<PAGE>
- -------------------------------------------------------------------------------
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) May 1, 1999
Prudential Securities Secured Financing Corporation
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 333-74859 13-3526694
--------------------------- ------------ -------------------
<S> <C> <C>
(State or Other Jurisdiction of Incorporation) (Commission File (I.R.S. Employer Identification
Number) No.)
c/o Prudential Securities Secured Financing
Corporation
Attention: Mary Alice Kohs
One New York Plaza, 12th Fl. 10292
New York, New York -------------------------
------------------------------------------ (Zip Code)
(Address of Principal Executive Offices)
</TABLE>
Registrant's telephone number, including area code (212)214-7435
-------------
No Change
- -------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
- -------------------------------------------------------------------------------
<PAGE>
Item 2. Acquisition or Disposition of Assets
Description of the Notes 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. 333-74859) (as amended, the "Registration
Statement"). HomeGold Home Equity Loan Trust 1999-1 (the "Trust") was formed
pursuant to an Amended and Restated Trust Agreement, dated as of May 1,
1999(the "Trust Agreement") between Emergent Mortgage Holdings Corporation, as
seller, the Depositor, as depositor and Wilmington Trust Company, as owner
trustee. The Depositor sold the Mortgage Loans (as defined below) to the Trust,
pursuant to a Sale and Servicing Agreement, dated as of May 1, 1999 (the "Sale
and Servicing Agreement"), among the Depositor, HomeGold, Inc., as servicer
(the "Servicer"), Fairbanks Capital Corp., as back-up servicer (the "Back-up
Servicer"), the Trust and First Union National Bank, as indenture trustee (the
"Indenture Trustee"). The Trust then pledged the Mortgage Loans (as defined
below) to the Indenture Trustee for the benefit of the Noteholders pursuant to
an Indenture dated as of May 1, 1999 (the "Indenture") between the Trust and
the Indenture Trustee. Pursuant to the Registration Statement, the Trust issued
$53,964,000 in aggregate principal amount of its HomeGold Home Equity Loan
Asset-Backed Notes, Class A (the "Notes"), on May 27, 1999. 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 Notes, the forms of
which are being filed as exhibits to the Indenture attached hereto as Exhibit
4.1.
The Notes were issued pursuant to the Indenture attached
hereto as Exhibit 4.1. The Notes consist of two senior classes, the Class A-1
Notes and the Class A-2 Notes, together the "Class A Notes."
The assets of the Trust consist of two segregated pools 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 Indenture Trustee's rights with
respect to the Mortgage Loans under the
2
<PAGE>
insurance policies required to be maintained pursuant to the Sale 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, the Reserve
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
Indenture 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 Sale and Servicing Agreement). On and prior to May 27, 1999 (the
"Closing Date"), HomeGold, Inc. (the "Originator") transferred the Mortgage
Loans and the related assets to Emergent Mortgage Holdings Corporation (the
"Seller") pursuant to the Purchase Agreement and Assignment, dated as of May 1,
1999 ("Purchase Agreement"), attached hereto as Exhibit 4.6, by and among the
Originator, the Seller and HomeGold Financial, Inc. On the Closing Date, the
Seller sold the Mortgage Loans and the related assets to the Depositor pursuant
to the Unaffiliated Seller's Agreement, dated as of May 1, 1999, attached
hereto as Exhibit 4.4, among the Seller, HomeGold Financial, Inc. and the
Depositor. The Depositor then transferred the Mortgage Loans and the related
assets to the Trust pursuant to the Sale and Servicing Agreement, attached
hereto as Exhibit 4.2. The Trust, in turn, then pledged the Mortgage Loans and
related assets to the Indenture Trustee, for the benefit of the Noteholders,
pursuant to the Indenture, attached hereto as Exhibit 4.1.
Interest payments on the Class A Notes are based on the
outstanding Note Principal Balance for the related Class A Notes and the
applicable Interest Rate. The Class A-1 Interest Rate will be 6.87% per annum
(for each accrual period ending on or prior to the date on which the Servicer
could exercise its option to redeem the Class A-1 Notes) or 7.37% per annum(for
each accrual period ending after such date), and the Class A-2 Interest Rate
will be 6.82% per annum (for each accrual period ending on or prior to the date
on which the Servicer could exercise its option to redeem the Class A-2 Notes)
or 7.32% per annum(for each accrual period ending after such date). The Class
A-1 Notes have an initial Class A-1 Note Principal Balance of $18,418,000, and
the Class A-2 Notes have an initial Class A-2 Note Principal Balance of
$35,546,000.
As of the Closing Date, the Mortgage Loans generally
possessed the characteristics described in the Prospectus dated March 23, 1999
and the Prospectus Supplement dated May 19, 1999 filed pursuant to Rule 424(b)
of the Act on May 27, 1999.
3
<PAGE>
Item 5. Other Events
Pursuant to Rule 424(b) under the Securities Act of 1933, as
amended, Prudential Securities Secured Financing Corporation has filed a
Prospectus Supplement with the Securities and Exchange Commission relating to
an offering of HomeGold Home Equity Loan Trust 1999-1, HomeGold Home Equity
Loan Asset-Backed Notes, Series 1999-1.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement, dated May 19, 1999, between
Prudential Securities Secured Financing Corporation and Prudential Securities
Incorporated.
1.2 Indemnification Agreement, dated as of May 19, 1999 among
Financial Security Assurance Inc., Prudential Securities Secured Financing
Corporation, HomeGold Financial, Inc., Emergent Mortgage Holdings Corporation,
HomeGold, Inc., HomeGold Home Equity Loan Trust 1999-1 and Prudential
Securities Incorporated.
4.1 Indenture, dated as of May 1, 1999, between HomeGold Home
Equity Loan Trust 1999-1 and First Union National Bank.
4.2 Sale and Servicing Agreement, dated as of May 1, 1999,
among Prudential Securities Secured Financing Corporation, as depositor,
HomeGold, Inc., as servicer, Fairbanks Capital Corp., as back-up servicer,
HomeGold Home Equity Loan Trust 1999-1, as trust and First Union National Bank,
as indenture trustee.
4.3 Form of Note Insurance Policy and Endorsement No. 1
thereto dated May 27, 1999.
4.4 Unaffiliated Seller's Agreement, dated as of May 1, 1999,
among Prudential Securities Secured Financing Corporation, HomeGold Financial,
Inc. and Emergent Mortgage
4
<PAGE>
Holdings Corporation.
4.5 Purchase Agreement and Assignment, dated as of May 1,
1999, by and among the Emergent Mortgage Holdings Corporation, Prudential
Securities Secured Financing Corporation and HomeGold Financial, Inc.
4.6 Glossary of Defined Terms
23.1 Consent of PricewaterhouseCoopers dated May 24, 1999.
5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
- ---------------------------------------------------------------------------------------------------------------------
Exhibit No. Description Page No.
- ----------- ----------- --------
- ---------------------------------------------------------------------------------------------------------------------
<C> <C> <C>
1.1 Underwriting Agreement, dated May 19, 1999
between Prudential Securities Secured Financing
Corporation and Prudentia Securities Incorporated.
- ---------------------------------------------------------------------------------------------------------------------
1.2 Indemnification Agreement, dated as of May 19,
1999 among Financial Security Assurance Inc.,
Prudential Securities Secured Financing
Corporation, HomeGold Financial, Inc.,
HomeGold, Inc., Emergent Mortgage Holdings
Corporation, HomeGold Home Equity Loan Trust
1999-1 and Prudential Securities Incorporated.
- ---------------------------------------------------------------------------------------------------------------------
4.1 Indenture, dated as of May 1, 1999, between
HomeGold Home Equity Loan Trust 1999-1 and
First Union National Bank.
- ---------------------------------------------------------------------------------------------------------------------
4.2 Sale and Servicing Agreement, dated as of May
1, 1999, among Prudential Securities Secured
Financing Corporation, Fairbanks Capital Corp.,
HomeGold, Inc., HomeGold Home Equity Loan Trust
1999-1, and First Union National Bank.
- ---------------------------------------------------------------------------------------------------------------------
4.3 Form of Note Insurance Policy and Endorsement
No. 1 thereto dated May 27, 1999.
- ---------------------------------------------------------------------------------------------------------------------
4.4 Unaffiliated Seller's Agreement, dated as of
May 1, 1999, among Prudential Securities
Secured Financing Corporation, Emergent
Mortgage Holdings Corporation and HomeGold
Financial, Inc.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
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<C> <C>
4.5 Purchase Agreement and Assignment, dated as of
May 1, 1999, by and among Emergent Mortgage
Holdings Corporation, Prudential Securities Secured
Financing Corporation and HomeGold Financial, Inc.
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4.6 Glossary of Defined Terms
- ---------------------------------------------------------------------------------------------------------------------
23.1 Consent of PricewaterhouseCoopers dated
May 24, 1999
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
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/ Mary Alice Kohs
------------------------------------
Name: Mary Alice Kohs
Title: Vice President
Dated: June 9, 1999
8
<PAGE>
EXECUTION COPY
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
HOMEGOLD HOME EQUITY LOAN ASSET BACKED NOTES
SERIES 1999-1
UNDERWRITING AGREEMENT
May 19, 1999
<PAGE>
UNDERWRITING AGREEMENT
PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza, 17th Floor
New York, New York 10292
May 19, 1999
Dear Sirs:
Prudential Securities Secured Financing Corporation (the
"Depositor") and HomeGold Home Equity Loan Trust 1999-1 (the "Trust") propose,
subject to the terms and conditions stated herein and in the attached
Underwriting Agreement Standard Provisions, dated May 19, 1999 (the "Standard
Provisions"), between the Depositor and Prudential Securities Incorporated, to
issue and sell, or to cause to be issued and sold, to you (the "Underwriter")
the Securities of the Trust 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 and the
Trust agree to issue and sell, or to cause to be issued and sold, to the
Underwriter, and the Underwriter agrees to purchase from the Trust, 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.
It is expressly understood and agreed by the parties hereto
that (a) this Agreement is executed and delivered by Wilmington Trust Company,
not individually or personally but solely as Owner Trustee of the Trust, (b) any
representations, undertakings and agreements herein made on the part of the
Trust are made and intended not as
1
<PAGE>
personal representations, undertakings and agreements by Wilmington Trust
Company but only for the purpose of binding the Trust, (c) nothing herein
contained shall be construed as creating any liability on Wilmington Trust
Company individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived by
the parties to this Agreement and by any person claiming by, through or under
them and (d) under no circumstances shall Wilmington Trust Company be personally
liable for the payment of any indebtedness or expenses of the Trust or be liable
for the breach or failure of any obligation, representation, warranty or
covenant made or undertaking by the Trust under this Agreement or any related
documents.
2
<PAGE>
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 among the Underwriter, the Depositor and the Trust.
Very truly yours,
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By: /s/ Mary Alice Kohs
-------------------------------
Name: Mary Alice Kohs
Title: Vice President
HOMEGOLD HOME EQUITY LOAN
TRUST 1999-1, Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: /s/ Emmet Harmon
-------------------------------
Name:
Title:
Accepted as of the date hereof:
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Brendan Keane
------------------------------
Name: Brendan Keane
Title: Director
[Signature Page to the Underwriting Agreement]
3
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
<S> <C>
Title of Offered Securities: HomeGold Home Equity Loan Asset Backed Notes,
Series 1999-1, Class A-1 and Class A-2, (together,
the "Class A Notes.")
- ------------------------------------------------------------------------------------------------------------
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 descriptions thereof
contained therein, and shall be issued pursuant to
an Indenture between the Trust, and First Union
National Bank, as indenture trustee.
- ------------------------------------------------------------------------------------------------------------
Purchase Price: The purchase price for the Class A-1 Notes shall be
99.50% plus accrued interest at the rate of 6.87%
per annum from May 1, 1999 to the date of payment
thereof. The purchase price for the Class A-2 Notes
shall be 99.50% plus accrued interest at the rate
of 6.82% per annum from May 1, 1999 to the date of
payment thereof.
- ------------------------------------------------------------------------------------------------------------
Specified funds for payment of Federal Funds (immediately available funds).
Purchase Price:
- ------------------------------------------------------------------------------------------------------------
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 May 27, 1999 at 12:00 noon eastern
standard time or at such other time as the
Depositor and the Underwriter shall agree.
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Closing Location: Offices of Dewey Ballantine LLP, 1301 Avenue of the
Americas, New York, New York.
- ------------------------------------------------------------------------------------------------------------
Name and address of Designated Representative: Prudential Securities
Representative: Incorporated.
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Address for Notices, One New York Plaza, 14th Floor
etc.: New York, New York 10292
Attn: Asset-Backed Securities
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</TABLE>
4
<PAGE>
STANDARD PROVISIONS TO UNDERWRITING AGREEMENT
May 19, 1999
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 "Representativte" 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 asset backed notes (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 an Indenture dated as of May 1, 1999
between the Trust and First Union National Bank, as Indenture Trustee (the
"Trustee"). The underlying home equity loans are to be serviced pursuant to a
Sale and Servicing Agreement dated as of May 1, 1999 (the "Sale and Servicing
Agreement") by and among the Trust, the Depositor, HomeGold, Inc. (the
"Servicer") and 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 Sale and 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."
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The Depositor has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-74859), 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
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
6
<PAGE>
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 Trust or the transactions contemplated
by the Underwriting Agreement; (vi) neither the Depositor or the Trust
is 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 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 LLP, 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.
7
<PAGE>
(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 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 LLP, special counsel for the
Depositor, 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
Insurer"), dated the Closing Date, in form and substance satisfactory
to the Representative and counsel for the Underwriters and containing
opinions substantially to the effect set forth in Exhibit 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
8
<PAGE>
downgrading or (ii) any review or possible change in rating the
direction of which has not been indicated, in the rating accorded the
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, 1998, of the 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
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
9
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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 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.
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(f) To make generally available to the Depositor's security
holders, as soon as practicable, but in any event not later than
eighteen months after the date on which the filing of the Prospectus,
as amended or supplemented, pursuant to Rule 424 under the 1933 Act
first occurs, an earnings statement of the Depositor covering a
twelve-month period beginning after the date of the Underwriting
Agreement, which shall satisfy the provisions of Section 11(a) of the
1933 Act and the applicable rules and regulations of the Commission
thereunder (including at the option of the Depositor Rule 158).
(g) For so long as any of the 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 Sale and Servicing Agreement, (ii) the annual
independent public accountants' servicing report furnished to the
Trustee pursuant to the applicable Sale 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 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
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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.
(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 Sale 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.
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(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 Indenture.
(g) The execution and delivery by the Depositor of this
Agreement, the Underwriting Agreement and the Sale 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 Sale 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 Sale 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 Sale 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 Sale and
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Servicing Agreement, except such as have been obtained and except such
as may be required under the 1933 Act, the rules and regulations
thereunder, or state securities or "Blue Sky" laws, in connection with
the purchase and distribution of the 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) [Reserved].
(n) At the Closing Date each of the Mortgage Loans which is a
subject of the Sale 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 Sale and Servicing Agreement will be true
and correct as of such date.
(o) At the time of execution and delivery of the Sale and
Servicing Agreement, the Depositor will have good and marketable title
to the Mortgage Loans being transferred to the Trustee pursuant to the
Sale 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 to any person any of
its right, title or interest in such Mortgage Loans or in such Sale 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 Sale 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.
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(p) The Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended, and the Trust 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 Sale and Servicing
Agreement and the Offered Securities have been or will be paid at or
prior to the Closing Date.
7. INDEMNIFICATION AND CONTRIBUTION. 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 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.
(a) 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
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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 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.
(b) 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 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).
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(c) 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 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.
(d) 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 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.
(e) Each Underwriter agrees to provide the Depositor no later
than the date on which the Prospectus Supplement is required to be
filed pursuant to Rule
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424 with a copy of its Derived Information (defined below) for filing
with the Commission on Form 8-K.
(f) 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
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 7(c) shall be equally
applicable to this Section 7(e).
For purposes of this Section 7, the term "Derived Information"
means such portion, if any, of the information delivered to the Depositor
pursuant to Section 7(e) 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
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effectiveness of the Registration Statement shall have been issued or
proceedings for that purpose shall have been instituted or threatened.
(b) The Underwriting Agreement may be terminated by the
Representative by notice to the Depositor in the event that the
Depositor shall have failed, refused or been unable to perform all
obligations and satisfy all conditions to be performed or satisfied
hereunder by the Depositor at or prior to the Closing Date.
(c) Termination of the Underwriting Agreement pursuant to this
Section 9 shall be without liability of any party to any other party
other than as provided in Sections 7 and 11 hereof.
10. DEFAULT OF UNDERWRITERS. If any Underwriter or
Underwriters defaults or default in their obligation to purchase 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 Underwriting
Agreement and any related underwriting documents, the Registration
Statement, any Preliminary Prospectus, the Prospectus, any
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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,
and, if sent to the Trust, shall be mailed, delivered or telecopied and
confirmed to HomeGold Home Equity Loan Trust 1999-1, c/o Wilmington Trust
Company, as Owner Trustee, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 119890-0001, Attention: Corporate Trust Administration;
provided, however, that any notice to any Underwriter pursuant to the
Underwriting Agreement shall be mailed, delivered or telegraphed and confirmed
to such Underwriter at the address furnished by it.
13. REPRESENTATIVE OF UNDERWRITERS. Any Representative
identified in the Underwriting Agreement will act for the Underwriters of the
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, the Trust and the
Depositor
20
<PAGE>
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.
21
<PAGE>
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 Notes, 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 Indenture.
(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 Notes 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) The Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended, and the Trust is not required to be
registered under the Investment Company Act of 1940.
(vi) The statements in the Prospectus Supplement set forth
under the caption "DESCRIPTION OF THE NOTES," to the extent such statements
purport to summarize certain provisions of the Notes or of the Sale and
Servicing Agreement or of the Unaffiliated Seller's Agreement, are fair and
accurate in all material respects.
<PAGE>
Exhibit B
Opinions of Counsel
to the Servicer
(i) The Servicer has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of South
Carolina 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 Sale and Servicing Agreement.
(iii) The Sale 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 Sale 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 Notes, except as
otherwise contemplated by the Sale 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 Sale and Servicing
Agreement or the consummation of any other transaction contemplated thereby by
the Servicer, except such which have been obtained.
(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 Sale and Servicing Agreement; or (B)
which have not otherwise been disclosed in the Registration Statement and to the
<PAGE>
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 Indenture and the Sale and Servicing Agreement;
(ii) Each of the Indenture and the Sale and Servicing
Agreement has been duly authorized, executed and delivered by the Trustee and
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 Indenture and the
Sale and Servicing Agreement or the performance of its obligations thereunder;
(iv) The Notes 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 Indenture and the Sale 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 Insurer
(i) The Insurer is a stock insurance corporation, duly
incorporated and validly existing under the laws of the State of New York. The
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 Insurer of the Policy,
the Insurance and Indemnity Agreement and the Indemnification Agreement are
within the corporate power of the Insurer and has been authorized by all
necessary corporate action on the part of the Insurer; the Policy has been duly
executed and is the valid and binding obligation of the 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 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 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
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 Insurer in connection with such Policy.
(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.
<PAGE>
- --------------------------------------------------------------------------------
INDEMNIFICATION AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.
HOMEGOLD HOME EQUITY LOAN TRUST 1999-1
EMERGENT MORTGAGE HOLDINGS CORPORATION
HOMEGOLD FINANCIAL, INC.
HOMEGOLD, INC.
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
and
PRUDENTIAL SECURITIES INCORPORATED
Dated as of May 19, 1999
HomeGold Home Equity Loan Trust 1999-1
$53,964,000 HomeGold Home Equity Loan
Asset Backed Notes Series 1999-1
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1. Definitions.....................................................................................1
Section 2. Representations, Warranties and Agreements of Financial Security................................3
Section 3. Representations, Warranties and Agreements of the Underwriter...................................6
Section 4. Indemnification.................................................................................6
Section 5. Indemnification Procedures......................................................................7
Section 6. Contribution....................................................................................8
Section 7. Miscellaneous...................................................................................9
</TABLE>
EXHIBIT
Exhibit A Opinion of General Counsel
<PAGE>
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT dated as of May 19, 1999, among
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), HOMEGOLD HOME
EQUITY LOAN TRUST 1999-1 (the "Issuer"), EMERGENT MORTGAGE HOLDINGS
CORPORATION (the "Seller"), HOMEGOLD, INC. (the "Originator"), HOMEGOLD
FINANCIAL, INC. (the "Company"), PRUDENTIAL SECURITIES SECURED FINANCING
CORPORATION (the "Depositor") and PRUDENTIAL SECURITIES INCORPORATED (the
"Underwriter"):
Section 1. Definitions. Capitalized terms used herein and not
defined shall have the meanings assigned in the Insurance Agreement or, if not
defined therein, in the Glossary of Terms attached as Exhibit A to each of the
Sale and Servicing Agreement, the Indenture and the Trust Agreement. 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 May 1, 1999, by and among Financial Security, the
Depositor, the Company, the Originator, the Seller, HomeGold Residual
Corporation and the Issuer.
<PAGE>
-2-
"Indenture" means the Indenture, dated as of May 1, 1999,
between the Issuer and First Union National Bank, as indenture trustee.
"Issuer Party" means any of the Issuer, 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.
"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.
"Notes" means the HomeGold Home Equity Loan Trust 1999-1,
$53,964,000 HomeGold Home Equity Loan Asset Backed Notes, Series 1999-1, issued
by the Issuer pursuant to the Indenture.
"Offering Circular" means the Prospectus relating to the Notes
dated March 23, 1999, as supplemented by the Prospectus Supplement relating to
the Notes dated May 19, 1999.
"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
Notes.
"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,
including any endorsements thereto, issued by Financial Security with respect to
the Notes.
"Sale and Servicing Agreement" means the Sale and Servicing
Agreement, dated as of May 1, 1999, among the Issuer as issuer, the Originator
as servicer, Fairbanks Capital Corp. as back-up servicer, the Depositor as
depositor and First Union National Bank as indenture trustee.
<PAGE>
-3-
"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.
"Underwriting Agreement" means the Underwriting Agreement,
dated May 19, 1999, among the Issuer, the Depositor and the Underwriter in
respect of the Notes.
"Underwriter Information" has the meaning provided in Section
3(b) 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
<PAGE>
-4-
to which Financial Security is a party or by which any of its
property is bound nor violate any judgment, order or decree
applicable to Financial Security of any governmental or
regulatory body, administrative agency, court or arbitrator
having jurisdiction over Financial Security (except that, in
the published opinion of the Securities and Exchange
Commission, the indemnification provisions of this Agreement,
insofar as they relate to indemnification for liabilities
arising under the Securities Act, are against public policy as
expressed in the Securities Act and are therefore
unenforceable).
(f) Financial Information. The consolidated balance sheets of
Financial Security as of December 31, 1998 and December 31,
1997 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 March 31, 1999, 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 Issuer, the Seller, the Originator, the Company, the
Depositor or the Underwriter, upon request of the Issuer, the
Seller, the Originator, the Company, the Depositor or the
Underwriter, 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
<PAGE>
-5-
statements, to normal year-end adjustments); provided,
however, that, if the Issuer, the Seller, the Originator, the
Company, the Depositor or the Underwriter 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 Issuer, the
Seller, the Originator, the Company, the Depositor or the
Underwriter, as the case may be. In addition, if the delivery
of an Offering Circular relating to the Notes 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 Notes, the Issuer, the Depositor or
the Underwriter will notify Financial Security of such
requirement to deliver an Offering Circular and Financial
Security will promptly provide the Issuer, the Depositor and
the Underwriter 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.
(i) Opinion of Counsel. Financial Security will furnish to the
Issuer, the Seller, the Originator, the Company, the Depositor
and the Underwriter on the closing date for the sale of the
Notes 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 Issuer, the Seller, the
Originator, the Company, the Depositor and the Underwriter.
(j) Consents and Reports of Independent Accountants. Financial
Security will furnish to the Issuer, the Seller, the
Originator, the Company, the Depositor and the Underwriter,
upon request, as comfort from its independent accountants in
respect of its financial condition, (i) at the expense of the
Person specified in the Insurance Agreement, a copy of the
Offering 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, a division of the McGraw-Hill Companies,
Inc. 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:
<PAGE>
-6-
(a) Compliance With Laws. The Underwriter will comply in all
material respects with all legal requirements in connection with offers and
sales of the Notes 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 Notes 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 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 Issuer Party, each Seller Party, each Originator
Party, each Company Party, each Depositor Party and each Underwriter Party
against (i) any and all Losses incurred by them with respect to the offer and
sale of the Notes 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 Issuer Party, Seller Party, Originator Party,
Company Party, Depositor 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 Notes 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.
<PAGE>
-7-
(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 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 Issuer
Parties, one such firm for all Seller Parties, one such firm for all Originator
Parties, one such firm for all Company Parties, one such firm for all Depositor
Parties, one such firm for all Underwriter Parties and one such firm for all
Financial Security Parties, as the case may be, which firm shall be designated
in writing by the Issuer in respect of the Issuer Parties, by the Seller in
respect of the Seller Parties, by the Originator in respect of the Originator
Parties, by the Company in respect of the Company Parties, by the Depositor in
respect of the Depositor Parties, by the Underwriter in respect of the
Underwriter 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 been in default in its obligations
hereunder. Any failure by an
<PAGE>
-8-
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.
(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 Issuer, the Seller, the Originator, the
Company 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 Notes over (y) the purchase price paid by the Underwriter
for such Notes.
(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.
<PAGE>
-9-
(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 Owner Trust 1999-1
If to the Issuer: Emergent Home Equity Loan Trust 1999-1
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
If to the Company: HomeGold Financial, Inc.
3901 Pelham Road
Greenville, South Carolina 29615
Attention: Kevin J. Mast
If to the Depositor: Prudential Securities Secured Financing Corporation
One New York Plaza, 15th Floor
New York, New York 10292
Attention: Manager--Asset-Backed 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: HomeGold, Inc.
3901 Pelham Road
Greenville, South Carolina 29615
Attention: Laird Minor
If to the Underwriter: Prudential Securities Incorporated
<PAGE>
-10-
One New York Plaza, 15th Floor
New York, New York 10292
Attention: Manager-Asset Finance Group
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the conflict of laws principles thereof.
(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 Notes 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 hereto may otherwise have and shall
in no way limit any rights or obligations of the parties under the Underwriting
Agreement or the Insurance Agreement.
(f) Counterparts. This Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
(g) Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Wilmington Trust Company, not individually or personally, but solely as
trustee of HomeGold Home Equity Loan Trust 1999-1 under the Trust Agreement,
dated as of May 1, 1999, with the Seller, in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Issuer, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company, individually or personally, to perform
any covenant either expressly or impliedly contained herein, all such liability,
if any, being expressly waived by the parties hereto and by any Person claiming
by, through or under the parties hereto and (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Trust under this Agreement or the other Basic Documents.
<PAGE>
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 among the Underwriter, the Depositor and the Trust.
Very truly yours,
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By: /s/ Mary Alice Kohs
---------------------------------
Name: Mary Alice Kohs
Title: Vice President
HOMNEGOLD HOME EQUITY LOAN
TRUST 1999-1, Issuer
By: WILMINGTON TRUST COMPANY
not in its individual capacity
but solely as Owner Trustee
By: /s/ Emmet Harmon
---------------------------------
Name:
Title:
Accepted as of the date hereof:
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Brendan Keane
---------------------------------
Name: Brendan Keane
Title: Director
<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 HOMEGOLD INC.
INC.
By: /s/ Laird Minor
------------------------------
By: /s/ Glenn Tso Name:
------------------------------ Title:
Name:
Title: Authorized Officer
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
HOMEGOLD HOME EQUITY LOAN
TRUST 1999-1
By: /s/ Mary Alice Kohs
------------------------------
By WILMINGTON TRUST COMPANY, Name: Mary Alice Kohs
not in its individual capacity but solely as Title:
Owner Trustee
PRUDENTIAL SECURITIES
By: /s/ Amy L. Martin INCORPORATED
------------------------------
Name: Amy L. Martin
Title: Administrative Account Manager By: /s/ Brendan N. Keane
------------------------------
Name: Brendan N. Keane
EMERGENT MORTGAGE HOLDINGS Title: Director
CORPORATION
By: /s/ Laird Minor
------------------------------
Name:
Title:
HOMEGOLD FINANCIAL, INC.
By: /s/ Kevin Mast
------------------------------
Name:
Title:
<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 May 19, 1999 (the "Offering Document") of the Issuer
with respect to the Notes. The information provided in the Offering Document
with respect to Financial Security is limited and does not purport to provide
the scope of disclosure required to be included in a prospectus with respect to
a registrant under the Act in connection with a public offering and sale of
securities of such registrant. Within such
<PAGE>
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).
<PAGE>
- --------------------------------------------------------------------------------
HOMEGOLD HOME EQUITY LOAN TRUST 1999-1
Class A Home Equity Loan Asset Backed Notes, Series 1999-1
---------------
INDENTURE
Dated as of May 1, 1999
---------------
FIRST UNION NATIONAL BANK
Indenture Trustee
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE I Definitions and Incorporation by Reference.....................................................2
SECTION 1.1. Definitions....................................................................................2
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act..........................................2
SECTION 1.3. Rules of Construction..........................................................................3
SECTION 1.4. Conflict with TIA..............................................................................3
ARTICLE II The Notes......................................................................................3
SECTION 2.1. Form...........................................................................................3
SECTION 2.2. Execution, Authentication and Delivery.........................................................4
SECTION 2.3. Registration; Registration of Transfer and Exchange............................................4
SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Notes.....................................................5
SECTION 2.5. Persons Deemed Owners..........................................................................6
SECTION 2.6. Payment of Principal and Interest..............................................................7
SECTION 2.7. Cancellation...................................................................................7
SECTION 2.8. Release of Collateral..........................................................................7
SECTION 2.9. Book-Entry Notes...............................................................................8
SECTION 2.10. Notices to Depository..........................................................................8
SECTION 2.11. Definitive Notes...............................................................................8
ARTICLE III Covenants......................................................................................9
SECTION 3.1. Payment of Principal and Interest..............................................................9
SECTION 3.2. Maintenance of Office or Agency................................................................9
SECTION 3.3. Money for Payments to Be Held in Trust.........................................................9
SECTION 3.4. Existence.....................................................................................10
SECTION 3.5. Protection of Trust Property..................................................................11
SECTION 3.6. Opinions as to Trust Property.................................................................11
SECTION 3.7. Performance of Obligations; Servicing of Mortgage Loans.......................................12
SECTION 3.8. Negative Covenants............................................................................13
SECTION 3.9. Annual Statement as to Compliance.............................................................13
SECTION 3.10. Issuer May Not Consolidate....................................................................14
SECTION 3.11. No Other Business.............................................................................14
SECTION 3.12. No Borrowing; Use of Proceeds.................................................................14
SECTION 3.13. Servicer's Obligations........................................................................14
SECTION 3.14. Guarantees, Loans, Advances and Other Liabilities.............................................14
SECTION 3.15. Capital Expenditures..........................................................................14
SECTION 3.16. Compliance with Laws..........................................................................14
SECTION 3.17. Restricted Payments...........................................................................14
SECTION 3.18. Notice of Events of Default and Servicer Events of Default....................................15
SECTION 3.19. Further Instruments and Acts..................................................................15
SECTION 3.20. Amendments of Sale and Servicing Agreement and Trust Agreement................................15
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i
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SECTION 3.21. Income Tax Characterization...................................................................15
SECTION 3.22. [Reserved]....................................................................................15
ARTICLE IV Satisfaction and Discharge....................................................................15
SECTION 4.1. Satisfaction and Discharge of Indenture.......................................................15
SECTION 4.2. Application of Trust Money....................................................................16
SECTION 4.3. Repayment of Monies Held by Note Paying Agent.................................................16
ARTICLE V Remedies......................................................................................17
SECTION 5.1. Events of Default.............................................................................17
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment............................................17
SECTION 5.3. Remedies......................................................................................18
SECTION 5.4. Indenture Trustee Shall File Proofs of Claim..................................................19
SECTION 5.5. Indenture Trustee May Enforce Claims Without Possession of Notes..............................20
SECTION 5.6. Application of Money Collected................................................................20
SECTION 5.7. Limitation on Rights of Noteholders...........................................................20
SECTION 5.8. Unconditional Rights of Noteholders to Receive Principal and Interest.........................21
SECTION 5.9. Restoration of Rights and Remedies............................................................21
SECTION 5.10. Rights and Remedies Cumulative................................................................21
SECTION 5.11. Delay or Omission Not a Waiver................................................................22
SECTION 5.12. Control by Insurer or Noteholders.............................................................22
SECTION 5.13. Undertaking for Costs.........................................................................22
SECTION 5.14. Waiver of Stay or Extension Laws..............................................................23
SECTION 5.15. Action on Notes...............................................................................23
SECTION 5.16. Performance and Enforcement of Certain Obligations............................................23
SECTION 5.17. Subrogation...................................................................................23
SECTION 5.18. Preference Claims.............................................................................24
SECTION 5.19. Sale of Trust Estate..........................................................................24
SECTION 5.20. Waiver of Past Defaults.......................................................................25
ARTICLE VI The Indenture Trustee.........................................................................26
SECTION 6.1. Duties of Indenture Trustee...................................................................26
SECTION 6.2. Rights of Indenture Trustee...................................................................28
SECTION 6.3. Individual Rights of Indenture Trustee........................................................29
SECTION 6.4. Indenture Trustee's Disclaimer................................................................29
SECTION 6.5. Notice of Defaults............................................................................29
SECTION 6.6. Reports by Indenture Trustee to Holders.......................................................29
SECTION 6.7. Compensation and Indemnity....................................................................29
SECTION 6.8. Replacement of Indenture Trustee..............................................................30
SECTION 6.9. Successor Indenture Trustee by Merger.........................................................32
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee.............................32
SECTION 6.11. Eligibility...................................................................................33
SECTION 6.12. Preferential Collection of Claims Against Issuer..............................................33
SECTION 6.13. Appointment and Powers........................................................................33
SECTION 6.14. Performance of Duties.........................................................................34
</TABLE>
ii
<PAGE>
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<S> <C> <C>
SECTION 6.15. Limitation on Liability.......................................................................34
SECTION 6.16. Reliance Upon Documents.......................................................................34
SECTION 6.17. Representations and Warranties of the Indenture Trustee.......................................34
SECTION 6.18. Waiver of Setoffs.............................................................................35
SECTION 6.19. Suits for Enforcement.........................................................................35
SECTION 6.20. Mortgagor Claims..............................................................................36
SECTION 6.21. Certain Available Information.................................................................36
ARTICLE VII Noteholders' Lists and Reports................................................................37
SECTION 7.1. Issuer to Furnish to Indenture Trustee Names and Addresses of Noteholders.....................37
SECTION 7.2. Preservation of Information; Communications to Noteholders....................................37
SECTION 7.3. Reports by Issuer.............................................................................37
SECTION 7.4. Reports by Indenture Trustee..................................................................38
ARTICLE VIII Accounts; Investment of Moneys; Collection and Application of Moneys; Reports.................38
SECTION 8.1. Collection of Money...........................................................................38
SECTION 8.2. Release of Trust Property.....................................................................38
SECTION 8.3. Payments......................................................................................39
SECTION 8.4. Compliance with Withholding Requirements......................................................42
SECTION 8.5. Statements to Noteholders.....................................................................43
SECTION 8.6. Rights of Noteholders.........................................................................43
SECTION 8.7. Distribution Account..........................................................................43
SECTION 8.8. [Reserved]....................................................................................44
SECTION 8.9. [Reserved]....................................................................................44
SECTION 8.10. Expense Account...............................................................................44
SECTION 8.11. Reserve Account...............................................................................45
SECTION 8.12. Investment of Funds...........................................................................46
ARTICLE IX Supplemental Indentures...............................................................................47
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders........................................47
SECTION 9.2. Supplemental Indentures with Consent of Insurer or Noteholders................................48
SECTION 9.3. Execution of Supplemental Indentures..........................................................49
SECTION 9.4. Effect of Supplemental Indenture..............................................................50
SECTION 9.5. Conformity With Trust Indenture Act...........................................................50
SECTION 9.6. Reference in Notes to Supplemental Indentures.................................................50
ARTICLE X Redemption of Notes...........................................................................50
SECTION 10.1. Redemption....................................................................................50
SECTION 10.2. Notice........................................................................................51
SECTION 10.3. Presentation and Surrender of Notes and Payment...............................................51
ARTICLE XI Certain Matters Regarding the Insurer.........................................................51
SECTION 11.1. Rights of the Insurer to Exercise Rights of Class A Noteholders...............................51
</TABLE>
iii
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SECTION 11.2. Indenture Trustee to Act Solely with Consent of the Insurer..................................51
SECTION 11.3. Trust Property and Accounts Held for Benefit of the Insurer..................................51
SECTION 11.4. Claims Upon the Policy; Policy Payments Account..............................................52
SECTION 11.5. Notices to the Insurer.......................................................................53
SECTION 11.6. Third-Party Beneficiary......................................................................53
SECTION 11.7. Indenture Trustee to Hold the Policy.........................................................53
ARTICLE XII Miscellaneous................................................................................53
SECTION 12.1. Compliance Certificates and Opinions, etc....................................................53
SECTION 12.2. Form of Documents Delivered to Indenture Trustee.............................................54
SECTION 12.3. Acts of Noteholders..........................................................................54
SECTION 12.4. Notices, etc. to Indenture Trustee, Issuer, Insurer and Rating Agencies......................55
SECTION 12.5. Notices to Noteholders; Waiver...............................................................56
SECTION 12.6. Alternate Payment and Notice Provisions......................................................56
SECTION 12.7. Conflict with Trust Indenture Act............................................................57
SECTION 12.8. Effect of Headings and Table of Contents.....................................................57
SECTION 12.9. Successors and Assigns.......................................................................57
SECTION 12.10. Separability.................................................................................57
SECTION 12.11. Benefits of Indenture........................................................................57
SECTION 12.12. Legal Holidays...............................................................................57
SECTION 12.13. GOVERNING LAW................................................................................57
SECTION 12.14. Counterparts.................................................................................58
SECTION 12.15. Recording of Indenture.......................................................................58
SECTION 12.16. Trust Obligation.............................................................................58
SECTION 12.17. No Petition..................................................................................58
SECTION 12.18. Inspection...................................................................................58
SECTION 12.19. Limitation of Liability......................................................................59
EXHIBIT A -- Glossary of Defined Terms
EXHIBIT B -- Form of Class A Note
EXHIBIT C -- Form of Financial Guaranty Insurance Policy
</TABLE>
iv
<PAGE>
HOMEGOLD HOME EQUITY LOAN TRUST 1999-1
Reconciliation and Tie between the Indenture
dated as of March 1, 1999 and the
Trust Indenture Act of 1939, as amended
Trust Indenture Act Section Indenture Section
ss. 310 (a) (1) ss. 6.11
(a) (2) ss. 6.11
(a) (3) ss. 6.10
(a) (4) Not Applicable
(b) ss. 6.11
(c) Not Applicable
311 (a) ss. 6.12
(b) ss. 6.12
312 (a) ss. 7.1
(b) ss. 7.2(b)
(c) ss. 7.2(c)
313 (a) ss. 7.4
(b) (1) ss. 7.4
(b) (2) ss. 7.4
(c) ss. 7.3, ss. 7.4
(d) ss. 7.4
314 (a) ss. 3.9, ss. 7.3
(b) ss. 3.6
(c) (1) ss. 2.8, ss. 8.2(c), ss. 12.1
(c) (2) ss. 12.1
(c) (3) ss. 12.1
(d) ss. 2.8, ss. 8.2(c), ss. 12.1
(e) ss. 12.1
(f) Not Applicable
315 (a) ss. 6.1, ss. 6.14, ss. 6.16
(b) ss. 6.5
(c) ss. 6.1
(d) ss. 6.1
(e) ss. 5.13
316 (a) (last sentence) ss. 1.1
(a) (1) (A) ss. 5.12
(a) (1) (B) ss. 5.20
(a) (2) Not Applicable
317 (a) (1) ss. 5.3
(a) (2) ss. 5.4, ss. 5.5
(b) ss. 3.3
318 (a) ss. 1.4, ss. 12.7
(c) ss. 12.7
v
<PAGE>
INDENTURE dated as of May 1, 1999, between HOMEGOLD HOME
EQUITY LOAN TRUST 1999-1, a Delaware business trust (the "Issuer"), and FIRST
UNION NATIONAL BANK, a national banking association, as trustee (the "Indenture
Trustee").
Each party agrees as follows for the benefit of the other
party, the Insurer and for the equal and ratable benefit of the Holders of the
Issuer's Class A Home Equity Loan Asset Backed Notes, Series 1999-1
(collectively, the "Notes"):
As security for the payment and performance by the Issuer of
its obligations under this Indenture and the Notes, the Issuer has agreed to
assign the Collateral (as defined below) to the Indenture Trustee on behalf of
the Noteholders and the Insurer.
Financial Security Assurance, Inc. (the "Insurer") has issued
and delivered a financial guaranty insurance policy, dated the Closing Date (the
"Policy"), pursuant to which the Insurer guarantees the Scheduled Payments (as
defined below).
As an inducement to the Insurer to issue and deliver the
Policy, the Issuer and the Insurer have executed and delivered the Insurance and
Indemnity Agreement, dated as of May1, 1999 (as amended from time to time, the
"Insurance Agreement"), among the Insurer, the Issuer, HomeGold, Inc., HomeGold
Financial, Inc., Emergent Mortgage Holdings Corporation, and Prudential
Securities Secured Financing Corporation.
As an additional inducement to the Insurer to issue the
Policy, and as security for the performance by the Issuer of its respective
obligations hereunder and the other Basic Documents to the Insurer and the
Indenture Trustee, the Issuer has agreed to grant and assign the Collateral (as
defined below) to the Indenture Trustee for the benefit of the Issuer Secured
Parties, as their respective interests may appear.
<PAGE>
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the
Closing Date, for the benefit of the Issuer Secured Parties all of the Issuer's
right, title and interest in and to (i) the Mortgage Loans, (ii) any Qualified
Substitute Mortgage Loans acquired by the Issuer subsequent to the Closing Date
pursuant to the Sale and Servicing Agreement, (iii) the Mortgage Files delivered
or to be delivered to the Indenture Trustee pursuant to the Sale and Servicing
Agreement, (iv) all interest and principal received by the Issuer on or in
respect of the Mortgage Loans and the Qualified Substitute Mortgage Loans
pursuant to the Sale and Servicing Agreement due after the applicable Cut-off
Date and all other proceeds received in respect of such Mortgage Loans, (v) the
Depositor's rights under the Unaffiliated Seller's Agreement, and the Purchase
Agreement and Assignment (including any security interest created thereby)
assigned to the Issuer pursuant to the Sale and Servicing Agreement, (vi) the
Sale and Servicing Agreement, (vii) any and all other property, assets, rights
and interests included or to be included in the Trust Property, (viii) all cash,
instruments or other property held or required to be deposited in the Collection
Account, the Distribution Account, the Reserve Account and the Expense Account,
including all investments made with funds in such accounts (but not including
any income on funds deposited in, or investments made with funds deposited in,
such accounts, which income shall belong to and be for the account of the
Servicer), and (ix) all proceeds of the conversion, voluntary or involuntary, of
any of the foregoing into cash or other liquid assets, including, without
limitation, all insurance proceeds and condemnation awards. Such Grants are
made, however, in trust, to secure the Notes equally and ratably without
prejudice, priority or distinction between any Note and any other Note by reason
of difference in time of issuance or otherwise, and for the benefit of the
Insurer to secure (x) the payment of all amounts due on the Notes in accordance
with their terms, (y) the payment of all other sums payable under this Indenture
and (z) compliance with the provisions of this Indenture, all as provided in
this Indenture (the foregoing "Collateral").
The foregoing Grant is made in trust to the Indenture Trustee,
for the benefit first, of the Holders of the Notes, and second, for the benefit
of the Insurer. The Indenture Trustee hereby acknowledges such Grant, accepts
the trusts under this Indenture in accordance with the provisions of this
Indenture and agrees to perform its duties required in this Indenture to the
best of its ability to the end that the interests of such parties, recognizing
the priorities of their respective interests, may be adequately and effectively
protected.
In connection with the Grant set forth above, the Issuer does
hereby deliver to, and deposit with the Indenture Trustee, the Mortgage Files.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions. Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed thereto in Exhibit A
hereto.
SECTION 1.2. Incorporation by Reference of the Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by
2
<PAGE>
reference in and made a part of this Indenture. The following TIA terms used in
this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"Indenture Trustee" or "institutional trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the Issuer.
All other TIA terms used in this Indenture that are defined by
the TIA, or defined by Commission rule have the meaning assigned to them by such
definitions.
SECTION 1.3. Rules of Construction. Unless the context
otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles as in
effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the
plural include the singular.
SECTION 1.4. Conflict with TIA. If any provision hereof
limits, qualifies or conflicts with a provision of the TIA that is required
under the TIA to be part of and govern this Indenture, the latter provision
shall control and all provisions required by the TIA are hereby incorporated by
reference. If any provision of this Indenture modifies or excludes any provision
of the TIA that may be so modified or excluded, such provisions of the TIA shall
be deemed to apply to this Indenture as so modified or excluded, as the case may
be.
ARTICLE II
The Notes
SECTION 2.1. Form. The Class A Notes, in each case together
with the Indenture Trustee's certificate of authentication, shall be in
substantially the form set forth in Exhibits B-1 and B-2, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their
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execution of the Notes. Any portion of the text of any Note may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the
Note.
Each Note shall be dated the date of its authentication. The
terms of the Notes set forth in Exhibits B-1 and B-2 are part of the terms of
this Indenture.
SECTION 2.2. Execution, Authentication and Delivery. The
Notes shall be executed on behalf of the Issuer by any of its Authorized
Officers. The signature of any such Authorized Officer on the Notes may be
original or facsimile.
Notes bearing the original or facsimile signature of
individuals who were at any time Authorized Officers of the Issuer shall bind
the Issuer, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Notes or did
not hold such offices at the date of such Notes.
The Indenture Trustee shall authenticate and deliver Class A
Notes for original issue in an aggregate principal amount of $53,964,000. The
Class A Notes outstanding at any time may not exceed such amount except as
provided in Section 2.4.
Each Note shall be dated the date of its authentication. The
Notes shall be issuable as registered Notes in the minimum denomination of
$1,000 and in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose, unless there appears attached to such
Note a certificate of authentication substantially in the form provided for
herein executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate attached to any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder. Subject to Section 2.9 and Section 2.11,
the Notes shall be Book-Entry Notes.
SECTION 2.3. Registration; Registration of Transfer and
Exchange. The Issuer shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee shall be "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
If a Person other than the Indenture Trustee is appointed by
the Issuer as Note Registrar, the Issuer will give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the location,
and any change in the location, of the Note Register, and the Indenture Trustee
shall have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof. The Indenture Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Authorized Officer
thereof as to the names and addresses of the Holders of the Notes and the
principal amounts and number of such Notes.
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Upon surrender for registration or transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 3.2, and
if the requirements of Section 8-401(a) of the UCC are met, the Issuer shall
execute and cause the Indenture Trustee to authenticate one or more new Notes,
in any authorized denominations, of the same class and a like aggregate
principal amount. A Noteholder may also obtain from the Indenture Trustee, in
the name of the designated transferee or transferees one or more new Notes, in
any authorized denominations, of the same Class and a like aggregate principal
amount. Such requirements shall not be deemed to create a duty on the part of
the Indenture Trustee to monitor the compliance by the Issuer with Section 8-401
of the UCC.
At the option of the Holder, Notes may be exchanged for other
Notes in any authorized denominations, of the same Class and a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange, and if the
requirements of Section 8-401(a) of the UCC are met, the Issuer shall execute
and upon its request the Indenture Trustee shall authenticate the Notes which
the Noteholder making the exchange is entitled to receive. Such requirements
shall not be deemed to create a duty on the part the Indenture Trustee to
monitor the compliance by the Issuer with Section 8-401 of the UCC.
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of
transfer or exchange shall be (i) duly endorsed by, or be accompanied by a
written instrument of transfer in the form attached to Exhibits B-1 and B-2,
duly executed by, the Holder thereof or such Holder's attorney duly authorized
in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar all in accordance
with the Exchange Act, and (ii) accompanied by such other documents as the Note
Registrar may require.
No service charge shall be made to a Holder for any
registration of transfer or exchange of Notes, but the Note Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.4 not involving
any transfer.
Any Noteholder using the assets of (i) an employee benefit
plan (as defined in Section 3(3) of ERISA that is subject to the provisions of
Title I of ERISA, (ii) a plan described in Section 4975(e)(1) of the Internal
Revenue Code of 1986, as amended, or (iii) any entity whose underlying assets
include plan assets by reason of a plan's investment in the entity to purchase
the Notes, or to whom the Notes are transferred, will be deemed to have
represented that the acquisition and continued holding of the Notes will be
covered by a U.S. Department of Labor Class Exemption.
SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Notes. If
(i) any mutilated Note is surrendered to the Note Registrar, or the Note
Registrar receives evidence to its satisfaction of the destruction, loss or
theft of any Note, and (ii) there is delivered to the
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Indenture Trustee and the Insurer such security or indemnity as may be required
by it to hold the Issuer, the Indenture Trustee and the Insurer harmless, then,
in the absence of notice to the Issuer, the Note Registrar or the Indenture
Trustee that such Note has been acquired by a bona fide purchaser or protected
purchaser (within the meaning of Section 8-302 of the UCC), and provided that
the requirements of Section 8-405 of the UCC are met, the Issuer shall execute
and upon its request the Indenture Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a
replacement Note (such requirement shall not be deemed to create a duty in the
Indenture Trustee to monitor the compliance by the Issuer with Section 8-405);
provided, however, that if any such destroyed, lost or stolen Note, but not a
mutilated Note, shall have become or within seven days shall be due and payable,
or shall have been called for redemption, the Issuer may, instead of issuing a
replacement Note, direct the Indenture Trustee, in writing, to pay such
destroyed, lost or stolen Note when so due or payable or upon the Redemption
Date without surrender thereof. If, after the delivery of such replacement Note
or payment of a destroyed, lost or stolen Note pursuant to the proviso to the
preceding sentence, a protected purchaser of the original Note in lieu of which
such replacement Note was issued presents for payment such original Note, the
Issuer, the Indenture Trustee and the Insurer shall be entitled to recover such
replacement Note (or such payment) from the Person to whom it was delivered or
any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a
protected purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Issuer, the Insurer or the Indenture Trustee in connection
therewith.
Upon the issuance of any replacement Note under this Section,
the Issuer may require the payment by the Holder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.5. Persons Deemed Owners. Prior to due presentment
for registration of transfer of any Note, the Issuer, the Indenture Trustee and
the Insurer and any agent of the Issuer, the Indenture Trustee and the Insurer
may treat the Person in whose name any Note is registered (as of the Record
Date) as the owner of such Note for the purpose of receiving payments of
principal of and interest, if any, on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and none of the Issuer, the
Insurer, the Indenture Trustee nor any agent of the Issuer, the Insurer or the
Indenture Trustee shall be affected by notice to the contrary.
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SECTION 2.6. Payment of Principal and Interest (a). (a) The
unpaid principal of the Notes of each Class shall accrue interest as provided
herein, which (except for Shortfall Interest Deferred Amounts or Accrued
Shortfall Interest Carry Forward Amounts, which shall be due and payable only to
the extent funds are available therefor as provided herein) shall be due and
payable on each Payment Date prior to the Final Payment Date thereof and
(without regard to the availability of funds for the payment of Shortfall
Interest Deferred Amounts or Accrued Shortfall Interest Carry Forward Amounts)
on such Final Payment Date. The unpaid principal of the Notes of each Class
shall be due and payable (to the extent of funds available therefor as provided
herein) on each Payment Date as provided in Section 8.3 and (regardless of the
availability of sufficient funds therefor) on the Final Payment Date for such
Class. Payment of interest and principal on any Note shall be made as provided
in Section 8.3(d).
(b) [Intentionally Omitted.]
(c) [Intentionally Omitted.]
