations under this Article XI, (ii) to the Servicer pursuant to Section
11.03 hereof, if such tax arises out of or results from a breach by the Servicer
of any of its obligations under Article III or this Article XI, or otherwise
(iii) against amounts on deposit in the Distribution Account and shall be paid
by withdrawal therefrom.
(h) On or before April 15 of each calendar year, commencing April 15, 1998,
the Trustee shall deliver to the Servicer and each Rating Agency a Certificate
from a Responsible Officer of the Trustee stating the Trustee's compliance with
this Article XI.
(i) The Trustee and the Servicer shall, for federal income tax purposes,
maintain books and records with respect to the Trust Fund on a calendar year and
on an accrual basis.
(j) Following the Startup Day, the Trustee shall not accept any
contributions of assets to the Trust Fund other than in connection with any
Qualified Substitute Mortgage Loan delivered in accordance with Section 2.03
unless it shall have received an Opinion of Counsel to the effect that the
inclusion of such assets in the REMIC Trust will not cause the REMIC Trust to
fail to qualify as a REMIC at any time that any Certificates are outstanding or
subject the REMIC Trust to any tax under the REMIC Provisions or other
applicable provisions of federal, state and local law or ordinances.
(k) Neither the Trustee nor the Servicer shall enter into any arrangement
by which the Trust Fund will receive a fee or other compensation for services
nor permit the REMIC Trust to receive any income from assets other than
"qualified mortgages" as defined in Section 860G(a)(3) of the Code or "permitted
investments" as defined in Section 860G(a)(5) of the Code.
SECTION 11.02. Prohibited Transactions and Activities.
None of the Depositor, the Servicer or the Trustee shall sell, dispose of
or substitute for any of the Mortgage Loans (except in connection with (i) the
foreclosure of a Mortgage Loan, including but not limited to, the acquisition or
sale
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of a Mortgaged Property acquired by deed in lieu of foreclosure, (ii) the
bankruptcy of the Trust Fund (iii) the termination of the Trust Fund pursuant to
Article X of this Agreement, (iv) a substitution pursuant to Article II of this
Agreement or (v) a purchase of Mortgage Loans pursuant to Article II or III of
this Agreement), nor acquire any assets for the Trust Fund (other than a REO
Property acquired in respect of a defaulted Mortgage Loan), nor sell or dispose
of any investments in the Collection Account or the Distribution Account for
gain, nor accept any contributions to the Trust Fund after the Closing Date
(other than a Qualified Substitute Mortgage Loan delivered in accordance with
Section 2.03), unless it has received an Opinion of Counsel, addressed to the
Certificate Insurer and the Trustee (at the expense of the party seeking to
cause such sale, disposition, substitution, acquisition or contribution but in
no event at the expense of the Trustee) that such sale, disposition,
substitution, acquisition or contribution will not (a) affect adversely the
status of the REMIC Trust as a REMIC or (b) cause the REMIC Trust to be subject
to a tax on "prohibited transactions" or "contributions" pursuant to the REMIC
Provisions.
SECTION 11.03. Servicer and Trustee Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the Depositor, the
Certificate Insurer and the Servicer for any taxes and costs including, without
limitation, any reasonable attorneys' fees imposed on or incurred by the Trust
Fund, the Depositor, the Certificate Insurer or the Servicer, as a result of a
breach of the Trustee's covenants set forth in this Article XI.
(b) The Servicer agrees to indemnify the Trust Fund, the Depositor, the
Certificate Insurer and the Trustee for any taxes and costs including, without
limitation, any reasonable attorneys' fees imposed on or incurred by the Trust
Fund, the Depositor, the Certificate Insurer or the Trustee, as a result of a
breach of the Servicer's covenants set forth in Article III or this Article XI.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee without the consent of any of the Certificateholders,
(i) to cure any ambiguity, to correct any defect or to give effect to the
expectations of Holders, (ii) to correct, modify or supplement any provisions
herein, to modify, eliminate or add to any of its provisions to such extent as
shall be necessary to maintain the qualification of the Trust Fund as a REMIC at
all times that any Certificates are outstanding or to avoid or lessen the risk
of the imposition of any tax on the Trust Fund pursuant to the Code that would
be a claim against the Trust Fund,
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provided that the Trustee has received an Opinion of Counsel to the effect that
such action is necessary or desirable to maintain such qualification or to avoid
or minimize the risk of the imposition of any such tax and such action will not,
as evidenced by such Opinion of Counsel, adversely affect in any material
respect the interests of any Certificateholder, (iii) to change the timing
and/or nature of deposits in the Collection Account, provided that such change
will not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder and that such change
will not adversely affect the then current rating or shadow rating assigned to
any Class A Certificates, as evidenced by a letter from each Rating Agency to
such effect, (iv) to add to, modify or eliminate any provisions therein
restricting transfers of certain Certificates, which are inserted in response to
Code provisions, or (v) to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be inconsistent with the
provisions of this Agreement, provided that such action shall not, as evidenced
by an Opinion of Counsel delivered to the Trustee and the Certificate Insurer,
adversely affect in any material respect the interests of any Certificateholder,
provided, further, that if the Person requesting such amendment delivers to the
Trustee and the Certificate Insurer written confirmation from each Rating Agency
that such amendment will not cause such Rating Agency to revise or withdraw its
then current rating or shadow rating of the Class A Certificates, such amendment
will be deemed to not adversely affect in any material respect the interests of
the Certificateholders and no such Opinion of Counsel shall be required.
This Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee with the consent of the Certificate Insurer and the
Holders of Certificates entitled to at least 66% of the Voting Rights 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 Holders of Certificates; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) adversely affect in any
material respect the interests of the Holders of any Class of Certificates in a
manner, other than as described in (i), without the consent of the Holders of
Certificates of such Class evidencing at least 66% of the Voting Rights
allocated to such Class, or (iii) modify the consents required by the
immediately preceding clauses (i) and (ii) without the consent of the
Certificate Insurer and the Holders of all Certificates then outstanding.
Notwithstanding the foregoing, this Agreement may be amended by the Depositor,
the Servicer, where applicable, and the Trustee provided that such action is
approved by holders of Certificates evidencing 100% of the Percentage Interest
of each Class that, as evidenced by an Opinion of Counsel, is adversely affected
in any material respect by such action. For purposes of giving any such consent
(other than a consent to an action which would adversely affect in any material
respect the interests of the Certificateholders of any Class, while the Servicer
or any affiliate thereof is the holder of Certificates aggregating not less than
66% of the Percentage Interest of such
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Class), any Certificates registered in the name of the Servicer or any affiliate
thereof shall be deemed not to be outstanding.
Notwithstanding any contrary provision of this Agreement, the Trustee shall
not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel to the effect that such amendment will not result
in the imposition of any tax on the REMIC Trust pursuant to the REMIC Provisions
or cause the REMIC Trust to fail to qualify as a REMIC at any time that any
Certificates are outstanding. Any such amendment pursuant to the first paragraph
of this Section 12.01 shall not be deemed to adversely affect in any material
respect the interests of any Certificateholder if such change is required by the
Certificate Insurer, so long as no Certificate Insurer Default has occurred and
is continuing, and the Servicer receives written confirmation from each Rating
Agency that such amendment will not cause such Rating Agency to reduce the then
current rating or any shadow rating of the affected Certificates.
Promptly after the execution of any such amendment with the consent of
Holders the Trustee shall furnish a copy of such amendment to each
Certificateholder, the Rating Agencies and the Certificate Insurer.
It shall not be necessary for the consent of Certificateholders under this
Section 12.01 to approve the particular form of any proposed amendment, 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
regulations as the Trustee may prescribe.
The cost of any Opinion of Counsel to be delivered pursuant to this Section
12.01 shall be borne by the Person seeking the related amendment, but in no
event shall such Opinion of Counsel be an expense of the Trustee.
The Trustee may, but shall not be obligated to enter into any amendment
pursuant to this Section that affects its rights, duties and immunities under
this Agreement or otherwise.
SECTION 12.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the expense of the Certificateholders, but only upon direction of
the Trustee accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.
118
<PAGE>
For the purpose of facilitating the recordation of this Agreement as herein
provided 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 such counterparts shall constitute but one and the same
instrument.
SECTION 12.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
No Certificateholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of any 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 hereof.
No Certificateholder shall have any right by virtue of any provision 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 hereinbefore provided, and unless also the Holders of
Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 15 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. It is
understood and intended, and expressly covenanted by each Certificateholder with
every other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatsoever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such 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 herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
119
<PAGE>
SECTION 12.04. GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 12.05. Notices.
All directions, demands and notices hereunder shall be in writing and shall
be deemed to have been duly given when received if personally delivered at or
mailed by first class mail, postage prepaid, or by express delivery service or
delivered in any other manner specified herein, to (a) in the case of the
Depositor, One New York Plaza, New York, NY 10292, Attention: Asset-Backed
Finance Group (phone number (212) 778-1000), or such other address or telecopy
number as may hereafter be furnished to the Servicer, the Certificate Insurer
and the Trustee in writing by the Depositor, (b) in the case of the Servicer, 15
South Main Street, Suite 750, Greenville, SC 29606, Attention: Wade Hall
(telecopy number: (864) 271-8374, or such other address or telecopy number as
may hereafter be furnished to the Trustee and the Depositor in writing by the
Servicer, (c) in the case of the Trustee, First Union National Bank of North
Carolina, 230 South Tryon Street, 8th Floor, Charlotte, NC 28288-1179,
Attention: Corporate Trust Department (telecopy number 704-383-7316, or such
other address or telecopy number as may hereafter be furnished to the Servicer
and the Depositor in writing by the Trustee and (d) in the Case of the
Certificate Insurer, Financial Security Assurance Inc., 350 Park Avenue, New
York, NY 10022, Attention: Surveillance Department Re: Emergent Home Equity Loan
Trust 1997-1 (telecopy number 212-888-5278) or such other address or telecopy
number as may hereafter be furnished to the Trustee, the Depositor and the
Servicer in writing by the Certificate Insurer. Any party hereto may change the
address, telephone number or telecopier number by notice to the other parties
hereto in accordance with the terms hereof. In each case in which a notice or
other communication to the Certificate Insurer refers to a Servicer Event of
Default or a claim under the Policy or with respect to which failure on the part
of the Certificate Insurer 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 the General Counsel and the Head-Financial Guaranty
Group and shall be marked to indicate "URGENT MATERIAL ENCLOSED". Any notice
required or permitted to be given to a Certificateholder shall be given by first
class mail, postage prepaid, at the address of such Holder as shown in the
Certificate Register. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given when mailed,
whether or not the Certificateholder receives such notice. A copy of any notice
required to be telecopied hereunder also shall be mailed to the appropriate
party in the manner set forth above.
120
<PAGE>
SECTION 12.06. 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 12.07. Notice to Rating Agencies and Certificate Insurer.
The Trustee shall use its best efforts promptly to provide notice to the
Rating Agencies and the Certificate Insurer with respect to each of the
following of which it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Servicer Event of Default that has not been
cured or waived;
3. The resignation or termination of the Servicer or the Trustee;
4. The repurchase or substitution of Mortgage Loans pursuant to or as
contemplated by Section 2.03;
5. The final payment to the Holders of any Class of Certificates;
6. Any change in the location of the Collection Account or the
Distribution Account;
7. Any event that would result in the inability of the Trustee to make
advances regarding delinquent mortgage loans; and
8. Any Certificate Insurer Default that has not been cured.
In addition, the Trustee shall promptly furnish to each Rating Agency and
the Certificate Insurer copies of each report to Certificateholders described in
Section 4.02 and the Servicer shall promptly furnish to each Rating Agency
copies of the following:
1. Each annual statement as to compliance described in Section 3.20;
and
121
<PAGE>
2. Each annual independent public accountants' servicing report
described in Section 3.21.
Any such notice pursuant to this Section 12.07 shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
first class mail, postage prepaid, or by express delivery service to Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10007, and to
Standard & Poor's Ratings Services, 25 Broadway, New York, New York 10004, or
such other addresses as the Rating Agencies may designate in writing to the
parties hereto.
SECTION 12.08. Article and Section References.
All article and section references used in this Agreement, unless otherwise
provided, are to articles and sections in this Agreement.
SECTION 12.09. Confirmation of Intent.
It is the express intent of the parties hereto that the conveyance of the
Mortgage Loans and the other assets constituting the Trust Fund by the Depositor
to the Trustee as contemplated by this Agreement be, and be treated for all
purposes as, a sale by the Depositor to the Trustee of the Mortgage Loans and
the other assets constituting the Trust Fund. It is, further, not the intention
of the parties that such conveyance be deemed a pledge of the Mortgage Loans and
the other assets constituting the Trust Fund by the Depositor to the Trustee to
secure a debt or other obligation of the Depositor. However, in the event that,
notwithstanding the intent of the parties, the Mortgage Loans and the other
assets constituting the Trust Fund are held to continue to be property of the
Depositor then (a) this Agreement shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the Uniform Commercial Code;
(b) the transfer of the Mortgage Loans and the other assets constituting the
Trust Fund provided for herein shall be deemed to be a grant by the Depositor to
the Trustee of a security interest in all of the Depositor's right, title and
interest in and to the Mortgage Loans and the other assets constituting the
Trust Fund and all amounts payable on the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property; (c) the
possession by the Trustee of Mortgage Loans and such other items of property as
constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be "possession by the secured party" for purposes of perfecting the
security interest pursuant to Section 9-305 of the Uniform Commercial Code; and
(d) notifications to persons holding such property, and acknowledgments,
receipts or confirmations from persons holding such property, shall be deemed
notifications to, or acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of the Trustee for the purpose
of perfecting such security interest under applicable law. Any assignment of the
interest of the Trustee pursuant to any provision hereof shall also be deemed to
be an assignment of any security interest
122
<PAGE>
created hereby. The Servicer and the Depositor shall, to the extent consistent
with this Agreement, take such actions as may be necessary to ensure that, if
this Agreement were deemed to create a security interest in the Mortgage Loans
and the other assets constituting the Trust Fund, 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.
123
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized, in each case 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 MORTGAGE CORP.,
as Servicer
By:/s/ J. Phil Cox
----------------------------------
Name: J. Phil Cox
Title: Senior Executive Vice President
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA,
solely in its capacity as Trustee
and not in its individual capacity
By:/s/ Shannon Stahel
----------------------------------
Name: Shannon Stahel
Title: Corporate Trust Officer
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 26th day of March 1997, before me, a notary public in and for said
State, personally appeared Glen Stein, known to me to be a Vice President of
Prudential Securities Secured Financing Corporation, one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
__________________________
Notary Public
[Notarial Seal]
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the 26th day of March 1997, before me, a notary public in and for said
State, personally appeared J. Phil Cox, known to me to be a Senior Executive
Vice President of Emergent Mortgage Corp., one of the corporations that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
__________________________
Notary Public
[Notarial Seal]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 26th day of March 1997, before me, a notary public in and for said
State, personally appeared Shannon Stahel, known to me to be an officer of First
Union National Bank of North Carolina, a national banking association that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said banking association, and acknowledged to me that
such banking association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
__________________________
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Depositor or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in 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.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
================================================================================
Series 1997-1, Class A-1 Class A-1 Certificate Principal Balance
as of the Issue Date:
- --------------------------------------------------------------------------------
Pass-Through Rate: _________% $_____________
- --------------------------------------------------------------------------------
Date of Pooling and Servicing Denomination: $____________
Agreement:
March 1, 1997
- --------------------------------------------------------------------------------
First Distribution Date: Servicer:
April 20, 1997 Emergent Mortgage Corp.
- --------------------------------------------------------------------------------
No. 1 Trustee: First Union National
Bank of North Carolina
- --------------------------------------------------------------------------------
Issue Date: March __, 1997
- --------------------------------------------------------------------------------
CUSIP: __________________
================================================================================
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY
BE LESS THAN THE AMOUNT SHOWN ABOVE.
A-1-1
<PAGE>
EMERGENT HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of closed end, fixed rate home equity loans
secured by mortgages on single-family residences (which may be attached,
detached, part of a two- to four-family dwelling, a condominium, townhouse, or a
unit in a planned unit development) and manufactured housing (the "Mortgage
Loans") formed and sold by
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
THE SERVICER, THE TRUSTEE OR ANY OF THEIR AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that Cede & Co. is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the Class
A-1 Certificate Principal Balance) in that certain beneficial ownership interest
evidenced by all the Class A-1 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Prudential Securities Secured Financing Corporation
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), the Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
20th day of each month or, if such 20th day is not a Business Day, the Business
Day immediately following (a "Distribution Date"), commencing on the First
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the last Business Day of the month immediately preceding the
month of such distribution (the "Record Date"), from funds in the Distribution
Account in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed to the Holders of
Class A-1 Certificates on such Distribution Date pursuant to the Agreement.
So long as this Certificate is registered in the name of a Depository or
its nominee, the Trustee will make payments of principal and interest on this
Certificate by wire transfers of immediately available funds to the Depository
or its nominee. Otherwise all distributions to the Holder of this Certificate
under the Agreement will be made or caused to be made by or on behalf of the
Trustee by wire
A-1-2
<PAGE>
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class A-1 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Trustee may deduct a reasonable wire transfer fee
from any payment made by wire transfer. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
The Pass-Through Rate on the Class A-1 Certificates on each Distribution
Date will be a rate per annum equal to ____% per annum.
This Certificate is one of a duly authorized issue of Certificates
designated as Emergent Home Equity Loan Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class A-1 Certificates.
The Class A-1 Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans and payments under the
Policy, all as more specifically set forth herein and in the Agreement and the
policy. As provided in the Agreement, withdrawals from the Collection Accounts
and the Distribution Account may be made from time to time for purposes other
than distributions to Certificateholders, such purposes including reimbursement
of advances made, or certain expenses incurred, with respect to the Mortgage
Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, the Trustee with
the consent of the Holders of Certificates entitled to at least 66% of the
Voting Rights and the Certificate Insurer. 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.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or
A-1-3
<PAGE>
accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without coupons
in Classes and denominations representing Percentage Interests specified in the
Agreement. As provided in the Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee, the Certificate Insurer and the
Certificate Registrar and any agent of the Depositor, any Servicer, the Trustee,
the Certificate Insurer or the Certificate Registrar may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and none of the Depositor, the Servicer, the Trustee, the Certificate Insurer,
the Certificate Registrar nor any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund created thereby
shall terminate upon payment to the Certificateholders of all amounts held by or
on behalf of the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the later of the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan or
REO Property remaining in the Trust Fund, and (ii) the purchase by the party
designated in the Agreement at a price determined as provided in the Agreement
from the Trust Fund of all Mortgage Loans and all property acquired in respect
of such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all Mortgage Loans
and all property acquired in respect of any Mortgage Loan at a price determined
as provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans and each REO
Property at the time of purchase being 10% or less of the Original Pool Balance.
The recitals contained herein shall be taken as statements of the Depositor
and the Trustee assumes no responsibility for their correctness.
A-1-4
<PAGE>
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, solely in its capacity as
Trustee and not in its individual
capacity
By_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1 Certificates referred to in the
within-mentioned Agreement.
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, as Certificate Registrar
BY:__________________________________
Authorized Signatory
A-1-5
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT Custodian
-----------
(Cuss) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right
if survivorship and not as __________________-
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
________________________________________________________________________________
a Percentage Interest equal to ____% evidenced by the within Emergent Home
Equity Loan Pass-Through Certificate Series 1997-1, Class A-1 and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:_____________________________________.
Dated:
_____________________________________________
Signature by or on behalf of assignor
_____________________________________________
Signature Guaranteed
A-1-6
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _________________, account number __________________________,
or, if mailed by check, to _____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to ______________________________________
_______________________________________________________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________, as its agent.
A-1-7
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2 CERTIFICATE
Unless this certificate is presented by an authorized representative of The
Depository of The Depository Trust Company, a New York corporation ("DTC"), to
the Depositor or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in 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.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
================================================================================
Series 1997-1, Class A-2 Class A-2 Certificate Principal Balance
as of the Issue Date:
- --------------------------------------------------------------------------------
Pass-Through Rate: _________% $_____________
- --------------------------------------------------------------------------------
Date of Pooling and Servicing Denomination: $____________
Agreement:
March 1, 1997
- --------------------------------------------------------------------------------
First Distribution Date: Servicer:
April 20, 1997 Emergent Mortgage Corp.
- --------------------------------------------------------------------------------
No. 1 Trustee: First Union National
Bank of North Carolina
- --------------------------------------------------------------------------------
Issue Date: March __, 1997
- --------------------------------------------------------------------------------
CUSIP: __________________
================================================================================
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY
BE LESS THAN THE AMOUNT SHOWN ABOVE.
A-2-1
<PAGE>
EMERGENT HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of closed end, fixed rate home equity loans
secured by mortgages on single-family residences (which may be attached,
detached, part of a two- to four-family dwelling, a condominium, townhouse, or a
unit in a planned unit development) and manufactured housing (the "Mortgage
Loans") formed and sold by
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
THE PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, THE TRUSTEE
OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that Cede & Co. is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the Class
A-2 Certificate Principal Balance) in that certain beneficial ownership interest
evidenced by all the Class A-2 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Prudential Securities Secured Financing Corporation
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), the Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
20th day of each month or, if such 20th day is not a Business Day, the Business
Day immediately following (a "Distribution Date"), commencing on the First
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the last Business Day of the month immediately preceding the
month of such distribution (the "Record Date"), from funds in the Distribution
Account in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed to the Holders of
Class A-2 Certificates on such Distribution Date pursuant to the Agreement.
So long as this Certificate is registered in the name of a Depository or
its nominee, the Trustee will make payments of a principal and interest on this
Certificate by wire transfer of immediately available funds to the Depository or
its nominee. Otherwise, all distributions to the Holder of this Certificate
under the
A-2-2
<PAGE>
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class A-2 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Trustee may deduct a reasonable wire transfer fee
from any payment made by wire transfer. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
The Pass-Through Rate on the Class A-2 Certificates on each Distribution
Date will be a rate per annum equal to ____% per annum.
This Certificate is one of a duly authorized issue of Certificates
designated as Emergent Home Equity Loan Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class A-2 Certificates.
The Class A-2 Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans and payments under the
Policy, all as more specifically set forth herein and in the Agreement and the
policy. As provided in the Agreement, withdrawals from the Collection Accounts
and the Distribution Account may be made from time to time for purposes other
than distributions to Certificateholders, such purposes including reimbursement
of advances made, or certain expenses incurred, with respect to the Mortgage
Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, the Trustee with
the consent of the Holders of Certificates entitled to at least 66% of the
Voting Rights and the Certificate Insurer. 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 herefor 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.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies
A-2-3
<PAGE>
appointed by the Trustee as provided in the Agreement, duly endorsed by, or
accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without coupons
in Classes and denominations representing Percentage Interests specified in the
Agreement. As provided in the Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee, the Certificate Insurer and the
Certificate Registrar and any agent of the Depositor, any Servicer, the Trustee,
the Certificate Insurer or the Certificate Registrar may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and none of the Depositor, the Servicer, the Trustee, the Certificate Insurer,
the Certificate Registrar nor any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund created thereby
shall terminate upon payment to the Certificateholders of all amounts held by or
on behalf of the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the later of the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan or
REO Property remaining in the Trust Fund, and (ii) the purchase by the party
designated in the Agreement at a price determined as provided in the Agreement
from the Trust Fund of all Mortgage Loans and all property acquired in respect
of such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all Mortgage Loans
and all property acquired in respect of any Mortgage Loan at a price determined
as provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans and each REO
Property at the time of purchase being 10% or less of the Original Pool Balance.
The recitals contained herein shall be taken as statements of the Depositor
and the Trustee assumes no responsibility for their correctness.
A-2-4
<PAGE>
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, solely in its capacity as
Trustee and not in its individual
capacity
By_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-2 Certificates referred to in the within-
mentioned Agreement.
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, as Certificate Registrar
BY:________________________________
Authorized Signatory
A-2-5
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
-----------
(Cuss) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right
if survivorship and not as ___________________
tenants in common (State)
Additional abbreviations may also be used though not in the
above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
________________________________________________________________________________
a Percentage Interest equal to ____% evidenced by the within Emergent Home
Equity Loan Pass-Through Certificate Series 1997-1, Class A-2 and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:_____________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
A-2-6
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _________________, account number __________________________,
or, if mailed by check, to _____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to ______________________________________
_______________________________________________________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________, as its agent.
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-3 CERTIFICATE
Unless this certificate is presented by an authorized representative of The
Depository of The Depository Trust Company, a New York corporation ("DTC"), to
the Depositor or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in 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.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
================================================================================
Series 1997-1, Class A-3 Class A-3 Certificate Principal Balance
as of the Issue Date:
- --------------------------------------------------------------------------------
Pass-Through Rate: _________% $_____________
- --------------------------------------------------------------------------------
Date of Pooling and Servicing Denomination: $____________
Agreement:
March 1, 1997
- --------------------------------------------------------------------------------
First Distribution Date: Servicer:
April 20, 1997 Emergent Mortgage Corp.
- --------------------------------------------------------------------------------
No. 1 Trustee: First Union National
Bank of North Carolina
- --------------------------------------------------------------------------------
Issue Date: March __, 1997
- --------------------------------------------------------------------------------
CUSIP: __________________
================================================================================
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY
BE LESS THAN THE AMOUNT SHOWN ABOVE.
A-3-1
<PAGE>
EMERGENT HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of closed end fixed rate home equity loans
secured by mortgages on single-family residences (which may be attached,
detached, part of a two- to four-family dwelling, a condominium, townhouse, or a
unit in a planned unit development) and manufactured housing (the "Mortgage
Loans") formed and sold by
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
THE SERVICER, THE TRUSTEE OR ANY OF THEIR AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that Cede & Co. is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the Class
A-3 Certificate Principal Balance) in that certain beneficial ownership interest
evidenced by all the Class A-3 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Prudential Securities Secured Financing Corporation
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), the Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
20th day of each month or, if such 20th day is not a Business Day, the Business
Day immediately following (a "Distribution Date"), commencing on the First
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the last Business Day of the month immediately preceding the
month of such distribution (the "Record Date"), from funds in the Distribution
Account in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed to the Holders of
Class A-3 Certificates on such Distribution Date pursuant to the Agreement.
So long as this Certificate is registered in the name of a Depository or
its nominee, the Trustee will make payments of a principal and interest on this
Certificate by wire transfer of immediately available funds to the Depository or
its nominee. Otherwise, all distributions to the Holder of this Certificate
under the Agreement will be made or caused to be made by or on behalf of the
Trustee by wire
A-3-2
<PAGE>
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class A-3 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Trustee may deduct a reasonable wire transfer fee
from any payment made by wire transfer. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
The Pass-Through Rate on the Class A-3 Certificates on each Distribution
Date will be a rate per annum equal to ____% per annum.
This Certificate is one of a duly authorized issue of Certificates
designated as Emergent Home Equity Loan Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class A-3 Certificates.
The Class A-3 Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans and payments under the
Policy, all as more specifically set forth herein and in the Agreement and the
policy. As provided in the Agreement, withdrawals from the Collection Accounts
and the Distribution Account may be made from time to time for purposes other
than distributions to Certificateholders, such purposes including reimbursement
of advances made, or certain expenses incurred, with respect to the Mortgage
Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, the Trustee with
the consent of the Holders of Certificates entitled to at least 66% of the
Voting Rights and the Certificate Insurer. 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 herefor 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.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or
A-3-3
<PAGE>
accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without coupons
in Classes and denominations representing Percentage Interests specified in the
Agreement. As provided in the Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee, the Certificate Insurer and the
Certificate Registrar and any agent of the Depositor, any Servicer, the Trustee,
the Certificate Insurer or the Certificate Registrar may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and none of the Depositor, the Servicer, the Trustee, the Certificate Insurer,
the Certificate Registrar nor any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund created thereby
shall terminate upon payment to the Certificateholders of all amounts held by or
on behalf of the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the later of the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan or
REO Property remaining in the Trust Fund, and (ii) the purchase by the party
designated in the Agreement at a price determined as provided in the Agreement
from the Trust Fund of all Mortgage Loans and all property acquired in respect
of such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all Mortgage Loans
and all property acquired in respect of any Mortgage Loan at a price determined
as provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans and each REO
Property at the time of purchase being 10% or less of the Original Pool Balance.
The recitals contained herein shall be taken as statements of the Depositor
and the Trustee assumes no responsibility for their correctness.
A-3-4
<PAGE>
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, solely in its capacity as
Trustee and not in its individual
capacity
By_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-3 Certificates referred to in the within-
mentioned Agreement.
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, as Certificate Registrar
BY:________________________________
Authorized Signatory
A-3-5
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
-----------
(Cuss) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right
if survivorship and not as ___________________
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
________________________________________________________________________________
a Percentage Interest equal to ____% evidenced by the within Emergent Home
Equity Loan Pass-Through Certificate Series 1997-1, Class A-3 and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:_______________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
A-3-6
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _________________, account number __________________________,
or, if mailed by check, to _____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to ______________________________________
_______________________________________________________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________, as its agent.
A-3-7
<PAGE>
EXHIBIT A-4
CLASS R CERTIFICATE
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CLASS R CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES OF
THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CLASS R CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH
TIME AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CLASS R CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE
SECURITIES LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER
DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR
QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION THAT DOES NOT REQUIRE
SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
AS DESCRIBED HEREIN, NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE
BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT (OR AN ENTITY USING THE
ASSETS OF SUCH A PLAN OR ARRANGEMENT) SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL
BE REGISTERED.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS R CERTIFICATE
MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (1) AN AFFIDAVIT
TO THE CERTIFICATE REGISTRAR AND THE TRUSTEE THAT SUCH TRANSFEREE IS
NOT (A) THE UNITED STATES, ANY STATE OR POLITICAL
A-4-1
<PAGE>
SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN
SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY
CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX
IMPOSED BY SECTION 511 OF THE CODE, (C) ANY ORGANIZATION DESCRIBED IN
SECTION 1381(a)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE
FOREGOING CLAUSES (A), (B) OR (C) BEING HEREINAFTER REFERRED TO AS A
"DISQUALIFIED ORGANIZATION"), OR (D) AN AGENT OF A DISQUALIFIED
ORGANIZATION AND (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE
ASSESSMENT OR COLLECTION OF TAX, AND (3) SUCH TRANSFEREE SATISFIES
CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF
THE PROPOSED TRANSFEREE. NOTWITHSTANDING REGISTRATION IN THE
CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF
THIS CLASS R CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF
A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE
OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE
DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING,
BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE.
EACH HOLDER OF A CLASS R CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH
AND THE PROVISIONS OF SECTION 5.02(d) OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED
ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF THIS
CLASS R CERTIFICATE.
A-4-2
<PAGE>
================================================================================
Series 1997-1, Class R Certificate Principal Balance of the
Class R Certificates as of the Issue
Date: $0.00
- --------------------------------------------------------------------------------
Date of Pooling and Servicing
Agreement:
March 1, 1997
- --------------------------------------------------------------------------------
First Distribution Date: Servicer:
April 20, 1997 Emergent Mortgage Corp.
- --------------------------------------------------------------------------------
No. 1 Trustee: First Union National
Bank of North Carolina
- --------------------------------------------------------------------------------
Issue Date: March __, 1997
- --------------------------------------------------------------------------------
Percentage Interest: 100%
================================================================================
A-4-3
<PAGE>
EMERGENT HOME EQUITY LOAN PASS-THROUGH
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of closed end fixed rate home equity loans
secured by mortgages on single-family residences (which may be attached,
detached, part of a two- to four-family dwelling, a condominium, townhouse, or a
unit in a planned unit development) and manufactured housing (the "Mortgage
Loans") formed and sold by
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, THE SERVICER, THE
TRUSTEE OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that Emergent Mortgage Corp. is the registered owner of a
Percentage Interest set forth above in that certain beneficial ownership
interest evidenced by all the Class R Certificates in the Trust Fund created
pursuant to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Prudential Securities Secured Financing Corporation
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), the Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
20th day of each month or, if such 20th day is not a Business Day, the Business
Day immediately following (a "Distribution Date"), commencing on the First
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the last Business Day of the month immediately preceding the
month of such distribution (the "Record Date"), from funds in the Distribution
Account in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed to the Holders of
Class R Certificates on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered
A-4-4
<PAGE>
owner of Class R Certificates the aggregate Percentage Interest of which is in
excess of a 66% Percentage Interest of the Class R Certificates, or by check
mailed by first class mail to the address of the Person entitled thereto, as
such name and address shall appear on the Certificate Register, provided that
the Trustee may deduct a reasonable wire transfer fee from any payment made by
wire transfer. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Emergent Home Equity Loan Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
the Percentage Interest specified on the face hereof.
The Class R Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, the Trustee with
the consent of the Holders of Certificates entitled to at least 66% of the
Voting Rights and the Certificate Insurer. 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 herefor 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.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
A-4-5
<PAGE>
The Certificates are issuable in fully registered form only without coupons
in Classes and denominations representing Percentage Interests specified in the
Agreement. As provided in the Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the 1933 Act and effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that a transfer is to be made without registration or qualification,
the Trustee and the Certificate Registrar shall require, in order to assure
compliance with such laws, (i) if such transfer is purportedly being made in
reliance upon Rule 144A under the 1933 Act, written certifications from the
Certificateholder desiring to effect the transfer and from such
Certificateholder's prospective transferee, in the form described by the
Agreement certifying to the Trustee and the Certificate Registrar the facts
surrounding the transfer, or (ii) in all other cases, an Opinion of Counsel
satisfactory to them that such transfer may be made without such registration or
qualification, which Opinion of Counsel shall not be an expense of the
Depositor, the Trustee or the Certificate Registrar, in their respective
capacities as such, together with copies of the written certification(s) of the
Certificateholder desiring to effect the transfer and/or such
Certificateholder's prospective transferee upon which such Opinion of Counsel is
based, if any. None of the Depositor, the Certificate Registrar nor the Trustee
is obligated to register or qualify the Class of Certificates specified on the
face hereof under the 1933 Act or any other securities law or to take any action
not otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Depositor, the Certificate Registrar, the Servicer and the
Certificate Insurer against any liability that may result if the transfer is not
so exempt or is not made in accordance with such federal and state laws.