(d) Promptly following the date on which all principal of and
interest on the Notes has been paid in full and the Notes have been surrendered
to the Indenture Trustee, the Indenture Trustee shall, upon written notice from
the Servicer of the amounts, if any, that the Insurer has paid in respect of the
Notes under the Policy or otherwise which has not been reimbursed to it, deliver
such surrendered Notes to the Insurer to the extent not previously cancelled or
destroyed.
SECTION 2.7. Cancellation. Subject to Section 2.6(d), all
Notes surrendered for payment, registration of transfer, exchange or redemption
shall, if surrendered to any Person other than the Indenture Trustee, be
delivered to the Indenture Trustee and shall be promptly canceled by the
Indenture Trustee. Subject to Section 2.6(d), the Issuer may at any time deliver
to the Indenture Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly canceled by the Indenture Trustee.
No Notes shall be authenticated in lieu of or in exchange for any Notes canceled
as provided in this Section, except as expressly permitted by this Indenture.
Subject to Section 2.6(d), all canceled Notes may be held or disposed of by the
Indenture Trustee in accordance with its standard retention or disposal policy
as in effect at the time unless the Issuer shall direct by an Issuer Order that
they be destroyed or returned to it; provided that such Issuer Order is timely
and the Notes have not been previously disposed of by the Indenture Trustee.
SECTION 2.8. Release of Collateral. The Indenture Trustee
shall (i) release any portion of the Trust Property relating to a Class from the
lien created by this Indenture in accordance with the provisions of Section
10.02(b) of the Sale and Servicing Agreement and (ii) on or after the
Termination Date, release any remaining portion of the Trust Property relating
to such Class from the lien created by this Indenture, in each case upon receipt
of an Issuer Request accompanied by an Officer's Certificate, an Opinion of
Counsel and (if required by the TIA) Independent Certificates in accordance with
TIA ss.ss. 314(c) and 314(d)(1) meeting the applicable requirements of Section
10.02.
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SECTION 2.9. Book-Entry Notes. The Notes, upon original
issuance, will be issued in the form of typewritten Notes representing the
Book-Entry Notes, to be delivered to the Depository or its nominee by, or on
behalf of, the Issuer. Such Notes shall initially be registered on the Note
Register in the name of Cede & Co., the nominee of the Depository, and no Note
Owner will receive a Definitive Note representing such Note Owner's interest in
such Note, except as provided in Section 2.11. Unless and until definitive,
fully registered Notes (the "Definitive Notes") have been issued to Note Owners
pursuant to Section 2.11:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Depository for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the giving
of instructions or directions hereunder) as the sole Holder of the Notes, and
shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of this
Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Depository and shall be limited to those established by law and agreements
between such Note Owners and the Depository and/or the Depository Participants.
Unless and until Definitive Notes are issued pursuant to Section 2.11, the
initial Depository will make book-entry transfers among the Depository
Participants and receive and transmit payments of principal of and interest on
the Notes to such Depository Participants;
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the Outstanding Amount of the Notes, the Depository
shall be deemed to represent such percentage only to the extent that it has
received instructions to such effect from Note Owners and/or Depository
Participants owning or representing, respectively, such required percentage of
the beneficial interest in the Notes and has delivered such instructions to the
Indenture Trustee; and
(vi) Note Owners may receive copies of any reports sent to
Noteholders pursuant to this Indenture, upon written request, together with a
certification that they are Note Owners and payment of reproduction and postage
expenses associated with the distribution of such reports, from the Indenture
Trustee at the Corporate Trust Office.
SECTION 2.10. Notices to Depository. Whenever a notice or
other communication to the Noteholders is required under this Indenture, unless
and until Definitive Notes shall have been issued to Note Owners pursuant to
Section 2.11, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes to the
Depository, and shall have no obligation to the Note Owners.
SECTION 2.11. Definitive Notes. If (i) the Depositor or the
Depository advises the Indenture Trustee in writing that the Depository is no
longer willing or able to properly discharge its responsibilities with respect
to the Notes, and the Servicer is unable to locate a qualified successor, (ii)
the Depositor at its option advises the Indenture Trustee in writing that it
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elects to terminate the book-entry system through the Depository or (iii) after
the occurrence of a Servicer Event of Default or Event of Default, Holders of
Notes evidencing not less than 51% of the Outstanding Amount of the Notes advise
the Indenture 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 Note Owners, then the Indenture Trustee shall notify all Depository
Participants and Note Owners of the occurrence of any such event and of the
availability of Definitive Notes to Note Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Note or Notes representing
the Book-Entry Notes by the Depository, accompanied by registration
instructions, the Issuer shall execute and the Indenture Trustee shall
authenticate Definitive Notes in accordance with the instructions of the
Depository. None of the Issuer, the Note Registrar or the Indenture Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the
Holders of the Definitive Notes as Noteholders.
ARTICLE III
Covenants
SECTION 3.1. Payment of Principal and Interest. The Issuer
will duly and punctually pay the principal of and interest on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting the
foregoing, the Issuer will cause to be delivered to the Indenture Trustee all
amounts on deposit in the Collection Account when and as required by the Sale
and Servicing Agreement. Amounts properly withheld under the Code by any Person
from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Noteholder for all purposes
of this Indenture.
SECTION 3.2. Maintenance of Office or Agency. The Issuer will
maintain in Charlotte, North Carolina, an office or agency where Notes may be
surrendered for registration, transfer or exchange of the Notes, and where
notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints the Indenture
Trustee to serve as its agent for the foregoing purposes. The Issuer will give
prompt written notice to the Indenture Trustee of the location, and of any
change in the location, of any such office or agency. If at any time the Issuer
shall fail to maintain any such office or agency or shall fail to furnish the
Indenture Trustee with the address thereof, such surrenders, notices and demands
may be made or served at the Corporate Trust Office, and the Issuer hereby
appoints the Indenture Trustee as its agent to receive all such surrenders,
notices and demands.
SECTION 3.3. Money for Payments to Be Held in Trust. The
Issuer will cause each Note Paying Agent other than the Indenture Trustee to
execute and deliver to the Indenture Trustee and the Insurer an instrument in
which such Note Paying Agent shall agree with the Indenture Trustee (and if the
Indenture Trustee acts as Note Paying Agent, it hereby so agrees), subject to
the provisions of this Section, that such Note Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid
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to such Persons or otherwise disposed of as herein provided and pay such sums to
such Persons as herein provided;
(ii) give the Indenture Trustee and the Insurer written notice
of any default by the Issuer (or any other obligor upon the Notes) of which it
has actual knowledge in the making of any payment required to be made with
respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Note Paying Agent;
(iv) immediately resign as a Note Paying Agent and forthwith
pay to the Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be met by a
Note Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Note Paying Agent to pay to the Indenture Trustee all sums held
in trust by such Note Paying Agent, such sums to be held by the Indenture
Trustee upon the same trusts as those upon which the sums were held by such Note
Paying Agent; and upon such a payment by any Note Paying Agent to the Indenture
Trustee, such Note Paying Agent shall be released from all further liability
with respect to such money.
Subject to applicable laws with respect to the escheat of
funds, any money held by the Indenture Trustee or any Note Paying Agent in trust
for the payment of any amount due with respect to any Note and remaining
unclaimed for two years after such amount has become due and payable shall be
discharged from such trust and be paid to the Issuer on Issuer Request, and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof (but only to the extent of the amounts so
paid to the Issuer), and all liability of the Indenture Trustee or such Note
Paying Agent with respect to such trust money shall thereupon cease.
SECTION 3.4. Existence. The Issuer will keep in full effect
its existence, rights and franchises as a business trust under the laws of the
State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other state or of the United States of
America, in which case the Issuer will keep in full effect its existence, rights
and franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Trust Property, the Notes, and each other
instrument or agreement included in the Trust Property.
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SECTION 3.5. Protection of Trust Property. The Issuer intends
the security interest granted pursuant to this Indenture in favor of the Issuer
Secured Parties to be prior to all other liens in respect of the Trust Property,
and the Issuer shall take all actions necessary to discharge and release the
Warehouse Liens upon the acquisition by the Trust of the related Mortgage Loans
and thereafter to obtain and maintain, in favor of the Indenture Trustee, for
the benefit of the Issuer Secured Parties, a first lien on and a first priority,
perfected security interest in the Trust Property. The Issuer will from time to
time prepare (or shall cause to be prepared), execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
and will take such other action necessary or advisable to:
(i) Grant more effectively all or any portion of the Trust
Property;
(ii) maintain or preserve the lien and security interest (and
the priority thereof) in favor of the Indenture Trustee for the benefit of the
Issuer Secured Parties created by this Indenture or carry out more effectively
the purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Trust Property and the
rights of the Indenture Trustee in such Trust Property against the claims of all
persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon the
Trust Property when due.
The Issuer hereby designates the Indenture Trustee its agent
and attorney-in-fact to execute any financing statement, continuation statement
or other instrument required by the Indenture Trustee pursuant to this Section;
provided that, such designation shall not be deemed to create a duty in the
Indenture Trustee or the Indenture Trustee to monitor the compliance of the
Issuer with respect to its duties under this Section 3.5 or the adequacy of any
financing statement, continuation statement or other instrument prepared by the
Issuer.
SECTION 3.6. Opinions as to Trust Property. (a) On the
Closing Date, the Issuer shall furnish to the Indenture Trustee and the Insurer
an Opinion of Counsel stating that, in the opinion of such counsel, such actions
have been taken with respect to the recording and filing of this Indenture, any
indentures supplemental hereto, and any other requisite documents, and with
respect to the execution and filing of any financing statements and continuation
statements, as are necessary to perfect and make effective the first priority
lien and security interest in favor of the Indenture Trustee, for the benefit of
the Issuer Secured Parties, created by this Indenture.
(b) Within 90 days after the beginning of each calendar year,
beginning with the first calendar year beginning more than six months after the
Closing Date, the Issuer shall furnish to the Indenture Trustee and the Insurer,
an Opinion of Counsel either stating that, in the opinion of such counsel, such
actions have been taken with respect to the recording, filing, re-recording and
refiling of this Indenture, any indentures supplemental hereto and any other
requisite
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documents and with respect to the execution and filing of any financing
statements and continuation statements as are necessary to maintain the lien and
security interest created by this Indenture and reciting the details of such
action or stating that in the opinion of such counsel, no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and the execution and filing of any financing statements and continuation
statements that will, in the opinion of such counsel, be required to maintain
the lien and security interest of this Indenture.
SECTION 3.7. Performance of Obligations; Servicing of Mortgage
Loans. (a) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Property or that would result in
the amendment, hypothecation, subordination, termination or discharge of, or
impair the validity or effectiveness of, any such instrument or agreement,
except as ordered by any bankruptcy or other court or as expressly provided or
permitted in this Indenture, the Basic Documents or such other instrument or
agreement.
(b) The Issuer may contract with other Persons acceptable to
the Insurer to assist it in performing its duties under this Indenture, and any
performance of such duties by a Person identified to the Indenture Trustee and
the Insurer in an Officer's Certificate of the Issuer shall be deemed to be
action taken by the Issuer. Initially, the Issuer has contracted with the
Servicer to assist the Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Property, including, but
not limited, to preparing (or causing to be prepared) and filing (or causing to
be filed) all UCC financing statements and continuation statements required to
be filed by the terms of this Indenture and the Sale and Servicing Agreement in
accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly provided therein, the Issuer shall not waive,
amend, modify, supplement or terminate any Basic Document or any provision
thereof without the consent of the Indenture Trustee and the Insurer (or, if an
Insurer Default has occurred and is continuing, and such waiver, amendment,
modification, supplement or termination would adversely affect the interests of
the Noteholders, then of the Holders of a majority of the Outstanding Amount of
the Notes). The Indenture Trustee may determine whether or not any Notes would
be adversely affected by any such waiver, amendment, modification, supplement or
termination upon receipt of written confirmation from the Rating Agencies that
such action would not adversely affect the then current ratings on the Notes.
(d) If a Responsible Officer of the Owner Trustee shall have
actual knowledge of the occurrence of a Servicer Event of Default under the Sale
and Servicing Agreement, the Issuer shall promptly notify the Indenture Trustee,
the Insurer and the Rating Agencies thereof in accordance with Section 12.4, and
shall specify in such notice the action, if any, being taken or to be taken by
the Issuer or other Persons.
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(e) The Issuer agrees that it will not waive timely
performance or observance by the Servicer or the Unaffiliated Seller of their
respective duties under the Basic Documents (x) without the prior consent of the
Insurer or (y) if the effect thereof would adversely affect the Holders of the
Notes.
SECTION 3.8. Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(i) except as permitted by this Indenture or the Basic
Documents, sell, transfer, exchange or otherwise dispose of any of the
properties or assets of the Issuer, including those included in the Trust
Property, without the consent of the Insurer;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than amounts
properly withheld from such payments under the Code) or assert any claim against
any present or former Noteholder by reason of the payment of the taxes levied or
assessed upon any part of the Trust Property; or
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien in favor of the Indenture Trustee
created by this Indenture to be amended, hypothecated, subordinated, terminated
or discharged, or permit any Person to be released from any covenants or
obligations with respect to the Notes under this Indenture except as may be
expressly permitted hereby, (B) permit any lien, charge, excise, claim, security
interest, mortgage or other encumbrance (other than the lien of this Indenture)
to be created on or extend to or otherwise arise upon or burden the Trust
Property or any part thereof or any interest therein or the proceeds thereof
(other than (i) tax liens, mechanics' liens and other liens that arise by
operation of law, in each case on a Mortgaged Property and arising solely as a
result of an action or omission of the related Mortgagor and (ii) the Warehouse
Liens provided that such Warehouse Liens are discharged and released as provided
in Section 3.12), (C) permit the lien of this Indenture not to constitute a
valid first priority (other than with respect to any such tax, mechanics' or
other lien or such Warehouse Liens) security interest in the Trust Property or
(D) amend, modify or fail to comply with the provisions of the Basic Documents
without the prior written consent of the Insurer.
SECTION 3.9. Annual Statement as to Compliance. The Issuer
will deliver to the Indenture Trustee and the Insurer, within 90 days after the
end of each fiscal year of the Issuer (commencing with the fiscal year ended
December 31, 1999), and otherwise in compliance with the requirements of TIA
Section 314(a)(4) an Officer's Certificate stating, as to the Authorized Officer
signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during such year
and of performance under this Indenture has been made under such Authorized
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based
on such review, the Issuer has complied with all conditions and covenants under
this Indenture throughout
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such year, or, if there has been a default in the compliance of any such
condition or covenant, specifying each such default known to such Authorized
Officer and the nature and status thereof.
SECTION 3.10. Issuer May Not Consolidate. The Issuer may not
consolidate or merge with or into any other Person.
SECTION 3.11. No Other Business. The Issuer shall not engage
in any business other than as contemplated by this Indenture and the Basic
Documents and activities incidental thereto.
SECTION 3.12. No Borrowing; Use of Proceeds. The Issuer shall
not issue, incur, assume, guarantee or otherwise become liable, directly or
indirectly, for any Indebtedness except for (i) the Notes, (ii) obligations
owing from time to time to the Insurer under the Insurance Agreement and (iii)
any other Indebtedness permitted by or arising under the Basic Documents. The
proceeds of the Notes shall be used exclusively to repay the Warehouse Loans and
obtain the release and discharge of the Warehouse Liens, to make any other
payments required by the terms of any of the Basic Documents and to pay the
Issuer's organizational, transactional and start-up expenses.
SECTION 3.13. Servicer's Obligations. The Issuer shall cause
the Servicer to comply with its obligations under the Sale and Servicing
Agreement.
SECTION 3.14. Guarantees, Loans, Advances and Other
Liabilities. Except as contemplated by the Sale and Servicing Agreement, this
Indenture or the Basic Documents, the Issuer shall not make any loan or advance
or credit to, or guarantee (directly or indirectly or by an instrument having
the effect of assuring another's payment or performance on any obligation or
capability of so doing or otherwise), endorse or otherwise become continently
liable, directly or indirectly, in connection with the obligations, stocks or
dividends of, or own, purchase, repurchase or acquire (or agree continently to
do so) any stock, obligations, assets or securities of, or any other interest
in, or make any capital contribution to, any other Person.
SECTION 3.15. Capital Expenditures. Except as and to the
extent authorized by the Basic Documents, the Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personally).
SECTION 3.16. Compliance with Laws. The Issuer shall comply
with the requirements of all applicable laws, the noncompliance with which
would, individually or in the aggregate, materially and adversely affect the
ability of the Issuer to perform its obligations under the Notes, this Indenture
or any Basic Document.
SECTION 3.17. Restricted Payments. The Issuer shall not,
directly or indirectly, (i) pay any dividend or make any distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, to the Owner Trustee or any owner of a beneficial interest
in the Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire
or otherwise acquire for value any such ownership or equity interest or security
or (iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or
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cause to be made, distributions to the Servicer, the Owner Trustee, the
Indenture Trustee, the Insurer and the Noteholders as permitted or contemplated
by, and to the extent funds are available for such purpose under, the Sale and
Servicing Agreement, this Indenture or the Trust Agreement.
SECTION 3.18. Notice of Events of Default and Servicer Events
of Default . Upon a Responsible Officer of the Owner Trustee having actual
knowledge thereof, the Issuer agrees to give the Indenture Trustee, the Insurer
and the Rating Agencies prompt written notice of each Event of Default hereunder
or Servicer Event of Default under the Sale and Servicing Agreement.
SECTION 3.19. Further Instruments and Acts. Upon request of
the Indenture Trustee or the Insurer, the Issuer will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.
SECTION 3.20. Amendments of Sale and Servicing Agreement and
Trust Agreement. The Issuer shall not agree to any amendment to Section 12.01
of the Sale and Servicing Agreement or Section 16.1 of the Trust Agreement to
eliminate the requirements thereunder that the Indenture Trustee, the Insurer or
the Holders of the Notes, as the case may be, consent to amendments thereto as
provided therein.
SECTION 3.21. Income Tax Characterization. For purposes of
federal income, state and local income and franchise and any other income taxes,
the Issuer will treat the Notes as indebtedness and hereby instructs the
Indenture Trustee to treat the Notes as indebtedness for federal and state tax
reporting purposes.
SECTION 3.22. [Reserved].
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1. Satisfaction and Discharge of Indenture. Upon
payment in full of the Notes and all amounts due to the Insurer under the
Insurance Agreement, this Indenture shall cease to be of further effect with
respect to the Notes except as to (i) the rights, obligations and immunities of
the Indenture Trustee hereunder (including the rights of the Indenture Trustee
under Section 6.7 and the obligations of the Indenture Trustee under Section
4.2) and (ii) the rights of Noteholders as beneficiaries hereof with respect to
the property so deposited with the Indenture Trustee payable to all or any of
them, and the Indenture Trustee, on demand of and at the expense of the Issuer,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 2.4 and (ii) Notes for
which money in payment of which has theretofore been
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deposited in trust or segregated and held in trust and thereafter
repaid to the Issuer or discharged from such trust, as provided in
Section 3.3) have been delivered to the Indenture Trustee for
cancellation and the Policy has terminated and been returned to the
Insurer for cancellation and all amounts owing to the Insurer have been
paid in full; or
(2) all Notes not theretofore delivered to the Indenture
Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at the Final Maturity Date
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for
the giving of notice of redemption by the Indenture
Trustee in the name, and at the expense, of the Issuer,
and in the case of (i), (ii) or (iii) above
(B) the Issuer, has irrevocably deposited or caused to be
irrevocably deposited with the Indenture Trustee cash or direct obligations of
or obligations guaranteed by the United States of America (which will mature
prior to the date such amounts are payable), in trust for such purpose, in an
amount sufficient to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Indenture Trustee for cancellation when due on the
Final Maturity Date or the Redemption Date (if Notes shall have been called for
redemption pursuant to Section 10.1), as the case may be;
(C) the Issuer has paid or caused to be paid all Insurer
Issuer Secured Obligations and all Indenture Trustee Issuer Secured Obligations;
and
(D) the Issuer has delivered to the Indenture Trustee and the
Insurer an Officer's Certificate, an Opinion of Counsel and if required by the
TIA, the Indenture Trustee or the Insurer an Independent Certificate from a firm
of certified public accountants, each meeting the applicable requirements of
Section 12.1 and each stating that all conditions precedent herein provided
relating to the satisfaction and discharge of this Indenture have been complied
with.
SECTION 4.2. Application of Trust Money. All monies deposited
with the Indenture Trustee pursuant to Section 4.1 hereof shall be held in trust
and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Note Paying Agent, as
the Indenture Trustee may determine, to the Holders of the particular Notes for
the payment or redemption of which such monies have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest.
SECTION 4.3. Repayment of Monies Held by Note Paying Agent.
In connection with the satisfaction and discharge of this Indenture with respect
to the Notes, all monies then held by any Note Paying Agent other than the
Indenture Trustee under the provisions of this Indenture with respect to such
Notes shall, upon demand of the Issuer, be paid to the Indenture Trustee to be
held and applied according to Section 3.3 and thereupon such Note Paying Agent
shall be released from all further liability with respect to such monies.
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ARTICLE V
Remedies
SECTION 5.1. Events of Default. "Event of Default" with
respect to each Class of Notes issued hereunder, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be affected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) (i) default in the payment of any interest on or in
respect of any Note of such Class when due and payable (as provided in Section
2.6(a)), which default shall continue for a period of five days, or (ii) the
failure to apply funds which are available for payment in accordance with the
priority of distribution set forth in Article VIII hereof, which failure shall
continue for a period of five days, or (iii) default in the payment of principal
due on any such Class of Notes, on the Final Distribution Date thereof; or
(b) with respect to the related Class of Notes the occurrence
and continuance of an Insurer Default; or
(c) the entry by a court having jurisdiction in the premises
of (i) a decree or order for relief in respect of the Issuer in an involuntary
case or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or (ii) a decree or order adjudging the
Issuer a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment, or composition of or in respect
of the Issuer under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator, or other
similar official of the Issuer or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or
(d) the commencement by the Issuer of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Issuer in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable federal
or state law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator, or similar official of the Issuer or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the Issuer's failure to pay its debts generally as they
become due, or the taking of corporate action by the Issuer in furtherance of
any such action.
SECTION 5.2. Acceleration of Maturity; Rescission and
Annulment. (a) If an Event of Default occurs and is continuing, then and in
every such case, the Insurer may (or, if an
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Insurer Default has occurred and is continuing, the Indenture Trustee may, and
if so directed by the Holders of Notes evidencing to at least 66-2/3% of the
Outstanding Amount of the related Class of Notes shall) declare the unpaid
principal amount of all such Notes to be due and payable immediately, by a
notice in writing to the Issuer, the Servicer and the Insurer, and upon any such
declaration such principal amount shall become immediately due and payable
together with all accrued and unpaid interest thereon, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Issuer.
(b) At any time after such a declaration of acceleration of
the related Class of Notes has been made and before a judgment or decree for
payment of the money due has been obtained by the Indenture Trustee as
hereinafter in this Article provided, the Insurer may (or, if an Insurer Default
has occurred and is continuing, the Indenture Trustee may, and, if so directed
by the Holders of Notes evidencing at least 66-2/3% of the Outstanding Amount of
the related Class of Notes, shall), by written notice to the Issuer, Servicer,
Insurer and the Indenture Trustee, rescind and annul such declaration and its
consequences, if:
(i) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
(A) all overdue amounts payable on or in respect of the
related Notes (other than amounts due solely as a result of the acceleration),
(B) to the extent that payment of interest on such amount is
lawful, interest on such overdue amounts at the applicable Note Interest Rate;
(C) all unpaid amounts referred to in Section 6.7 and clauses
(iii) and (v) of Section 8.3(a);
(D) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements, and
advances of the Indenture Trustee, its agents and counsel;
and
(ii) all Events of Default, other than the nonpayment of
amounts payable on or in respect of the related Notes which have become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 5.20.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
SECTION 5.3. Remedies. (a) If an Event of Default occurs
and is continuing of which a Responsible Officer has actual knowledge, the
Indenture Trustee shall give notice to each Noteholder of the related Class of
Notes as set forth in Section 6.5.
(b) Following any acceleration of the related Class of Notes,
the Indenture Trustee shall, subject to Section 5.3(d), have all of the rights,
powers and remedies with respect to the Trust Property as are available to
secured parties under the Uniform Commercial Code or
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other applicable law. Such rights, powers and remedies may be exercised by the
Indenture Trustee in its own name as trustee of an express trust.
(c) If an Event of Default specified in Section 5.1(a) occurs
and is continuing, the Indenture Trustee is authorized to recover judgment in
its own name and as trustee of an express trust against the Issuer for the whole
amount of principal and interest remaining of the related Class Notes of not
paid when due and payable.
(d) In exercising its rights and obligations under this
Section 5.3, the Indenture Trustee may sell the Trust Property subject to the
provisions of Section 5.19. Neither the Indenture Trustee nor any Noteholder of
the related Class of Notes shall have any rights against the Issuer other than
to enforce the Grant hereunder and to sell the Trust Property.
SECTION 5.4. Indenture Trustee Shall File Proofs of Claim.
(a) In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition, or other
judicial proceeding relative to the Issuer, the Servicer, the Unaffiliated
Seller, the Insurer or any other obligor upon or in respect of the Notes or the
other obligations secured hereby or relating to the property of the Issuer, the
Servicer, the Unaffiliated Seller, the Insurer or of such other obligor or their
creditors, the Indenture Trustee (irrespective of whether the principal of the
such Class of Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand on the Issuer, the Servicer, the Unaffiliated Seller, or
the Insurer for the payment of overdue principal or interest or any such other
obligation) shall by intervention in such proceeding or otherwise:
(i) file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of such Notes and any other
obligation secured hereby and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the
Indenture Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, its
agents and counsel) and of the Noteholders of the Related Class allowed
in such judicial proceeding; and
(ii) collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator, or
other similar official in any such judicial proceeding is hereby authorized by
each Noteholder of the related Class to make such payments to the Indenture
Trustee and, in the event that the Indenture Trustee shall consent to the making
of such payments directly to the Noteholders of the related Class to pay to the
Indenture Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its agents and counsel, and
any other amounts due the Indenture Trustee under Section 6.7.
(b) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder of the related Class any plan of reorganization, arrangement,
adjustment or composition affecting such Notes or the
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rights of any holder thereof or to authorize the Indenture Trustee to vote in
respect of the claim of any Noteholder of the related Class in any such
proceeding.
SECTION 5.5. Indenture Trustee May Enforce Claims Without
Possession of Notes. All rights of action and claims under this Indenture or
any of the Notes may be prosecuted and enforced by the Indenture Trustee without
the possession of any of the Notes or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Indenture Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee, its
agents and counsel, be for the ratable benefit of the Holders of the related
Class of Notes in respect of which such judgment has been recovered.
SECTION 5.6. Application of Money Collected. Any money
collected by the Indenture Trustee pursuant to this Article (including all
collections from, and proceeds of the sale or liquidation of, the Trust
Property), and any moneys that may then be held or thereafter received by the
Indenture Trustee shall be applied in the following order, at the date or dates
fixed by the Indenture Trustee and, in case of the distribution of the entire
amount due on account of principal or interest, upon presentation of the related
Class of Notes and surrender thereof:
first, to the payment of all costs and expenses of collection
incurred by the Indenture Trustee and the Noteholders of the related
Class (including the reasonable fees and expenses of any counsel to the
Indenture Trustee and the Noteholders of the related Class) and all
amounts due and unpaid to the Indenture Trustee pursuant to Section
6.7; and
second, in the same order as specified in Section 8.3.
SECTION 5.7. Limitation on Rights of Noteholders. (a) No
Holder of any Note shall have any right to institute any Proceeding with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Holders of Notes evidencing not less than 25% of the
Outstanding Amount of the related Class of Notes have made written
request to the Indenture Trustee to institute such Proceeding in
respect of such Event of Default in its own name as Indenture Trustee
hereunder; (iii) such Holder or Holders have offered to the Indenture
Trustee indemnity reasonably satisfactory to it against the costs,
expenses and liabilities to be incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute
such Proceedings;
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(v) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the
Holders of a majority of the Outstanding Amount of the related Class of
Notes; and
(vi) an Insurer Default shall have occurred and be continuing;
it being understood and intended that no Holders of a Class of Notes shall have
any right in any manner whatsoever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes or to obtain or to seek to obtain priority or preference
over any other Holders or to enforce any right under this Indenture, except in
the manner herein provided.
In the event the Indenture Trustee shall receive conflicting
or inconsistent requests and indemnity from two or more groups of Holders of a
Class of Notes, each representing less than a majority of the Outstanding Amount
of the related Class of Notes, the Indenture Trustee in its sole discretion may
determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.
(b) The death or incapacity of any Noteholder shall not
operate to terminate this Indenture, nor entitle such Noteholder'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 Issuer, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
(c) No Noteholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Issuer, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of any of the Notes,
be construed so as to constitute the Noteholders from time to time as partners
or members of an association; nor shall any Noteholder be under any liability to
any third person by reason of any action taken by the parties to this Indenture
pursuant to any provision hereof.
SECTION 5.8. Unconditional Rights of Noteholders to Receive
Principal and Interest. Notwithstanding any other provisions in this Indenture,
the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest on such Note
on or after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
SECTION 5.9. Restoration of Rights and Remedies. If any
Noteholder has instituted any Proceeding to enforce any right or remedy under
this Indenture and such Proceeding has been discontinued or abandoned for any
reason, then and in every such case the Issuer, the Indenture Trustee and the
Noteholders shall, subject to any determination in such Proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Indenture Trustee and the Noteholders shall
continue as though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. No right or
remedy herein conferred upon or reserved to the Noteholders is intended to be
exclusive of any other right or
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remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not a Waiver. No delay or
omission of the Indenture Trustee, any Holder of any Note or the Insurer to
exercise any right or remedy accruing upon any Default or Event of Default shall
impair any such right or remedy or constitute a waiver of any such Default or
Event of Default or an acquiescence therein. Every right and remedy given by
this Article V or by law to the Indenture Trustee, to the Noteholders or the
Insurer may be exercised from time to time, and as often as may be deemed
expedient, by the Indenture Trustee , the Noteholders or the Insurer, as the
case may be.
SECTION 5.12. Control by Insurer or Noteholders. The Insurer
(or, if an Insurer Default has occurred and is continuing, the Holders of Notes
evidencing a majority of the Outstanding Amount of a Class of Notes) shall have
the right to direct the time, method and place of conducting any Proceeding for
any remedy available to the Indenture Trustee with respect to such Notes or
exercising any trust or power conferred on the Indenture Trustee; provided that
(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
(ii) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction;
provided, however, that, subject to Section 6.1, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to such
action.
SECTION 5.13. Undertaking for Costs. All parties to this
Indenture agree, and each Holder of any Note by such Holder's acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Indenture Trustee for any action taken, suffered or omitted
by it as Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee or the Insurer, (b) any suit instituted by any Noteholder, or
group of Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the related Class of Notes or (c) any suit instituted by
any Noteholder of such Class for the enforcement of the payment of principal of
or interest on any Note on or after the respective due dates thereof expressed
in such Note and in this Indenture (or, in the case of redemption, on or after
the Redemption Date).
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SECTION 5.14. Waiver of Stay or Extension Laws. The Issuer
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead or in any manner whatsoever, claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 5.15. Action on Notes. The Indenture Trustee's right
to seek and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under or
with respect to this Indenture. Neither the lien of this Indenture nor any
rights or remedies of the Indenture Trustee or the Noteholders shall be impaired
by the recovery of any judgment by the Indenture Trustee against the Issuer or
by the levy of any execution under such judgment upon any portion of the Trust
Property or upon any of the assets of the Issuer.
SECTION 5.16. Performance and Enforcement of Certain
Obligation. (a) Promptly following a request from the Indenture Trustee or the
Insurer to do so, and at the Servicer's expense, the Issuer agrees to take all
such lawful action as the Indenture Trustee or the Insurer may request to compel
or secure the performance and observance by the Unaffiliated Seller and the
Servicer, as applicable, of each of their obligations to the Issuer under or in
connection with the Sale and Servicing Agreement in accordance with the terms
thereof, and to exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer under or in connection with the Sale and
Servicing Agreement to the extent and in the manner directed by the Indenture
Trustee or the Insurer, including the transmission of notices of default on the
part of the Unaffiliated Seller or the Servicer thereunder and the institution
of legal or administrative actions or proceedings to compel or secure
performance by the Unaffiliated Seller or the Servicer of each of their
obligations under the Sale and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and, at the written direction of the Insurer (or, if an
Insurer Default has occurred and is continuing, the Holders of a Class of Notes
evidencing at least 66-2/3% of the Outstanding Amount of the related Class of
Notes), shall, exercise all rights, remedies, powers, privileges and claims of
the Issuer against the Unaffiliated Seller or the Servicer under or in
connection with the Sale and Servicing Agreement, including the right or power
to take any action to compel or secure performance or observance by the
Unaffiliated Seller or the Servicer of each of their obligations to the Issuer
thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Sale and Servicing Agreement, and any right of the
Issuer to take such action shall be suspended.
SECTION 5.17. Subrogation. The Indenture Trustee shall
receive as attorney-in-fact of each Noteholder any amount received from the
Insurer under the Policy. Any and all amounts disbursed by the Indenture Trustee
from claims made under the Policy shall not be considered payment by the Issuer
with respect to such Notes, and shall not discharge the obligations of the
Issuer with respect thereto. The Insurer shall, to the extent it makes any
payment with respect to the Notes, become subrogated to the rights of the
recipient of such
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payments to the extent of such payments. Subject to and conditioned upon any
payment with respect to the Notes by or on behalf of the Insurer, the Indenture
Trustee shall assign to the Insurer all rights to the payment of interest or
principal with respect to the Notes which are then due for payment to the extent
of all such payments made by the Insurer, and the Insurer may exercise any
option, vote right, power or the like with respect to the Notes to the extent
that it has made payment pursuant to the Policy.
SECTION 5.18. Preference Claims. The Indenture Trustee shall
promptly notify the Insurer of any proceeding or the institution of any action,
of which a Responsible Officer has actual knowledge, seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership or
similar law (a "Preference Claim") of any distribution made with respect to a
Class of Notes. Each Class A Noteholder, by its purchase of Class A Notes, the
Servicer and the Indenture Trustee hereby agree that the Insurer (so long as no
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, supersedes or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the Insurer shall
be subrogated to the rights of the Servicer, the Indenture Trustee and each
Class A Noteholder 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 5.19. Sale of Trust Estate. (a) The power to
effect any sale of any portion of the Trust Property pursuant to this Section
5.19 shall not be exhausted by any one or more sales as to any portion of the
Trust Property remaining unsold, but shall continue unimpaired until the entire
Trust Property shall have been sold or all amounts payable on the Notes shall
have been paid. The Indenture Trustee may from time to time, upon directions in
accordance with Section 5.12, postpone any public sale by public announcement
made at the time and place of such sale.
(b) To the extent permitted by applicable law, the Indenture
Trustee shall not in any private sale sell to a third party the Trust Property,
or any portion thereof unless,
(i) until such time as the conditions specified in Sections
10.01(a)(i) or 10.01(a)(ii) of the Sale and Servicing Agreement have
been satisfied in full, the Insurer (or, if an Insurer Default has
occurred and is continuing, the Holders of Notes evidencing at least
66-2/3% of the Outstanding Amount of the related Class of Notes),
consent to or direct the Indenture Trustee in writing to make such
sale; or
(ii) the proceeds of such sale would be not less than the sum
of all amounts due to the Indenture Trustee hereunder and the Insurer
under the Insurance Agreement and the entire unpaid principal amount of
the Notes and all interest due or to become due thereon in accordance
with Section 8.3(a) on the Payment Date next succeeding the date of
such sale.
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The foregoing provisions shall not preclude or limit the ability of the
Indenture Trustee to purchase all or any portion of the Trust Property at a
private sale.
(c) In connection with a sale of all or any portion of the
Trust Property:
(i) any one or more Noteholders may bid for and purchase the
property offered for sale, and upon compliance with the terms of sale
may hold, retain, and possess and dispose of such property, without
further accountability, and any Noteholder may, in paying the purchase
money therefor, deliver in lieu of cash any Outstanding Notes or claims
for interest thereon for credit in the amount that shall, upon
distribution of the net proceeds of such sale, be payable thereon, and
such Notes, in case the amounts so payable thereon shall be less than
the amount due thereon, shall be returned to the Noteholders thereof
after being appropriately stamped to show such partial payment;
(ii) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any
portion of the Trust Property related to the Class of Notes in
connection with a sale thereof;
(iii) the Indenture Trustee is hereby irrevocably appointed
the agent and attorney-in-fact of the Issuer to transfer and convey its
interest in any portion of the Trust Property related to the Class of
Notes in connection with a sale thereof, and to take all action
necessary to effect such sale; and
(iv) no purchaser or transferee at such a sale shall be bound
to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of
any moneys.
(d) The method, manner, time, place and terms of any sale of
all or any portion of the Trust Property shall be commercially
reasonable.
(e) The provisions of this Section 5.19 shall not be construed
to restrict the ability of the Indenture Trustee to exercise any rights and
powers against the Issuer or the Trust Property that are vested in the Indenture
Trustee by this Indenture, including, without limitation, the power of the
Indenture Trustee to proceed against the Collateral and to institute judicial
proceedings for the collection of any deficiency remaining thereafter or the
ability of the Servicer to exercise any rights or powers or to perform its
obligations under the Sale and Servicing Agreement.
SECTION 5.20. Waiver of Past Defaults. Prior to the time a
judgment or decree for payment of the money due has been obtained by the
Indenture Trustee, the Insurer (or, if an Insurer Default has occurred and is
continuing, the Holders of Notes evidencing at least a majority of the
Outstanding Amount of the related Class of Notes) may on behalf of the Holders
of all the Notes waive any past Default or Event of Default and its
consequences, except a Default or Event of Default:
(a) In the payment of the principal of or interest on any Note
when due and payable, or
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(b) In respect of a covenant or provision hereof that under
Section 9.2 cannot be modified or amended without the consent of the Holder of
each Outstanding Note affected.
In the case of any such waiver, the Issuer, the Indenture
Trustee and the Holders of the Notes shall be restored to their former positions
and rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto. Upon such waiver, such Default or Event of Default shall cease to
exist, and any Event of Default arising from any such Default shall be deemed to
have been cured, for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereon.
ARTICLE VI
The Indenture Trustee
SECTION 6.1. Duties of Indenture Trustee. (a) If an Event
of Default has occurred and is continuing, the Indenture Trustee shall exercise
the rights and powers vested in it by this Indenture and the Basic Documents and
use the same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs; provided, however, that if the Indenture Trustee is acting as Servicer,
it shall use the same degree of care and skill as is required of the Servicer
under the Sale and Servicing Agreement.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture
and the Basic Documents and no implied covenants or obligations shall
be read into this Indenture or the Basic Documents against the
Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture and the Basic Documents; however, the
Indenture Trustee shall examine the certificates and opinions to
determine whether or not they conform on their face to the requirements
of this Indenture and the Basic Documents. (c) The Indenture Trustee
may not be relieved from liability for its own gross negligent action,
its own gross negligent failure to act or its own misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts;
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(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it from Holders of Notes evidencing a
majority of the Outstanding Amount of the Notes (or such greater
percentage as may be required by the terms hereof), with the consent of
the Insurer if no Insurer Default shall have occurred and be
continuing, relating to the time, method and place of conducting any
Proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred upon the Indenture Trustee,
under this Indenture; and
(iv) the Indenture Trustee shall not be charged with knowledge
of any failure by the Servicer to comply with the obligations of the
Servicer under the Sale and Servicing Agreement unless a Responsible
Officer obtains actual knowledge of such failure or occurrence or the
Indenture Trustee receives written notice of such failure or occurrence
from the Servicer, the Insurer or the Holders of Notes entitled to a
majority of the Voting Rights.
(d) The Indenture Trustee shall not be liable for interest on
any money received by it except as the Indenture Trustee may agree in writing
with the Issuer.
(e) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or indemnity reasonably satisfactory to it against such
risk or liability is not reasonably assured to it.
(f) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
(g) The Indenture Trustee shall, upon three Business Day's
prior written notice to the Indenture Trustee, permit any representative of the
Insurer, during the Indenture Trustee's normal business hours, to examine all
books of account, records, reports and other papers of the Indenture Trustee
relating to the Notes, to make copies and extracts therefrom and to discuss the
Indenture Trustee's affairs and actions, as such affairs and actions relate to
the Indenture Trustee's duties with respect to the Notes, with the Indenture
Trustee's officers and employees responsible for carrying out the Indenture
Trustee's duties with respect to the Notes.
(h) The Indenture Trustee is hereby authorized to execute and
shall execute the Sale and Servicing Agreement and shall perform its duties and
satisfy its obligations thereunder. Every provision of this Indenture relating
to the conduct or affecting the liability of or affording protection to the
Indenture Trustee shall apply to the Indenture Trustee's execution of the Sale
and Servicing Agreement and the performance of its duties and satisfaction of
its obligations thereunder.
(i) The Indenture Trustee shall, and hereby agrees that it
will, hold the Policy in trust, and will hold any proceeds of any claim on the
Policy in trust solely for the use and benefit of the Noteholders.
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(j) In no event shall the Indenture Trustee, in any of its
capacities hereunder, be deemed to have assumed any duties of the Owner Trustee
under the Delaware Business Trust Statute, common law, or the Trust Agreement.
SECTION 6.2. Rights of Indenture Trustee. (a) The
Indenture Trustee may rely on any document reasonably believed by it to be
genuine and to have been signed or presented by the proper person. The Indenture
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting,
it may require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on the Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian or nominee.
(d) The Indenture Trustee shall not be liable for any action
it takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that the Indenture Trustee's
conduct does not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) The Indenture Trustee shall be under no obligation to
institute, conduct or defend any litigation under this Indenture or in relation
to this Indenture, at the request, order or direction of any of the Holders of
Notes, pursuant to the provisions of this Indenture, unless such Holders of
Notes shall have offered to the Indenture Trustee reasonable security or
indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby; provided, however, that the Indenture Trustee shall, upon
the occurrence of an Event of Default (that has not been cured or waived),
exercise the rights and powers vested in it by this Indenture or the Sale and
Servicing Agreement with reasonable care and skill.
(g) Prior to the occurrence of an Event of Default, the
Indenture 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 Insurer (or, if an Insurer
Default has occurred and is continuing, by the Holders of Notes evidencing not
less than 25% of the Outstanding Amount of the related Class of Notes);
provided, however, that if the payment within a reasonable time to the Indenture
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 Indenture Trustee, not
reasonably assured to the Indenture Trustee by the security afforded to it by
the terms of this
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Indenture, the Indenture Trustee may require indemnity reasonably satisfactory
to it against such cost, expense or liability as a condition to so proceeding;
the reasonable expense of every such examination shall be paid by the Person
making such request, or, if paid by the Indenture Trustee shall be reimbursed by
the Person making such request upon demand.
(h) The Indenture Trustee shall not be accountable, shall have
no liability and makes no representation as to any acts or omissions hereunder
or under the Sale and Servicing Agreement of the Servicer until such time as the
Indenture Trustee may be required to act as Servicer.
(i) The Indenture 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 8.11.
SECTION 6.3. Individual Rights of Indenture Trustee. The
Indenture Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates
with the same rights it would have if it were not Indenture Trustee. Any Note
Paying Agent, Note Registrar, co-registrar or co-paying agent may do the same
with like rights. However, the Indenture Trustee must comply with Sections 6.11
and 6.12.
SECTION 6.4. Indenture Trustee's Disclaimer. The Indenture
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or any of the Basic Documents, the Trust
Property or the Notes, it shall not be accountable for the Issuer's use of the
proceeds from the Notes, and it shall not be responsible for any statement of
the Issuer in the Indenture or in any document issued in connection with the
sale of the Notes or in the Notes other than the Indenture Trustee's certificate
of authentication.
SECTION 6.5. Notice of Defaults. If a Servicer Event of
Default or an Event of Default occurs and is continuing and if it is either
known by, or written notice of the existence thereof has been delivered to, a
Responsible Officer, the Indenture Trustee shall mail to each Noteholder of such
event within 90 days after such knowledge or notice occurs. Except in the case
of a Default in payment of principal of or interest on any Note when due and
payable, the Indenture Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of Noteholders.
SECTION 6.6. Reports by Indenture Trustee to Holders. Upon
written request, the Note Paying Agent or the Servicer shall on behalf of the
Issuer deliver to each Noteholder such information as may be reasonably required
to enable such Holder to prepare its Federal and state income tax returns
required by law.
SECTION 6.7. Compensation and Indemnity. (a) The
Indenture Trustee shall withdraw from the Distribution Account on each Payment
Date and pay to itself the Indenture Trustee's Fee and, to the extent that the
funds therein are at any time insufficient for such purpose, the Servicer shall
pay such fees. Any such amount so withdrawn from the Distribution Amount shall
reduce the Available Distribution Amount for each Group pro rata based upon the
relative proportions of the aggregate Stated Principal Balances of the Mortgage
Loans and any
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REO Properties in each Group as of the preceding Payment Date (or, in the case
of the initial Payment Date as of the Cut-Off Date to the total aggregate Stated
Principal Balance of Mortgage Loans and the REO Properties in both Groups as of
such date). The Indenture Trustee and any director, officer, employee or agent
of the Indenture Trustee shall be indemnified by the Issuer from the Trust
Property and held harmless against any loss, liability or expense (not including
expenses, disbursements and advances incurred or made by the Indenture Trustee,
including the compensation and the expenses and disbursements of its agents and
counsel, in the ordinary course of the Indenture Trustee's performance in
accordance with the provisions of this Agreement) incurred by the Indenture
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 Sale and Servicing Agreement and the Mortgage Loans (but only to the
extent the Indenture Trustee is actually indemnified by the Servicer pursuant to
the Sale and Servicing Agreement), or (ii) any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or gross negligence in the
performance of the Indenture Trustee's duties hereunder or by reason of reckless
disregard of the Indenture Trustee's obligations and duties hereunder.
(b) The Issuer's payment obligations to the Indenture Trustee
pursuant to this Section shall survive the discharge of this Indenture.
Notwithstanding anything else set forth in this Indenture or the Basic
Documents, the Indenture Trustee agrees that the obligations of the Issuer (but
not the Servicer) to the Indenture Trustee hereunder and under the Basic
Documents shall be recourse to the Trust Property only and specifically shall
not be recourse to the assets of the Issuer or any Securityholder. In addition,
the Indenture Trustee agrees that its recourse to the Issuer, the Trust Property
and amounts held in any of the Trust Accounts shall be limited to the right to
receive the distributions referred to in Section 8.3 hereof.
SECTION 6.8. Replacement of Indenture Trustee. The Indenture
Trustee may resign at any time by so notifying the Issuer, the Servicer, the
Unaffiliated Seller and the Insurer by written notice. Upon receiving such
notice of resignation, the Issuer shall promptly appoint a successor Indenture
Trustee (approved in writing by the Insurer, so long as such approval is not
unreasonably withheld) by written instrument, in duplicate, one copy of such
instrument shall be delivered to the resigning Indenture Trustee (who shall
deliver a copy to the Servicer) and one copy to the successor Trustee. The
Insurer (or, if an Insurer Default has occurred and is continuing, the Issuer)
may remove the Indenture Trustee, if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of
the Indenture Trustee in an involuntary case or proceeding under
federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, shall have entered a decree or order
granting relief or appointing a receiver, liquidator, assignee,
custodian, trustee, conservator, sequestrator (or similar official) for
the Indenture Trustee or for any substantial part of the Indenture
Trustee's property, or ordering the winding-up or liquidation of the
Indenture Trustee's affairs;
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(iii) an involuntary case under the federal bankruptcy laws,
as now or hereafter in effect, or another present or future federal or
state bankruptcy, insolvency or similar law is commenced with respect
to the Indenture Trustee and such case is not dismissed within 60 days;
(iv) the Indenture Trustee commences a voluntary case under
any federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, conservator, sequestrator (or other similar official) for the
Indenture Trustee or for any substantial part of the Indenture
Trustee's property, or makes any assignment for the benefit of
creditors or fails generally to pay its debts as such debts become due
or takes any corporate action in furtherance of any of the foregoing;
or
(v) the Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee resigns or is removed or if a vacancy
exists in the office of Indenture Trustee for any reason (the Indenture Trustee
in such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee (approved in writing
by the Insurer, so long as such approval is not unreasonably withheld). If the
Issuer fails to appoint such a successor Indenture Trustee, the Insurer may
appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written
acceptance of its appointment to the retiring Indenture Trustee, to the Insurer
and to the Issuer. Thereupon the resignation or removal of the retiring
Indenture Trustee shall become effective, and the successor Indenture Trustee
shall have all the rights, powers and duties of the retiring Indenture Trustee
under this Indenture. The successor Indenture Trustee shall mail a notice of its
succession to Noteholders. The retiring Indenture Trustee shall promptly
transfer all property held by it as Indenture Trustee to the successor Indenture
Trustee.
If a successor Indenture Trustee does not take office within
30 days after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Insurer (or, if an Insurer Default has occurred and is
continuing, the Issuer or the Holders of Notes evidencing a majority of the
Outstanding Amount of the Notes) may petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee acceptable to
the Insurer.
If the Indenture Trustee fails to comply with Section 6.11,
the Insurer (or, if an Insurer Default has occurred and is continuing, the
Issuer or the Holders of Notes evidencing a majority of the Outstanding Amount
of the Notes), may petition any court of competent jurisdiction for the removal
of the Indenture Trustee and the appointment of a successor Indenture Trustee
acceptable to the Insurer.
Any resignation or removal of the Indenture Trustee and
appointment of a successor Indenture Trustee pursuant to any of the provisions
of this Section shall not become effective until acceptance of appointment by
the successor Indenture Trustee pursuant to Section 6.8 and payment of all fees
and expenses owed to the outgoing Indenture Trustee.
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Notwithstanding the replacement of the Indenture Trustee
pursuant to this Section, the Issuer's and the Servicer's indemnity obligations
under Section 6.7 shall continue for the benefit of the retiring Indenture
Trustee and the Servicer shall pay any amounts owing to the Indenture Trustee.
SECTION 6.9. Successor Indenture Trustee by Merger. If the
Indenture Trustee consolidates with, merges or converts into, or transfers all
or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall (subject to replacement as provided in
Section 6.8) be the successor Indenture Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Indenture Trustee shall succeed to the trusts
created by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee. (a) Notwithstanding any other provisions of this
Indenture, at any time, for the purpose of meeting any legal requirement of any
jurisdiction in which any part of the Trust may at the time be located, the
Indenture Trustee with the consent of the Insurer shall have the power and may
execute and deliver all instruments to appoint one or more Persons to act as a
co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Noteholders, such title to the Trust, or any part
hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Indenture Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.11 and no notice to Noteholders of the appointment of any co-trustee or
separate trustee shall be required under Section 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Indenture Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to
be performed the Indenture 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 or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Indenture Trustee;
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(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder, including acts
or omissions of predecessor or successor trustees; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the
Indenture 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 VI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Indenture Trustee or separately, as may be provided therein,
subject to all the provisions of this Indenture, specifically including every
provision of this Indenture relating to the conduct of, affecting the liability
of, or affording protection to, the Indenture Trustee. Every such instrument
shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time
constitute the Indenture 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, dissolve, become insolvent, 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 Indenture Trustee, to the
extent permitted by law, without the appointment of a new or successor trustee.
(e) The Servicer shall be responsible for the fees of any
co-trustee or separate trustee appointed hereunder.
SECTION 6.11. Eligibility. The Indenture Trustee shall at all
times satisfy the requirements of TIA ss. 310(a). The Indenture Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. The Indenture Trustee shall
provide copies of such reports to the Insurer upon request. The Indenture
Trustee shall comply with TIA ss. 310(b), including the optional provision
permitted by the second sentence of TIA ss. 310(b)(9); provided, however, that
there shall be excluded from the operation of TIA ss. 310(b)(1) any indenture or
indentures under which other securities of the Issuer are outstanding if the
requirements for such exclusion set forth in TIA ss. 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against
Issuer. The Indenture Trustee shall comply with TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). An Indenture Trustee who has
resigned or been removed shall be subject to TIA ss. 311(a) to the extent
indicated.