No transfer of a Certificate or any interest therein may be made to
employee benefit plans and certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA and Section 4975 of the Code ("Plans") or any person who is
directly or indirectly purchasing the Certificate or interest therein on behalf
of, as named fiduciary of, as trustee of, or with assets of a Plan.
The Holder of this Certificate, by its acceptance hereof, shall be deemed
for all purposes to have consented to the provisions of Section 5.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
A-4-6
<PAGE>
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause the REMIC
Trust to cease to qualify as a REMIC or cause the imposition of a tax upon the
REMIC Trust.
No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee, the Certificate Insurer and the
Certificate Registrar and any agent of the Depositor, any Servicer, the Trustee,
the Certificate Insurer or the Certificate Registrar may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and none of the Depositor, the Servicer, the Trustee, the Certificate Insurer,
the Certificate Registrar nor any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund created thereby
shall terminate upon payment to the Certificateholders of all amounts held by or
on behalf of the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the later of the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan or
REO Property remaining in the Trust Fund, and (ii) the purchase by the party
designated in the Agreement at a price determined as provided in the Agreement
from the Trust Fund of all Mortgage Loans and all property acquired in respect
of such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all Mortgage Loans
and all property acquired in respect of any Mortgage Loan at a price determined
as provided in the Agreement. The exercise of such right will effect early
retirement of they Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans and each REO
Property at the time of purchase being 10% or less of the Original Pool Balance.
The recitals contained herein shall be taken as statements of the Depositor
and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
A-4-7
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, solely
in its capacity as
Trustee and not in its
individual capacity
By _____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class R Certificates referred to in the within-
mentioned Agreement.
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA,
as Certificate Registrar
BY: _____________________________________
Authorized Signatory
A-4-8
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
-----------
(Cuss) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right
if survivorship and not as _____________________
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ___________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
________________________________________________________________________________
a Percentage Interest equal to ____% evidenced by the within Emergent Home
Equity Loan Pass-Through Certificate Series 1997-1, Class R and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:
Dated:
_______________________________________
Signature by or on behalf of assignor
_______________________________________
Signature Guaranteed
A-4-9
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _________________, account number __________________________,
or, if mailed by check, to _____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to ______________________________________
_______________________________________________________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________, as its agent.
A-4-10
<PAGE>
EXHIBIT B
FORM OF FINANCIAL GUARANTY INSURANCE POLICY
[See Exhibit 4.2]
B-1
<PAGE>
EXHIBIT C-1
FORM OF TRUSTEE'S INITIAL CERTIFICATION
__________, 1997
Prudential Securities Secured
Financing Corporation
One New York Plaza
New York, New York 10292
Attn: Asset-Backed Finance Group
Emergent Mortgage Corp.
50 Datastream Plaza, Suite 201
Greenville, SC 29605
Re: Pooling and Servicing Agreement, dated as of March 1, 1997,
among Prudential Securities Secured Financing Corporation,
Emergent Mortgage Corp. and First Union National Bank of
North Carolina
Ladies and Gentlemen:
Pursuant to Section 2.02 of the Agreement, we certify that, as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in the exception
report annexed hereto as not being covered by this certification), (i) the
Mortgage Note included in each Mortgage File required to be delivered to us
pursuant to the Agreement is in our possession and (ii) such Mortgage Note has
been reviewed by us and appears regular on its face and relates to such Mortgage
Loan.
Attached is the Trustee's preliminary exceptions in accordance with Section
2.02 of the Agreement. Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to them in the Agreement.
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
due authorization, recordability or genuineness of any of the documents
contained in the Mortgage File of any of the Mortgage Loans identified on the
Mortgage Loan
C-1-1
<PAGE>
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Mortgage Loan.
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, solely
in its capacity as
Trustee and not in its
individual capacity
By:_______________________
Name:______________________
Title:_____________________
C-1-2
<PAGE>
EXHIBIT C-2
FORM OF TRUSTEE'S FINAL CERTIFICATION
_________, 1997
Prudential Securities Secured
Financing Corporation
One New York Plaza
New York, New York 10292
Attn: Asset-Backed Finance Group
Emergent Mortgage Corp.
50 Datastream Plaza, Suite 201
Greenville, SC 29605
Re: Pooling and Servicing Agreement, dated as of March 1, 1997,
among Prudential Securities Secured Financing Corporation,
Emergent Mortgage Corp. and First Union National Bank of
North Carolina
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on the attachment hereto), it or a Custodian on its
behalf has received:
(i) the original recorded Mortgage, and the original recorded power of
attorney, if the Mortgage was executed pursuant to a power of attorney, or
a certified copy thereof in those instances where the public recording
office retains the original or where the original has been lost; and
(ii) an original recorded Assignment of the Mortgage to the Trustee
together with the original recorded Assignment or Assignments of the
Mortgage showing a complete chain of assignment from the originator, or a
certified copy of such Assignments in those instances where the public
recording retains the original or where original has been lost; and
(iii) the original lender's title insurance policy.
C-2-1
<PAGE>
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in the Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, solely
in its capacity as
Trustee and not in its
individual capacity
By:_______________________
Name:______________________
Title:_____________________
C-2-2
<PAGE>
EXHIBIT D
FORM OF UNAFFILIATED SELLER'S AGREEMENT
[See Exhibit 4.3]
D-1
<PAGE>
Exhibit E-1
REQUEST FOR RELEASE
(for Trustee/Custodian)
Loan Information
Name of Mortgagor:
Servicer
Loan No.:
Trustee/Custodian
Name: First Union National Bank of North Carolina
Address: 230 S. Tryon Street, Charlotte, NC 28288
Trustee/Custodian
Mortgage File No.:
Depositor
Name: Prudential Securities Secured
Financing Corporation
Address: One New York Plaza, New York 10292
Certificates: Emergent Home Equity Loan Pass-Through
Certificates, Series 1997-1.
E-1-1
<PAGE>
The undersigned Servicer hereby acknowledges that it has received from
First Union National Bank of North Carolina, as Trustee for the Holders of
Emergent Home Equity Loan Pass-Through Certificates, Series 1997-1, the
documents referred to below (the "Documents"). All capitalized terms not
otherwise in this Request for Release shall have the meanings given them in the
Pooling and Servicing Agreement, dated as of March 1, 1997, among the Trustee,
the Depositor and the Servicer (the "Pooling and Servicing Agreement").
( ) Promissory Note dated __________, 19__, in the original principal sum of
$________, made by ______________, payable to, or endorsed to the order of,
the Trustee.
( ) Mortgage recorded on ____________________ as instrument no. __________ in
the County Recorder's Office of the County of _______________, State of
_______________ in book/reel/docket _________________ of official records
at page/image ______________.
( ) Deed of Trust recorded on _______________ as instrument no. ___________ in
the County Recorder's Office of the County of _______________, State of
________________ in book/reel/docket ________________ of official records
at page/image _____________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on ______
as instrument no. _______ in the County Recorder's Office of the County of
______________, State of ______________ in book/reel/docket __________ of
official records at page/image ___________.
( ) Other documents, including any amendments, assignments or other assumptions
of the Mortgage Note or Mortgage.
( ) __________________________________________
( ) __________________________________________
( ) __________________________________________
( ) __________________________________________
The undersigned Servicer hereby acknowledges and agrees as follows:
(1) The Servicer shall hold and retain possession of the Documents in
trust for the benefit of the Trustee, solely for the purposes provided in
the Agreement.
E-1-2
<PAGE>
(2) The Servicer shall not cause or permit the Documents to become
subject to, or encumbered by, any claim, liens, security interest, charges,
writs of attachment or other impositions nor shall the Servicer assert or
seek to assert any claims or rights of setoff to or against the Documents
or any proceeds thereof.
(3) The Servicer shall return each and every Document previously
requested from the Mortgage File to the Trustee when the need therefor no
longer exists, unless the Mortgage Loan relating to the Documents has been
liquidated and the proceeds thereof have been remitted to the Collection
Account and except as expressly provided in the Agreement.
(4) The Documents and any proceeds thereof, including any proceeds of
proceeds, coming into the possession or control of the Servicer shall at
all times be earmarked for the account of the Trustee, and the Servicer
shall keep the Documents and any proceeds separate and distinct from all
other property in the Servicer's possession, custody or control.
Dated:
EMERGENT MORTGAGE CORP.
By:_______________________
Name:______________________
Title:_____________________
E-1-3
<PAGE>
EXHIBIT E-2
REQUEST FOR RELEASE
[Mortgage Loans Paid in Full]
OFFICERS' CERTIFICATE AND TRUST RECEIPT
EMERGENT HOME EQUITY LOAN PASS-THROUGH CERTIFICATES
SERIES 1997-1
____________________________________________ HEREBY CERTIFIES THAT HE/SHE IS AN
OFFICER OF THE SERVICER, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER SIGNATURE,
AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN MADE.
LOAN NUMBER:_____________ BORROWER'S NAME:
COUNTY:
WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLECTION ACCOUNT PURSUANT TO SECTION
3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.
DATED:
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
E-2-1
<PAGE>
EXHIBIT F
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
, being duly sworn, deposes, represents and
warrants as follows:
1. I am a ________________ of ___________________________ (the "Owner") a
corporation duly organized and existing under the laws of ________, the record
owner of Emergent Home Equity Loan Pass-Through Certificates, Series 1997-1,
Class R (the "Class R Certificates"), on behalf of whom I have the authority to
make this affidavit and agreement. Capitalized terms used but not defined herein
have the respective meanings assigned thereto in the Pooling and Servicing
Agreement pursuant to which the Class R Certificates were issued.
2. The Owner (i) is and will be a "Permitted Transferee" as of
____________, 199_ and (ii) is acquiring the Class R Certificates, in the
initial principal amount of $0.00 for its own account or for the account of
another Owner from which it has received an affidavit in substantially the same
form as this affidavit. A "Permitted Transferee" is any person other than a
"disqualified organization" or a possession of the United States. For this
purpose, a "disqualified organization" means the United States, any state or
political subdivision thereof, any agency or instrumentality of any of the
foregoing (other than an instrumentality all of the activities of which are
subject to tax and, except for the Federal Home Loan Mortgage Corporation, a
majority of whose board of directors is not selected by any such governmental
entity) or any foreign government, international organization or any agency or
instrumentality of such foreign government or organization, any rural electric
or telephone cooperative, or any organization (other than certain farmers'
cooperatives) that is generally exempt from federal income tax unless such
organization is subject to the tax on unrelated business taxable income.
3. The Owner is aware (i) of the tax that would be imposed on transfers of
the Class R Certificates to disqualified organizations under the Internal
Revenue Code of 1986 that applies to all transfers of the Class R Certificates
after March 31, 1988; (ii) that such tax would be on the transferor or, if such
transfer is through an agent (which person includes a broker, nominee or
middleman) for a non-Permitted Transferee, on the agent; (iii) that the person
otherwise liable for the tax shall be relieved of liability for the tax if the
transferee furnishes to such person an affidavit that the transferee is a
Permitted Transferee and, at the time of transfer, such person does not have
actual knowledge that the affidavit is false; and (iv) that each of the Class R
Certificates may be a "noneconomic residual interest" within the
F-1
<PAGE>
meaning of proposed Treasury regulations promulgated under the Code and that the
transferor of a "noneconomic residual interest" will remain liable for any taxes
due with respect to the income on such residual interest, unless no significant
purpose of the transfer is to impede the assessment or collection of tax.
4. The Owner is aware of the tax imposed on a "pass-through entity" holding
the Class R Certificates if, at any time during the taxable year of the
pass-through entity, a non-Permitted Transferee is the record holder of an
interest in such entity. (For this purpose, a "pass-through entity" includes a
regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)
5. The Owner is aware that the Trustee will not register the transfer of
any Class R Certificate unless the transferee, or the transferee's agent,
delivers to the Trustee, among other things, an affidavit substantially in the
same form as this affidavit. The Owner expressly agrees that it will not
consummate any such transfer if it knows or believes that any of the
representations contained in such affidavit and agreement are false.
6. The Owner consents to any additional restrictions or arrangements that
shall be deemed necessary upon advice of counsel to constitute a reasonable
arrangement to ensure that the Class R Certificates will only be owned, directly
or indirectly, by an Owner that is a Permitted Transferee.
7. The Owner's Taxpayer Identification number is _____________.
8. The Owner has reviewed the restrictions set forth on the face of the
Class R Certificates and the provisions of Section 5.02(d) of the Pooling and
Servicing Agreement under which the Class R Certificates were issued (in
particular, clauses (iii)(A) and (iii)(B) of Section 5.02(d) which authorize the
Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event that the Owner holds such Certificate
in violation of Section 5.02(d)), and that the Owner expressly agrees to be
bound by and to comply with such restrictions and provisions.
9. The Owner is not acquiring and will not transfer the Class R
Certificates in order to impede the assessment or collection of any tax.
10. The Owner anticipates that it will, so long as it holds the Class R
Certificates, have sufficient assets to pay any taxes owed by the holder of such
Class R Certificates, and hereby represents to and for the benefit of the person
from whom it acquired the Class R Certificates that the Owner intends to pay
taxes associated with holding such Class R Certificates as they become due,
fully understanding that it may incur tax liabilities in excess of any cash
flows generated by the Class R Certificates.
F-2
<PAGE>
11. The Owner has no present knowledge that it may become insolvent or
subject to a bankruptcy proceeding for so long as it holds the Class R
Certificates.
12. The Owner has no present knowledge or expectation that it will be
unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding.
13. The Owner is not acquiring the Class R Certificates with the intent to
transfer the Class R Certificates to any person or entity that will not have
sufficient funds to pay any taxes owed by the holder of such Class R
Certificates, or that may become insolvent or subject to a bankruptcy
proceeding, for so long as the Class R Certificates remain outstanding.
14. The Owner will, in connection with any transfer that it makes of the
Class R Certificates, obtain from its transferee the representations required by
Section 5.02(d) of the Pooling and Servicing Agreement under which the Class R
Certificate were issued and will not consummate any such transfer if it knows,
or knows facts that should lead it to believe, that any such representations are
false.
15. The Owner will, in connection with any transfer that it makes of the
Class R Certificates, deliver to the Trustee an affidavit, which represents and
warrants that it is not transferring the Class R Certificates to impede the
assessment or collection of any tax and that it has no actual knowledge that the
proposed transferee: (i) has insufficient assets to pay any taxes owed by such
transferee as holder of the Class R Certificates; (ii) may become insolvent or
subject to a bankruptcy proceeding for so long as the Class R Certificates
remains outstanding; and (iii) is not a "Permitted Transferee".
16. The Owner is a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in, or under the laws of, the
United States or any political subdivision thereof, or an estate or trust whose
income from sources without the United States may be included in gross income
for United States federal income tax purposes regardless of its connection with
the conduct of a trade or business within the United States.
F-3
<PAGE>
IN WITNESS WHEREOF, the Owner has caused this instrument to be executed on
its behalf, pursuant to the authority of its Board of Directors, by its [Vice]
President, attested by its [Assistant] Secretary, this ____ day of ________,
199_.
[OWNER]
By:_________________________________
Name:_______________________________
Title: [Vice] President
Personally appeared before me the above-named __________, known or proved
to me to be the same person who executed the foregoing instrument and to be a
[Vice] President of the Owner, and acknowledged to me that [he/she] executed the
same as [his/her] free act and deed and the free act and deed of the Owner.
Subscribed and sworn before me this ____ day of ____________, 199_.
Notary Public
County of_________
State of _________
My Commission expires:
F-4
<PAGE>
FORM OF TRANSFEROR AFFIDAVIT
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
___________________________________, being duly sworn, deposes, represents and
warrants as follows:
1. I am a ___________________ of _________________________ (the "Owner"), a
corporation duly organized and existing under the laws of _____________, on
behalf of whom I make this affidavit.
2. The Owner is not transferring the Residual Certificates to impede the
assessment or collection of any tax.
3. The Owner has no actual knowledge that the Person that is the proposed
transferee (the "Purchaser") of the Class R Certificates: (i) has insufficient
assets to pay any taxes owed by such proposed transferee as holder of the Class
R Certificates; (ii) may become insolvent or subject to a bankruptcy proceeding
for so long as the Class R Certificates remain outstanding and (iii) is not a
Permitted Transferee.
4. The Owner understands that the Purchaser has delivered to the Trustee a
transfer affidavit and agreement in the form attached to the Pooling and
Servicing Agreement as Exhibit F. The Owner does not know or believe that any
representation contained therein is false.
5. The Owner has no knowledge that the Purchaser is not both a United
States Person and a Permitted Transferee.
6. At the time of transfer, the Owner has conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Owner has determined that the Purchaser has historically paid
its debts as they became due and has found no significant evidence to indicate
that the Purchaser will not continue to pay its debts as they become due in the
future. The Owner understands that the transfer of a Residual Certificate may
not be respected for United States income tax purposes (and the Owner may
continue to be liable for United States income taxes associated therewith)
unless the Owner has conducted such an investigation.
7. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Pooling and Servicing Agreement.
F-5
<PAGE>
IN WITNESS WHEREOF, the Owner has caused this instrument to be executed on
its behalf, pursuant to the authority of its Board of Directors, by its [Vice]
President, attested by its [Assistant] Secretary, this ____ day of ________,
199_.
[OWNER]
By:_________________________________
Name:_______________________________
Title: [Vice] President
Personally appeared before me the above-named __________, known or proved
to me to be the same person who executed the foregoing instrument and to be a
[Vice] President of the Owner, and acknowledged to me that [he/she] executed the
same as [his/her] free act and deed and the free act and deed of the Owner.
Subscribed and sworn before me this ____ day of ____________, 199_.
Notary Public
County of_______
State of________
My Commission expires:
F-6
<PAGE>
Schedule 1
MORTGAGE LOAN SCHEDULE
<TABLE>
<CAPTION>
Account Last Name Full Name Original Balance Current Balance
<C> <S> <C> <C> <C>
64378 RUSSELL STEPHANIE ELIZABETH J RUSSELL $110,200.00 $110,144.52
64383 DIXON VERNON DIXON $75,200.00 $75,170.04
64395 MOTIKA PETER MOTIKA $78,250.00 $78,218.83
64409 LOUTHAN CRYSTAL D BLACKWOOD LOUTHAN $48,794.00 $48,776.55
64410 CONYERS JIM H CONYERS $29,600.00 $29,521.69
64415 ANDERSON TINA R ANDERSON $48,000.00 $47,973.72
64418 SIMMONDS DEBRA C SIMMONDS $72,400.00 $72,384.83
64423 JOHNSON RANDY JOHNSON $37,600.00 $37,583.32
64426 ARMOUR REBECCA P ARMOUR $98,400.00 $98,360.80
64431 WILLIAMS CHARLES WILLIAMS $54,400.00 $54,384.39
64434 CLARK EDGAR E CLARK $49,600.00 $49,572.84
64436 TROXEL LARRY GENE TROXEL JR $89,728.00 $89,728.00
64437 JORDAN BRENDA C JORDAN $67,200.00 $67,187.44
64439 CONYERS WILLIE L CONYERS $59,200.00 $59,075.64
64440 WIGGINS RONALD L WIGGINS $108,000.00 $107,951.08
64441 LEACH JULIUS LEACH $61,600.00 $61,600.00
64443 JONES ZAKIYYAH SHAREEF JONES $19,500.00 $19,470.09
64451 RONDON SARAH L RONDON $32,000.00 $32,000.00
64456 GRIDDLE THOMAS GRIDDLE $44,000.00 $43,866.30
64459 LATHAM SCOTT T LATHAM $39,525.00 $39,449.05
64461 SNOW T MELVIN SNOW $82,875.00 $82,874.99
64469 KOONS DAVID KOONS $57,600.00 $57,600.00
64471 KAISER HARRY L KAISER JR $65,600.00 $65,600.00
64475 PURVIS JOHN C PURVIS $89,600.00 $89,600.00
64479 ADAMS JACKSON ADAMS $77,600.00 $77,600.00
64481 PRICE EVELYN D PRICE $78,200.00 $78,200.00
64483 EALEY ROGER J EALEY $39,200.00 $39,200.00
64485 GUFFEY ROBERT DALE GUFFEY $52,000.00 $52,000.00
64487 ALSTON ARNETHA ALSTON $76,800.00 $76,800.00
64489 MIXON DEBRA H MIXON $32,000.00 $32,000.00
64491 REID PATRICIA C REID $36,000.00 $36,000.00
64498 BECKHAM JOHN L BECKHAM $49,500.00 $49,500.00
64502 NIX AUDREY SIMS NIX $41,200.00 $41,200.00
64504 MORGAN MICHAEL MORGAN $132,600.00 $132,600.00
64506 SELLARS MICHAEL L SELLARS $33,600.00 $33,599.99
64507 KINARD JAMES T KINARD $60,000.00 $60,000.00
64509 LIDE BENJAMIN LIDE JR $42,800.00 $42,800.00
64511 KEMPSON JEANNIE KEMPSON $40,400.00 $40,400.00
64514 JACKSON CATHY W JACKSON $64,000.00 $64,000.00
64516 SIMS LARRY R SIMS $60,000.00 $60,000.00
64519 KEITH GREGORY R KEITH $72,800.00 $72,800.00
64523 LITTLES ELNORA LITTLES $52,800.00 $52,800.00
64530 GILBERT RICHARD J GILBERT $64,000.00 $64,000.00
64532 BERRY BENJAMIN BERRY $55,200.00 $55,200.00
64534 WILDEN RICHARD E WILDEN $93,600.00 $93,600.00
64537 BACKMON BESSIE MAE BACKMON $26,250.00 $26,250.00
64542 POLLIN MELODY A POLLIN $50,400.00 $50,400.00
64544 ODELL CHARLES DAVID ODELL $35,000.00 $35,000.00
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
64547 SINGLETON ALVIN SINGLETON $44,000.00 $44,000.00
64549 BEASON SARILYN BEASON $68,800.00 $68,800.00
64551 JENNINGS GENE A JENNINGS $60,000.00 $60,000.00
64553 HARDIN FLOYD HARDIN $36,971.00 $36,971.00
64557 NASO DANIEL NASO $56,700.00 $56,700.00
64558 GHRIGSBY JUDY GHRIGSBY $56,000.00 $56,000.00
64562 EMLER STEVEN W EMLER $32,000.00 $32,000.00
64564 POUND MARVIN L POUND $41,600.00 $41,600.00
64568 GARY JOE E GARY $40,000.00 $40,000.00
64570 COPELAND GENE R COPELAND $72,000.00 $72,000.00
64572 ANTHONY JAMES E ANTHONY $42,400.00 $42,400.00
64577 FOOTMAN BERNARD L FOOTMAN $68,000.00 $68,000.00
64578 BULLARD EDWARD P BULLARD $31,500.00 $31,500.00
64584 ARNOLD THERESA P ARNOLD $44,800.00 $44,800.00
64586 COBB WILLIAM S COBB $64,800.00 $64,800.00
64589 LINGERFELDT NEIL W LINGERFELDT $65,000.00 $65,000.00
64592 DEMPSEY JOHNNIE R DEMPSEY $50,400.00 $50,399.99
64597 DAVIS DIANA DAVIS $61,600.00 $61,600.00
1000374 MULLINS DAVID MULLINS $50,000.00 $49,757.47
1000376 MITCHELL DOROTHY MITCHELL $25,125.00 $25,113.40
1000377 COLLIER DEBORAH HOLMES BENSON COLLIER $47,600.00 $47,551.87
1000385 THORNBURG LUCIA REGINA THORNBURG $58,400.00 $58,346.64
1000388 GIBSON PEGGY A GIBSON $49,600.00 $49,459.91
1000407 SCHAEFER JACOB J SCHAEFER $64,000.00 $63,954.03
1000410 WILLIAMS WILLIE WILLIAMS $29,600.00 $29,563.42
1000416 SMITH KIM Y SMITH $64,000.00 $63,936.63
1000434 TURNAAGE LARRY B TURNAAGE $64,000.00 $63,854.70
1000437 LEVINSKY LAURIE ANN LEVINSKY $62,000.00 $61,712.77
1000438 ARMSTRONG LOUISE ARMSTRONG $51,675.00 $51,637.89
1000440 COWAN DOUG COWAN $201,600.00 $201,438.70
1000449 ALEXANDER JAMES G ALEXANDER $32,400.00 $32,118.09
1000452 VILLAVICENCIO HECTOR VILLAVICENCIO $78,200.00 $78,120.95
1000458 MOUZON WILLIAM MOUZON $64,000.00 $63,854.73
1000459 LYTTON TODD MICHAEL LYTTON $75,000.00 $74,925.76
1000460 STINSON BRAD A STINSON $80,000.00 $79,977.05
1000462 NOWELL PHILLIP W NOWELL $50,400.00 $50,350.10
1000467 STREET BARBARA D STREET $88,000.00 $87,968.54
1000470 SESSOMS GARLAND T SESSOMS $37,500.00 $37,486.59
1000472 MCINTOSH SAMUEL L MCINTOSH $49,500.00 $49,460.37
1000489 SHOAF EDDIE C SHOAF $88,000.00 $87,955.69
1000491 DELGADO ELEANOR E DELGADO $61,200.00 $61,145.49
1000497 PRINCE MARVIN DANNY PRINCE $66,000.00 $65,859.45
1000510 JANDLE ROBERT J JANDLE $72,000.00 $71,973.69
1000516 ROSS SANDRA L ROSS $97,350.00 $97,318.81
1000520 YANCEY GEORGE A YANCEY $68,000.00 $67,978.22
1000521 BIAGO ANTHONY R BIAGO JR $148,500.00 $148,446.92