SECTION 6.13. Appointment and Powers. Subject to the terms
and conditions hereof, each of the Issuer Secured Parties hereby appoints First
Union National Bank as the Indenture Trustee with respect to the Collateral, and
First Union National Bank hereby accepts such appointment and agrees to act as
Indenture Trustee with respect to the Trust Property for the
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Issuer Secured Parties, to maintain custody and possession of such Trust
Property (except as otherwise provided hereunder or under the Sale and Servicing
Agreement) and to perform the other duties of the Indenture Trustee in
accordance with the provisions of this Indenture and the other Basic Documents.
Each Issuer Secured Party hereby authorizes the Indenture Trustee to take such
action on its behalf, and to exercise such rights, remedies, powers and
privileges hereunder, as the Insurer (or, if an Insurer Default has occurred and
is continuing, Holders of Notes evidencing a majority (or such greater
percentage as may be required by the terms hereof) of the Outstanding Amount of
the Notes) may direct and as are specifically authorized to be exercised by the
Indenture Trustee by the terms hereof, together with such actions, rights,
remedies, powers and privileges as are reasonably incidental thereto. The
Indenture Trustee shall act upon and in compliance with the written instructions
of the Insurer (or, if an Insurer Default has occurred and is continuing,
Holders of Notes evidencing a majority (or such greater percentage as may be
required by the terms hereof) of the Outstanding Amount of the related Class of
Notes) delivered pursuant to this Indenture promptly following receipt of such
written instructions; provided that the Indenture Trustee shall not act in
accordance with any instructions (i) which are not authorized by, or in
violation of the provisions of, this Indenture or (ii) for which the Indenture
Trustee has not received reasonable indemnity. Receipt of such instructions
shall not be a condition to the exercise by the Indenture Trustee of its express
duties hereunder, except where this Indenture provides that the Indenture
Trustee is permitted to act only following and in accordance with such
instructions.
SECTION 6.14. Performance of Duties. The Indenture Trustee
shall have no duties or responsibilities except those expressly set forth in
this Indenture and the other Basic Documents to which the Indenture Trustee is a
party or as directed by the Controlling Party in accordance with this Indenture.
The Indenture Trustee shall not be required to take any discretionary actions
hereunder except at the written direction of the Insurer (or, if an Insurer
Default has occurred and is continuing, Holders of Notes evidencing a majority
(or such greater percentage as may be required by the terms hereof) of the
Outstanding Amount of the related Class of Notes) and with indemnification as
provided herein.
SECTION 6.15. Limitation on Liability. Neither the Indenture
Trustee nor any of its directors, officers, employees and agents shall be liable
for any action taken or omitted to be taken by it or them hereunder, or in
connection herewith, except that the Indenture Trustee shall be liable for its
gross negligence, bad faith or willful misconduct; nor shall the Indenture
Trustee be responsible for the validity, effectiveness, value, sufficiency or
enforceability against the Issuer of this Indenture or any of the Trust Property
(or any part thereof).
SECTION 6.16. Reliance Upon Documents. In the absence of
negligence, bad faith or willful misconduct on its part, the Indenture Trustee
shall be entitled to rely on any communication, instrument, paper or other
document reasonably believed by it to be genuine and correct and to have been
signed or sent by the proper Person or Persons and shall have no liability in
acting, or omitting to act, where such action or omission to act is in
reasonable reliance upon any statement or opinion contained in any such document
or instrument.
SECTION 6.17. Representations and Warranties of the Indenture
Trustee. The Indenture Trustee represents and warrants to the Issuer and to
each Issuer Secured Party as follows:
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(a) The Indenture Trustee is a national banking association
duly organized, validly existing and in good standing under the laws of the
United States.
(b) The execution and delivery of this Indenture by the
Indenture Trustee, and the performance and compliance with the terms of this
Indenture by the Indenture Trustee, will not violate the Indenture 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.
(c) The Indenture Trustee has the full power and authority to
enter into and consummate all transactions contemplated by this Indenture, has
duly authorized the execution, delivery and performance of this Indenture, and
has duly executed and delivered this Indenture.
(d) This Indenture, assuming due authorization, execution and
delivery by the Issuer, constitutes a valid, legal and binding obligation of the
Indenture Trustee, enforceable against the Indenture 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.
(e) The Indenture Trustee is not in violation of, and its
execution and delivery of this Indenture and its performance and compliance with
the terms of this Indenture 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 Indenture Trustee's good faith and reasonable judgment, is
likely to affect materially and adversely either the ability of the Indenture
Trustee to perform its obligations under this Indenture or the financial
condition of the Indenture Trustee.
(f) No litigation is pending or, to the best of the Indenture
Trustee's knowledge, threatened against the Indenture Trustee which would
prohibit the Indenture Trustee from entering into this Indenture or, in the
Indenture Trustee's good faith reasonable judgment, is likely to materially and
adversely affect either the ability of the Indenture Trustee to perform its
obligations under this Indenture or the financial condition of the Indenture
Trustee.
SECTION 6.18. Waiver of Setoffs. The Indenture Trustee hereby
expressly waives any and all rights of setoff that the Indenture Trustee may
otherwise at any time have under applicable law with respect to any Trust
Account and agrees that amounts in the Trust Accounts shall at all times be held
and applied solely in accordance with the provisions hereof.
SECTION 6.19. Suits for Enforcement. In case a Servicer Event
of Default or other default by the Servicer under the Sale and Servicing
Agreement shall occur and be continuing, the Indenture Trustee (with the consent
of the Insurer if no Insurer Default has occurred and is continuing) may proceed
to protect and enforce its rights and the rights of the Noteholders under this
Indenture by a suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in aid of the execution of any power granted in this Agreement
or for the enforcement of any
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other legal, equitable or other remedy, as the Indenture Trustee, being advised
by counsel, shall deem most effectual to protect and enforce any of the rights
of the Indenture Trustee and the Noteholders.
SECTION 6.20. Mortgagor Claims. In connection with any offset
defenses, or affirmative claim for recovery, asserted in legal actions brought
by Mortgagors under one or more Mortgage Loans based upon provisions therein or
upon other rights or remedies arising from any requirements of law applicable to
the Mortgage Loans:
(a) The Indenture Trustee is the holder of Mortgage Loans only
as trustee on behalf of the holders of the Notes, and not as a principal or in
any individual or personal capacity.
(b) The Indenture Trustee shall not be personally liable for,
or obligated to pay Mortgagors, any affirmative claims asserted thereby, or
responsible to holders of the Notes for any offset defense amounts applied
against Mortgage Loan payments for the related Group, pursuant to such legal
actions.
(c) The Indenture Trustee will pay, solely from available
Trust money, affirmative claims for recovery by Mortgagors only pursuant to
final judicial orders or judgments, or judicially approved settlement
agreements, resulting from such legal actions.
(d) The Indenture Trustee will comply with judicial orders and
judgments which require its actions or cooperation in connection with
Mortgagors' legal actions to recover affirmative claims against holders of the
Notes.
(e) The Indenture Trustee will cooperate with and assist the
Servicer, the Unaffiliated Seller, or holders of the Notes in their defense of
legal actions by Mortgagors to recover affirmative claims if such cooperation
and assistance is not contrary to the interests of the Indenture Trustee as a
party to such legal actions and if the Indenture Trustee is satisfactorily
indemnified for all liability, costs and expenses arising therefrom.
(f) The Issuer hereby agrees to indemnify, hold harmless and
defend the Indenture Trustee from and against any and all liability, loss, costs
and expenses of the Indenture Trustee resulting from any affirmative claims for
recovery asserted or collected by mortgagors under the Mortgage Loans.
SECTION 6.21. Certain Available Information. The Indenture
Trustee shall maintain its Corporate Trust Office and make available free of
charge during normal business hours for review by any Holder of a Note or any
Person identified to the Indenture Trustee as a prospective transferee of a
Note, originals or copies of the following items: (A) this Indenture and any
supplements hereto entered into pursuant to Article IX, (B) the Sale and
Servicing Agreement and any amendments thereto entered into pursuant to Section
12.01 of the Sale and Servicing Agreement, (C) all monthly statements required
to be delivered to Noteholders of the relevant Class pursuant to Section 4.02 of
the Sale and Servicing Agreement since the Closing Date, and all other notices,
reports, statements and written communications delivered to the Noteholders of
the relevant Class pursuant to this Indenture or the Sale and Servicing
Agreement since the Closing Date (to the extent the Indenture Trustee is in
receipt thereof), (D) any and all
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Officer's Certificates delivered to the Indenture 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 Officer's Certificates delivered to the Indenture
Trustee by the Servicer since the Closing Date pursuant to Section 4.04 of the
Sale and Servicing Agreement. Copies and mailing of any and all of the foregoing
items will be available from the Indenture Trustee upon request at the expense
of the Person requesting the same.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1. Issuer to Furnish to Indenture Trustee Names and
Addresses of Noteholders. The Issuer will furnish or cause to be furnished to
the Indenture Trustee or the Insurer (a) not more than five days after the
earlier of (i) each Record Date and (ii) three months after the last Record
Date, a list, in such form as the Indenture Trustee or the Insurer may
reasonably require, of the names and addresses of the Holders as of such Record
Date, (b) at such other times as the Indenture Trustee or the Insurer may
request in writing, within 30 days after receipt by the Issuer of any such
request, a list of similar form and content as of a date not more than 10 days
prior to the time such list is furnished; provided, however, that so long as the
Indenture Trustee is the Note Registrar, no such list shall be required to be
furnished. The Indenture Trustee or, if the Indenture Trustee is not the Note
Registrar, the Issuer shall furnish to the Insurer or the Issuer in writing upon
their written request and at such other times as the Insurer or the Issuer may
request a copy of the list.
SECTION 7.2. Preservation of Information; Communications to
Noteholders. (a) The Indenture Trustee shall preserve, in as current a form
as is reasonably practicable, the names and addresses of the Holders contained
in the most recent list furnished to the Indenture Trustee as provided in
Section 7.1 and the names and addresses of Holders received by the Indenture
Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy any
list furnished to it as provided in such Section 7.1 upon receipt of a new list
so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar
shall have the protection of TIA ss. 312(c).
SECTION 7.3. Reports by Issuer. (a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the
Issuer or Depositor is required to file the same with the Commission,
copies of the annual reports and copies of the information, documents
and other reports (or copies of such portions of any of the foregoing
as the Commission may from time to time by rules and regulations
prescribe) which the Issuer or Depositor may be required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
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(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer or Depositor with the conditions
and covenants of this Indenture as may be required from time to time by
such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA ss.
313(c)) such summaries of any information, documents and reports
required to be filed by the Issuer or Depositor pursuant to clauses (i)
and (ii) of this Section 7.3(a) as may be required by rules and
regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of
the Issuer shall end on December 31 of each year.
SECTION 7.4. Reports by Indenture Trustee. If required by TIA
ss. 313(a), within 60 days after each March 31, beginning with March 31, 2000,
the Indenture Trustee shall mail to each Noteholder as required by TIA ss.
313(c) and the Insurer a brief report dated as of such date that complies with
TIA ss. 313(a). The Indenture Trustee also shall comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to
Noteholders shall be filed by the Indenture Trustee with the Commission and each
stock exchange, if any, on which the Notes are listed. The Issuer shall notify
the Indenture Trustee and the Insurer if and when the Notes are listed on any
stock exchange.
ARTICLE VIII
Accounts; Investment of Moneys;
Collection and Application of Moneys; Reports
SECTION 8.1. Collection of Money. Except as otherwise
expressly provided herein, the Indenture Trustee may demand payment or delivery
of, and shall receive and collect, directly and without intervention or
assistance of any fiscal agent or other intermediary, all money and other
property payable to or receivable by the Indenture Trustee pursuant to this
Indenture. The Indenture Trustee shall apply all such money received by it as
provided in this Indenture. Except as otherwise expressly provided in this
Indenture or in the Sale and Servicing Agreement, if any default occurs in the
making of any payment or performance under any agreement or instrument that is
part of the Trust Property, the Indenture Trustee may take such action as may be
appropriate to enforce such payment or performance, including the institution
and prosecution of appropriate proceedings.
SECTION 8.2. Release of Trust Property. (a) Subject to
Section 8.9 and the payment of its fees and expenses pursuant to Section 6.7,
the Indenture Trustee may, and when required by the Issuer and the provisions of
this Indenture shall, execute instruments to release property from the lien of
this Indenture, in a manner and under circumstances that are not inconsistent
with the provisions of this Indenture or the Sale and Servicing Agreement. No
party
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relying upon an instrument executed by the Indenture Trustee as provided in this
Article VIII shall be bound to ascertain the Indenture Trustee's authority,
inquire into the satisfaction of any conditions precedent or see to the
application of any monies. The Indenture Trustee may require as a condition to
any such release, an Opinion of Counsel, stating the legal effect of any such
action, outlining the steps required to complete the same, and concluding that
all conditions precedent to the taking of such action have been complied with
and such action will not materially and adversely impair the security for the
Notes or the rights of the Noteholders or the Insurer in contravention of the
provisions of this Indenture; provided, however, that such Opinion of Counsel
shall not be required to express an opinion as to the fair value of the Trust
Property. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
release.
(b) The Indenture Trustee shall, at such time as there are no
Notes outstanding and all sums due the Indenture Trustee pursuant to Section 6.7
and to the Insurer pursuant to the Insurance Agreement have been paid, release
any remaining portion of the Trust Property that secured the Notes from the lien
of this Indenture and release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Trust Accounts.
(c) The Indenture Trustee shall release property from the lien
of this Indenture pursuant to this Section 8.2 only upon receipt of an Issuer
Request accompanied by an Officer's Certificate, an Opinion of Counsel and (if
required by the TIA) Independent Certificates in accordance with TIA ss.ss.
314(c) and 314(d)(1) meeting the applicable requirements of Section 12.1.
SECTION 8.3. Payments. (a) On each Payment Date, after
withdrawing amounts owed pursuant to Section 6.7 and Section 8.7(c) and amounts
owed to the Owner Trustee under Section 12.1 of the Trust Agreement, the
Indenture Trustee or the Note Paying Agent, as the case may be, shall, based
solely on information contained in the Remittance Report for such Payment Date,
withdraw from the Distribution Account an amount equal to the Available
Distribution Amount for each Class and pay to the following Persons the
following amounts, in the following order of priority:
(i) first, to the payment of the Interest Distribution Amount
(other than the Shortfall Interest Deferred Amount and the Accrued
Shortfall Interest Carry Forward Amount) for the related Class of
Notes;
(ii) second, to the payment of the unpaid Interest
Distribution Amount (other than the Shortfall Interest Deferred Amount
and the Accrued Shortfall Interest Carry Forward Amount) for the other
Class of Notes;
(iii) third, to the Insurer, any amounts due to the Insurer
with respect to the Notes under the terms of the Insurance Agreement;
(iv) fourth, to the payment of the Base Principal Distribution
Amount for the related Class of Notes;
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(v) fifth, to the Holders of the related Class of Notes, as a
payment of such Class' allocable portion of the Overcollateralization
Deficit, if any;
(vi) sixth, to the Holders of the other Class of Notes, as a
payment of such other Class' allocable portion of the
Overcollateralization Deficit, if any, to the extent that the Available
Distribution Amount for such other Class is insufficient to pay such
portion;
(vii) seventh, to the Holders of the related Class of Notes,
an amount equal to the Overcollateralization Increase Amount;
(viii) eighth, to the Reserve Account, to the extent of any
shortfall in the payment of the full amount of the
Overcollateralization Increase Amount for the other Class of Notes;
(ix) ninth, to the Holders of the Notes, to the extent of any
shortfall in the payment of the full amount of Accrued Shortfall
Interest Carry Forward Amount on a pro rata basis;
(x) tenth, if the Back-up Servicer shall have become the
Servicer hereunder, to the Back-up Servicer, the amount of any
Compensating Interest advanced by the Back-up Servicer;
(xi) eleventh, to the Trust for distribution to the
Certificateholder;
Funds distributed to the Certificateholder pursuant to clause (xi) above shall
be free and clear of the lien of this Indenture.
Distributions in respect of the Certificate shall be made (i)
by wire transfer of immediately available funds to the account of the
Certificateholder at a bank or other entity having appropriate facilities
therefor, provided that the Certificateholder shall have notified the Indenture
Trustee in writing at least five Business Days prior to the relevant Record
Date, and (ii) if the Certificateholder shall have failed to give the
notification referred to in clause (i), by check mailed by first class mail to
the address of such Holder appearing in the Certificate Register. The Indenture
Trustee may deduct a reasonable wire transfer fee from any payment made by wire
transfer. The final distribution on the Certificate will be made in like manner,
but only upon presentment and surrender of the Certificate to the Certificate
Registrar.
Prior to the final distribution hereunder with respect to the
Certificate, the Indenture Trustee shall mail to the Certificateholder a notice
to the effect that the Indenture Trustee expects that the final distribution
with respect to the Certificate will be made on a specific date but only upon
presentation and surrender of the Certificate at the office of the Certificate
Registrar therein specified.
(b) In addition to making the payments required pursuant to
Section 8.3(a), on each Payment Date for which there exists a Deficiency Amount
for a Class of Notes, the Indenture 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
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11.4 and pay to the Holders of that Class (i) an amount equal to any amount
required to be paid pursuant to Section 8.3(a)(i) for such Payment Date
remaining unpaid after giving effect to all payments made pursuant to Section
8.3(a) for such Payment Date, (ii) an amount equal to any Remaining
Overcollateralization Deficit for such Class on such Payment Date after giving
effect to all distributions made pursuant to Section 8.3(a) for such Payment
Date and (iii) without duplication, any other amount constituting a Deficiency
Amount for such Class.
(c) All payments made with respect to the Notes on each
Payment Date shall be allocated, pro rata among the outstanding Notes, and on
their respective Note Principal Balances.
(d) Payments in respect of the Notes on each Payment Date will
be made to the Holders of record on the related Record Date (except as otherwise
provided in Section 8.3(f) and Article X respecting the final distribution on
the Notes), based on the aggregate Note Principal Balance evidenced by their
respective Notes. So long as the Book-Entry Notes are registered in the name of
the Depository or its nominee, the Indenture Trustee shall make all payments on
such Notes by wire transfers of immediately available funds to the Depository or
its nominee. In the case of Notes issued in fully registered, certificated form,
payments 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 Indenture Trustee
in writing at least five Business Days prior to the Record Date immediately
prior to such Payment Date and is the registered owner of Notes having an
initial aggregate Note Principal Balance in excess of $5,000,000, or otherwise
by check mailed by first class mail to the address of such Holder appearing in
the Note Register. The Indenture Trustee may deduct a reasonable wire transfer
fee from any payment made by wire transfer. The final payment on each Note will
be made in like manner, but only upon presentment and surrender of such Note at
the Corporate Trust Office or such other location specified in the notice to
Noteholders of such final distribution. Payments to the Insurer on any Payment
Date will be made by wire transfer of immediately available funds to the account
designated by the Insurer. Funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.3.
Each payment with respect to a Book-Entry Note 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 payment to the Note 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 Note Owners
that it represents. None of the Indenture Trustee, the Note 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 Noteholders to receive payments in
respect of the Notes, and all interests of the Noteholders in such
distributions, shall be as set forth in this Indenture. Neither the Holders of
the Notes nor the Issuer, Insurer, Indenture Trustee, Unaffiliated Seller or
Servicer shall in any way be responsible or liable to the Holders of any other
Notes in respect of amounts properly previously paid on the Notes.
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(f) Whenever the Indenture Trustee expects that the Final
Payment Date with respect to the Notes will occur on the next Payment Date, the
Indenture Trustee shall mail to each Holder on the such Class of Notes and to
the Insurer a notice to the effect that:
(i) the Indenture Trustee expects that the final payment with
respect to the Notes will be made on such Payment Date but only upon
presentation and surrender of such Notes at the office of the Indenture
Trustee therein specified;
(ii) no interest shall accrue on such Notes from and after the
end of the related Interest Accrual Period.
Such notice shall be given by the Indenture Trustee (a) in the
event such notice is given in connection with a redemption of the Notes pursuant
to Article X, not earlier than the 10th day and not later than the 15th day of
the month next preceding the Redemption Date or (b) otherwise, during the month
of such Final Payment Date on or before the Determination Date in respect of
such Final Payment Date.
Any funds not paid to any Holder or Holders of Notes on the
related Final Payment Date because of the failure of such Holder or Holders to
tender their Notes 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 Note as to which notice has been given pursuant to this Section 8.3(f) shall
not have been surrendered for cancellation within six months after the time
specified in such notice, the Indenture Trustee shall mail a second notice to
the remaining non-tendering Noteholders to surrender their Notes for
cancellation in order to receive the final distribution with respect thereto. If
within one year after the second notice all such Notes shall not have been
surrendered for cancellation, the Indenture Trustee shall, directly or through
an agent, contact the remaining non-tendering Noteholders concerning surrender
of their Notes in the manner reasonably specified to the Indenture Trustee by
the Servicer in writing. The costs and expenses of maintaining the funds in
trust and of contacting such Noteholders shall be paid out of the assets so held
in trust for such Noteholders. If in one year after the second notice any such
Notes shall not have been surrendered for cancellation, the Servicer shall pay
to the Insurer any amount of such funds that were paid by the Insurer under the
Policy but shall continue to hold any remaining funds for the benefit of the
non-tendering Noteholders, and such Noteholders shall thereafter look solely to
the Servicer for payment thereof, and all liability of the Insurer with respect
to such Trust Properties shall thereupon cease. No interest shall accrue or be
payable to any Noteholder on any amount held in trust by the Servicer as a
result of such Noteholder's failure to surrender its Note(s) for final payment
thereof in accordance with this Section 8.3(f).
(g) [Reserved]
SECTION 8.4. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Indenture Trustee
shall comply with all federal withholding requirements respecting payments to
Noteholders of interest or original issue discount that the Indenture Trustee
reasonably believes are applicable under the Code. The consent of Noteholders
shall not be required for such withholding. In the event the Indenture Trustee
does withhold any amount from interest or original issue discount payments or
advances
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thereof to any Noteholder pursuant to federal withholding requirements, the
Indenture Trustee shall indicate the amount withheld to such Noteholders.
SECTION 8.5. Statements to Noteholders. Concurrently with
each payment to Noteholders on any Payment Date, the Indenture Trustee shall
forward to each Noteholder, the Servicer, the Insurer and each Rating Agency the
statement prepared by the Servicer pursuant to Section 4.02 of the Sale and
Servicing Agreement with respect to such payment.
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 under the
Sale and Servicing Agreement, the Indenture Trustee shall be entitled to rely
upon the telecopy.
Within a reasonable period of time after the end of each
calendar year, the Indenture Trustee shall forward to each Person who at any
time during the calendar year was a Holder of Notes (a) the statement furnished
to the Indenture Trustee by the Servicer pursuant to Section 4.02 of the Sale
and Servicing Agreement containing the information set forth in clauses (1)
through (3) of Section 4.02 of the Sale and Servicing Agreement, aggregated for
such calendar year or applicable portion thereof during which such person was a
Noteholder and (b) such information contained in the Remittance Reports as
required to enable the Holders of the Notes to prepare their tax returns.
Upon request, the Indenture Trustee shall forward to each
Noteholder, during the term of this Indenture, such periodic, special, or other
reports or information, whether or not provided for herein, as shall be
reasonably requested with respect to the Noteholder, or otherwise with respect
to the purposes of this Indenture, all such reports or information to be
prepared by the Servicer and provided at the expense of the Noteholder in
accordance with such reasonable and explicit instructions and directions as the
Noteholder may provide. For purposes of this Section 8.5, the Indenture
Trustee's duties are limited to the extent that the Indenture Trustee receives
timely reports as required from the Servicer.
SECTION 8.6. Rights of Noteholders. The Notes shall represent
obligations of the Issuer, secured by the Trust Property, including the Trust
Accounts and the right to receive interest, principal and other amounts at the
times and in the amounts specified in this Indenture.
SECTION 8.7. Distribution Account. (a) The Indenture
Trustee shall establish and maintain with itself a separate trust account (the
"Distribution Account") entitled "First Union National Bank as Indenture
Trustee, in trust for (A) the registered holders of HomeGold Home Equity Loan
Trust 1999-1 Asset Backed Notes, Series 1999-1, and (B) Financial Security
Assurance Inc., Distribution Account". The Distribution Account shall be an
Eligible Account. Deposits to and withdrawals from the Distribution Account
shall be made as provided herein and in the Sale and Servicing Agreement. Funds
in the Distribution Account shall be invested in Permitted Investments, at the
direction of the Servicer, in accordance with Section 8.12 hereof. The Indenture
Trustee shall give notice to the Issuer, the Servicer and the Insurer of the
location of the Distribution Account when established and prior to any change
thereof.
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(b) Promptly upon receipt of any Stayed Funds, whether from
the Servicer, a trustee in bankruptcy, or federal bankruptcy court or other
source, the Indenture Trustee shall deposit such funds in the Distribution
Account, subject to withdrawal thereof pursuant to Section 7.02(b) of the Sale
and Servicing Agreement or as otherwise permitted thereunder.
(c) The Indenture 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 Payment Date pursuant to
Section 8.10(b) prior to any payments as required pursuant to Section 8.3.
(d) If, at the close of business on the third Business Day
prior to any Payment Date, the funds on deposit in the Distribution Account are
less than the Scheduled Payment for such Payment Date, the Indenture Trustee
shall give notice by telephone or telecopy of the amount of such deficiency,
confirmed in writing in the form set forth as Exhibit A to the Policy, to the
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 Payment
Date.
SECTION 8.8. [Reserved]
SECTION 8.9. [Reserved]
SECTION 8.10. Expense Account. (a) The Indenture Trustee
shall establish and maintain with itself a separate trust account (the "Expense
Account") entitled "First Union National Bank as Indenture Trustee, in trust for
(A) the registered holders of HomeGold Home Equity Loan Trust 1999-1 Asset
Backed Notes, Series 1999-1, and (B) Financial Security Assurance Inc., 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.
(b) On the Business Day immediately preceding each Payment
Date, the Indenture 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 Insurer Premium Rate and (ii) the Class A Note Principal Balance after
giving effect to distributions of principal on such Payment Date. Such amount so
withdrawn from the Distribution Account shall reduce the Available Distribution
Amount for each Group pro rata, based upon the relative proportions of the Class
A-1 Note Principal Balance and the Class A-2 Note Principal Balance to the total
Class A Note Principal Balance (in such case after giving effect to
distributions of principal on such Payment Date).
(c) The Indenture Trustee shall make withdrawals from the
Expense Account to pay the Insurer Premium on each Payment Date.
(d) Funds in the Expense Account shall be invested in
Permitted Investments, at the direction of the Servicer, in accordance with
Section 8.12 hereof. The Indenture Trustee shall give notice to the Issuer, the
Servicer and the Insurer of the location of the Expense Account on the Closing
Date and prior to any change thereof.
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(e) Upon payment in full of the principal of and interest on
the Notes and any amounts due the Insurer under the Insurance Agreement, any
amounts remaining in the Expense Account following the payment of all unpaid
Insurer Premiums shall be released to the Servicer as additional servicing
compensation.
SECTION 8.11. Reserve Account. (a) The Indenture Trustee
shall establish and maintain with itself a separate trust account (the "Reserve
Account") entitled "First Union National Bank as Indenture Trustee, in trust for
(A) the registered holders of HomeGold Home Equity Loan Trust 1999-1 Asset
Backed Notes, Series 1999-1, and (B) Financial Security Assurance Inc., Reserve
Account." The Reserve 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.
(b) On each Payment Date, the Indenture Trustee shall withdraw
from the Distribution Account and deposit into the Reserve Account the amounts
if any, described in Section 8.3(a)(viii) hereof. In addition, in the event that
the Servicer exercises its option to call one Class of Notes, the Servicer shall
deliver to the Trustee, and the Trustee shall deposit to the Reserve Account,
the full amount of the Overcollateralization Deficiency, if any, with respect to
the still-outstanding Class of Notes, calculated as of the date on which the
Servicer exercises such option.
(c) If, on any Payment Date, and after applying the Available
Distribution Amount for each Class as described on Section 8.3 hereof, either
Class has not received the full amount of its Interest Distribution Amount
(other than the Shortfall Interest Deferred Amount and the Accrued Shortfall
Interest Carry Forward Amount) or its allocable portion of any
Overcollateralization Deficit, the Trustee shall withdraw the amount of any such
insufficiency from the Reserve Account and apply it to the payment of such
shortfall; if the aggregate amount of such insufficiency on a Payment Date
exceeds the amount available in the Reserve Account, the Trustee shall apply
such amount as is available in the Reserve Account as directed by the Insurer;
(d) Funds in the Reserve Account shall be invested in
Permitted Investments, at the direction of the Servicer, in accordance with
Section 8.12 hereof. The Indenture Trustee shall give notice to the Issuer, the
Servicer and the Insurer of the location of the Reserve Account on the Closing
Date and prior to any change thereof;
(e) If, on any Payment Date, and after applying the Available
Distribution Amount for each class, as described in Section 8.3 hereof, and
after making any withdrawal from the Reserve Account pursuant to Clause (c)
above, (A) the sum of (x) the Overcollateralization Amount for both classes of
Notes plus (y) the amount remaining in the Reserve Account exceeds (B) the
Specified Overcollateralization Amount for both classes of Notes for such
Payment Date, the Trustee shall release to the Certificateholders the lesser of
(i) such excess, or (ii) the amount then on deposit on the Reserve Account;
(f) Upon payment in full of the principal of and interest on
the Notes and any amounts due the Insurer under the Insurance Agreement, any
amounts remaining in the Reserve
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Account following the payment of all unpaid Insurer Premiums shall be released
to the Certificateholder.
SECTION 8.12. Investment of Funds. (a) The Servicer may
direct the Indenture Trustee to invest funds in the Collection Account, the
Distribution Account, the Reserve Account and the Expense Account (each, for
purposes of this Section 8.12, 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 next Payment Date, if a Person other
than the Indenture Trustee is the obligor thereon, and (ii) no later than the
next Payment Date, if the Indenture 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
Indenture Trustee (in its capacity as such) or in the name of a nominee of the
Indenture Trustee. The Indenture 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
Indenture Trustee or its agent, together with any document of transfer necessary
to transfer title to such investment to the Indenture 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 Indenture 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 (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 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, the Distribution
Account and the Servicing Accounts held by or on behalf of the Servicer or the
Indenture Trustee, shall be for the benefit of the Servicer and shall be subject
to its withdrawal in accordance with Section 3.11 of the Sale and Servicing
Agreement or remitted to the Servicer pursuant to this Section. Pursuant to
Section 3.14(b) of the Sale and Servicing Agreement, the Servicer shall be
obligated to 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 Indenture Trustee may and, subject to Article VI, upon
the request of the Insurer, shall, take such action as may be appropriate to
enforce such payment or performance, including the institution and prosecution
of appropriate Proceedings.
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ARTICLE IX
Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of
Noteholders. (a) Without the consent of the Holders of any Notes but with
the consent of the Insurer, as evidenced to the Indenture Trustee, the Issuer
and the Indenture Trustee, when authorized by an Issuer Order, at any time and
from time to time, may enter into one or more indentures supplemental hereto
(which shall conform to the provisions of the Trust Indenture Act as in force at
the date of the execution thereof), in form satisfactory to the Indenture
Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; provided that such action shall not adversely affect the
interests of the Holders of the Notes or the Insurer;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the
execution of any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
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(b) The Issuer and the Indenture Trustee, when authorized by
an Issuer Order, may, also without the consent of any of the Holders of the
Notes but with the prior written consent of the Insurer and with prior notice to
the Rating Agencies by the Issuer, as evidenced to the Indenture Trustee, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that such action
shall not, as evidenced by a written confirmation from the Rating Agencies that
such action will not adversely affect the then current ratings on the Notes
without taking into account the Policy, adversely affect in any material respect
the interests of any Noteholder or the Insurer.
SECTION 9.2. Supplemental Indentures with Consent of Insurer
or Noteholders. The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, also may, with prior notice to the Rating Agencies, with the
consent of the Insurer (or, if an Insurer Default has occurred and is
continuing, the Holders of the Notes evidencing a majority of the Outstanding
Amount of both Classes of Notes, by Act of such Holders delivered to the Issuer
and the Indenture Trustee), enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of the Notes under this Indenture; provided,
however, that, subject to the express rights of the Insurer under the Basic
Documents, no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon or the amounts payable upon any redemption of the
Notes, change the provision of this Indenture relating to the
application of collections on, or the proceeds of the sale of, the
Trust Property to payment of principal of or interest on the Notes, or
change any place of payment where, or the coin or currency in which,
any Note or the interest thereon is payable;
(ii) impair the right to institute suit for the enforcement of
the provisions of this Indenture requiring the application of funds
available therefor, as provided in Article V, to the payment of any
such amount due on the Notes on or after the respective due dates
thereof (or, in the case of redemption, on or after the Redemption
Date);
(iii) reduce the percentage of the Holders of Notes entitled
to Voting Rights required for any such supplemental indenture, or for
any waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(v) reduce the percentage of the Holders of Notes entitled
to Voting Rights required to authorize a private sale of Trust
Property as contemplated in Section 5.19(b);
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(vi) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified
or waived without the consent of the Insurer and Holder of each
Outstanding Note affected thereby;
(vii) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Payment Date (including
the calculation of any of the individual components of such
calculation); or
(viii) permit the creation of any lien (other than the
Warehouse Liens to be discharged and released as provided in Section
3.5 and 3.12) ranking prior to or on a parity with the lien of this
Indenture with respect to any part of the Trust Property or, except as
otherwise permitted or contemplated herein or in any of the Basic
Documents, terminate the lien of this Indenture on any property at any
time subject hereto or deprive the Holder of any Note or the Insurer of
the security provided by the lien of this Indenture.
The Indenture Trustee may determine whether or not any Notes
would be adversely affected by any supplemental indenture upon receipt of
written confirmation from the Rating Agencies that such action will not
adversely effect the then current ratings on the Notes without taking into
account the Policy and any such determination shall be conclusive upon the
Holders of all Notes, whether theretofore or thereafter authenticated and
delivered hereunder. The Indenture Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for any Act of Noteholders under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Issuer and the Indenture
Trustee of any supplemental indenture pursuant to this Section, the Indenture
Trustee shall mail to the Insurer and the Holders of the Notes to which such
amendment or supplemental indenture relates a notice setting forth in general
terms the substance of such supplemental indenture. Any failure of the Indenture
Trustee to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
SECTION 9.3. Execution of Supplemental Indentures. In
executing, or permitting the additional trusts created by, any supplemental
indenture permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, the Indenture Trustee shall be entitled to
receive, and subject to Sections 6.1 and 6.2, shall be fully protected in
relying upon, an Opinion of Counsel (and, if requested, an Officer's
Certificate) stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
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SECTION 9.4. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the Holders of the Notes
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 9.5. Conformity With Trust Indenture Act. Every
amendment of this Indenture and every supplemental indenture executed pursuant
to this Article IX shall conform to the requirements of the Trust Indenture Act
as then in effect so long as this Indenture shall then be qualified under the
Trust Indenture Act.
SECTION 9.6. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and if required by the Indenture
Trustee shall, bear a notation in form approved by the Indenture Trustee as to
any matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X
Redemption of Notes
SECTION 10.1. Redemption. (a) The Servicer shall have the
option to cause either Class of Notes to be redeemed, in whole but not in part,
at the Redemption Price, on any Payment Date after which the Note Principal
Balance of the related Class is less than 10% of the Note Principal Balance of
such Class as of the Closing Date. Notice of the exercise of the redemption
option pursuant to this Section 10.01(a) shall be given by the Issuer to the
Indenture Trustee and the Insurer not later than the 5th day of the month
immediately preceding the Redemption Date. In order to exercise its redemption
hereunder, the Servicer must purchase the Mortgage Loans in the related Group
and related REO Property as provided in Section 10.02(a) of the Sale and
Servicing Agreement and pay the price specified in such Section 10.02(a)
therefor.
(b) [Reserved].
(c) The Issuer shall fund any redemption pursuant to this
Article X through sales of Mortgage Loans in the related Group and other
properties in accordance with Article X of the Sale and Servicing Agreement. The
Issuer is also authorized and shall be permitted to sell Mortgage Loans and
other properties as provided in Section 10.02 of the Sale and Servicing
Agreement, whether or not in connection with a redemption of the Notes pursuant
to this Article X.
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SECTION 10.2. Notice. Notice of any redemption of a Class of
Notes pursuant to this Article X shall be given to Noteholders by the Indenture
Trustee in accordance with Section 8.3(f).
SECTION 10.3. Presentation and Surrender of Notes and Payment.
The provisions of Section 8.3(f) shall apply with respect to the presentation
and surrender of Notes for payment and the consequences of any failure to
present or surrender any Note for payment in connection with a redemption
pursuant to this Article X. Upon presentation and surrender of any Note in
connection with a redemption pursuant to this Article X as contemplated in this
Article X and Section 8.3(f), the Indenture Trustee shall pay to the Noteholder
in respect of such Note the Redemption Price.
ARTICLE XI
Certain Matters Regarding the Insurer
SECTION 11.1. Rights of the Insurer to Exercise Rights of
Class A Noteholders. The Indenture Trustee and, by accepting any Note, each
Class A Noteholder, agrees that unless an Insurer Default has occurred and is
continuing, the Insurer shall have the right to exercise all rights of the Class
A Noteholders under this Indenture and the Sale and Servicing Agreement
(including all Voting Rights) (except as provided in Section 9.2 and except as
otherwise expressly required by the TIA) without any further consent of the
Class A Noteholders, including, without limitation the rights enumerated in
Sections 5.2, 5.12, 5.19, 5.20 and 6.13 of this Indenture and, so long as no
Insurer Default shall have occurred and be continuing, the consent of the
Insurer to any action or matter (except as provided in Section 9.2) shall be
deemed to also constitute the consent of the requisite percentage of Noteholders
required by this Indenture or the Sale and Servicing Agreement in respect of
such action or matter. In addition, each Class A Noteholder agrees that, unless
an Insurer Default has occurred and is continuing, the rights referred to above
may be exercised by the Class A Noteholders only with the prior written consent
of the Insurer.
SECTION 11.2. Indenture Trustee to Act Solely with Consent of
the Insurer. Unless an Insurer Default has occurred and is continuing, the
Indenture Trustee shall not:
(a) agree to any amendment of this Indenture pursuant to
Section 9.1 or 9.2 hereof or of the Sale and Servicing Agreement pursuant to
Section 12.01 thereof;
(b) undertake any litigation pursuant to Section 6.19 of this
Indenture; or
(c) terminate the Servicer pursuant to Section 7.01 of the
Sale and Servicing Agreement,
without the prior written consent of the Insurer which consent shall not be
unreasonably withheld.
SECTION 11.3. Trust Property and Accounts Held for Benefit of
the Insurer. The Indenture Trustee shall hold the Trust Property and the
Mortgage Files for the benefit of the Noteholders and the Insurer and all
references in this Indenture and in the Notes to the benefit of
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Holders of the Notes shall be deemed to include the Insurer unless an Insurer
default has occurred and is continuing. The Indenture Trustee shall cooperate in
all reasonable respects with any reasonable request by the Insurer for action to
preserve or enforce the Insurer's rights or interests under this Indenture and
the Notes.
SECTION 11.4. Claims Upon the Policy; Policy Payments Account.
(a) If, by the close of business on the third Business Day prior to a Payment
Date, the Indenture Trustee determines, based on the Remittance Report, that a
Deficiency Amount for any Payment Date is greater than zero, then the Indenture
Trustee shall give notice to the 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
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 Payment
Date. Following receipt by the Insurer of such notice in such form, the 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 Payment Date to which such deficiency relates,
as provided in Exhibit A to the Policy.
(b) The Indenture Trustee shall establish separate special
purpose trust accounts for the benefit of Holders of each Class of Notes and the
Insurer referred to herein as the "Policy Payments Accounts" over which the
Indenture Trustee shall have exclusive control and sole right of withdrawal. The
Indenture Trustee shall deposit any amount paid under the Policy in the Policy
Payments Accounts and distribute such amount only for purposes of payment to
Holders of Class A Notes of the Scheduled Payment for which a claim was made and
such amount may not be applied to satisfy any costs, expenses or liabilities of
the Servicer, the Indenture Trustee or the Issuer. Amounts paid under the Policy
shall be transferred to the Distribution Account in accordance with the next
succeeding paragraph and disbursed by the Indenture Trustee to Holders of the
applicable Class of Class A Notes in accordance with Section 8.3(b) or Article
X, 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 Scheduled Payment with other funds available to make such payment. However,
the amount of any payment of principal of or interest on the applicable Class of
Class A Notes to be paid from funds transferred from the Policy Payments Account
shall be noted as provided in paragraph (c) below in the Note Register and in
the statement to be furnished to Holders of the applicable Class of Class A
Notes pursuant to Section 8.5. Funds held in the Policy Payments Account shall
not be invested.
On any Payment Date with respect to which a claim has been
made under the Policy, the amount of any funds received by the Indenture Trustee
as a result of any claim under the Policy, to the extent required to make the
Scheduled Payment on such Payment Date, shall be withdrawn from the Policy
Payments Account and deposited in the Distribution Account and applied by the
Indenture Trustee, together with the other funds to be withdrawn from the
Distribution Account pursuant to Section 8.3(b) or Article X, as applicable,
directly to the payment in full of the Scheduled Payment due on the applicable
Class of Class A Notes. Funds received by the Indenture Trustee as a result of
any claim under the Policy shall be deposited by the Indenture Trustee in the
Policy Payments Account and used solely for payment to the Holders of the
applicable Class of Class A Notes and may not be applied to satisfy any costs,
expenses or liabilities of the Servicer, the Indenture Trustee or the Issuer.
Any funds remaining
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in the Policy Payments Account on the first Business Day following a Payment
Date shall be remitted to the Insurer, pursuant to the instructions of the
Insurer, by the end of such Business Day.
(c) The Indenture Trustee shall keep a complete and accurate
record of the amount of interest and principal paid in respect of any Class A
Note from moneys received under the Policy. The 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 Indenture Trustee.
SECTION 11.5. Notices to the Insurer. All notices,
statements, reports, certificates or opinions required by this Indenture to be
sent to any other party hereto or to any of the Noteholders shall also be sent
to the Insurer.
SECTION 11.6. Third-Party Beneficiary. The Insurer shall be a
third-party beneficiary of this Agreement, entitled to enforce the provisions
hereof as if a party hereto.
SECTION 11.7. Indenture Trustee to Hold the Policy. The
Indenture Trustee will hold the Policy in trust as agent for the Holders of the
Class A Notes 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 Property.
Each Holder of Class A Notes, by accepting its Class A Notes, appoints the
Indenture Trustee as attorney-in-fact for the purpose of making claims on the
Policy.
ARTICLE XII
Miscellaneous
SECTION 12.1. Compliance Certificates and Opinions, etc. Upon
any application or request by the Issuer to the Indenture Trustee to take any
action under any provision of this Indenture, the Issuer shall furnish to the
Indenture Trustee and to the Insurer (i) an Officer's Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
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(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory such condition or covenant has been complied with.
SECTION 12.2. Form of Documents Delivered to Indenture
Trustee. In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the
Issuer may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Unaffiliated Seller or the Issuer, stating that the
information with respect to such factual matters is in the possession of the
Servicer, the Unaffiliated Seller or the Issuer, unless such counsel knows, or
in the exercise of reasonable care should know, that the certificate or opinion
or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Whenever in this Indenture, in connection with any application
or certificate or report to the Indenture Trustee, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer's compliance with any term hereof, it
is intended that the truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or report (as the case
may be), of the facts and opinions stated in such document shall in such case be
conditions precedent to the right of the Issuer to have such application granted
or to the sufficiency of such certificate or report. The foregoing shall not,
however, be construed to affect the Indenture Trustee's right to conclusively
rely upon the truth and accuracy of any statement or opinion contained in any
such document as provided in Article VI.
SECTION 12.3. Acts of Noteholders. (a) Subject to Section
11.1, Any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be given or taken by Noteholders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Noteholders in person or by
54
<PAGE>
agents duly appointed in writing; and except as herein otherwise expressly
provided such action shall become effective when such instrument or instruments
are delivered to the Indenture Trustee, and, where it is hereby expressly
required, to the Issuer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Noteholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of the Indenture Trustee and the Issuer, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any person of any
such instrument or writing may be proved in any customary manner of the
Indenture Trustee.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Notes shall bind the Holder
of every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
SECTION 12.4. Notices, etc. to Indenture Trustee, Issuer,
Insurer and Rating Agencies. Any request, demand, authorization, direction,
notice, consent, waiver or Act of Noteholders or other documents provided or
permitted by this Indenture to be made upon, given or furnished to or filed
with:
(a) The Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if personally delivered,
delivered by overnight courier or mailed first-class and shall be deemed to have
been duly given upon receipt to the Indenture Trustee at its Corporate Trust
Office and any notice delivered by facsimile shall be addressed to the Corporate
Trust Office, telecopy number (704) 383-7316, or
(b) The Issuer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if personally delivered,
delivered by facsimile or overnight courier or mailed first class, and shall
deemed to have been duly given upon receipt to the Issuer addressed to: HomeGold
Home Equity Loan Trust 1999-1, in care of Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, DE 19890-0001 Attention:
Corporate Trust Administration, or at any other address previously furnished in
writing to the Indenture Trustee by Issuer. The Issuer shall promptly transmit
any notice received by it from the Noteholders to the Indenture Trustee.
(c) The Insurer by the Issuer or the Indenture Trustee shall
be sufficient for any purpose hereunder if in writing and mailed by first-class
mail personally delivered or telecopied to the recipient as follows:
55
<PAGE>
To the Insurer: Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Attention: Surveillance Department
Re: HomeGold Home Equity Loan Trust 1999-1
Telecopy: (212) 888-5278
Notices required to be given to the Rating Agencies by the
Issuer, the Indenture Trustee or the Owner Trustee shall be in writing,
personally delivered, delivered by overnight courier or first class or via
facsimile to (i) in the case of Moody's, at the following address: Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10004, Fax No.:
(212) 533-0355 and (ii) in the case of S&P, at the following address: Standard &
Poor's Ratings Group, 26 Broadway (15th Floor), New York, New York 10004,
Attention: Asset Backed Surveillance Department, Fax No.: (212) 412-0224; or as
to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
SECTION 12.5. Notices to Noteholders; Waiver. Where this
Indenture provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Indenture Trustee
shall be deemed to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating
Agencies, failure to give such notice shall not affect any other rights or
obligations created hereunder.
SECTION 12.6. Alternate Payment and Notice Provisions .
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Note Paying Agent to such Holder, that is different from the methods provided
for in this Indenture for such payments or notices, provided that such methods
are reasonable and consented to by the Indenture Trustee (which consent shall
not be unreasonably
56
<PAGE>
withheld). The Issuer will furnish to the Indenture Trustee a copy of each such
agreement and the Indenture Trustee will cause payments to be made and notices
to be given in accordance with such agreements.
SECTION 12.7. Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another provision hereof
that is required to be included in this indenture by any of the provisions of
the Trust Indenture Act, such required provision shall control.
The provisions of TIA ss.ss. 310 through 317 that impose
duties on any person (including the provisions automatically deemed included
herein unless expressly excluded by this Indenture) are a part of and govern
this Indenture, whether or not physically contained herein.
SECTION 12.8. 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 12.9. Successors and Assigns. All covenants and
agreements in this Indenture and the Notes by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of the
Indenture Trustee in this Indenture shall bind its successors.
SECTION 12.10. Separability. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 12.11. Benefits of Indenture. The Insurer and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Indenture, and shall be entitled to rely upon and directly to enforce such
provisions of this Indenture. Nothing in this Indenture or in the Notes, express
or implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the Insurer and the Noteholders, and any other party
secured hereunder, and any other person with an ownership interest in any part
of the Trust Property, any benefit or any legal or equitable right, remedy or
claim under this Indenture. The Insurer may disclaim any of its rights and
powers under this Indenture (in which case the Indenture Trustee may exercise
such right or power hereunder), but not its duties and obligations under the
Policy, upon delivery of a written notice to the Indenture Trustee.
SECTION 12.12. Legal Holidays. In any case where the date on
which any payment is due shall not be a Business Day, then (notwithstanding any
other provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 12.13. GOVERNING LAW. THIS INDENTURE SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
57
<PAGE>
SECTION 12.14. Counterparts. This Indenture 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 12.15. Recording of Indenture. If this Indenture is
subject to recording in any appropriate public recording offices, such recording
is to be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Trust or any other counsel reasonably
acceptable to the Indenture Trustee and the Insurer) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.
SECTION 12.16. Trust Obligation. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the
Unaffiliated Seller, the Depositor, the Servicer, the Owner Trustee or the
Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Unaffiliated Seller, the Depositor, the Servicer, the Indenture Trustee or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director, employee or agent of the Unaffiliated Seller, the Depositor, the
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
any holder of a beneficial interest in the Issuer, the Unaffiliated Seller, the
Depositor, the Servicer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Unaffiliated Seller, the Depositor, the Servicer, the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed (it being understood that the Indenture
Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such owner or beneficiary shall be fully liable,
to the extent provided by applicable law, for any unpaid consideration for
stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity. For all purposes of this Indenture, in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VII and VIII of the Trust Agreement.
SECTION 12.17. No Petition. The Indenture Trustee, by
entering into this Indenture, and each Noteholder, by accepting a Note, hereby
covenant and agree that they will not at any time institute against the
Unaffiliated Seller, the Depositor, or the Issuer, or join in any institution
against the Unaffiliated Seller, the Depositor, or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, this
Indenture or any of the Basic Documents.
SECTION 12.18. Inspection. The Issuer agrees that, on
reasonable prior notice, it will permit any representative of the Indenture
Trustee or of the Insurer, during the Issuer's normal business hours, to examine
all the books of account, records, reports, and other papers of the Issuer, to
make copies and extracts therefrom, to cause such books to be audited by
independent certified public accountants, and to discuss the Issuer's affairs,
finances and accounts with the Issuer's officers, employees, and independent
certified public accountants, all at such reasonable times and as often as may
be reasonably requested. The Indenture Trustee
58
<PAGE>
shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Indenture Trustee may reasonably determine that such
disclosure is consistent with its Obligations hereunder.
SECTION 12.19. Limitation of Liability. It is expressly
understood and agreed by the parties hereto that (a) this Agreement is executed
and delivered by Wilmington Trust Company, not individually or personally but
solely as Owner Trustee of the Issuer under the Trust Agreement, in the exercise
of the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Issuer is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Issuer, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties to this Agreement and
by any person claiming by, through or under them and (d) under no circumstances
shall Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaking by the
Issuer under this Agreement or any related documents.
59
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have
caused this Indenture to be duly executed by their respective officers, hereunto
duly authorized, all as of the day and year first above written.
HOMEGOLD HOME EQUITY LOAN TRUST
1999-1,
By: WILMINGTON TRUST COMPANY, not in
its individual capacity but solely as Owner
Trustee,
By: /s/ Virginia Karablacas
--------------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK, not in its
individual capacity but solely as Indenture
Trustee,
By: /s/ Pablo de La Canal
--------------------------------------------
Name:
Title:
60
<PAGE>
EXHIBIT A
GLOSSARY OF DEFINED TERMS
[See Separate Document]
A-1
<PAGE>
EXHIBIT B-1
[Form of Class A-1 Note]
REGISTERED $18,418,000
No. A-1
CUSIP NO. 43740C AA 6
Unless this Note is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
or its agent for registration of transfer, exchange or payment, and any Note
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.
<TABLE>
<CAPTION>
===========================================================================================================
<S> <C>
Series 1999-1, Class A-1 Class A-1 Note Principal Balance as of the
Issue Date: $18,418,000
- -----------------------------------------------------------------------------------------------------------
Initial Interest Rate: 6.87%
- -----------------------------------------------------------------------------------------------------------
Date of Sale and Servicing Agreement: Denomination: $18,418,000
May 1, 1999
- -----------------------------------------------------------------------------------------------------------
First Payment Date: Servicer:
June 15, 1999 HomeGold, Inc.
- -----------------------------------------------------------------------------------------------------------
Final Maturity Date: July 15, 2029 or, if Indenture Trustee:
earlier, the Redemption Date (as defined)
First Union National Bank
- -----------------------------------------------------------------------------------------------------------
Issue Date: May 27, 1999
- -----------------------------------------------------------------------------------------------------------
CUSIP: 43740C AA 6
===========================================================================================================
</TABLE>
PAYMENTS IN REDUCTION OF THE NOTE PRINCIPAL BALANCE OF THIS NOTE MAY BE
MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING NOTE
PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ABOVE.
THIS NOTE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN THE
SERVICER, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE, THE UNAFFILIATED
SELLER, THE CONTRIBUTOR, THE DEPOSITOR OR ANY OF THEIR AFFILIATES.
NEITHER THIS NOTE NOR THE UNDERLYING
B-1-1
<PAGE>
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES.
HOMEGOLD HOME EQUITY LOAN TRUST 1999-1
CLASS A-1 ASSET BACKED NOTES
HomeGold Home Equity Loan Trust 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO.,
or registered assigns, the principal sum of ($18,418,000), such amount payable
on each Payment Date in an amount equal to the result obtained by multiplying
(i) a fraction the numerator of which is the initial Note Principal Balance
hereof and the denominator of which is the initial aggregate Note Principal
Balance of the Class A-1 Notes by (ii) the aggregate amount, if any, payable on
such Payment Date in respect of principal on the Class A-1 Notes pursuant to
Section 8.3 of the Indenture; provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the Final Maturity
Date. The unpaid principal of this Note shall accrue interest at the initial
rate of 6.87% per annum (for each Interest Accrual Period on or prior to the
date on which the Servicer could exercise its option to redeem the Notes as
provided in Article X of the Indenture) or 7.37% (for each Interest Accrual
Period after such date), which (except for Shortfall Interest Deferred Amounts
and Accrued Shortfall Interest Carry Forward Amounts (as defined in the
Indenture), which shall be due and payable only to the extent funds are
available therefor as provided in the Indenture) shall be due and payable on
each Payment Date prior to the Final Payment Date and (without regard to the
availability of funds for the payment of Shortfall Interest Deferred Amounts and
Accrued Shortfall Interest Carry Forward Amounts) on the Final Payment Date. The
Interest Accrual Period for any Payment Date is the calendar month immediately
preceding the month in which such Payment Date occurs. All calculations of
interest on the Class A-1 Notes will be based on a 360-day year consisting of
twelve 30-day months. Payments in respect of principal and interest will be made
on each Payment Date to the Person in whose name this Note is registered on the
last Business Day of the month immediately preceding the month of such payment
as provided in the Indenture.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.
The Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Policy") issued by Financial Security Assurance Inc. (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed
payments of principal and interest (excluding Shortfall Interest Deferred
Amounts and Accrued Shortfall Interest Carry Forward Amounts), all as more fully
set forth in the Indenture and the Policy.
For purposes of federal income, state and local income and
franchise and any other income taxes, the Issuer will treat the Notes as
indebtedness and has instructed the Indenture Trustee to treat the Notes as
indebtedness for federal and state tax reporting purposes.
B-1-2
<PAGE>
Reference is made to the further provisions of this Note
following the Indenture Trustee's Certificate of Authentication, which shall
have the same effect as though fully set forth herein.
Unless the Certificate of Authentication hereon has been
executed by the Indenture Trustee whose name appears below by manual signature,
this Note shall not be entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.
B-1-3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be signed, manually or in facsimile, by its Authorized Officer.
Date: May 27, 1999
HOMEGOLD HOME EQUITY LOAN TRUST 1999-1
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
under the Trust Agreement
By:
-------------------------------------------------
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in
the within-mentioned Indenture.
Date: May 27, 1999
FIRST UNION NATIONAL BANK, not in its individual capacity but
solely as Indenture Trustee,
By:
-------------------------------------------------
Authorized Signatory
B-1-4
<PAGE>
FURTHER PROVISIONS
This Class A-1 Note is one of a duly authorized issue of Notes
of the Issuer, designated as its Class A Asset Backed Notes (herein called the
"Class A Notes"), all issued under an Indenture dated as of May 1, 1999 (such
Indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and First Union National Bank, as trustee (the "Indenture
Trustee," which term includes any successor Indenture Trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Indenture Trustee and the Holders of the Notes.
The Notes are subject to all terms of the Indenture. All terms used in this Note
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so supplemented or
amended.
The Class A Notes are and will be equally and ratably secured
by the collateral pledged as security therefor as provided in the Indenture.
Principal of the Class A Notes will be payable on each Payment
Date in an amount described above. "Payment Date" means the fifteenth day of
each month, or, if any such date is not a Business Day, the next succeeding
Business Day, commencing June 15, 1999. The term "Payment Date" shall be deemed
to include the Final Payment Date and, unless the context otherwise requires,
the Final Maturity Date. The Final Maturity Date of the Class A-1 Notes is July
15, 2029 or, if earlier, the Redemption Date (as defined below).
As described above, the entire unpaid principal amount of this
Note shall be due and payable on the earlier of the Final Payment Date and the
Redemption Date, if any. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes may be accelerated, and upon such acceleration
shall become, due and payable if an Event of Default shall have occurred and be
continuing, in the manner, with the effect and subject to the conditions
provided in the Indenture.
As provided in the Indenture, the Servicer shall have the
option to cause the Notes to be redeemed, in whole but not in part, on any
Payment Date after which the aggregate Class A-1 Note Principal Balance is
$1,841,800 or less.
So long as this Note is registered in the name of a Depository
or its nominee, the Trustee will make payments of principal and interest on this
Note by wire transfers of immediately available funds to the Depository or its
nominee. Otherwise all payments to the Holder of this Note under the Indenture
will be made or caused to be made by or on behalf of the Indenture Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Indenture Trustee in
writing at least five Business Days prior to the Record Date immediately prior
to such Payment Date and is the registered owner of Class A-1 Notes the
aggregate initial Note 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 Note Register, provided
that the Indenture Trustee may deduct a reasonable wire transfer fee from any
payment made by wire transfer. Notwithstanding the above, the final payment on
this Note will be made after due notice by the Indenture Trustee of the pendency
of such payment and only upon presentation and surrender of
B-1-5
<PAGE>
this Note at the office or agency appointed by the Indenture Trustee for that
purpose as provided in the Agreement.
Payments in respect of the Class A-1 Notes are limited
recourse obligations of the Issuer payable solely from certain collections and
recoveries respecting the Mortgage Loans and payments under the Policy, all as
more specifically set forth herein, in the Indenture and the Policy. As provided
in the Sale and Servicing Agreement and the Indenture, withdrawals from the
Collection Account and the Distribution Account may be made from time to time
for purposes other than payments to Noteholders, such purposes including
reimbursement of advances made, or certain expenses incurred, with respect to
the Mortgage Loans.
The Indenture and the Sale and Serving Agreement each permits,
with certain exceptions therein provided, the amendment thereof and the
modification of the rights and obligations of the Depositor, the Servicer, the
Indenture Trustee and the rights of the Noteholders under the Indenture and the
Sale and Servicing Agreement, as the case may be, at any time by the parties
thereto with the consent of the Holders of Notes and the Insurer. Any such
consent by the Holder of this Note shall be conclusive and binding on such
Holder and upon all future Holders of this Note and of any Note issued upon the
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent is made upon this Note. The Indenture and the Sale and Servicing
Agreement each also permit the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Notes. In
addition, pursuant to Section 11.1 of the Indenture, the Insurer, so long as no
Insurer Default shall have occurred and be continuing, shall, except in certain
limited circumstances, be entitled to exercise all rights of the Noteholders
(including voting rights) under the Indenture without any further consent of the
Noteholders and, so long as no Insurer Default shall have occurred and be
continuing, the consent to any action or other matter of the Insurer shall be
deemed to also constitute the consent thereto of the requisite percentage of
Noteholders required by the Indenture in respect of such action or matter.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Note is registrable in the
Note Register upon surrender of this Note for registration of transfer at the
offices or agencies appointed by the Indenture Trustee as provided in the
Indenture, (i) duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Indenture Trustee and the Note Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar which requirements include membership or participation in
Securities Transfer Agents Medallion Program ("Stamp") or such other "signature
guarantee program" as may be determined by the Note Registrar in addition to, or
in substitution for, Stamp, all in accordance with the Exchange Act, and (ii)
accompanied by such other documents as the Indenture Trustee may require, and
thereupon one or more new Notes of the same Class in authorized denominations
evidencing the same aggregate principal amount will be issued to the designated
transferee or transferees.
The Notes are issuable in fully registered form only without
coupons in Classes and denominations and in the original principal amounts
specified in the Indenture. As provided in the Indenture and subject to certain
limitations therein set forth, Notes are exchangeable for
B-1-6
<PAGE>
new Notes of the same Class in authorized denominations in the same aggregate
principal amount, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange of Notes, but the Indenture 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 Notes.
Any Noteholder using the assets of (i) an employee benefit
plan (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), that is subject to the provisions of Title I of
ERISA, (ii) a plan described in Section 4975(e)(1) of the Internal Revenue Code
of 1986, as amended, or (iii) any entity whose underlying assets include plan
assets by reason of a plan's investment in the entity to purchase the Notes, or
to whom the Notes are transferred, will be deemed to have represented that the
acquisition and continued holding of the Notes will be covered by a U.S.
Department of Labor Class Exemption.
The Depositor, the Servicer, the Indenture Trustee, the Owner
Trustee, the Insurer and the Note Registrar and any agent of the Depositor, the
Servicer, the Indenture Trustee, the Owner Trustee, the Insurer or the Note
Registrar may treat the Person in whose name this Note is registered as the
owner hereof for all purposes, and none of the Depositor, the Servicer, the
Indenture Trustee, the Owner Trustee, the Insurer, the Note Registrar nor any
such agent shall be affected by notice to the contrary.
The recitals contained herein shall be taken as statements of
the Issuer and the Indenture Trustee assumes no responsibility for their
correctness.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note covenants and agrees
that no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Unaffiliated Seller, the Depositor, the
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
(ii) any owner of a beneficial interest in the Issuer or (iii) any owner,
beneficiary, agent, officer, director or employee of the Unaffiliated Seller,
the Depositor, the Servicer, the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Unaffiliated Seller, the Depositor, the Servicer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Unaffiliated Seller, the
Depositor, the Servicer, the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note covenants and agrees
that by accepting the benefits of the Indenture that such Noteholder will not at
any time institute against the Unaffiliated Seller, the Depositor,
B-1-7
<PAGE>
or the Issuer or join in any institution against the Unaffiliated Seller, the
Depositor, or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings, under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and the Insurer and any agent of
the Issuer, the Indenture Trustee or the Insurer may treat the Person in whose
name this Note (as of the day of determination or as of such other date as may
be specified in the Indenture) is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Issuer, the
Indenture Trustee nor any such agent shall be affected by notice to the
contrary.
The term "Issuer" as used in this Note includes any successor
to the Issuer under the Indenture.
This Note and the Indenture shall be construed in accordance
with the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place, and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Indenture or the Basic Documents, none of Wilmington
Trust Company in its individual capacity, any owner of a beneficial interest in
the Issuer, or any of their respective beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of or
interest on, or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Note or the Indenture, it
being expressly understood that said covenants, obligations and indemnifications
have been made by the Issuer for the sole purposes of binding the interests of
the Issuer in the assets of the Issuer. The Holder of this Note by the
acceptance hereof agrees that except as expressly provided in the Indenture or
the Basic Documents, in the case of a Default or an Event of Default under the
Indenture, the Holder shall have no claim against any of the foregoing for any
deficiency, loss or claim therefrom; provided, however, that nothing contained
herein shall be taken to prevent recourse to, and enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
B-1-8
<PAGE>
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)
----------------
- --------------------------------------------------------------------------------
the within Note on the books kept for registration thereof, with full power of
substitution in the premises.
I (we) further direct the Note Registrar to issue a new Note of like
tenor to the above named assignee and deliver such Note to the following
address:
------------------------------------------------------------------------
- ----------------------------------------------------
Dated:
--------------------------------------------------
Signature by or on behalf of assignor
--------------------------------------------------
Signature Guaranteed
B-1-9
<PAGE>
PAYMENT INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Payments 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 , as its agent.
B-1-10
<PAGE>
EXHIBIT B-2
[Form of Class A-2 Note]
REGISTERED $35,546,000
No. A-2
CUSIP NO. 43740C AB 4
Unless this Note is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
or its agent for registration of transfer, exchange or payment, and any Note
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.
<TABLE>
<CAPTION>
============================================================================================
<S> <C>
Series 1999-1, Class A-2 Class A-2 Note Principal Balance as of the
Issue Date: $35,546,000
- --------------------------------------------------------------------------------------------
Initial Interest Rate: 6.82%
- --------------------------------------------------------------------------------------------
Date of Sale and Servicing Agreement: Denomination: $35,546,000
May 1, 1999
- --------------------------------------------------------------------------------------------
First Payment Date: Servicer:
June 15, 1999 HomeGold, Inc.
- --------------------------------------------------------------------------------------------
Final Maturity Date: August 15, 2029 or, if Indenture Trustee:
earlier, the Redemption Date (as defined)
First Union National Bank
- --------------------------------------------------------------------------------------------
Issue Date: May 27, 1999
- --------------------------------------------------------------------------------------------
CUSIP: 43740C AB 4
============================================================================================
</TABLE>
PAYMENTS IN REDUCTION OF THE NOTE PRINCIPAL BALANCE OF THIS NOTE MAY
BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING NOTE
PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ABOVE.
THIS NOTE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN THE
SERVICER, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE, THE UNAFFILIATED
SELLER, THE CONTRIBUTOR, THE DEPOSITOR OR ANY OF THEIR AFFILIATES.
NEITHER THIS NOTE NOR THE UNDERLYING
B-2-1
<PAGE>
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES.
HOMEGOLD HOME EQUITY LOAN TRUST 1999-1
CLASS A-2 ASSET BACKED NOTES
HomeGold Home Equity Loan Trust 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO.,
or registered assigns, the principal sum of ($53,964,000), such amount payable
on each Payment Date in an amount equal to the result obtained by multiplying
(i) a fraction the numerator of which is the initial Note Principal Balance
hereof and the denominator of which is the initial aggregate Note Principal
Balance of the Class A-2 Notes by (ii) the aggregate amount, if any, payable on
such Payment Date in respect of principal on the Class A-2 Notes pursuant to
Section 8.3 of the Indenture; provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the Final Maturity
Date. The unpaid principal of this Note shall accrue interest at the initial
rate of 6.82% per annum for each Interest Accrual Period on or prior to the date
on which the Servicer could exercise its option to redeem the Notes as provided
in Article X of the Indenture) or 7.32% (for each Interest Accrual Period after
such date), which (except for Shortfall Interest Deferred Amounts and Accrued
Shortfall Interest Carry Forward Amounts (as defined in the Indenture), which
shall be due and payable only to the extent funds are available therefor as
provided in the Indenture) shall be due and payable on each Payment Date prior
to the Final Payment Date and (without regard to the availability of funds for
the payment of Shortfall Interest Deferred Amounts and Accrued Shortfall
Interest Carry Forward Amounts) on the Final Payment Date. The Interest Accrual
Period for any Payment Date is the calendar month immediately preceding the
month in which such Payment Date occurs. All calculations of interest on the
Class A-2 Notes will be based on a 360-day year consisting of twelve 30-day
months. Payments in respect of principal and interest will be made on each
Payment Date to the Person in whose name this Note is registered on the last
Business Day of the month immediately preceding the month of such payment as
provided in the Indenture.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.
The Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Policy") issued by Financial Security Assurance Inc. (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed
payments of principal and interest (excluding Shortfall Interest Deferred
Amounts and Accrued Shortfall Interest Carry Forward Amounts), all as more fully
set forth in the Indenture and the Policy.
For purposes of federal income, state and local income and
franchise and any other income taxes, the Issuer will treat the Notes as
indebtedness and has instructed the Indenture Trustee to treat the Notes as
indebtedness for federal and state tax reporting purposes.
B-2-2
<PAGE>
Reference is made to the further provisions of this Note
following the Indenture Trustee's Certificate of Authentication, which shall
have the same effect as though fully set forth herein.
Unless the Certificate of Authentication hereon has been
executed by the Indenture Trustee whose name appears below by manual signature,
this Note shall not be entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.
B-2-3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be signed, manually or in facsimile, by its Authorized Officer.
Date: May 27, 1999
HOMEGOLD HOME EQUITY LOAN TRUST 1999-1
By:WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
under the Trust Agreement
By:
-------------------------------------------------
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in
the within-mentioned Indenture.
Date: May 27, 1999
FIRST UNION NATIONAL BANK, not in its
individual capacity but
solely as Indenture Trustee,
By:
-------------------------------------------------
Authorized Signatory
B-2-4
<PAGE>
FURTHER PROVISIONS
This Class A-2 Note is one of a duly authorized issue of Notes
of the Issuer, designated as its Class A Asset Backed Notes (herein called the
"Class A Notes"), all issued under an Indenture dated as of May 1, 1999 (such
Indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and First Union National Bank, as trustee (the "Indenture
Trustee," which term includes any successor Indenture Trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Indenture Trustee and the Holders of the Notes.
The Notes are subject to all terms of the Indenture. All terms used in this Note
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so supplemented or
amended.
The Class A Notes are and will be equally and ratably secured
by the collateral pledged as security therefor as provided in the Indenture.
Principal of the Class A Notes will be payable on each Payment
Date in an amount described above. "Payment Date" means the fifteenth day of
each month, or, if any such date is not a Business Day, the next succeeding
Business Day, commencing June 15, 1999. The term "Payment Date" shall be deemed
to include the Final Payment Date and, unless the context otherwise requires,
the Final Maturity Date. The Final Maturity Date of the Class A-2 Notes is
August 15, 2029 or, if earlier, the Redemption Date (as defined below).
As described above, the entire unpaid principal amount of this
Note shall be due and payable on the earlier of the Final Payment Date and the
Redemption Date, if any. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes may be accelerated, and upon such acceleration
shall become, due and payable if an Event of Default shall have occurred and be
continuing, in the manner, with the effect and subject to the conditions
provided in the Indenture.
As provided in the Indenture, the Servicer shall have the
option to cause the Notes to be redeemed, in whole but not in part, on any
Payment Date after which the aggregate Class A-2 Note Principal Balance is
$1,841,800 or less.
So long as this Note is registered in the name of a Depository
or its nominee, the Trustee will make payments of principal and interest on this
Note by wire transfers of immediately available funds to the Depository or its
nominee. Otherwise all payments to the Holder of this Note under the Indenture
will be made or caused to be made by or on behalf of the Indenture Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Indenture Trustee in
writing at least five Business Days prior to the Record Date immediately prior
to such Payment Date and is the registered owner of Class A-2 Notes the
aggregate initial Note 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 Note Register, provided
that the Indenture Trustee may deduct a reasonable wire transfer fee from any
payment made by wire transfer. Notwithstanding the above, the final payment on
this Note will be made after due notice by the Indenture Trustee of the pendency
of such payment and only upon presentation and surrender of
B-2-5
<PAGE>
this Note at the office or agency appointed by the IndentureTrustee for that
purpose as provided in the Agreement.
Payments in respect of the Class A-2 Notes are limited
recourse obligations of the Issuer payable solely from certain collections and
recoveries respecting the Mortgage Loans and payments under the Policy, all as
more specifically set forth herein, in the Indenture and the Policy. As provided
in the Sale and Servicing Agreement and the Indenture, withdrawals from the
Collection Account and the Distribution Account may be made from time to time
for purposes other than payments to Noteholders, such purposes including
reimbursement of advances made, or certain expenses incurred, with respect to
the Mortgage Loans.
The Indenture and the Sale and Serving Agreement each permits,
with certain exceptions therein provided, the amendment thereof and the
modification of the rights and obligations of the Depositor, the Servicer, the
Indenture Trustee and the rights of the Noteholders under the Indenture and the
Sale and Servicing Agreement, as the case may be, at any time by the parties
thereto with the consent of the Holders of Notes and the Insurer. Any such
consent by the Holder of this Note shall be conclusive and binding on such
Holder and upon all future Holders of this Note and of any Note issued upon the
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent is made upon this Note. The Indenture and the Sale and Servicing
Agreement each also permit the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Notes. In
addition, pursuant to Section 11.1 of the Indenture, the Insurer, so long as no
Insurer Default shall have occurred and be continuing, shall, except in certain
limited circumstances, be entitled to exercise all rights of the Noteholders
(including voting rights) under the Indenture without any further consent of the
Noteholders and, so long as no Insurer Default shall have occurred and be
continuing, the consent to any action or other matter of the Insurer shall be
deemed to also constitute the consent thereto of the requisite percentage of
Noteholders required by the Indenture in respect of such action or matter.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Note is registrable in the
Note Register upon surrender of this Note for registration of transfer at the
offices or agencies appointed by the Indenture Trustee as provided in the
Indenture, (i) duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Indenture Trustee and the Note Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar which requirements include membership or participation in
Securities Transfer Agents Medallion Program ("Stamp") or such other "signature
guarantee program" as may be determined by the Note Registrar in addition to, or
in substitution for, Stamp, all in accordance with the Exchange Act, and (ii)
accompanied by such other documents as the Indenture Trustee may require, and
thereupon one or more new Notes of the same Class in authorized denominations
evidencing the same aggregate principal amount will be issued to the designated
transferee or transferees.
The Notes are issuable in fully registered form only without
coupons in Classes and denominations and in the original principal amounts
specified in the Indenture. As provided in the Indenture and subject to certain
limitations therein set forth, Notes are exchangeable for
B-2-6
<PAGE>
new Notes of the same Class in authorized denominations in the same aggregate
principal amount, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange of Notes, but the Indenture 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 Notes.
Any Noteholder using the assets of (i) an employee benefit
plan (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), that is subject to the provisions of Title I of
ERISA, (ii) a plan described in Section 4975(e)(1) of the Internal Revenue Code
of 1986, as amended, or (iii) any entity whose underlying assets include plan
assets by reason of a plan's investment in the entity to purchase the Notes, or
to whom the Notes are transferred, will be deemed to have represented that the
acquisition and continued holding of the Notes will be covered by a U.S.
Department of Labor Class Exemption.
The Depositor, the Servicer, the Indenture Trustee, the Owner
Trustee, the Insurer and the Note Registrar and any agent of the Depositor, the
Servicer, the Indenture Trustee, the Owner Trustee, the Insurer or the Note
Registrar may treat the Person in whose name this Note is registered as the
owner hereof for all purposes, and none of the Depositor, the Servicer, the
Indenture Trustee, the Owner Trustee, the Insurer, the Note Registrar nor any
such agent shall be affected by notice to the contrary.
The recitals contained herein shall be taken as statements of
the Issuer and the Indenture Trustee assumes no responsibility for their
correctness.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note covenants and agrees
that no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Unaffiliated Seller, the Depositor, the
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
(ii) any owner of a beneficial interest in the Issuer or (iii) any owner,
beneficiary, agent, officer, director or employee of the Unaffiliated Seller,
the Depositor, the Servicer, the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Unaffiliated Seller, the Depositor, the Servicer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Unaffiliated Seller, the
Depositor, the Servicer, the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note covenants and agrees
that by accepting the benefits of the Indenture that such Noteholder will not at
any time institute against the Unaffiliated Seller, the Depositor,
B-2-7
<PAGE>
or the Issuer or join in any institution against the Unaffiliated Seller, the
Depositor, or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings, under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and the Insurer and any agent of
the Issuer, the Indenture Trustee or the Insurer may treat the Person in whose
name this Note (as of the day of determination or as of such other date as may
be specified in the Indenture) is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Issuer, the
Indenture Trustee nor any such agent shall be affected by notice to the
contrary.
The term "Issuer" as used in this Note includes any successor
to the Issuer under the Indenture.
This Note and the Indenture shall be construed in accordance
with the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place, and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Indenture or the Basic Documents, none of Wilmington
Trust Company in its individual capacity, any owner of a beneficial interest in
the Issuer, or any of their respective beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of or
interest on, or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Note or the Indenture, it
being expressly understood that said covenants, obligations and indemnifications
have been made by the Issuer for the sole purposes of binding the interests of
the Issuer in the assets of the Issuer. The Holder of this Note by the
acceptance hereof agrees that except as expressly provided in the Indenture or
the Basic Documents, in the case of a Default or an Event of Default under the
Indenture, the Holder shall have no claim against any of the foregoing for any
deficiency, loss or claim therefrom; provided, however, that nothing contained
herein shall be taken to prevent recourse to, and enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
B-2-8
<PAGE>
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)
----------------
- -------------------------------------------------------------------------- the
within Note on the books kept for registration thereof, with full power of
substitution in the premises.
I (we) further direct the Note Registrar to issue a new Note
of like tenor to the above named assignee and deliver such Note to the following
address:
------------------------------------------
Dated:
--------------------------------------------
Signature by or on behalf of assignor
--------------------------------------------
Signature Guaranteed
B-2-9
<PAGE>
PAYMENT INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Payments 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 , as its agent.
B-2-10
<PAGE>
EXHIBIT C
FORM OF FINANCIAL GUARANTY INSURANCE POLICY
[See Separate Document]
C-1
<PAGE>
================================================================================
SALE AND SERVICING AGREEMENT
Dated as of May 1, 1999
by and among
HOMEGOLD HOME EQUITY LOAN TRUST 1999-1,
(Trust)
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
(Depositor)
HOMEGOLD, INC.,
(Originator and Servicer)
FAIRBANKS CAPITAL CORP.,
(Back-up Servicer)
and
FIRST UNION NATIONAL BANK,
(Indenture Trustee)
HomeGold Home Equity Asset Backed Notes,
Series 1999-1
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.01. DEFINED TERMS.........................................................................1
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS
SECTION 2.01. CONVEYANCE OF MORTGAGE LOANS..........................................................1
SECTION 2.02. [RESERVED]............................................................................2
SECTION 2.03. MORTGAGE FILES AND DOCUMENTS..........................................................2
SECTION 2.04. ACCEPTANCE BY INDENTURE TRUSTEE.......................................................4
SECTION 2.05. REPURCHASE OR SUBSTITUTION OF MORTGAGE LOANS..........................................5
SECTION 2.06. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.......................................8
SECTION 2.07. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SERVICER.............................9
SECTION 2.08. REPRESENTATIONS AND WARRANTIES OF THE TRUST..........................................11
SECTION 2.09. ISSUANCE OF SECURITIES...............................................................12
SECTION 2.10. SATISFACTION AND DISCHARGE OF WAREHOUSE LIENS........................................13
SECTION 2.11. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BACK-UP SERVICER....................13
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST PROPERTY
SECTION 3.01. SERVICER TO ACT AS SERVICER..........................................................14
SECTION 3.02. SUB-SERVICING AGREEMENTS BETWEEN SERVICER AND SUB-SERVICERS..........................16
SECTION 3.03. SUCCESSOR SUB-SERVICERS..............................................................17
SECTION 3.04. LIABILITY OF THE SERVICER............................................................18
SECTION 3.05. NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICERS AND TRUST, INDENTURE
TRUSTEE, NOTEHOLDERS OR INSURER......................................................18
SECTION 3.06. ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENTS BY THE BACK-UP
SERVICER.............................................................................18
SECTION 3.07. COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS; SUBSTITUTIONS AND
AMENDMENTS...........................................................................19
SECTION 3.08. SUB-SERVICING ACCOUNTS...............................................................19
SECTION 3.09. [RESERVED]...........................................................................20
SECTION 3.10. COLLECTION ACCOUNTS..................................................................20
SECTION 3.11. WITHDRAWALS FROM THE COLLECTION ACCOUNT..............................................23
SECTION 3.12. [RESERVED]...........................................................................24
SECTION 3.13. ADMINISTRATIVE DUTIES................................................................24
SECTION 3.14. INVESTMENT OF FUNDS IN THE INVESTMENT ACCOUNTS.......................................26
SECTION 3.15. [INTENTIONALLY OMITTED]..............................................................27
SECTION 3.16. MAINTENANCE OF HAZARD INSURANCE AND ERRORS AND OMISSIONS AND FIDELITY
COVERAGE.............................................................................27
SECTION 3.17. ENFORCEMENT OF DUE-ON-SALE CLAUSES, ASSUMPTION AGREEMENTS............................29
SECTION 3.18. REALIZATION UPON DEFAULTED MORTGAGE LOANS............................................30
SECTION 3.19. INDENTURE TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES............................32
SECTION 3.20. SERVICING COMPENSATION...............................................................34
SECTION 3.21. REPORTS TO THE INDENTURE TRUSTEE; COLLECTION ACCOUNT STATEMENTS......................34
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 3.22. STATEMENT AS TO COMPLIANCE...........................................................35
SECTION 3.23. INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.....................................35
SECTION 3.24. ACCESS TO CERTAIN DOCUMENTATION......................................................36
SECTION 3.25. TITLE, MANAGEMENT AND DISPOSITION OF REO PROPERTY....................................36
SECTION 3.26. OBLIGATIONS OF THE SERVICER IN RESPECT OF PREPAYMENT INTEREST SHORTFALLS.............38
SECTION 3.27. [RESERVED]...........................................................................39
SECTION 3.28. OBLIGATIONS OF THE SERVICER IN RESPECT OF MONTHLY PAYMENTS...........................39
SECTION 3.29. [RESERVED]...........................................................................39
SECTION 3.30. OBLIGATIONS UNDER INDENTURE..........................................................39
SECTION 3.31. RECORDS..............................................................................39
SECTION 3.32. ADDITIONAL INFORMATION TO BE FURNISHED TO THE TRUST..................................39
ARTICLE IV
PAYMENTS AND DISTRIBUTIONS; STATEMENTS;
SECTION 4.01. PAYMENTS AND DISTRIBUTIONS...........................................................40
SECTION 4.02. STATEMENTS TO SECURITYHOLDERS........................................................40
SECTION 4.03. MONTHLY ADVANCES.....................................................................44
SECTION 4.04. DETERMINATION OF REALIZED LOSSES.....................................................45
SECTION 4.05. COMPLIANCE WITH WITHHOLDING REQUIREMENTS.............................................45
ARTICLE V
[RESERVED]
ARTICLE VI
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. LIABILITY OF THE DEPOSITOR AND THE SERVICER..........................................46
SECTION 6.02. MERGER OR CONSOLIDATION OF THE DEPOSITOR OR THE SERVICER.............................46
SECTION 6.03. LIMITATION ON LIABILITY OF THE DEPOSITOR, THE SERVICER AND OTHERS....................46
SECTION 6.04. LIMITATION ON RESIGNATION OF THE SERVICER............................................47
SECTION 6.05. RIGHTS OF THE TRUST, THE DEPOSITOR AND OTHERS IN RESPECT OF THE SERVICER.............49
SECTION 6.06. LIMITATION OF LIABILITY..............................................................50
ARTICLE VII
DEFAULT
SECTION 7.01. SERVICER EVENTS OF DEFAULT...........................................................50
SECTION 7.02. BACK-UP SERVICER TO ACT; APPOINTMENT OF SUCCESSOR SERVICER...........................53
SECTION 7.03. NOTIFICATION TO NOTEHOLDERS AND TRUST................................................55
SECTION 7.04. WAIVER OF SERVICER EVENTS OF DEFAULT.................................................55
SECTION 7.05. THE BACK-UP SERVICER.................................................................56
ARTICLE VIII
CONCERNING THE INDENTURE TRUSTEE
SECTION 8.01. DUTIES, RESPONSIBILITIES, ETC. OF INDENTURE TRUSTEE..................................57
SECTION 8.02. REPLACEMENT OF INDENTURE TRUSTEE; SUCCESSOR INDENTURE TRUSTEE;
APPOINTMENT OF CO- OR SEPARATE INDENTURE TRUSTEE.....................................57
SECTION 8.03. REPRESENTATIONS AND WARRANTIES OF THE INDENTURE TRUSTEE..............................57
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE IX
CERTAIN MATTERS REGARDING THE INSURER
<S> <C> <C>
SECTION 9.01. RIGHTS OF THE INSURER TO EXERCISE RIGHTS OF CLASS A NOTEHOLDERS......................59
SECTION 9.02. INDENTURE TRUSTEE TO ACT SOLELY WITH CONSENT OF THE INSURER..........................59
SECTION 9.03. TRUST PROPERTY AND ACCOUNTS HELD FOR BENEFIT OF THE INSURER..........................60
SECTION 9.04. NOTICES TO THE INSURER...............................................................60
SECTION 9.05. THIRD-PARTY BENEFICIARY..............................................................60
SECTION 9.06. TERMINATION OF THE SERVICER..........................................................60
ARTICLE X
TERMINATION; SALE AND PURCHASE OF MORTGAGE LOANS
SECTION 10.01. TERMINATION UPON EARLY REDEMPTION OF THE NOTES OR LIQUIDATION OF ALL
MORTGAGE LOANS; RIGHT OF SERVICER AND INSURER TO PURCHASE MORTGAGE LOANS.............61
SECTION 10.02. SALE AND PURCHASE OF MORTGAGE LOANS..................................................61
SECTION 10.03. [RESERVED]...........................................................................62
ARTICLE XI
[RESERVED]
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01. AMENDMENT............................................................................62
SECTION 12.02. RECORDATION OF AGREEMENT; COUNTERPARTS...............................................64
SECTION 12.03. [RESERVED]...........................................................................64
SECTION 12.04. GOVERNING LAW........................................................................64
SECTION 12.05. NOTICES..............................................................................64
SECTION 12.06. SEVERABILITY OF PROVISIONS...........................................................65
SECTION 12.07. NOTICE TO RATING AGENCIES AND INSURER................................................66
SECTION 12.08. ARTICLE AND SECTION REFERENCES.......................................................66
SECTION 12.09. CONFIRMATION OF INTENT...............................................................67
</TABLE>
Exhibit A Glossary of Defined Terms
Exhibit B [Reserved]
Exhibit C-1 Form of Indenture Trustee's Initial Certification
Exhibit C-2 Form of Indenture 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 Form of Certificate of Back-up Servicer
Schedule 1 Mortgage Loan Schedule
(iii)
<PAGE>
This Sale and Servicing Agreement, dated as of May 1, 1999, among HOMEGOLD HOME
EQUITY LOAN TRUST 1999-1 (the "Trust"), PRUDENTIAL SECURITIES SECURED FINANCING
CORPORATION, as Depositor, HOMEGOLD, INC., as Servicer, FAIRBANKS CAPITAL CORP.,
as Back-up Servicer and FIRST UNION NATIONAL BANK, as Indenture Trustee.
PRELIMINARY STATEMENT:
The Depositor desires to transfer, assign, set over and
otherwise convey to the Trust, and the Trust desires to purchase and acquire
from the Depositor, certain mortgage loans acquired or to be acquired by the
Depositor and certain other related property.
The Trust proposes to issue Notes secured by such mortgage
loans pursuant to an indenture entered into with the Indenture Trustee.
The Servicer is willing to service all such mortgage loans.
Fairbanks Capital Corp. is willing to serve in the capacity as
Back-up Servicer hereunder.
In consideration of the mutual agreements herein contained,
the Trust, the Depositor, the Servicer, the Back-up Servicer and the Indenture
Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms.
For purposes of this Agreement, all capitalized terms used but
not otherwise defined herein shall have the respective meanings ascribed thereto
in Exhibit A hereto. Unless otherwise specified, all calculations described
herein shall be made on the basis of a 360-day year consisting of twelve 30-day
months.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Conveyance of Mortgage Loans.
In consideration of the Trust's delivery of the Certificate
issuable pursuant to Section 4.2 of the Trust Agreement to or upon the written
order of the Depositor and the net proceeds from the issuance of the Notes, the
Depositor, concurrently with the execution and delivery hereof, does hereby
transfer, assign, set over and otherwise convey to the Trust, without recourse
(except as provided herein) all
<PAGE>
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, the
rights of the Depositor under the Unaffiliated Seller's Agreement, the Purchase
Agreement and Assignment, and all other assets included or to be included in the
Trust Property. Such assignment includes all interest and principal received by
the Depositor, the Unaffiliated Seller, or the Servicer on or after the Cut-off
Date with respect to the Mortgage Loans. The Trust shall treat the conveyance of
the Mortgage Loans pursuant to this Section 2.01 as a tax free capital
contribution.
Section 2.02. [Reserved]
Section 2.03. Mortgage Files and Documents.
(a) In connection with each transfer and assignment
contemplated by Section 2.01 hereof, the Depositor will cause the
Originator to deliver to, and deposit with, the Indenture 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 substantially
the following form: "Pay to the order of First Union National
Bank, as Indenture Trustee for the registered holders of
HomeGold Home Equity Loan Asset Backed Notes, Series 1999-1,
without recourse," with all prior and intervening endorsements
showing a complete chain of endorsement from the originator to
the Person so endorsing to the Indenture 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 Indenture Trustee promptly after receipt
thereof;
(iii) an original Assignment of the Mortgage executed
substantially in the following form: "First Union National
Bank, as Indenture Trustee for the registered holders of
HomeGold Home Equity Loan Asset Backed Notes, Series 1999-1";
(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
Indenture Trustee as contemplated by the immediately preceding
clause (iii) or, if any such Assignment has been submitted for
recording but has not been returned
2
<PAGE>
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 Indenture Trustee promptly
after receipt thereof;
(v) the original or copies of each assumption,
modification, written assurance or substitution agreement, if
any; and
(vi) except with respect to Mortgage Loans with an
original principal balance of less than $16,000 which were
originated prior to 1996 in a program which required no title
insurance, the original or a copy of the 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 or
second lien on the Mortgaged Property represented therein as a
fee interest vested in the Mortgagor, or in the event such
original or copy of 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 Originator, no later than 30
days following the Originator's receipt of original recording
information and in any event within one year following the Closing
Date, to submit or cause to be submitted for recording, at no
expense to the Trust, the Indenture Trustee or the Insurer, in the
appropriate public office for real property records, each
Assignment referred to in Sections 2.03(a)(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
2.03(a)(i) cannot be located (as certified by the Originator), the
obligations of the Depositor to cause the Originator to deliver
such documents shall be deemed to be satisfied upon delivery to the
Indenture 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 Section 2.03(a)(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 Originator to deliver such documents shall
be deemed to be satisfied upon (1) delivery to the Indenture
Trustee of a copy of each such document certified by the Originator
in the case of (x) above or the applicable public recording office
in the case 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 Originator, delivery to the Indenture Trustee
promptly upon receipt thereof of either the original or a copy of
such document certified by the applicable
3
<PAGE>
public recording office to be a true and complete copy of the
original. Notice shall be provided to the Indenture Trustee, the
Insurer and the Rating Agencies by the Originator if delivery
pursuant to clause (2) above will be made more than 180 days after
the Closing Date. If the original or copy of lender's title
insurance policy was not delivered pursuant to Section 2.03(a)(vi)
above (if required thereunder), the Depositor shall cause the
Originator to deliver to the Indenture Trustee, promptly after
receipt thereof, the original or a copy of the lender's title
insurance policy. The Depositor shall cause the Originator to
deliver to the Indenture 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 Indenture Trustee are and shall be held by
or on behalf of the Trust, the Originator, the Depositor or the
Servicer, as the case may be, in trust for the benefit of the
Indenture Trustee on behalf of the Noteholders and the 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 Indenture Trustee. Any
such original document delivered to or held by the Trust, the
Depositor or the Originator 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 Indenture Trustee
for the benefit of the Noteholders and the Insurer an executed copy
of the Unaffiliated Seller's Agreement. In addition to the
foregoing, the Depositor shall cause the Insurer to deliver the
Policy to the Indenture Trustee for the benefit of the Noteholders.
Section 2.04. Acceptance by Indenture Trustee.
(a) The Indenture Trustee acknowledges receipt of the Policy
and, subject to the provisions of Section 2.03 and subject to the
review described in the next paragraph below and any exceptions
noted on the exception report described in the next paragraph
below, the documents referred to in Section 2.03 (other than such
documents described in Section 2.03(a)(v)) above and all other
assets included in the definition of "Trust Property" (to the
extent of amounts deposited into the Collection Account and the
Redemption Account) and declares that it holds and will hold such
documents and the other documents delivered and to be 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 Property" in trust for the exclusive use and benefit of all
present and future Noteholders and the Insurer in accordance with
the provisions of this Agreement and the Indenture.
4
<PAGE>
(b) The Indenture Trustee agrees, for the benefit of the
Noteholders and the Insurer, to review each Mortgage File relating
to the Mortgage Loans within 30 days after the Closing Date, and to
certify in substantially the form attached hereto as Exhibit C-1
that, as to each Mortgage Loan (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 Indenture Trustee is 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 2.03(a).
(c) Prior to the first anniversary date of this Agreement the
Indenture Trustee shall deliver to the Trust, the Depositor, the
Servicer and the 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 Indenture 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 Indenture Trustee shall so notify the Trust, the Depositor, the
Unaffiliated Seller, the Servicer and the Insurer. In addition,
upon the discovery by the Trust, the Depositor, the Servicer or the
Indenture Trustee of a breach of any of the representations and
warranties made by the Unaffiliated Seller in the Unaffiliated
Seller's Agreement, or by the Originator in the Purchase Agreement
and Assignment in respect of any Mortgage Loan which materially
adversely affects such Mortgage Loan or the interests of the
Noteholders or the Insurer in such Mortgage Loan, the party
discovering such breach shall give prompt written notice to the
other parties and the Insurer.
Section 2.05. 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 Unaffiliated Seller of any
representation, warranty or covenant
5
<PAGE>
under the Unaffiliated Seller's Agreement or by the Originator in
the Purchase Agreement and Assignment in respect of any Mortgage
Loan which materially adversely affects the value of such Mortgage
Loan or the interest therein of the Noteholders or the Insurer, the
party discovering such defect, missing document or breach shall
promptly notify the Trust, the Originator, the Unaffiliated Seller,
the Servicer, the Depositor and the Insurer of such defect, missing
document or breach and request that the Unaffiliated Seller, and
the Originator deliver such missing document or cure such defect or
breach within 60 days from the date the Unaffiliated Seller, and
the Originator were notified of such missing document, defect or
breach, and if the Unaffiliated Seller, or the Originator does not
deliver such missing document or cure such defect or breach in all
material respects during such period, the Indenture Trustee shall
enforce the Unaffiliated Seller's obligation under the Unaffiliated
Seller's Agreement, and the Originator's obligation under the
Purchase Agreement and Assignment (i) in connection with any such
breach that could not reasonably have been cured within such 60-day
period, if the Unaffiliated 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 Agreement and Assignment 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 Property at the Purchase Price within 60 days after the date
on which it was notified (subject to Section 2.05(e)) of such
missing document, defect or breach, if and to the extent that the
Unaffiliated Seller is obligated to do so under the Unaffiliated
Seller's Agreement, and the Originator is obligated to do so under
the Purchase Agreement and Assignment. The Purchase Price for the
repurchased Mortgage Loan shall be deposited in the Collection
Account and the Indenture Trustee, upon receipt of written
certification from the Servicer of such deposit, shall release the
related Mortgage File to the Unaffiliated 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
Unaffiliated Seller or the Originator shall furnish to it and as
shall be necessary to vest in the Unaffiliated Seller or the
Originator, as the case may be, any Mortgage Loan released pursuant
hereto and the Indenture 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 Agreement and Assignment, the Originator
may cause such Mortgage Loan to be removed from the Trust Property
(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 2.05(d).
It is understood and agreed that the obligation of the Unaffiliated
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 Indenture Trustee on behalf of the
Noteholders and the Insurer.
6
<PAGE>
Notwithstanding anything to the contrary contained herein, any
Mortgage Loan substituted pursuant to the last paragraph of Section
3.07 shall be deemed to be a Qualified Substitute Mortgage Loan for
purposes of this Section 2.05.
(b) [Reserved]
(c) [Reserved]
(d) 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
Indenture Trustee, for such Qualified Substitute Mortgage Loan or
Loans, the Mortgage Note, the Mortgage, the Assignment to the
Indenture Trustee, and such other documents and agreements, with
all necessary endorsements thereon, as are required by Section
2.03, 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
Indenture 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 2.04 and
deliver to the Depositor, the Servicer and the 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 Indenture Trustee shall deliver to
the Depositor, the Servicer and the Insurer a certification
substantially in 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 part of the Trust and will be retained by the Trust. For the
month of substitution, payments and distributions hereunder and
under the Indenture 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 from the terms of this
Agreement and the substitution of the Qualified Substitute Mortgage
Loan and shall thereafter be entitled 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
Indenture 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 Agreement and Assignment, including, in
the case of a substitution effected by the Originator all
applicable representations and warranties thereof included in the
Purchase Agreement and Assignment as of the date of substitution.
7
<PAGE>
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 Indenture
Trustee, upon receipt of the related Qualified Substitute Mortgage Loan or Loans
and certification by the Servicer of such deposit, shall 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 the event of a breach of the representation in the
Unaffiliated Seller's Agreement and the Purchase Agreement and Assignment that
none of the Mortgage Loans is a "bond for title" obligation or loan, such
Mortgage Loan shall be repurchased or substituted for as provided in this
Section 2.05 within thirty days of the Closing Date.
Section 2.06. Representations and Warranties of the Depositor.
(a) The Depositor hereby represents and warrants to the Trust
and the Indenture Trustee for the benefit of the Noteholders and
the 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 Indenture Trustee to enforce the obligations of the
Unaffiliated Seller thereunder.
(b) It is understood and agreed that the representations and
warranties set forth in this Section 2.06 shall survive delivery of
the Mortgage Files to the Indenture Trustee and shall inure to the
benefit of the Trust, the Noteholders and the Insurer
notwithstanding any restrictive or qualified endorsement or
assignment. Upon discovery by any of the Trust, the Depositor, the
Servicer or the Indenture Trustee of a breach of any of such
representations and warranties which materially and adversely
affects the value of any Mortgage Loan or the interests therein of
the Noteholders and the Insurer, the party discovering such breach
shall give prompt written notice to the other parties hereto, the
Originator and the Insurer 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
8
<PAGE>
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 hereof by the Trust, the
Servicer and the Indenture 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.
Section 2.07. Representations, Warranties and Covenants of the
Servicer.
The Servicer hereby represents, warrants and covenants to the
Indenture Trustee, for the benefit of each of the Indenture Trustee, the
Noteholders, the 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
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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 hereof by the Trust, the
Depositor and the Indenture 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];
(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;
(vi) 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 Indenture
Trustee;
(vii) 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
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(viii) 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 2.07 shall survive delivery
of the Mortgage Files to the Indenture Trustee and shall inure to the benefit of
the Trust, the Indenture Trustee, the Depositor, the Noteholders and the
Insurer. Upon discovery by any of the Trust, the Depositor, the Servicer or the
Indenture 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 Noteholders and the 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 parties hereto,
the Originator and the Insurer.
Section 2.08. Representations and Warranties of the Trust.
The Trust hereby represents, warrants and covenants to the
Indenture Trustee, for the benefit of each of the Indenture Trustee, the
Noteholders, the Servicer, the Insurer and to the Depositor that as of the
Closing Date or as of such date specifically provided herein:
(a) The Trust is duly organized, validly existing and in good
standing as a Delaware Business Trust under the laws of the State
of Delaware.
(b) The Trust 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 Trust 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 hereof by the Depositor,
the Servicer and the Indenture Trustee, constitutes a legal, valid
and binding obligation of the Trust, 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.
(c) The execution and delivery of this Agreement by the Trust
and the performance of and compliance with the terms of this
Agreement will not (a) violate the Certificate of Trust, Trust
Agreement or other constituent documents of the Trust or any law,
rule, regulation, order, judgment, award, administrative
interpretation, injunction, writ, decree or the like affecting the
Trust or by which the Trust is bound or (b) result in a breach of
or constitute a default under any indenture or other material
agreement to which the Trust is a party or by which
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the Trust is bound, which in the case of either clause (a) or (b)
will have a material adverse effect on the Trust's ability to
perform its obligations under this Agreement.
(d) There are no actions or proceedings against,
investigations known to it of, the Trust 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 Trust of its obligations under, or validity or
enforceability of, this Agreement.
(e) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery and performance by the Trust of, or compliance by the
Trust 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 and
warranties set forth in this Section 2.08 shall survive delivery of
the Mortgage Files to the Indenture Trustee and shall inure to the
benefit of the Noteholders, the Indenture Trustee and the Insurer
notwithstanding any restrictive or qualified endorsement or
assignment. Upon discovery by any of the Depositor, the Servicer or
the Indenture Trustee of a breach of any of such representations
and warranties which materially and adversely affects the value of
any Mortgage Loan or the interests therein of the Noteholders and
the Insurer, the party discovering such breach shall give prompt
written notice to the other parties hereto, the Originator and the
Insurer and in no event later than two Business Days from the date
of such discovery.
Section 2.09. Issuance of Securities.
(a) The Trust acknowledges the assignment to it of the
Mortgage Loans and the delivery to it of the Mortgage Files,
subject to the provisions of Sections 2.02, 2.03 and 2.04, together
with the assignment to it of all other assets included in the Trust
Property, receipt of which is hereby acknowledged. Concurrently
with such assignment and delivery, the Trust and Indenture Trustee,
pursuant to the written request of the Trust, are executing,
authenticating and delivering the Notes to or upon the order of the
Trust, in accordance with the terms of the Indenture.
(b) In consideration of the conveyance to it by the Depositor
of the Mortgage Loans as contemplated in Section 2.01, subject to
the provisions of sections 2.03 and 2.04, the Owner Trustee is
executing, authenticating and delivering on behalf of the Trust the
Certificate issuable pursuant to Section 4.2 of the Trust Agreement
to or upon the written order of the Depositor.
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Section 2.10. Satisfaction and Discharge of Warehouse Liens.
(a) The Trust agrees to satisfy and discharge, effective on
the Closing Date, all Warehouse Liens with respect to the Mortgage
Loans.
(b) [Reserved]
Section 2.11. Representations, Warranties and Covenants of the
Back-up Servicer.
The Back-up Servicer hereby represents, warrants and covenants
to the Indenture Trustee, for the benefit of each of the Indenture Trustee, the
Noteholders, the Insurer and to the Depositor that as of the Closing Date or as
of such date specifically provided herein:
(i) The Back-up 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 Back-up 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 Back-up 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 hereof by the Trust, the
Depositor and the Indenture Trustee, constitutes a legal,
valid and binding obligation of the Back-up 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
Back-up Servicer and the performance of and compliance with
the terms of this Agreement will not (a) violate the Back-up
Servicer's charter or by-laws or any law, rule, regulation,
order, judgment, award, administrative interpretation,
injunction, writ, decree or the like affecting the Back-up
Servicer or by which the Back-up Servicer is bound or (b)
result in a breach of or constitute a default under any
indenture or other material agreement to which the Back-up
Servicer is a party or by which the Back-up Servicer is bound,
which in the case of either clause (a) or (b)
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will have a material adverse effect on the Back-up Servicer's
ability to perform its obligations under this Agreement;
(iv) The Back-up 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) There are no actions or proceedings against,
investigations known to it of, the Back-up 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 Back-up Servicer of
its obligations under, or validity or enforceability of, this
Agreement; and
(vi) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution, delivery and performance by the Back-up Servicer
of, or compliance by the Back-up 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 2.11 shall survive delivery
of the Mortgage Files to the Indenture Trustee and shall inure to the benefit of
the Trust, the Indenture Trustee, the Depositor, the Noteholders and the
Insurer. Upon discovery by any of the Trust, the Depositor, the Back-up Servicer
or the Indenture 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 Noteholders and the 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 parties hereto,
the Originator and the Insurer.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST PROPERTY
Section 3.01. Servicer to Act as Servicer.
The Servicer shall service and administer the Mortgage Loans
on behalf of the Indenture Trustee and in the best interests of and for the
benefit of the Securityholders and the 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
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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 Security 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. The
Servicer shall promptly notify the Back-up Servicer in writing of any event,
circumstance or occurrence which materially adversely affects the ability of the
Servicer to service the Mortgage Loans or to otherwise perform and carry out its
duties, responsibilities and obligations under and in accordance with this
Agreement. 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
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 Indenture Trustee and the Noteholders or any of them, and upon notice to
the Indenture 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 Indenture Trustee, the Noteholders
and the Insurer. 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 3.19, the Indenture 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 Indenture Trustee shall
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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 payments to Noteholders, be added to the
unpaid principal balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit.