1000538 HARTMAN DAVID WALTER HARTMAN JR $50,000.00 $49,955.46
1000540 PETTET MARVIN C PETTET $64,800.00 $64,764.52
1000545 HORSWOOD WILLIAM G HORSWOOD $47,600.00 $47,471.60
</TABLE>
2
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
1000546 LEE CLARA BELL LEE $64,000.00 $63,968.44
1000551 LOGGINS JAMES LOGGINS III $72,800.00 $72,764.11
1000557 GRAHAM JAMES F GRAHAM $51,200.00 $51,177.29
1000559 SAGE TED SAGE $41,000.00 $40,988.23
1000562 BALFREY ROBERT P BALFREY $68,400.00 $68,227.08
1000563 THOMAS RAYMOND E THOMAS $34,000.00 $34,000.00
1000564 RICHARDSON CHARLES RICHARDSON $59,200.00 $59,178.37
1000574 WHITAKER IVORY LEE WHITAKER $45,600.00 $45,535.86
1000578 TAYLOR RITCHIE DARNELL TAYLOR $46,400.00 $46,384.80
1000583 BAXTER KENNETH G BAXTER $48,000.00 $47,973.72
1000587 MILLS DAVID E MILLS $38,250.00 $38,234.76
1000588 LEWIS MILTON A LEWIS $62,400.00 $62,256.09
1000591 TEAGUE MARIE P TEAGUE $45,200.00 $45,200.00
1000596 BOYD RONALD J BOYD $84,000.00 $83,958.59
1000604 WELCH EDWARD SCOTT WELCH $90,400.00 $90,355.43
1000605 MCNEELY JERRY R MCNEELY $79,900.00 $79,864.57
1000607 THOMPSON JAMES E THOMPSON $71,400.00 $71,263.59
1000608 STRAW LAWRENCE J STRAW $102,800.00 $102,743.72
1000612 CRABTREE PAUL R CRABTREE $40,000.00 $39,992.69
1000615 HIGH DAVID L HIGH $73,600.00 $73,600.00
1000617 COPELAND KENNETH COPELAND $57,600.00 $57,568.46
1000618 SCOTT GEORGE F SCOTT $57,600.00 $57,570.99
1000622 CANTIBERRY ZELMA ANN CANTIBERRY $30,000.00 $29,986.40
1000626 THOMPSON BOBBIE B THOMPSON $41,600.00 $41,545.14
1000631 YOUNGBLOOD TERRY YOUNGBLOOD $40,000.00 $39,959.06
1000633 BUSH BESSIE M BUSH $96,000.00 $96,000.00
1000635 MAYO PHILLIP LEE MAYO $80,000.00 $79,961.41
1000639 RAY FRANKLIN RAY JR $37,500.00 $37,400.80
1000640 DUNCAN RANDY DUNCAN $72,250.00 $72,250.00
1000642 HIXENBAUGH DENNIS HIXENBAUGH $53,600.00 $53,584.62
1000644 LAWSON JUNIOR LAWSON $46,750.00 $46,630.73
1000645 ANDERSON ROY C ANDERSON $21,750.00 $21,663.43
1000646 POSTELL BERNICE S POSTELL $28,000.00 $27,994.88
1000653 WILLIAMS FREDERICK J WILLIAMS $104,000.00 $103,948.73
1000654 MATTHEWS WILLIAM MATTHEWS $34,400.00 $34,313.03
1000655 WILDER GLADYS F WILDER $44,000.00 $43,984.27
1000659 CHAPMAN DOUGLAS V CHAPMAN $68,000.00 $67,962.77
1000661 PHILLIPS SAMUEL T PHILLIPS $73,600.00 $73,600.00
1000663 REYNOLDS TERRELL REYNOLDS $24,000.00 $24,000.00
1000666 GRANT ETHEL T GRANT $36,000.00 $36,000.00
1000668 RHODES ROBERT RHODES $49,500.00 $49,448.05
1000670 TROUTMAN DON TROUTMAN $54,400.00 $54,399.99
1000674 ROBINSON EDDY W ROBINSON $56,000.00 $55,999.98
1000676 GARLOCK LESTER BURT GARLOCK III $44,625.00 $44,625.00
1000678 GREEN NORRIS GREEN $82,320.00 $82,287.20
1000680 MCDUFFIE KRIS M MCDUFFIE $44,800.00 $44,782.15
1000681 DUGGER LAWRENCE EDWIN DUGGER $113,880.00 $113,879.98
1000683 DAY SHELLY SETZER DAY $72,800.00 $72,799.99
1000684 SMITH BROOKIE L SMITH $26,400.00 $26,362.86
</TABLE>
3
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
1000686 MASSEY JEFFREY L MASSEY $49,600.00 $49,600.00
1000697 MALAFONTE JOSEPH F MALAFONTE $84,000.00 $83,954.01
1000701 WADE BELAH WADE $45,900.00 $45,900.00
1000702 GRIFFY BRUCE A GRIFFY $145,350.00 $145,350.00
1000705 STEVENS JAMIE M STEVENS $56,950.00 $56,950.00
1000709 GIBSON BETTY L GIBSON $45,600.00 $45,600.00
1000712 BAZEMORE CHESTER BAZEMORE $76,925.00 $76,925.00
1000715 JOHNSON SALLY MAE S JOHNSON $64,500.00 $64,500.00
1000717 STEVENSON GASTON E STEVENSON $46,000.00 $46,000.00
1000720 WILSON JANET L WILSON $68,000.00 $68,000.00
1000725 SWANN CHARLES A SWANN $267,000.00 $267,000.00
1000728 GARNETT JAMES C GARNETT $129,440.00 $129,440.00
1000729 COWARD OSBORNE COWARD $96,000.00 $96,000.00
1000733 MOSELEY LOIS JEAN MOSELEY $56,950.00 $56,950.00
1000736 EASTER DAVID L EASTER JR $59,200.00 $59,200.00
1000739 RENAUD MAX C RENAUD $52,800.00 $52,800.00
1000744 MOODY DAISY MOODY $60,000.00 $60,000.00
1000753 CHISAM DANIEL CHISAM $72,250.00 $72,250.00
1000755 ADAMS ANNETTE Y ADAMS $44,800.00 $44,800.00
1000757 MCLAIN KATHERINE T MCLAIN $59,743.00 $59,743.00
1000760 GREENLEE DAVID J GREENLEE $39,988.00 $39,988.00
1000764 CRAWFORD ROLAND A CRAWFORD $66,400.00 $66,400.00
1000767 HESTER TONY HESTER $35,775.00 $35,775.00
1000769 WILLS JAMIE M WILLS $49,600.00 $49,600.00
1000773 BEAVER ALLAN BEAVER $46,400.00 $46,400.00
1000775 BLALOCK JAMES R BLALOCK $63,200.00 $63,200.00
1000777 CHERRY JAMES CHERRY $43,200.00 $43,200.00
1000779 AJIBOGUN SOLOMON AJIBOGUN $104,000.00 $103,982.28
1000780 ADAMS SHELDON ADAMS $62,400.00 $62,400.00
1000781 DEKLE TINA DEKLE $64,800.00 $64,800.00
1000783 STEPHENS HAROLD STEPHENS $36,000.00 $35,980.28
1000785 POUCHER NANCY A POUCHER $46,400.00 $46,400.00
1000789 TESH RALPH EDWARD TESH JR $35,000.00 $35,000.00
1000794 EVANS EDGAR EVANS $39,200.00 $39,200.00
1000796 MCCUTCHEON DAVID MCCUTCHEON $163,442.00 $163,442.00
1000798 JUSTUS BILLY DEWAYNE JUSTUS $66,300.00 $66,300.00
1000800 ODOM BETTE H ODOM $89,600.00 $89,600.00
1000804 AVERY MARUEEN AVERY $67,120.00 $67,120.00
1000806 ZARDERS NORMA JEAN ZARDERS $80,910.00 $80,910.00
1000810 STOREY WILLIAM H STOREY $50,250.00 $50,250.00
1000817 WOFFORD MARVIN JAMES WOFFORD $51,000.00 $51,000.00
1000818 NEWTON EVERETTE L NEWTON $272,000.00 $272,000.00
1000819 ROBINSON TINA LOUISE ROBINSON $56,000.00 $56,000.00
1000823 CHAPPELL REX CHAPPELL $30,600.00 $30,600.00
1000824 LEWIS STEVEN RICHARD LEWIS $54,400.00 $54,400.00
1000827 PEELE JEFFREY BILL PEELE $48,800.00 $48,800.00
1000828 EDENS WILLIAM L EDENS $59,800.00 $59,800.00
1000829 WEIL RICHARD WEIL $29,600.00 $29,600.00
1000830 CERNUTO MARY ELLEN CERNUTO $88,360.00 $88,360.00
</TABLE>
4
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
1000832 KING JAMES C KING $136,000.00 $136,000.00
1000834 BARNES ERIC S BARNES $104,000.00 $104,000.00
1000836 PARKER STEVE RAY PARKER $38,250.00 $38,250.00
1000844 HENSON GEORGE HENSON $67,000.00 $67,000.00
1000845 FISHER HARRY C FISHER $81,000.00 $81,000.00
1000851 ADDISON ESSIE L ADDISON $45,569.00 $45,569.00
1000852 WINGERT RICHARD J WINGERT $55,000.00 $55,000.00
1000853 HEARN JAMES F HEARN $52,000.00 $52,000.00
1000857 ELWELL RICHARD D ELWELL $94,400.00 $94,400.00
1000858 WILLIAMS JO ANN VOSS WILLIAMS $61,600.00 $61,600.00
1000861 PANNI MICHAEL D PANNI $68,000.00 $68,000.00
1000864 MCCOLLUM PATRICK L MCCOLLUM $118,375.00 $118,375.00
1000865 BYRD ALPHONSO BYRD $36,000.00 $36,000.00
1000869 NELSON DONALD S NELSON $95,200.00 $95,200.00
1000871 AMICO SALVATORE J AMICO $91,200.00 $91,200.00
1000873 MOORE MILDRED B MOORE $75,510.00 $75,510.00
1000874 MEADORS NEWMAN MEADORS $24,000.00 $24,000.00
1000876 QUIGGIN BARBARA SUE QUIGGIN $126,500.00 $126,500.00
1000877 HOLLAND LISA P HOLLAND $72,000.00 $72,000.00
1000880 DIXSON JAMES M DIXSON $54,000.00 $54,000.00
1000882 PURVIS JAMES EARL PURVIS $47,200.00 $47,200.00
1000884 JOYNER BRENDA JOYNER $44,200.00 $44,200.00
1000888 JOYCE CASSANDRA C JOYCE $64,000.00 $64,000.00
1000890 BRANCH GWENDOLYN MARIE BRANCH $57,760.00 $57,760.00
1000893 JEWELL LINDA S JEWELL $108,000.00 $108,000.00
1000894 CONNORS MARY JEAN CONNORS $44,965.00 $44,965.00
1000896 MITCHELL MAGGIE MITCHELL $55,200.00 $55,200.00
1000899 PADGETTE TONY A PADGETTE $39,600.00 $39,600.00
1000900 WADDELL JACK E WADDELL SR $56,250.00 $56,250.00
1000902 HANSON THOMAS P HANSON III $56,000.00 $56,000.00
1000906 WILLIAMS CLARENCE WILLIAMS $52,650.00 $52,650.00
1000907 POWELL JAMES L POWELL SR $85,510.00 $85,510.00
1000908 WALDEN GARY L WALDEN $71,400.00 $71,400.00
1000911 HYDE ALLEN LEE HYDE $51,600.00 $51,600.00
1000912 STEWART JEFFREY DWAYNE STEWART $53,586.00 $53,586.00
1000916 EDWARDS ALPHONSE EDWARDS $61,750.00 $61,750.00
1000917 ANTHONY JOSEPH E ANTHONY $59,200.00 $59,200.00
1000920 CUMMINGS GARY L CUMMINGS $60,350.00 $60,350.00
1000921 POOVEY KRISTIE R POOVEY $45,100.00 $45,100.00
1000922 PRICE JIMMY ALLEN PRICE $58,400.00 $58,400.00
1000925 RHODES MICHAEL RHODES $28,000.00 $28,000.00
1000929 PRICE DAVID BRYSON PRICE $66,300.00 $66,300.00
1000933 WYATT JOHN C WYATT $64,000.00 $64,000.00
1000935 HARRISON WOODIE H HARRISON $59,000.00 $59,000.00
1000937 WILSON MICHAEL WILSON $57,600.00 $57,600.00
1000939 ISENHOUR RALPH L ISENHOUR $70,400.00 $70,400.00
1000942 REED STEVE R REED $100,000.00 $100,000.00
1000944 EDMUNDS SAINT CLAIR EDMUNDS JR $112,000.00 $112,000.00
1000948 LEIGH ALVYN LEIGH $184,000.00 $184,000.00
</TABLE>
5
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
1000950 LESTER BENJAMIN F LESTER JR $73,100.00 $73,100.00
1000952 KIMBROUGH SABRINA A KIMBROUGH $98,600.00 $98,600.00
1000953 BAILEY JULIE P BAILEY $64,000.00 $64,000.00
1000955 REID JUDY C REID $45,000.00 $45,000.00
1000957 LIPPY BARRY C LIPPY $168,750.00 $168,750.00
1000959 NESTER MICHAEL NESTER $154,000.00 $154,000.00
1000963 DINGUS CHARLIE G DINGUS $7,800.00 $7,800.00
1000966 COX LARRY D COX $32,000.00 $32,000.00
1000968 WALKER PHIL ALLEN WALKER $57,600.00 $57,600.00
1000969 STALLINGS CHARLOTTE STALLINGS $34,400.00 $34,400.00
1000975 GIBBONS CAROLYN GIBBONS $65,450.00 $65,450.00
1000976 WILLIS MICHAEL D WILLIS $62,300.00 $62,300.00
1000977 LATHAN ALICE FAYE LATHAN $43,600.00 $43,600.00
1000988 FINNEY RAYMOND H FINNEY $44,800.00 $44,800.00
1000990 BROWN LORETTA P BROWN $76,800.00 $76,799.99
1000993 DAVIS WILBUR DAVIS JR $41,600.00 $41,600.00
1000998 ASTWOOD YVONNE ASTWOOD $124,000.00 $124,000.00
1001009 BEARD TERRY J BEARD $221,850.00 $221,850.00
1001022 DRIVER LISA ANN DRIVER $147,900.00 $147,900.00
1001025 BAKER BILLY R BAKER $97,800.00 $97,800.00
1001028 STEELE GEORGE A STEELE $52,000.00 $52,000.00
1001032 MCDONALD BENNETT S MCDONALD $47,000.00 $47,000.00
1001034 DAVIS THELMA LEE DAVIS $35,100.00 $35,100.00
1001038 TYDINGS RALPH O TYDINGS $55,250.00 $55,250.00
1001040 SHAW SAMUEL A SHAW $72,000.00 $72,000.00
1001051 MELOON SHIRLEY A MELOON $80,100.00 $80,100.00
1001055 HODGES MARION HODGES $97,980.00 $97,980.00
1001070 JONES GLORIA C JONES $36,000.00 $36,000.00
1001077 DEMERY LUCILLE A DEMERY $135,000.00 $135,000.00
1001081 JACOBSON CRAIG D JACOBSON $40,800.00 $40,800.00
1001085 ALBERT RICHARD ALBERT $54,000.00 $54,000.00
1001092 WOOD MICHAEL DALE WOOD $48,750.00 $48,750.00
1001095 MCWINN TIMOTHY A MCWINN $27,600.00 $27,600.00
1001099 HONEYCUTT KENNETH D HONEYCUTT $100,000.00 $100,000.00
1001100 LITTLE MARK T LITTLE $68,000.00 $68,000.00
1001102 ZARN JUDITH L DE ZARN $58,950.00 $58,950.00
1001109 HOLT SOLON S HOLT $77,572.88 $77,572.88
1001112 SPENCER LEONARD SPENCER $58,000.00 $58,000.00
1001114 HAMBY BRYAN HAMBY $50,400.00 $50,400.00
1001116 BUNTING BRIAN BUNTING $22,739.00 $22,739.00
1001118 SPRUILL CLAYTON SPRUILL $44,800.00 $44,800.00
1001121 HOOTS MAX T HOOTS $136,000.00 $136,000.00
1001122 PURKEY HAROLD PURKEY $103,920.00 $103,920.00
1001123 BRADLEY KEN BRADLEY $80,000.00 $80,000.00
1001124 LYONS ROSCOE LYONS JR $48,000.00 $48,000.00
1001129 BYRON GLORIA W BYRON $44,800.00 $44,800.00
1001131 WILLIAMS PAMELA WILLIAMS $60,800.00 $60,800.00
1001138 RHODES SUSAN J RHODES $26,250.00 $26,250.00
1001139 SHORT DONNIE F SHORT JR $44,000.00 $44,000.00
</TABLE>
6
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
1001143 MILES SHIRLEY A MILES $47,200.00 $47,200.00
1001144 CROOM WILLIAM EARL CROOM SR $115,000.00 $115,000.00
1001146 BYRD ROY EARL BYRD $147,050.00 $147,050.00
1001153 NUNEZ EDWARD NUNEZ $140,250.00 $140,250.00
1001154 RICHARDSON GEORGE H RICHARDSON JR $46,800.00 $46,800.00
1001155 CAMERON MONICA T CAMERON $73,100.00 $73,100.00
1001157 BELL COLUMBUS BELL $68,000.00 $68,000.00
1001165 MOORE ROGER MOORE $54,375.00 $54,375.00
1001171 PEAY MARIE S PEAY $33,600.00 $33,600.00
1001172 WEBSTER DARRELL W WEBSTER $47,200.00 $47,200.00
1001174 EDMOND LYDIA M EDMOND $64,000.00 $64,000.00
1001176 SADEN CHARLES R SADEN $106,250.00 $106,250.00
1001178 SCOTT ROCKY SCOTT $51,200.00 $51,200.00
1001180 HAMMOCK CALVIN HAMMOCK $55,500.00 $55,500.00
1001181 DAMONE MICHAEL A DAMONE $42,400.00 $42,400.00
1001183 HICKMAN PAMELA J HICKMAN $49,600.00 $49,600.00
1001185 MILLER JOHNNY E MILLER $85,138.00 $85,138.00
1001190 GRAY BILLY KEVIN GRAY $68,000.00 $68,000.00
1001192 MOREFIELD MARTHA A MOREFIELD $59,200.00 $59,200.00
1001195 STALLINGS CHARLOTTE STALLINGS $29,260.00 $29,260.00
1001196 PHIPPS ROBERT EDWIN PHIPPS $37,600.00 $37,600.00
1001200 BOWEN DOUGLAS M BOWEN $62,400.00 $62,400.00
1001202 SIPLON LAZARO J SIPLON $69,300.00 $69,300.00
1001203 FUENTES NADINA FUENTES $91,800.00 $91,800.00
1001204 WADE DOROTHY S WADE $396,000.00 $396,000.00
1001211 FLOYD JUANITA FLOYD $56,000.00 $56,000.00
1001215 SHEARON RANDALL C SHEARON $48,600.00 $48,600.00
1001224 BRADLEY KIRBY BRADLEY $66,000.00 $66,000.00
1001240 GRAY MARY F GRAY $36,000.00 $36,000.00
2001036 NORTON WILLIAM NORTON $31,710.00 $31,700.76
2001057 MCCRAY GEORGENE H MCCRAY $43,200.00 $43,184.15
2001084 GRIFFIN MELVIN D GRIFFIN $92,800.00 $92,761.82
2001087 ROSSMAN ARNOLD ROSSMAN $52,800.00 $53,227.08
2001100 SON ALFRED L SON $59,400.00 $59,357.36
2001103 PACE JAMES H PACE $40,000.00 $39,968.63
2001107 ROBINSON BOBBY J ROBINSON $42,320.00 $42,302.58
2001134 DOGAN CHARLES A DOGAN $29,600.00 $29,584.74
2001136 PRICE MELISSA T PRICE $52,800.00 $52,736.25
2001138 FRIERSON JESSIE M FRIERSON $31,500.00 $31,492.78
2001140 NELSON WAYNE NELSON $58,000.00 $57,986.71
2001144 HATCHETT IMOGENE E HATCHETT $79,200.00 $79,174.08
2001146 ANDREWS JOE G ANDREWS $63,600.00 $63,559.06
2001154 MCMURTURY CURTIS MCMURTURY $19,200.00 $19,190.11
2001156 WHERRY SABRINA A WHERRY $51,200.00 $51,188.24
2001160 LIVINGSTON HATTIE M LIVINGSTON $32,000.00 $31,985.26
2001162 LOWE DWAYNE LOWE $36,000.00 $35,985.18
2001166 HEYWARD TIESHA HEYWARD $37,200.00 $37,184.69
2001170 POINDEXTER JOHN D POINDEXTER $74,320.00 $74,300.94
2001172 MAJOR KAREN A MAJOR $35,200.00 $35,181.85
</TABLE>
7
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
2001175 REED EMMA REED $28,800.00 $28,782.11
2001177 DOZIER THELMA J DOZIER $26,195.00 $26,191.21
2001179 DOWNS JACK E DOWNS JR $57,520.00 $57,473.98
2001181 SCHLEHR HARRY J SCHLEHR $93,928.00 $93,917.25
2001182 EBERHART ERNEST EBERHART SR $78,400.00 $78,363.87
2001188 SMITH EVELYN E SMITH $31,920.00 $31,908.28
2001189 FRANKS CHARLES T FRANKS $95,600.00 $95,575.48
2001191 WALLACE ULYSSES WALLACE $44,000.00 $43,979.73
2001193 WISE BRANTLEA G WISE $32,000.00 $31,992.67
2001196 MCCOMBS JAMES F MCCOMBS $33,200.00 $33,191.49
2001199 BROWN WILLIAM O BROWN III $39,920.00 $39,913.51
2001202 GIBSON CHRISTOPHER LEE GIBSON $35,140.00 $35,125.54
2001204 ALLEN CYNTHIA DAVIS ALLEN $82,500.00 $82,282.55
2001207 REED SANDRA H REED $28,400.00 $28,388.32
2001208 NOWAK ERIC J NOWAK $47,920.00 $47,897.91
2001210 MIDDLEBROOK JAMES M MIDDLEBROOK $56,000.00 $55,987.17
2001213 GRANTHAM ROBERT J GRANTHAM $32,000.00 $31,994.16
2001214 JOHNSON CHRISTINE J JOHNSON $98,400.00 $98,305.64
2001216 BOYD ETHEL Y BOYD $31,200.00 $31,183.92
2001218 BROWN FRANCES A BROWN $34,800.00 $34,791.07
2001220 MOORE CONNIE MOORE $115,200.00 $115,178.98
2001221 STUARD CAMELIA L STUARD $36,960.00 $36,950.52
2001223 HARRISON BETTY R HARRISON $42,400.00 $42,233.31
2001225 REED DEREK A REED $100,800.00 $100,781.67
2001228 DUNCAN CHANDRA D DUNCAN $58,400.00 $58,383.25
2001229 QUARLES P MARION QUARLES JR $51,456.00 $51,429.46
2001231 ZIYAD RASHEEDA I ZIYAD $136,400.00 $136,208.74
2001233 LEE PATRICIA D LEE $50,400.00 $50,379.26
2001237 BURDETTE BECKY BURDETTE $56,250.00 $56,237.11
2001239 CASON JAMES M CASON $67,200.00 $67,156.75
2001245 BLAKELY T'LENE BLAKELY $81,000.00 $80,948.86
2001249 BAKER JAMES A BAKER $22,400.00 $22,392.68
2001250 JENKINS RUSSELL JENKINS $45,200.00 $45,191.76
2001251 BOWERS GLENDA W BOWERS $44,000.00 $43,987.38
2001253 HOOD MICHAEL HOOD $30,240.00 $30,233.83
2001257 SMITH JOHN E SMITH $52,000.00 $51,986.66
2001259 YOUNG SARAH M YOUNG $27,200.00 $27,100.41
2001260 HOWELL CHARLES HOWELL III $44,925.00 $44,914.70
2001262 COLGAN TIM H COLGAN $79,116.00 $79,059.20
2001264 MATTRESS FRANK A MATTRESS $35,920.00 $35,904.81
2001265 MAIMO ROMAN MAIMO $51,200.00 $51,185.31
2001267 WORLEY JANET B WORLEY $71,920.00 $71,886.85
2001269 THOMAS ESTHER K THOMAS $58,400.00 $58,386.62
2001271 MASSEY DENNIS K MASSEY $143,010.00 $142,882.67
2001272 CARRAZANA JOEL CARRAZANA $45,280.00 $45,270.73
2001276 WHITE ALENE WHITE $43,920.00 $43,908.73
2001278 BUFORD FRANCES M BUFORD $63,200.00 $63,188.47
2001279 DIEFFENDERFER BARBARA DIEFFENDERFER $80,000.00 $79,977.06
2001281 MILLIGAN CATHERINE MILLIGAN $47,200.00 $47,187.89
</TABLE>
8
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
2001283 PRESSLEY ALEXANDER PRESSLEY $36,000.00 $35,991.75
2001285 HICKS/CATES NANCIE R HICKS/CATES $63,200.00 $63,187.07
2001287 TINDAL MONALETHIA TINDAL $35,600.00 $35,589.79
2001291 REYNOLDS MICHAEL REYNOLDS $60,800.00 $60,784.41
2001295 DEMIRANDA ALBILIO DEMIRANDA $48,800.00 $48,787.49
2001296 SIMMONS JERRY D SIMMONS $17,500.00 $17,496.42
2001298 BARTLEY DAVID A BARTLEY $41,175.00 $41,165.56
2001300 WASHINGTON JOHNNY K WASHINGTON $32,000.00 $32,270.83
2001302 BUTLER TRESSA M BUTLER $37,600.00 $37,592.31
2001304 DOLPHIN DONNA S DOLPHIN $52,800.00 $52,787.90
2001306 SAULISBERRY VENDY SAULISBERRY $72,800.00 $72,783.32
2001308 OCHS KEITH OCHS $108,460.00 $108,412.02
2001310 GREEN DIANNE M GREEN $50,575.00 $50,558.81
2001312 BOYKIN STEVEN BOYKIN $32,800.00 $32,791.58
2001314 GREENE CARRIE GREENE $52,800.00 $52,800.00
2001316 GARNER JOHNNY WAYNE GARNER $34,500.00 $34,494.39
2001320 GRANT HAROLD C GRANT II $30,400.00 $30,393.77
2001321 GILES DENNIS W GILES $103,600.00 $103,576.26
2001323 GILL JOHNNIE D GILL JR $57,600.00 $57,583.48
2001325 SCOTT VERONICA F SCOTT $60,000.00 $59,986.25
2001327 DOOLEY COLIE L DOOLEY III $120,000.00 $119,974.01
2001328 WILLIAMS SYLVIA M WILLIAMS $56,000.00 $55,990.89
2001331 ROBERTS PEGGI A ROBERTS $74,399.00 $74,383.79
2001333 NYQUIST CHRIS NYQUIST $68,319.00 $68,303.34
2001339 LITTLEJOHN TRELLIS K LITTLEJOHN $71,600.00 $71,575.07
2001341 KENNEDY BETTY KENNEDY $32,596.00 $32,588.53
2001350 GREEK ROSE GREEK $45,345.00 $45,334.61
2001353 TRIBBLE BRYANT K TRIBBLE $36,400.00 $36,391.65
2001364 LUCAS COREY LUCAS $62,475.00 $62,457.09
2001375 BUSH LINDA BUSH $34,160.00 $34,153.02
2001378 SHUMATE JO ANN SHUMATE $52,800.00 $52,784.86
2001380 AHRENS KELLY H AHRENS $91,000.00 $91,000.00
2001383 KARNER LINDA KARNER $36,000.00 $35,990.77
2001387 RITTER ARTHUR RITTER $34,400.00 $34,392.11
2001399 DALE GINNY L DALE $28,700.00 $28,688.26
2001416 IZZARD LORETTA IZZARD $26,000.00 $25,994.04
2001418 ROBERTS LAURA A ROBERTS $55,920.00 $55,853.96
2001423 MCCALL ERICKA L MCCALL $77,600.00 $77,582.21
2001430 POWELL BEVERLY A POWELL $34,320.00 $34,312.13
2001437 WICKER RONALD LEON WICKER $63,200.00 $63,183.79
2001442 SPATES BOBBY L SPATES $35,000.00 $34,992.84
2001444 SEGARS STEVEN M SEGARS $48,000.00 $48,000.00
2001465 PERRY ISHAM E PERRY $62,400.00 $62,400.00
2001467 MCCARTHY JOSEPH V MCCARTHY $50,800.00 $50,789.61
2001472 FRIERSON ROBIN T FRIERSON $64,800.00 $64,800.00
2001476 WALTON MICHAEL WALTON $42,400.00 $42,400.00
2001485 GLOVER IRENE GLOVER $94,000.00 $94,000.00
2001488 DAVIS RUTH BILLUPS DAVIS $29,000.00 $29,000.00
2001495 HENDERSON TERESA HENDERSON $32,800.00 $32,800.00
</TABLE>
9
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
2001501 COSTELLO ROBERT COSTELLO $60,400.00 $60,400.00
2001503 DRAKE KEVIN P DRAKE $51,200.00 $51,200.00
2001505 HYATT HERMAN M HYATT $47,600.00 $47,599.99
2001507 GRAHAM HOWARD GRAHAM $33,200.00 $33,200.00
2001511 ELLIOTT MARCO ELLIOTT $47,920.00 $47,920.00
2001517 FINN MILLARD L FINN JR $73,904.00 $73,904.00
2001525 ADAMS TARA D ADAMS $47,625.00 $47,625.00
2001527 WALMSLEY CARL E WALMSLEY JR $33,200.00 $33,200.00
2001540 JACKSON WANDA JACKSON $34,500.00 $34,500.00
2001560 MCCRAY ZEPHANIAH MCCRAY $64,500.00 $64,500.00
2001562 JIMENEZ EZEKIEL F JIMENEZ $82,960.00 $82,960.00
2001564 MORRIS DAVID MORRIS $37,600.00 $37,600.00
2001566 RAMSEY ANNA RAMSEY $33,600.00 $33,600.00
2001568 GREEN SAM W GREEN $45,600.00 $45,600.00
2001570 SCOTT LARRY SCOTT $40,600.00 $40,600.00
2001576 CALLOWAY DWAIN CALLOWAY $76,800.00 $76,800.00
2001578 LYCETT JEFFREY S LYCETT $36,400.00 $36,400.00
2001584 LEE RANDOLPH DEREK LEE $48,300.00 $48,300.00
2001586 BROWNING KARL F BROWNING $52,500.00 $52,500.00
2001590 WILLIAMS HERDISENE WILLIAMS $37,600.00 $37,600.00
2001594 QUATTLEBAUM VERNITA QUATTLEBAUM $21,000.00 $21,000.00
2001598 KENDRICK JACKIE KENDRICK $23,200.00 $23,200.00
2001600 WALKUP HILDA F WALKUP $24,000.00 $24,000.00
2001601 HOLBROOK JOHNNY R HOLBROOK $74,149.60 $74,149.60
2001605 TUBBS VIOLA TUBBS $47,840.00 $47,840.00
2001607 AHRENS KEBIN S AHRENS $48,750.00 $48,750.00
2001609 SINGLETON TONY SINGLETON $38,800.00 $38,800.00
2001611 ENGLISH ROSA F ENGLISH $70,064.00 $70,064.00
2001613 THOMPSON KENNY MARK THOMPSON $53,600.00 $53,600.00
2001615 DANIEL JANICE I DANIEL $39,120.00 $39,120.00
2001617 HOLMES JACQUELINE M HOLMES $36,000.00 $36,000.00
2001623 FREW TIMOTHY P FREW $45,600.00 $45,600.00
2001627 DODGE CLIFTON E DODGE $77,520.00 $77,520.00
2001629 CRITCHLEY GEORGE CRITCHLEY $41,600.00 $41,600.00
2001637 SIMENSON BOBBY J SIMENSON $39,000.00 $39,000.00
2001639 KERSHAW FLETCHER KERSHAW $28,000.00 $28,000.00
2001641 SEIGLER SHANNON SEIGLER $35,200.00 $35,200.00
2001647 LYLES JESSIE LYLES $47,200.00 $47,200.00
2001651 CONNOR A LATRECE CONNOR $56,000.00 $56,000.00
2001652 JOHNSON HORACE JOHNSON $60,000.00 $60,000.00
2001656 CARTEE FLOYD A CARTEE $34,400.00 $34,400.00
2001666 ROBINSON YVETTE FLOWERS ROBINSON $39,920.00 $39,920.00
2001670 TAYLOR CHERYL R TAYLOR $56,480.00 $56,480.00
2001672 VOGT GLENDALE VOGT $49,200.00 $49,200.00
2001674 CANNON TRACY CANNON $32,000.00 $32,000.00
2001676 ARTHUR MARTY ARTHUR $31,640.00 $31,640.00
2001678 DELESTON ANDREW C DELESTON $62,000.00 $62,000.00
2001680 JOHNSON CAROLYN L JOHNSON $41,760.00 $41,760.00
2001682 GARY GERALDINE GARY $35,520.00 $35,520.00
</TABLE>
10
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
2001684 EDWARDS SHARON D EDWARDS $36,000.00 $36,000.00
2001685 MOULTRIE CURTIS A MOULTRIE $28,000.00 $28,000.00
2001687 SMITH MARY E SMITH $43,600.00 $43,600.00
2001689 VELASCO LAWRENCE VELASCO $76,000.00 $76,000.00
2001691 TURNER WILLIE L TURNER $35,000.00 $35,000.00
2001693 HAMILTON JACQUELINE HAMILTON $53,200.00 $53,200.00
2001696 BOOZER JOEY A BOOZER $59,625.00 $59,625.00
2001698 LANGFORD EUGENE W LANGFORD $38,000.00 $38,000.00
2001700 MARCHE SHIRLEY MARCHE $50,720.00 $50,720.00
2001702 WHISNANT GREEN WHISNANT JR $68,720.00 $68,720.00
2001706 CAPERS TYRONE CAPERS $38,800.00 $38,800.00
2001708 COBB ANTHONY COBB $23,040.00 $23,040.00
2001712 SMITH CLYDE LEWIS SMITH $78,400.00 $78,400.00
2001716 BYERS LORETTA BYERS $44,000.00 $44,000.00
2001718 WATERS SAMUEL V WATERS $35,200.00 $35,200.00
2001726 ALEXANDER JUDIE H ALEXANDER $31,920.00 $31,920.00
2001728 FOSTER ANGELA Y FOSTER $40,400.00 $40,400.00
2001730 SANDERS ROBERT L SANDERS $50,320.00 $50,320.00
2001732 JOHNSON WILLIAM JOHNSON JR $52,000.00 $52,000.00
2001734 SIMPSON LILLIAN SIMPSON $20,000.00 $20,000.00
2001742 WILSON RENEE WILSON $31,200.00 $31,200.00
2001751 MATHEWS ROBERT MATHEWS $37,200.00 $37,200.00
2001759 WILLIAMS RHONNIE J WILLIAMS $55,250.00 $55,250.00
2001771 BARBAO KELLY BARBAO $66,000.00 $66,000.00
2001823 MINCEY VIOUTTLE MINCEY $35,000.00 $35,000.00
2001835 MATTIS DONALD MATTIS $36,000.00 $36,000.00
2001836 AUSTIN ELIZABETH AUSTIN $38,400.00 $38,400.00
2001840 THACKER SHERRI L THACKER $51,300.00 $51,300.00
2001844 KNIAZEW VICTOR JOHN KNIAZEW $41,250.00 $41,250.00
2001847 WRIGHT BOBBY E WRIGHT $32,900.00 $32,900.00
2001849 EPPS CALVIN EPPS $73,840.00 $73,840.00
2001852 SAFE KEN M SAFE $90,400.00 $90,400.00
2001854 MCABEE SHANNA L MCABEE $20,348.00 $20,348.00
2001858 DENNIS DONN W DENNIS $31,200.00 $31,200.00
2001860 ASHMORE JOHN ROBERT ASHMORE $62,112.00 $62,112.00
2001864 JENKINS JOHN T JENKINS $35,920.00 $35,920.00
2001866 HINSON VICKIE P HINSON $43,120.00 $43,120.00
2001868 JACKSON SANDRA JACKSON $18,400.00 $18,400.00
2001870 SHORTER LAMAR SHORTER JR $44,000.00 $44,000.00
2001873 ABRAMS LISA F ABRAMS $35,600.00 $35,600.00
2001875 ASHLEY TINA ASHLEY $53,250.00 $53,250.00
2001878 MCGRATH PAULA MCGRATH $48,000.00 $48,000.00
2001886 HUDSON CHARLES T HUDSON JR $76,680.00 $76,680.00
4000069 HARDIMAN DEBORAH S HARDIMAN $64,000.00 $63,981.96
4000138 STUART DEANNA J STUART $24,375.00 $24,288.78
4000144 DUNCAN VERONICA L DUNCAN $121,500.00 $121,425.39
4000154 MCCARTNEY VIRGINIA A MCCARTNEY $46,800.00 $46,785.14
4000163 BELL MICHAEL BELL $96,000.00 $95,969.65
4000166 UTTER MARK UTTER $39,200.00 $39,013.49
</TABLE>
11
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
4000171 SPENCER SALLYE R SPENCER $40,000.00 $39,948.00
4000172 SPENCER SALLYE R SPENCER $31,500.00 $31,461.59
4000178 WHITE KATHERINE J WHITE $28,000.00 $27,935.00
4000179 SPELLMAN MICHAEL E SPELLMAN $42,800.00 $42,700.52
4000195 JENKINS DONALD JENKINS $57,600.00 $57,487.89
4000198 NOWLIN ERA M NOWLIN $65,000.00 $64,974.88
4000202 SCHAEFER DUANE R SCHAEFER $64,000.00 $63,675.20
4000207 ACKERMAN JOSEPH C ACKERMAN $244,000.00 $243,686.51
4000233 PATTERSON LEAYN PATTERSON $24,000.00 $24,000.00
4000252 BAKER GENE ALLEN BAKER $76,500.00 $76,500.00
5003284 OSBORNE RICK OSBORNE $45,449.25 $45,045.71
5003309 WHITTINGTON DEBORAH WHITTINGTON $31,413.10 $31,345.48
5003313 STRONG GEORGE DANIEL STRONG $55,953.75 $55,730.97
5003314 DUPREE DWAYNE ORPHA DUPREE $35,249.00 $35,219.71
5003330 DILLER STEVEN A DILLER $113,950.00 $113,430.84
5003341 HAMILTON RONNIE D HAMILTON $53,982.29 $53,597.86
5003345 TURNER DAVID MICHEAL TURNER $86,300.00 $85,904.64
5003351 NORMAN LEON B NORMAN $66,300.00 $66,024.31
5003358 GRACE JOSEPH GRACE $50,562.00 $50,132.64
5003367 HOLMAN JAMES O HOLMAN $76,500.00 $76,166.64
5003371 LASHA LARRY WAYNE LASHA $53,148.89 $53,040.62
5003379 LANDRY WILEY CHRISTOPHER LANDRY $90,178.00 $89,823.34
5003382 HUGHES LLOYD HUGHES JR $63,000.00 $62,849.87
5003394 BOUDIN JOHN LOUIS BOUDIN $82,449.98 $82,076.75
5003404 QUIRE JERRY E QUIRE $51,300.00 $51,050.63
5003413 CAPPS JAMES KEVIN CAPPS $25,415.00 $24,731.70
5003417 CASTILLO IRENEO CASTILLO JR $76,839.79 $76,541.66
5003420 ODER RAY ODER $54,450.00 $54,430.54
5003428 GOW MATTHEW C GOW $56,111.38 $55,891.66
5003434 SEAMON ALVIN RAEFORD SEAMON $40,000.00 $39,817.25
5003436 VAUGHN MARGARET VAUGHN $49,450.00 $49,322.42
5003441 CALVERT GLORIA JEAN CALVERT $69,300.00 $69,142.83
5003443 DEVANE HORACE LEE DEVANE SR $85,500.00 $85,416.13
5003448 FRANCOIS MICHAEL FRANCOIS $40,802.09 $40,523.75
5003455 STUART TERRY STUART $59,384.31 $59,125.55
5003462 DURHAM F SUE DURHAM $53,821.00 $53,576.90
5003474 HACKLER JANELL HACKLER $42,925.00 $42,727.19
5003484 JACKS DON O'NEAL JACKS $68,273.46 $67,960.39
5003498 BROWN RAYMOND BROWN $12,400.00 $12,350.26
5003536 WINKLES LINDA M WINKLES $61,439.63 $61,426.68
5003550 LARSON ELIZABETH JOE LARSON $38,000.00 $37,988.07
5003556 WARREN KEVIN D WARREN $61,650.00 $61,516.30
5003558 PIATT JEFFERY M PIATT $161,640.17 $161,583.16
5003562 SCOTT JESSICA SCOTT $27,140.40 $27,005.08
5003591 GLASS DONALD R GLASS $50,394.90 $50,154.06
5003595 HINCH PAUL M HINCH $83,700.01 $83,491.30
5003603 ODOM TOMMY WEBSTER ODOM $123,067.90 $122,771.52
5003610 HOUSE GLENN A HOUSE SR $39,950.00 $39,286.80
5003615 ROBERSON BETTY BETTS ROBERSON $60,750.00 $60,611.33
</TABLE>
12
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
5003619 SHELLEY KAROL DAVESA SHELLEY $37,800.00 $37,617.16
5003621 CAMPBELL VONCILE CAMPBELL $32,414.00 $32,250.62
5003622 MORGAN DOUGLAS E MORGAN $58,500.00 $58,374.08
5003624 MCJENKIN JOHN STEPHEN MCJENKIN $179,946.75 $179,737.87
5003627 HILLHOUSE MICHAEL R HILLHOUSE $46,936.76 $46,834.97
5003629 COLLUM JOHN MC COLLUM $128,250.00 $127,940.83
5003632 HOOKER ROY ANTHONY HOOKER $92,700.00 $92,488.00
5003634 WHITE RANDOLPH WHITE $121,069.73 $121,027.03
5003638 JORDAN JOSEPH LEONARD JORDAN $51,000.00 $50,901.08
5003643 ACUFF BILLY ACUFF $51,565.23 $51,323.25
5003646 AYERS LEO AYERS $43,890.00 $43,301.96
5003648 TAYLOR RALPH TAYLOR JR $38,250.00 $38,161.95
5003651 MCLAIN SAMMY H MCLAIN $76,430.97 $76,404.59
5003654 OVERFIELD EDWARD LESTER OVERFIELD $95,596.11 $95,319.61
5003655 MOSES BEVERLEY MOSES $33,000.00 $32,926.27
5003657 CANNON WILLIAM H CANNON $106,200.00 $105,938.55
5003659 JONES WILLIAM EDDIE JONES II $58,459.25 $58,325.18
5003663 MAGEE FREDERICK MAGEE $45,000.26 $44,843.59
5003664 DICK WYMAN T DICK $20,247.90 $20,167.61
5003665 CLARK JOHN IVAN CLARK $62,975.70 $62,519.09
5003666 MASHBURN WILLIAM D MASHBURN $53,040.00 $52,775.69
5003668 SMITH DAVID J SMITH $200,250.00 $200,128.69
5003671 CHAVARRIA THOMAS A CHAVARRIA $61,200.00 $61,015.74
5003673 HALL STEPHEN A HALL $180,000.00 $179,609.00
5003675 SIKES JOSEPH T SIKES $54,955.06 $54,818.97
5003678 KRAFT CHARLES KRAFT $91,762.40 $91,429.99
5003681 SCOTT ISIAH SCOTT $98,100.00 $97,884.48
5003684 CHUI BETTY S CHUI $138,006.30 $137,759.10
5003685 DOWDY ALEX DOWDY $76,500.00 $76,326.50
5003687 WOOLGAR CHARLES WOOLGAR $31,495.20 $31,338.61
5003690 MCWHORTER LORENZO C MCWHORTER $124,623.00 $124,547.51
5003692 VEAL ASHLEY VEAL $79,235.00 $79,066.67
5003697 WILLIAMS DARRELL L WILLIAMS $35,070.00 $34,824.39
5003700 MORPHEW ROBERT MORPHEW $30,240.00 $30,170.91
5003701 BOHANA OLLIE BELL GRACE BOHANA $37,761.34 $37,245.81
5003702 LAWSON SUSAN SCOTT LAWSON $73,869.00 $73,697.70
5003704 MCADAMS JAMES LEROY MCADAMS JR $62,125.00 $61,988.24
5003708 COLLINS CLOVER A COLLINS $35,375.64 $35,304.76
5003711 JOHNSON ELVIS JOHNSON $39,331.00 $39,242.29
5003714 EVANS DANIEL EVANS $45,000.00 $44,907.82
5003716 GORDON FRANK GORDON $47,837.52 $47,825.20
5003720 MCNAIR KAREN E TOMPKINS MCNAIR $75,092.30 $75,016.19
5003722 GREENE BOBBY R. GREENE $55,000.00 $54,718.99
5003723 BROWN JOE N BROWN $27,792.60 $27,792.60
5003725 HENDERSON JOHN HENDERSON $54,360.00 $54,238.43
5003730 SMITH DANIEL SMITH $82,612.35 $82,419.35
5003735 COLSTON JAMEY KAY COLSTON $267,840.00 $267,282.15
5003737 WILLIAMS MARILYN WILSON WILLIAMS $93,464.50 $93,023.20
5003738 MARTIN KEVIN D MARTIN $54,450.00 $54,335.09
</TABLE>
13
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
5003742 DEWVALL BETTY J PRATER DEWVALL $45,521.95 $45,416.38
5003744 SHEETS WILLIAM SHEETS $43,160.00 $42,936.71
5003746 HALL HARRY N HALL JR $59,561.51 $59,358.30
5003747 KELSAY ELIJAH THOMAS KELSAY $72,250.00 $72,185.75
5003748 TURNER LARRIE TURNER $63,600.26 $63,447.65
5003750 LEE LARRY J LEE $41,096.95 $40,999.51
5003752 BARNHART SUSAN BARNHART $60,200.00 $60,061.82
5003753 HEBERT DARRYL HOUSTON HEBERT $52,229.30 $51,989.35
5003755 HOLCOMB MYRON CRAIG HOLCOMB $53,100.00 $52,961.12
5003760 ROGERS-BOND ALICE MARIE ROGERS-BOND $53,866.02 $53,494.25
5003761 HAYES LEONA HAYES $46,800.00 $46,772.60
5003762 ARANT ROGER N ARANT $67,050.00 $66,884.63
5003770 PEARSON PRESTON A PEARSON $80,100.00 $79,953.58
5003772 CLARK LORETTA M CLARK $43,854.36 $43,644.41
5003773 WEBB MITCHELL RAY WEBB $37,000.00 $36,814.57
5003775 HAWKINS MANNIX MITCHELL HAWKINS $72,000.00 $71,828.98
5003780 GULLEDGE TONY RAY GULLEDGE $64,399.00 $64,239.01
5003783 LEWIS CARNELL LEWIS $70,382.50 $70,214.09
5003784 LEWIS CARNELL LEWIS $71,135.00 $70,964.79
5003786 MCVEY DAVID MCVEY $52,087.47 $51,993.22
5003787 BELCHER ASHTON RAY BELCHER $113,400.00 $113,137.76
5003790 ASSAM UNA C ASSAM $72,125.92 $72,081.88
5003792 HICKS JIM HICKS $69,750.00 $69,607.50
5003795 MINOR DWIGHT MINOR $45,900.00 $45,900.00
5003798 TILLMAN HENRY TILLMAN $43,161.25 $43,065.52
5003802 BLACKSTON PATRICIA BLACKSTON $78,750.00 $78,608.95
5003805 MITCHEM EMERY MITCHEM $114,750.00 $114,615.26
5003807 HARRELL RICHARD HARRELL $35,518.60 $35,039.73
5003809 FONTENOT MERVIN VALMOND FONTENOT JR $102,000.00 $101,791.73
5003810 JONES ROGER JONES $26,350.00 $26,282.59
5003814 WINSTEAD PAUL WINSTEAD $197,500.00 $197,050.41
5003816 WILLIAMS OLIVER CHARLES WILLIAMS $81,060.53 $80,954.06
5003818 BAKER DARRELL E BAKER $63,283.00 $63,185.14
5003823 BAUCOM STEVE BAUCOM $106,064.12 $106,064.12
5003825 YEOMANS RANDALL D YEOMANS $63,898.18 $63,754.32
5003826 SPEARS ALICE SPEARS $58,400.00 $58,400.00
5003829 WILKINS WILLIAM ONEAL WILKINS $39,574.75 $39,479.18
5003830 HUGHES GLYNN HUGHES $45,900.00 $45,822.66
5003832 CORLEY JAMES R CORLEY $42,500.11 $42,500.11
5003834 JONES HERMAN JONES JR $51,000.00 $50,894.28
5003835 BENOIT TIMOTHY B.F. BENOIT $75,200.00 $75,036.31
5003837 MIZE WILLIAM D MIZE $73,645.69 $73,495.03
5003839 BOOTH SAMUEL BOOTH $75,600.00 $75,429.49
5003841 MANLEY HELEN MANLEY $94,500.00 $94,336.34
5003843 CAMPBELL ROY CAMPBELL $39,422.96 $39,282.96
5003845 SCHLITZ WILMA J SCHLITZ $51,400.15 $51,271.16
5003847 WILSON ARON M WILSON $71,086.00 $71,086.00
5003850 CIAMPI MARK A CIAMPI $90,000.00 $89,999.99
5003853 BLOW VIVIAN B BLOW $17,200.00 $17,114.78
</TABLE>
14
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
5003855 GUIDRY JOHN GUIDRY $69,607.33 $69,607.33
5003859 PHILLIPS BRIAN PHILLIPS $57,805.00 $57,683.69
5003861 WILSON RUSSELL WILSON $43,600.00 $43,600.00
5003863 LOVE DOBOURAHIA A LOVE $48,552.60 $48,376.59
5003865 FARMER SHAW ANN FARMER $87,587.65 $87,587.65
5003867 BENNETT BRUCE W BENNETT $188,372.55 $187,671.91
5003869 CARVER JEFFREY L CARVER $39,100.00 $39,100.00
5003872 YOUNG ELIZABETH J YOUNG $34,531.80 $34,531.80
5003873 STIDHAM DANNY RAY STIDHAM $45,049.93 $45,049.93
5003876 SANFORD CHERYL W SANFORD $45,900.00 $45,804.85
5003877 WILLIAMSON WILLIAM WILLIAMSON $77,118.00 $77,118.00
5003880 JOHNSON JOHN JOHNSON $59,446.93 $59,138.61
5003882 HOWARD JAMES HOWARD $70,408.02 $70,408.02
5003885 THOMAS BARBARA THOMAS $264,563.74 $264,563.74
5003890 COX JAMES R COX $251,910.70 $251,317.29
5003893 PERRY JIMMY PERRY $72,900.00 $72,539.41
5003894 CRAWFORD JACK C CRAWFORD $107,158.15 $107,158.15
5003897 PALMER LINDA PALMER $58,718.75 $58,718.75
5003899 CREAMER MARK DANIEL CREAMER $63,000.00 $63,000.00
5003901 SAUL JERRY B SAUL $77,749.60 $77,566.28
5003903 BROWN LINWOOD CHESTER BROWN $62,399.99 $62,399.99
5003908 BLACKWELL ERIC BLACKWELL $56,669.80 $56,669.80
5003910 FISHER RONALD W FISHER $57,600.00 $57,600.00
5003919 KILLEBREW KENNY KILLEBREW $59,200.00 $59,200.00
5003921 MANN DANNY HUGH MANN $79,380.00 $79,380.00
5003923 GIFFORD CONNIE GIFFORD $59,221.61 $59,221.61
5003925 WRIGHT JEFFERY S WRIGHT $90,270.00 $90,270.00
5003927 GRENKE JOHN GRENKE $83,050.00 $83,050.00
5003929 WALKER GLENNA WALKER $58,499.17 $58,499.17
5003930 ARD LLOYD F ARD $51,372.00 $51,372.00
5003932 CASTELLANOZ ENRIQUE CASTELLANOZ $56,100.00 $56,100.00
5003935 FRATARCANGELI MARK FRATARCANGELI $36,044.33 $36,044.33
5003936 BOATWRIGHT ELLEN BOATWRIGHT $21,846.86 $21,794.56
5003937 SMILEY MELVIN D SMILEY $77,620.00 $77,620.00
5003940 BAYES LEAH COLLINS BAYES $30,568.00 $30,498.15
5003942 MCAVOY RUBY ALICE MCAVOY $76,500.00 $76,500.00
5003944 JORDAN PORTIA JORDAN $46,750.00 $46,705.77
5003946 LEDOUX JOSEPH HARRIS LEDOUX $102,600.00 $102,600.00
5003949 BUFFINGTON MICHAEL BUFFINGTON $75,739.31 $75,739.31
5003950 JONES JOSEPH JONES $38,700.21 $38,700.21
5003954 PERRY LARRY PERRY $34,800.00 $34,800.00
5003957 BROWN AMY L BROWN $72,435.36 $72,435.36
5003959 DELEON MARIO ESTEBAN DELEON $64,548.25 $64,548.25
5003961 MCCLUSKEY VIRGIL MCCLUSKEY $45,899.42 $45,899.42
5003962 INGLES LISA INGLES $51,095.53 $51,095.53
5003965 HELLER MELANIE L HELLER $61,110.50 $61,110.50
5003966 HILL JOHN HILL $63,000.00 $63,000.00
5003970 BAYNES ROBERT LEE BAYNES $52,800.00 $52,800.00
5003973 TREMPS DAVID E TREMPS $103,500.00 $103,500.00
</TABLE>
15
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
5003975 GILREATH JAMES BARRY GILREATH $131,811.85 $131,811.85
5003977 CAPUCCI ALAIN E CAPUCCI $57,332.87 $57,332.87
5003979 NORRIS NORMAN L NORRIS $38,880.00 $38,880.00
5003981 PETIT QUENTIN PETIT $76,500.00 $76,500.00
5003984 PERRY JACKIE A PERRY $124,939.48 $124,939.48
5003986 WHITE JASPER D WHITE $80,992.50 $80,992.50
5003988 ROBINSON MAJORIE B ROBINSON $58,763.49 $58,763.49
5003989 PARCHER KELLY E PARCHER $89,500.00 $89,500.00
5003991 GEMENHARDT SANDRA GEMENHARDT $64,000.00 $64,000.00
5003993 BAILEY JESSE T BAILEY $48,600.00 $48,600.00
5003995 WILLIAMS ANNIE WILLIAMS $85,889.18 $85,889.18
5003996 PORTISH LARRY EDWARD PORTISH $91,254.40 $91,254.40
5003998 HUGHES BILLY RAY HUGHES $50,066.29 $50,066.29
5004004 VERRET LESLIE VERRET $50,400.00 $50,400.00
5004007 MATTHEWS DWIGHT MATTHEWS $82,498.21 $82,493.23
5004013 TAYLOR CHARLES TAYLOR $115,439.27 $115,439.27
5004016 BLAKELY DEBORAH BLAKELY $32,759.80 $32,759.80
5004019 WILKINSON CLIFFORD A WILKINSON $89,500.00 $89,500.00
5004023 HICKMAN PAUL HICKMAN $58,320.00 $57,828.52
5004030 DYSON ROBERT GLEN DYSON $112,218.58 $112,218.58
5004031 HEFNER THOMAS HEFNER $161,994.96 $161,994.96
5004034 WATSON DENNIS WATSON $64,629.34 $64,629.34
5004043 COOPER IVY S COOPER $104,095.00 $104,095.00
5004044 SYKES THOMAS H SYKES $43,107.50 $43,107.50
5004045 SHOLAR LOUIS SHOLAR $39,599.88 $39,599.88
5004052 DWYER JAMES H DWYER $101,754.26 $101,754.26
5004056 COOPERWOOD DOROTHY COOPERWOOD $40,003.68 $40,003.68
5004065 WALTON DONALD RAY WALTON $82,682.60 $82,682.60
5004071 NELSON MICHAEL A NELSON $23,714.52 $23,714.52
5004072 DAVIS JAMES R DAVIS $50,755.30 $50,755.30
5004075 RICE RICHARD B RICE $65,599.50 $65,599.50
5004078 HOLLEY A RAY HOLLEY $62,224.38 $62,224.38
5004084 DODSON JASPER DODSON $40,001.60 $39,899.61
5004093 MCCAN WILLIAM MCCAN $58,059.34 $58,059.34
5004098 MANRIQUEZ RAUL MANRIQUEZ $68,000.14 $68,000.14
5004101 HALL LARRY A HALL $34,189.65 $34,189.65
5004103 JONES BOBBIE JONES $53,646.13 $53,646.13
5004105 MULLINS FREDDIE LAYNE MULLINS $50,883.52 $50,883.52
5004106 MAXENA LARRAINE MAXENA $33,450.60 $33,450.60
5004107 LACY DOROTHY LACY $27,532.05 $27,532.05
5004112 KNIGHT DAVID B KNIGHT $56,399.08 $56,399.08
5004113 BARR EUGENE BARR $48,841.80 $48,841.80
5004118 DAVIS BILLY DAVIS $40,990.28 $40,990.28
5004119 MOSELEY WILLIAM C MOSELEY $54,343.99 $54,343.99
5004121 GORDON PATRICIA E GORDON $76,490.65 $76,490.65
5004125 RESCIGNO RICHARD D RESCIGNO $74,260.57 $74,260.57
5004130 DININO FRANK DININO JR $46,400.02 $46,400.02
5004136 REINHOLT SIDNEY RAY REINHOLT $33,870.06 $33,870.06
5004138 LAWRENCE JAN LAWRENCE $44,000.00 $44,000.00
</TABLE>
16
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
5004139 WAGNER MICHAEL E WAGNER $85,690.00 $85,690.00
5004141 MORRIS JEFFREY L MORRIS $69,570.79 $69,570.79
5004143 PRITCHARD CHARLES ALBERT PRITCHARD $113,918.00 $113,918.00
5004148 SEATON MALCOLM ODELL SEATON $37,620.20 $37,620.20
5004150 CROWE LESLIE CROWE JR $41,632.45 $41,632.45
5004151 BARNES SAMUEL L BARNES $62,066.87 $62,066.87
5004155 SIMS DELORES SIMS $36,038.80 $36,038.80
5004156 WATSON PHYLLIS MAE WATSON $48,415.00 $48,415.00
5004159 WESTFALL ROGER WESTFALL $68,800.50 $68,800.50
5004164 THOMAS RAYMOND THOMAS $30,000.28 $30,000.28
5004165 AWKARD LARRY S AWKARD $50,400.00 $50,400.00
5004168 GREENE JOHN E GREENE $81,402.25 $81,402.25
5004169 DORSEY JAMES D DORSEY $100,000.00 $100,000.00
5004170 CALLAWAY DELPHIA JONES CALLAWAY $63,375.75 $63,375.75
5004177 WATERS DONNA D WATERS $48,178.07 $48,178.07
5004179 MATTSON DONALD J MATTSON $35,764.82 $35,764.82
5004183 ENGLISH ANDREW S ENGLISH $42,500.00 $42,500.00
5004192 LIDESTER NATALIE E LIDESTER $52,399.90 $52,399.90
5004195 BUNCH JAMES WILLIAM BUNCH $34,958.00 $34,958.00
5004197 RATLIFF DONALD D RATLIFF JR $71,400.03 $71,400.03
5004199 FUSSEL LYNDA FUSSEL $33,988.30 $33,988.30
5004200 THOMPSON CHRISTOPHER D THOMPSON $73,600.00 $73,600.00
5004203 RICHTER GLENN E RICHTER $376,250.00 $376,250.00
5004204 ADKINS DEANNA J ADKINS $73,143.40 $73,143.40
5004210 GERALD DAN C GERALD $39,956.70 $39,956.70
5004215 SHEPHERD CALVIN W SHEPHERD $49,600.01 $49,600.01
5004217 MOORE TIMOTHY EMMETT MOORE $45,749.14 $45,749.14
5004223 COOK WENDY COOK $71,600.75 $71,600.75
5004226 HOUSE ANTHONY LAMOUNT HOUSE $136,000.00 $136,000.00
5004230 BROWN BOBBY G BROWN $78,200.00 $78,200.00
5004232 PRICE JOHN EDWARD PRICE $62,441.16 $62,441.16
5004239 JONES BARBARA H JONES $59,707.67 $59,707.67
5004241 RODRIGUEZ NORMA RODRIGUEZ $290,315.29 $290,315.29
5004247 BALL GREGORY L BALL $49,850.00 $49,850.00
5004249 JONES EDDIE L JONES $71,391.34 $71,391.34
5004251 BOYD DEWAYNE A BOYD $54,400.00 $54,400.00
5004252 AYALA CARLOS ALFREDO AYALA $48,980.90 $48,980.90
5004258 BURKES CHARLEY WILLIAM BURKES $67,025.65 $67,025.65
5004259 JUNE ALEXANDER JUNE JR $64,800.00 $64,800.00
5004262 SOUSA JOHN F SOUSA $54,400.00 $54,400.00
5004272 TURNAGE ETRICE ROWELL TURNAGE $59,999.50 $59,999.50
5004275 HILL DORIS T HILL $35,790.00 $35,790.00
5004276 SHOEMAKE WILLIAM A SHOEMAKE $200,400.00 $200,400.00
5004277 COX MAURICE H COX $48,400.00 $48,400.00
5004279 MOBLEY DENNIS E MOBLEY $58,875.00 $58,875.00
5004281 LANTZ DANNY L LANTZ $39,836.88 $39,836.88
5004282 THOMPSON TOM THOMPSON $53,551.48 $53,551.48
5004293 SPLIETHOF DAROL C SPLIETHOF $79,950.00 $79,950.00
5004298 MONTELEONE ANTHONY W MONTELEONE $57,799.44 $57,799.44
</TABLE>
17
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
5004300 EMMONS PHILLIP E EMMONS $64,345.64 $64,345.64
5004304 EVANS TERRY A EVANS $31,600.00 $31,600.00
5004305 HUNTER JAMES HUNTER $91,799.99 $91,799.99
5004307 BARRON LINDA BARRON $56,951.88 $56,951.88
5004311 CALLIHAN ALLEN CALLIHAN $37,366.08 $37,366.08
5004314 WENZEL JAMES WENZEL $23,971.00 $23,971.00
5004316 BELCHER WILLIAM L BELCHER $63,881.48 $63,881.48
5004318 MARTIN KEVIN MARTIN $93,600.00 $93,600.00
5004321 BEWLEY HOWARD BEWLEY $110,500.00 $110,500.00
5004323 MADISON JAMES R MADISON $67,996.00 $67,996.00
5004325 TANNER BETTY J TANNER $33,569.67 $33,569.67
5004327 HUDSON TERRY LEE HUDSON $43,156.24 $43,156.24
5004331 ARNOLD RICK A ARNOLD $40,000.00 $40,000.00
5004333 WRIGHT MEMORY M WRIGHT $64,799.90 $64,799.90
5004336 KING HECTOR L KING $59,500.00 $59,500.00
5004338 BOWMAN LLOYD D BOWMAN $92,825.60 $92,825.60
5004340 HEWITT LUCILLA A HEWITT $57,746.34 $57,746.34
5004343 SINGLETON ROBERT SINGLETON $17,925.00 $17,925.00
5004352 TESORO PERLITA G TESORO $100,958.73 $100,958.73
5004355 HANCOCK LARRY R HANCOCK $91,144.85 $91,144.85
5004356 CARTER GREG CARTER $70,125.00 $70,125.00
5004362 EDWARDS STANLEY T EDWARDS $95,215.00 $95,215.00
5004367 DUAY DWIGHT DUAY $34,405.28 $34,405.28
5004369 CAPELLAN HULDA R CAPELLAN $62,992.42 $62,992.42
5004371 MATTINGLY PATRICIA A MATTINGLY $50,250.00 $50,250.00
5004375 MCNEAVE CYNTHIA J MCNEAVE $87,999.50 $87,999.50
5004378 COFFIELD ROBERT TERRY COFFIELD $59,250.00 $59,250.00
5004382 JONES H CRAIG JONES $71,705.36 $71,705.36
5004391 HURD CARL MAYNARD HURD $48,750.00 $48,750.00
5004393 DALE RONALD LEE DALE $83,422.28 $83,422.28
5004395 TURNER DAVID W TURNER $79,934.85 $79,934.85
5004405 HENDERSON CANDI LOU HENDERSON $43,499.60 $43,499.60
5004407 THOMAS MARVA THOMAS $52,800.06 $52,800.06
5004410 KNAPP PAUL D KNAPP $52,032.71 $52,032.71
5004422 MAY ELAINE J MAY $51,200.00 $51,200.00
5004424 REED RICHARD L REED $65,510.70 $65,510.70
5004426 HARRIS JOHN H HARRIS $80,452.55 $80,452.55
5004429 JIMENEZ ANGEL JIMENEZ $40,600.00 $40,600.00
5004444 WINFIELD FRED H WINFIELD $68,818.00 $68,818.00
5004446 LUCAS JERRY W LUCAS $19,190.90 $19,190.90
5004454 MAVIS LINDA L MAVIS $113,999.40 $113,999.40
5004456 MOSIER TERRY A MOSIER $81,250.00 $81,250.00
5004459 ROSENBERGER MARK A ROSENBERGER JR $113,310.00 $113,310.00
5004463 BIGNER CAROLE STUPKA BIGNER $43,401.28 $43,401.28
5004465 JOHNSON HOWARD E JOHNSON III $37,148.56 $37,061.54
5004470 STOCKDALE KEITH E STOCKDALE $72,184.08 $72,184.08
5004471 KOLISH BARBARA L KOLISH $186,133.36 $186,133.36
5004477 MAST RONALD L MAST $33,775.00 $33,775.00
5004479 RAVEN ERNEST RAVEN $86,798.49 $86,798.49
</TABLE>
18
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
5004481 LINEBERRY HAROLD WAYNE LINEBERRY $48,000.00 $48,000.00
5004484 NANTHARATH PONGPHILA NANTHARATH $97,369.97 $97,369.97
5004486 MILFORD JAMES R MILFORD $45,042.63 $45,042.63
5004487 KWASNIEWSKI JAMES KWASNIEWSKI $106,190.16 $106,190.16
5004490 BRINKS RICHARD C BRINKS JR $82,728.01 $82,728.01
5004494 RUTH CAROLYN Y RUTH $37,966.60 $37,966.60
5004495 SHUMACHER JOHN SHUMACHER $70,463.48 $70,463.48
5004496 FORSHEE MICHAEL FORSHEE $93,499.20 $93,499.20
5004499 WEILINSKI TAMMY L WEILINSKI $70,549.99 $70,549.99
5004502 RATLIFF VIRGIL R RATLIFF JR $69,071.58 $69,071.58
5004505 CAFFREY NANCY CAFFREY $40,800.00 $40,800.00
5004507 SEOANE JOSEPH SEOANE $70,090.00 $70,090.00
5004509 BARTLEY ARTHUR A BARTLEY $33,695.97 $33,695.97
5004515 ELLIOTT KEVIN ELLIOTT $55,055.23 $55,055.23
5004518 STEVENSON BRENT A STEVENSON $55,470.00 $55,470.00
5004522 WILLIAMS JOSEPHINE P WILLIAMS $42,312.64 $42,312.64
5004523 KAMERZELL KATHLEEN A KAMERZELL $52,800.00 $52,800.00
5004525 STARKS JOHN STARKS $61,600.00 $61,600.00
5004529 ALLEY REX D ALLEY $124,188.50 $124,188.50
5004532 CLARK GRAHAM B CLARK $54,745.53 $54,745.53
5004534 KELLY MICHAEL J KELLY $84,484.18 $84,484.18
5004537 ROBERSON ROBERT J ROBERSON $126,362.74 $126,362.74
5004540 LONGSTRETH SCOTT LONGSTRETH $95,594.48 $95,594.48
5004542 LENTEN MICHAEL LENTEN $44,103.12 $44,103.12
5004545 ODOM NETTI LYNN ODOM $31,500.00 $31,500.00
5004549 RUEHR MICHAEL ALLEN RUEHR $58,964.70 $58,964.70
5004551 MYERS CHARLES S MYERS $38,395.09 $38,395.09
5004553 CLARK BRIAN J CLARK $312,699.52 $312,699.52
5004560 GALLIEN RICHARD ALLEN GALLIEN $69,200.00 $69,200.00
5004563 EDWARDS ALLISTER T EDWARDS $56,649.69 $56,649.69
5004567 BOGAN DAVID WILLIAM BOGAN $77,600.00 $77,600.00
5004569 HAMPTON LINDA C HAMPTON $78,786.27 $78,786.27
5004572 HILL WILLIAM HILL $67,500.00 $67,500.00
5004574 GLASER MICHAEL RAYMOND GLASER $75,006.00 $75,006.00
5004576 FIELDS MILTON FIELDS $85,102.64 $85,102.64
5004578 PIERCE DIANE K PIERCE $60,918.52 $60,918.52
5004581 DASUQI AHDI N DASUQI $120,000.00 $120,000.00
5004583 BURNS THERON C BURNS $46,547.55 $46,547.55
5004586 HATCHER RICHARD L HATCHER $70,993.00 $70,993.00
5004589 TITUS BRIANT SCOTT TITUS $69,088.00 $69,088.00
5004591 HARMS ROLF HARMS $63,714.00 $63,714.00
5004593 RASCH ELLEN H RASCH $42,247.50 $42,247.50
5004596 STEGALL JEROME R STEGALL $78,402.00 $78,402.00
5004598 MARANVILLE PAUL R MARANVILLE $35,549.28 $35,549.28
5004604 LOHMANN THOMAS E LOHMANN $112,000.00 $112,000.00
5004606 HEMME RICHARD I HEMME $126,900.00 $126,900.00
5004609 GRANGER JOSEPH E GRANGER $181,137.50 $181,137.50
5004612 WILIAMS RUDOLPH WILIAMS $71,353.71 $71,353.71
5004616 LEGRAND CHARLES F LEGRAND $72,000.01 $72,000.01
</TABLE>
19
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
5004622 HENDERSON WILLIAM C HENDERSON $55,290.88 $55,290.88
5004626 ELBERSON JAMES L ELBERSON $128,000.00 $128,000.00
5004643 HECK LARRY JOE HECK $134,979.55 $134,979.55
6000122 WARD CHARLES V WARD $24,000.00 $23,994.50
6000124 SMITH RANDY K SMITH $139,500.00 $139,457.81
6000128 KEEN TIMOTHY M KEEN $21,600.00 $21,583.67
6000148 CARR FREDDIE CARR $120,000.00 $120,000.00
7000107 RICHARDS GEORGE D RICHARDS $32,000.00 $31,978.62
7000120 MYERS JOSEPH MYERS $16,750.00 $16,598.22
7000124 PASSMAN GENE OVERTON PASSMAN $40,800.00 $40,627.92
7000132 WALKER ANNETTE HILL WALKER $49,500.00 $49,471.52
7000135 BROWN LILLIAN BROWN $35,700.00 $35,625.08
7000140 BAZIL KENNETH C BAZIL $23,400.00 $23,038.52
7000142 BENTON VERNORN BENTON $42,500.00 $42,663.95
7000143 BROWN NICK L BROWN $39,600.00 $39,516.89
7000146 CAMBRICE VICTORIA A PRICE CAMBRICE $41,950.00 $41,937.99
7000152 COLLINS BRIAN PAUL COLLINS $47,400.00 $47,400.00
7000154 LANGE RODNEY DEAN LANGE $85,500.00 $85,500.00
7000161 MATHIEU MILDRED SMITH MATHIEU $22,500.00 $22,500.00
7000162 WILLIAMS DEISRAEL LABYRD WILLIAMS $41,800.00 $41,800.00
7000166 KENNEDY ROSE MARY GLASPER KENNEDY $52,900.00 $52,900.00
7000167 MUNSON TOMMY L MUNSON $43,650.00 $43,650.00
8000207 RANSOM JASON RANSOM $16,500.00 $16,487.93
8000211 SMITH JOHNNIE R SMITH $48,000.00 $47,952.47
8000214 BOOTHE KATIE BOOTHE $52,000.00 $51,970.01
8000218 LIDDLE DIANA M V LIDDLE $21,600.00 $20,521.62
8000238 PORTER MICHAEL A PORTER $20,400.00 $20,400.00
8000241 MONTGOMERY DOZIER W MONTGOMERY $80,800.00 $80,800.00
8000501 HALSTEAD JAMES A HALSTEAD $90,000.00 $89,927.99
8000502 PARKER DAVID E PARKER $57,600.00 $57,318.52
8000503 ASHWOOD WILLIAM RANDY ASHWOOD $76,000.00 $75,959.37
8000506 ADDIS REBECCA S ADDIS $59,000.00 $58,404.58
8000508 SUTTON LYNN P SUTTON $83,300.00 $83,222.75
8000513 SCHUBERT ROBERT SCHUBERT $115,200.00 $114,830.76
8000515 ROGERS STEPHEN L ROGERS $68,000.00 $67,945.59
8000517 PRESSON WILLIAM R PRESSON JR $90,000.00 $89,970.53
8000520 BROWN CHARLES HENRY BROWN $70,400.00 $70,376.94
8000522 OSBORNE DAVID A OSBORNE $58,400.00 $58,340.97
8000524 STONE GARY H STONE $60,000.00 $59,978.08
8000527 BRYANT RICHARD EUGENE BRYANT $125,800.00 $125,563.92
8000528 YEOMAN MATLYNN B YEOMAN $52,125.00 $52,113.05
8000533 SPRINGS KERMIT L SPRINGS $60,300.00 $60,273.27
8000534 TATE JAMS H TATE $38,250.00 $38,238.78
8000535 GANTT BENJAMIN G GANTT $88,000.00 $87,971.81
8000536 ANDREWS EVERETTE R ANDREWS $44,000.00 $43,934.03
8000538 BECKWITH KEVIN HAZEL BECKWITH $30,800.00 $30,787.73
8000561 SANZ PAUL SANZ $48,800.00 $48,780.56
8000566 ABALOS LAWRENCE B ABALOS $60,000.00 $59,956.65
8000651 TYRREL EVELYN TYRREL $52,000.00 $52,000.00
</TABLE>
20
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
8000658 PRESSLEY LORIE G PRESSLEY $35,250.00 $35,250.00
8000660 JOHNSON CURLEY BELL JOHNSON $48,750.00 $48,750.00
8000664 ADAMS ROBERT FRANKLIN ADAMS $41,250.00 $41,250.00
8000668 JOHNSON DONNA JOHNSON $59,280.00 $59,280.00
8000670 BROCKINGTON ETHEL D BROCKINGTON $40,000.00 $40,000.00
8000672 BARRETT HOWARD BARRETT JR $60,675.00 $60,675.00
8000681 EVERETT ELIZABETH B EVERETT $66,400.00 $66,400.00
8000684 WILKERSON JOHN D WILKERSON $140,000.00 $140,000.00
8000687 MOORE RICHARD L MOORE $82,500.00 $82,500.00
8000690 DODSON DANIEL W DODSON $84,000.00 $84,000.00
8000692 HATFIELD KENNETH L HATFIELD $54,400.00 $54,400.00
8000694 THOMPSON CHARLES E THOMPSON JR $59,250.00 $59,250.00
8000696 OMAR RANDI L OMAR $95,200.00 $95,200.00
8000698 DUNCAN LANORA A DUNCAN $51,750.00 $51,750.00
8000700 TAYLOR CAROL LOUISE TAYLOR $62,250.00 $62,250.00
8000704 CHAFFIN DOUGLAS E CHAFFIN $45,227.00 $45,227.00
8000705 SANDERS WAYNE T SANDERS $47,200.00 $47,200.00
8000707 LAWSON GEOFFREY A LAWSON $76,800.00 $76,800.00
8000712 FRAZIER WILBERT FRAZIER $89,600.00 $89,600.00
8000714 FUTRELL KIMOTHY DUANE FUTRELL $66,000.00 $66,000.00
8000717 AMATO MICHAEL C AMATO $142,000.00 $142,000.00
8000719 ROSENBAUM ELIZABETH IRENE ROSENBAUM $88,000.00 $88,000.00
8000721 JOHNSON JOHN F JOHNSON $50,000.00 $50,000.00
8000723 SAVAGE RONALD SAVAGE SR $72,800.00 $72,800.00
8000726 SHEPPARD JAMES E SHEPPARD $105,600.00 $105,600.00
8000729 CAIN GERALD MILLER CAIN $52,000.00 $52,000.00
8000731 CHAPMAN BARBARA J CHAPMAN $41,000.00 $41,000.00
8000732 BORDEAUX WILLIAM A BORDEAUX $64,800.00 $64,800.00
8000734 FASCELLA LISA MARIE FASCELLA $57,000.00 $57,000.00
8000736 BABSON WILLIAM BRADLEY BABSON $56,250.00 $56,250.00
8000741 WARREN JOHN LEWIS WARREN JR $48,750.00 $48,750.00
8000743 CAMERON LUTHER W CAMERON $58,950.00 $58,950.00
8000745 EVANS JAMES CLIFTON EVANS JR $93,600.00 $93,600.00
8000750 CROOMS ERNEST CROOMS $64,000.00 $64,000.00
8000777 KETELSEN GARY A KETELSEN $64,600.00 $64,600.00
8000780 FREEMAN JAMES ERVIN FREEMAN $60,560.00 $60,560.00
8000813 RICHARD SANDRA P RICHARD $52,400.00 $52,400.00
8000831 PITARO MICHELLE M PITARO $107,920.00 $107,920.00
8000838 DAWSON MELVIN L DAWSON $25,500.00 $25,500.00
9001001 YOUNG LONNY E YOUNG $34,500.00 $34,459.75
21000130 KIRKLAND RONALD L KIRKLAND $70,186.00 $69,879.31
21000142 DUPLANTIS CONNELY I DUPLANTIS $34,937.50 $34,599.43
21000146 YATES RICHARD YATES $75,166.44 $74,871.38
21000150 FITCH BRYAN KEITH FITCH $61,200.62 $60,787.38
21000154 TREVARROW TROY ALLEN TREVARROW $44,812.60 $44,715.50
21000161 HUDSON CORA J HUDSON $71,200.21 $70,878.21
21000163 RUSSELL CHARLES S RUSSELL $79,372.65 $78,610.27
21000170 MARTIN CHARLES C MARTIN III $100,800.00 $100,376.49
21000177 NOWLIN GARY JOYCE NOWLIN $61,740.00 $61,468.96
</TABLE>
21
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
21000180 THOMAS MARTIN LEE THOMAS $45,000.00 $44,938.14
21000186 MOYERS PAMELA JOYCE MOYERS $60,200.00 $60,069.45
21000188 HANSON RITA ANN HANSON $30,562.89 $30,520.43
21000189 SILCOX VIRGIL SILCOX JR $73,504.39 $73,370.42
21000193 GREENE RICHIE GREENE $27,000.00 $26,941.01
21000202 MOORE CHARLES MOORE $60,771.22 $60,639.80
21000208 HAYES RITCHIE L HAYES $49,200.00 $49,141.22
21000211 COTHRAN WILLIAM E COTHRAN JR $25,666.81 $25,609.19
21000213 BENNETT DONNIE BENNETT $58,400.00 $58,283.04
21000217 PAGE JOHN W PAGE SR $69,385.00 $69,235.65
21000220 TURNER BILLY J TURNER $51,249.26 $51,125.11
21000222 KLOCK PATRICIA SCHULTZ KLOCK $98,600.00 $98,400.19
21000226 HAYWOOD DOROTHY HAYWOOD $46,750.00 $46,702.74
21000228 JONES BOBBY JONES $51,295.25 $51,197.35
21000235 FITZHUGH BRUCE W FITZHUGH $120,800.00 $120,498.50
21000238 MARTINEZ CHRISTOPHER MARTINEZ $68,034.00 $68,034.00
21000239 MASON RAY ANTHONY MASON $53,550.08 $53,431.94
21000249 MUSTARD DOUGLAS MUSTARD $47,863.11 $47,764.26
21000260 SIMS JACK LEE SIMS III $38,399.08 $38,234.88
21000266 DAVIS DANIEL D DAVIS $39,999.50 $39,823.91
21000277 CROSSETT WILLIAM F CROSSETT $42,480.00 $42,480.00
21000280 BEAGLES RICHARD D BEAGLES $44,000.53 $43,787.20
21000297 PLAIR FREDWARD PLAIR $49,154.89 $48,915.85
21000299 BUTTERSON TERRY L BUTTERSON $119,999.58 $119,999.58
21000303 OFFICER WAYNE OFFICER $69,653.55 $69,653.55
21000305 CLAGGETT KAREN A CLAGGETT $80,995.00 $80,602.32
21000309 TREVARROW CHRISTOPHER J TREVARROW $29,880.00 $29,817.76
21000311 BRADFORD STEPHANIE A BRADFORD $75,201.49 $75,201.49
21000318 PRIM THOMAS C PRIM JR $48,000.00 $48,000.00
21000321 TRUESDELL PAUL GRANT TRUESDELL $63,231.37 $63,231.37
21000323 OGLESBY MALCOLM RALPH OGLESBY $23,000.54 $23,000.54
21000325 VICENTE LEONARDO PACHECO VICENTE $66,420.33 $66,420.33
21000331 ALVARADO OSBERTO R ALVARADO $56,519.20 $56,519.20
21000336 HARRIS BOBBIE R HARRIS $36,445.00 $36,445.00
21000338 WATSON JAMES T WATSON $278,212.48 $278,212.48
21000340 SANDERS JOHNNY SANDERS $35,968.23 $35,968.23
21000341 RICHARDSON SIDNEY L RICHARDSON $55,579.00 $55,579.00
21000345 PEARSON JAMES H PEARSON $66,416.00 $66,416.00
21000347 SADDLER RANDY SADDLER $44,275.90 $44,165.72
21000355 CHAMBERS WESLEY FRANKLIN CHAMBERS $65,052.09 $65,052.09
21000358 WATSON JAMES M WATSON $75,943.97 $75,943.97
21000361 MAY WALTER EUGENE MAY $72,650.00 $72,650.00
21000363 REAVEY SANDRA A REAVEY $89,362.75 $89,362.75
21000365 SHARPE TERENCE C SHARPE $59,202.28 $59,202.28
21000368 GREENE ARTHUR S GREENE JR $123,250.61 $122,975.22
21000371 WINDHAM TONIA L WINDHAM $48,162.14 $48,162.14
21000374 WIGGINGTON JAMES S WIGGINGTON $93,461.84 $93,461.84
21000375 LAMB JAMES M LAMB $34,764.00 $34,764.00
21000377 RILEY DOROTHY DIANE RILEY $37,385.20 $37,385.20
</TABLE>
22
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
21000382 TOWNSEND ALLEN TOWNSEND JR $72,351.30 $72,351.30
21000384 WILLING MARILYN T WILLING $134,455.49 $134,174.38
21000386 HERRING KENNETH R HERRING $32,341.68 $32,341.68
21000390 HENSLEY DAVID L HENSLEY $111,982.98 $111,982.98
21000393 DEMOSS GARY G DEMOSS $55,000.00 $55,000.00
21000397 MOREFIELD JACK C MOREFIELD $48,268.00 $48,268.00
21000398 COTTRELL ROBERT COTTRELL $59,515.00 $59,515.00
21000407 DIXON BRYAN JOE DIXON $54,339.05 $54,339.05
21000409 SANDLIN JAMES L SANDLIN $31,998.54 $31,998.54
21000411 ROBERSON MARILYNN R ROBERSON $41,598.93 $41,598.93