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.
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
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 the Notes) with Sub-Servicers, for the
servicing and administration of the Mortgage Loans.
(b) 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 Noteholders, without the consent of the Insurer.
Any variation without the consent of the
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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 Indenture
Trustee, the Back-up Servicer and the Insurer copies of all
Sub-Servicing Agreements, and any amendments or modifications
thereof, promptly upon the Servicer's execution and delivery of
such instruments.
(c) As part of its servicing activities hereunder, the
Servicer, for the benefit of the Indenture Trustee, the Noteholders
and the Insurer, shall enforce the obligations of each Sub-Servicer
under the related Sub-Servicing Agreement, of the Unaffiliated
Seller under the Unaffiliated Seller's Agreement, and of the
Originator under the Purchase Agreement and Assignment, 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 2.05(a). Such
enforcement, including, without limitation, the legal prosecution
of claims, termination of Sub-Servicing Agreements, 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 Unaffiliated Seller
shall be effected by the Servicer and the Originator in accordance
with the foregoing provisions of this paragraph. Enforcement of the
Purchase Agreement and Assignment against the Originator shall be
effected by the Indenture Trustee in accordance with the 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 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. The Sub-Servicer shall give written notice to the Back-up
Servicer, Indenture Trustee and the Insurer of the termination of any
Sub-Servicer.
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Any Sub-Servicing Agreement shall include the provision that
(i) such agreement may be immediately terminated by the Back-up Servicer or
Indenture 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 Trust, the Back-up Servicer, the Indenture Trustee, the
Securityholders or the 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
Indenture Trustee, the Noteholders and the 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 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 Trust, Indenture Trustee, Noteholders or Insurer.
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 none of the Trust, the Back-up Servicer, the Indenture
Trustee, the Securityholders or the Insurer shall be deemed to be a party
thereto or to have any 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 the Back-up Servicer.
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 Back-up Servicer 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 Back-up Servicer
(at the direction of the Insurer) elects to terminate any Sub-Servicing
Agreement in accordance with its terms as provided in Section 3.03. Upon such
assumption, the Back-up Servicer, its designee or the successor servicer for
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the Back-up Servicer 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
Indenture Trustee or the Back-up Servicer, 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;
Substitutions and Amendments.
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 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 Insurer
to which the 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.
In addition to the rights of the Servicer pursuant to the
immediately preceding paragraph of this Section 3.07, the Servicer may, at its
option (but only with the written consent of the Insurer) substitute Mortgage
Loans for Mortgage Loans included in either Group and amend the terms of any of
the Mortgage Loans included in either Group; provided, however, that the
aggregate outstanding principal balance of Mortgage Loans in either Group for
which substitutions and amendments are so allowed may not exceed 10% of the
initial aggregate principal balance of the Mortgage Loans in such Group as of
the Cut-off Date.
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
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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. [Reserved].
Section 3.10. Collection Accounts.
(a) The Indenture Trustee shall establish and maintain one or
more accounts (such account or accounts, the "Collection Account"),
held in trust for the benefit of the Indenture Trustee, the
Noteholders and the Insurer. On behalf of the Indenture Trustee,
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 thereof, 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 in each Group;
(ii) all payments on account of interest (net of the
related Servicing Fee) on each Mortgage Loan in each Group;
(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 in each
Group pursuant to Section 10.01);
(iv) any amounts required to be deposited pursuant to
Section 3.14 in connection with any losses realized on
Permitted Investments with respect to funds held in the
Collection Account with respect to the Mortgage Loans in each
Group;
(v) any amounts required to be deposited by the Servicer
pursuant to the second paragraph of Section 3.16(a) in respect
of any blanket policy deductibles with respect to the Mortgage
Loans in each Group; and
(vi) any Purchase Price or Substitution Shortfall Amount
delivered to the Servicer.
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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) The Indenture Trustee shall establish and maintain the
Distribution Account in accordance with the provisions of Section
8.7 of the Indenture. The Servicer shall deliver to the Indenture
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 Payment 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
Indenture Trustee, the Unaffiliated 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 may be invested in
Permitted Investments in accordance with the provisions set forth
in Section 3.14. The Servicer shall give notice to the Indenture
Trustee and the Insurer of the location of the Collection Account
maintained by it when established and prior to any change thereof.
The Indenture Trustee shall give notice to the Servicer, the Trust,
the Depositor and the 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 Indenture Trustee for deposit in
the Distribution Account. In the event the Servicer shall deliver
to the Indenture Trustee for deposit in the Distribution Account
any amount not required to be deposited therein, it may at any time
request that the Indenture 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 Indenture Trustee from time to time for
deposit the amounts set forth in clauses
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(i) through (v) below, and the Indenture Trustee shall deposit such
amounts in the Distribution Account:
(i) any Monthly Advances for each Group, as required
pursuant to Section 4.03;
(ii) any amounts required to be deposited pursuant to
Section 3.25(d) or (f) in connection with any REO Property in
each Group;
(iii) any amounts to be paid in connection with a purchase
of Mortgage Loans and REO Properties in each Group pursuant to
Section 10.01;
(iv) any amounts required to be deposited pursuant to
Section 3.26 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 Indenture 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 3.14 in connection
with losses realized on Permitted Investments with respect to funds
held in the Distribution Account.
(f) Notwithstanding any contrary provision of this Agreement
(including the provisions of this Section 3.10), (i) the Servicer
shall be deemed to be in compliance with the provisions of this
Section 3.10 if amounts in any clearing account referred to in
Section 3.10(a) which the Servicer would otherwise be required by
this Section 3.10 to deposit or cause to be deposited into the
Collection Account are instead deposited or caused to be deposited
into the Distribution Account provided that such deposit into the
Distribution Account is made within the time period that such
amount would otherwise have been required to be deposited into the
Collection Account (i.e., within one Business Day of the Servicer's
receipt thereof), (ii) amounts otherwise payable or distributable
from the Collection Account may be paid or distributed from the
Distribution Account to the extent of any funds deposited into the
Distribution Account rather than the Collection Account pursuant to
clause (i) (as certified by the Servicer), and (iii) the provisions
of this Agreement (including references herein to the Collection
Account and the Distribution Account) shall be interpreted and
construed to give effect to the foregoing.
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Section 3.11. Withdrawals from the Collection 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 Indenture Trustee for deposit in the
Distribution Account the amounts required to be so remitted
pursuant to Section 3.10(b) or permitted to be so remitted
pursuant to the first sentence of Section 3.10(d);
(ii) subject to Section 3.18(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) to pay (i) subject to Section 3.18(d), 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 and (ii) the Back-up Servicer any unpaid Back-up
Servicing Fees;
(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
Unaffiliated Seller, as the case may be, with respect to each
Mortgage Loan that has previously been purchased or replaced
pursuant to Section 2.05 all amounts received thereon not
included in the Purchase Price or the Substitution Shortfall
Amount;
(vi) from proceeds on the Collection Account with respect
to the Mortgage Loans in the related Group 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) from proceeds on the Collection Account with respect
to the Mortgage Loans in the related Group 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) from proceeds on the Collection Account with
respect to the Mortgage Loans in the related Group to
reimburse the Servicer or the Indenture Trustee, as the case
may be, for expenses reasonably incurred in respect of the
breach or defect giving rise to the purchase obligation
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under Section 2.05 or Section 2.06 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;
(ix) from proceeds on the Collection Account with respect
to the Mortgage Loans in the related Group to pay, or to
reimburse the Servicer for advances in respect of, expenses
incurred in connection with any Mortgage Loan pursuant to
Section 3.18(b); and
(x) to clear and terminate the Collection Account upon
termination of this Agreement pursuant to Section 10.01(a).
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 Indenture 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. [Reserved].
Section 3.13. Administrative Duties.
(a) Duties with Respect to the Indenture. The Servicer shall
perform all its duties and the duties of the Trust under the
Indenture. In addition, the Servicer shall consult with the Owner
Trustee as the Servicer deems appropriate regarding the duties of
the Trust under the Indenture. The Servicer shall monitor the
performance of the Trust and shall advise the Owner Trustee when
action is necessary to comply with the Trust's duties under the
Indenture. The Servicer shall prepare for execution by the Trust or
shall cause the preparation by other appropriate Persons of all
such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Trust to prepare, file or
deliver pursuant to the Indenture. In furtherance of the foregoing,
the Servicer shall take all necessary action that is the duty of
the Trust to take pursuant to the Indenture including, without
limitation, pursuant to Sections 3.4, 3.5, 3.6, 3.7, 3.9, 3.16,
3.19, 7.1, 7.3, and of the Indenture.
(b) Duties with Respect to the Trust.
(i) In addition to the duties of the Servicer set forth in
this Agreement or any of the Basic Documents, the Servicer
shall perform such calculations and shall prepare for
execution by the Trust or the Owner Trustee or shall cause the
preparation by other appropriate Persons of all such
documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Trust or the Owner
Trustee to prepare, file or deliver pursuant to this Agreement
or any of the Basic Documents or under state and federal tax
and securities laws shall take
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all appropriate action that it is the duty of the Trust to
take pursuant to this Agreement or any of the Basic Documents.
In accordance with the directions of the Trust or the Owner
Trustee, the Servicer shall administer, perform or supervise
the performance of such other activities in connection with
the Collateral (including the Basic Documents) as are not
covered by any of the foregoing provisions and as are
expressly requested by the Trust or the Owner Trustee and are
reasonably within the capability of the Servicer.
(ii) Notwithstanding anything in this Agreement or the
Basic Documents to the contrary, the Servicer shall be
responsible for performance of the duties of the Trust set
forth in Article VIII of the Trust Agreement with respect to,
among other things, accounting and reports to the
Certificateholder (as defined in the Trust Agreement).
(iii) The Servicer shall perform the duties of the
Servicer specified in Section 14.2 of the Trust Agreement
required to be performed in connection with the resignation or
removal of the Owner Trustee, and any other duties expressly
required to be performed by the Servicer under this Agreement
or any of the Basic Documents.
(iv) In carrying out the foregoing duties or any of its
other obligations under this Agreement, the Servicer may enter
into transactions with or otherwise deal with any of its
Affiliates; provided, however, that the terms of any such
transactions or dealings shall be in accordance with any
directions received from the Trust and shall be, in the
Servicer's opinion, no less favorable to the Trust in any
material respect.
(c) Tax Matters. The Servicer shall prepare and file, on
behalf of the Trust, all tax returns, tax elections, financial
statements, and such annual or other reports of the Trust as are
necessary for the preparation of tax reports as provided in Article
VIII of the Trust Agreement. All tax returns will be signed by the
Owner Trustee on behalf of the Trust.
(d) Non-Ministerial Matters. With respect to matters that in
the reasonable judgment of the Servicer are non-ministerial, the
Servicer shall not take any action pursuant to this Article III
unless within a reasonable time before the taking of such action,
the Servicer shall have notified the Owner Trustee and the Trustee
of the proposed action and the Owner Trustee and, with respect to
items (A), (B), (C) and (D) below, the Trustee shall not have
withheld consent or provided an alternative direction. For the
purpose of the preceding sentence, "non-ministerial matters" shall
include:
(A) the amendment of or any supplement to the
Indenture;
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(B) the initiation of any claim or lawsuit by the Trust
and the compromise of any action, claim or lawsuit brought
by or against the Trust (other than in connection with the
collection of the Mortgage Loans);
(C) the amendment, change or modification of this
Agreement or any of the Basic Documents;
(D) the appointment of successor Note Registrars, Note
Paying Agents and successor Trustees pursuant to the
Indenture or the appointment of successor Servicers or the
consent to the assignment by the Note Registrar, Note
Paying Agent or Trustee of its obligations under the
Indenture; and
(E) the removal of the Indenture Trustee.
(e) Notwithstanding anything to the contrary contained herein,
if HomeGold, Inc. shall cease to be the Servicer hereunder,
HomeGold, Inc. shall nevertheless continue to be bound by the
provisions of this Section 3.13, all references in this Section
3.13 to the Servicer shall be deemed to be references to HomeGold,
Inc. and the Servicer hereunder shall not be bound by such
provisions.
Section 3.14. Investment of Funds in the Investment Accounts.
(a) The Servicer may direct any depository institution
maintaining the Collection Account, the Expense Account, the
Distribution Account and the Servicing Accounts (each, for purposes
of this Section 3.14, 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 next Payment Date, if a Person other than the
Indenture Trustee is the obligor thereon, and (ii) no later than
the next Payment Date, if the Indenture 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 Indenture Trustee (in its
capacity as such) or in the name of a nominee of the Indenture
Trustee. The Indenture Trustee on behalf of the Noteholders 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 Indenture
Trustee or its agent, together with any document of transfer
necessary to transfer title to such investment to the Indenture
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 Indenture Trustee shall at the
direction of the Servicer:
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(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 (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
Indenture 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, the
Distribution Account and the Servicing Accounts held by or on
behalf of the Servicer or the Indenture Trustee, shall be for the
benefit of the Servicer and shall in the case of the Servicer
Accounts and the Collection Account be subject to its withdrawal in
accordance with Section 3.09 and Section 3.11, respectively. 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 Indenture
Trustee may and, subject to Section 6.1 of the Indenture and
Section 6.2(g) of the Indenture, upon the request of the Insurer,
shall take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution
of appropriate proceedings.
Section 3.15. [intentionally omitted]
Section 3.16. 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
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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 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 3.25, 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 Noteholders and the
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 3.16, 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 3.16, 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 Indenture Trustee, the Noteholders and the
Insurer, claims under any such blanket policy in a timely fashion in accordance
with the terms of such policy.
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(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 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 Indenture 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 3.17. 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
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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 Indenture Trustee that any such substitution or assumption agreement
has been completed by forwarding to the Indenture Trustee the executed 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 3.17, 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 3.18. 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 Sections 3.11 and 3.25. 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
3.18 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 Trust, the Indenture Trustee, the
Insurer or otherwise, 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 Trust, the Indenture Trustee, the Noteholders or the
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
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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:
(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
Indenture Trustee, the Noteholders and the
Insurer 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 Indenture
Trustee, the Noteholders and the Insurer to take
such actions with respect to the affected
Mortgaged Property.
The cost of the environmental audit report contemplated by
this Section 3.18 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
Noteholders 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 Indenture Trustee, Noteholders and the Insurer
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, cleanup 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 the Indenture Trustee, Noteholders
and the Insurer. 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 Noteholders
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 any
Mortgage Loan that is 90 days or more delinquent, which the
Servicer determines in good
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faith will otherwise become subject to foreclosure proceedings
(evidence of such determination to be delivered in writing to the
Indenture Trustee and the Insurer prior to purchase), at a price
equal to the Purchase Price, provided that the aggregate Stated
Principal Balance of the Mortgage Loans so purchased may not,
without the consent of the Insurer, exceed 3% of the aggregate
Stated Principal Balances of the Mortgage Loans as of the Cut-Off
Date. The Purchase Price for any Mortgage Loan purchased hereunder
shall be deposited in the Collection Account, and the Indenture
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 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
Payment 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 3.19. Indenture 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
Indenture Trustee and the 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
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delivery to it of the Mortgage File. Upon receipt of such certification and
request, the Indenture 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 Indenture Trustee shall, upon request of the Servicer and delivery to
the Indenture Trustee of a Request for Release in the form of Exhibit E-1,
release the related Mortgage File to the Servicer, and the Indenture Trustee
shall, at the direction of the Servicer, execute such documents as shall 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 Indenture 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 Indenture 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 Indenture Trustee to the Servicer.
Upon written certification of a Servicing Officer, the
Indenture Trustee shall execute and deliver to the Servicer, with copies to the
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 Indenture Trustee and a statement as to the reason such
documents or pleadings are required and that the execution and delivery thereof
by the Indenture 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.
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Section 3.20. 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 in each Group payable solely from payments of interest in respect
of such Mortgage Loan, subject to Section 3.26. In addition, the Servicer shall
be entitled to recover unpaid related 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 3.25. 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.
Additional servicing compensation in the form of late payment
charges or otherwise shall be retained by the Servicer (subject to Section 3.26)
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, and pursuant to Section 3.25(b) to withdraw from any REO
Account, as additional servicing compensation, interest or other income earned
on deposits therein, subject to Section 3.14 and Section 3.26, and shall also be
entitled to interest or other income earned on other Investment Accounts
pursuant to the Indenture. 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 3.16, 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 in Section 6.7 of
the Indenture, the fees and expenses of the Indenture Trustee) and shall not be
entitled to reimbursement therefor except as specifically provided herein.
As compensation for the activities of the Back-up Servicer
hereunder, the Back-up Servicer shall be entitled to the Back-up Servicing Fee
with respect to each Mortgage Loan in each Group. The Back-up Servicer shall
cease to be entitled to the Back-up Servicing Fee in the event it shall become
the successor Servicer hereunder (in which case it shall be entitled to the
compensation to which the Servicer is entitled to as provided herein).
Section 3.21. Reports to the Indenture Trustee; Collection
Account Statements.
Not later than fifteen days after each Payment Date, the
Servicer shall forward to the Trust, the Indenture Trustee, the 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 Payment Date with respect
to the Mortgage Loans in Group I or Group II, 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
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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 in
Group I and Group II as of the last day of the calendar month immediately
preceding such Payment Date. Copies of such statement shall be provided by the
Indenture Trustee to any Securityholder and to any Person identified to the
Indenture Trustee as a prospective transferee of a Security, upon request at the
expense of the requesting party, provided such statement is delivered by the
Servicer to the Indenture Trustee.
Section 3.22. Statement as to Compliance.
The Servicer will deliver to the Trust, the Indenture Trustee,
the 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 and the
nature and status thereof. Copies of any such report shall be provided by the
Indenture Trustee to any Securityholder and to any Person identified to the
Indenture Trustee as a prospective transferee of a Security, upon request at the
expense of the requesting party, provided such report is delivered by the
Servicer to the Indenture Trustee.
Section 3.23. 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 Trust, the Indenture Trustee, the Insurer
and each Rating Agency. Copies of such report shall be provided by the Indenture
Trustee to any Securityholder upon request at the Servicer's expense,
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provided that such report is delivered by the Servicer to the Indenture Trustee
and such report does not prohibit such delivery.
Section 3.24. 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 Securityholder, 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 Securityholder, the Insurer, the
Trust, the Indenture Trustee and to any Person identified to the Servicer as a
prospective transferee of a Security, 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.
Section 3.25. 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 Indenture Trustee, or its nominee, on
behalf of the Noteholders, the Certificateholder and the Insurer.
(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 Indenture Trustee for the benefit of the
Noteholders and the 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 the Noteholders and
the Insurer. 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:
(i) all insurance premiums due and payable in respect of
such REO Property;
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(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.
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 3.25(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 Indenture
Trustee on behalf of the Noteholders and the 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 3.20 is sufficient to pay such fees, subject to
the Servicer's rights under Section 3.25(c)(iii).
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(d) In addition to the withdrawals permitted under Section
3.25(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 payment on the related
Payment Date in accordance with Section 8.3 of the Indenture, the
income from the related REO Property received during the prior
calendar month, net of any withdrawals made pursuant to Section
3.25(c) or this Section 3.25(d).
(e) Subject to the time constraints set forth in Section
3.25(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 payment on the related Payment Date in accordance with
Section 8.3 of the Indenture.
(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 3.26. Obligations of the Servicer in Respect of
Prepayment Interest Shortfalls.
The Servicer shall deliver to the Indenture 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 Payment
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.
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Section 3.27. [Reserved].
Section 3.28. 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 Indenture Trustee for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Indenture Trustee, the 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 3.29. [Reserved].
Section 3.30. Obligations Under Indenture.
The Servicer agrees to perform the obligations stated in the
Indenture to be performed by the Servicer, including, without limitation, (i)
provision of the notice of the amounts, if any, that the Insurer has paid in
respect of the Notes pursuant to Section 2.6(d) of the Indenture, (ii) payment
of the expenses and fees referred to in Sections 5.13, 6.7, 6.8 and 6.10(e) of
the Indenture, and (iii) advising the Indenture Trustee with respect to the
manner of surrender of Notes as contemplated in Section 8.3(f) of the Indenture.
Section 3.31. Records.
The Servicer shall maintain appropriate books of account and
records relating to services performed under this Agreement, which books of
account and records shall be accessible for inspection by the Trust at any time
during normal business hours.
Section 3.32. Additional Information to be Furnished to the
Trust.
The Servicer shall furnish to the Trust from time to time such
additional information regarding the Collateral as the Trust shall reasonably
request.
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ARTICLE IV
PAYMENTS AND DISTRIBUTIONS; STATEMENTS;
MONTHLY ADVANCES; REALIZED LOSSES; WITHHOLDING
Section 4.01. Payments and Distributions.
The Securityholders shall have the right to receive payments
and distributions in respect of the Securities as set forth in the Indenture and
the Trust Agreement.
Section 4.02. Statements to Securityholders.
On each Servicer Remittance Date, the Servicer shall deliver
to the Trust, the Back-up Servicer, the Indenture Trustee, the Insurer and the
Rating Agencies by telecopy (or by such other means as the Servicer and the
Trust, the Indenture Trustee, the Insurer or the Rating Agencies, as the case
may be, may agree from time to time) a report prepared by the Servicer with
respect to each Group of Mortgage Loans as to the distributions to be made on
the related Payment Date and shall forward to the Indenture Trustee and the
Back-up Servicer by overnight mail a computer readable magnetic tape or diskette
of such report. Both reports (each a "Remittance Report") shall contain the
following information:
a. the amount of the payment to be made on such Payment Date
to the Holders of each Class of Class A Notes allocable
to principal;
b. the amount of the payment to be made on such Payment Date
to the Holders of each Class of Class A Notes allocable
to interest;
c. 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
Indenture Trustee as the Indenture Trustee deems necessary
or desirable, or which a Securityholder reasonably
requests, to enable Securityholders to prepare their tax
returns;
d. the Scheduled Payments for each Group for such Payment
Date and the respective provisions thereof allocable to
principal and interest;
e. the Available Distribution Amount for each Group
for such Payment Date;
f. the amount, if any, by which the Scheduled Payments for
each Group for such Payment Date exceeds the Available
Distribution Amount for the related Class expected to be
on deposit in the Distribution Account on such Payment
Date;
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g. the amount of Monthly Advances for each Group to be made
by the Servicer in respect of the related Payment Date,
the aggregate amount of Monthly Advances for each Group
outstanding after giving effect to such Monthly Advances,
and the aggregate amount of Nonrecoverable Monthly
Advances for each Group in respect of such Payment Date;
h. with respect to any reimbursement to be made to the
Insurer on such Payment Date pursuant to Sections
8.3(a)(iii) and (v) of the Indenture, the amount, if any,
allocable to principal and the amount allocable to
interest;
i. Cumulative Insurance Payments for each Group after giving
effect to the distributions to be made on such Payment
Date;
j. the Delinquency Percentage for each Group for the related
Collection Period;
k. the Cumulative Loss Percentage for each Group for such
Payment Date;
l. the amount of any Insurance Payment to be made to each
Class of Class A Noteholders on such Payment Date, the
amount of any reimbursement payment to be made to the
Insurer on such Payment Date pursuant to Section
8.3(a)(iii) of the Indenture and the amount of Cumulative
Insurance Payments after giving effect to any such
Insurance Payment to such Class A Noteholders or any such
reimbursement payment to the Insurer;
m. the aggregate Stated Principal Balance of the Mortgage
Loans and any REO Properties in each Group at the close of
business on such Payment Date;
n. the number, aggregate principal balance, weighted average
remaining term to maturity and weighted average Mortgage
Rate of the Mortgage Loans in each Group as of the related
Due Date;
o. the number and aggregate unpaid principal balance of
Mortgage Loans in each Group (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;
p. with respect to any Mortgage Loan that became an REO
Property in each Group 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;
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q. the book value of any REO Property in each Group as of the
close of business on the last Business Day of the calendar
month preceding the Payment Date;
r. the aggregate amount of Principal Prepayments for each
Group made during the related Collection Period;
s. the aggregate amount of Realized Losses for each Group
incurred during the related Collection Period;
t. the aggregate amount of extraordinary expenses withdrawn
from the Collection Account or the Distribution Account
for such Payment Date;
u. the Note Principal Balance for each Class after giving
effect to the distributions to be made on such Payment
Date;
v. the Note Factor for each Class of Notes applicable to such
Payment Date;
w. the Interest Distribution Amount in respect of each Class
of Class A Notes for such Payment 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 Notes on
such Payment Date;
x. the aggregate amount of any Prepayment Interest Shortfalls
for each Class for such Payment Date, to the extent not
covered by payments by the Servicer pursuant to Section
3.26;
y. the aggregate amount of Relief Act Interest Shortfalls for
each Class for such Payment Date;
z. the Required Overcollateralization Amount for each Class
for such Payment Date;
aa. the Subordination Overcollateralization Amount for each
Class, if any, for such Payment Date;
bb. the Subordination Overcollateralization Amount for each
Class, if any, for such Payment Date; and
cc. the amount of the distribution to be made on such Payment
Date to the Holder of the Certificate.
In the case of information furnished pursuant to clauses (1)
through (3) above, the amounts shall be expressed as a dollar amount per Single
Security.
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At the request of the Insurer, the Back-up Servicer and the
Servicer shall attempt to reconcile any material inconsistencies and/or to
furnish any omitted information. Unless the Servicer reasonably believes that
the Back-up Servicer's determinations are correct, the Servicer shall have no
obligation to amend the Remittance Report to reflect the Back-up Servicer's
computations or to include the omitted information; provided notice of such
determination shall be given to the Insurer and the Back-up Servicer by the
Servicer. The Back-up Servicer shall in no event be liable to the Servicer with
respect to any failure of the Back-up Servicer to discover or detect any errors,
inconsistencies or omissions by the Servicer with respect to the Remittance
Reports.
Within a reasonable period of time after the end of each
calendar year, the Servicer shall furnish to the Indenture Trustee, and the
Indenture Trustee shall forward to each Person who at any time during the
calendar year was a Holder of a Note (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 Noteholder and (b)
such information contained in the Remittance Reports as required to enable the
Holders of the Notes 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.
On each Payment Date, the Indenture Trustee shall forward to
the Trust, the Depositor, the Holder of the Certificate, the Insurer and the
Servicer, a copy of the reports forwarded to the Class A Noteholders on such
Payment 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 Certificate on such Payment Date.
Within a reasonable period of time after the end of each
calendar year, the Servicer shall furnish to the Indenture Trustee, and the
Indenture Trustee shall forward to each Person who at any time during the
calendar year was a Holder of the Certificate a statement setting forth the
amount, if any, actually distributed with respect to the Certificate, 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 Indenture
Trustee, and the Indenture Trustee shall forward to each Securityholder, 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 Securityholder, or otherwise with respect to the purposes of this
Agreement, all such reports or information to be provided at the expense of the
Securityholder in accordance with such reasonable and explicit instructions and
directions as the Securityholder may provide. For purposes of this Section 4.02,
the Indenture Trustee's duties are limited to the extent that the Indenture
Trustee receives timely reports as required from the Servicer.
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Section 4.03. Monthly Advances.
(a) [Reserved]
(b) The amount of Monthly Advances for each Group to be made
by the Servicer for any Payment 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 3.25 for distribution on such Payment
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.
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
Indenture 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 Group and Payment 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
Payment 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 Securityholders pursuant to Section 8.3 of the Indenture on such
Payment Date if such amounts held for future distributions had not been so used
to make Monthly Advances. The Indenture Trustee will provide notice to the
Servicer and the 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
Indenture Trustee on such date is less than the Monthly Advances required to be
made by the Servicer for the related Payment Date.
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(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 Property 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 Indenture Trustee and the
Insurer.
Section 4.04. Determination of Realized Losses.
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 Officer's Certificate delivered to the Trust, the
Indenture Trustee and the 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
Indenture Trustee shall comply with all federal withholding requirements
respecting payments to Noteholders of interest or original issue discount that
the Indenture Trustee reasonably believes are applicable under the Code. The
consent of Noteholders shall not be required for such withholding. In the event
the Indenture Trustee does withhold any amount from interest or original issue
discount payments or advances thereof to any Noteholder pursuant to federal
withholding requirements, the Indenture Trustee shall indicate the amount
withheld to such Noteholders.
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ARTICLE V
[RESERVED]
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 on and undertaken hereunder by the Depositor and the Servicer,
respectively herein.
Section 6.02. Merger or Consolidation of the Depositor or the
Servicer.
Subject to the following paragraph, each of the Trust, the
Depositor and the Servicer will keep in full effect its existence, rights and
franchises as a trust or corporation, as the case may be, 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 Securities 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 Notes 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
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 or the Noteholders for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Servicer or any such
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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 willful 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 (to the extent of the Trust
Property only) against any loss, liability or expense incurred in connection
with any legal action relating to this Agreement or the Notes, 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 Noteholders hereunder. In such event,
unless the Depositor or the Servicer acts without the consent of the Insurer
prior to an Insurer Default or without the consent of Holders of Notes entitled
to at least 51% of the Voting Rights after an 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 Property, 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 Noteholders 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 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 Indenture Trustee and the Back-up Servicer. No resignation
of the Servicer shall become effective until the Back-up Servicer or other
successor servicer shall have
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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.
If, at the time the Servicer is removed or resigned there is
no Back-up Servicer or the Back-up Servicer is unable to act as successor
servicer and the Indenture Trustee does not appoint a different successor
servicer, then the Indenture Trustee shall become the successor servicer.
Upon the termination or resignation of the Servicer, the
Servicer also shall promptly (and in any event no later than 10 Business Days
subsequent to such termination or resignation) deliver or cause to be delivered
to the Back-up Servicer all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the Mortgage Loans, including all tax bills, assessment notices, insurance
premium notices and all other documents as well as all original documents then
in the Servicer's possession. The Servicer may retain copies of any such books
and records.
Any collections received by the Servicer after termination or
resignation shall be endorsed by it and remitted directly and immediately to the
Back-up Servicer. The Servicer shall be entitled to receive the Servicing Fee
through the day on which it is terminated as Servicer (which may be pro rated
for a partial month).
To the extent that the Servicer, at the time of its
termination or resignation, has therefore expended any amounts as Servicing
Advances with respect to any Mortgage Loan, which Servicing Advances remain
unreimbursed as of such date ("Unrecovered Advances") the Servicer shall
thereafter be entitled to receive from the Back-up Servicer, monthly, such
information as may be generated by the Back-up Servicer as may be reasonably
necessary to enable the Servicer to monitor the recovery of, and collection
efforts undertaken with respect to, the Unrecovered Advances, which information
will include details of collection activities, payment records and trial
balances. To the extent that the Back-up Servicer or other successor servicer
receives any amounts which relate to reimbursement for Unrecovered Advances made
by the prior Servicer, such amounts shall be remitted to the prior Servicer on
the related Payment Date. To the extent that the Servicer, based upon the
information supplied by the Back-up Servicer, believes that any discrepancies
exist between actual Unrecovered Advances received by the Back-up Servicer and
the amounts forwarded to the Servicer as recovered Unrecovered Advances, the
Servicer and the Back-up Servicer shall attempt in good faith to reconcile such
discrepancies.
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The Back-up Servicer shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any succession to become the
successor servicer. The Servicer agrees to cooperate reasonably with the Back-up
Servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide to the Back-up
Servicer all documents and records reasonably requested by it to enable it to
assume the Servicer's functions hereunder and shall promptly also transfer to
the Back-up Servicer all amounts which then have been or should have been
deposited in the Collection Account, or which are thereafter received with
respect to the Mortgage Loans. The Back-up Servicer shall not be held liable by
reason of any failure to make, or any delay in making, any distribution
hereunder or any portion thereof caused by (i) the failure of the Servicer to
deliver, or any delay in delivering, cash, documents or records to it, or (ii)
restrictions imposed by any regulatory authority having jurisdiction over the
Servicer.
The Servicer which is being terminated or is resigning shall
give notice to the Mortgagors of the transfer of the servicing to the Back-up
Servicer. Said notice shall be a joint notice of servicing transfer in the form
required by applicable law.
Section 6.05. Rights of the Trust, the Depositor and Others in
Respect of the Servicer.
The Servicer shall afford the Trust, the Depositor, the
Indenture Trustee and the 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 Trust, the Depositor, the Indenture Trustee and the 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 Trust, the Depositor,
the Indenture Trustee and the 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 Trust, the Depositor, the
Indenture Trustee, the Insurer or the Trust Property, and in either case, the
Trust, the Depositor, the Insurer or the Indenture 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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Section 6.06. Limitation of Liability.
It is expressly understood and agreed by the parties hereto
that (a) this Agreement is executed and delivered by Wilmington Trust Company,
not individually or personally but solely as trustee of HomeGold Home Equity
Loan Trust 1999-1 under the Trust Agreement dated as of May 1, 1999, with
Emergent Residual Holding Corp., in the exercise of the powers and authority
conferred and vested in it, (b) each of the representations, undertakings and
agreements herein made on the part of the Trust is made and intended not as
personal representations, undertakings and agreements by Wilmington Trust
Company but is made and intended for the purpose for binding only the Trust, (c)
nothing herein contained shall be construed as creating any liability on
Wilmington Trust Company, individually or personally, to perform any covenant
either expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties hereto and by any Person claiming by, through or
under the parties hereto and (d) under no circumstances shall Wilmington Trust
Company be personally liable for the payment of any indebtedness or expenses of
the Trust or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trust under this
Agreement or the other Basic Documents.
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 Indenture
Trustee for payment to Noteholders 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 Indenture or 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 Trust, the Depositor, the
Insurer or the Indenture Trustee (in which case notice shall
be provided by telecopy), or to the Servicer, the Trust, the
Depositor, the Insurer and the Indenture Trustee by the
Holders of both Classes of Notes entitled to at least 25% of
the Voting Rights or (y) five 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
Indenture or 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
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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 Trust,
the Depositor, the Insurer or the Indenture Trustee, or to the
Servicer, the Depositor, the Insurer and the Indenture Trustee
by the Holders of both Classes of Notes 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 liquidate 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 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 liquidate 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 3.26 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
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 Trust, the Depositor, the Insurer or
the Indenture Trustee may, and at the
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written direction of the Holders of both Classes of Notes entitled to at least
25% of Voting Rights (with the consent of the Insurer to the extent there is no
Insurer Default), the Indenture Trustee shall, by notice in writing to the
Servicer and the Back-up Servicer (and to the Trust, the Depositor and the
Insurer if given by the Indenture Trustee or to the Indenture Trustee if given
by the Trust, the Depositor or the 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 Indenture Trustee shall, by notice in writing to the Servicer, the
Back-up Servicer, the Insurer, the Trust 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 Servicer and the Back-up Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Securities (other than as a Holder of any Security) or the Mortgage Loans
or the Policy or otherwise, shall pass to and be vested in the Back-up Servicer
pursuant to and under this Section, and, without limitation, the Back-up
Servicer, 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 Back-up Servicer 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 Back-up Servicer 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 Indenture 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 Indenture Trustee shall not be deemed to have knowledge of a Servicer
Event of Default unless a Responsible Officer of the Indenture Trustee assigned
to and working in the Indenture 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 Indenture Trustee and such notice
references the Notes, the Trust Property or this Agreement.
In the event that the Back-up Servicer becomes the Successor
Servicer, the parties hereby agree that there shall no longer be the requirement
to have a Back-up Servicer.
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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 August 31, 1999, which term shall be extendable by the
Insurer for successive terms of three calendar months thereafter, until the
termination of the Servicer's obligations and responsibilities pursuant to
Article X; provided that, if the Back-up Servicer shall become the Servicer
hereunder the term of the Back-up Servicer as Servicer shall not be subject to
termination without cause. Each such notice of extension (a "Servicer Extension
Notice") shall be delivered by the Insurer to the Trust, the Indenture 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
Indenture Trustee agrees that if as of the fifteenth (15th) day prior to the
last day of any term of the Servicer the Indenture Trustee shall not have
received any Servicer Extension Notice from the Insurer, the Indenture Trustee
will within five (5) days thereafter, give written notice of such non-receipt to
the Trust, the Back-up Servicer, the Insurer and the Servicer. The failure of
the Insurer to deliver a Servicer Extension Notice by the end of a calendar term
shall result in the termination of the Servicer and the Back-up Servicer shall
become the Successor Servicer. The foregoing provisions of this paragraph shall
not apply to the Indenture Trustee in the event the Indenture Trustee succeeds
to the rights and obligations of the Servicer and the Indenture 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. Back-up Servicer to Act; Appointment of
Successor Servicer.
(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 Back-up Servicer 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 3.14) 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 Back-up Servicer is prohibited by
law or regulation from obligating itself to make advances regarding
delinquent mortgage loans, then the Indenture 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 3.26; 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 Back-up Servicer as successor to the
Servicer hereunder. As compensation therefor, the Back-up Servicer
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
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continued to act hereunder. Notwithstanding the above, if the
Back-up Servicer is unable to so act or if it is prohibited by law
from making advances regarding delinquent mortgage loans or if the
Insurer or if the Holders of both Classes of Notes entitled to at
least 51% of the Voting Rights so request in writing to the
Indenture Trustee, the Indenture Trustee may promptly appoint, with
the consent of the Insurer, or petition a court of competent
jurisdiction to appoint, an established mortgage loan servicing
institution acceptable to each Rating Agency and the 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 Indenture 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
Indenture Trustee and such successor shall take such action,
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 Indenture Trustee shall act in
such capacity as hereinabove provided.
(b) If the Servicer fails to remit to the Indenture Trustee
for payment to the Noteholders any payment required to be made
under the terms of the Indenture or 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 Indenture 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 Payment Date. The Indenture Trustee shall be obligated
to make such advance only if (i) such advance, in the good faith
judgment of the Indenture 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 Indenture Trustee is
not prohibited by law from making such advance or obligating itself
to do so. Upon remittance of the Stayed Funds to the Indenture
Trustee or the deposit thereof in the Distribution Account by the
Servicer, a trustee in bankruptcy or a federal bankruptcy court,
the Indenture 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 Indenture 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
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any such advance. If the Indenture 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 Indenture
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 Indenture Trustee, from the Servicer's own funds, interest
on any advance made by the Indenture 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.
(c) The Servicer, the Back-up Servicer, the Indenture Trustee
and such successor Servicer shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such
succession. The Back-up Servicer (or the Indenture Trustee) shall
be reimbursed for Transition Costs, if any, incurred in connection
with the assumption of responsibilities of the successor Servicer,
upon receipt of documentation of such costs and expenses. The
Back-up Servicer shall have no claim against the Servicer, the
Indenture Trustee, the Insurer, the Owner Trustee, the Depositor,
any Noteholder, the Trust or any other Party to the Related
Documents for any costs and expenses incurred in effecting such
succession in excess of the amount specified in the definition of
"Transition Costs."
Section 7.03. Notification to Noteholders and Trust.
(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 Indenture Trustee shall give
prompt written notice thereof to the Trust and to all Noteholders
at their respective addresses appearing in the Note 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 Indenture Trustee becomes
aware of the occurrence of such an event, the Indenture Trustee
shall transmit by mail to the Trust and all Holders of Notes 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 of Notes evidencing at least 66% of the aggregate
Note Principal Balance of all Classes of Notes affected by any default or
Servicer Event of Default hereunder, with the written consent of the 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 Notes with the written consent
of the Insurer. Upon any such waiver of a default
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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.
Section 7.05. The Back-up Servicer.
Prior to assuming any of the Servicer's rights and obligations
hereunder the Back-up Servicer shall only be responsible to perform those duties
specifically imposed upon it by the provisions hereof. Such duties generally
relate to the following procedures which would permit the Back-up Servicer to
assume some or all of the Servicer's rights and obligations hereunder with
reasonable dispatch, following notice.
The Back-up Servicer, prior to assuming any of the Servicer's
duties hereunder may not resign hereunder unless it arranges for a successor
Back-up Servicer reasonably acceptable to each Rating Agency, and the Insurer
with not less than 60 day's notice delivered to the Servicer, the Indenture
Trustee and the Depositor. Prior to its becoming successor servicer, the Back-up
Servicer shall have only those duties and obligations imposed by it under this
Agreement, and shall have no obligations or duties under any agreement to which
it is not a party, including but not limited to the various agreements named
herein. In its capacity as successor servicer and as Back-up Servicer, Fairbanks
Capital Corp. shall in no event be liable for any obligations of the
Unaffiliated Seller or the Servicer to any party, whether hereunder or under any
other agreement, which are not related to servicing functions, including,
without limitation, any repurchase obligations.
The Back-up Servicer agrees to indemnify the Trust, the
Indenture Trustee, the Depositor, each Noteholder, the Servicer and the
Unaffiliated Seller, and any of their respective directors, officers, employees
or agents from, and hold them harmless against, any and all costs, expenses
(including reasonable attorney fees and disbursements), losses, claims, damages
and liabilities to the extent that such cost, expense, loss, claim, damage or
liability arose out of, or was imposed upon the Trust, the Indenture Trustee,
the Depositor, the Noteholder, the Servicer, or the Unaffiliated Seller and
their respective directors, officers, employees and agents through the Back-up
Servicer's acts or omissions in violation of this Agreement, except to the
extent such indemnified party's own bad faith, willful misconduct or gross
negligence contributes to the cost, loss, claim, damage or liability.
The Back-up Servicer (including the Back-up Servicer in its
capacity as successor servicer) in addition agrees to indemnify the Servicer
against any losses, claims or damages whenever imposed or suffered resulting
from the performance or non-performance by the Back-up Servicer of its duties
hereunder from the date on which it becomes the successor servicer, other than
any loss, claim or damage resulting from the Servicer's negligence, misconduct,
bad faith or failure to comply with this Agreement.
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The Servicer shall have no liability, direct or indirect, to
any party, for the acts or omissions of the Back-up Servicer, whenever such acts
or omissions occur whenever such liability is imposed.
No later than the fifth Business Day of each calendar month,
the Servicer shall deliver to the Back-up Servicer a complete set of servicing
records in computer-readable form with respect to the payment, collection and
other servicing activity of the Mortgage Loans during the preceding calendar
month, which records shall contain sufficient data to permit the Back-up
Servicer to assume the duties of the Servicer hereunder without delay on account
of the absence of relevant servicing information. On at least a quarterly basis,
the Back-up Servicer shall convert and "map" the data contained in such
servicing records to its own servicing system, and shall provide the Insurer and
Indenture Trustee not later than each March 15, June 15, September 15 and
December 15, commencing September 15, 1999, with an officer's certificate, in
the form of Exhibit F hereto, to the effect that it has received from the
Servicer each monthly submission of servicing data, has completed such
conversion and mapping of the data delivered with respect to the three
immediately preceding calendar months, and is capable of assuming the duties of
the Servicer if required to do so hereunder.
ARTICLE VIII
CONCERNING THE INDENTURE TRUSTEE
Section 8.01. Duties, Responsibilities, Etc. of Indenture
Trustee.
The duties, rights, responsibilities and privileges of the
Indenture Trustee shall be as set forth herein, in the Indenture and in the
other Basic Documents to which the Indenture Trustee is a party and no implied
covenants or obligations on the part of the Indenture Trustee shall be read into
this Agreement, the Indenture or any of the Basic Documents. Without limitation
of the foregoing, it is acknowledged and agreed that the provisions of Sections
6.1 through 6.7 and 6.11 through 6.21 of the Indenture shall apply as if set
forth in full herein.
Section 8.02. Replacement of Indenture Trustee; Successor
Indenture Trustee; Appointment of Co- or Separate Indenture Trustee.
Any successor Indenture Trustee pursuant to Section 6.8 or 6.9
of the Indenture shall succeed to all the rights, duties, responsibilities of
the Indenture Trustee pursuant to this Agreement and any co-trustee or separate
trustee appointed pursuant to Section 6.10 of the Indenture may, with the
consent of the Insurer, act as co-trustee or separate trustee hereunder.
Section 8.03. Representations and Warranties of the Indenture
Trustee.
The Indenture Trustee hereby represents and warrants to the
Servicer, the Depositor and the Insurer, as of the Closing Date, that:
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(i) The Indenture 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
Indenture Trustee, and the performance and compliance with the
terms of this Agreement by the Indenture Trustee, will not
violate the Indenture 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.
(iii) The Indenture 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 Indenture Trustee,
enforceable against the Indenture 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 Indenture 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 Indenture Trustee's good faith and
reasonable judgment, is likely to affect materially and
adversely either the ability of the Indenture Trustee to
perform its obligations under this Agreement or the financial
condition of the Indenture Trustee.
(vi) No litigation is pending or, to the best of the
Indenture Trustee's knowledge, threatened against the
Indenture Trustee which would prohibit the Indenture Trustee
from entering into this Agreement or, in the Indenture
Trustee's good faith reasonable judgment, is likely to
materially and adversely affect either the ability of the
Indenture Trustee to perform its obligations under this
Agreement or the financial condition of the Indenture Trustee.
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ARTICLE IX
CERTAIN MATTERS REGARDING THE INSURER
Section 9.01. Rights of the Insurer to Exercise Rights of
Class A Noteholders.
Each of the Trust, the Depositor, the Servicer and the
Indenture Trustee, and by accepting a Note, each Noteholder, agrees that unless
an Insurer Default has occurred and is continuing, the Insurer shall have the
right to exercise all rights of the Noteholders under this Agreement, the
Indenture and the Basic Documents (including all Voting Rights) (except as
provided in clause (i) of the second paragraph of Section 12.01) without any
further consent of the Noteholders, 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 Unaffiliated Seller or the
Originator to repurchase, or substitute for, Mortgage Loans
pursuant to Section 2.05;
(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 Indenture 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; and
(f) the right to remove the Indenture Trustee pursuant to
Section 6.8 of the Indenture.
So long as no Insurer Default should have occurred and be
continuing, the consent of the Insurer to any action or matter shall be deemed
to also constitute the consent of the requisite percentage of Noteholders
required by this Agreement or the Indenture in respect of such action or matter.
In addition, each Noteholder agrees that, unless an Insurer
Default has occurred and is continuing, the rights specifically set forth above
may be exercised by the Noteholders only with the prior written consent of the
Insurer.
Section 9.02. Indenture Trustee to Act Solely with Consent of
the Insurer.
Unless an Insurer Default has occurred and is continuing, the
Indenture Trustee shall not agree to any amendment pursuant to Section 12.01 or
terminate the Servicer pursuant to Section 7.01, in each case without the prior
written consent of the Insurer (which consent shall not be unreasonably
withheld).
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Section 9.03. Trust Property and Accounts Held for Benefit of
the Insurer.
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
Trust, the Noteholders and for the benefit of the 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 Trust, the Noteholders shall be deemed to
include the Insurer. Unless an Insurer Default has occurred and is continuing,
the Servicer shall not terminate any Sub-Servicing Agreements without cause
without the prior consent of the Insurer. Unless an 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 Insurer. The
Indenture Trustee and the Servicer shall provide such information as may be
reasonably requested by, and shall otherwise cooperate with all reasonable
requests of the Insurer with respect to the Mortgage Loans or the Notes;
provided that such information is within the control of or reasonably accessible
to such party without undue expense.
Section 9.04. Notices to the 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
Noteholders shall also be sent to the Insurer.
Section 9.05. Third-Party Beneficiary.
The Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if a party hereto,
provided, however, that notwithstanding the foregoing, for so long as an Insurer
Default has occurred and is continuing, the Noteholders shall succeed to the
Insurer's rights hereunder.
Section 9.06. Termination of the Servicer.
Notwithstanding anything this Agreement to the contrary, the
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 Insurer
Default has occurred and is continuing.
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ARTICLE X
TERMINATION; SALE AND PURCHASE OF MORTGAGE LOANS
Section 10.01. Termination Upon Early Redemption of the Notes
or Liquidation of All Mortgage Loans; Right of Servicer and Insurer to Purchase
Mortgage Loans.
(a) The respective obligations and responsibilities under this
Agreement of the Trust, the Depositor, the Servicer and the
Indenture Trustee (other than the obligations to the Indenture
Trustee pursuant to Section 6.7 of the Indenture and of the
Servicer to provide for and the Indenture Trustee to make payments
to Noteholders as contemplated herein and in the Indenture) shall
terminate upon the earlier to occur of (i) satisfaction and
discharge of the indebtedness evidenced by the Notes pursuant to
the Indenture; 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 Property;
provided, however, that in no event shall the Trust or any 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.
(b) [Reserved]
Section 10.02. Sale and Purchase of Mortgage Loans.
(a) Any redemption of a Class of Notes pursuant to Article X
of the Indenture shall be funded through the sale to the Servicer
of all of the Mortgage Loans and REO Properties included in the
relevant Group pursuant to Section 10.02(b) at a price equal to not
less than the greater of (A) the Redemption Price plus all amounts
due to the Insurer in respect of such Class or (B) the greater of
(x) the aggregate Purchase Price of all such Mortgage Loans in the
related Group, plus the appraised value of each such REO Property
in the related Group, if any, to be sold, such appraisal to be
conducted by an appraiser mutually agreed upon by the Trust, the
purchaser and the Indenture Trustee in their reasonable discretion
(and approved by the Insurer in its reasonable discretion) and (y)
the aggregate fair market value of all of the assets to be sold (as
determined by the Trust, the purchaser, the Insurer (to the extent
the Insurer is not the purchaser) and the Indenture Trustee) as of
the close of business on the third Business Day next preceding the
date upon which notice of any such Note Redemption is furnished to
Noteholders.
(b) [Reserved]
(c) [Reserved]
(d) In the event of a purchase of all of the Mortgage Loans
and REO Property in a Group by the Servicer pursuant to Section
10.02(a), the Servicer
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shall deliver to the Indenture Trustee for deposit into the
Distribution Account an amount in immediately available funds equal
to the purchase price at the time of such purchase.
(e) [Reserved]
(f) Upon certification to the Indenture Trustee by a Servicing
Officer (a copy of which certification shall be delivered to the
Insurer) of the deposit into the Distribution Account of the
purchase price of any Mortgage Loans and REO Properties sold
pursuant to Section 10.01(a), the Indenture Trustee shall promptly
release to the purchaser thereof the Mortgage Files for such
Mortgage Loans, and execute all assignments, endorsements and other
instruments necessary to effectuate such transfer, subject to the
requirements of Section 2.8 of the Indenture.
Section 10.03. [Reserved]
ARTICLE XI
[RESERVED]
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Amendment.
This Agreement may be amended from time to time by the Trust,
the Depositor, the Servicer and the Indenture Trustee without the consent of any
of the Noteholders, (i) to cure any ambiguity, to correct any defect or to give
effect to the expectations of Securityholders, (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 avoid or lessen the risk of
the imposition of any tax on the Trust pursuant to the Code that would be a
claim against the Trust Property, provided that the Indenture Trustee and the
Insurer have received an Opinion of Counsel to the effect that such action is
necessary or desirable 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 Securityholder,
(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
delivered to the Indenture Trustee and the Insurer, adversely affect in any
material respect the interests of any Noteholder and that such change will not
adversely affect the then current rating or shadow rating assigned to any Class
A Notes, 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 Securities, 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
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Agreement, provided that such action shall not, as evidenced by an Opinion of
Counsel delivered to the Indenture Trustee and the Insurer, adversely affect in
any material respect the interests of any Noteholder; provided, further, that if
the Person requesting such amendment delivers to the Indenture Trustee and the
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 each Class of the Class A Notes, such amendment will be deemed to
not adversely affect in any material respect the interests of the Noteholders
and no such Opinion of Counsel shall be required.