21000415 DUFF DANIL L DUFF $79,050.52 $79,050.52
21000419 LIVINGSTON JOHN MERRICK LIVINGSTON $64,523.70 $64,523.70
21000421 TURRENTINE SHAWN TURRENTINE $89,600.88 $89,600.88
21000424 GRIFFIN NATHANIEL M GRIFFIN $93,449.50 $93,449.50
21000426 SCHAUER RICHARD A SCHAUER $55,987.89 $55,987.89
21000428 BABB VERNON R BABB $55,000.00 $55,000.00
21000430 YOUNG FRED L YOUNG $45,700.97 $45,700.97
21000432 HANRATTY ROBERT E HANRATTY $59,499.73 $59,499.73
21000437 MCCRAY TIMOTHY D MCCRAY $82,875.00 $82,875.00
21000439 KIRKLAND CARL W KIRKLAND SR $47,861.80 $47,861.80
21000443 BURNETT DONALD L BURNETT $63,927.52 $63,927.52
21000452 FERGUSON TRAVIS FERGUSON $49,599.00 $49,599.00
21000455 PIERSON JERRY PIERSON $85,603.67 $85,603.67
21000457 WELLMAN WILLIAM B WELLMAN $56,800.00 $56,800.00
21000458 WOOD JOHN N WOOD $107,950.00 $107,950.00
21000460 BARNHART HAROLD CLARENCE BARNHART $52,800.00 $52,800.00
21000467 WILKERSON EDDIE GENE WILKERSON $42,797.65 $42,797.65
21000473 BOLLING HELEN H BOLLING $78,752.50 $78,752.50
21000477 HADLEY ROBERT T HADLEY $85,600.00 $85,600.00
21000480 BREWER RONALD E BREWER $51,998.48 $51,998.48
21000486 HAMPTON JOHN ROBERT HAMPTON $56,522.70 $56,522.70
21000488 BASHAM LARRY M BASHAM $45,791.33 $45,791.33
21000492 REEDY DENNIS M REEDY $142,320.00 $142,320.00
21000495 RETHERFORD RICKY V RETHERFORD $60,800.00 $60,800.00
21000498 PYRTLE MICHAEL EUGENE PYRTLE $79,950.00 $79,950.00
21000502 CROCKER ERIC B CROCKER $46,432.37 $46,432.37
21000508 MOSS WILLIAM EARL MOSS $46,495.48 $46,495.48
21000511 MADRY TIMOTHY P MADRY $188,655.00 $188,655.00
21000512 DALTON PAULA IRENE DALTON $30,800.00 $30,800.00
21000516 JUGE RUSSEL J JUGE $32,934.50 $32,934.50
21000517 ADAMS TIMOTHY H ADAMS $58,400.83 $58,400.83
21000519 LOPEZ CHERYL A LOPEZ $76,000.16 $76,000.16
21000521 HALL BLAIR C HALL $152,796.87 $152,796.87
21000524 DAVIS WARREN L DAVIS $55,109.20 $55,109.20
21000527 BISHOP GREGORY B BISHOP $58,331.76 $58,331.76
21000529 WERNER CHELSEA G WERNER $42,398.95 $42,398.95
21000531 ZELENAK JOHN R ZELENAK $54,400.00 $54,400.00
21000533 VENABLE JOANNE VENABLE $89,667.59 $89,667.59
21000539 ANDERSON ROY DELL ANDERSON $66,000.00 $66,000.00
</TABLE>
23
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
21000542 CAREY BRIAN H CAREY $69,600.00 $69,600.00
21000545 ANDERSON SCOTT R ANDERSON $82,400.00 $82,400.00
21000549 GENDRON CATHERINE LOUISE GENDRON $45,895.75 $45,895.75
21000550 FIGUEROA EDDIE A FIGUEROA $49,602.58 $49,602.58
21000552 HARRELSON PATRICIA STANLEY HARRELSON $35,250.50 $35,250.50
21000553 HORN DIANA L VAN HORN $79,200.00 $79,200.00
21000555 WOOD BRAD A WOOD $58,854.55 $4,405.31
21000558 GLASGOW MARTHA ANN GLASGOW $31,999.56 $31,999.56
21000564 REICH ROBERT F REICH $76,737.77 $76,737.77
21000567 BROWN RONALD W BROWN JR $67,499.15 $67,499.15
21000571 ABBETT AMY L ABBETT $67,126.58 $67,126.58
21000579 JOHNSON FRED R JOHNSON $95,042.48 $95,042.48
21000600 SPELLS ARCHIE LEE SPELLS $17,549.45 $17,549.45
21000603 STICKELL TONY EUGENE STICKELL $64,499.70 $64,499.70
21000605 RADANDT JACK RADANDT $65,157.70 $65,157.70
21000612 KING WILLIAM M KING $47,119.05 $47,119.05
21000614 COBB COLEMAN B COBB $57,750.00 $57,750.00
21000616 GILLESPIE BASHARA GILLESPIE $43,719.00 $43,719.00
21000620 EL-ZEIN AMHAD EL-ZEIN $39,752.46 $39,752.46
21000622 HARRIS LARRY PATRICK HARRIS $36,746.76 $36,746.76
21000624 LEONARD RICHARD J LEONARD $33,792.35 $33,792.35
21000625 GALLEGOS FRANK GALLEGOS $35,231.74 $35,231.74
21000627 WILLIAMS GEORGE C WILLIAMS $46,633.08 $46,633.08
21000629 MARSHALL FLOYD SAMUELL MARSHALL $63,997.00 $63,997.00
21000631 GREEN DARRYL J GREEN $67,997.11 $67,997.11
21000633 DAVIDSON KENNETH A DAVIDSON $129,004.07 $129,004.07
21000635 GOOLSBY PAUL A GOOLSBY $69,376.64 $69,376.64
21000636 PURCELL BRIAN PURCELL $54,262.04 $54,262.04
21000638 CAMON ARTIS CAMON JR $48,595.50 $48,595.50
21000640 WILBURN WENDY DANIELLE WILBURN $72,004.47 $72,004.47
21000642 STAFFORD RICHARD H STAFFORD $35,623.00 $35,623.00
21000645 HAMILTON BRENT A HAMILTON $28,800.40 $28,800.40
21000647 MCCREADY LEON J MCCREADY $68,357.67 $68,357.67
21000649 GUTIERREZ JUAN D GUTIERREZ $99,999.90 $99,999.90
21000651 HIGBEE PAMELA HIGBEE $24,692.82 $24,692.82
21000652 TREGEMBO TINA M TREGEMBO $48,743.75 $48,743.75
21000653 FIELDS JOE FIELDS JR $51,475.96 $51,475.96
21000655 KNECHT CHARLES N KNECHT $167,900.67 $167,900.67
21000657 EPPS HENRY EPPS $42,604.21 $42,604.21
21000658 ONEBENE GLENN P ONEBENE SR $49,122.49 $49,122.49
21000666 DALFREY TRACEY JOSEPH DALFREY $112,309.60 $112,309.60
21000668 TATUM RAYMOND D TATUM $55,193.69 $55,193.69
21000676 DEVRIES MARK DEVRIES $63,750.00 $63,750.00
21000678 DEVRIES MARK DEVRIES $29,623.10 $29,623.10
21000679 BEAUDETTE RAYMOND F BEAUDETTE $27,999.40 $27,999.40
21000680 MORRIS THOMAS RAY MORRIS $45,749.61 $45,749.61
21000686 FORTUNE RUMI B FORTUNE $84,000.00 $84,000.00
21000715 BROWN MICHAEL BROWN $34,395.00 $34,232.78
22000101 SHUMATE TERRY SHUMATE $68,400.00 $68,400.00
</TABLE>
24
<PAGE>
<TABLE>
<C> <S> <C> <C> <C>
22000103 ADKINS DIANA W ADKINS $84,058.25 $84,058.25
22000105 DUNN DOUGLAS DUNN $63,376.00 $63,376.00
22000109 STONE DEBORA W STONE $63,892.66 $63,892.66
22000112 SMITH PHYLLIS A SMITH $40,000.00 $40,000.00
22000115 TOLER BRENDA K TOLER $48,250.13 $48,250.13
22000118 NORRIS JEFFREY G NORRIS $67,704.15 $67,704.15
22000121 BUFFINGTON TIMOTHY G BUFFINGTON $72,000.00 $72,000.00
22000123 THOMAS ROOSEVELT THOMAS $60,535.28 $60,535.28
22000130 TAYLOR TERRY TAYLOR $32,400.00 $32,400.00
22000135 BALDWIN KIKI NUNNERY BALDWIN $97,200.00 $97,199.99
22000144 JOHNSTON RICKY L JOHNSTON $102,000.00 $102,000.00
22000146 TINSLEY JOHN F TINSLEY $48,954.42 $48,954.41
22000147 WILSON GLORIA ELIZABETH WILSON $17,501.00 $17,501.00
22000148 SUPPES TODD M SUPPES $43,695.69 $43,695.69
22000149 TOMASELLI MICHAEL F TOMASELLI $63,900.00 $63,900.00
22000154 VALLAD DONALD L VALLAD JR $43,200.00 $43,200.00
22000158 ROBINSON JOAN G ROBINSON $44,330.00 $44,330.00
22000160 FUGITT MARY FUGITT $39,200.00 $39,200.00
22000162 WISE HENRY C WISE $39,950.00 $39,950.00
22000163 SKUTT KEITH O SKUTT $68,511.69 $68,511.69
22000164 BARTLETT ROBERT H BARTLETT $30,000.00 $30,000.00
22000168 DEWILDE EUGENE J DEWILDE JR $91,350.00 $91,350.00
22000170 HUMPHRIES LEONARD HUMPHRIES $152,150.00 $152,150.00
22000172 BURNHAM DONALD L BURNHAM $44,800.00 $44,800.00
22000174 PERRY ALLEN E PERRY $118,883.13 $118,883.13
22000178 SCHAARD WILLIAM A SCHAARD $127,600.00 $127,600.00
22000181 CHAPKO FRANK CHAPKO $65,600.00 $65,600.00
22000183 JOHNSON HELENA JACKSON JOHNSON $49,500.00 $49,500.00
22000185 HAMMILL JOHN PATRICK HAMMILL $85,547.93 $85,547.93
22000187 MOORE JULIUS C MOORE $64,350.00 $64,350.00
22000189 PRESTON JOYCE PRESTON $49,600.00 $49,600.00
22000197 GWYNN ROBERT W GWYNN $22,575.00 $22,575.00
22000200 CAMPBELL CAROL CAMPBELL $40,000.00 $40,000.00
22000202 CROUCH SAMUEL LAWRENCE CROUCH JR $62,700.00 $62,700.00
22000204 BERGIN HOWARD E BERGIN $39,065.37 $39,065.37
22000212 MOORE JAMES MOORE $87,921.59 $87,921.59
22000216 BOYER WILLIAM R BOYER $48,590.00 $48,590.00
95003005 JONES AARON JONES $60,750.00 $60,750.00
95003007 BURNS HENRY O BURNS $22,131.80 $22,131.80
95003009 JOSSELYN WAYNE K JOSSELYN $70,980.00 $70,980.00
$77,526,089.80
</TABLE>
25
EXHIBIT 4.2
FINANCIAL GUARANTY
INSURANCE POLICY
Trust: As described in Endorsement No. 1 Policy No.: 50571-N
Certificates: Emergent Home Equity Loan Pass-Through Date of Issuance: 3/26/97
Certificates, Series 1997-1, Class A-1,
Class A-2 and Class A-3 Certificates
having an aggregate original Certificate
Principal Balance of $75,000,000
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 /s/ Roger Taylor
---------------------------------
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 ASSURANCE INC.
TRUST: Established pursuant to the Pooling and Servicing
Agreement, dated as of March 1, 1997, among Emergent
Mortgage Corp. as servicer, Prudential Securities
Secured Financing Corporation as depositor and First
Union National Bank of North Carolina as trustee.
POLICY NO.: 50571-N
SECURITIES: Emergent Home Equity Loan Pass-Through Certificates,
Series 1997-1, Class A-1, Class A-2 and Class A-3
Certificates (collectively, the "Class A
Certificates") having an aggregate original
Certificate Principal Balance of $75,000,000.
DATE OF ISSUANCE: March 26, 1997
1. Definitions. For all purposes of this Policy, the terms specified below
shall have the meanings or constructions provided below. Capitalized terms used
herein and not otherwise defined herein shall have the meanings provided in the
Pooling and Servicing Agreement unless the context shall otherwise require.
"Business Day" means any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking institutions in New York are authorized or obligated by law
or executive order to be closed.
"Guaranteed Distributions" means, with respect to the Class A Certificates
and any Distribution Date, the sum of (i) the Interest Distribution Amount for
the Class A Certificates on such Distribution Date, (ii) any Remaining
Overcollateralization Deficit and (iii) without duplication of the amount
specified in clause (ii), on the final Distribution Date for the Class A
Certificates, the outstanding Certificate Principal Balance of such Class A
Certificates, if any, in each case in accordance with the original terms of the
Securities without regard to any amendment or modification of the Securities or
the Pooling and Servicing Agreement except amendments or modifications to which
Financial Security has given its prior written consent. Guaranteed Distributions
shall not include, nor shall coverage be provided under this Policy in respect
of shortfalls, if any, attributable to the application of the Relief Act,
<PAGE>
Prepayment Interest Shortfalls or any taxes, withholding or other charge imposed
by any governmental authority due in connection with the payment of any
Guaranteed Distribution to a Holder.
"Policy" means this Financial Guaranty Insurance Policy and includes each
endorsement thereto.
"Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement, dated as of March 1, 1997, among Emergent Mortgage Corp. as servicer,
Prudential Securities Secured Financing Corporation as depositor and First Union
National Bank of North Carolina as trustee, as amended from time to time as
required by the Pooling and Servicing Agreement in accordance with the terms of
the Pooling and Servicing Agreement and with the consent of Financial Security.
"Receipt" and "Received" mean actual delivery to Financial Security and to
the Fiscal Agent (as defined below), if any, at or 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 Received 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 its Fiscal Agent shall promptly so advise the Trustee and the Trustee may
submit an amended notice.
"Term of This Policy" means the period from and including the Date of
Issuance to and including the date on which (i) the aggregate Certificate
Principal Balance of the Securities is zero, (ii) any period during which any
payment on the Securities 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 non-appealable order in resolution of each such proceeding has
been entered.
"Trustee" means First Union National Bank of North Carolina, 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
-2-
<PAGE>
to occur of (a) 12:00 noon, New York City time, on the second Business Day
following such Receipt; and (b) 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 Payments 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 Distributions shall be discharged
to the extent funds are
disbursed by Financial Security 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 amount previously distributed on the
Class A Certificates 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 referred to 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 relevant
Holder is required to return principal or interest distributed with respect to
the Class A Certificate 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 relevant Holder that the Order has
been entered and is not subject to any stay and (C) an assignment duly executed
and delivered by the relevant Holder, in such form as is reasonably required by
Financial Security and provided to the relevant Holder by Financial Security,
irrevocably assigning to Financial Security all rights and claims of the
relevant Holder relating to or arising under the Class A Certificate 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
-3-
<PAGE>
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 Holder directly
(unless a Holder 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 Holder
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 9.04(d) 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 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 Holder 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 Holder, all rights (whether by counterclaim, setoff 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:
-4-
<PAGE>
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President
- Surveillance Department
Telecopy 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.
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: /s/ Roger Taylor
---------------------------------------
Authorized Officer
-5-
<PAGE>
Exhibit A
To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
The undersigned, a duly authorized officer of First Union National Bank of
North Carolina (the "Trustee"), hereby certifies to Financial Security Assurance
Inc. ("FSA"), with reference to Financial Guaranty Insurance Policy No. 50571-N,
dated March 26, 1997 (the "Policy") issued by FSA in respect of Emergent Home
Equity Loan Pass-Through Certificates, Series 1997-1, Class A-1, Class A-2 and
Class A-3 Certificates (collectively, the "Class A Certificates") that:
(i) The Trustee is the Trustee under the Pooling and Servicing
Agreement for the Holders.
(ii) the sum of all amounts on deposit (or scheduled to be on deposit)
in the Distribution Account and available for distribution to the Holders
of the Class A Certificates (the "Securities") pursuant to the Pooling and
Servicing Agreement will be $______________ (the "Shortfall") less than the
Guaranteed Distributions with respect to the Distribution Date.
(iii) The Trustee is making a claim under the Policy for the Shortfall
to be applied to distributions of principal or interest or both with
respect to the Securities.
(iv) The Trustee agrees that, following receipt of funds from FSA, it
shall (a) hold such amounts in trust and apply the same directly to the
payment of Guaranteed Distributions on the Securities when due; (b) not
apply such funds for any other purpose; (c) not commingle such funds with
other funds held by the Trustee and (d) maintain an accurate record of such
payments with respect to each Security and the corresponding claim on the
Policy and proceeds thereof and, if the Security is required to be
surrendered for such payment, shall stamp on each such Security the legend
"$[insert applicable amount] paid by FSA and the balance hereof has been
cancelled and reissued" and then shall deliver such Security to FSA.
A-1
<PAGE>
(v) The Trustee, on behalf of the Holders, hereby assigns to FSA the
rights of the Holders with respect to the Trust Fund to the extent of any
payments under the Policy, including, without limitation, any amounts due
to the Holders in respect of securities law violations arising from the
offer and sale of the Trust Fund. The foregoing assignment is in addition
to, and not in limitation of, rights of subrogation otherwise available to
FSA in respect of such payments. The Trustee shall take such action and
deliver such instruments as may be reasonably requested or required by FSA
to effectuate the purpose or provisions of this clause (v).
(vi) The Trustee, on its behalf and on behalf of the Holders, hereby
appoints FSA as agent and attorney-in-fact for the Trustee and each such
Holder in any legal proceeding with respect to the Trust Fund. The Trustee
hereby agrees that FSA may at any time during the continuation of any
proceeding by or against any debtor 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 with respect to the Trust Fund (a "Preference Claim"), (B) the
direction of any appeal of any order relating to any Preference Claim at
the expense of FSA but subject to reimbursement as provided in the
Insurance Agreement and (C) the posting of any surety, supersedeas or
performance bond pending any such appeal. In addition, the Trustee hereby
agrees that FSA shall be subrogated to, and the Trustee on its behalf and
on behalf of each Holder, hereby delegates and assigns, to the fullest
extent permitted by law, the rights of the Trustee and each Holder 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 the [SPECIFY
POLICY PAYMENTS ACCOUNT].
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.
A-2
<PAGE>
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice of
Claim and Certificate as of the _______ day of _____________________, _____.
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, as Trustee
By: _________________________________
Title: ______________________________
================================================================================
For FSA or Fiscal Agent Use Only
Wire transfer sent _____________ by _____________________________________
Confirmation Number _____________________________________________________
A-3
EXECUTION COPY
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
Depositor
EMERGENT MORTGAGE HOLDINGS CORPORATION
Unaffiliated Seller
and
EMERGENT GROUP, INC.
---------------------------
UNAFFILIATED SELLER'S AGREEMENT
Dated as of March 1, 1997
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions................................................ 1
ARTICLE TWO
PURCHASE, SALE AND CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01. Agreement to Purchase...................................... 4
Section 2.02. Purchase Price............................................. 5
Section 2.03. Delivery of Mortgage Loan Files............................ 5
Section 2.04. Transfer of Mortgage Loans;
Assignment of Agreement.................................. 5
Section 2.05. Examination of Mortgage Loan 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 Mortgage Loans......................... 8
Section 3.03. Covenants of the Unaffiliated
Seller................................................. 16
Section 3.04. Representations and Warranties of
the Depositor.......................................... 16
Section 3.05. Repurchase Obligation for Breach of
a Representation or Warranty........................... 17
Section 3.06. Reassignment of Purchased Mortgage
Loans.................................................. 18
Section 3.07. Waivers................................................... 19
Section 3.08. Representations and Warranties of
Emergent Group......................................... 19
ARTICLE FOUR
THE UNAFFILIATED SELLER
Section 4.01. Liability of the Unaffiliated
Seller.................................................. 20
Section 4.02. Merger or Consolidation.................................... 20
Section 4.03. Costs...................................................... 21
Section 4.04. Servicing.................................................. 22
Section 4.05. Mandatory Delivery......................................... 22
Section 4.06. Indemnification............................................ 22
ARTICLE FIVE
i
<PAGE>
Page
----
CONDITIONS OF CLOSING
Section 5.01. Conditions of Depositor's
Obligations............................................. 26
Section 5.02. Conditions of Unaffiliated Seller's
Obligations............................................. 28
Section 5.03. Termination of Depositor's
Obligations............................................. 29
ARTICLE SIX
MISCELLANEOUS
Section 6.01. Notices.................................................... 29
Section 6.02. Severability of Provisions................................. 29
Section 6.03. Agreement of Unaffiliated Seller........................... 30
Section 6.04. Survival................................................... 30
Section 6.05. Effect of Headings and Table of
Contents................................................. 30
Section 6.06. Successors and Assigns..................................... 30
Section 6.07. Governing Law.............................................. 30
Section 6.08. Confirmation of Intent..................................... 31
Section 6.09. Execution in Counterparts.................................. 31
Section 6.10. Amendments................................................. 32
Section 6.11. Miscellaneous.............................................. 33
EXHIBITS
Exhibit A - Schedule of Mortgage Loans
Exhibit B - Officer's Certificate
ii
<PAGE>
This Unaffiliated Seller's Agreement, dated as of March 1, 1997, among
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, a Delaware corporation (the
"Depositor"), EMERGENT MORTGAGE HOLDINGS CORPORATION, a Delaware corporation
(the "Unaffiliated Seller") and EMERGENT GROUP, INC., a South Carolina
corporation ("Emergent Group").
W I T N E S S E T H:
WHEREAS, the Depositor has agreed to purchase from the Unaffiliated Seller
and the Unaffiliated Seller, pursuant to this Agreement, is selling to the
Depositor the Mortgage Loans and Other Conveyed Property;
WHEREAS, it is the intention of the Unaffiliated Seller and the Depositor
that simultaneously with the Unaffiliated Seller's conveyance of the Mortgage
Loans and Other Conveyed Property to the Depositor (a) the Depositor shall
deposit the Mortgage Loans and Other Conveyed Property in a trust pursuant to a
Pooling and Servicing Agreement to be dated as of March 1, 1997 (the "Pooling
and Servicing Agreement"), to be entered into by and among the Depositor, as
depositor, Emergent Mortgage Corp., as servicer, and First Union National Bank
of North Carolina, 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 26, 1997.
<PAGE>
"Commission" means the Securities and Exchange Commission and its
successors.
"Cut-Off Date Principal Balance" means as to each Mortgage Loan, its unpaid
principal balance as of the Cut-Off Date.
"Depositor Information" shall have the meaning given to such term in
Section 4.06(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FSA Information" means any information furnished by the Certificate
Insurer in writing expressly for the use in the Offering Document, it being
understood that in respect of the initial Offering Document, the FSA Information
is limited to the information included under the caption "The Insurer" and the
financial statements of the Certificate Insurer incorporated by reference
therein.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind other than tax liens, mechanics liens and any liens that
attach to a Mortgaged Property by operation of law.
"Original Pool Balance" means the aggregate unpaid principal balance of the
Mortgage Loans as of the Cut-Off Date. The Original Pool Balance is
$77,526,089.80.
"Originator" means Emergent Mortgage Corp., a South Carolina corporation.
"Other Conveyed Property" means all monies at any time paid or payable on
the Mortgage Loans or in respect thereof after the Cut-Off Date (including
amounts due on or before the Cut-Off Date but received by the Originator, the
Unaffiliated Seller or the Depositor after the Cut-Off Date), the insurance
policies relating to the Mortgage Loans and all Insurance Proceeds, rights of
the Unaffiliated Seller against the Originator under the Purchase Agreement and
Assignment, all items contained in the Mortgage Files, and any REO Property,
together with all collections thereon and proceeds thereof.
"Prospectus" means the Prospectus dated December 4, 1996 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 21,
1997, relating to the offering of the Certificates in the form in which it was
or will be filed with the Commission pursuant to Rule 424(b) under the
Securities Act with respect to the offer and sale of the Certificates.
"Purchase Agreement and Assignment" means the Agreement dated as of March
1, 1997 among the Originator, the Unaffiliated Seller and Emergent Group, Inc.
"Registration Statement" means that certain registration statement on Form
S-3, as amended (Registration No. 333-16511) relating to the offering by the
Depositor from time to time of its pass-through certificates (issuable in
series) as heretofore declared effective by the Commission.
"Related Documents" means the Insurance Agreement and the Indemnification
Agreement dated as of March 1, 1997 among the Originator, the Unaffiliated
Seller, Emergent Group, the Depositor, Prudential Securities Incorporated and
Financial Security Assurance Inc.
"Schedule of Mortgage Loans" means the schedule of all Mortgages and
Mortgage 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
3
<PAGE>
Insurer or the Unaffiliated Seller reasonably determined by the Depositor to be
material; or
(d) Subsequent to the date of this Agreement there shall have occurred any
of the following: (i) a suspension or material limitation in trading in
securities substantially similar to the Certificates; (ii) a general moratorium
on commercial banking activities in New York declared by either Federal or New
York State authorities; or (iii) the engagement by the United States in
hostilities, or the escalation of such hostilities, or any calamity or crisis,
if the effect of any such event specified in this clause (iii) in the reasonable
judgment of the Depositor makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the Certificates on the terms and in the
manner contemplated in the Prospectus Supplement.
"Unaffiliated Seller" means Emergent Mortgage Holdings Corporation, in its
capacity as Unaffiliated Seller of the Mortgage Loans under this Agreement and
any successor to Emergent Mortgage Holdings Corporation, whether through merger,
consolidation, purchase and assumption of Emergent Mortgage Holdings Corporation
or all or substantially all of its assets or otherwise.
"Unaffiliated Seller Repurchase Event" means the occurrence of a breach of
any of the Unaffiliated Seller's representations and warranties under Section
3.02 herein.
Capitalized terms used herein that are not otherwise defined shall have the
respective meanings ascribed thereto in the Pooling and Servicing Agreement.
ARTICLE TWO
PURCHASE, SALE AND CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01. Agreement to Purchase. (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 and representations in this Agreement), and the
Depositor hereby purchases, all right, title and interest of the Unaffiliated
Seller in and to the Mortgage Loans 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
Mortgage Loans and the Other Conveyed Property from the Unaffiliated Seller to
the Depositor, conveying good title thereto free and clear of any Liens, and the
Mortgage Loans and the Other Conveyed Property shall not be part of the
Unaffiliated Seller's estate in the
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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 Mortgage Loans to the Depositor, the
Depositor will deliver to the Unaffiliated Seller (i) an amount in cash equal to
$74,879,657.42 (which amount includes accrued interest of $373,649.29), less
certain expenses and (ii) the Residual Certificate to be issued pursuant to the
Pooling and Servicing Agreement.
Section 2.03. Delivery of Mortgage Loan Files. On or prior to the Closing
Date, the Unaffiliated Seller shall deliver or shall cause to be delivered to
the Trustee (as assignee of the Depositor pursuant to the Pooling and Servicing
Agreement), the documents with respect to each Mortgage Loan listed in Section
2.01(a) of the Pooling and Servicing Agreement.
Section 2.04. Transfer of Mortgage Loans; Assignment of Agreement. The
Depositor has the right to assign its interest under this Agreement to the
Trustee as may be required to effect the purposes of the Pooling and Servicing
Agreement, without further notice to, or consent of, the Unaffiliated Seller,
and the Trustee shall succeed to such of the rights and obligations of the
Depositor hereunder as shall be so assigned. The Depositor shall, pursuant to
the Pooling and Servicing Agreement, assign all of its right, title and interest
in and to the Mortgage Loans and its right to exercise the remedies created by
this Section 2.04 and Section 3.05 hereof to the Trustee for the benefit of the
Certificateholders. The Unaffiliated Seller agrees that, upon such assignment to
the Trustee, such representations, warranties, agreements and covenants will run
to and be for the benefit of the Trustee and the Trustee may enforce diligently,
without joinder of the Depositor, the repurchase obligations of the Unaffiliated
Seller set forth herein with respect to breaches of such representations,
warranties, agreements and covenants.
Section 2.05. Examination of Mortgage Loan File. Prior to the Closing Date,
the Unaffiliated Seller shall make the Mortgage Files available to the Depositor
or its designee for examination at the Unaffiliated Seller's offices or at such
other place as the Unaffiliated Seller shall 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 Mortgage Loans that do not conform
to the requirements of the Depositor as described in this Agreement, such
Mortgage Loans shall be deleted from the Schedule of Mortgage Loans. The
Depositor may, at its option
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and without notice to the Unaffiliated Seller, purchase all or part of the
Mortgage Loans without conducting any partial or complete examination. The fact
that the Depositor or the Trustee has conducted or has failed to conduct any
partial or complete examination of the Mortgage Files shall not affect the
rights of the Depositor or the Trustee to demand repurchase or other relief as
provided in this Agreement.
Section 2.06. Books and Records. The sale of each Mortgage Loan shall be
reflected on the Unaffiliated Seller's balance sheet and other financial
statements as a sale of assets by the Unaffiliated Seller. The Unaffiliated
Seller shall be responsible for maintaining, and shall maintain, a complete set
of books and records for each Mortgage Loan which shall be clearly marked to
reflect the ownership of each Mortgage Loan by the Trustee for the benefit of
the Certificateholders and the Certificate Insurer.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties as to the Unaffiliated Seller.
The Unaffiliated Seller hereby represents and warrants to the Depositor, as of
the Closing Date, that:
(a) Organization and Good Standing. The Unaffiliated Seller has been
duly organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with power and authority to own
its properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and now has, power, authority and legal right to acquire, own and
sell the Mortgage Loans and the Other Conveyed Property transferred to the
Depositor.
(b) Due Qualification. The Unaffiliated Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of its property or the conduct of its business requires
such qualification.
(c) Power and Authority. The Unaffiliated Seller has the power and
authority to execute and deliver this Agreement and to carry out its terms;
the Unaffiliated Seller has full power and authority to sell and assign the
Mortgage Loans and the Other Conveyed Property to be sold and assigned to
and deposited with the Depositor by it and has duly authorized such sale
and assignment to
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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) Valid Sale; Binding Obligations. This Agreement, when duly
executed and delivered, shall effect a valid sale, transfer and assignment
of the Mortgage Loans and the Other Conveyed Property, enforceable against
the Unaffiliated Seller and creditors of and purchasers from the
Unaffiliated Seller; and this Agreement, 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.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms of this Agreement shall not
conflict with, result in any breach of any of the terms and provisions of
or constitute (with or without notice, lapse of time or both) a default
under, the certificate of incorporation or by-laws of the Unaffiliated
Seller, or any material indenture, agreement, mortgage, deed of trust or
other instrument to which the Unaffiliated Seller is a party or by which it
is bound, or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than this Agreement, or
violate any law, order, rule or regulation applicable to the Unaffiliated
Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Unaffiliated Seller or any of its properties.
(f) No Proceedings. There are no material proceedings or
investigations pending or, to the Unaffiliated Seller's knowledge,
threatened against the Unaffiliated Seller, before any court, regulatory
body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Unaffiliated Seller or its
properties (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement,
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(iii) seeking any determination or ruling that might materially and
adversely affect the performance by the Unaffiliated Seller of its
obligations under, or the validity or enforceability of, this Agreement,
(iv) involving the Unaffiliated Seller and which might adversely affect the
federal income tax or other federal, state or local tax attributes of the
Certificates, or (v) that could have a material adverse effect on the
Mortgage Loans.
(g) Approvals. All approvals, authorizations, consents, orders or
other actions of any person, corporation or other organization, or of any
court, governmental agency or body or official, required in connection with
the execution and delivery by the Unaffiliated Seller of this Agreement and
the consummation of the transactions contemplated hereby have been or will
be taken or obtained on or prior to the Closing Date.
(h) Chief Executive Office. The chief executive office of the
Unaffiliated Seller is at 44 East Camperdown Way, Greenville, South
Carolina 29601, Attention: William P. Crawford.
Section 3.02. Representations and Warranties Relating to the Mortgage
Loans. The Unaffiliated Seller represents and warrants to the Depositor, as of
the Closing Date, that as to each Mortgage Loan, immediately prior to the sale
and transfer of the Mortgage Loans by the Unaffiliated Seller to the Depositor:
(a) The information with respect to each Mortgage Loan set forth in
the Schedule of Mortgage Loans is true and correct as of the Cut-off Date;
(b) All of the original or certified documentation required to be
delivered to the Trustee pursuant to the Pooling and Servicing Agreement
(including all material documents related thereto) with respect to each
Mortgage Loan has been or will be delivered to the Trustee in accordance
with the terms of such Pooling and Servicing Agreement. Each of the
documents and instruments specified to be included therein has been duly
executed and in due and proper form, and each such document or instrument
is in a form generally acceptable to prudent mortgage lenders that
regularly originate or purchase mortgage loans comparable to the Mortgage
Loans for sale to prudent investors in the secondary market that invest in
mortgage loans such as the Mortgage Loans.
(c) Each Mortgaged Property is improved by a single (one-to-four)
family residential dwelling, which may
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include condominiums, townhouses and units in planned unit developments, or
manufactured housing, but shall not include cooperatives;
(d) No Mortgage Loan had a Loan-to-Value Ratio in excess of 95%;
(e) Each Mortgage is a valid and subsisting first lien of record on
the Mortgaged Property subject in all cases to the exceptions to title set
forth in the title insurance policy, with respect to the related Mortgage
Loan, which exceptions are generally acceptable to banking institutions in
connection with their regular mortgage lending activities, and such other
exceptions to which similar properties are commonly subject and which do
not individually, or in the aggregate, materially and adversely affect the
benefits of the security intended to be provided by such Mortgage;
(f) Immediately prior to the transfer and assignment herein
contemplated, the Unaffiliated Seller held good and indefeasible title to,
and was the sole owner of, each Mortgage Loan conveyed by it subject to no
Liens, except Liens which will be released simultaneously with such
transfer and assignment and subordinate Liens on the related Mortgaged
Property;
(g) As of the related Cut-off Date, no Mortgage Loan is 30 or more
days delinquent;
(h) There is no delinquent tax or assessment lien on any Mortgaged
Property, and each Mortgaged Property is free of substantial damage and is
in good repair;
(i) There is no valid and enforceable right of rescission, offset,
defense or counterclaim to any Mortgage Note or Mortgage, including the
obligation of the related Mortgagor to pay the unpaid principal of or
interest on such Mortgage Note or the defense of usury, nor will the
operation of any of the terms of the Mortgage Note or the Mortgage, or the
exercise of any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim or defense
has been asserted with respect thereto;
(j) There is no mechanics' lien or claim for work, labor or material
affecting any Mortgaged Property which is or may be a lien prior to, or
equal with, the lien of the related Mortgage except those which are insured
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against by any title insurance policy referred to in paragraph (l) below;
(k) Each Mortgage Loan at the time it was made complied in all
material respects with all applicable state and federal laws and
regulations, including, without limitation, the federal Truth-in-Lending
Act and other consumer protection laws, real estate settlement procedure,
usury, equal credit opportunity, disclosure and recording laws;
(l) With respect to each Mortgage Loan, a lender's title insurance
policy, issued in standard American Land Title Association form, or other
form acceptable in a particular jurisdiction by a title insurance company
authorized to transact business in the state in which the related Mortgaged
Property is situated, in an amount at least equal to the initial Stated
Principal Balance of such Mortgage Loan insuring the mortgagee's interest
under the related Mortgage Loan as the holder of a valid first mortgage
lien of record on the real property described in the related Mortgage, as
the case may be, subject only to exceptions of the character referred to in
paragraph (e) above, was effective on the date of the origination of such
Mortgage Loan, and, as of the Cut-off Date such policy will be valid and
thereafter such policy shall continue in full force and effect;
(m) The improvements upon each Mortgaged Property are covered by a
valid and existing hazard insurance policy (which may be a blanket policy
of the type described in the related Pooling and Servicing Agreement) with
a generally acceptable carrier that provides for fire and extended coverage
representing coverage not less than the least of (A) the outstanding
principal balance of the related Mortgage Loan and (B) the minimum amount
required to compensate for damage or loss on a replacement cost basis;
(n) If any Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy (which may be a blanket policy of the
type described in the Pooling and Servicing Agreement) in a form meeting
the requirements of the current guidelines of the Federal Insurance
Administration is in effect with respect to such Mortgaged Property with a
generally acceptable carrier in an amount representing coverage not less
than the least of (A) the outstanding principal balance of the related
Mortgage Loan and (B) the maximum amount of insurance that is available
under the Flood Disaster Protection Act of 1973;
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(o) Each Mortgage and Mortgage Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with its
terms, except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at law),
and all parties to each Mortgage Loan had full legal capacity to execute
all documents relating to such Mortgage Loan and convey the estate therein
purported to be conveyed;
(p) The Unaffiliated Seller has caused and will cause to be performed
any and all acts required to be performed to preserve the rights and
remedies of the servicer in any insurance policies applicable to any
Mortgage Loans delivered by such Unaffiliated Seller including, to the
extent such Mortgage Loan is not covered by a blanket policy described in
the Pooling and Servicing Agreement, any necessary notifications of
insurers, assignments of policies or interests therein, and establishments
of co-insured, joint loss payee and mortgagee rights in favor of the
servicer;
(q) Each original Mortgage was recorded or is in the process of being
recorded, and all subsequent assignments of the original Mortgage have been
recorded or are in the process of being recorded in the appropriate
jurisdictions wherein such recordation is necessary to perfect the lien
thereof for the benefit of the Trustee, subject to the provisions of
Section 2.01 of the Pooling and Servicing Agreement;
(r) The terms of each Mortgage Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the interest
of the owners and which has been delivered to the Trustee;
(s) The proceeds of each Mortgage Loan have been fully disbursed, and
there is no obligation on the part of the mortgagee to make future advances
thereunder. Any and all requirements as to completion of any on-site or
off-site improvements and as to disbursements of any escrow funds therefor
have been complied with. All costs, fees and expenses incurred in making or
closing or recording such Mortgage Loans have been paid;
(t) Except as otherwise required by law or pursuant to the statute
under which the related Mortgage Loan was made, the related Mortgage Note
is not and has not been
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secured by any collateral, pledged account or other security except the
lien of the corresponding Mortgage;
(u) No Mortgage Loan was originated under a buydown plan;
(v) No Mortgage Loan provides for negative amortization, has a shared
appreciation feature, or other contingent interest feature;
(w) Each Mortgaged Property is located in the state identified in the
Schedule of Mortgage Loans;
(x) Each Mortgage contains a provision for the acceleration of the
payment of the unpaid principal balance of the related Mortgage Loan in the
event the related Mortgaged Property is sold without the prior consent of
the mortgagee thereunder;
(y) Any advances made after the date of origination of a Mortgage Loan
but prior to the Cut-off Date, have been consolidated with the outstanding
principal amount secured by the related Mortgage, and the secured principal
amount, as consolidated, bears a single interest rate and single repayment
term reflected on the Schedule of Mortgage Loans. The consolidated
principal amount does not exceed the original principal amount of the
related Mortgage Loan. No Mortgage Note permits or obligates the Originator
to make future advances to the related Mortgagor at the option of the
Mortgagor;
(z) There is no proceeding pending or threatened for the total or
partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring, and each Mortgaged Property is undamaged by waste,
fire, earthquake or earth movement, flood, tornado or other casualty, so as
to affect adversely the value of the Mortgaged Property as security for the
Mortgage Loan or the use for which the premises were intended;
(aa) All of the improvements of any Mortgaged Property lie wholly
within the boundaries and building restriction lines of such Mortgaged
Property, and no improvements on adjoining properties encroach upon such
Mortgaged Property, and, if a title insurance policy exists with respect to
such Mortgaged Property, are stated in such title insurance policy and
affirmatively insured;
(ab) No improvement located on or being part of any Mortgaged Property
is in violation of any applicable zoning law or regulation. All
inspections, licenses and certificates required to be made or issued with
respect
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to all occupied portions of each Mortgaged Property and, with respect to
the use and occupancy of the same, including, but not limited to,
certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities and such Mortgaged
Property is lawfully occupied under the applicable law;
(ac) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the Originator or the
Trust Fund to the trustee under the deed of trust, except in connection
with a trustee's sale after default by the related Mortgagor;
(ad) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including (A) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (B) otherwise by judicial foreclosure. There
is no homestead or other exemption available which materially interferes
with the right to sell the related Mortgaged Property at a trustee's sale
or the right to foreclose the related Mortgage;
(ae) There is no default, breach, violation or event of acceleration
existing under any Mortgage or the related Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or
event of acceleration; and neither the Originator or the Unaffiliated
Seller has waived any default, breach, violation or event of acceleration;
(af) No instrument of release or waiver has been executed in
connection with any Mortgage Loan, and no Mortgagor has been released, in
whole or in part;
(ag) The credit underwriting guidelines applicable to each Mortgage
Loan conform in all material respects to the Originator's underwriting
guidelines;
(ah) All parties to the Mortgage Note and the Mortgage had legal
capacity to execute the Mortgage Note and the Mortgage and each Mortgage
Note and Mortgage have been duly and properly executed by such parties;
(ai) The Unaffiliated Seller has no actual knowledge that there exist
on any Mortgaged Property any hazardous
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substances, hazardous wastes or solid wastes, as such terms are defined in
the Comprehensive Environmental Response Compensation and Liability Act,
the Resource Conservation and Recovery Act of 1976, or other federal, state
or local environmental legislation;
(aj) None of the Mortgage Loans shall be due from the United States of
America or any State or from any agency, department, subdivision or
instrumentality thereof;
(ak) At the Cut-Off Date, no Mortgagor had been identified on the
records of the Originator as being the subject of a current bankruptcy
proceeding;
(al) By the Closing Date, the Unaffiliated Seller will have caused the
portions of the Unaffiliated Seller's records relating to the Mortgage
Loans to be clearly and unambiguously marked to show that the Mortgage
Loans constitute part of the Trust Fund and are owned by the Trust Fund in
accordance with the terms of the Pooling and Servicing Agreement;
(am) No Mortgage Loan was originated in, or is subject to the laws of,
any jurisdiction the laws of which would make unlawful, void or voidable
the sale, transfer and assignment of such Mortgage Loan under this
Agreement or pursuant to transfers of the Certificates. The Unaffiliated
Seller has not entered into any agreement with any account debtor that
prohibits, restricts or conditions the assignment of any portion of the
Mortgage Loans;
(an) All filings (including, without limitation, UCC filings) required
to be made by any Person and actions required to be taken or performed by
any Person in any jurisdiction to give the Trustee a first priority
perfected lien on, or ownership interest in, the Mortgage Loans and the
proceeds thereof and the other property of the Trust Fund have been made,
taken or performed;
(ao) The Unaffiliated Seller has not done anything to convey any right
to any Person that would result in such Person having a right to payments
due under the Mortgage Loan or otherwise to impair the rights of the Trust
Fund and the Certificateholders in any Mortgage Loan or the proceeds
thereof;
(ap) No Mortgage Loan is assumable (without the consent of the
Originator which consent has not been given) by another Person in a manner
which would release the Mortgagor thereof from such Mortgagor's obligations
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to the Unaffiliated Seller with respect to such Mortgage Loan;
(aq) With respect to the Initial Mortgage Loans as of the Cut-off
Date: the aggregated Stated Principal Balance was $64,553,830.89; each of
the Stated Principal Balances was at least $4,405.31 but no more than
$376,250.00: the average Stated Principal Balance was $63,288.07; the
Mortgage Rates were at least 7.640% but no more than 15.990%; the weighted
average Mortgage Rate was 11.006%; the original Loan-to-Value Ratios were
at least 30% but no more than 95%; the weighted average original
Loan-to-Value Ratio was 80.618%; the remaining terms to stated maturity
were at least 58 months but no more than 360 months; the weighted average
remaining term to stated maturity was 208 months; the original terms to
stated maturity was at least 60 months but no more than 361 months; the
weighted average original term to stated maturity was 209 months; and no
more than 1.36% of the Mortgage Loans are secured by Mortgaged Properties
located in any one postal zip code area;
(ar) No selection procedures adverse to the Certificateholders or to
the Certificate Insurer have been utilized in selecting such Mortgage Loan
from all other similar Mortgage Loans originated by the Originator;
(as) The related Mortgaged Property has not been subject to any
foreclosure proceeding or litigation;
(at) There was no fraud involved in the origination of the Mortgage
Loan by the mortgagee or the Mortgagor, any appraiser or any other party
involved in the origination of the Mortgage Loan; and
(au) Each Mortgage File contains an appraisal of the Mortgaged
Property indicating an appraised value equal to the appraised value of such
Mortgaged Property on the Mortgage Loan Schedule. Each appraisal has been
performed in accordance with the requirements of FNMA or FHLMC.
(av) Each Mortgage Loan is a "qualified mortgage" as defined in
Section 860G(a)(3) of the Code.
Section 3.03. Covenants of the Unaffiliated Seller. The Unaffiliated Seller
covenants to the Depositor as follows:
(a) The Unaffiliated Seller shall cooperate with the Depositor and the firm
of independent certified public accountants retained with respect to the
issuance of the Certificates in making available all information and taking
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all steps reasonably necessary to permit the accountants' letters required
hereunder to be delivered within the times set for delivery herein.
(b) The Unaffiliated Seller agrees to satisfy or cause to be satisfied on
or prior to the Closing Date all of the conditions to the Depositor's
obligations set forth in Section 5.01 hereof that are within the Unaffiliated
Seller's (or its agents') control.
(c) The Unaffiliated Seller hereby agrees to do all acts, transactions, and
things and to execute and deliver all agreements, documents, instruments, and
papers by and on behalf of the Unaffiliated Seller as the Depositor or its
counsel may reasonably request in order to consummate the transfer of the
Mortgage Loans to the Depositor and the subsequent transfer thereof to the
Trustee, and the rating, issuance and sale of the Certificates.
(d) The Unaffiliated Seller hereby agrees to arrange separately to pay to
the Trustee all of the Trustee's fees and expenses in connection with the
transactions contemplated by the Pooling and Servicing Agreement, including,
without limitation, all of the Trustee's fees and expenses in connection with
any actions taken by the Trustee pursuant to Section 8.10 thereof. For the
avoidance of doubt, the parties hereto acknowledge that it is the intention of
the parties that the Depositor shall not pay any of the Trustee's fees and
expenses in connection with the transactions contemplated by the Pooling and
Servicing Agreement.
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
Mortgage Loan and to execute, deliver and perform, and to enter into and
consummate all the transactions contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, and, assuming the due authorization, execution and
delivery hereof by the Unaffiliated Seller, constitutes the legal, valid and
binding agreement of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to
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or affecting the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law);
(d) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required for
the execution, delivery and performance of or compliance by the Depositor with
this Agreement or the consummation by the Depositor of any of the transactions
contemplated hereby, except such as have been made on or prior to the Closing
Date;
(e) The Depositor has filed or will file the Prospectus and Prospectus
Supplement with the Commission in accordance with Rule 424(b) under the
Securities Act;
(f) None of the execution and delivery of this Agreement, the purchase of
the Mortgage Loans from the Unaffiliated Seller, the consummation of the other
transactions contemplated hereby, or the fulfillment of or compliance with the
terms and conditions of this Agreement, (i) conflicts or will conflict with the
charter or bylaws of the Depositor or conflicts or will conflict with or results
or will result in a breach of, or constitutes or will constitute a default or
results or will result in an acceleration under, any term, condition or
provision of any indenture, deed of trust, contract or other agreement or other
instrument to which the Depositor is a party or by which it is bound and which
is material to the Depositor, or (ii) results or will result in a violation of
any law, rule, regulation, order, judgment or decree of any court or
governmental authority having jurisdiction over the Depositor.
Section 3.05. Repurchase Obligation for Breach of a Representation or
Warranty. Each of the representations and warranties contained in Sections 3.01
and 3.02 shall survive the purchase by the Depositor of the Mortgage Loans and
the subsequent transfer thereof by the Depositor to the Trustee and shall
continue in full force and effect, notwithstanding any restrictive or qualified
endorsement on the Mortgage Loans and notwithstanding subsequent termination of
this Agreement or the Pooling and Servicing Agreement.
(a) Upon the occurrence of a breach of any of the Unaffiliated Seller's
representations and warranties under Section 3.02 hereof that materially and
adversely affects the related Mortgage Loan, the Unaffiliated Seller shall,
unless such breach shall have been cured in all material respects or unless the
Originator shall have repurchased such Mortgage Loan directly from the Trustee,
repurchase the related Mortgage Loan from the Trustee within 60 days following
discovery by or notice to the Unaffiliated Seller of such breach pursuant to
Section 2.03 of the Pooling and Servicing
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Agreement, and, the Unaffiliated Seller shall pay the Purchase Price to the
Trustee pursuant to the Pooling and Servicing Agreement. To the extent such
Unaffiliated Seller fails to effect its repurchase obligation, Emergent Group
shall repurchase the related Mortgage Loans and pay the Purchase Price to the
Trustee on such date. The provisions of this Section 3.05 are intended to grant
the Trustee a direct right against the Unaffiliated Seller to demand performance
hereunder, and in connection therewith, the Unaffiliated Seller and Emergent
Group waive any requirement of prior demand against the Depositor with respect
to such repurchase obligation. Any such purchase resulting from the Unaffiliated
Seller Repurchase Event shall take place in the manner specified in Section 2.03
of the Pooling and Servicing Agreement. Notwithstanding any other provision of
this Agreement or the Pooling and Servicing Agreement to the contrary, the
obligation of the Unaffiliated Seller and Emergent Group under this Section
shall be performed in accordance with the terms hereof notwithstanding the
failure of the Depositor or the Servicer to perform any of their respective
obligations with respect to such Mortgage Loan under this Agreement or under the
Pooling and Servicing Agreement.
(b) In addition to the foregoing and notwithstanding whether the related
Mortgage Loan shall have been purchased by the Unaffiliated Seller or Emergent
Group, the Unaffiliated Seller shall indemnify the Depositor, the Trustee, the
Certificate Insurer, Emergent Group and the Certificateholders against all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel, which may be asserted against or incurred by any
of them as a result of third party claims arising out of the events or facts
giving rise to Unaffiliated Seller Repurchase Events.
Section 3.06. Reassignment of Purchased Mortgage Loans. Upon deposit in the
Collection Account of the Purchase Price of any Mortgage Loan repurchased by the
Unaffiliated Seller under Section 3.05 hereof, the Depositor and the Trustee
shall take such steps as may be reasonably requested by the Unaffiliated Seller
in order to assign to the Unaffiliated Seller all of the Depositor's and the
Trust Fund's right, title and interest in and to such Mortgage Loan and all
security and documents and all Other Conveyed Property conveyed to the Depositor
and the Trust Fund directly relating thereto, without recourse, representation
or warranty, except as to the absence of Liens created by or arising as a result
of actions of the Depositor or the Trustee. Such assignment shall be a sale and
assignment outright, and not for security. If, following the reassignment of a
Purchased Mortgage Loan, in any enforcement suit or legal proceeding, it is held
that the Unaffiliated Seller may not enforce any such Mortgage Loan
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on the ground that it shall not be a real party in interest or a holder entitled
to enforce the Mortgage Loan, the Depositor and the Trustee shall, at the
expense of the Unaffiliated Seller, take such steps as the Unaffiliated Seller
deems reasonably necessary to enforce the Mortgage Loan, including bringing suit
in the Depositor's or the Trustee's name or the names of the Certificateholders.
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.
Section 3.08. Representations and Warranties of Emergent Group. Emergent
Group hereby represents and warrants to the Depositor as of the date of
execution of this Agreement and as of the Closing Date, that:
(a) Emergent Group is a corporation duly organized, validly existing and in
good standing under the laws of the State of South Carolina;
(b) Emergent Group has the corporate power and authority to execute,
deliver and perform, and to enter into and consummate all the transactions
contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by Emergent Group, and constitutes the legal, valid and binding
agreement of Emergent Group, enforceable against Emergent Group in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law);
(d) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required for
the execution, delivery and performance of or compliance by Emergent Group with
this Agreement or the consummation by Emergent Group of any of the transactions
contemplated hereby or thereby, except such as have been made on or prior to the
Closing Date;
(e) None of the execution and delivery of this Agreement, the consummation
of the other transactions contemplated hereby, or the fulfillment of or
compliance with the terms and conditions of this Agreement, (i) conflicts or
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will conflict with the charter or bylaws of Emergent Group or conflicts or will
conflict with or results or will result in a breach of, or constitutes or will
constitute a default or results or will result in an acceleration under, any
term, condition or provision of any material indenture, deed of trust, contract
or other agreement or other instrument to which Emergent Group is a party or by
which it is bound and which is material to Emergent Group, or (ii) results or
will result in a violation of any law, rule, regulation, order, judgment or
decree of any court or governmental authority having jurisdiction over Emergent
Group.
ARTICLE FOUR
THE UNAFFILIATED SELLER
Section 4.01. Liability of the Unaffiliated Seller. The Unaffiliated Seller
shall be liable in accordance herewith only to the extent of the obligations in
this Agreement specifically undertaken by such Unaffiliated Seller and its
representations and warranties.
Section 4.02. Merger or Consolidation. The Unaffiliated Seller will keep in
full effect its existence, rights and franchises as a corporation and will
obtain and preserve its qualification to do business as a foreign corporation,
in each jurisdiction necessary to protect the validity and enforceability of
this Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement.
Any corporation or other entity (i) into which the Unaffiliated Seller or
Emergent Group may be merged or consolidated, (ii) resulting from any merger or
consolidation to which the Unaffiliated Seller or Emergent Group is a party or
(iii) succeeding to the business of the Unaffiliated Seller or Emergent Group,
which corporation has a certificate of incorporation containing provisions
relating to limitations on business and other matters substantively identical to
those contained in the Unaffiliated Seller's certificate of incorporation, shall
execute an agreement of assumption to perform every obligation of the
Unaffiliated Seller or Emergent Group, as the case may be, under this Agreement
and, whether or not such assumption agreement is executed, shall be the
successor to the Unaffiliated Seller or Emergent Group, as the case may be,
hereunder (without relieving the Unaffiliated Seller or Emergent Group, as the
case may be, of its responsibilities hereunder, if it survives such merger or
consolidation) without the execution or filing of any document or any further
act by any of the parties to this Agreement. Notwithstanding the foregoing, so
long as a Certificate Insurer Default shall not have occurred and be continuing,
the Unaffiliated Seller shall not merge or consolidate with any
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other Person or permit any other Person to become the successor to the
Unaffiliated Seller's business without the prior written consent of the
Certificate Insurer. The Unaffiliated Seller or Emergent Group, as the case may
be, shall promptly inform the other party, the Trustee and, so long as a
Certificate Insurer Default shall not have occurred and be continuing, the
Certificate Insurer of such merger, consolidation or purchase and assumption.
Notwithstanding the foregoing, as a condition to the consummation of the
transactions referred to in clauses (i), (ii) and (iii) above, (x) immediately
after giving effect to such transaction, no representation or warranty made
pursuant to Sections 3.01, 3.02 and 3.08 or covenant made pursuant to Section
3.03, shall have been breached (for purposes hereof, such representations and
warranties shall speak as of the date of the consummation of such transaction)
and no event that, after notice or lapse of time, or both, would become an event
of default under the Insurance Agreement, shall have occurred and be continuing,
(y) the Unaffiliated Seller or Emergent Group, as the case may be, shall have
delivered to the Trustee an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section 4.02 and that all conditions precedent, if
any, provided for in this Agreement relating to such transaction have been
complied with, and (z) the Unaffiliated Seller shall have delivered to the
Trustee an Opinion of Counsel, stating, in the opinion of such counsel, either
(A) all financing statements and continuation statements and amendments thereto
have been executed and filed that are necessary to preserve and protect the
interest of the Trustee in the Trust Fund and reciting the details of the
filings or (B) no such action shall be necessary to preserve and protect such
interest.
Section 4.03. Costs. In connection with the transactions contemplated under
this Agreement and the Pooling and Servicing Agreement, the Unaffiliated Seller
shall promptly pay (or shall promptly reimburse the Depositor to the extent that
the Depositor shall have paid or otherwise incurred): (i) the fees and
disbursements of the Unaffiliated Seller's counsel; (ii) the fees of the
Depositor's counsel, not to exceed $175,000; (iii) the fees and disbursements of
Ernst & Young, the Unaffiliated Seller's independent certified public
accountants, in rendering a comfort letter in connection with the Prospectus
Supplement and in comforting the Derived Information; (iv) the fees of Standard
& Poor's Ratings Group and 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
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expenses relating to the filing of documents with the Securities and Exchange
Commission (including without limitation periodic reports under the Exchange
Act); (viii) the shelf registration amortization fee paid in connection with the
issuance of Certificates; and (ix) to the extent not covered above, all of the
initial upfront expenses of the Depositor and the Underwriter including, without
limitation, legal fees and expenses, accountant fees and expenses and expenses
in connection with due diligence conducted on the Mortgage Loan File. The
Unaffiliated Seller also will promptly pay (or shall promptly reimburse the
Depositor to the extent that the Depositor shall have paid or otherwise
incurred) all of the initial upfront expenses of the Certificate Insurer
including, without limitation, legal fees and expenses, accountant fees and
expenses and expenses in connection with due diligence conducted on the Mortgage
Loan File. All other costs and expenses in connection with the transactions
contemplated hereunder shall be borne by the party incurring such expenses.
Section 4.04. Servicing. The Mortgage Loans shall be serviced by the
Servicer in accordance with the Pooling and Servicing Agreement.
Section 4.05. Mandatory Delivery. Each document specified in Section 2.01
of the Pooling and Servicing Agreement for each Mortgage Loan 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) Emergent Group agrees to indemnify
and hold harmless the Depositor, each of its directors, each of its officers who
have signed the Registration Statement, Prudential Securities Incorporated and
each of its directors and each person or entity who controls the Depositor or
Prudential Securities Incorporated or any such person, within the meaning of
Section 15 of the Securities Act, against any and all losses, claims, damages or
liabilities, joint and several, to which the Depositor, Prudential Securities
Incorporated or any such person or entity may become subject, under the
Securities Act or otherwise, and will reimburse the Depositor, Prudential
Securities Incorporated and each such controlling person for any legal or other
expenses incurred by the Depositor, Prudential Securities Incorporated or such
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Prospectus Supplement or any amendment or supplement to the Prospectus
Supplement or the omission or the alleged omission to state therein a material
fact required to be stated therein
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or necessary to make the statements in the Prospectus Supplement or any
amendment or supplement to the Prospectus Supplement, in light of the
circumstances under which they were made, not misleading, except insofar as such
claims arise out of or are based upon any untrue statement or omission in the
FSA Information or the Depositor Information. This indemnity agreement will be
in addition to any liability which Emergent Group may otherwise have.
(ii) Emergent Group agrees to indemnify and to hold each of the Depositor,
the Trustee, the Certificate Insurer and each Certificateholder harmless against
any and all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses that the
Depositor, the Trustee, the Certificate Insurer and any Certificateholder may
sustain in any way related to (i) the failure of the Unaffiliated Seller or
Emergent Group to perform its duties in compliance with the terms of this
Agreement or (ii) the breach by either the Unaffiliated Seller or Emergent Group
of any of the representations or warranties made by it in this Agreement.
(b) The Depositor agrees to indemnify and hold harmless the Unaffiliated
Seller, each of its directors and each person or entity who controls the
Unaffiliated Seller or any such person, within the meaning of Section 15 of the
Securities Act, against any and all losses, claims, damages or liabilities,
joint and several, to which the Unaffiliated Seller or any such person or entity
may become subject, under the Securities Act or otherwise, and will reimburse
the Unaffiliated Seller and any such director or controlling person for any
legal or other expenses incurred by the Unaffiliated Seller or any such director
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, the Prospectus
Supplement, any amendment or supplement to the Prospectus or the Prospectus
Supplement or the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, but
with respect to the Prospectus Supplement, only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission relates to
the information contained in the Prospectus Supplement under the caption "Plan
of Distribution" (the information contained under the caption "Plan of
Distribution" the "Depositor Information"). This indemnity agreement will be in
addition to any liability which the Depositor may otherwise have.
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(c) Promptly after receipt by an indemnified party under this Section 4.06
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 4.06, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent such indemnifying party
has been prejudiced thereby. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. After notice from the indemnifying party to such indemnified
party of its election to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section 4.06 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it that are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. The indemnifying party shall not be
liable for the expenses of more than one separate counsel.