This Agreement may also be amended from time to time by the
Trust, the Depositor, the Servicer and the Indenture Trustee with the consent of
the Insurer and the Noteholders of both Classes of Notes holding Notes
evidencing at least 66% of the aggregate Note Principal Balance of both Classes
of the Notes for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders of both Classes Notes; 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 or payments which are
required to be deposited into the Collection Account or remitted to the
Indenture Trustee for deposit into the Distribution Account, (ii) adversely
affect in any material respect the interests of the Holders of any Class of
Notes in a manner, other than as described in (i), without the consent of the
Holders of both Classes of Notes evidencing at least 66% of the Note Principal
Balance of both Classes of the Notes, or (iii) modify the consents required by
the immediately preceding clauses (i) and (ii) without the consent of the
Insurer and the Holders of all Notes then outstanding. Notwithstanding the
foregoing, this Agreement may be amended by the Trust, the Depositor, the
Servicer, where applicable, and the Indenture Trustee provided that such action
is approved by Holders of Notes evidencing 100% of the Note Principal Balance 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 Noteholders, while the Servicer or any affiliate
thereof is the holder of a Class of Notes evidencing not less than 66% of the
Note Principal Balance of such Notes of the relevant Class or Classes), any such
Notes registered in the name of the Servicer or any affiliate thereof shall be
deemed not to be 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 Noteholder if such change is required by the Insurer, so
long as no 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 Notes.
Promptly after the execution of any such amendment with the
consent of Holders the Indenture Trustee shall furnish a copy of such amendment
to the Trust and each Noteholder, the Rating Agencies and the Insurer.
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It shall not be necessary for the consent of Noteholders 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 Noteholders shall be subject to such reasonable regulations
as the Indenture 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 Indenture
Trustee.
The Indenture 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 Trust, but only upon direction of
the Indenture Trustee accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of the
Noteholders.
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. [Reserved]
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 Trust, c/o Wilmington Trust
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Company, as Owner Trustee, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration, (b)
in the case of the Depositor, One New York Plaza, New York, New York 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 Insurer and the Indenture Trustee in writing by the Depositor, (c) in the
case of the Servicer, 3901 Pelham Road, Greenville, South Carolina 29615,
Attention: Laird Minor (telecopy number: (864) 289-6098, or such other address
or telecopy number as may hereafter be furnished to the Indenture Trustee and
the Depositor in writing by the Servicer, (d) in the case of the Indenture
Trustee, First Union National Bank, 230 South Tryon Street, 9th Floor,
Charlotte, North Carolina 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
Indenture Trustee, (e) in the case of the Insurer, Financial Security Assurance
Inc., 350 Park Avenue, New York, NY 10022, Attention: Surveillance Department
Re: HomeGold Home Equity Loan Trust 1999-1 (telecopy number 212-888-5278) or
such other address or telecopy number as may hereafter be furnished to the
Indenture Trustee, the Depositor and the Servicer in writing by the Insurer, and
(f) in the case of the Back-up Servicer, Fairbanks Capital Corp., if by mail,
P.O. Box 65250, Salt Lake City, Utah 84165-0250 and if by express delivery
service, 3815 South West Temple, Salt Lake City, Utah 84115, Attention: Terrill
W. Smith (telecopy number 801-293-2555) or such other address or telecopy number
as may hereafter be furnished to the Indenture Trustee, the Depositor, the
Servicer, and the Insurer in writing by the Back-up Servicer. 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 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 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 Noteholder shall be given in the manner provided in
Section 12.5 of the Indenture. Any notice so given to a Noteholder within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Noteholder 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.
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 Notes or the rights of the Holders thereof.
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Section 12.07. Notice to Rating Agencies and Insurer.
The Indenture Trustee shall use its best efforts promptly to
provide notice to the Rating Agencies and the 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
Indenture Trustee;
4. The repurchase or substitution of Mortgage Loans pursuant
to or as contemplated by Section 2.05;
5. The final payment to the Holders of any Notes;
6. Any change in the location of the Collection Account;
7. Any event that would result in the inability of the
Indenture Trustee to make advances regarding delinquent
Mortgage Loans; and
8. Any Insurer Default that has not been cured.
In addition, the Indenture Trustee shall promptly furnish to
each Rating Agency and the Insurer copies of each report to Noteholders
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 3.22; and
2. Each annual independent public accountants' servicing
report described in Section 3.23.
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.
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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
Property by the Depositor to the Trust as contemplated by this Agreement be, and
be treated for all purposes as, a sale by the Depositor to the Trust of the
Mortgage Loans and the other assets constituting the Trust Property. However, in
the event that, notwithstanding the intent of the parties, the Mortgage Loans
and the other assets constituting the Trust Property 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 Property provided for herein shall be deemed to be a
grant by the Depositor to the Trust 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 Property 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 Trust 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 Trust for the purpose of perfecting such security interest under
applicable law. Any assignment of the interest of the Trust pursuant to any
provision hereof shall also be deemed to be an assignment of any security
interest 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 Property, 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.
67
<PAGE>
IN WITNESS WHEREOF, the Trust, the Depositor, the Servicer and
the Indenture 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.
HOMEGOLD HOME EQUITY LOAN TRUST 1999-1
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee
By: /s/ Virginia Karablacas
Name:
Title:
PRUDENTIAL SECURITIES SECURED FINANCING
CORPORATION, as Depositor
By: /s/ Mary Alice Kohs
Name:
Title:
HOMEGOLD, INC., as Servicer
By: /s/ Laird Minor
Name: Laird Minor
Title: Executive Vice President
FAIRBANKS CAPITAL CORP., as Back-up
Servicer
By: /s/ Terrell Smith
Name:
Title:
[Sale and Servicing Agreement]
<PAGE>
FIRST UNION NATIONAL BANK, solely in its capacity as Indenture Trustee and not
in its individual capacity
By: /s/ Pablo de la Canal
------------------------------
Name: Pablo de la Canal
Title: Assistant Vice President
[Signature Page for Sale and Servicing Agreement]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 27th day of May, 1999, before me, a notary public in
and for said State, personally appeared ___________, known to me to be a
__________ of Wilmington Trust Company, 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
[Seal]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 27th day of May, 1999, before me, a notary public in
and for said State, personally appeared Mary Alice Kohs, 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
[Seal]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 27th day of May, 1999, before me, a notary public in
and for said State, personally appeared Laird Minor, known to me to be a
Executive Vice President of HomeGold, Inc., 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
[Seal]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 27th day of May, 1999, before me, a notary public in
and for said State, personally appeared Pablo de la Canal, known to me to be an
officer of First Union National Bank, 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
[Seal]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 27th day of May, 1999, before me, a notary public in
and for said State, personally appeared , known to me to be an officer of
Fairbanks Capital Corp. a [ ] corporation 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
[Seal]
<PAGE>
EXHIBIT A
GLOSSARY OF DEFINED TERMS
[See Separate Document]
A-1
<PAGE>
EXHIBIT B
[RESERVED]
B-1
<PAGE>
EXHIBIT C-1
FORM OF INDENTURE TRUSTEE'S INITIAL CERTIFICATION
__________, 1999
HomeGold Home Equity Loan Trust 1999-1
c/o Wilmington Trust Company, as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attn: Corporate Trust Office
Prudential Securities Secured
Financing Corporation
One New York Plaza
New York, New York 10292
Attn: Asset-Backed Finance Group
HomeGold, Inc.
3901 Pelham Road
Greenville, SC 29615
Re: Sale and Servicing Agreement, dated as of May 1, 1999,
among HomeGold Home Equity Loan Trust 1999-1, Prudential
Securities Secured Financing Corporation, Fairbanks
Capital Corp., HomeGold, Inc. and First Union National
Bank (the "Agreement")
Ladies and Gentlemen:
Pursuant to Section 2.04 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 Indenture Trustee's preliminary exceptions in
accordance with Section 2.04 of the Agreement. Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to them in the
Agreement.
C-1-1
<PAGE>
The Indenture Trustee has made no independent examination of
any documents contained in each Mortgage File beyond the review specifically
required in the Agreement. The Indenture 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 Schedule, or
(ii) the collectability, insurability, effectiveness or suitability of any such
Mortgage Loan.
FIRST UNION NATIONAL BANK,
solely in its capacity as Indenture
Trustee and not in its individual capacity
By:
Name:
Title:
C-1-2
<PAGE>
EXHIBIT C-2
FORM OF INDENTURE TRUSTEE'S FINAL CERTIFICATION
_________, 1999
HomeGold Home Equity Loan Trust 1999-1
c/o Wilmington Trust Company, as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attn: Corporate Trust Office
Prudential Securities Secured
Financing Corporation
One New York Plaza
New York, New York 10292
Attn: Asset-Backed Finance Group
HomeGold, Inc.
3901 Pelham Road
Greenville, SC 29615
Re: Sale and Servicing Agreement, dated as of May 1, 1999,
among HomeGold Home Equity Loan Trust 1999-1, Prudential
Securities Secured Financing Corporation, Fairbanks
Capital Corp., HomeGold, Inc., and First Union National
Bank (the "Agreement")
Ladies and Gentlemen:
In accordance with Section 2.04 of the Agreement, the
undersigned, as Indenture 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:
(a) 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;
(b) an original recorded Assignment of the Mortgage to the
Indenture Trustee together with the original recorded Assignment or
Assignments of the Mortgage showing a complete chain of assignment
from the originator, or a
C-2-1
<PAGE>
certified copy of such Assignments in those instances where the
public recording retains the original or where original has been
lost; and
(c) the original lender's title insurance policy.
The Indenture Trustee has made no independent examination of
any documents contained in each Mortgage File beyond the review specifically
required in the Agreement. The Indenture 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,
solely in its capacity as Indenture
Trustee and not in its individual
capacity
By:
Name:
Title:
C-2-2
<PAGE>
EXHIBIT D
FORM OF UNAFFILIATED SELLER'S AGREEMENT
[See Separate Document]
D-1
<PAGE>
Exhibit E-1
REQUEST FOR RELEASE
(for Indenture Trustee/Custodian)
Loan Information
Name of Mortgagor:
Servicer
Loan No.:
Indenture Trustee/Custodian
Name: First Union National Bank
Address: 230 S. Tryon Street, Charlotte, NC 28288
Indenture Trustee/Custodian
Mortgage File No.:
Depositor
Name: Prudential Securities Secured
Financing Corporation
Address: One New York Plaza, New York 10292
Trust
Name: HomeGold Home Equity Loan Trust 1999-1
Address: c/o Wilmington Trust Company, Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attn: Corporate Trust Office
Securities: HomeGold Home Equity Loan Asset Backed Notes,
Series 1999-1.
E-1-1
<PAGE>
The undersigned Servicer hereby acknowledges that it has
received from First Union National Bank, as Indenture Trustee for the Holders of
HomeGold Home Equity Loan Asset Backed Notes, Series 1999-1, 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 Sale and Servicing
Agreement, dated as of May 1, 1999, among the Indenture Trustee, the Trust, the
Depositor, the Back-up Servicer and the Servicer (the "Sale and Servicing
Agreement").
(a) Promissory Note dated __________, 19__, in the original principal sum
of $________, made by ______________, payable to, or endorsed to the
order of, the Indenture Trustee.
(b) 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 ______________.
(c) 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 _____________.
(d) Assignment of Mortgage or Deed of Trust to the Indenture 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 ________.
(e) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
(f) __________________________________________
(g) __________________________________________
(h) __________________________________________
(i) __________________________________________
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 Indenture Trustee, solely for
the purposes provided in the Agreement and the Indenture.
(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
E-1-2
<PAGE>
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 Indenture 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
Indenture 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:
HOMEGOLD, INC.
By:
Name:
Title:
E-1-3
<PAGE>
EXHIBIT E-2
REQUEST FOR RELEASE
[Mortgage Loans Paid in Full]
OFFICER'S CERTIFICATE AND TRUST RECEIPT
HOMEGOLD HOME EQUITY LOAN ASSET BACKED NOTES
SERIES 1999-1
____________________________________________ 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 SALE 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 SALE AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.
DATED:
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
E-2
<PAGE>
EXHIBIT F
FORM OF BACK-UP SERVICER CERTIFICATION
[Date]
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Attention: Senior Vice President-Surveillance
Re: MPS Mortgage Loan Trust 1998-1
First Union National Bank
230 South Tryon Street, 9th Floor
Charlotte, North Carolina 28288-1179
Re: Sale and Servicing Agreement, dated as of May 1, 1999, among
HomeGold Home Equity Loan Trust 1999-1, Prudential Securities
Secured Financing Corporation, HomeGold, Inc. and First Union
National Bank
Ladies and Gentlemen:
In accordance with Section 7.05 of the above-referenced Sale
and Servicing Agreement (the "Sale and Servicing Agreement"), the undersigned,
as back-up servicer (the "Back-up Servicer"), hereby certifies that:
(i) the Back-up Servicer has received from the Servicer a
complete set of servicing records (the "Servicing
Information") on a monthly basis through [__________,
____] in computer readable format in accordance with
Section 7.05 of the Sale and Servicing Agreement;
(ii) the Servicing Information has been converted and
"mapped" to the Back-up Servicer's servicing system;
and
(iii) the Back-up Servicer is ready, willing and able to
assume the duties of the Servicer if required to do
so in accordance with the Sale and Servicing
Agreement.
FAIRBANKS CAPITAL CORP.
By:
Name:
Title:
F-1
<PAGE>
Schedule 1
MORTGAGE LOAN SCHEDULE
<PAGE>
<TABLE>
<CAPTION>
account pool name1 curr_bal
<S> <C> <C> <C>
12 A1 WILLIAM THOMAS HALL $7,569.55
196 A1 CHARLES J WRIGHT $13,168.92
1715 A1 SICERO ALLEN $28,936.80
1902 A1 GARLEY S GRANT $22,749.21
1949 A1 JOE AIKEN $32,009.06
2004 A1 HAMMIE FARR $23,824.82
2267 A1 PATRICIA A HERRMANN $14,639.74
2281 A1 PAUL DANSBY $23,644.17
2342 A1 JACOB C HUNTER $23,496.27
2755 A1 WILLIAM D BRADEN $18,858.74
2775 A1 RAYMOND A OWENS $24,538.34
3037 A1 WILLIE R HARRIS $17,832.66
3089 A1 MILDRED BOYCE $16,214.63
3197 A1 WAYNE HOLCOMBE $7,377.22
3244 A1 CLEMMIE JEAN WOMBLE $18,085.05
3330 A1 JAMES M BOITER $21,940.00
3566 A1 CHARLES E CHILDRESS $14,804.65
3876 A1 GEORGE W HENDERSON $3,910.88
30094 A1 SAM GREGORY $10,089.20
35491 A1 EDNA V DUNCAN $1,403.06
60038 A1 BERNIDEAN W WILLIAMS $27,066.95
60065 A1 ALLSTATE PROPERTIES INC $12,174.43
60135 A1 ELLA B THOMPSON $5,907.85
60152 A1 OSCAR LEE OWENS $4,066.11
60254 A1 JIMMY DONALD ATKINS $11,308.26
60266 A1 ALICE FAYE LUNNY $9,699.47
60272 A1 LIZZIE MOORE TOLBERT $12,036.79
60291 A1 JO ELLEN TAYLOR SULLIVAN $6,261.35
60450 A1 EULA R WINN $2,312.43
60451 A1 ANDRE D HAWKINS $8,725.94
60454 A1 LOUISE MAUDE JOY $5,065.74
60612 A1 JOEL A SEABOLT $7,137.06
60697 A1 LENORA A HENRY $6,766.25
60699 A1 NANCY L FOSTER $29,355.91
60710 A1 MILDRED F MIDDLETON $22,573.32
60761 A1 WILLIE J WILLIAMS $23,976.54
60766 A1 WILLIE J WRIGHT $27,395.31
60852 A1 LEROY GAY $10,866.29
60867 A1 JAMES ROBIN DENNIS $13,324.48
60933 A1 HELEN HOWARD ISAAC $7,292.76
60950 A1 LINDA H BELL $5,681.57
61016 A1 FLOSSIE MAE ABERCROMBIE $9,377.09
61065 A1 JUDI E. MAULDIN $23,398.05
61159 A1 THOMAS H CAMPBELL JR $18,574.38
61191 A1 ROBERT J ZALEZNACK $22,513.77
61219 A1 ANNIE R COX $1,535.60
61248 A1 LUTHER S MCALISTER II $21,828.06
61285 A1 JOYCE M WALKER $16,391.86
61293 A1 WILLIE TRIBBLE $35,329.59
61485 A1 MILWEE PROPERTIES TRUST $64,349.27
61496 A1 WILLIE J SMITH $1,771.97
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
61524 A1 AUSTIN DAVIS $16,855.95
61608 A1 OLIVER E RAY $8,547.15
61624 A1 MICHAEL J LOVELL $18,091.40
61926 A1 DAVID J NEER SR $30,778.09
62217 A1 ROLAND C TURNER $2,528.11
62230 A1 MINNIE P BONNER $37,646.45
62288 A1 PHYLLIS B KELLY(EST OF) $34,044.07
62347 A1 RAYMOND J BULLOCK SR $6,179.22
62416 A1 NATHANIEL WALKER $14,524.31
62519 A1 CURTIS S LACKEY $1,281.35
62535 A1 EUNICE WHICHARD $37,782.23
62543 A1 KELLY BRYAN $33,531.49
62567 A1 LEVERN MCKENNEY $8,322.18
62590 A1 WILLIAM T MARVIN II $4,332.45
62667 A1 JAMES B HAWKINS $16,356.57
62676 A1 CHARLES MORANT $13,047.49
62679 A1 PEGGY ANN BARR $34,996.34
62689 A1 OSCAR TORRES $27,450.16
62694 A1 JEANETTE SELLERS $26,532.88
62815 A1 MARK SNOW $29,005.07
62885 A1 WILLIAM J MOORE $7,487.86
62914 A1 ROBERT S YOUNG $61,506.02
63012 A1 JOHN R LOVETT $29,280.80
63033 A1 BOYD E ISLER $4,245.48
63060 A1 JIMMY RAY ANDERS $14,659.45
63071 A1 JACQUELINE JACKSON $21,732.57
63122 A1 RODNEY D LANDIS $30,291.35
63131 A1 MARYLOU SHARP $22,836.12
63144 A1 ROBERT T STRAYER $28,524.57
63171 A1 WILLIAM BRISTOW JR $18,475.25
63209 A1 SCOTTY MCQUILLER $20,808.73
63260 A1 LINDA H WILLIAMS $41,732.17
63323 A1 WILLIAM E HAMILTON $18,729.18
63436 A1 HIRAM CRUZ $8,360.67
63547 A1 MITTIE VANN $40,448.40
63548 A1 MITTIE VANN $6,375.57
63597 A1 TONYA HAYNES $42,359.09
63609 A1 MINNIE D CLARK $40,901.79
63639 A1 CLAUDETTE B DRAKE $35,975.04
63796 A1 JOSEPH DAVIS JR $35,922.20
63807 A1 SUSAN LYNN FAUST $19,776.88
63870 A1 LEO E BROWN $37,845.60
63880 A1 MICHAEL LANCELEY $36,789.52
63883 A1 TALMO LEVY $23,737.23
63888 A1 HAZEL F PARRIS $15,777.72
64029 A1 ALLEN R JAMISON $31,768.43
64113 A1 CAROLYN C KELLY $41,452.33
64141 A1 LEROY MCMILLAN $41,320.90
64170 A1 JAMES F HART III $41,167.88
64202 A1 GEORGIA HARLEY $22,949.21
64238 A1 JOHNNIE MAE SMALLS $10,504.74
64263 A1 SANDRA MILLER $23,807.64
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
64287 A1 JENNIE LYBRAND $35,207.88
64291 A1 GERALD S ROSE $275,233.01
64306 A1 THOMAS M CROSBY $15,117.35
64312 A1 ISAAC N STRONG $11,272.48
64313 A1 VIOLA K BROWN $35,576.74
64338 A1 SADIE BENNETT $39,499.07
64369 A1 ROBERT S GOFF $32,196.04
64374 A1 MARY B TUCKER $34,081.05
64401 A1 PAMELA B FARLEY $16,121.20
64402 A1 RONALD L FARLEY $20,149.12
64403 A1 CHARLES H ELKINS $32,799.84
64406 A1 WILSON HAYNES SR $36,000.09
64470 A1 BLAND MCCALL $29,065.85
64497 A1 ROBERT L THOMPSON JR $10,730.26
64591 A1 CATHERINE GILMER $25,965.57
64596 A1 JOHN ALLEN HAYNESWORTH $32,636.65
64599 A1 JOHN W STALEY $41,956.36
64602 A1 SOMSAK SOMCHEEN $38,586.70
64625 A1 ALBERT S BLUNT $31,291.78
64631 A1 WILLIAM BORUM JR $36,829.29
64650 A1 DAVID GREEN $17,863.60
64798 A1 TIMOTHY SCOTT SMITH $29,479.63
64895 A1 BOBBY STEADMAN $24,431.55
64938 A1 JERRY SATTERFIELD $29,624.19
64948 A1 LUCILLE GASKIN $27,616.67
65057 A1 ERNEST WRIGHT (EST OF) $18,725.73
65234 A1 WILLIAM H FLEMING $32,326.01
65312 A1 R GRADY JEFFERY $36,541.03
65378 A1 RODNEY L BAILEY $43,000.36
65413 A1 BRYAN O'NEAL $39,060.90
65454 A1 JUDY G TUCKER $7,621.27
65578 A1 TOWNSELL GORE $20,987.02
65629 A1 BOBBY J BEARD $43,556.44
65753 A1 BARBARA J ROBINSON $15,758.72
65797 A1 GEORGIA A CONNER $43,899.18
65841 A1 MARSHALL A GREGG $40,658.86
65922 A1 MARGARET FALLAW $25,768.09
65964 A1 JOHNNY M CHAPPELL $13,730.25
65969 A1 WANDA H SCRUGGS $38,802.53
66009 A1 HARMON EARL ERTZBERGER $31,102.55
66015 A1 BARBARA M BOSTIC $38,559.65
66016 A1 GLORIA D CLARKSON $39,867.02
66025 A1 RICKY TYRONE MYERS $38,830.28
66032 A1 ALTON SELLERS $39,859.50
66070 A1 PENNY A COX $31,371.01
66071 A1 JAMES PRESCOTT $38,943.32
66108 A1 CORRESSA W WARREN $40,375.00
66140 A1 SAMMY C WINDHAM $40,508.39
66164 A1 DOROTHY LEWIS $19,602.88
66178 A1 IRENE RICHARDSON $36,537.98
66202 A1 MAJOR JACKSON $35,910.31
66255 A1 RICHARD H BLUME $21,028.13
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
66277 A1 LOIS B LANIER $27,062.43
66279 A1 MICHAEL W KELLY $43,751.31
66302 A1 ROZINA JAVIS $31,763.10
66310 A1 DONALD PRITCHARD $22,986.40
66322 A1 ROBERT LEWIS SINGLETON $32,975.80
66334 A1 MARY FRANCES TYLER $35,199.98
66344 A1 MICHAEL H GARTNER $25,470.38
66349 A1 LOLA MAE SUDDETH $40,823.57
102601 A1 LAURA D LLOYD $14,268.32
627221 A1 MICHAEL S LECLAIR $43,995.60
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4001078 A1 DANIEL D MCBRIDE $19,830.84
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<PAGE>
<TABLE>
<S> <C> <C>
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7001626 A1 WILLIS E HOLSOMBACK $80,390.99
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7001665 A1 LAWYER BULLARD $35,000.00
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7001678 A1 EARNEST LEE WILEY $31,627.29
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7001888 A1 ANDREW CARR JR $37,089.77
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7002070 A1 CATHERINE C WILLIAMS $37,590.53
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<PAGE>
<TABLE>
<S> <C> <C> <C>
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8003796 A1 SAMUEL J BRANCH $14,693.24
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13000500 A1 LENORA M MANKE $11,888.77
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14000259 A1 GERI COGDILL $14,793.22
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<PAGE>
<TABLE>
<S> <C> <C> <C>
21001884 A1 ANTONIO H CANDELARIA $13,256.22
21002510 A1 THOMAS KONAL $35,529.20
21002588 A1 SHANE B DYE $17,660.39
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21003438 A1 BOBBY GLENN CHOATE $36,168.10
21003446 A1 SCOTT E BECKWORTH $23,510.03
21003496 A1 NELL MARIE LEPARD $24,622.35
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21003895 A1 WILLIAM G WOOD $38,041.63
21003913 A1 ROBERT P SCHEETT SR $33,298.14
21003924 A1 TERRY W MASON $18,741.67
21003932 A1 ALBERT WHITE III $29,853.19
21004022 A1 THOMAS V ROTOLE $35,303.48
21004373 A1 KARALYN M LYON $15,375.56
21004741 A1 ROBERT K ATEN $42,993.79
21004921 A1 JOSE RUEDA $39,522.00
21004962 A1 ROBERT E SHEFFIELD $28,964.68
21005032 A1 ELZY BEAM $17,498.89
21005039 A1 MARGARET E DOUGLAS $30,431.56
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21005062 A1 MICHELLE D B FULBRIGHT $41,742.21
21005064 A1 HECTOR MARTINEZ JR $23,438.10
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21005066 A1 NORMA JEAN GOLDMAN PHILLIPS $23,520.76
22000706 A1 THOMAS RAY JAMES $16,102.44
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22002503 A1 VINCENT R RUBEL JR $17,035.17
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22002720 A1 TIMOTHY D ROBINSON $13,241.56
22002735 A1 ALFRED KNIGHTEN $16,639.29
22002847 A1 MICHAEL J HARVEY $30,859.30
22003415 A1 DENNIS R KINZER $19,648.26
22003457 A1 CRYSTAL F BONAR $33,417.04
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22003526 A1 THOMAS W ROSS $32,465.80
22003540 A1 DANNY O COULLIETTE $34,247.56
22003582 A1 AUBREY B MITCHELL $39,324.81
22003619 A1 JAMES E CIESIELSKI $24,443.36
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22003767 A1 THADDEUS F WYGLENDOWSKI $35,552.83
22003769 A1 RICHARD CARSON $23,491.90
22003778 A1 ROBERT COLLINS $15,284.57
22003784 A1 DAVID D RODRIGUEZ $32,616.68
22003812 A1 STEVEN J HAAG $23,783.83
22003828 A1 LANCE W BILLOW $27,866.11
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<PAGE>
<TABLE>
<S> <C> <C> <C>
22003995 A1 SHEILA DIANE PEGRAM $40,921.48
22004139 A1 JUNIOR WAYNE HILL $24,181.58
22004174 A1 KURT T MOUNT $27,381.20
22004202 A1 MICHAEL T GALEONE $90,083.99
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23000066 A1 CAROLYN H LAMB $16,322.34
23000169 A1 JOHN EDWARD RAYNOR $39,004.71
23000226 A1 VICTOR M WILSON $38,644.60
23000345 A1 EDNA C DAWKINS $15,896.64
23000424 A1 KEVIN A MCKEE $48,656.87
23000466 A1 CURTIS TODD JONAS $31,909.19
23000952 A1 JOE M LUCERO $16,060.78
23001183 A1 DANIEL J CARPER $39,355.75
23001301 A1 GINA T ELKINS $21,008.08
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50040241 A1 PAUL HICKMAN $6,418.53
50041541 A1 LEONARD L STRATTON $12,109.87
50043081 A1 LINDA BARRON $10,366.06
50045081 A1 JOSEPH SEOANE $33,508.63
50047461 A1 RONALD L BOOTH $7,249.60
50050181 A1 ROBERT YEAGER $13,578.30
50051601 A1 WILLIAM THOMAS MOORE $9,221.36
50062211 A1 RAYMOND J PERKINS $10,003.75
50066721 A1 LAWRENCE W DUVALL JR $8,605.93
50074261 A1 ALETHA O'CONNELL $11,342.28
50076771 A1 PATRICK L EVANS $23,174.42
50096801 A1 DONALD R MARSHALL $16,772.15
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90012601 A1 MINNIE PARKER $30,634.44
95000101 A1 JOHN FITZGERALD WILKIE $26,106.65
95000118 A1 SHIRLEY HOLLIDAY CHAMBERS $40,219.51
95003000 A1 CARL R WEATHERLY $24,448.04
95003012 A1 JAMES W MITCHELL $36,800.36
95003337 A1 HARRY S MILLER $31,805.19
95003396 A1 DARLENE R CLARK $33,084.49
95003402 A1 DARRALL CRANE $39,544.50
95003406 A1 GEORGE PHILIP ECKLES $23,920.20
95003414 A1 JOHN E BROWN $38,165.11
95003416 A1 KENNETH E BYRD $36,560.73
95003431 A1 JIM MILLER $41,750.54
95003456 A1 HILTON W BRODERICK $35,647.62
95003457 A1 HILTON W BRODERICK $13,784.74
95003464 A1 DELORES LINEN GADSON $29,504.66
95003468 A1 TIMOTHY D HILL $37,700.07
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210004681 A1 EDDIE GENE WILKERSON $8,468.47
210006371 A1 BRIAN PURCELL $10,536.54
210006421 A1 RICHARD H STAFFORD $31,463.22
210029061 A1 EDWARD A BOOTEN $24,753.77
220026631 A1 WILLIAM E MANN $12,548.61
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<PAGE>
<TABLE>
<S> <C> <C> <C>
220031921 A1 PHILLIP A NICHOLAS $15,483.22
230008331 A1 HERBERT M FERRELL $11,034.97
230008651 A1 BILLY R PARKS $5,105.38
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2000918054 A1 DANIEL J LANDESS $21,903.38
2000918190 A1 GORDON LEROY ROTTMAN $33,278.97
2000928549 A1 DEBRA L STARCK $9,866.87
2000929798 A1 DOROTHY LUCAS $24,443.88
2000930087 A1 TERRY LYNN DISHMAN $9,736.68
2000930468 A1 DAVID WAYNE BROWN $10,082.45
2000931302 A1 OSCAR FLOYD ALBRITTON $12,225.72
2000932142 A1 ELIZABETH H WILLAMOWSKI $11,423.61
2000932887 A1 MARGARITA S WALTERS $10,119.69
2000934204 A1 DOUGLAS S BOWEN $14,045.73
2000936720 A1 LORI A ELLIOTT $8,793.20
2000936728 A1 LARRY L MCKINNEY JR $14,819.62
2000936892 A1 JACOB G SEAL SR $12,327.36
2000938050 A1 DONALD BEEMER $19,746.97
2000938755 A1 JAMES M NOETH $12,042.93
2000939114 A1 JENNY C BEAMON $20,413.85
2000940176 A1 JIMMY D RUSSELL $14,828.28
2000940395 A1 MICHAEL J MILLER $7,996.08
2000945188 A1 JAMES W MOORE $22,092.56
2000947504 A1 RONNIE DEAN CASSTEVENS $20,474.27
2090019430 A1 FELICIA LOVELACE $30,265.77
2100048911 A1 LARRY BASHAM $9,238.65
2100917449 A1 MARK TUGMAN $9,986.38
2100918818 A1 ALAN LEE HUTSELL $40,436.69
2100924278 A1 BARRIE KRAUSE $24,726.57
2100926130 A1 GEORGE T OVERSTREET $9,126.61
2100931304 A1 VALERIE LARSON-LOHR $20,013.80
2100931898 A1 BRADLEY J CONKLIN $8,235.14
2100932370 A1 JUAN JOSE BANDA $36,934.95
2100938653 A1 MARIA GUADALUPE BAEZA $10,527.51
2100940287 A1 CARMEN M STUDER $17,463.01
2100944824 A1 BEATRICE JOHNSON $33,131.07
2100947269 A1 JAMES R HUNT JR $40,360.03
2100947918 A1 COBY D THOMAS $39,401.70
2190020172 A1 MICHAEL J WALKER SR $36,792.71
2190022138 A1 MAGDIEL CORDERO CHAPA $19,709.36
2190022908 A1 ISRAEL FRANCO $28,270.08
2190023482 A1 JOHNNY MARMOLEJO $37,655.77
2190023878 A1 RANDOLPH CLARK $41,828.78
2190023993 A1 JERRY WILLIS $20,575.86
2190025427 A1 LUPE C GONZALEZ $20,668.14
2190030627 A1 JOHANNA ERIKA BENNIGHT $15,190.08
2190031122 A1 DAVID C YBARRA $34,155.11
2190032049 A1 BLANCA N RIVERA $9,428.68
2190033088 A1 CECILIA MARTIN MISER $31,459.19
2190033122 A1 JESSE GONZALES GONZALES $25,468.27
2190034464 A1 WARREN F.SCHMALENBERGER $241,191.11
2200915126 A1 WELBORN STANLEY MCCLELLION $41,531.50
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<PAGE>
<TABLE>
<S> <C> <C> <C>
2200917295 A1 CURTIS S LACKEY $18,816.04
2200918899 A1 DANNY EUGENE SANSBURY $30,280.78
2200921915 A1 KATHY E KARR $17,763.43
2200925040 A1 BEVERLY A BOUDREAU $9,530.53
2200927298 A1 VIOLA S ATKINS $9,874.09
2200928749 A1 JOHN C GRIFFIN $27,664.35
2200929715 A1 REGINALD GILLIARD $21,693.12
2200935074 A1 GEORGE M SMITH JR $10,856.66
2200935864 A1 MATTHEW W ANDREWS $10,455.17
2200940700 A1 CRAIG WILFONG $20,537.75
2200943334 A1 KENNETH ALLEN WILLEMS $17,013.11
2200950766 A1 BERTUS E MINER SR $12,554.05
2200951320 A1 PATRICIA PICKENS FULLER $40,926.35
2200953020 A1 GLENDA MIMS $29,936.89
2200953565 A1 BARBARA MONTANARO ROME PIERCE $34,908.33
2200953576 A1 GEORGE M LANKFORD $19,234.17
2200953896 A1 JAMES BIGGER $38,129.70
2200954370 A1 ROBERT A MILLER $8,070.62
2200955394 A1 JOSEPH E LAMB $27,689.53
2200956466 A1 CRAIG A WEAVER $14,793.82
2200957762 A1 JOHN L ALLENSWORTH $12,775.18
2200958507 A1 JOYCE W SMITH $15,386.45
2200959951 A1 HOWARD MUFUKA $35,196.68
2200960331 A1 JOSEPH DUBOSE $42,456.69
2200960398 A1 PATRICIA J WILSON $17,129.13
2200961553 A1 BILL W PATTERSON $26,316.22
2200963709 A1 FERNANDO HERRERA $35,864.99
2200970232 A1 CLOYCE J LIGHT $14,073.09
2200970872 A1 EARL BOLDEN $6,222.08
2200971268 A1 JODI C ROUSH $35,986.38
2200972323 A1 WAYNE ALTON SETTOON $204,000.00
2200972656 A1 THERESA M FLOWERS $29,432.08
2200973350 A1 THOMAS J SMITH $41,494.84
2200973420 A1 MELVIN CHAMBERLAIN $38,856.24
2200974757 A1 RONALD ULRIGG $43,572.37
2200975191 A1 HERMAN M LIPSCOMB II $64,077.29
2200975400 A1 DIANE M BERGER $42,846.18
2200975403 A1 JOHN CREED MANEY JR $27,485.03
2200975540 A1 ALLEN L MARX $43,905.37
2200975927 A1 WILLIE M CROMER $38,854.35
2200978715 A1 LARRY L EICKHOLT $40,800.00
2200979532 A1 JOSEPH DAVID STAFFORD $38,800.00
2290009890 A1 AARON MILTON $12,252.69
2290015142 A1 IRA L FLOYD $447,294.91
2290019481 A1 JAIME A ARREDONDO $36,908.29
2290020732 A1 JESUS ALONZO RUBIO $34,526.36
2290020787 A1 MIGUEL C BARRERA $26,201.28
2290029466 A1 CURTIS L WARREN $38,678.22
2290030828 A1 RENE A URIEGAS $22,912.84
2290034812 A1 JANET L HENDERSON $25,691.91
2290035453 A1 JIMMY BOLER $33,749.06
2290040520 A1 MICHEAL IRVIN $9,476.98
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<PAGE>
<TABLE>
<S> <C> <C> <C>
2300923630 A1 CARROLL A JACKSON $25,262.67
2300935750 A1 LEE CORPMAN $19,662.43
2300939109 A1 H VINCENT NELSON $53,641.94
2300941082 A1 DOLORES A SCHONEWOLF $6,934.23
5100900843 A1 HAZEL NORMAN $40,982.08
5100906647 A1 MAMIE VALENTINE $15,716.73
5100906950 A1 RUBEN BATTLE JR $40,009.89
5100912573 A1 SHERRY PARKER $28,196.82
5100914193 A1 ALONZO FALLS $27,352.99
5100915272 A1 MICHAEL L HARDEE $38,083.26
5100918693 A1 DAVID BRISTER $37,393.97
5100918717 A1 SANDRA W POTTER $20,799.51
5100922219 A1 FELIX PAGAN JR $22,401.00
5100922284 A1 KERRIE C THOMPSON $59,281.18
5100923644 A1 JOHN A COLE $14,425.08
5100924274 A1 MIQUEL A VILLARREAL $11,971.43
5100925014 A1 DEBRA REAVIS ROBINSON $16,401.14
5100925244 A1 NICHOLAS E CORBIN $40,247.81
5100925742 A1 JOEL DAVID WOODLE $43,468.24
5100925931 A1 ROBIN JACOBS $10,158.06
5100926329 A1 GEORGE E RIDDICK JR $16,174.12
5100927507 A1 RICKY ALVIN ANNAS $21,345.92
5100928171 A1 JUDITH J MONROE $20,946.03
5100928405 A1 ASHLEY BERNARD CANADY $11,095.04
5100928497 A1 CARL D MOORE $20,501.41
5100928875 A1 RICHARD ARTHUR KELLY $29,378.35
5100930542 A1 THERESA HARWARD $27,565.79
5100932005 A1 WALLACE BROWNLEE $40,822.52
5100932710 A1 FRENCH KEN MIXON $39,826.20
5100932996 A1 CAROLYN E CHAVIS $25,688.54
5100934618 A1 RONALD RASNAKE $6,804.92
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<PAGE>
<TABLE>
<S> <C> <C> <C>
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5100957282 A1 WILLIE MOBLEY $18,193.98
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5100958654 A1 CHRISTOPHER J CORREIA $10,909.62
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5100960583 A1 MARCUS T ROBINSON $22,899.92
5100960677 A1 CYNTHIA LYNN ROGERS $20,673.03
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5100967373 A1 RYAN D MONTI $18,945.51
5100967678 A1 HAROLD ANDERSON $37,482.09
5100967908 A1 RALPH J EFIRD JR $35,859.61
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5100968885 A1 CARLOS CANO III $29,810.29
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5100970595 A1 RANDY CHARLES SHEPPARD $37,769.81
5100971483 A1 IVORIS BOSTICK $43,985.59
5100971874 A1 JAMES EDWARD CAUBLE $39,978.10
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5100972752 A1 WILLIAM E FLOYD $39,956.03
5100975810 A1 JIMMY GRAY COALSON $38,985.53
5100976385 A1 FRANK M DEMICK $377,204.35
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5190001621 A1 TIMOTHY W BAILEY $274,201.38
5190001760 A1 ROSLYN G BELLAMY $38,822.12
5190002243 A1 MARY E LEE FLOWERS $36,908.19
5190002583 A1 LUCINDA HOWELL $36,918.87
5190002593 A1 MARY LOU HANNA $37,634.12
5190003274 A1 BEVERLY A JOHNSON $35,990.76
5190003849 A1 HORACE KENNEDY $30,521.73
5190004232 A1 CHARLES S ELLIS $35,781.09
5190004586 A1 JENNIFER A BLACK $43,888.70
5190005531 A1 YVONNE K MOORE $20,461.85
5190005560 A1 EDGAR N FOSTER SR $30,931.14
5190006906 A1 SHIRLEY A ROBINSON $33,806.09
5190007238 A1 ANDREW DORCH $19,159.14
5190008811 A1 BRENDA SANDERS $38,301.90
5190015747 A1 POINVENTA BOYD $38,031.84
5190017426 A1 BARBARA H LEGG $34,861.11
5190017501 A1 ENOCH C PARTON $42,678.10
5190017741 A1 PATRICIA ANN ANDERSON $37,703.92
5190019270 A1 SANDY MYERS $43,876.16
5190020145 A1 ETHEL SMALL $35,211.22
5190020654 A1 ELVEE MOORE $10,630.74
5190023198 A1 SUSAN L BELL $43,954.70
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<TABLE>
<S> <C> <C> <C>
5190025177 A1 ROBERT J PICKETT $9,891.72
5190029684 A1 BRENDA D CARSON $32,861.58
5190031604 A1 THOMAS SMITH $35,405.29
5190031693 A1 CORA SOWELL $35,363.20
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5200913245 A1 CHUCK HARRIS $12,554.34
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5200922184 A1 ELIZABETH B CUNNINGHAM $20,623.87
5200922496 A1 JANIE T BYERS $16,787.18
5200925391 A1 BRENDA WHALEY $13,017.98
5200928510 A1 JOHN CLAYTON KENNEDY $10,769.09
5200930720 A1 DENNIS SMITH JR $38,675.38
5200935287 A1 JOHN MONEA $24,590.84
5200940192 A1 BURTON L ARNOLD $11,611.80
5200941775 A1 CYRUS KIRKLAND $31,430.45
5200944243 A1 BARBARA BANKS $13,044.80
5200946904 A1 PATRICIA D LEWIS $22,649.64
5200947025 A1 WILLIE MAE CARD BURNETTE $28,390.51
5200948078 A1 JAMES W BOND $18,852.67
5200950545 A1 EARNEST RAMSEY $37,715.28
5200951989 A1 RHONDA CLARK JAMES $14,079.87
5200952728 A1 ELVIRA LOWMAN $12,295.09
5200952729 A1 ALI EMRE BASAL $271,162.18
5200954648 A1 ANNA BELL $33,553.88
5200955571 A1 STACY O COOK $11,501.88
5200969232 A1 PATRICIA ANN GRACIANETTE $21,728.52
5200969318 A1 CHERYLE D HARRISON $18,355.25
5200972835 A1 BIRDIA BAKER $32,779.60
5200973363 A1 ELIZABETH KNIGHT $43,156.12
5200974624 A1 LARRY LOWE $23,152.17
5200976729 A1 WAYNE J MCCANTS $199,670.61
5200978192 A1 WAYNE J MCCANTS $35,188.84
5290008144 A1 MARK POOLE $10,459.68
5300914426 A1 EDNA PEARL HAYES $8,876.04
5300940960 A1 LARRY W HATCH $10,689.72
5300955930 A1 CHRIS WHITSON $15,153.44
5300968963 A1 RUMPA SUWANNETR $11,036.25
5400929099 A1 WENDY MURRAY $10,237.01
5490005144 A1 BRYAN K WOODRING $25,415.81
5500926945 A1 RUSSELL A INMAN $33,461.34
5500933564 A1 JEFFREY COLE $14,410.82
5500972300 A1 THOMAS E BOOKHOUT $22,443.13
5500973286 A1 JAMES M RANSOM $18,645.61
5500979202 A1 JOSEPH G SUTULOVICH JR $20,994.30
5600929535 A1 BRENDA DENISE JONES $8,481.51
5600945382 A1 NAOMI HUDLEY $14,830.14
5600945520 A1 LISA M HILL $20,486.72
5600950034 A1 EVANGELINE LINDBERG $14,863.68
5600953300 A1 JAMES MOSBY JR $219,551.77
5600979530 A1 JOYCE LEHEW $33,587.35
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<TABLE>
<S> <C> <C> <C>
5700910530 A1 EDWARD MINTER $19,381.37
5700923481 A1 MICHAEL GALLIGAN $27,784.97
5700936586 A1 KEVIN AGUILAR $23,755.00
5700952095 A1 RODNEY D POTTER $17,363.89
$20,351,882.24
2258 A2 ULYSSES DUCKETT $94,224.25
2562 A2 RACHEL J BURR $14,406.87
21031 A2 WADE YATES $135,114.70
60358 A2 KEVIN B JONES $65,903.63
60389 A2 JAMES T GRAHAM $122,678.98
60770 A2 BERNHARD H SCHNEIDER $103,143.85
60828 A2 JOEY A ZGLINCKI $99,254.53
60884 A2 JAMES L DAWKINS $138,229.13
61184 A2 ARMOND A TURNER $88,885.63
61201 A2 CALVIN JOHNSON JR $51,402.04
61373 A2 MARK BROWN $51,859.07
61456 A2 JOYCE BURNS $46,863.28
61508 A2 TRI COUNTY PREGNANCY CTR. INC $50,070.88
61781 A2 JOYCE W BLOODWORTH $53,427.91
61821 A2 WILLIAM RICHARD HORNE $59,440.64
61991 A2 ROGER L PHILLIPS $186,911.38
62159 A2 JANET C GIBSON $75,304.49
62251 A2 CHARLES H WILLIAMS $58,751.08
62287 A2 JAMES L BROWN SR(ESTOF) $42,959.78
62360 A2 JAMES A KELLETT $99,474.04
62382 A2 DANIEL W COOKE $50,710.68
62391 A2 SCHKHANN MITCHELL $54,344.20
62414 A2 JEREMIAH FRANKLIN $65,062.19
62444 A2 RONALD P HERRING $94,618.06
62551 A2 LEVIE MORANT(EST OF) $52,562.89
62563 A2 JOHN E BLANCHARD $43,868.38
62572 A2 JAMES MORTON $66,418.77
62595 A2 SANDRA P FOSTER-GILLIS $75,814.62
62606 A2 ELLEN W REID $76,055.57
62645 A2 CYNTHIA B HODGE $93,989.83
62660 A2 ROOSEVELT R RICE $62,892.01
62750 A2 RENEE H TINSLEY $75,471.06
62843 A2 JAMES F STREETMAN $41,654.55
62971 A2 LAWTON P ROGERS $48,664.88
62973 A2 JAMES F ANDERSON $147,040.91
63000 A2 ELSIE S JONES $86,611.60
63086 A2 SYLVESTER WEST $84,517.21
63089 A2 JEFF HENRY JR $88,613.28
63100 A2 JOHN B WANNAMAKER $60,785.42
63172 A2 SAMARA M SCOTT $51,075.26
63175 A2 THOMAS COLEMAN $92,665.06
63177 A2 JAMES CLARK $57,008.54
63249 A2 LEO SMITH JR $64,069.25
63267 A2 GARY W OWENS $65,700.16
63384 A2 LIONEL M THOMAS $47,020.00
63401 A2 RAYMOND R DOWNING $56,393.50
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<PAGE>
<TABLE>
<S> <C> <C> <C>
63529 A2 BERRY C MORGAN $57,838.04
63600 A2 STEVEN R KLEIN $123,042.32
63605 A2 CLIFTON M OUZTS $53,129.85
63629 A2 TED WILLIAMS $43,455.89
63641 A2 STEVEN R KLEIN $53,056.15
63667 A2 KENNY BLAKENEY $70,948.37
63716 A2 ROOSEVELT DOWNS $71,317.32
63720 A2 DOROTHY LUCILLE KING $53,528.51
63723 A2 MARION DRUMMOND $139,106.41
63754 A2 JOSEPH RICHARDSON $34,021.66
63759 A2 MARTHA ANN GRANT $56,292.30
63775 A2 EARNESTINE ROSS $42,427.31
63826 A2 THOMAS D BROADWATER $106,604.06
63833 A2 RANDALL J HARRIS $42,868.55
63857 A2 DEBRA M MICKENS $63,422.79
63866 A2 GEORGE H JONES JR $54,322.80
63908 A2 JODY F COX $57,911.41
63946 A2 JEFFREY CURENTON $66,974.67
64014 A2 JAMES HOOD JR $49,439.81
64040 A2 CARL GEORGE SMITH JR $44,143.78
64080 A2 NICOLE O RODRIGUEZ $81,225.22
64089 A2 KEELA C JAMISON $51,543.64
64131 A2 W J WATFORD $57,155.04
64208 A2 JUSTIN W THARP $78,712.10
64209 A2 RAYNETTA B CHAVIS $46,153.50
64256 A2 GARVIN H SLOAN $48,272.31
64257 A2 ELIJAH HANNIBAL $43,480.34
64275 A2 LARRY M GILREATH $49,581.23
64349 A2 WALLACE BERRY $43,478.81
64354 A2 DOROTHY LOUISE SCOTT $60,482.72
64379 A2 MARY ELLEN GOODWIN $89,890.30
64389 A2 REGINALD BROWN $55,744.09
64399 A2 LESTER FLOWERS $51,577.89
64417 A2 LEO S GALLANT $65,026.81
64421 A2 JAMES M MORRIS $51,113.14
64429 A2 FRANK LEE GREEN $46,143.89
64438 A2 ALBERT JACKSON $59,969.97
64444 A2 CARL W HUTCHINS $43,028.65
64496 A2 ROBERT L THOMPSON JR $44,098.65
64546 A2 ROBERT E HEMINGWAY $54,576.86
64646 A2 JEFFERSON T ISAAC $47,720.81
64683 A2 ZEB B STARNES JR $46,819.82
64699 A2 ETHEL RICH BURNS $49,412.19
64799 A2 CURTIS SIDNEY SMITH JR $52,026.17
64811 A2 FRED C ROLLER IV $92,257.17
64942 A2 HANNA SNOW $51,119.31
64960 A2 ESSIE MAE KINSLER $52,168.27
65005 A2 EDWARD D BULLARD $135,875.77
65011 A2 MILDRED A MONROE $47,913.27
65019 A2 GREGORY C ATKINS $82,873.55
65053 A2 ROOSEVELT STARK SR $47,854.72
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<PAGE>
<TABLE>
<S> <C> <C> <C>
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65183 A2 MARY LEVINE $53,273.30
65248 A2 CLYDE WILLIAM JENNINGS $83,685.64
65353 A2 MICHAEL BLACKWELL $80,666.79
65395 A2 BARRY N SCOTT $65,741.00
65560 A2 LARRY P REID $51,371.14
65589 A2 GREGORY WILSON SR $108,375.44
65592 A2 GERALD GREEN $206,250.00
65607 A2 ERNEST R WASHINGTON $93,125.42
65712 A2 LOUIS SCOTT UTTER $59,499.31
65737 A2 EDWIN L GARDNER JR $108,722.16
65767 A2 LEROY F STEWART $70,230.07
65937 A2 ELLA MAE GILLIAN $56,867.37
65939 A2 BARBARA AMAKER $53,817.50
65947 A2 BILLY R COLLINS $57,707.26
65949 A2 TERESA A CANZATER $45,600.00
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65954 A2 RUDOLPH F MARSHALL $55,205.11
65972 A2 BELISTA DIXON $51,274.78
65977 A2 EDWARD W BAGWELL $49,541.89
65980 A2 GYPSIE L MURDAUGH $61,623.44
65989 A2 CARL BARNES $50,994.23
65991 A2 SAMUEL L SCOTT $57,199.94
65997 A2 JEROME THOMAS $48,774.66
66001 A2 TERRY G CHESTER $55,121.55
66007 A2 IVAN J HALL $64,700.35
66027 A2 SANDRA L ERICKSON $56,139.60
66038 A2 MELANIE O ATKINS $55,297.22
66050 A2 WILLIAM C SELF SR $46,363.34
66055 A2 BOBBY A CENTER $61,002.46
66057 A2 MICHAEL SHANE REINHARDT $61,404.27
66059 A2 RODNEY DAVIS $50,336.14
66061 A2 CHARLES E ROOF JR $99,902.85
66076 A2 TIMOTHY NIXON $45,624.41
66078 A2 ROBERT D HERRING $67,631.20
66082 A2 GERALDINE T ALLEN $47,964.90
66086 A2 BRYAN K BEELER $136,683.01
66092 A2 JAMES TODD $55,772.87
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66111 A2 GEORGE WILLIAM ESTES $47,490.62
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66133 A2 DEBORAH ROXANNE LAIRD $61,600.00
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66181 A2 DARREN J PRIDGEN $50,845.50
66195 A2 GRACE SMITH $47,967.81
66204 A2 GEORGE MILLER $46,148.89
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<TABLE>
<S> <C> <C> <C>
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66308 A2 SHIRLEY S YOUNG $51,435.99
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1002436 A2 PETER MINKS $99,060.37
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1003751 A2 TERRY M WRIGHT $44,390.60
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1006060 A2 MACCUS BARFIELD $53,919.62
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4001095 A2 EMMAZELL ROBERTS $50,903.10
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4001159 A2 STEPHANIE GIBSON $65,163.30
5006080 A2 DAVID H METZER $51,548.14
5006145 A2 STUART K VAUGHN $48,154.85
5006346 A2 JAMES SKINNER $51,803.17
5006567 A2 GREGORY DOLLINAR $48,508.04
5006794 A2 ROGER J DORKO $49,481.20
5007676 A2 JAMES E GORDON JR $63,463.55
5007708 A2 RODRIC J MYERS $50,212.85
5007991 A2 TIMOTHY J HENNING $64,709.65
5008113 A2 SOLOMON OLIVER CROMWELL $79,873.65
5008348 A2 SHARON S BUTLER $67,636.49
5008475 A2 REVA G THOMPSON $54,402.68
5008722 A2 DANIEL G JIMENEZ $48,342.44
5008766 A2 MICHAEL G EMBREY $48,048.63
5008791 A2 JOHN MICHAEL O'BRIEN $43,856.42
5008832 A2 SHERRY L STOUT $48,959.94
5008838 A2 TONY J PELLEGRINI $45,247.91
5008846 A2 ROBERT W CURTISS $52,333.38
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<TABLE>
<S> <C> <C> <C>
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7001826 A2 ELIZABETH LAFAYETTE $46,743.45
7001868 A2 STONEY GREG MULLINS $69,738.59
7001871 A2 GASPAR J RIVERA $55,931.98
7001881 A2 JOHN STEWART $57,316.20
7001893 A2 VICTOR H WILLIAMSON $100,295.87
7001925 A2 CHARLES K HENLE $49,845.38
7002000 A2 EDWARD K TREMBLE $166,177.60
7002008 A2 HARRY WEDUL $145,301.59
7002054 A2 GLORIA T HESTER JOHNSON $54,741.61
7002055 A2 ALFRED GRANT $46,011.33
7002112 A2 LAMONT D GODFREY JR $49,183.48
7002113 A2 JONNETTA C BENEDICT $52,968.87
7002148 A2 TERRY BRUCE WILBER $54,687.23
7002159 A2 PAUL J GRAYSON $54,819.68
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7002194 A2 WILLIAM ZEBELIN MITCHELL $48,072.64
9001292 A2 ALAN W GIBLER $107,586.09
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12000410 A2 LESTER D MCDANIEL $69,694.93
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13000489 A2 JOEL C BRUN $49,610.58
14000233 A2 JEFFERY SCOTT YATES $51,653.02
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14000278 A2 GRADY L KNIGHTON $56,616.07
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15000446 A2 THEODORE SCOTT SR $61,818.04
15000517 A2 JOHNNIE R LOGAN III $76,800.00
15000565 A2 JIMMY M SHAW $54,179.43
15000663 A2 JAMES R KIRVEN $52,913.46
15000682 A2 REGINALD WESTON $64,475.44
15000695 A2 CHARLES W HINSON $68,275.87
15000697 A2 JAMES G PEARSON $161,703.21
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15000718 A2 ROSE M DAVIS $56,586.83
15000732 A2 ALTON GEDDINGS $50,757.21
15000734 A2 STEVE HORSTMANN $68,000.00
21000369 A2 ARTHUR S GREENE JR $49,936.13
21001756 A2 TIMOTHY A HAYEN $56,052.49
21001871 A2 JEFFREY A WILLIAMSON $53,024.43
21002236 A2 DANNY RAY BOYETTE $55,266.34
21002499 A2 EMORY D NEAL $52,951.23
21002673 A2 KEVIN G EDWARDS $46,048.86
21002901 A2 WAYNE G KAROL $48,563.21
21003194 A2 CHRISTOPHER TAYLOR REED $43,447.71
21003305 A2 LARRY L GOODALL $41,444.66
21003316 A2 SHARON M GRAY $50,271.78
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<S> <C> <C> <C>
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21003900 A2 JOHN KIDMAN $44,340.59
21004049 A2 REYNALDO SEQUERA $51,483.56
22000909 A2 HESIRI M FERNANDO $48,197.45
22001041 A2 JOSEPH GRYLAS $52,146.79
22003287 A2 TREVOR LEE BENOIT $48,610.97
22003500 A2 JAY R GERBER $60,686.67
22003711 A2 DAVID PENHOLLOW SR $63,666.12
22003772 A2 MICHAEL V MICHALAK $62,508.46
22003906 A2 ROY D ASHCRAFT $49,830.64
22003969 A2 DAVE L FOREMAN $53,940.22
22004072 A2 BYRON G WOLFE JR $74,260.65
22004103 A2 CAROLYN L KNICELY $47,820.08
22004209 A2 ROBERT G DONALD $44,383.18
23000135 A2 NADINE PENN $45,275.20
23000142 A2 JAMES R DANIELL JR $50,989.54
23000212 A2 EDWARD B WALTMAN $45,656.27
70014611 A2 RICHARD DAVID CHANCE $113,016.56
95000125 A2 TONY M ROBINSON $50,221.17
95000145 A2 LEROY CRUEL $61,406.78
95000150 A2 MARY ANN RANCE $93,365.39
95003011 A2 FRANCENIA T ELLIS $62,101.05
95003377 A2 BERNARD L FOOTMAN $58,290.43
95003394 A2 WALLACE L SMITH $50,136.79
95003404 A2 G WALTER WHITLOCK $47,416.34
95003413 A2 JOHN E BROWN $70,665.70
95003427 A2 STEVE J PILGRIM $44,674.74
95003450 A2 MICHAEL N BYRD $77,538.00
95003473 A2 RANDALL W LEOPARD $58,339.46
130004301 A2 CLIFFORD D ROBINSON $44,128.49
220031281 A2 CLINTON W PALMER $41,695.84
1190009118 A2 JAMES L NASH $115,362.85
1190009144 A2 DANNY E MOORE $155,229.02
2000919447 A2 ROBERT P GARRETT $71,906.57
2000931895 A2 DEBORAH W SINGLETON $128,884.65
2000950681 A2 VICTOR C LOMBARDO $73,855.99
2000954896 A2 PAULA K VAWTER $76,983.33
2090024811 A2 ANGELA CARTER $51,118.27
2100903738 A2 CATHERINE H VINCENT $87,027.99
2100905239 A2 NORMAN J JACKSON $59,003.27
2100910491 A2 ELMER L NEAL SR $49,162.65
2100912127 A2 JOSEPH ALBERT PYPE $47,319.14
2100920880 A2 JACK F SYKES $49,896.36
2100944662 A2 GEORGE E MOFFITT $47,062.85
2100946161 A2 ELOISA MOLINA DODGE $68,338.78
2100947032 A2 KENNETH LEROY MOORE $74,204.21
2100947048 A2 BRADY C WILLIAMS $75,461.42
2100947165 A2 ALICE R BOWERS $51,174.37
2100965988 A2 SCOTT R ANDERSEN $72,210.68
2190020853 A2 LEE D POST $59,625.68
2190020862 A2 RONALD J DUNCAN $53,876.78
2190022887 A2 BETTY KELLY $44,370.74
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
2190023129 A2 BARRY DON SHAW $55,080.73
2190025934 A2 RONALD EVAN BRANUM $63,389.89
2190026459 A2 CLARA R LONGORIA $56,793.25
2190027967 A2 MURRAY ARCHIE $50,736.59
2190030556 A2 RICARDO S RIVERA $42,048.58
2190034329 A2 DAVID H GUYTON $94,754.03
2190039387 A2 NEIL KENT CAREW $62,305.77
2200902431 A2 CAROL MODER $50,518.28
2200903367 A2 JOSEPH E GRANGER $129,275.25
2200905996 A2 PATRICK E POWELL $73,424.59
2200910081 A2 DAVID AVILA $52,681.30
2200910267 A2 FREDERICK L SAMUEL $69,415.08
2200912836 A2 EDWINA W VINCENT $47,128.16
2200915999 A2 ROBERT L WAGNER $64,058.89
2200917116 A2 LOTTIE M GUITARD $70,435.86
2200917158 A2 JOHN R NORDIN $49,044.97