(d) The Depositor agrees, assuming all Emergent Group-Provided Information
(defined below) is accurate and complete in all material respects, to indemnify
and hold harmless Emergent Group, its respective officers and directors and each
person who controls Emergent Group within the meaning of the Securities Act or
the Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they may become subject under the Securities Act or
the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement of a material fact contained in the Derived Information
provided by the Depositor, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and agrees to reimburse each such
indemnified
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party for any legal or other expenses reasonably incurred by him, her or it in
connection with investigating or defending or preparing to defend any such loss,
claim, damage, liability or action as such expenses are incurred. The
obligations of the Depositor under this Section 4.06(d) shall be in addition to
any liability which the Depositor may otherwise have.
The procedures set forth in Section 4.06(c) shall be equally applicable to
this Section 4.06(d).
(e) For purposes of this Section 4.06, the term "Derived Information" means
such portion, if any, of the information used by the Depositor for filing with
the Commission on Form 8-K as: (i) is not contained in the Prospectus without
taking into account information incorporated therein by reference; and (ii) does
not constitute Emergent Group-Provided Information. "Emergent Group-Provided
Information" means any computer tape furnished to the Depositor by Emergent
Group or the Originator concerning the assets comprising the Trust Fund.
(f) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the preceding
parts of this Section 4.06 is for any reason held to be unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or
subsection (b) of this Section 4.06 in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof); provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered the relative benefits received by Emergent Group and the Unaffiliated
Seller on the one hand, and the Depositor on the other, Emergent Group and the
Unaffiliated Seller's, Emergent Group's and the Depositor's relative knowledge
and access to information concerning the matter with respect to which the claim
was asserted, the opportunity to correct and prevent any statement or omission,
and any other equitable considerations appropriate in the circumstances.
Emergent Group and the Unaffiliated Seller and the Depositor agree that it would
not be equitable if the amount of such contribution were determined by pro rata
or per capita allocation. For purposes of this Section 4.06, each director of
the Depositor, each officer of the Depositor who signed the Registration
Statement, and each person, if any who controls the Depositor within the meaning
of Section 15 of the Securities Act, shall have the same rights to contribution
as
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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 Mortgage Loans will be subject to the satisfaction, on
the Closing Date, of the following conditions. Upon payment of the purchase
price for the Mortgage Loans, such conditions shall be deemed satisfied or
waived.
(a) Each of the obligations of the Unaffiliated Seller required to be
performed by it on or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with and all of the
representations and warranties of the Unaffiliated Seller and Emergent Group
under this Agreement shall be true and correct as of the Closing Date and no
event shall have occurred which, with notice or the passage of time, would
constitute a default under this Agreement, and the Depositor shall have received
a certificate to the effect of the foregoing signed by an authorized officer of
the Unaffiliated Seller.
(b) The Depositor shall have received a letter dated the date of this
Agreement, in form and substance acceptable to the Depositor and its counsel,
prepared by Ernst & Young, independent certified public accountants, regarding
the numerical information contained in the Prospectus Supplement under the
caption "The Mortgage Pool."
(c) [This subsection is reserved.]
(d) The Depositor shall have received the following additional closing
documents, in form and substance satisfactory to the Depositor and its counsel:
(i) the Schedule of Mortgage Loans;
(ii) the Pooling and Servicing Agreement and the Underwriting
Agreement dated as of March 21, 1997 between the Depositor and Prudential
Securities Incorporated and all documents required thereunder, duly
executed and delivered by each of the parties thereto other than the
Depositor;
(iii) an officer's certificate, dated as of the Closing Date, in the
form of Exhibit B hereto, and
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attached thereto resolutions of the board of directors of the Unaffiliated
Seller and a copy of the by-laws of the Unaffiliated Seller;
(iv) copy of the Unaffiliated Seller's and Emergent Group's charter
and all amendments, revisions, and supplements thereof, certified as of a
recent date by the Secretary of State of the State of Delaware and the
State of South Carolina, respectively;
(v) an opinion of the counsel for the Unaffiliated Seller and Emergent
Group as to various corporate matters (it being agreed that the opinion
shall expressly provide that the Trustee shall be entitled to rely on the
opinion);
(vi) opinions of counsel for the Unaffiliated Seller, in forms
acceptable to the Depositor, its counsel, Standard & Poor's Ratings Group
and Moody's Investors Service, Inc. as to such matters as shall be required
for the assignment of a rating to the Class A Certificates of "AAA" by
Standard & Poor's Ratings Group, and "Aaa" by 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 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 Policy shall have been duly executed, delivered and issued with
respect to the Certificates.
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(f) All proceedings in connection with the transactions contemplated by
this Agreement and all documents incident hereto shall be satisfactory in form
and substance to the Depositor and its counsel.
(g) The Unaffiliated Seller shall have furnished the Depositor with such
other certificates of its officers or others and such other documents or
opinions as the Depositor or its counsel may reasonably request.
Section 5.02. Conditions of Unaffiliated Seller's Obligations. The
obligations of the Unaffiliated Seller under this Agreement shall be subject to
the satisfaction, on the Closing Date, of the following conditions:
(a) Each of the obligations of the Depositor required to be performed by it
at or prior to the Closing Date pursuant to the terms of this Agreement shall
have been duly performed and complied with and all of the representations and
warranties of the Depositor contained in this Agreement shall be true and
correct as of the Closing Date, and the Unaffiliated Seller shall have received
a certificate to that effect signed by an authorized officer of the Depositor.
(b) The Unaffiliated Seller shall have received the following additional
documents:
(i) the Pooling and Servicing Agreement, and all documents required
thereunder, in each case executed by the Depositor as applicable; 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 Mortgage Loans
if: (i) any of the conditions set forth in Section 5.01 are not satisfied when
and as provided therein; (ii) there shall have been the entry of a decree or
order by a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver
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or liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Unaffiliated Seller or
Emergent Group, or for the winding up or liquidation of the affairs of the
Unaffiliated Seller; (iii) there shall have been the consent by the Unaffiliated
Seller or Emergent Group to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Unaffiliated Seller or
Emergent Group or of or relating to substantially all of the property of the
Unaffiliated Seller or Emergent Group; (iv) any purchase and assumption
agreement with respect to the Unaffiliated Seller or Emergent Group or the
assets and properties of the Unaffiliated Seller or Emergent Group shall have
been entered into; or (v) a Termination Event shall have occurred. The
termination of the Depositor's obligations hereunder shall not terminate the
Depositor's rights hereunder or its right to exercise any remedy available to it
at law or in equity.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered to or mailed by registered mail, postage prepaid, or transmitted by
telex or telegraph and confirmed by a similar mailed writing, if to the
Depositor, addressed to the Depositor at Prudential Securities Secured Financing
Corporation, One New York Plaza, New York, New York 10292, if to the
Unaffiliated Seller, addressed to the Unaffiliated Seller at Emergent Mortgage
Holdings Corporation, 44 E. Camperdown Way, Greenville, South Carolina 29601,
Attention: William P. Crawford or to such other address as the Unaffiliated
Seller may designate in writing to the Depositor and if to Emergent Group,
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 Mortgage Loan
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shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof.
Section 6.03. Agreement of Unaffiliated Seller. The Unaffiliated Seller
agrees to execute and deliver such instruments and take such actions as the
Depositor may, from time to time, reasonably request in order to effectuate the
purpose and to carry out the terms of this Agreement.
Section 6.04. Survival. The parties to this Agreement agree that the
representations, warranties and agreements made by each of them herein and in
any certificate or other instrument delivered pursuant hereto shall be deemed to
be relied upon by the other party hereto, notwithstanding any investigation
heretofore or hereafter made by such other party or on such other party's
behalf, and that the representations, warranties and agreements made by the
parties hereto in this Agreement or in any such certificate or other instrument
shall survive the delivery of and payment for the Mortgage Loans.
Section 6.05. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 6.06. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as expressly permitted by the terms
hereof, this Agreement may not be assigned, pledged or hypothecated by any party
hereto to a third party without the written consent of the other party to this
Agreement and the Certificate Insurer; provided, however, that the Depositor may
assign its rights hereunder without the consent of the Unaffiliated Seller and
Emergent Group.
Section 6.07. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York (without
regard to conflicts of laws principles), and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
Section 6.08. Confirmation of Intent. It is the express intent of the
parties hereto that the conveyance of the Mortgage Loans by the Unaffiliated
Seller to the Depositor as contemplated by this Unaffiliated Seller's Agreement
be, and be treated for all purposes as, a sale by the Unaffiliated Seller to the
Depositor of the Mortgage Loans. It is,
30
<PAGE>
further, not the intention of the parties that such conveyance be deemed a
pledge of the Mortgage Loans by the Unaffiliated Seller to the Depositor to
secure a debt or other obligation of the Unaffiliated Seller. However, in the
event that, notwithstanding the intent of the parties, the Mortgage Loans are
held to continue to be property of the Unaffiliated Seller then (a) this
Unaffiliated Seller's Agreement shall also be deemed to be a security agreement
within the meaning of Articles 8 and 9 of the Uniform Commercial Code; (b) the
transfer of the Mortgage Loans provided for herein shall be deemed to be a grant
by the Unaffiliated Seller to the Depositor of a security interest in all of the
Unaffiliated Seller's right, title and interest in and to the Mortgage Loans and
all amounts payable on the Mortgage Loans in accordance with the terms thereof
and all proceeds of the conversion, voluntary or involuntary, of the foregoing
into cash, instruments, securities or other property; (c) the possession by the
Depositor of Mortgage Loans and such other items of property as constitute
instruments, money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the security
interest pursuant to Section 9-305 of the Uniform Commercial Code; and (d)
notifications to persons holding such property, and acknowledgments, receipts or
confirmations from persons holding such property, shall be deemed notifications
to, or acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of the Depositor for the
purpose of perfecting such security interest under applicable law. Any
assignment of the interest of the Depositor pursuant to any provision hereof
shall also be deemed to be an assignment of any security interest created
hereby. The Unaffiliated Seller and the Depositor shall, to the extent
consistent with this Unaffiliated Seller's Agreement, take such actions as may
be necessary to ensure that, if this Unaffiliated Seller's Agreement were deemed
to create a security interest in the Mortgage Loans, such security interest
would be deemed to be a perfected security interest of first priority under
applicable law and would be maintained as such throughout the term of this
Agreement.
Section 6.09. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 6.10. Amendments. This Agreement 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, with the prior written consent of the Certificate Insurer
(so long
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<PAGE>
as a Certificate Insurer Default shall not have occurred and be continuing) but
without the consent of the Trustee or any of the Certificateholders (unless a
Certificate Insurer Default shall have occurred, in which event the consent of
the Certificateholders with Voting Rights equal to or in excess of 50% shall be
obtained) (i) to cure any ambiguity or (ii) to correct any provisions in this
Agreement; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel delivered to the Trustee, adversely affect in any material
respect the interests of any Certificateholder.
(b) This Agreement may also be amended from time to time by the
Unaffiliated Seller, the Depositor and Emergent Group with the prior written
consent of the Certificate Insurer (so long as a Certificate Insurer Default
shall not have occurred and be continuing) and with the consent of the Trustee
and Certificateholders having Voting Rights equal to or in excess of 50%, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement, or of modifying in any manner the
rights of the Certificateholders; provided, however, that no such amendment
shall (i) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on Mortgage Loans or distributions that
shall be required to be made on any Certificate or the Pass-Through Rates or
(ii) reduce the aforesaid percentage required to consent to any such amendment
or any waiver hereunder, without the consent of the Holders of all Certificates
then outstanding.
(c) Prior to the execution of any such amendment or consent, Emergent Group
shall have furnished written notification of the substance of such amendment or
consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder.
(e) It shall not be necessary for the consent of Certificateholders
pursuant to this Section to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe, including
the establishment of record dates. The consent of any Holder of a Certificate
given pursuant to this Section or pursuant to any other provision of this
Agreement shall be conclusive and binding on such Holder and on all future
Holders of such Certificate and of any Certificate issued upon the transfer
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<PAGE>
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 3.05 and 4.06 of this Agreement. The parties further agree that
Prudential Securities Incorporated and each of its directors and each person or
entity who controls Prudential Securities Incorporated or any such person,
within the meaning of Section 15 of the Securities Act (each, an "Underwriter
Entity") is an intended third-party beneficiary of this Agreement to the extent
necessary to obtain the benefit of the enforcement of the obligations and
covenants of the Unaffiliated Seller with respect to each Underwriter Entity
under Section 4.06 of this Agreement.
(b) The Depositor, Emergent Group and the Unaffiliated Seller intend the
conveyance by the Unaffiliated Seller to the Depositor of all of its right,
title and interest in and to the Mortgage Loans pursuant to this Agreement to
constitute a purchase and sale and not a loan.
[Signatures Commence on Following Page]
33
<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 MORTGAGE HOLDINGS
CORPORATION
By:/s/ Kevin J. Mast
----------------------------------
Name: Kevin J. Mast
Title: Vice President
EMERGENT GROUP, INC.
By:/s/ Kevin J. Mast
----------------------------------
Name: Kevin J. Mast
Title: Vice President, CFO
and Treasurer
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On March 26, 1997 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.
___________________________
Notary Public
My Commission expires:
<PAGE>
STATE OF ____________ )
) ss.
COUNTY OF ___________ )
On March 26, 1997 before me, the undersigned, a Notary Public in and for
said County and State, personally appeared Kevin J. Mast, personally known to me
(or proved to me on the basis of satisfactory evidence) to be Kevin J. 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.
___________________________
Notary Public
My Commission expires:
<PAGE>
STATE OF ____________ )
) ss.
COUNTY OF ___________ )
On March 26, 1997 before me, the undersigned, a Notary Public in and for
said County and State, personally appeared Kevin J. Mast, personally known to me
(or proved to me on the basis of satisfactory evidence) to be Kevin J. Mast of
Emergent Mortgage Holdings Corporation, the corporation that executed the within
Unaffiliated Seller's Agreement on behalf of said corporation, and acknowledged
to me that said corporation executed it.
___________________________
Notary Public
My Commission expires:
<PAGE>
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[See Schedule 1 to Exhibit 4.1]
<PAGE>
EXHIBIT B
OFFICER'S CERTIFICATE
I, Kevin J. Mast, Vice President of EMERGENT MORTGAGE HOLDINGS CORPORATION
(the "Company") do hereby certify as follows:
(1) No financing statements or other filings have been filed naming the
Company as debtor or seller in any State of the United States of America to
perfect a sale, transfer or assignment of or lien, encumbrance, security
interest or other interest in, or which otherwise pertains to, the Mortgage
Loans other than those filed in connection with the Unaffiliated Seller's
Agreement and the Pooling and Servicing Agreement.
(2) The Company's chief executive office is located at 44 East Camperdown
Way, Greenville, South Carolina 29601.
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, 1997, among Prudential Securities Secured Financing Corporation, as
Depositor, Emergent Mortgage Corp., as Servicer, and First Union National Bank
of North Carolina, as Trustee.
IN WITNESS WHEREOF, I have set my hand this 26th day of March 1997.
EMERGENT MORTGAGE HOLDINGS
CORPORATION
By: /s/ Kevin J. Mast
---------------------------
Name: Kevin J. Mast
Title: Vice President
B-1
EXHIBIT 4.4
EXECUTION COPY
PURCHASE AGREEMENT AND ASSIGNMENT
among
EMERGENT MORTGAGE HOLDINGS CORPORATION
as Purchaser
EMERGENT MORTGAGE CORP.
as Seller
and
EMERGENT GROUP, INC.
dated as of
March 1, 1997
<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.......................................... 2
SECTION 1.5 No Recourse................................................. 3
SECTION 1.6 Action by or Consent of Certificateholders.................. 3
SECTION 1.7 Material Adverse Effect..................................... 3
ARTICLE II
CONVEYANCE OF THE MORTGAGE LOANS
AND THE OTHER CONVEYED PROPERTY........................... 3
SECTION 2.1 Conveyance of the Mortgage Loans 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 Seller................ 4
SECTION 3.2 Representations and Warranties of Purchaser................. 6
SECTION 3.3 Indemnification............................................. 8
SECTION 3.4 Representations and Warranties of Emergent Group............ 10
ARTICLE IV
COVENANTS OF THE SELLER..................................... 12
SECTION 4.1 Protection of Title of Purchaser, the Depositor and the
Trust..................................................... 12
SECTION 4.2 Other Liens or Interests.................................... 13
SECTION 4.3 Costs and Expenses.......................................... 13
ARTICLE V
REPURCHASES................................................. 13
-i-
<PAGE>
SECTION 5.1 Repurchase of Mortgage Loans Upon Breach of
Warranty.................................................. 13
SECTION 5.2 Reassignment of Purchased Mortgage Loans.................... 14
SECTION 5.3 Waivers..................................................... 15
ARTICLE VI
MISCELLANEOUS............................................... 15
SECTION 6.1 Liability of the Seller..................................... 15
SECTION 6.2 Merger or Consolidation of any Seller or Purchaser.......... 15
SECTION 6.3 Limitation on Liability of the Seller and Others............ 16
SECTION 6.4 Amendment................................................... 16
SECTION 6.5 Notices..................................................... 17
SECTION 6.6 Merger and Integration...................................... 17
SECTION 6.7 Severability of Provisions.................................. 17
SECTION 6.8 Intention of the Parties.................................... 18
SECTION 6.9 Governing Law............................................... 18
SECTION 6.10 Counterparts................................................ 18
SECTION 6.11 Conveyance of the Mortgage Loans and the Other
Conveyed Property to the Trust............................ 18
SECTION 6.12 Nonpetition Covenant........................................ 19
SECTION 6.13 Miscellaneous............................................... 19
SCHEDULE A -- Schedule of Mortgage Loans Conveyed
SCHEDULE B -- Representations and Warranties of Seller
-ii-
<PAGE>
PURCHASE AGREEMENT AND ASSIGNMENT
THIS PURCHASE AGREEMENT AND ASSIGNMENT, dated as of March 1, 1997, executed
among Emergent Mortgage Holdings Corporation, a Delaware corporation (the
"Purchaser"), Emergent Mortgage Corp., a South Carolina corporation (the
"Seller") and Emergent Group, Inc., a South Carolina corporation ("Emergent
Group").
W I T N E S S E T H:
WHEREAS, Purchaser has agreed to purchase from Seller, and Seller, pursuant
to this Agreement, is transferring to Purchaser the Mortgage Loans and Other
Conveyed Property.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter contained, and for other good and valuable consideration, the
receipt of which is acknowledged, Purchaser and Seller, intending to be legally
bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 General. The specific terms defined in this Article include the
plural as well as the singular. The words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision, and Article, Section, Schedule
and Exhibit references, unless otherwise specified, refer to Articles and
Sections of and Schedules and Exhibits to this Agreement. Capitalized terms used
herein without definition shall have the respective meanings assigned to such
terms in the Pooling and Servicing Agreement (defined herein).
SECTION 1.2 Specific Terms. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
"Agreement" shall mean this Purchase Agreement and Assignment and all
amendments hereof and supplements hereto.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind other than tax liens, mechanics liens and liens that
attach to a Mortgaged Property by operation of law.
<PAGE>
"Other Conveyed Property" means all monies at any time paid or payable on
the Mortgage Loans or in respect thereof after the Cut-Off Date (including
amounts due on or before the Cut-Off Date but received by the Seller after the
Cut-Off Date), the insurance policies relating to the Mortgage Loans and all
Insurance Proceeds, the Mortgage Files, and any REO Property, together with all
collections thereon and proceeds thereof.
"Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement, dated as of March 1, 1997, among Prudential Securities Secured
Financing Corporation, as Depositor, Emergent Mortgage Corp. as Servicer, and
First Union National Bank of North Carolina, as Trustee, as the same may be
amended, modified or supplemented from time to time.
"Purchaser" means Emergent Mortgage Holdings Corporation.
"Related Documents" means the Unaffiliated Seller's Agreement, the
Insurance Agreement and the Indemnification Agreement dated as of March 1, 1997
among the Seller, the Purchaser, Prudential Securities Incorporated, the
Depositor, Emergent Group and Financial Securities Assurance Corporation.
"Schedule of Mortgage Loans Conveyed" means the schedule of all mortgages
and mortgage 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 the Seller, the occurrence
of a breach of any of Seller's representations and warranties under Schedule B
hereto.
"Seller" means Emergent Mortgage Corp.
SECTION 1.3 Usage of Terms. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement or the Pooling and
Servicing Agreement; references to Persons include their permitted successors
and assigns; and the terms "include" or "including" mean "include without
limitation" or "including without limitation."
SECTION 1.4 Certain References. All references to the Stated Principal
Balance of a Mortgage Loan as of a Record Date shall refer to the close of
business on such day, or as of the first day of a Collection Period shall refer
to the opening of
2
<PAGE>
business on such day. All references to the last day of a Collection Period
shall refer to the close of business on such day.
SECTION 1.5 No Recourse. Without limiting the obligations of Seller
hereunder, no recourse may be taken, directly or indirectly, under this
Agreement or any certificate or other writing delivered in connection herewith
or therewith, against any stockholder, officer or director, as such, of the
Seller, or of any predecessor or successor of any of the Seller.
SECTION 1.6 Action by or Consent of Certificateholders. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given, by
Certificateholders. Solely for the purposes of any action to be taken, or
consented to, by Certificateholders, any Certificate registered in the name of
the Seller or any Affiliate thereof shall be deemed not to be outstanding and
the Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite Percentage Interest necessary to effect any
such action or consent has been obtained; provided, however, that, solely for
the purpose of determining whether the Trustee is entitled to rely upon any such
action or consent, only Certificates which the Trustee knows to be so owned
shall be so disregarded.
SECTION 1.7 Material Adverse Effect. Whenever a determination is to be made
under this Agreement as to whether a given event, action, course of conduct or
set of facts or circumstances could or would have a material adverse effect on
the Trust Fund or the Certificateholders (or any similar or analogous
determination), such determination shall be made without taking into account the
funds available from claims under the Policy.
ARTICLE II
CONVEYANCE OF THE MORTGAGE LOANS
AND THE OTHER CONVEYED PROPERTY
SECTION 2.1 Conveyance of the Mortgage Loans and the Other Conveyed
Property. Subject to the terms and conditions of this Agreement, the Seller
hereby sells, transfers, assigns, and otherwise conveys to Purchaser without
recourse (but without limitation of its obligations in this Agreement), and
Purchaser hereby purchases, all right, title and interest of the Seller in and
to the Mortgage Loans and the Other Conveyed Property. It is the intention of
the Seller and Purchaser that the transfer and assignment contemplated by this
Agreement shall constitute a sale of the Mortgage Loans and the Other Conveyed
Property from the Seller to Purchaser, conveying good title thereto free and
clear of any liens, and the Mortgage Loans and the Other Conveyed
3
<PAGE>
Property shall not be part of the Seller's estate in the event of the filing of
a bankruptcy petition by or against the Seller under any bankruptcy or similar
law.
SECTION 2.2 Purchase Price. Simultaneously with the conveyance of the
Mortgage Loans and the Other Conveyed Property to Purchaser, Purchaser has paid
or caused to be paid to or upon the order of Seller $74,879,657.42 (which amount
includes accrued interest of $373,649.29), less certain expenses, by wire
transfer of immediately available funds (representing the proceeds to Purchaser
from the sale of the Mortgage Loans to the Depositor).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Seller. Seller makes the
following representations and warranties, on which Purchaser relies in
purchasing the Mortgage Loans and the Other Conveyed Property and in
transferring the Mortgage Loans and the Other Conveyed Property to the Depositor
under the Unaffiliated Seller's Agreement, on which the Depositor will rely in
transferring the Mortgage Loans and the Other Conveyed Property to the Trustee
under the Pooling and Servicing Agreement and on which the Certificate Insurer
will rely in issuing the Policy. Such representations are made 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
Mortgage Loans and the Other Conveyed Property hereunder, the sale, transfer and
assignment thereof by the Seller to the Depositor under the Unaffiliated
Seller's Agreement and the sale, transfer and assignment thereof by the
Depositor to the Trustee under the Pooling and Servicing Agreement. Seller and
Purchaser agree that Purchaser will assign to the Depositor all of Purchaser's
rights under this Agreement, the Depositor will assign to the Trustee all of
Purchaser's rights under this Agreement and that the Trustee will thereafter be
entitled to enforce this Agreement directly against the Seller in the Trustee's
own name on behalf of the Certificateholders.
(a) Schedule of Representations. The representations and warranties
made by the Seller and set forth on the Schedule of Representations are
true and correct.
(b) Organization and Good Standing. The Seller has been duly organized
and is validly existing as a corporation in good standing under the laws of
the State of South Carolina, with power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is currently conducted, and had at all relevant times and now has,
power, authority and legal right to enter into and perform its obligations
under this Agreement.
4
<PAGE>
(c) Due Qualification. The Seller is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of its property or the conduct of its business requires such
qualification.
(d) Power and Authority. The Seller has the power and authority to
execute and deliver this Agreement and to carry out its terms; the Seller
has full power and authority to sell and assign the Mortgage Loans and
Other Conveyed Property to be sold and assigned to and deposited with
Purchaser hereunder and has duly authorized such sale and assignment to
Purchaser by all necessary corporate action and the execution, delivery and
performance of this Agreement has been duly authorized by the Seller by all
necessary corporate action.
(e) No False Statement. Neither this Agreement nor the information
contained in the Prospectus Supplement, other than under the captions "The
Insurer" and "Plan of Distribution," nor any statement, report or other
document prepared by the Seller and furnished or to be furnished pursuant
to this Agreement or in connection with the transactions contemplated
hereby contains any untrue statement or alleged untrue statement of any
material fact or omits to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
(f) Valid Sale; Binding Obligations. This Agreement has been duly
executed and delivered, shall effect a valid sale, transfer and assignment
of the Mortgage Loans and the Other Conveyed Property, enforceable against
the Seller and creditors of and purchasers from the Seller, and this
Agreement constitutes the legal, valid and binding obligation of the Seller
enforceable in accordance with its respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and by equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
(g) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms of this Agreement does not
conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or bylaws of the Seller, or any material
indenture, agreement, mortgage, deed of trust or other instrument to which
the Seller is a party or by which it is bound or any of its properties are
subject, or result in the creation or imposition of any lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than this Agreement or
violate any law, order, rule or regulation applicable to the Seller of any
court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Seller or
any of its
5
<PAGE>
properties, or in any way materially adversely affect the interest of the
Certificateholders or the Trustee in any Mortgage Loan, or affect the
Seller's ability to perform its obligations under this Agreement;
(h) No Proceedings. There are no proceedings or investigations pending
or, to the Seller's knowledge, threatened against the Seller, before any
court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Seller or its
properties (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement, (iv) involving the Seller or which might
adversely affect the federal income tax or other federal, state or local
tax attributes of the Certificates or (v) that could have a material
adverse effect on the Mortgage Loans. To the Seller's knowledge, there are
no proceedings or investigations pending or threatened against the Seller,
before any court, regulatory body, administrative agency or other tribunal
or governmental instrumentality having jurisdiction over the Seller or its
properties relating to the Seller which might adversely affect the federal
income tax or other federal, state or local tax attributes of the
Certificates;
(i) No Consents. The Seller is not required to obtain the consent of
any other party or any consent, license, approval or authorization, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement except such consents as have been
obtained;
(j) Approvals. All approvals, authorizations, orders or other actions
of any person, corporation or other organization, or of any court,
governmental agency or body or official, required in connection with the
execution and delivery by the Seller of this Agreement and the consummation
of the transactions contemplated hereby have been or will be taken or
obtained on or prior to the Closing Date.
(k) Chief Executive Office. The chief executive office of Emergent
Mortgage Corp. is located at 50 Datastream Plaza, Suite 201, Greenville,
South Carolina 29605.
SECTION 3.2 Representations and Warranties of Purchaser. Purchaser makes
the following representations and warranties, on which Seller relies in selling,
assigning, transferring and conveying the Mortgage Loans and the Other Conveyed
Property to Purchaser hereunder. Such representations are made as of the
execution and delivery of this Agreement, but shall survive the sale, transfer
and assignment of the Mortgage Loans and the Other Conveyed Property hereunder,
the sale, transfer and assignment thereof by Purchaser to the Depositor under
the Unaffiliated Seller's
6
<PAGE>
Agreement and the sale, transfer and assignment thereof by the Depositor to the
Trustee under the Pooling and Servicing Agreement.
(a) Organization and Good Standing. Purchaser has been duly organized
and is validly existing and in good standing as a corporation under the
laws of the State of Delaware, with the power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and has, full power, authority and legal right to acquire and own
the Mortgage Loans and the Other Conveyed Property, and to transfer the
Mortgage Loans and the Other Conveyed Property to the Depositor pursuant to
the Unaffiliated Seller's Agreement.
(b) Due Qualification. Purchaser is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions where the failure to do so
would materially and adversely affect Purchaser's ability to acquire the
Mortgage Loans or the Other Conveyed Property or the validity or
enforceability of the Mortgage Loans and the Other Conveyed Property or to
perform Purchaser's obligations hereunder and under the Related Documents.
(c) Power and Authority. Purchaser has the power, authority and legal
right to execute and deliver this Agreement and to carry out the terms
hereof and to acquire the Mortgage Loans and the Other Conveyed Property
hereunder; and the execution, delivery and performance of this Agreement
and all of the documents required pursuant hereto have been duly authorized
by Purchaser by all necessary action.
(d) No Consent Required. Purchaser is not required to obtain the
consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery or
performance of this Agreement and the Related Documents, except for such as
have been obtained, effected or made.
(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
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of Purchaser, or conflict with or breach any of the terms or provisions of,
or constitute (with or without notice or lapse of time) a default under,
any indenture, agreement, mortgage, deed of trust or other instrument to
which Purchaser is a party or by which Purchaser is bound or to which any
of its properties are subject, or result in the creation or imposition of
any lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument (other
than the Unaffiliated Seller's Agreement, or violate any law, order, rule
or regulation, applicable to Purchaser or its properties, of any federal or
state regulatory body, any court, administrative agency, or other
governmental instrumentality having jurisdiction over Purchaser or any of
its properties.
(g) No Proceedings. There are no proceedings or investigations
pending, or, to the knowledge of Purchaser, threatened against Purchaser,
before any court, regulatory body, administrative agency, or other tribunal
or governmental instrumentality having jurisdiction over Purchaser or its
properties: (i) asserting the invalidity of this Agreement or any of the
Related Documents, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any of the Related
Documents, (iii) seeking any determination or ruling that might materially
and adversely affect the performance by Purchaser of its obligations under,
or the validity or enforceability of, this Agreement or any of the Related
Documents or (iv) that may adversely affect the federal or state income tax
attributes of, or seeking to impose any excise, franchise, transfer or
similar tax upon, the transfer and acquisition of the Mortgage Loans and
the Other Conveyed Property hereunder or the transfer by Purchaser of the
Mortgage Loans and the Other Conveyed Property to the Depositor pursuant to
the Unaffiliated Seller's Agreement.
In the event of any breach of a representation and warranty made by Purchaser
hereunder, the Seller covenants and agrees that it will take any action to
pursue any remedy that it may have hereunder, in law, in equity or otherwise,
until a year and a day have passed since the date on which all pass-through
certificates or other similar securities issued by the Trust Fund, or a trust or
similar vehicle formed by Purchaser, have been paid in full. The Seller and
Purchaser agree that damages will not be an adequate remedy for such breach and
that this covenant may be specifically enforced by Purchaser or by the Trustee
on behalf of the Trust Fund.
SECTION 3.3 Indemnification.
(a) The Seller shall defend, indemnify and hold harmless Purchaser, the
Depositor, the Trustee, the Certificateholders and the Certificate Insurer from
and against any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting from any breach of any of the Seller's
representations and warranties contained herein.
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(b) The Seller shall defend, indemnify and hold harmless Purchaser, the
Depositor, the Trustee, the Certificateholders and the Certificate Insurer from
and against any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting, from the use, ownership or operation
by the Seller or any affiliate thereof of a Mortgaged Property.
(c) The Seller will defend and indemnify Purchaser, the Depositor, the
Trustee, the Certificate Insurer and the Certificateholders against any and all
costs, expenses, losses, damages, claims and liabilities arising out of or
resulting from any action taken, or any action failed to be taken that is
required to be taken under this Agreement, by it in respect of any portion of
the Trust Fund other than in accordance with this Agreement.
(d) The Seller agrees to pay, and shall defend, indemnify and hold harmless
Purchaser, the Depositor, the Trustee, the Certificateholders and the
Certificate Insurer from and against any taxes that may at any time be asserted
against Purchaser, the Depositor, the Trustee, the Certificateholders or the
Certificate Insurer with respect to the transactions contemplated in this
Agreement, including, without limitation, any sales, gross receipts, general
corporation, tangible or intangible personal property, privilege, or license
taxes (but, not including any taxes asserted with respect to, and as of the date
of, the sale, transfer and assignment of the Mortgage Loans and the Other
Conveyed Property to Purchaser, the conveyance of the Mortgage Loans or Other
Conveyed Property under the Unaffiliated Seller's Agreement and the conveyance
of the Trust Fund to the Trustee or the issuance and original sale of the
Certificates, or asserted with respect to ownership of the Mortgage Loans and
Other Conveyed Property or the Trust Fund which shall be indemnified by each
Seller pursuant to clause (e) below, or federal, state or other income taxes,
arising out of distributions on the Certificates or transfer taxes arising in
connection with the transfer of Certificates) and costs and expenses in
defending against the same, arising by reason of the acts to be performed by the
Seller under this Agreement or imposed against such Persons.
(e) The Seller agrees to pay, and to indemnify, defend and hold harmless
Purchaser, the Depositor, the Trustee, the Certificateholders and the
Certificate Insurer from, any taxes which may at any time be asserted against
such Persons with respect to, and as of the date of, the conveyance or ownership
of the Mortgage Loans or the Other Conveyed Property hereunder, the conveyance
or ownership of the Mortgage Loans or Other Conveyed Property under the
Unaffiliated Seller's Agreement and the conveyance or ownership of the Trust
Fund under the Pooling and Servicing Agreement or the issuance and original sale
of the Certificates, including, without limitation, any sales, gross receipts,
personal property, tangible or intangible personal property, privilege or
license taxes (but not including any federal or other income taxes, including
franchise taxes, arising out of the transactions contemplated hereby or transfer
taxes arising in connection with the transfer of Certificates) and costs and
expenses in defending against the same, arising by reason of the acts to be
performed by each Seller under this Agreement or imposed against such Persons.