2200919419 A2 TAMMY D EVERGETIS $104,241.73
2200922713 A2 PATSY FERNANDEZ $69,518.99
2200924919 A2 ROBERT STOKES $93,367.99
2200927810 A2 VIVIAN SILVERS $54,222.80
2200943607 A2 A BILLIE DOBBS $106,869.50
2200944422 A2 EVELYN M JEFFERSON $87,560.73
2200946319 A2 DAVID BOOTH $51,441.15
2200946446 A2 RONNIE WITHERSPOON $44,964.94
2200946688 A2 DONNA M CONYERS $62,000.06
2200947743 A2 MARY C BRUCE $62,248.05
2200948562 A2 DAVID LUNA $52,144.05
2200948645 A2 ROGER B BAYNE $63,224.80
2200956621 A2 JOHN BEERY $44,727.05
2200958079 A2 LONNIE MICHAEL HARRELL $119,513.18
2200958426 A2 JOHN D ROBERTS $50,303.12
2200958582 A2 FREDERIC ROBERT KINARD $91,476.21
2200962079 A2 PATRICIA W PARDOE $54,303.34
2200963943 A2 BENJAMIN F GARLAND $131,055.83
2200965878 A2 MARK D LYNCH $91,529.85
2200966913 A2 DOUGLAS R BORTON $48,863.02
2200967727 A2 PAUL R LANE $69,420.31
2200967935 A2 KATHY WARE $50,884.88
2200968091 A2 LARRY T TANNER $47,872.87
2200968309 A2 JAMES W BALES III $65,338.30
2200968628 A2 WILLIAM D FIDDLER $50,832.87
2200968687 A2 THOMAS MICHAEL HOLT $71,792.21
2200968905 A2 ROD SMITH $46,683.85
2200969182 A2 PATRICIA J DAVIS $48,874.88
2200969783 A2 DONA S SMITH $61,121.98
2200970566 A2 BRIAN FERRARO $87,887.82
2200970799 A2 LISA PATTERSON $47,762.04
2200971480 A2 JAMES CONANT $44,836.84
2200971714 A2 REBECCA ANN GOULD $62,380.05
2200972643 A2 BILLY RAY CRAIN $62,957.17
2200972758 A2 JOHN G ELLIOTT $74,859.90
2200973043 A2 MARY E OWENS $58,967.70
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
2200973808 A2 BILLY N MITCHELL $54,372.01
2200974166 A2 KEITH MICHAEL PINEL $64,750.52
2200974631 A2 MARY A BISHOP $45,025.57
2200974692 A2 RICHARD C WILLIAMS $79,843.63
2200974875 A2 JAMES R ADKINS $47,936.70
2200974898 A2 JOE THOMAS MOORE $78,066.49
2200975314 A2 BART W BROADWELL $89,555.33
2200975348 A2 EDITH PEARL EVANS $78,270.01
2200975712 A2 PAUL TOMLINSON $65,434.17
2200976074 A2 GARLAND R STANLEY $69,200.00
2200976350 A2 KEM R FOWLER $47,145.39
2200976659 A2 MARSHA F CHARBONEAU $111,852.31
2200976813 A2 MATTHEW BUTLER $58,627.58
2200976830 A2 ROBERT LEE EDWARDS $46,290.59
2200976974 A2 ELAINE A MARESCA $94,499.38
2200977040 A2 SANDRA M JONES $73,851.87
2200977679 A2 KENNETH R BAILEY $55,918.78
2200977701 A2 KEITH A BECKMAN $84,800.00
2200978068 A2 MARK A EVANS $77,993.63
2200979682 A2 CLIFFORD SWITZER $119,850.00
2200980130 A2 LARRY WILLIAMS $45,496.38
2200980407 A2 SCOTT A BONNETTE $71,023.14
2200981916 A2 DALE L COOK $70,160.67
2290018641 A2 ANN H SIMMONS $56,601.28
2290019940 A2 SHARON R BURK $75,663.12
2290026119 A2 J JASON THOMAS $43,378.47
2290030062 A2 IDOLUIS E CASARES $43,219.98
2290030125 A2 JOHN MARNEY WALLER JR $59,367.67
2290032860 A2 CYNTHIA D KNIGHT $60,712.23
2290033657 A2 PERNICE O SMITH $43,205.02
2290036955 A2 COLLIN W COFFEY $59,806.12
2290037776 A2 JORGE ARTURO SALINAS $65,575.25
2300931216 A2 FRANK GALICIA $57,873.33
5100902192 A2 MICHAEL S WALKER $190,500.00
5100905617 A2 THOMAS E ALEXANDER $78,401.13
5100905924 A2 RAYMOND C QUEEN $71,138.96
5100907974 A2 EVERETT HAWKINS $58,250.90
5100911528 A2 ROBERT L MCLEAN $70,945.34
5100912902 A2 GEROME R MCLEOD $45,764.51
5100913276 A2 WILLIE J WHITE $63,684.94
5100914459 A2 BAKITA S ACEVEDO $47,022.06
5100914486 A2 DAVID E BURNETTE $94,347.59
5100914848 A2 B F ALLISON $46,934.24
5100915468 A2 DONNA K CATHEY $73,279.13
5100915872 A2 WILLIAM J WALKER $99,944.99
5100916405 A2 RAYMOND C GILPIN $54,132.18
5100916423 A2 VICKI WATFORD $75,617.54
5100917511 A2 JAMES L ROYSTER $190,966.87
5100917746 A2 CHRIS E CATER $62,956.72
5100918293 A2 JEFFREY BAUGUS $48,970.05
5100919086 A2 JAMES COPELAND III $55,755.83
5100920340 A2 BARBARA L ADAMS $59,759.23
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
5100921098 A2 JUDY BROWN $65,274.50
5100921634 A2 ROY DALE BAKER $50,925.73
5100922982 A2 JOHN A COLE $123,666.02
5100923108 A2 WILLIAM D YOUNG $73,319.64
5100923418 A2 KEITH TESNAR $49,731.48
5100923652 A2 JAMES W PAUL $61,352.81
5100923826 A2 JASON BYRD $60,170.51
5100924214 A2 GEORGE C RIDDICK JR $73,336.77
5100924384 A2 STEPHAN M CURRY $69,311.59
5100925400 A2 CLIFTON FREEMAN $60,487.99
5100925463 A2 RONALD HOOVER $111,049.34
5100925739 A2 RENE BOUKNIGHT $48,550.29
5100925802 A2 DONALD W SEAY $52,956.16
5100925860 A2 CHARLES J LIVINGSTON $64,159.05
5100926417 A2 ALBERT BRISBONE $55,277.27
5100926752 A2 MICHAEL R AYERS $71,659.26
5100926761 A2 FRANCIS X GILL $47,778.23
5100928117 A2 TERESA P MONDS $55,301.21
5100928403 A2 ALLYSON PUTMAN $47,034.33
5100928640 A2 RICHARD J PEARCE $49,404.55
5100928842 A2 DARYL E PAINTER $62,761.23
5100928854 A2 MARK T VANGORDER $60,159.53
5100929293 A2 CINDY L HARVEY $62,410.74
5100929324 A2 MARSHA RUTHERFORD $93,116.80
5100930743 A2 HERBERT HICKS $63,749.17
5100930899 A2 TAMMY K CLARK $49,192.08
5100931625 A2 JOSEPH CASTRONOVO $60,136.72
5100931830 A2 WILLIAM O FRAZIER SR $53,764.60
5100932356 A2 WILLIE J DAVIS $51,818.13
5100933170 A2 GAIL PICKETT $44,784.44
5100933903 A2 AQUILLA LEWIS $95,681.41
5100934244 A2 EDWARD SCARFO $53,425.79
5100935747 A2 REGGIE MACK $68,576.39
5100937100 A2 RICHARD W DIVENS $49,774.85
5100937273 A2 ANNIE PATTERSON $65,669.45
5100937928 A2 CHRIS A SMITH $71,766.39
5100938902 A2 GRANT E GEHLBACH $111,537.96
5100938970 A2 JAMES BETHEA $60,982.59
5100939929 A2 ROXICE SULLIVAN $95,950.81
5100940022 A2 DAVID ROBINSON JR $55,718.13
5100941146 A2 ANTHONY COLEY $63,772.47
5100941185 A2 SCOTT SOX $71,789.36
5100941445 A2 EDMUND HOFFMAN III $45,440.99
5100942274 A2 DEWARD NORRIS LUNSFORD $94,778.95
5100942366 A2 PATRICIA CHAMBERS $55,036.46
5100942700 A2 DEBORAH L WHITSON $57,646.48
5100943385 A2 ADAM R DROBNIS $140,644.60
5100943404 A2 ASHLEY POLLARD $87,723.16
5100943834 A2 DAVID MORIARTY $78,242.26
5100943867 A2 GUS E KALMER $59,503.77
5100943872 A2 DALLAS BLEDSOE $74,580.65
5100944261 A2 MARION D COLEMAN $72,824.68
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
5100945495 A2 HAROLD T BOATWRIGHT JR $82,210.27
5100946256 A2 JACKIE E BROOME $54,283.38
5100947036 A2 DAVID BLACKSTONE $64,276.51
5100947354 A2 DANIEL WAYNE LEDFORD $76,371.10
5100947481 A2 MICHAEL L CUDD $55,842.65
5100949168 A2 PAUL REEVES $54,052.59
5100950124 A2 WILBUR L MILFORD $49,513.72
5100950634 A2 EDWARD THOMPSON $89,155.50
5100951078 A2 SAMUEL H JOHNSON $56,857.24
5100953344 A2 CHRISTOPHER E WILLIAMS $52,388.95
5100953946 A2 TRAVIS M SCOTT $47,023.97
5100954470 A2 DENISE SAPOUGH $66,247.14
5100954963 A2 EILENE M KENDALL $70,967.38
5100955358 A2 CRAIG E ALIBOZEK $57,878.74
5100957111 A2 HOWARD L MAJETTE $63,512.85
5100957153 A2 WILLIE MOBLEY $73,088.56
5100957160 A2 NORWOOD A WILLIAMS $74,495.17
5100957778 A2 GLORIA JEAN GOODMAN $58,388.67
5100958048 A2 KELLY THORNHILL $68,267.74
5100958873 A2 KELLY H WILLIAMS $52,435.34
5100959959 A2 DANIEL M HOLCOMBE $63,872.30
5100959973 A2 JERRY DUDLEY $80,765.04
5100960032 A2 CYNTHIA E WAGONER $75,848.35
5100961181 A2 WANDA BEARDSLEY $83,482.75
5100962993 A2 JERRY LOSAW $62,511.45
5100963754 A2 JOHNNY GOODE $68,522.02
5100964922 A2 MELVIN BRADLEY BURDETTE $56,602.95
5100965498 A2 RENEE C HOLLOWAY SINGLETON $74,052.62
5100966211 A2 JOHN R GARRETT $57,604.01
5100966856 A2 DORIS R GEROW $57,452.75
5100967056 A2 MAURICE E DILLARD $46,459.26
5100968878 A2 TERRI CALLAHAN ALLEN $46,973.78
5100968975 A2 SCOTT B NORGAN $62,486.15
5100969133 A2 CARLOS A THOMPSON $66,459.48
5100969147 A2 FREDDY W HOYLE $92,030.90
5100969208 A2 DENNIS B COX JR $45,507.26
5100969679 A2 WAYNE WILKERSON $58,346.87
5100969904 A2 BRENDA S PHILLIPS $60,744.70
5100970534 A2 TONY ARNOLD OVERCASH $75,962.53
5100970992 A2 JUANETTA FRAZIER $57,137.13
5100971510 A2 JANIE ROBINSON $63,968.13
5100971994 A2 KENNETH LEARY $70,506.67
5100974605 A2 ROBERT TEDDER $44,979.01
5100975056 A2 NOAH J HEWITT $59,973.45
5100975329 A2 RAY J WINBURN $46,380.12
5100975482 A2 CAROLYN W HOWELL $47,977.12
5100975513 A2 RODNEY G CLAY $60,772.46
5100975795 A2 JOHN A MCKIVER SR $61,108.25
5100976099 A2 EDWARD B BERGAMINI $120,150.00
5100976241 A2 JEFFREY JENKINS $143,921.17
5100976423 A2 HERTFORD MOORE JR $68,768.84
5100976553 A2 WILLIAM R CURETON $107,943.89
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
5100976627 A2 JANET BATKER $107,860.92
5100977061 A2 DEBORAH A NICHOLS $63,971.01
5100977201 A2 LUIS J CAMPOS $68,598.13
5100977405 A2 JAMES P WOOTEN $53,573.58
5100977414 A2 THOMAS H RILEY $75,027.42
5100978106 A2 LILLIE B DAVIS $59,080.85
5100978535 A2 YVONNE P MABRY $57,968.25
5100979657 A2 VALERIE SUTTON $47,679.02
5190001294 A2 EVANS LOCKLEAR $57,406.36
5190001651 A2 MARK A COSTNER $58,267.63
5190001983 A2 RICKEY WHITE $45,423.90
5190002062 A2 ROBERT L SAMPLES $50,019.22
5190002354 A2 VICKI BANKS $50,322.06
5190002752 A2 ALICE L KOON $51,197.41
5190003234 A2 MAMIE LEE JACOBS $57,941.61
5190003488 A2 DEBORAH PAINTER $71,506.77
5190003768 A2 JAMES MOORE $117,787.84
5190003992 A2 WILLIAM A BUDDIN $59,294.92
5190004546 A2 FREDERICK STROUD $102,976.55
5190004816 A2 WILLIE BRIGGS $62,398.84
5190005314 A2 WILLIAM LEE CRAWFORD $54,941.89
5190005948 A2 DORIS M MCPHERSON $48,391.06
5190006103 A2 DOUGLAS A HADDOCK $59,859.86
5190006349 A2 RANDY L CROUCH $132,518.82
5190007615 A2 DORIS L REESE $54,399.94
5190009849 A2 NICHOLAS SCOTT SAITZ $113,850.85
5190011763 A2 ANNIE MABBINS BENJAMIN $46,643.81
5190012334 A2 KAY E MADISON $54,092.12
5190012367 A2 MICHAEL TOLBERT $55,999.60
5190013376 A2 ROSS BRICE $56,396.21
5190014538 A2 NELSON SCOTT BISHOP $44,976.07
5190014728 A2 MARY ANN BLAKELY $62,886.58
5190015281 A2 DENNIS BRYAN PITTMAN $56,105.86
5190016799 A2 HASAN ABU-EIDEH $47,637.75
5190017391 A2 DEBRA A PENDLETON $52,313.78
5190019078 A2 JULIUS BROWN JR $66,000.00
5190019106 A2 MARTY LOCKLEAR $62,928.43
5190021226 A2 DAWN ANN DODD $44,608.09
5190022910 A2 VERNON L LAWTON JR $51,874.61
5190023044 A2 JOHN TONEY $85,734.85
5190024378 A2 RICKY DALE CRAINE SR $47,786.27
5190025057 A2 DONALD R HARRIS $51,179.84
5190025149 A2 TIMOTHY W TAYLOR $57,877.19
5190028359 A2 TOY W SKIPPER $50,901.80
5190031937 A2 GAIL ENWRIGHT $84,372.86
5190032993 A2 HOMER C ABERNATHY $96,779.66
5190033145 A2 DIANNA ALLEN $59,348.99
5190033682 A2 LISA A ASKEW $52,456.10
5190034608 A2 FLORIE YOUNG $44,565.03
5190034719 A2 MERRY ANN KISH $55,622.73
5190035257 A2 MILLIE G MARTIN $49,124.38
5190035692 A2 JOSEPH R HUTCHINSON $69,822.98
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
5190036607 A2 JEFFREY A BLUE $93,564.02
5190037122 A2 MARY E BIVENS $76,343.26
5190037759 A2 EDNA R KENNEDY $67,638.02
5190038860 A2 SHELDY B AYE $59,960.19
5190039837 A2 KEVIN W BLANCHARD $136,302.15
5200910406 A2 THEODORE CHRISS $122,523.47
5200938751 A2 JAMES T HOLT $65,556.53
5200938807 A2 PAULETTE RODGERS ASHLEY $48,644.01
5200951583 A2 DALE D DEMONT $89,749.93
5200964367 A2 TODD ABBEY $62,338.24
5200965991 A2 TAMMYLYNNKUHN ROGERS SANDERSON $65,777.83
5200967644 A2 MICHAEL W RUTH $133,094.58
5200970502 A2 NANCY P TUCKER $51,059.96
5200971420 A2 EDELTRAUT HERNINA EDWARDS $155,054.59
5200973027 A2 MICHAEL PRESLEY $59,970.42
5200974173 A2 STACEY FOXX $123,863.75
5200976428 A2 NIEL SORENSEN $67,163.21
5200979413 A2 LEONEL G PEREZ $67,260.27
5300967114 A2 RICHARD DURIN CATALINE $65,566.97
5500961166 A2 STACEY L MOLENCUPP $59,146.16
5500972927 A2 JAMES M RANSOM $99,564.48
5500973872 A2 PATRICK ROGERS $62,365.84
5500978266 A2 DANNY OWEN $58,500.00
5590025258 A2 JAMES A MILLS $58,822.26
5600921281 A2 SUSAN B KESSLER $108,729.93
5600979853 A2 ALBERT J MARSHALL $75,164.91
5700969838 A2 ROBERT C CONGER $45,000.00
$39,277,999.04
</TABLE>
<PAGE>
FINANCIAL GUARANTY
FINANCIAL INSURANCE POLICY
SECURITY
ASSURANCE
Obligor: As described in Endorsement No. 1 Policy No.: 50816-N
Obligations: HomeGold Home Equity Loan Trust 1999-1, Date of Issuance: 5/27/99
$53,946,000 HomeGold Home Equity Loan Asset
Backed Notes, Series 1999-1
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for
consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to
each Holder, subject only to the terms of this Policy (which includes each
endorsement hereto), the full and complete payment by the Obligor of Scheduled
payments of principal of, and interest on, the Obligations.
For the further protection of each Holder, Financial Security
irrevocably and unconditionally guarantees:
(a) payment of the amount of any distribution of principal of, or
interest on, the Obligations 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 (such payment to be made by Financial
Security in accordance with Endorsement No. 1 hereto).
(b) payment of any amount required to be paid under this Policy by
Financial Security following Financial Security's receipt of notice as
described in Endorsement No. 1 hereto.
Financial Security shall be subrogated to the rights of each Holder to
receive payments under the Obligations to the extent of any payment by
Financial Security hereunder.
Except to the extent expressly modified by an endorsement hereto, the
following terms shall have the meaning specified for all purposes of this
Policy. "Holder" means the registered owner of any obligation as indicated on
the registration books maintained by or on behalf of the Obligor for such
purpose or, if the Obligation is in bearer form, the holder of the Obligation.
"Scheduled Payments" means payments which are scheduled to be made during the
Term of this Policy in accordance with the original terms of the Obligations
when issued and without regard to any amendment or modification of such
Obligations thereafter; payments which become due on an accelerated basis as a
result of (a) a default by the Obligor, (b) an election by the Obligor to pay
principal on an accelerated basis or (c) any other cause, shall not constitute
"Scheduled Payments" unless Financiual Security shall elect, in its sole
discretion, to pay such principal due upon such acceleration together with any
accrued interest to the date of acceleration. "Term of this Policy" shall have
the meaning 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, or by the merger,
consolidation or dissolution of the Obligor. Except to the extent expressly
modified by an endorsement hereto, the premiums paid in respect of this Policy
are nonrefundable for any reason whatsoever, including payment, or provision
being made for payment, of the Obligations prior to maturity. This Policy may
not be canceled or revoked during the Term of this Policy. 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/ Russell B. Brewer II
--------------------------------
AUTHORIZED OFFICER
A subsidiary of Financial Security Assurance Holdings Ltd.
350 Park Avenue, New York, NY 10022-6022 (212) 826-0100
Form 100NY (5/89)
<PAGE>
ENDORSEMENT NO. 1 TO
FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL SECURITY ASSURANCE INC.
OBLIGOR: HOMEGOLD HOME EQUITY TRUST 1999-1
OBLIGATIONS: HomeGold Home Equity Loan Trust 1999-1, $53,946,000
HomeGold Home Equity Loan Asset Backed Notes, Series 1999-1
POLICY NO.: 50816-N
DATE OF ISSUANCE: May 27, 1999
1. Definitions. For all purposes of this Policy, the terms specified
below shall have the meaning or constructions provided below. Capitalized terms
used herein and not otherwise defined herein shall have the meanings provided
in the Sale and Servicing Agreement and the Indenture 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.
"Holder" shall not include the Obligor or any affiliates or successors
thereof in the event the Obligor, or any such affiliate or successor, is a
registered or beneficial owner of the Obligation.
"Indenture" means the Indenture, dated as of May 1, 1999, between the
Obligor as Issuer and the Indenture Trustee, as amended from time to time with
the consent of Financial Security.
"Indenture Trustee" means First Union National Bank, in its capacity
as Indenture Trustee under the Indenture and the Sale and Servicing Agreement
and any successor in such capacity.
"Policy" means this Financial Guaranty Insurance Policy and includes
each endorsement thereto.
"Receipt" and "Received" mean actual delivery to Financial Security
and to the Fiscal Agent (as defined below), if any, 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 Indenture 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
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Policy No.: 50816-N Date of Issuance: May 27, 1999
Security or its Fiscal Agent shall promptly so advise the Indenture Trustee and
the Indenture Trustee may submit an amended notice.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of May 1, 1999, among the Obligor as Issuer, Prudential Securities
Secured Financing corporation as Depositor, HomeGold Inc. as Servicer and the
Indenture Trustee, a amended from time to time with consent of Financial
Security.
"Scheduled Payments" means, with respect to any Payment Date and the
Obligations, the Insured Payments, without regard to any amendment or
modification of the Notes, the Indenture or the Sale and Servicing Agreement,
except such amendments or modifications to which Financial Security has given
its prior written consent. Scheduled Payments shall not include any amounts due
in respect of the obligations attributable to any increase in interest rate,
penalty or other sum payable by the Obligor by reason of any default or event
of default in respect of the Obligations, or by reason of any deterioration of
the credit worthiness of the Obligor, nor shall Scheduled payments include, nor
shall coverage be provided under this Policy in respect of, any taxes,
withholding or other charge imposed by any governmental authority due in
connection with the payment of any Scheduled Payment to a Holder.
"Term of This Policy" means the period from and including the Date of
Issuance to and including the date on which (i) all Scheduled Payments have been
paid or deemed to have been paid within the meaning of Section 4.1 of the
Indenture, (ii) any period during which any Scheduled payment on the Notes 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.
2. Notices and Conditions to Payment in Respect of Scheduled Payments.
Following Receipt by financial Security of a notice and certificate from the
Indenture Trustee in the form attached as Exhibit A to this Endorsement,
Financial Security will pay any amount payable hereunder in respect of Scheduled
payments out of the funds of Financial Security on the later 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 Payment Date to which
such claim relates. Payments due hereunder in respect of Scheduled Payments will
be disbursed by wire transfer of immediately available funds to the Policy
Payments Account established pursuant to the Indenture or, if no such Policy
Payments Account has been established, to the Indenture Trustee.
Financial Security shall be entitled to pay any amount hereunder in
respect of Scheduled Payments, including any amounts due on the obligations on
an accelerated basis, whether or not any notice and certificate shall have been
Received by Financial Security as provided above, provided, however, that by
acceptance of this Policy the Indenture Trustee agrees to provide upon request
to Financial Security a notice and certificate in respect of any such payments
made by Financial Security. Financial Security shall be entitled to pay
hereunder any amount in respect of
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Policy No.: 50816-N Date of Issuance: May 27, 1999
Scheduled Payments on an accelerated basis at any time or from time to time, in
whole or in part, prior to the scheduled date of payment thereof. Scheduled
Payments 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
Scheduled payments shall be discharged to the extent such amounts are paid by
the Issuer in accordance with the Indenture or disbursed by Financial Security
as provided herein whether or not such funds are properly applied by the
Indenture Trustee except as otherwise provided in paragraph 3 of this
Endorsement.
3. Notices and Conditions to Payment in Respect of Scheduled Payments
Avoided as Preference Payments. If any Scheduled Payment 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 Indenture 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 Obligations
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
asignning to Financial Security all rights and claims of the relevant Holder
relating to or arising under the Notes 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 Indenture Trustee of the
items referred to in clauses (A), (B) and (C) above if, at least four Business
Days prior to such date of Receipt, financial security shall have Received
written notice from the Indenture 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 Indenture Trustee or any Holder
directly (unless such 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 reasonably satisfactory to Financial Security). In
connection with the foregoing, financial Security shall have the rights
provided pursuant to Section 5.17 and Section 5.18 of the Indenture.
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 Indenture Trustee at the notice address
specified in the Indenture specifying the name and notice address of the Fiscal
Agent. From and after the date of receipt of such notice by the Indenture
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Policy No.: 50816-N Date of Issuance: May 27, 1999
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 provision of this
Policy.
7. Notices. All notices to be given hereunder shall be in writing
(except as otherwise specifically provided herein) and shall be mailed by
registered mail or personally delivered or telecopied to Financial Security as
follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President--Surveillance Department
Re: HomeGold Home Equity Loan Trust 1999-1
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 Indenture 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 o 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 Indenture Trustee shall surrender this
Policy to Financial Security for cancellation upon expiration of the Term of
this Policy.
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Policy No.: 50816-N Date of Issuance: May 27, 1999
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/ Russell B. Brewer II
----------------------------------
Authorized Officer
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Policy No.: 50816-N Date of Issuance: May 27, 1999
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
(the "Indenture Trustee"), hereby certifies to Financial Security Assurance Inc.
("Financial Security"), with reference to Financial Guaranty Insurance Policy
No. 50816-N, dated May 27, 1999 (the "Policy"), issued by Financial Security
in respect of the HomeGold Home Equity Loan Trust 1999-1, $53,964,000 HomeGold
Home Equity Loan Asset Backed Notes Series 1999-1 that:
(i) The Indenture Trustee is the Indenture Trustee under the
Indenture 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 Notes (the "Securities") pursuant to the
Indenture and Sale and Servicing Agreement will be $____________ (the
"Shortfall") less than the aggregate amount of Scheduled Payments due
on _______________.
(iii) The Indenture Trustee is making a claim under the Policy for
the Shortfall to be applied to the payment of Scheduled Payments.
(iv) The Indenture Trustee agrees that, following receipt of
funds from Financial Security, it shall (a) hold such amounts in trust
and apply the same directly to the payment of Scheduled Payments on the
Obligations when due; (b) not apply such funds for any other purpose;
(c) not commingle such funds with other funds held by the Indenture
Trustee and (d) maintain an accurate record of such payments with
respect to each Obligation is required to be surrendered for such
payment, shall stamp on each such Obligation the legend "$[insert
applicable amount] paid by Financial Security and the balance hereof
has been cancelled and reissued" and then shall deliver such Obligation
to Financial Security.
(v) The Indenture Trustee, on behalf of the Holders, hereby
assigns to Financial Security the rights of the Holders with respect to
the Trust Property 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
Obligations. The foregoing assignment is in addition to, and
A-1
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Policy No.: 50816-N Date of Issuance: May 27, 1999
not in limitation of, rights of subrogation otherwise available to
Financial Security in respect of such payments. The Indenture Trustee
shall take such action and delivery such instruments as may be
reasonably requested or required by Financial Security to effectuate
the purpose or provisions of this clause (v).
(vi) The Indenture Trustee, on its behalf and on behalf of the
Holders, hereby appoints Financial Security as agent and attorney-in-
fact for the Indenture Trustee and each such Holder in any legal
proceeding with respect to the Obligations. The Indenture Trustee hereby
agrees that Financial Security may at any time during the continuation
of any proceeding by or against the Servicer 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 Obligations (a "Preference
Claim"), (B) the direction of any appeal of any order relating to any
Preference Claim at the expense of Financial Security 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 Indenture Trustee hereby agrees that Financial Security
shall be subrogated to, and the Indenture 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 Indenture 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
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Policy No.: 50816-N Date of Issuance: May 27, 1999
IN WITNESS WHEREOF, the Indenture Trustee has executed and delivered
this Notice of Claim and Certificate as of the _________ day of _______________,
_______.
FIRST UNION NATIONAL BANK,
as Indenture Trustee
By:
-------------------------------
Title:
----------------------------
- --------------------------------------------------------------------------------
For Financial Security or Fiscal Agent Use Only
Wire Transfer sent
--------------------------------------------------------------
Confirmation Number
-------------------------------------------------------------
<PAGE>
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
Depositor
EMERGENT MORTGAGE HOLDINGS CORPORATION
Unaffiliated Seller
and
HOMEGOLD FINANCIAL INC.
---------------------------
UNAFFILIATED SELLER'S AGREEMENT
Dated as of May 1, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE ONE DEFINITIONS..................................................................................1
Section 1.01. Definitions.....................................................................1
ARTICLE TWO PURCHASE, SALE AND CONVEYANCE OF THE MORTGAGE LOANS...........................................4
Section 2.01. Agreement to Purchase Mortgage Loans............................................4
Section 2.02. Purchase Price..................................................................4
Section 2.03. Delivery of Mortgage Loan Files.................................................4
Section 2.04. Transfer of Mortgage Loans; Assignment of Agreement.............................4
Section 2.05. Examination of Mortgage Loan File...............................................5
Section 2.06. Books and Records...............................................................5
ARTICLE THREE REPRESENTATIONS AND WARRANTIES.............................................................5
Section 3.01. Representations and Warranties as to the Unaffiliated Seller....................5
Section 3.02. Representations and Warranties Relating to the Mortgage Loans...................7
Section 3.03. Covenants of the Unaffiliated Seller...........................................15
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........................................................................18
Section 3.08. Representations and Warranties of HomeGold Financial...........................18
ARTICLE FOUR THE UNAFFILIATED SELLER....................................................................19
Section 4.01. Liability of the Unaffiliated Seller...........................................19
Section 4.02. Merger or Consolidation........................................................19
</TABLE>
i
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<TABLE>
<S> <C> <C>
Section 4.03. Costs..........................................................................20
Section 4.04. Servicing......................................................................21
Section 4.05. Mandatory Delivery.............................................................21
Section 4.06. Indemnification................................................................21
ARTICLE FIVE CONDITIONS OF CLOSING......................................................................25
Section 5.01. Conditions of Depositor's Obligations..........................................25
Section 5.02. Conditions of Unaffiliated Seller's Obligations................................27
Section 5.03. Termination of Depositor's Obligations.........................................28
ARTICLE SIX MISCELLANEOUS.............................................................................. 28
Section 6.01. Notices........................................................................28
Section 6.02. Severability of Provisions.....................................................28
Section 6.03. Agreement of Unaffiliated Seller...............................................29
Section 6.04. Survival.......................................................................29
Section 6.05. Effect of Headings and Table of Contents.......................................29
Section 6.06. Successors and Assigns.........................................................29
Section 6.07. Governing Law..................................................................29
Section 6.08. Confirmation of Intent.........................................................29
Section 6.09. Execution in Counterparts......................................................30
Section 6.10. Amendments.....................................................................30
Section 6.11. Miscellaneous..................................................................31
</TABLE>
EXHIBITS
Exhibit A - Schedule of Mortgage Loans
Exhibit B - Officer's Certificate
ii
<PAGE>
This Unaffiliated Seller's Agreement, dated as of May 1, 1999, among
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, a Delaware corporation
(the "Depositor"), EMERGENT MORTGAGE HOLDINGS CORPORATION, a Delaware
corporation (the "Unaffiliated Seller"), and HOMEGOLD FINANCIAL, INC., a South
Carolina corporation ("HomeGold Financial").
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 Sale and Servicing Agreement to be dated as of May 1, 1999 (the
"Sale and Servicing Agreement"), to be entered into by and among the
Depositor, as Depositor, HomeGold, Inc., as Servicer, Fairbanks Capital Corp.,
as Back-up Servicer, First Union National Bank, as Indenture Trustee (the
"Indenture Trustee"), into the HomeGold Home Equity Loan Trust 1999-1 (the
"Trust") created pursuant to the Trust Agreement dated as of May 1, 1999 (the
"Trust Agreement") between Unaffiliated Seller as Sponsor and Wilmington Trust
Company, as Owner Trustee (the "Owner Trustee"), and (b) the Indenture Trustee
shall issue notes (the "Notes") evidencing beneficial ownership interests in
the Trust to or upon the written order of the Depositor;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. 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.
"Commission" means the Securities and Exchange Commission and its
successors.
"Cut-off Date" means the opening of business on May 1, 1999 for any
Mortgage Loan, and with respect to all Qualified Substitute Mortgage Loans,
the first day of the calendar month in which the substitution occurs.
"Cut-off Date Principal Balance" means as to each Mortgage Loan, its
unpaid principal balance as of the Cut-off Date.
<PAGE>
"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 Insurer in
writing expressly for the use in the Offering Document, it being understood
that in respect of the initial Offering Document, the FSA Information is
limited to the information included under the caption "The Insurer" and the
financial statements of the Insurer incorporated by reference therein.
"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.
"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.
"Mortgage Loans" means the mortgage loans listed on the Schedule of
Mortgage Loans which were identified as of May 1, 1999 and any mortgage loan
substituting or replacing a Mortgage Loan pursuant to the terms of the Sale
and Servicing Agreement.
"Original Pool Balance" means the aggregate unpaid principal balance
of the Mortgage Loans as of the Cut-off Date.
"Originator" means HomeGold, Inc., 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 March 23, 1999 relating to
the offering by the Depositor from time to time of its pass-through
certificates or notes (issuable in series) in the form in which it was or will
be filed with the Securities and Exchange Commission pursuant to Rule 424(b)
under the Securities Act with respect to the offer and sale of the Notes.
"Prospectus Supplement" means the Prospectus Supplement dated May 19,
1999, relating to the offering of the Notes in the form in which it was or
will be filed with the Commission pursuant to Rule 424(b) under the Securities
Act with respect to the offer and sale of the Notes.
"Purchase Agreement and Assignment" means the Agreement dated as of
May 1, 1999 among the Originator, the Unaffiliated Seller and HomeGold
Financial, Inc.
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"Registration Statement" means that certain registration statement on
Form S-3, as amended (Registration No. 333-74859) relating to the offering by
the Depositor from time to time of its pass-through certificates or notes
(issuable in series) as heretofore declared effective by the Commission.
"Related Documents" means the Insurance Agreement dated as of May 1,
1999 among the the Unaffiliated Seller, HomeGold Financial, the Depositor,
HomeGold Home Equity Loan Trust 1999-1 and Financial Security Assurance Inc.
and the Indemnification Agreement dated as of May 19, 1999 among the
Unaffiliated Seller, HomeGold Financial, the Depositor, HomeGold Home Equity
Loan Trust 1999-1 and Financial Security Assurance Inc.
"Schedule of Mortgage Loans" means the schedule of Mortgage Loans and
related mortgage notes 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 Notes, by any "nationally
recognized statistical rating organization," as that term is
defined by the Commission for purposes of Rule 436(g)(2)
under the Securities Act; or
(c) Subsequent to the execution and delivery of this Agreement,
there shall have occurred an adverse change in the
condition, financial or otherwise, earnings, affairs,
regulatory situation or business prospects of the Insurer 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 Notes, (ii) a general moratorium on commercial banking
activities in New York declared by either Federal or New
York State authorities; or (iii) the engagement by the
United States in hostilities, or the escalation of such
hostilities, or any calamity or crisis, if the effect of any
such event specified in this clause (iii) in the reasonable
judgment of the Depositor makes it impracticable or
inadvisable to proceed with the public offering or the
delivery of the Notes on the terms
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<PAGE>
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 Sale and Servicing
Agreement.
ARTICLE TWO
PURCHASE, SALE AND CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01. Agreement to Purchase Mortgage Loans. 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
relating thereto. 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 relating
thereto from the Unaffiliated Seller to the Depositor, conveying good title
thereto free and clear of any Liens, and such Mortgage Loans and Other Conveyed
Property shall not be part of the Unaffiliated Seller's estate in the event of
the filing of a bankruptcy petition by or against the Unaffiliated Seller under
any bankruptcy or similar law.
Section 2.02. Purchase Price. On the Closing Date, as full
consideration for the Unaffiliated Seller's sale of the Mortgage Loans and the
Other Conveyed Property relating thereto to the Depositor, the Depositor will
deliver to the Unaffiliated Seller the net proceeds from the issuance of the
Notes and will deliver to or upon the written order of the Unaffiliated Seller,
the Certificate to be issued by the Trust pursuant to Section 4.2 of the Trust
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 Indenture Trustee (as assignee of the Depositor and the Trust
pursuant to the Sale and Servicing Agreement) the documents listed in Section
2.03(a) of the Sale and Servicing Agreement with respect to each Mortgage Loan
being sold to the Depositor on such date.
Section 2.04. Transfer of Mortgage Loans; Assignment of Agreement. The
Depositor has the right to assign its interest under this Agreement to the
Trust, as may be required to effect the purposes of the Sale and Servicing
Agreement and the Trust has the right to pledge such interest to the Indenture
Trustee as may be required to effect the purposes of the Indenture, without
further notice to, or consent of, the Unaffiliated Seller,
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<PAGE>
the Trust and the Indenture Trustee shall succeed to such of the rights and
obligations of the Depositor hereunder as shall be so assigned. The Depositor
shall, pursuant to the Sale and Servicing Agreement, assign all of its right,
title and interest in and to the Mortgage Loans and its right to exercise the
remedies created by this Section 2.04 and Section 3.05 hereof to the Trust and
the Trust shall pledge all of its right, title and interest in and to the
Mortgage Loans and its right to exercise the remedies created by this Section
2.04 and Section 3.05 to the Indenture Trustee. The Unaffiliated Seller agrees
that, upon such assignment to the Trust and pledge to the Indenture Trustee,
such representations, warranties, agreements and covenants will run to and be
for the benefit of the Trust and the Indenture Trustee and the Trust and the
Indenture Trustee may enforce diligently, without joinder of the Depositor,
the repurchase obligations of the 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 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 Indenture Trustee has
conducted or has failed to conduct any partial or complete examination of the
Mortgage Files shall not affect the rights of the Depositor or the Indenture
Trustee to demand repurchase or other relief as provided in this Agreement.
Section 2.06. 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 Trust and the pledge thereof
to the Indenture Trustee, for the benefit of the Noteholders and the 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
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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 the Depositor by all necessary
corporate action; the execution, delivery and performance of
this Agreement and the Related Documents to which it is a
party have been duly authorized by the Unaffiliated Seller
by all necessary corporate action; and this Agreement has
been duly and validly executed and delivered by the
Unaffiliated Seller;
(d) Valid Sale; Binding Obligations. This Agreement shall effect
a valid sale, transfer and assignment of the Mortgage Loans
and the Other Conveyed Property, enforceable against the
Unaffiliated Seller and creditors of and purchasers from the
Unaffiliated Seller; and this Agreement constitutes a legal,
valid and binding obligation 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
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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 Notes or the consummation of
any of the transactions contemplated by this Agreement,
(iii) seeking any determination or ruling that might
materially and adversely affect the performance by the
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 Certificate , 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; and
(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, as to each Mortgage Loan, that immediately prior to the sale
and transfer of the relevant Mortgage Loans on such date by the Unaffiliated
Seller to the Depositor and immediately prior to the sale of the Mortgage
Loans from the Depositor to the Trust pursuant to the Sale and Servicing
Agreement and the pledge thereof by the Trust to the Indenture Trustee
pursuant to the Indenture:
(a) The information with respect to each Mortgage Loan set forth
in the Schedule of Mortgage Loans is true and correct as of
the related Cut-off Date;
(b) All of the original or certified documentation required to
be delivered to the Trust, pursuant to the Sale and
Servicing Agreement (including all material documents
related thereto) with
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respect to each Mortgage Loan has been or will be delivered
to the Indenture Trustee, in accordance with the terms of
such Sale and Servicing Agreement. Each of the documents and
instruments specified to be included therein has been duly
executed and in due and proper form, and each such document
or instrument is in a form generally acceptable to prudent
mortgage lenders that regularly originate or purchase
mortgage loans comparable to the Mortgage Loans for sale to
prudent investors in the secondary market that invest in
mortgage loans such as the Mortgage Loans;
(c) Except as otherwise disclosed on the Mortgage Loan Schedule,
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;
(d) No Mortgage Loan had an original Loan-to-Value Ratio in
excess of 140%;
(e) Each Mortgage is a valid and subsisting first or junior 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 immediately upon the sale and
assignment herein contemplated, the Depositor will hold good
and infeasible title to, and will be the sole owner of each
Mortgage Loans subject to no liens, except Liens which will
be released simultaneously with such sale and assignment;
(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,
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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 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) Except for the Mortgage Loans as to which the policies under
which they were originated, no title insurance was required,
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 or junior
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 Sale and
Servicing Agreement) with a generally acceptable carrier
that provides for fire and extended coverage representing
coverage not less than the least of (A) the outstanding
principal balance of the related Mortgage Loan and (B) the
minimum amount required to compensate for damage or loss on
a replacement cost basis;
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(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
Sale and Servicing Agreement) in a form meeting the
requirements of the current guidelines of the Federal
Insurance Administration is in effect with respect to such
Mortgaged Property with a generally acceptable carrier in an
amount representing coverage not less than the least of (A)
the outstanding principal balance of the related Mortgage
Loan and (B) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973;
(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 Sale and Servicing Agreement, any necessary
notifications of insurers, assignments of policies or
interests therein, and establishments of co-insured, joint
loss payee and mortgagee rights in favor of the servicer;
(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, or the Trust Administrator
on behalf of the Trustee, subject to the provisions of
Section 2.03 of the Sale 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 Indenture 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
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future advances thereunder. 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 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, and except as is
described in the Mortgage Loan Schedule, consists of one or
more parcels of real property with a residential dwelling
thereon;
(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
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such title insurance policy and affirmatively insured;
(bb) 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;
(cc) 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;
(dd) 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;
(ee) 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;
(ff) 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;
(gg) The credit underwriting guidelines applicable to each
Mortgage Loan conform in all material respects to the
Originator's underwriting guidelines in effect at the time
such Mortgage Loan was originated;
(hh) All parties to the Mortgage Note and the Mortgage had legal
capacity to execute the Mortgage Note and the Mortgage and
each
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Mortgage Note and Mortgage have been duly and properly
executed by such parties;
(ii) The Unaffiliated 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;
(jj) 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;
(kk) 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;
(ll) 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 such Loans constitute part
of the Trust and are owned by the Trust in accordance with
the terms of the Sale and Servicing Agreement and have been
pledged to the Indenture Trustee in accordance with the
terms of the Indenture.
(mm) No Mortgage Loan was originated in, or is subject to the
laws of, any jurisdiction the laws of which would make
unlawful, void or voidable the sale, transfer and assignment
of such Mortgage Loan under this Agreement or pursuant to
transfers of the Notes. The 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;
(nn) All filings (including, without limitation, UCC filings)
required to be made by any Person and actions required to be
taken or performed by any Person in any jurisdiction to give
the Indenture Trustee, a first or junior 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;
(oo) 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 and the Noteholders in any
Mortgage Loan or the proceeds thereof;
(pp) No Mortgage Loan is assumable (without the consent of the
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Originator 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 Unaffiliated Seller
with respect to such Mortgage Loan;
(qq) With respect to the Group I Mortgage Loans as of the Cut-off
Date: the aggregated Stated Principal Balance was
$20,351,882.24; each of the Stated Principal Balances was at
least $1,281.35 but no more than $447,294.91;the average
Stated Principal Balance was $29,973.32; the Mortgage Rates
were at least 8.000% but no more than 18.428%; the weighted
average Mortgage Rate was 12.005%; the original
Loan-to-Value Ratios were at least 4.98% but no more than
133.61%; the weighted average original Loan-to-Value Ratio
was 60.72%; the remaining terms to stated maturity were at
least 11 months but no more than 359 months; the weighted
average remaining term to stated maturity was approximately
182.74 months; the original terms to stated maturity were at
least 35 months but no more than 363 months; the weighted
average original term to stated maturity was approximately
198.55 months; and no more than 2.20% of the aggregate
Stated Principal Balance of the Mortgage Loans are secured
by Mortgaged Properties located in any one postal ZIP code
area;
(rr) With respect to the Group II Mortgage Loans as of the
Cut-off Date: the aggregated Stated Principal Balance was
$39,277,999.04; each of the Stated Principal Balances was at
least $14,406.87but no more than $206,250.00: the average
Stated Principal Balance was $66,124.58; the Mortgage Rates
were at least 6.100% but no more than 18.990%; the weighted
average Mortgage Rate was 1.649%; the original Loan-to-Value
Ratios were at least 11.80% but no more than 138.18%; the
weighted average original Loan-to-Value Ratio was 77.38%;
the remaining terms to stated maturity were at least 33
months but no more than 359 months; the weighted average
remaining term to stated maturity was approximately 222.89
months; the original terms to stated maturity were at least
60 months but no more than 370 months; the weighted average
original term to stated maturity was approximately 237.14
months; and no more than 2.05% of the aggregate Stated
Principal Balance of the Mortgage Loans are secured by
Mortgaged Properties located in any one postal ZIP code
area;
(ss) No selection procedures adverse to the Noteholders or to the
Insurer have been utilized in selecting such Mortgage Loan
from all other similar Mortgage Loans originated by the
Originator;
(tt) The related Mortgaged Property has not been subject to any
foreclosure proceeding or litigation;
(uu) There was no fraud involved in the origination of the
Mortgage
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Loan by the mortgagee or the Mortgagor, any appraiser or any
other party involved in the origination of the Mortgage
Loan; and
(vv) Except for Mortgage Loans as to which the policies under
which they were originated no appraisal was required, 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 such appraisal has been performed in
accordance with the requirements of FNMA or FHLMC.