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(f) The Seller shall defend, indemnify, and hold harmless Purchaser, the
Depositor, the Trustee, the Certificateholders and the Certificate Insurer from
and against any and all costs, expenses, losses, claims, damages, and
liabilities to the extent that such cost, expense, loss, claim, damage, or
liability arose out of, or was imposed upon Purchaser, the Depositor, the
Trustee, the Certificateholders and the Certificate Insurer through, the
negligence, willful misfeasance, or bad faith of 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) The Seller shall indemnify, defend and hold harmless Purchaser, the
Depositor, the Trustee, the Certificate Insurer and the Certificateholders from
and against any loss, liability or expense incurred by reason of the violation
by the Seller of federal or state securities laws in connection with the
registration or the sale of the Certificates.
(h) The Seller shall indemnify, defend and hold harmless Purchaser, the
Depositor, the Trustee, the Certificate Insurer and the Certificateholders from
and against any loss, liability or expense imposed upon, or incurred by,
Purchaser, the Depositor, the Trustee, the Certificate Insurer or the
Certificateholders as a result of the failure of any Mortgage Loan, or the sale
of the related Mortgage Property to comply with all requirements of applicable
law.
Indemnification under this Section 3.3 shall include reasonable fees and
expenses of counsel and expenses of litigation and shall survive termination of
the Trust Fund. The indemnity obligations hereunder shall be in addition to any
obligation that the Seller may otherwise have.
SECTION 3.4 Representations and Warranties of Emergent Group. Emergent
Group hereby represents and warrants to the Purchaser as of the date of
execution of this Agreement and as of the Closing Date, that:
(a) Emergent Group is a corporation duly organized, validly existing and in
good standing under the laws of the State of South Carolina;
(b) Emergent Group has the corporate power and authority to execute,
deliver and perform, and to enter into and consummate all the transactions
contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by Emergent Group, and constitutes the legal, valid and binding
agreement of Emergent Group, enforceable against Emergent Group in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law);
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(d) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required for
the execution, delivery and performance of or compliance by Emergent Group with
this Agreement or the consummation by it of any of the transactions contemplated
hereby or thereby, except such as have been made on or prior to the Closing
Date;
(e) None of the execution and delivery of this Agreement, the consummation
of the other transactions contemplated hereby, or the fulfillment of or
compliance with the terms and conditions of this Agreement, (i) conflicts or
will conflict with the charter or bylaws of Emergent Group or conflicts or will
conflict with or results or will result in a breach of, or constitutes or will
constitute a default or results or will result in an acceleration under, any
term, condition or provision of any material indenture, deed of trust, contract
or other agreement or other instrument to which Emergent Group is a party or by
which it is bound and which is material to Emergent Group, or (ii) results or
will result in a violation of any law, rule, regulation, order, judgment or
decree of any court or governmental authority having jurisdiction over Emergent
Group.
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ARTICLE IV
COVENANTS OF THE SELLER
SECTION 4.1 Protection of Title of Purchaser, the Depositor and the Trust.
(a) At or prior to the Closing Date, the Seller shall have filed or caused
to be filed a UCC-1 financing statement, executed by the Seller as seller or
debtor, naming Purchaser as purchaser or secured party and describing the
Mortgage Loans and the Other Conveyed Property being sold by it to Purchaser as
collateral, with the office of the Secretary of State of the State of South
Carolina and in such other locations as Purchaser shall have required. From time
to time thereafter, the Seller shall execute and file such financing statements
and cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve, maintain
and protect the interest of Purchaser under this Agreement, of the Depositor
under the Unaffiliated Seller's Agreement and of the Trustee under the Pooling
and Servicing Agreement in the Mortgage Loans and the Other Conveyed Property,
as the case may be, and in the proceeds thereof. The Seller shall deliver (or
cause to be delivered) to Purchaser, the Depositor, the Trustee, and the
Certificate Insurer file-stamped copies of, or filing receipts for, any document
filed as provided above, as soon as available following such filing. In the
event that each Seller fails to perform its obligations under this subsection,
Purchaser, the Depositor or the Trustee may do so, at the expense of the Seller.
(b) The Seller shall not change its name, identity, or corporate structure
in any manner that would, could or might make any financing statement or
continuation statement filed by the Seller (or by Purchaser or the Trustee on
behalf of the Seller) in accordance with paragraph (a) above seriously
misleading within the meaning of ss. 9-402(7) of the UCC, unless the Seller
shall have given Purchaser, the Depositor, the Trustee and the Certificate
Insurer at least 60 days prior written notice thereof, and shall promptly file
appropriate amendments to all previously filed financing statements and
continuation statements.
(c) The Seller shall give Purchaser, the Depositor, the Certificate Insurer
(so long as an Insurer Default shall not have occurred and be continuing) and
the Trustee at least 60 days prior written notice of any relocation of its
principal executive office if, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement. The Seller shall at all times maintain each office from which it
services Mortgage Loans and its principal executive office within the United
States of America.
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(d) The Seller shall maintain its computer systems so that, from and after
the time of sale under this Agreement of the Mortgage Loans to Purchaser, the
conveyance of the Mortgage Loans by Purchaser to the Depositor and the
conveyance of the Mortgage Loans by the Depositor to the Trustee on behalf of
the Trustee, the Seller's master computer records (including archives) that
shall refer to a Mortgage Loan indicate clearly that such Mortgage Loan has been
sold to Purchaser and has been conveyed by Purchaser to the Depositor and by the
Depositor to the Trustee on behalf of the Certificateholders and the Certificate
Insurer. Indication of the Trustee's ownership of a Mortgage Loan shall be
deleted from or modified on each Seller's computer systems when, and only when,
the Mortgage Loan shall become a Deleted Mortgage Loan, shall have been
repurchased or shall have been paid in full.
(e) If at any time the Seller shall propose to sell, grant a security
interest in, or otherwise transfer any interest in mortgage loans to any
prospective purchaser, lender or other transferee, the Seller shall give to such
prospective purchaser, lender, or other transferee computer tapes, records, or
print-outs (including any restored from archives) that, if they shall refer in
any manner whatsoever to any Mortgage Loan shall indicate clearly that such
Mortgage Loan has been sold to Purchaser, sold by Purchaser to the Depositor,
and is owned by the Trust Fund.
SECTION 4.2 Other Liens or Interests. Except for the conveyances hereunder,
the Seller will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on the Mortgage Loans
or the Other Conveyed Property or any interest therein, and the Seller shall
defend the right, title, and interest of Purchaser, the Depositor and the
Trustee in and to the Mortgage Loans and the Other Conveyed Property against all
claims of third parties claiming through or under the Seller.
SECTION 4.3 Costs and Expenses. The Seller shall pay all reasonable costs
and disbursements in connection with the performance of its obligations
hereunder and its Related Documents.
ARTICLE V
REPURCHASES
SECTION 5.1 Repurchase of Mortgage Loans Upon Breach of Warranty. (a) Upon
the occurrence of a Seller Repurchase Event, the Seller shall, unless such
breach shall have been cured in all material respects, repurchase the related
Mortgage Loan from the Trustee within 60 days following discovery or notice to
the Seller of such breach pursuant to Section 2.03 of the Pooling and Servicing
Agreement and the Seller shall pay the Purchase Price to the Trustee as provided
in the Pooling and Servicing Agreement. In lieu of repurchasing any such
Mortgage Loan, the Seller may cause such Mortgage Loan to be removed from the
Trust Fund and substitute one or more Qualified
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Substitute Mortgage Loans in the manner provided in Section 2.03 of the Pooling
and Security Agreement. To the extent the Seller fails to effect its repurchase
obligation, Emergent Group shall repurchase the related Mortgage Loan and pay
the Purchase Price to the Trustee on such date. The provisions of this Section
5.1 are intended to grant the Trustee a direct right against the Seller to
demand performance hereunder, and in connection therewith the Seller and
Emergent Group waive any requirement of prior demand against the Depositor or
Purchaser with respect to such repurchase or substitution obligation. Any such
purchase or substitution resulting from a Seller Repurchase Event shall take
place in the manner specified in Section 2.03 of the Pooling and Servicing
Agreement. Notwithstanding any other provision of this Agreement or the Pooling
and Servicing Agreement to the contrary, the obligation of the Seller and
Emergent Group under this Section shall be performed in accordance with the
terms hereof notwithstanding the failure of the Servicer, the Unaffiliated
Seller and the Depositor to perform any of their respective obligations with
respect to such Mortgage Loan under the Pooling and Servicing Agreement.
(b) In addition to the foregoing, the Seller shall promptly
purchase from Purchaser (or provide for the substitution of a Qualified
Substitute Mortgage Loan) any Mortgage Loan repurchased by Purchaser (in its
capacity as Seller under the Unaffiliated Seller's Agreement) upon the
occurrence of an Unaffiliated Seller Repurchase Event (as defined therein)
involving a breach by Purchaser (in its capacity as Seller under the
Unaffiliated Seller's Agreement) pursuant to Section 3.05 of the Unaffiliated
Seller's Agreement.
(c) In addition to the foregoing and notwithstanding whether the related
Mortgage Loan shall have been purchased by the Seller or Emergent Group, the
Seller shall indemnify the Trustee, the Depositor, the Certificate Insurer and
the Certificateholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to a repurchase or substitution
under Section 2.03 of the Pooling and Security, Section 3.05 of the Unaffiliated
Seller's Agreement or this Section 5.1 hereof.
SECTION 5.2 Reassignment of Purchased Mortgage Loans. Upon deposit in the
Collection Account of the Purchase Price of any Mortgage Loan repurchased by the
Seller or the substitution of a Qualified Substitute Mortgage Loan under Section
5.1 hereof, the Servicer and the Trustee shall take such steps as may be
reasonably requested by the Seller in order to assign to the Seller all of
Purchaser's, the Depositor's and the Trustee's right, title and interest in and
to such repurchased Mortgage Loan or Mortgage Loan for which substitution was
made and all security and documents and all Other Conveyed Property conveyed to
Purchaser, the Depositor and the Trustee directly relating thereto, without
recourse, representation or warranty, except as to the absence of liens, charges
or encumbrances created by or arising as a result of actions of Purchaser, the
Depositor or the Trustee. Such assignment shall be a sale and assignment
outright, and not for security. If, following the reassignment of a Mortgage
Loan, in any enforcement
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suit or legal proceeding, it is held that the Seller may not enforce any such
Mortgage Loan on the ground that it shall not be a real party in interest or a
holder entitled to enforce the Mortgage Loan, the Servicer and the Trustee
shall, at the expense of the Seller, take such steps as the Seller deems
reasonably necessary to enforce the Mortgage Loan, including bringing suit in
Purchaser's or the Trustee's name or the names of the Certificateholders.
SECTION 5.3 Waivers. No failure or delay on the part of Purchaser, the
Depositor or the Trustee as assignee of Purchaser, in exercising any power,
right or remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or remedy preclude
any other or future exercise thereof or the exercise of any other power, right
or remedy.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Liability of the Seller. The Seller shall be liable in
accordance herewith only to the extent of the obligations in this Agreement
specifically undertaken by the Seller and its representations and warranties.
SECTION 6.2 Merger or Consolidation of any Seller or Purchaser. Any
corporation or other entity (i) into which the Seller, Purchaser or Emergent
Group may be merged or consolidated, (ii) resulting from any merger or
consolidation to which the Seller, Purchaser or Emergent Group is a party or
(iii) succeeding to the business of the Seller, Purchaser or Emergent Group, in
the case of Purchaser, which corporation has a certificate of incorporation
containing provisions relating to limitations on business and other matters
substantively identical to those contained in Purchaser's certificate of
incorporation, provided that in any of the foregoing cases such corporation
shall execute an agreement of assumption to perform every obligation of the
Seller, Purchaser or Emergent Group, as the case may be, under this Agreement
and, whether or not such assumption agreement is executed, shall be the
successor to the Seller, Purchaser or Emergent Group, as the case may be,
hereunder (without relieving the Seller, Purchaser or Emergent Group of its
responsibilities hereunder, if it survives such merger or consolidation) without
the execution or filing of any document or any further act by any of the parties
to this Agreement. Notwithstanding the foregoing, so long as a Certificate
Insurer Default shall not have occurred and be continuing, Purchaser shall not
merge or consolidate with any other Person or permit any other Person to become
the successor to Purchaser's business without the prior written consent of the
Certificate Insurer. The Seller, Purchaser or Emergent Group shall promptly
inform the other party, the Trustee and, so long as a Certificate Insurer
Default shall not have occurred and be continuing, the Certificate Insurer of
such merger, consolidation or purchase and assumption. Notwithstanding the
foregoing, as a condition to the consummation of the transactions referred to in
clauses (i), (ii) and (iii) above, (x) immediately after giving effect to such
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transaction, no representation or warranty made pursuant to Sections 3.1, 3.2
and 3.4 or covenant made pursuant to Section 3.3, shall have been breached (for
purposes hereof, such representations and warranties shall speak as of the date
of the consummation of such transaction) and no event that, after notice or
lapse of time, or both, would become an event of default under the Insurance
Agreement, shall have occurred and be continuing, (y) the Seller, Purchaser or
Emergent Group, as applicable, shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
6.2 and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, and (z) the Seller,
Purchaser or Emergent Group, as applicable, shall have delivered to the Trustee
an Opinion of Counsel, stating, in the opinion of such counsel, either (A) all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary to preserve and protect the interest
of the Trustee in the Trust Fund and reciting the details of the filings or (B)
no such action shall be necessary to preserve and protect such interest.
SECTION 6.3 Limitation on Liability of the Seller and Others. The Seller
and any director, officer, employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
under this Agreement. The Seller shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its obligations
under this Agreement or its Related Documents and that in its opinion may
involve it in any expense or liability.
SECTION 6.4 Amendment.
(a) This Agreement may be amended by the Seller, Purchaser and Emergent
Group, with the prior written consent of the Certificate Insurer (so long as a
Certificate Insurer Default shall not have occurred and be continuing) but
without the consent of the Trustee or any of the Certificateholders (unless a
Certificate Insurer Default shall have occurred, in which event the consent of
the Certificateholders with Voting Rights equal to or in excess of 50% of the
Voting Rights shall be obtained) (i) to cure any ambiguity or (ii) to correct
any provisions in this Agreement; provided, however, that such action shall not,
as evidenced by an Opinion of Counsel delivered to the Trustee, adversely affect
in any material respect the interests of any Certificateholder.
(b) This Agreement may also be amended from time to time by the Seller,
Purchaser and Emergent Group with the prior written consent of the Certificate
Insurer (so long as a Certificate Insurer Default shall not have occurred and be
continuing) and with the consent of the Trustee and Certificateholders having
Voting Rights equal to or in excess of 50%, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall (i) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
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collections of payments on Mortgage Loans or distributions that shall be
required to be made on any Certificate or the Pass-Through Rates or (ii) reduce
the aforesaid percentage required to consent to any such amendment or any waiver
hereunder, without the consent of the Holders of all Certificates then
outstanding.
(c) Prior to the execution of any such amendment or consent, Emergent Group
shall have furnished written notification of the substance of such amendment or
consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder.
(e) It shall not be necessary for the consent of Certificateholders
pursuant to this Section to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe, including
the establishment of record dates. The consent of any Holder of a Certificate
given pursuant to this Section or pursuant to any other provision of this
Agreement shall be conclusive and binding on such Holder and on all future
Holders of such Certificate and of any Certificate issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether or not notation of
such consent is made upon the Certificate.
SECTION 6.5 Notices. All demands, notices and communications to any of the
Seller, Purchaser or Emergent Group hereunder shall be in writing, personally
delivered, or sent by telecopier (subsequently confirmed in writing), reputable
overnight courier or mailed by certified mail, return receipt requested, and
shall be deemed to have been given upon receipt (a) in the case of the Seller,
to Emergent Mortgage Corp., 50 Datastream Plaza, Suite 201, Greenville, South
Carolina 29605, (b) in the case of Emergent Group, to Emergent Group, Inc., 15
South Main Street, Suite 750, Greenville, South Carolina 29601 or (c) in the
case of Purchaser, to Emergent Mortgage Holdings Corporation, 44 East Camperdown
Way, Greenville, South Carolina 29601, Attention: William P. Crawford, Jr.
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
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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 the Seller and Purchaser that
they intend that the assignment and transfer herein contemplated constitute a
sale and assignment outright, and not for security, of the Mortgage Loans and
the Other Conveyed Property conveying good title thereto free and clear of any
Liens, from the Seller to Purchaser, and that none of the Mortgage Loans and the
Other Conveyed Property shall be a part of the Seller's estate in the event of
the bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding, or other proceeding under any federal or state bankruptcy or similar
law, or the occurrence of another similar event, of, or with respect to, the
Seller. In the event that such conveyance is determined to be made as security
for a loan made by Purchaser, the Depositor, the Trustee or the
Certificateholders to the Seller, as applicable, the parties intend that the
Seller shall have granted to Purchaser a security interest in all right, title
and interest in and to the Mortgage Loans and the Other Conveyed Property
conveyed pursuant to Section 2.1 hereof, and that this Agreement shall
constitute a security agreement under applicable law.
SECTION 6.9 Governing Law. This Agreement shall be construed in accordance
with, the laws of the State of New York without regard to the principles of
conflicts of laws thereof and the obligations, rights and remedies of the
parties under this Agreement shall be determined in accordance with such laws.
SECTION 6.10 Counterparts. For the purpose of facilitating the execution of
this Agreement and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all of which counterparts shall constitute but
one and the same instrument.
SECTION 6.11 Conveyance of the Mortgage Loans and the Other Conveyed
Property to the Trust. The Seller acknowledges that Purchaser intends, pursuant
to the Unaffiliated Seller's Agreement, to convey the Mortgage Loans and the
Other 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 Mortgage Loans
and the Other Conveyed Property, together with its respective rights under this
Agreement, to the Trustee on the date hereof. The Seller acknowledges and
consents to such conveyance and waives any further notice thereof and covenants
and agrees that the representations and warranties of the Seller contained in
this Agreement and the rights of Purchaser hereunder are intended to benefit the
Depositor, the Certificate Insurer, the Trustee and the Certificateholders. In
furtherance of the foregoing, the Seller covenants and agrees to perform its
duties and obligations hereunder, in accordance with the terms hereof for the
benefit of the Depositor, the Certificate Insurer, the Trustee and the
Certificateholders and that, notwithstanding anything to the contrary in this
Agreement, the Seller shall be directly
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liable to the Trustee and the Certificateholders (notwithstanding any failure by
the 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 the Seller under this Agreement against the Seller for
the benefit of the Certificate Insurer, the Trustee and the Certificateholders.
SECTION 6.12 Nonpetition Covenant. Until one year and one day after the
termination of the Trust Fund, neither the Seller, nor Emergent Group nor the
Purchaser shall petition or otherwise invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Trust Fund (or, in the case of the Seller, against Purchaser) under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Trust Fund (or Purchaser) or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Trust Fund (or
Purchaser).
SECTION 6.13 Miscellaneous. The parties agree that each of the Certificate
Insurer, the Depositor and the Trustee is an intended third-party beneficiary of
this Agreement to the extent necessary to enforce the rights and to obtain the
benefit of the remedies of the Purchaser under this Agreement which are assigned
to the Depositor pursuant to the Unaffiliated Seller's Agreement and to the
Trustee for the benefit of the Certificateholders pursuant to the Pooling and
Servicing Agreement and to the extent necessary to obtain the benefit of the
enforcement of the obligations and covenants of the Seller under Section 3.3 and
5.1 of this Agreement.
19
<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 MORTGAGE HOLDINGS
CORPORATION, as Purchaser
By: /s/ Kevin J. Mast
---------------------
Name: Kevin J. Mast
Title: Vice President, CFO and Treasurer
EMERGENT MORTGAGE CORP., as Seller
By: /s/ J. Phil Cox
---------------------
Name: J. Phil Cox
Title: Executive Senior Vice President
EMERGENT GROUP, INC.
By: /s/ Kevin J. Mast
---------------------
Name: Kevin J. Mast
Title: Vice President, CFO and Treasurer
<PAGE>
SCHEDULE A
SCHEDULE OF MORTGAGE LOANS CONVEYED
[See Schedule 1 to Exhibit 4.1]
A-1
<PAGE>
SCHEDULE B
SCHEDULE OF REPRESENTATIONS
1. The information with respect to each Mortgage Loan set forth in the
Schedule of Mortgage Loans is true and correct as of the Cut-off Date;
2. All of the original or certified documentation required to be delivered
to the Trustee pursuant to the Pooling and Servicing Agreement (including all
material documents related thereto) with respect to each Mortgage Loan has been
or will be delivered to the Trustee in accordance with the terms of such Pooling
and Servicing Agreement. Each of the documents and instruments specified to be
included therein has been duly executed and in due and proper form, and each
such document or instrument is in a form generally acceptable to prudent
mortgage lenders that regularly originate or purchase mortgage loans comparable
to the Mortgage Loans for sale to prudent investors in the secondary market that
invest in mortgage loans such as the Mortgage Loans.
3. Each Mortgaged Property is improved by a single (one-to-four) family
residential dwelling, which may include condominiums, townhouses and units in
planned unit developments, or manufactured housing, but shall not include
cooperatives;
4. No Mortgage Loan had a Loan-to-Value Ratio in excess of 95%;
5. Each Mortgage is a valid and subsisting first lien of record on the
Mortgaged Property subject in all cases to the exceptions to title set forth in
the title insurance policy, with respect to the related Mortgage Loan, which
exceptions are generally acceptable to banking institutions in connection with
their regular mortgage lending activities, and such other exceptions to which
similar properties are commonly subject and which do not individually, or in the
aggregate, materially and adversely affect the benefits of the security intended
to be provided by such Mortgage;
6. Immediately prior to the transfer and assignment herein contemplated,
the Seller held good and indefeasible title to, and was the sole owner of, each
Mortgage Loan conveyed by it subject to no liens, charges, mortgages,
encumbrances or rights of others except liens which will be released
simultaneously with such transfer and assignment; and immediately upon the
transfer and assignment herein contemplated, the Purchaser will hold good and
indefeasible title to, and be the sole owner of, each Mortgage Loan subject to
no Liens, except Liens which will be released simultaneously with such transfer
and assignment and subordinate Liens on the related Mortgaged Property;
7. As of the related Cut-off Date, no Mortgage Loan is 30 or more days
delinquent;
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<PAGE>
8. There is no delinquent tax or assessment lien on any Mortgaged Property,
and each Mortgaged Property is free of substantial damage and is in good repair;
9. There is no valid and enforceable right of rescission, offset, defense
or counterclaim to any Mortgage Note or Mortgage, including the obligation of
the related Mortgagor to pay the unpaid principal of or interest on such
Mortgage Note or the defense of usury, nor will the operation of any of the
terms of the Mortgage Note or the Mortgage, or the exercise of any right
thereunder, render either the Mortgage Note or the Mortgage unenforceable in
whole or in part, or subject to any right of rescission, set-off, counterclaim
or defense, including the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect thereto;
10. There is no mechanics' lien or claim for work, labor or material
affecting any Mortgaged Property which is or may be a lien prior to, or equal
with, the lien of the related Mortgage except those which are insured against by
any title insurance policy referred to in paragraph 12 below;
11. Each Mortgage Loan at the time it was made complied in all material
respects with all applicable state and federal laws and regulations, including,
without limitation, the federal Truth-in-Lending Act and other consumer
protection laws, real estate settlement procedure, usury, equal credit
opportunity, disclosure and recording laws;
12. With respect to each Mortgage Loan, a lender's title insurance policy,
issued in standard American Land Title Association form, or other form
acceptable in a particular jurisdiction by a title insurance company authorized
to transact business in the state in which the related Mortgaged Property is
situated, in an amount at least equal to the initial Stated Principal Balance of
such Mortgage Loan insuring the mortgagee's interest under the related Mortgage
Loan as the holder of a valid first mortgage lien of record on the real property
described in the related Mortgage, as the case may be, subject only to
exceptions of the character referred to in paragraph 5 above, was effective on
the date of the origination of such Mortgage Loan, and, as of the Cut-off Date
such policy will be valid and thereafter such policy shall continue in full
force and effect;
13. The improvements upon each Mortgaged Property are covered by a valid
and existing hazard insurance policy (which may be a blanket policy of the type
described in the related Pooling and Servicing Agreement) with a generally
acceptable carrier that provides for fire and extended coverage representing
coverage not less than the least of (A) the outstanding principal balance of the
related Mortgage Loan and (B) the minimum amount required to compensate for
damage or loss on a replacement cost basis;
14. If any Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards,
B-2
<PAGE>
a flood insurance policy (which may be a blanket policy of the type described in
the Pooling and Servicing Agreement) in a form meeting the requirements of the
current guidelines of the Federal Insurance Administration is in effect with
respect to such Mortgaged Property with a generally acceptable carrier in an
amount representing coverage not less than the least of (A) the outstanding
principal balance of the related Mortgage Loan and (B) the maximum amount of
insurance that is available under the Flood Disaster Protection Act of 1973;
15. Each Mortgage and Mortgage Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with its terms,
except only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law), and all parties to
each Mortgage Loan had full legal capacity to execute all documents relating to
such Mortgage Loan and convey the estate therein purported to be conveyed;
16. The Seller has caused and will cause to be performed any and all acts
required to be performed to preserve the rights and remedies of the servicer in
any insurance policies applicable to any Mortgage Loans delivered by the Seller
including, to the extent such Mortgage Loan is not covered by a blanket policy
described in the Pooling and Servicing Agreement, any necessary notifications of
insurers, assignments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of the servicer;
17. Each original Mortgage was recorded or is in the process of being
recorded, and all subsequent assignments of the original Mortgage have been
recorded (or are in the process of being recorded) in the appropriate
jurisdictions wherein such recordation is necessary to perfect the lien thereof
for the benefit of the Trustee, subject to the provisions of Section 2.01 of the
Pooling and Servicing Agreement;
18. The terms of each Mortgage Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written instrument
which has been recorded, if necessary, to protect the interest of the owners and
which has been delivered to the Trustee;
19. The proceeds of each Mortgage Loan have been fully disbursed, and there
is no obligation on the part of the mortgagee to make future advances
thereunder. Any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have been
complied with. All costs, fees and expenses incurred in making or closing or
recording such Mortgage Loans have been paid;
20. Except as otherwise required by law or pursuant to the statute under
which the related Mortgage Loan was made, the related Mortgage Note is not and
B-3
<PAGE>
has not been secured by any collateral, pledged account or other security except
the lien of the corresponding Mortgage;
21. No Mortgage Loan was originated under a buydown plan;
22. No Mortgage Loan provides for negative amortization, has a shared
appreciation feature, or other contingent interest feature;
23. Each Mortgaged Property is located in the state identified in the
Schedule of Mortgage Loans and consists of one or more parcels of real property
with a residential dwelling erected thereon;
24. Each Mortgage contains a provision for the acceleration of the payment
of the unpaid principal balance of the related Mortgage Loan in the event the
related Mortgaged Property is sold without the prior consent of the mortgagee
thereunder;
25. Any advances made after the date of origination of a Mortgage Loan but
prior to the Cut-off Date, have been consolidated with the outstanding principal
amount secured by the related Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term reflected
on the Schedule of Mortgage Loans. The consolidated principal amount does not
exceed the original principal amount of the related Mortgage Loan. No Mortgage
Note permits or obligates the Seller to make future advances to the related
Mortgagor at the option of the Mortgagor;
26. There is no proceeding pending or threatened for the total or partial
condemnation of any Mortgaged Property, nor is such a proceeding currently
occurring, and each Mortgaged Property is undamaged by waste, fire, earthquake
or earth movement, flood, tornado or other casualty, so as to affect adversely
the value of the Mortgaged Property as security for the Mortgage Loan or the use
for which the premises were intended;
27. All of the improvements of any Mortgaged Property lie wholly within the
boundaries and building restriction lines of such Mortgaged Property, and no
improvements on adjoining properties encroach upon such Mortgaged Property, and,
if a title insurance policy exists with respect to such Mortgaged Property, are
stated in such title insurance policy and affirmatively insured;
28. No improvement located on or being part of any Mortgaged Property is in
violation of any applicable zoning law or regulation. All inspections, licenses
and certificates required to be made or issued with respect to all occupied
portions of each Mortgaged Property and, with respect to the use and occupancy
of the same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities and such Mortgaged Property is lawfully occupied under the
applicable law;
B-4
<PAGE>
29. With respect to each Mortgage constituting a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Seller or the Trust Fund to the
trustee under the deed of trust, except in connection with a trustee's sale
after default by the related Mortgagor;
30. Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including (A) in the case of a Mortgage designated as a deed of trust,
by trustee's sale and (B) otherwise by judicial foreclosure. There is no
homestead or other exemption available which materially interferes with the
right to sell the related Mortgaged Property at a trustee's sale or the right to
foreclose the related Mortgage;
31. There is no default, breach, violation or event of acceleration
existing under any Mortgage or the related Mortgage Note and no event which,
with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of acceleration;
and neither the Seller or the Purchaser has waived any default, breach,
violation or event of acceleration;
32. No instrument of release or waiver has been executed in connection with
any Mortgage Loan, and no Mortgagor has been released, in whole or in part;
33. The credit underwriting guidelines applicable to each Mortgage Loan
conform in all material respects to the Seller's underwriting guidelines;
34. All parties to the Mortgage Note and the Mortgage had legal capacity to
execute the Mortgage Note and the Mortgage and each Mortgage Note and Mortgage
have been duly and properly executed by such parties;
35. The Seller has no actual knowledge that there exist on any Mortgaged
Property any hazardous substances, hazardous wastes or solid wastes, as such
terms are defined in the Comprehensive Environmental Response Compensation and
Liability Act, the Resource Conservation and Recovery Act of 1976, or other
federal, state or local environmental legislation;
36. None of the Mortgage Loans shall be due from the United States of
America or any State or from any agency, department, subdivision or
instrumentality thereof;
37. At the Cut-Off Date, no Mortgagor had been identified by the Seller as
being the subject of a current bankruptcy proceeding;
B-5
<PAGE>
38. By the Closing Date, the Seller will have caused the portions of the
Seller's servicing records relating to the Mortgage Loans to be clearly and
unambiguously marked to show that the Mortgage Loans have been sold to the Trust
Fund and are owned by the Trust Fund in accordance with the terms of the Pooling
and Servicing Agreement;
39. No Mortgage Loan was originated in, or is subject to the laws of, any
jurisdiction the laws of which would make unlawful, void or voidable the sale,
transfer and assignment of such Mortgage Loan under this Agreement or pursuant
to transfers of the Certificates. The Seller has not entered into any agreement
with any account debtor that prohibits, restricts or conditions the assignment
of any portion of the Mortgage Loans;
40. All filings (including, without limitation, UCC filings) required to be
made by any Person and actions required to be taken or performed by any Person
in any jurisdiction to give the Trustee a first priority perfected lien on, or
ownership interest in, the Mortgage Loans and the proceeds thereof and the other
property of the Trust Fund have been made, taken or performed;
41. The Seller has not done anything to convey any right to any Person that
would result in such Person having a right to payments due under the Mortgage
Loan or otherwise to impair the rights of the Trust Fund and the
Certificateholders in any Mortgage Loan or the proceeds thereof;
42. No Mortgage Loan is assumable (without the Seller's consent which
consent has not been given) by another Person in a manner which would release
the Mortgagor thereof from such Mortgagor's obligations to the Seller with
respect to such Mortgage Loan;
43. With respect to the Initial Mortgage Loans as of the Cut-off Date: the
aggregated Stated Principal Balance was $64,553,830.89; each of the Stated
Principal Balances was at least $4,405.31 but no more than $376,250.00: the
average Stated Principal Balance was $63,288.07; the Mortgage Rates were at
least 7.640% but no more than 15.990%; the weighted average Mortgage Rate was
11.006%; the original Loan-to-Value Ratios were at least 30% but no more than
95%; the weighted average original Loan-to-Value Ratio was 80.618%; the
remaining terms to stated maturity were at least 58 months but no more than 360
months; the weighted average remaining term to stated maturity was 208 months;
the original terms to stated maturity was at least 60 months but no more than
361 months; the weighted average original term to stated maturity was 209
months; and no more than 1.36% of the Mortgage Loans are secured by Mortgaged
Properties located in any one postal zip code area; and
44. No selection procedures adverse to the Certificateholders or to the
Certificate Insurer have been utilized in selecting such Mortgage Loan from all
other similar Mortgage Loans originated by the Seller;
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<PAGE>
45. The related Mortgaged Property has not been subject to any foreclosure
proceeding or litigation;
46. There was no fraud involved in the origination of the Mortgage Loan by
the mortgagee or by the Mortgagor, any appraiser or any other party involved in
the origination of the Mortgage Loan; and
47. Each Mortgage File contains an appraisal of the Mortgaged Property
indicating an appraised value equal to the appraised value of such Mortgaged
Property on the Mortgage Loan Schedule. Each appraisal has been performed in
accordance with the requirements of FNMA or FHLMC.
48. Each Mortgage Loan is a "qualified mortgage" as defined in Section
860G(a)(3) of the Code.
B-7
[LETTERHEAD OF COOPERS & LYBRAND L.L.P.]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Prospectus Supplement dated
March 21, 1997 (to Prospectus dated December 4, 1996) of Prudential Securities
Secured Financing Corporation relating to Emergent Home Equity Loan Trust 1997-1
of our report dated January 17, 1996, on our audits of the consolidated
financial statements of Financial Security Assurance Inc. and Subsidiaries as of
December 31, 1995 and 1994, and for each of the three years in the period ended
December 31, 1995. We also consent to the reference to our Firm under the
caption "Experts".
/s/ COOPERS & lYBRAND L.L.P.
---------------------------------
Coopers & Lybrand L.L.P.
New York, New York
March 25, 1997