(ww) None of the Mortgage Loans is a "bond for title" obligation
or loan, provided that the Unaffiliated Seller shall have 30
days after the Closing Date to cure any breach of this
representation.
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 Notes in making
available all information and taking all steps reasonably
necessary to permit the accountants' letters required
hereunder to be delivered within the times set for delivery
herein;
(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 Trust and the subsequent
pledge to the Indenture Trustee pursuant to the Indenture
and the rating, issuance and sale of the Notes; and
(d) The Unaffiliated Seller hereby agrees to arrange separately
to pay to the Indenture Trustee the Indenture Trustee's fees
and expenses in connection with the transactions
contemplated by the Sale and Servicing Agreement and the
Indenture, including, without limitation, all of the
Indenture Trustee's fees and expenses in connection with any
actions taken by the Indenture Trustee pursuant to Section
8.01 thereof. For the avoidance of doubt, the parties hereto
acknowledge that it is the intention of the parties that the
Depositor shall not pay any of the Owner Trustee's or the
Indenture Trustee's fees and expenses in connection with the
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transactions contemplated by the Trust Agreement, the Sale
and Servicing Agreement or the Indenture.
Section 3.04. Representations and Warranties of the Depositor. The
Depositor hereby represents, warrants and covenants to the Unaffiliated
Seller, as of the date of execution of this Agreement, and as of 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
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; and
(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
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Depositor, or (ii) results or will result in a violation of
any law, rule, regulation, order, judgment or decree of any
court or governmental authority having jurisdiction over the
Depositor.
Section 3.05. Repurchase Obligation for Breach of a Representation or
Warranty. Each of the representations and warranties contained in Sections
3.01 and 3.02 shall survive the purchase by the Depositor of the Mortgage
Loans and the subsequent transfer thereof by the Depositor to the Trust and
from the Trust to the Indenture Trustee and shall continue in full force and
effect, notwithstanding any restrictive or qualified endorsement on the
Mortgage Loans and notwithstanding subsequent termination of this Agreement or
the Sale and Servicing Agreement.
(a) Upon the occurrence of a breach of any of the 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 Trust, repurchase the related
Mortgage Loan from the Trust within 60 days following
discovery by or notice to the Unaffiliated Seller of such
breach pursuant to Section 2.05 of the Sale and Servicing
Agreement, and, the Unaffiliated Seller shall pay the
Purchase Price to the Indenture Trustee pursuant to the Sale
and Servicing Agreement. To the extent such Unaffiliated
Seller fails to effect its repurchase obligation, HomeGold
Financial shall repurchase the related Mortgage Loans and
pay the Purchase Price to the Trust Administrator on behalf
of the Trustee on such date. The provisions of this Section
3.05 are intended to grant the Indenture Trustee a direct
right against the Unaffiliated Seller and HomeGold Financial
to demand performance hereunder, and in connection
therewith, the Unaffiliated Seller and HomeGold Financial
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
2.05 of the Sale and Servicing Agreement. Notwithstanding
any other provision of this Agreement or the Sale and
Servicing Agreement to the contrary, the obligation of the
Unaffiliated Seller and HomeGold Financial under this
Section shall be performed in accordance with the terms
hereof notwithstanding the failure of the Depositor or the
Servicer to perform any of their respective obligations with
respect to such Mortgage Loan under this Agreement or under
the Sale and Servicing Agreement.
(b) In addition to the foregoing and notwithstanding whether the
related Mortgage Loan shall have been purchased by the
Unaffiliated Seller or HomeGold Financial, the Unaffiliated
Seller shall indemnify the Depositor, the Trust, the
Indenture Trustee, the Owner Trustee, the Insurer, HomeGold
Financial and the
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Noteholders against all costs, expenses, losses, damages,
claims and liabilities, including reasonable fees and
expenses of counsel, which may be asserted against or
incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to
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 Indenture Trustee, shall take such steps as may be
reasonably requested by the Unaffiliated Seller in order to assign to the
Unaffiliated Seller all of the Depositor's and the Trust's and the Indenture
Trustee's right, title and interest in and to such Mortgage Loan and all
security and documents and all Other Conveyed Property conveyed to the
Depositor, the Trust and the Indenture Trustee directly relating thereto,
without recourse, representation or warranty, except as to the absence of
Liens created by or arising as a result of actions of the Depositor or the
Indenture Trustee. Such assignment shall be a sale and assignment outright,
and not for security. If, following the reassignment of a Purchased Mortgage
Loan, in any enforcement suit or legal proceeding, it is held that the
Unaffiliated 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 Depositor, the Trust and the Indenture 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, the Trust's or the Indenture Trustee's name,
or the names of the Noteholders.
Section 3.07. Waivers. No failure or delay on the part of the
Depositor, the Trust or the Indenture Trustee as pledgee of the Trust 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 HomeGold Financial.
HomeGold Financial hereby represents and warrants to the Depositor as of the
date of execution of this Agreement, and as of the Closing Date, that:
(a) HomeGold Financial is a corporation duly organized, validly
existing and in good standing under the laws of the State of
South Carolina;
(b) HomeGold Financial 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 HomeGold Financial, and
constitutes the legal, valid and binding agreement of
HomeGold Financial, enforceable against HomeGold Financial
in accordance with its terms, except as such enforcement may
be limited by bankruptcy, insolvency,
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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 HomeGold Financial with
this Agreement or the consummation by HomeGold Financial of
any of the transactions contemplated hereby or thereby,
except such as have been made on or prior to the Closing
Date; and
(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 HomeGold Financial 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 HomeGold Financial is a party or by which it is bound
and which is material to HomeGold Financial, 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 HomeGold Financial.
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 HomeGold Financial may be merged or consolidated, (ii) resulting
from any merger or consolidation to which the Unaffiliated Seller or HomeGold
Financial is a party or (iii) succeeding to the business of the Unaffiliated
Seller or HomeGold Financial, 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
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assumption to perform every obligation of the Unaffiliated Seller or HomeGold
Financial, 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 HomeGold Financial, as the case may be, hereunder (without relieving
the Unaffiliated Seller or HomeGold Financial, as the case may be, of its
responsibilities hereunder, if it survives such merger or consolidation)
without the execution or filing of any document or any further act by any of
the parties to this Agreement. Notwithstanding the foregoing, so long as a
Insurer Default shall not have occurred and be continuing, the Unaffiliated
Seller shall not merge or consolidate with any other Person or permit any
other Person to become the successor to the Unaffiliated Seller's business
without the prior written consent of the Insurer. The Unaffiliated Seller or
HomeGold Financial, as the case may be, shall promptly inform the other party,
the Indenture Trustee, so long as an Insurer Default shall not have occurred
and be continuing, the Insurer of such merger, consolidation or purchase and
assumption. Notwithstanding the foregoing, as a condition to the consummation
of the transactions referred to in clauses (i), (ii) and (iii) above, (x)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Sections 3.01, 3.02 and 3.08 or covenant made
pursuant to Section 3.03, shall have been breached (for purposes hereof, such
representations and warranties shall speak as of the date of the consummation
of such transaction) and no event that, after notice or lapse of time, or
both, would become an event of default under the Insurance Agreement, shall
have occurred and be continuing, (y) the Unaffiliated Seller or HomeGold
Financial, as the case may be, shall have delivered to the Indenture Trustee
an Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply
with this Section 4.02 and that all conditions precedent, if any, provided for
in this Agreement relating to such transaction have been complied with, and
(z) the Unaffiliated Seller shall have delivered to the Indenture Trustee an
Opinion of Counsel, stating, in the opinion of such counsel, either (A) all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary to preserve and protect the
interest of the Indenture Trustee in the Trust and reciting the details of the
filings or (B) no such action shall be necessary to preserve and protect such
interest.
Section 4.03. Costs. In connection with the transactions contemplated
under this Agreement, the Sale and Servicing Agreement and the Indenture, the
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 Dewey Ballantine LLP, not to exceed $150,000; (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) expenses incurred in connection with printing the
Prospectus, the Prospectus Supplement, any amendment or supplement thereto,
any preliminary prospectus and the Notes; (vi) fees and expenses relating to
the filing of documents with the Securities and Exchange Commission (including
without limitation periodic reports under the Exchange Act); (vii) the shelf
registration amortization fee paid in connection with the issuance of the
Certificate; and (viii) 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,
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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 Insurer including, without limitation, legal fees and
expenses, accountant fees and expenses and expenses in connection with due
diligence conducted on the Mortgage Loan File. All other costs and expenses in
connection with the transactions contemplated hereunder shall be borne by the
party incurring such expenses.
Section 4.04. Servicing. The Mortgage Loans shall be serviced by the
Servicer in accordance with the Sale and Servicing Agreement.
Section 4.05. Mandatory Delivery. Each document specified in Section
2.03 of the Sale and Servicing Agreement for each Mortgage Loan shall be
delivered to the Depositor on or before the Closing Date (except as otherwise
provided in such Section 2.03).
Section 4.06. Indemnification.
(a) (i) HomeGold Financial agrees to indemnify and hold harmless
the Depositor, each of its directors, each of its officers
who have signed the Registration Statement, Prudential
Securities Incorporated and each of its directors and each
person or entity who controls the Depositor or Prudential
Securities Incorporated or any such person, within the
meaning of Section 15 of the Securities Act, against any and
all losses, claims, damages or liabilities, joint and
several, to which the Depositor, Prudential Securities
Incorporated or any such person or entity may become
subject, under the Securities Act or otherwise, and will
reimburse the Depositor, Prudential Securities Incorporated
and each such controlling person for any legal or other
expenses incurred by the Depositor, Prudential Securities
Incorporated or such controlling person in connection with
investigating or defending any such loss, claim, damage,
liability or action, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Prospectus
Supplement or any amendment or supplement to the Prospectus
Supplement or the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements in the Prospectus
Supplement or any amendment or supplement to the Prospectus
Supplement, in light of the circumstances under which they
were made, not misleading, 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 HomeGold Financial may otherwise have.
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(ii) HomeGold Financial agrees to indemnify and to hold each
of the Depositor, the Indenture Trustee, the Owner Trustee,
the Insurer and each Noteholder harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, fees and
expenses that the Depositor, the Trust, the Indenture
Trustee, the Owner Trustee, the Insurer and any Noteholder
may sustain in any way related to (1) the failure of the
Unaffiliated Seller or HomeGold Financial to perform its
duties in compliance with the terms of this Agreement or (2)
the breach by either the Unaffiliated Seller or HomeGold
Financial 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.
(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
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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 HomeGold
Financial-Provided Information (defined below) is accurate
and complete in all material respects, to indemnify and hold
harmless HomeGold Financial, its respective officers and
directors and each person who controls HomeGold Financial
within the meaning of the Securities Act or the Exchange Act
against any and all losses, claims, damages or liabilities,
joint or several, to which they may become subject under the
Securities Act or the Exchange Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue
statement of a material fact contained in the Derived
Information provided by the Depositor, or arise out of or
are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading,
and agrees to reimburse each such indemnified party for any
legal or other expenses reasonably incurred by him, her or
it in connection with investigating or defending or
preparing to defend any such loss, claim, damage, liability
or action as such expenses are incurred. The obligations of
the Depositor under this Section 4.06(d) shall be in
addition to any liability which the Depositor may otherwise
have.
The procedures set forth in Section 4.06(c) shall be equally
applicable to this Section 4.06(d).
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(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 HomeGold Financial-Provided
Information. "HomeGold Financial-Provided Information" means
any computer tape furnished to the Depositor by HomeGold
Financial 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 HomeGold
Financial and the Unaffiliated Seller on the one hand, and
the Depositor on the other, HomeGold Financial and the
Unaffiliated Seller's, HomeGold Financial'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. HomeGold
Financial 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 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.
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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 HomeGold
Financial 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 Sale and Servicing Agreement and the
Underwriting Agreement, dated May 19,
1999, among the Depositor, the Trust and
Prudential Securities Incorporated and all
documents required thereunder, duly
executed and delivered by each of the
parties thereto other than the Depositor;
(iii) an officer's certificate, dated as of the
Closing Date, in the form of Exhibit B
hereto, and attached thereto resolutions
of the board of directors of the
Unaffiliated Seller and a copy of the
by-laws of the Unaffiliated Seller;
(iv) copy of the Unaffiliated Seller's and
HomeGold Financial's charter and all
amendments, revisions, and supplements
thereof, certified as of a recent date by
the Secretary of
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State of the State of Delaware and the
State of South Carolina, respectively;
(v) an opinion of the counsel for the
Unaffiliated Seller and HomeGold Financial
as to various corporate matters (it being
agreed that the opinion shall expressly
provide that the Trust and Indenture
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 Notes 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 Trust and the Indenture 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 Notes;
(viii) a letter from Standard & Poor's Ratings
Group that it has assigned a rating of
"AAA" to the Class A Notes;
(ix) an opinion of counsel of the Trust in form
and substance acceptable to the Depositor,
its counsel, 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 of counsel of the Owner Trustee
in form and substance acceptable to the
Depositor, its counsel, Moody's Investor
Service, Inc. and Standard and Poor's
Ratings Group;
(xi) an opinion of counsel for the Indenture
Trustee in form and substance acceptable
to the Depositor, its counsel, Moody's
Investors Service, Inc. and Standard &
Poor's Ratings Group;
(xii) an opinion or opinions of counsel for the
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).
(e) The Policy shall have been duly executed, delivered
and issued with respect to the Notes.
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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 Sale and Servicing Agreement, the
Indenture 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 Notes and a copy of a
letter from Standard & Poor's Ratings
Group to the Depositor to the effect that
it has assigned a rating of "AAA" to the
Class A Notes.
(c) The Depositor shall have furnished the 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.
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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 or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Unaffiliated Seller
or HomeGold Financial, 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 HomeGold Financial 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 HomeGold Financial or of or relating to substantially
all of the property of the Unaffiliated Seller or HomeGold Financial; (iv) any
purchase and assumption agreement with respect to the Unaffiliated Seller or
HomeGold Financial or the assets and properties of the Unaffiliated Seller or
HomeGold Financial 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 East 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
HomeGold Financial, addressed to HomeGold Financial, Inc., 3901 Pelham Road,
Greenville, South Carolina 29615, Attention: Kevin J. Mast.
Section 6.02. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement which is prohibited or
which is held to be void or unenforceable shall be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation, warranty or covenant
of this Agreement which is prohibited or unenforceable or is held to be void
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction as to any Mortgage Loan shall not
invalidate or render unenforceable such provision in any other jurisdiction.
To the extent permitted by applicable law, the parties hereto waive any
provision of law which prohibits or renders void or unenforceable any
provision hereof.
28
<PAGE>
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 Insurer; provided, however, that the Depositor may
assign its rights hereunder without the consent of the Unaffiliated Seller and
HomeGold Financial.
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, 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
29
<PAGE>
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 supersedes all prior
agreements and understandings relating to the subject matter hereof.
(a) This Agreement may be amended by the Unaffiliated Seller,
the Depositor and HomeGold Financial, with the prior written
consent of the Insurer (so long as an Insurer Default shall
not have occurred and be continuing) but without the consent
of the Indenture Trustee, the Trust or any of the
Noteholders (unless an Insurer Default shall have occurred,
in which event the consent of the Holders of Notes
evidencing in excess of 50% of the Outstanding Amount of the
Notes shall be obtained) (i) to cure any ambiguity or (ii)
to correct any provisions in this Agreement; provided,
however, that such action shall not, as evidenced by an
Opinion of Counsel delivered to the Indenture Trustee ,
adversely affect in any material respect the interests of
any Noteholder.
(b) This Agreement may also be amended from time to time by the
Unaffiliated Seller, the Depositor and HomeGold Financial
with the prior written consent of the Insurer (so long as an
Insurer Default shall not have occurred and be continuing)
and with the consent of the Indenture Trustee and the
Holders of Notes evidencing in excess of 50% of the
Outstanding Amount of the Notes, for the purpose of adding
any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement, or of modifying in
any manner the rights of the Noteholders; provided, however,
that no such amendment shall (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of,
collections of payments on Mortgage Loans or distributions
that shall be required to be made on any Note or the
Interest Rates or (ii) reduce the aforesaid percentage
required to consent to any such amendment or any waiver
hereunder, without
30
<PAGE>
the consent of the Holders of all Notes then outstanding.
(c) Prior to the execution of any such amendment or consent,
HomeGold Financial 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 Indenture Trustee shall furnish written
notification of the substance of such amendment or consent
to each Noteholder.
(e) It shall not be necessary for the consent of Noteholders
pursuant to this Section to approve the particular form of
any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by
Noteholders shall be subject to such reasonable requirements
as the Indenture Trustee may prescribe, including the
establishment of record dates. The consent of any Holder of
a Note given pursuant to this Section or pursuant to any
other provision of this Agreement shall be conclusive and
binding on such Holder and on all future Holders of such
Note and of any Note issued upon the transfer thereof or in
exchange thereof or in lieu thereof whether or not notation
of such consent is made upon the Note.
Section 6.11. Miscellaneous.
(a) The parties agree that each of the Insurer, the Trust, the
Owner Trustee and the Indenture Trustee is an intended
third-party beneficiary of this Agreement to the extent
necessary to enforce the rights and to obtain the benefit of
the remedies of the Depositor under this Agreement which are
assigned to the Trust pursuant to the Sale and Servicing
Agreement, to the Indenture Trustee for the benefit of the
Noteholders pursuant to the Indenture and to the extent
necessary to obtain the benefit of the enforcement of the
obligations and covenants of the 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, HomeGold Financial and the Unaffiliated
Seller intend the conveyance by the Unaffiliated Seller to
the Depositor
32
<PAGE>
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]
<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/ Mary Alice Kohs
--------------------------------------
Name:
Title:
EMERGENT MORTGAGE HOLDINGS
CORPORATION
By: /s/ Laird Minor
--------------------------------------
Name: Laird Minor
Title: Vice President
HOMEGOLD FINANCIAL, INC.
By:/s/ Kevin J. Mast
--------------------------------------
Name: Kevin J. Mast
Title: Executive Vice President, Chief
Financial Officer and Treasurer
[Signature Page to the Unaffiliated Seller's Agreement]
33
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On May 27, 1999 before me, the undersigned, a Notary Public in and
for said County and State, personally appeared __________, personally known to
me (or proved to me on the basis of satisfactory evidence) to be _________ of
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:
34
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK)
On May 27, 1999 before me, the undersigned, a Notary Public in and
for said County and State, personally appeared Laird Minor, personally known
to me (or proved to me on the basis of satisfactory evidence) to be Laird
Minor of HomeGold Financial, 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:
35
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On May 27, 1999 before me, the undersigned, a Notary Public in and
for said County and State, personally appeared Laird Minor, personally known
to me (or proved to me on the basis of satisfactory evidence) to be Laird
Minor 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
SCHEDULE OF MORTGAGE LOANS
A-1
<PAGE>
<TABLE>
<CAPTION>
account pool name1 curr_bal
<S> <C> <C> <C>
12 A1 WILLIAM THOMAS HALL $7,569.55
196 A1 CHARLES J WRIGHT $13,168.92
1715 A1 SICERO ALLEN $28,936.80
1902 A1 GARLEY S GRANT $22,749.21
1949 A1 JOE AIKEN $32,009.06
2004 A1 HAMMIE FARR $23,824.82
2267 A1 PATRICIA A HERRMANN $14,639.74
2281 A1 PAUL DANSBY $23,644.17
2342 A1 JACOB C HUNTER $23,496.27
2755 A1 WILLIAM D BRADEN $18,858.74
2775 A1 RAYMOND A OWENS $24,538.34
3037 A1 WILLIE R HARRIS $17,832.66
3089 A1 MILDRED BOYCE $16,214.63
3197 A1 WAYNE HOLCOMBE $7,377.22
3244 A1 CLEMMIE JEAN WOMBLE $18,085.05
3330 A1 JAMES M BOITER $21,940.00
3566 A1 CHARLES E CHILDRESS $14,804.65
3876 A1 GEORGE W HENDERSON $3,910.88
30094 A1 SAM GREGORY $10,089.20
35491 A1 EDNA V DUNCAN $1,403.06
60038 A1 BERNIDEAN W WILLIAMS $27,066.95
60065 A1 ALLSTATE PROPERTIES INC $12,174.43
60135 A1 ELLA B THOMPSON $5,907.85
60152 A1 OSCAR LEE OWENS $4,066.11
60254 A1 JIMMY DONALD ATKINS $11,308.26
60266 A1 ALICE FAYE LUNNY $9,699.47
60272 A1 LIZZIE MOORE TOLBERT $12,036.79
60291 A1 JO ELLEN TAYLOR SULLIVAN $6,261.35
60450 A1 EULA R WINN $2,312.43
60451 A1 ANDRE D HAWKINS $8,725.94
60454 A1 LOUISE MAUDE JOY $5,065.74
60612 A1 JOEL A SEABOLT $7,137.06
60697 A1 LENORA A HENRY $6,766.25
60699 A1 NANCY L FOSTER $29,355.91
60710 A1 MILDRED F MIDDLETON $22,573.32
60761 A1 WILLIE J WILLIAMS $23,976.54
60766 A1 WILLIE J WRIGHT $27,395.31
60852 A1 LEROY GAY $10,866.29
60867 A1 JAMES ROBIN DENNIS $13,324.48
60933 A1 HELEN HOWARD ISAAC $7,292.76
60950 A1 LINDA H BELL $5,681.57
61016 A1 FLOSSIE MAE ABERCROMBIE $9,377.09
61065 A1 JUDI E. MAULDIN $23,398.05
61159 A1 THOMAS H CAMPBELL JR $18,574.38
61191 A1 ROBERT J ZALEZNACK $22,513.77
61219 A1 ANNIE R COX $1,535.60
61248 A1 LUTHER S MCALISTER II $21,828.06
61285 A1 JOYCE M WALKER $16,391.86
61293 A1 WILLIE TRIBBLE $35,329.59
61485 A1 MILWEE PROPERTIES TRUST $64,349.27
61496 A1 WILLIE J SMITH $1,771.97
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
61524 A1 AUSTIN DAVIS $16,855.95
61608 A1 OLIVER E RAY $8,547.15
61624 A1 MICHAEL J LOVELL $18,091.40
61926 A1 DAVID J NEER SR $30,778.09
62217 A1 ROLAND C TURNER $2,528.11
62230 A1 MINNIE P BONNER $37,646.45
62288 A1 PHYLLIS B KELLY(EST OF) $34,044.07
62347 A1 RAYMOND J BULLOCK SR $6,179.22
62416 A1 NATHANIEL WALKER $14,524.31
62519 A1 CURTIS S LACKEY $1,281.35
62535 A1 EUNICE WHICHARD $37,782.23
62543 A1 KELLY BRYAN $33,531.49
62567 A1 LEVERN MCKENNEY $8,322.18
62590 A1 WILLIAM T MARVIN II $4,332.45
62667 A1 JAMES B HAWKINS $16,356.57
62676 A1 CHARLES MORANT $13,047.49
62679 A1 PEGGY ANN BARR $34,996.34
62689 A1 OSCAR TORRES $27,450.16
62694 A1 JEANETTE SELLERS $26,532.88
62815 A1 MARK SNOW $29,005.07
62885 A1 WILLIAM J MOORE $7,487.86
62914 A1 ROBERT S YOUNG $61,506.02
63012 A1 JOHN R LOVETT $29,280.80
63033 A1 BOYD E ISLER $4,245.48
63060 A1 JIMMY RAY ANDERS $14,659.45
63071 A1 JACQUELINE JACKSON $21,732.57
63122 A1 RODNEY D LANDIS $30,291.35
63131 A1 MARYLOU SHARP $22,836.12
63144 A1 ROBERT T STRAYER $28,524.57
63171 A1 WILLIAM BRISTOW JR $18,475.25
63209 A1 SCOTTY MCQUILLER $20,808.73
63260 A1 LINDA H WILLIAMS $41,732.17
63323 A1 WILLIAM E HAMILTON $18,729.18
63436 A1 HIRAM CRUZ $8,360.67
63547 A1 MITTIE VANN $40,448.40
63548 A1 MITTIE VANN $6,375.57
63597 A1 TONYA HAYNES $42,359.09
63609 A1 MINNIE D CLARK $40,901.79
63639 A1 CLAUDETTE B DRAKE $35,975.04
63796 A1 JOSEPH DAVIS JR $35,922.20
63807 A1 SUSAN LYNN FAUST $19,776.88
63870 A1 LEO E BROWN $37,845.60
63880 A1 MICHAEL LANCELEY $36,789.52
63883 A1 TALMO LEVY $23,737.23
63888 A1 HAZEL F PARRIS $15,777.72
64029 A1 ALLEN R JAMISON $31,768.43
64113 A1 CAROLYN C KELLY $41,452.33
64141 A1 LEROY MCMILLAN $41,320.90
64170 A1 JAMES F HART III $41,167.88
64202 A1 GEORGIA HARLEY $22,949.21
64238 A1 JOHNNIE MAE SMALLS $10,504.74
64263 A1 SANDRA MILLER $23,807.64
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
64287 A1 JENNIE LYBRAND $35,207.88
64291 A1 GERALD S ROSE $275,233.01
64306 A1 THOMAS M CROSBY $15,117.35
64312 A1 ISAAC N STRONG $11,272.48
64313 A1 VIOLA K BROWN $35,576.74
64338 A1 SADIE BENNETT $39,499.07
64369 A1 ROBERT S GOFF $32,196.04
64374 A1 MARY B TUCKER $34,081.05
64401 A1 PAMELA B FARLEY $16,121.20
64402 A1 RONALD L FARLEY $20,149.12
64403 A1 CHARLES H ELKINS $32,799.84
64406 A1 WILSON HAYNES SR $36,000.09
64470 A1 BLAND MCCALL $29,065.85
64497 A1 ROBERT L THOMPSON JR $10,730.26
64591 A1 CATHERINE GILMER $25,965.57
64596 A1 JOHN ALLEN HAYNESWORTH $32,636.65
64599 A1 JOHN W STALEY $41,956.36
64602 A1 SOMSAK SOMCHEEN $38,586.70
64625 A1 ALBERT S BLUNT $31,291.78
64631 A1 WILLIAM BORUM JR $36,829.29
64650 A1 DAVID GREEN $17,863.60
64798 A1 TIMOTHY SCOTT SMITH $29,479.63
64895 A1 BOBBY STEADMAN $24,431.55
64938 A1 JERRY SATTERFIELD $29,624.19
64948 A1 LUCILLE GASKIN $27,616.67
65057 A1 ERNEST WRIGHT (EST OF) $18,725.73
65234 A1 WILLIAM H FLEMING $32,326.01
65312 A1 R GRADY JEFFERY $36,541.03
65378 A1 RODNEY L BAILEY $43,000.36
65413 A1 BRYAN O'NEAL $39,060.90
65454 A1 JUDY G TUCKER $7,621.27
65578 A1 TOWNSELL GORE $20,987.02
65629 A1 BOBBY J BEARD $43,556.44
65753 A1 BARBARA J ROBINSON $15,758.72
65797 A1 GEORGIA A CONNER $43,899.18
65841 A1 MARSHALL A GREGG $40,658.86
65922 A1 MARGARET FALLAW $25,768.09
65964 A1 JOHNNY M CHAPPELL $13,730.25
65969 A1 WANDA H SCRUGGS $38,802.53
66009 A1 HARMON EARL ERTZBERGER $31,102.55
66015 A1 BARBARA M BOSTIC $38,559.65
66016 A1 GLORIA D CLARKSON $39,867.02
66025 A1 RICKY TYRONE MYERS $38,830.28
66032 A1 ALTON SELLERS $39,859.50
66070 A1 PENNY A COX $31,371.01
66071 A1 JAMES PRESCOTT $38,943.32
66108 A1 CORRESSA W WARREN $40,375.00
66140 A1 SAMMY C WINDHAM $40,508.39
66164 A1 DOROTHY LEWIS $19,602.88
66178 A1 IRENE RICHARDSON $36,537.98
66202 A1 MAJOR JACKSON $35,910.31
66255 A1 RICHARD H BLUME $21,028.13
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
66277 A1 LOIS B LANIER $27,062.43
66279 A1 MICHAEL W KELLY $43,751.31
66302 A1 ROZINA JAVIS $31,763.10
66310 A1 DONALD PRITCHARD $22,986.40
66322 A1 ROBERT LEWIS SINGLETON $32,975.80
66334 A1 MARY FRANCES TYLER $35,199.98
66344 A1 MICHAEL H GARTNER $25,470.38
66349 A1 LOLA MAE SUDDETH $40,823.57
102601 A1 LAURA D LLOYD $14,268.32
627221 A1 MICHAEL S LECLAIR $43,995.60
653821 A1 JACK WILSON $13,073.00
1002649 A1 DAVID E GRUBB $38,596.08
1002933 A1 MARIE G HIATT LOWERY $28,065.45
1002938 A1 BONIFACIO VILLEGAS $22,751.13
1003485 A1 MAURICE E SMITH $14,984.08
1003923 A1 SIMPSON SHAWN BAKER $8,824.44
1004047 A1 MARIE A JUGGER $8,713.16
1004314 A1 CLARENCE L HAMPSHIRE $28,684.20
1004419 A1 ELWOOD MURPHY $27,264.58
1004550 A1 SCOTT LEE GODWIN $24,613.88
1004790 A1 SHAWN PEPP $10,127.21
1005946 A1 ROGER F MORROW $19,922.98
1006125 A1 SHIRLEY WILLIAMS $42,137.13
4000999 A1 HARRY L FOX $35,365.37
4001078 A1 DANIEL D MCBRIDE $19,830.84
5001031 A1 MARK D FULLER $3,422.10
5004221 A1 DOUGLAS GARNER SR $17,873.07
5005618 A1 WILLIAM J STUTZ $51,445.18
5006005 A1 MICHAEL T BEAMISH $19,211.87
5006053 A1 JOSEPH M GEARY $36,001.50
5006058 A1 RANDY F MCCARRIER $26,318.37
5006067 A1 STEVEN L WINDHAM $32,079.94
5006729 A1 NEAL S GRAY $37,374.43
5007034 A1 DONNIE D RUSHING $42,689.38
5007122 A1 STEVE A ROGERS $27,138.37
5007380 A1 RICHARD G PATRICK $36,074.19
5007409 A1 ROY JOHNSON $20,490.64
5007643 A1 RALPH MICHAEL JACKSON $24,362.69
5008176 A1 MATTHEW P PALMER $25,822.13
5008199 A1 KENNETH J HESS $33,812.19
5008201 A1 MICHAEL L JAMES $26,744.72
5008317 A1 MICHAEL H GAGE $42,071.53
5008365 A1 DONALD L RIVENBURGH $34,597.01
5008402 A1 PAULA A GRESHAM-BEGUETTE $37,963.35
5008422 A1 JOHN T RUSSELL $72,730.59
5008588 A1 JEAN E ALLEN $23,865.06
5008629 A1 MICHAEL DAGUE $36,554.18
5008679 A1 KELLI J MANNEL $19,484.55
5008718 A1 FRANCIS B MALLO $41,070.26
5008736 A1 WILLIAM A WELKER $16,131.08
5008784 A1 RICHARD A TOTTEN $29,442.52
5008867 A1 FRED E BOURGEOIS $30,979.71
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
5008888 A1 GERALD G BISSONETTE $35,064.52
5008957 A1 HAROLD W HUNT $22,009.98
5009786 A1 REYES M PENA $36,152.89
7000725 A1 FLOYD HOWARD WILLIAMS $23,328.39
7000796 A1 CARL ERWIN WATSON $31,368.94
7000948 A1 SAMUEL GLINTON $6,346.26
7000982 A1 CLAUDIA LEWIS $42,172.18
7001029 A1 VINCENT WILLIAMS $26,283.24
7001040 A1 TERRY REEVES BISHOP $34,964.52
7001067 A1 JUANITA MILLER GILYARD $29,606.39
7001090 A1 MARK HEARD $18,092.72
7001126 A1 LARRY NICHOLSON $14,838.59
7001250 A1 STANLEY BANKS $23,598.14
7001366 A1 VANESSA JOHNSON $15,427.65
7001447 A1 ROBERT J SABO JR $12,143.39
7001486 A1 ANNIE HOLMES-MARTIN $27,999.57
7001524 A1 JOHN E HAYSLETT $27,869.14
7001525 A1 MELVIN RAY ROBERTS $29,178.10
7001546 A1 BENJAMIN BRADLEY $33,251.33
7001567 A1 DENISE M MATTHEWS $11,460.09
7001610 A1 JAMES WAYNE CLINTON $25,556.90
7001626 A1 WILLIS E HOLSOMBACK $80,390.99
7001643 A1 BOOKER T COOPER $32,327.58
7001665 A1 LAWYER BULLARD $35,000.00
7001675 A1 JOYCE L WARTHEN $19,772.28
7001678 A1 EARNEST LEE WILEY $31,627.29
7001778 A1 BERNETT WALTER HOFFMAN $35,723.75
7001793 A1 JESSIE GREEN $1,474.74
7001816 A1 WENDELL JONES $35,000.00
7001836 A1 ANNIE B WOODSON $32,239.13
7001844 A1 LAYTHERIA MCNEALY $43,894.28
7001888 A1 ANDREW CARR JR $37,089.77
7001895 A1 ROBERT L GRAYSON $15,875.30
7001896 A1 ROBERT L MARTINEZ $16,614.37
7001904 A1 JORGE L COLONDRES $21,254.10
7001965 A1 CHARLES A GREENFIELD JR $30,474.81
7001991 A1 WILLIE OLIVER $37,398.59
7002016 A1 BEVERLY MAYO $40,384.73
7002061 A1 RUTH PIERRE SANDERS $19,256.00
7002068 A1 SCOTT A BOYD $33,583.31
7002070 A1 CATHERINE C WILLIAMS $37,590.53
7002096 A1 TERRY G BYRD $41,551.39
7002152 A1 IVA DIXON FLOYD $35,267.11
7002163 A1 HELEN SAPP $30,684.47
7002186 A1 DANIEL LEROY HAMBURG $33,257.98
8000512 A1 NATHANIEL C PARKER $56,817.24
8001440 A1 CHARLES E HENRY SR $48,467.65
8001617 A1 BOBBY BRUNSON $9,792.45
8002157 A1 ROBERTA FITZHUGH $50,624.06
8002330 A1 PATRICIA R MILTON $45,190.80
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5200955571 A1 STACY O COOK $11,501.88
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5500972300 A1 THOMAS E BOOKHOUT $22,443.13
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5500979202 A1 JOSEPH G SUTULOVICH JR $20,994.30
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5600945520 A1 LISA M HILL $20,486.72
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<PAGE>
<TABLE>
<S> <C> <C> <C>
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$20,351,882.24
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63086 A2 SYLVESTER WEST $84,517.21
63089 A2 JEFF HENRY JR $88,613.28
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63172 A2 SAMARA M SCOTT $51,075.26
63175 A2 THOMAS COLEMAN $92,665.06
63177 A2 JAMES CLARK $57,008.54
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63267 A2 GARY W OWENS $65,700.16
63384 A2 LIONEL M THOMAS $47,020.00
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<PAGE>
<TABLE>
<S> <C> <C> <C>
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63600 A2 STEVEN R KLEIN $123,042.32
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63857 A2 DEBRA M MICKENS $63,422.79
63866 A2 GEORGE H JONES JR $54,322.80
63908 A2 JODY F COX $57,911.41
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64014 A2 JAMES HOOD JR $49,439.81
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64089 A2 KEELA C JAMISON $51,543.64
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64417 A2 LEO S GALLANT $65,026.81
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64683 A2 ZEB B STARNES JR $46,819.82
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64799 A2 CURTIS SIDNEY SMITH JR $52,026.17
64811 A2 FRED C ROLLER IV $92,257.17
64942 A2 HANNA SNOW $51,119.31
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<PAGE>
<TABLE>
<S> <C> <C> <C>
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65395 A2 BARRY N SCOTT $65,741.00
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65737 A2 EDWIN L GARDNER JR $108,722.16
65767 A2 LEROY F STEWART $70,230.07
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66061 A2 CHARLES E ROOF JR $99,902.85
66076 A2 TIMOTHY NIXON $45,624.41
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<TABLE>
<S> <C> <C> <C>
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1002436 A2 PETER MINKS $99,060.37
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1003751 A2 TERRY M WRIGHT $44,390.60
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5007708 A2 RODRIC J MYERS $50,212.85
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<TABLE>
<S> <C> <C> <C>
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<TABLE>
<S> <C> <C> <C>
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2100910491 A2 ELMER L NEAL SR $49,162.65
2100912127 A2 JOSEPH ALBERT PYPE $47,319.14
2100920880 A2 JACK F SYKES $49,896.36
2100944662 A2 GEORGE E MOFFITT $47,062.85
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2100947048 A2 BRADY C WILLIAMS $75,461.42
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2100965988 A2 SCOTT R ANDERSEN $72,210.68
2190020853 A2 LEE D POST $59,625.68
2190020862 A2 RONALD J DUNCAN $53,876.78
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<TABLE>
<S> <C> <C> <C>
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2200912836 A2 EDWINA W VINCENT $47,128.16
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2200922713 A2 PATSY FERNANDEZ $69,518.99
2200924919 A2 ROBERT STOKES $93,367.99
2200927810 A2 VIVIAN SILVERS $54,222.80
2200943607 A2 A BILLIE DOBBS $106,869.50
2200944422 A2 EVELYN M JEFFERSON $87,560.73
2200946319 A2 DAVID BOOTH $51,441.15
2200946446 A2 RONNIE WITHERSPOON $44,964.94
2200946688 A2 DONNA M CONYERS $62,000.06
2200947743 A2 MARY C BRUCE $62,248.05
2200948562 A2 DAVID LUNA $52,144.05
2200948645 A2 ROGER B BAYNE $63,224.80
2200956621 A2 JOHN BEERY $44,727.05
2200958079 A2 LONNIE MICHAEL HARRELL $119,513.18
2200958426 A2 JOHN D ROBERTS $50,303.12
2200958582 A2 FREDERIC ROBERT KINARD $91,476.21
2200962079 A2 PATRICIA W PARDOE $54,303.34
2200963943 A2 BENJAMIN F GARLAND $131,055.83
2200965878 A2 MARK D LYNCH $91,529.85
2200966913 A2 DOUGLAS R BORTON $48,863.02
2200967727 A2 PAUL R LANE $69,420.31
2200967935 A2 KATHY WARE $50,884.88
2200968091 A2 LARRY T TANNER $47,872.87
2200968309 A2 JAMES W BALES III $65,338.30
2200968628 A2 WILLIAM D FIDDLER $50,832.87
2200968687 A2 THOMAS MICHAEL HOLT $71,792.21
2200968905 A2 ROD SMITH $46,683.85
2200969182 A2 PATRICIA J DAVIS $48,874.88
2200969783 A2 DONA S SMITH $61,121.98
2200970566 A2 BRIAN FERRARO $87,887.82
2200970799 A2 LISA PATTERSON $47,762.04
2200971480 A2 JAMES CONANT $44,836.84
2200971714 A2 REBECCA ANN GOULD $62,380.05
2200972643 A2 BILLY RAY CRAIN $62,957.17
2200972758 A2 JOHN G ELLIOTT $74,859.90
2200973043 A2 MARY E OWENS $58,967.70
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
2200973808 A2 BILLY N MITCHELL $54,372.01
2200974166 A2 KEITH MICHAEL PINEL $64,750.52
2200974631 A2 MARY A BISHOP $45,025.57
2200974692 A2 RICHARD C WILLIAMS $79,843.63
2200974875 A2 JAMES R ADKINS $47,936.70
2200974898 A2 JOE THOMAS MOORE $78,066.49
2200975314 A2 BART W BROADWELL $89,555.33
2200975348 A2 EDITH PEARL EVANS $78,270.01
2200975712 A2 PAUL TOMLINSON $65,434.17
2200976074 A2 GARLAND R STANLEY $69,200.00
2200976350 A2 KEM R FOWLER $47,145.39
2200976659 A2 MARSHA F CHARBONEAU $111,852.31
2200976813 A2 MATTHEW BUTLER $58,627.58
2200976830 A2 ROBERT LEE EDWARDS $46,290.59
2200976974 A2 ELAINE A MARESCA $94,499.38
2200977040 A2 SANDRA M JONES $73,851.87
2200977679 A2 KENNETH R BAILEY $55,918.78
2200977701 A2 KEITH A BECKMAN $84,800.00
2200978068 A2 MARK A EVANS $77,993.63
2200979682 A2 CLIFFORD SWITZER $119,850.00
2200980130 A2 LARRY WILLIAMS $45,496.38
2200980407 A2 SCOTT A BONNETTE $71,023.14
2200981916 A2 DALE L COOK $70,160.67
2290018641 A2 ANN H SIMMONS $56,601.28
2290019940 A2 SHARON R BURK $75,663.12
2290026119 A2 J JASON THOMAS $43,378.47
2290030062 A2 IDOLUIS E CASARES $43,219.98
2290030125 A2 JOHN MARNEY WALLER JR $59,367.67
2290032860 A2 CYNTHIA D KNIGHT $60,712.23
2290033657 A2 PERNICE O SMITH $43,205.02
2290036955 A2 COLLIN W COFFEY $59,806.12
2290037776 A2 JORGE ARTURO SALINAS $65,575.25
2300931216 A2 FRANK GALICIA $57,873.33
5100902192 A2 MICHAEL S WALKER $190,500.00
5100905617 A2 THOMAS E ALEXANDER $78,401.13
5100905924 A2 RAYMOND C QUEEN $71,138.96
5100907974 A2 EVERETT HAWKINS $58,250.90
5100911528 A2 ROBERT L MCLEAN $70,945.34
5100912902 A2 GEROME R MCLEOD $45,764.51
5100913276 A2 WILLIE J WHITE $63,684.94
5100914459 A2 BAKITA S ACEVEDO $47,022.06
5100914486 A2 DAVID E BURNETTE $94,347.59
5100914848 A2 B F ALLISON $46,934.24
5100915468 A2 DONNA K CATHEY $73,279.13
5100915872 A2 WILLIAM J WALKER $99,944.99
5100916405 A2 RAYMOND C GILPIN $54,132.18
5100916423 A2 VICKI WATFORD $75,617.54
5100917511 A2 JAMES L ROYSTER $190,966.87
5100917746 A2 CHRIS E CATER $62,956.72
5100918293 A2 JEFFREY BAUGUS $48,970.05
5100919086 A2 JAMES COPELAND III $55,755.83
5100920340 A2 BARBARA L ADAMS $59,759.23
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
5100921098 A2 JUDY BROWN $65,274.50
5100921634 A2 ROY DALE BAKER $50,925.73
5100922982 A2 JOHN A COLE $123,666.02
5100923108 A2 WILLIAM D YOUNG $73,319.64
5100923418 A2 KEITH TESNAR $49,731.48
5100923652 A2 JAMES W PAUL $61,352.81
5100923826 A2 JASON BYRD $60,170.51
5100924214 A2 GEORGE C RIDDICK JR $73,336.77
5100924384 A2 STEPHAN M CURRY $69,311.59
5100925400 A2 CLIFTON FREEMAN $60,487.99
5100925463 A2 RONALD HOOVER $111,049.34
5100925739 A2 RENE BOUKNIGHT $48,550.29
5100925802 A2 DONALD W SEAY $52,956.16
5100925860 A2 CHARLES J LIVINGSTON $64,159.05
5100926417 A2 ALBERT BRISBONE $55,277.27
5100926752 A2 MICHAEL R AYERS $71,659.26
5100926761 A2 FRANCIS X GILL $47,778.23
5100928117 A2 TERESA P MONDS $55,301.21
5100928403 A2 ALLYSON PUTMAN $47,034.33
5100928640 A2 RICHARD J PEARCE $49,404.55
5100928842 A2 DARYL E PAINTER $62,761.23
5100928854 A2 MARK T VANGORDER $60,159.53
5100929293 A2 CINDY L HARVEY $62,410.74
5100929324 A2 MARSHA RUTHERFORD $93,116.80
5100930743 A2 HERBERT HICKS $63,749.17
5100930899 A2 TAMMY K CLARK $49,192.08
5100931625 A2 JOSEPH CASTRONOVO $60,136.72
5100931830 A2 WILLIAM O FRAZIER SR $53,764.60
5100932356 A2 WILLIE J DAVIS $51,818.13
5100933170 A2 GAIL PICKETT $44,784.44
5100933903 A2 AQUILLA LEWIS $95,681.41
5100934244 A2 EDWARD SCARFO $53,425.79
5100935747 A2 REGGIE MACK $68,576.39
5100937100 A2 RICHARD W DIVENS $49,774.85
5100937273 A2 ANNIE PATTERSON $65,669.45
5100937928 A2 CHRIS A SMITH $71,766.39
5100938902 A2 GRANT E GEHLBACH $111,537.96
5100938970 A2 JAMES BETHEA $60,982.59
5100939929 A2 ROXICE SULLIVAN $95,950.81
5100940022 A2 DAVID ROBINSON JR $55,718.13
5100941146 A2 ANTHONY COLEY $63,772.47
5100941185 A2 SCOTT SOX $71,789.36
5100941445 A2 EDMUND HOFFMAN III $45,440.99
5100942274 A2 DEWARD NORRIS LUNSFORD $94,778.95
5100942366 A2 PATRICIA CHAMBERS $55,036.46
5100942700 A2 DEBORAH L WHITSON $57,646.48
5100943385 A2 ADAM R DROBNIS $140,644.60
5100943404 A2 ASHLEY POLLARD $87,723.16
5100943834 A2 DAVID MORIARTY $78,242.26
5100943867 A2 GUS E KALMER $59,503.77
5100943872 A2 DALLAS BLEDSOE $74,580.65
5100944261 A2 MARION D COLEMAN $72,824.68
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
5100945495 A2 HAROLD T BOATWRIGHT JR $82,210.27
5100946256 A2 JACKIE E BROOME $54,283.38
5100947036 A2 DAVID BLACKSTONE $64,276.51
5100947354 A2 DANIEL WAYNE LEDFORD $76,371.10
5100947481 A2 MICHAEL L CUDD $55,842.65
5100949168 A2 PAUL REEVES $54,052.59
5100950124 A2 WILBUR L MILFORD $49,513.72
5100950634 A2 EDWARD THOMPSON $89,155.50
5100951078 A2 SAMUEL H JOHNSON $56,857.24
5100953344 A2 CHRISTOPHER E WILLIAMS $52,388.95
5100953946 A2 TRAVIS M SCOTT $47,023.97
5100954470 A2 DENISE SAPOUGH $66,247.14
5100954963 A2 EILENE M KENDALL $70,967.38
5100955358 A2 CRAIG E ALIBOZEK $57,878.74
5100957111 A2 HOWARD L MAJETTE $63,512.85
5100957153 A2 WILLIE MOBLEY $73,088.56
5100957160 A2 NORWOOD A WILLIAMS $74,495.17
5100957778 A2 GLORIA JEAN GOODMAN $58,388.67
5100958048 A2 KELLY THORNHILL $68,267.74
5100958873 A2 KELLY H WILLIAMS $52,435.34
5100959959 A2 DANIEL M HOLCOMBE $63,872.30
5100959973 A2 JERRY DUDLEY $80,765.04
5100960032 A2 CYNTHIA E WAGONER $75,848.35
5100961181 A2 WANDA BEARDSLEY $83,482.75
5100962993 A2 JERRY LOSAW $62,511.45
5100963754 A2 JOHNNY GOODE $68,522.02
5100964922 A2 MELVIN BRADLEY BURDETTE $56,602.95
5100965498 A2 RENEE C HOLLOWAY SINGLETON $74,052.62
5100966211 A2 JOHN R GARRETT $57,604.01
5100966856 A2 DORIS R GEROW $57,452.75
5100967056 A2 MAURICE E DILLARD $46,459.26
5100968878 A2 TERRI CALLAHAN ALLEN $46,973.78
5100968975 A2 SCOTT B NORGAN $62,486.15
5100969133 A2 CARLOS A THOMPSON $66,459.48
5100969147 A2 FREDDY W HOYLE $92,030.90
5100969208 A2 DENNIS B COX JR $45,507.26
5100969679 A2 WAYNE WILKERSON $58,346.87
5100969904 A2 BRENDA S PHILLIPS $60,744.70
5100970534 A2 TONY ARNOLD OVERCASH $75,962.53
5100970992 A2 JUANETTA FRAZIER $57,137.13
5100971510 A2 JANIE ROBINSON $63,968.13
5100971994 A2 KENNETH LEARY $70,506.67
5100974605 A2 ROBERT TEDDER $44,979.01
5100975056 A2 NOAH J HEWITT $59,973.45
5100975329 A2 RAY J WINBURN $46,380.12
5100975482 A2 CAROLYN W HOWELL $47,977.12
5100975513 A2 RODNEY G CLAY $60,772.46
5100975795 A2 JOHN A MCKIVER SR $61,108.25
5100976099 A2 EDWARD B BERGAMINI $120,150.00
5100976241 A2 JEFFREY JENKINS $143,921.17
5100976423 A2 HERTFORD MOORE JR $68,768.84
5100976553 A2 WILLIAM R CURETON $107,943.89
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
5100976627 A2 JANET BATKER $107,860.92
5100977061 A2 DEBORAH A NICHOLS $63,971.01
5100977201 A2 LUIS J CAMPOS $68,598.13
5100977405 A2 JAMES P WOOTEN $53,573.58
5100977414 A2 THOMAS H RILEY $75,027.42
5100978106 A2 LILLIE B DAVIS $59,080.85
5100978535 A2 YVONNE P MABRY $57,968.25
5100979657 A2 VALERIE SUTTON $47,679.02
5190001294 A2 EVANS LOCKLEAR $57,406.36
5190001651 A2 MARK A COSTNER $58,267.63
5190001983 A2 RICKEY WHITE $45,423.90
5190002062 A2 ROBERT L SAMPLES $50,019.22
5190002354 A2 VICKI BANKS $50,322.06
5190002752 A2 ALICE L KOON $51,197.41
5190003234 A2 MAMIE LEE JACOBS $57,941.61
5190003488 A2 DEBORAH PAINTER $71,506.77
5190003768 A2 JAMES MOORE $117,787.84
5190003992 A2 WILLIAM A BUDDIN $59,294.92
5190004546 A2 FREDERICK STROUD $102,976.55
5190004816 A2 WILLIE BRIGGS $62,398.84
5190005314 A2 WILLIAM LEE CRAWFORD $54,941.89
5190005948 A2 DORIS M MCPHERSON $48,391.06
5190006103 A2 DOUGLAS A HADDOCK $59,859.86
5190006349 A2 RANDY L CROUCH $132,518.82
5190007615 A2 DORIS L REESE $54,399.94
5190009849 A2 NICHOLAS SCOTT SAITZ $113,850.85
5190011763 A2 ANNIE MABBINS BENJAMIN $46,643.81
5190012334 A2 KAY E MADISON $54,092.12
5190012367 A2 MICHAEL TOLBERT $55,999.60
5190013376 A2 ROSS BRICE $56,396.21
5190014538 A2 NELSON SCOTT BISHOP $44,976.07
5190014728 A2 MARY ANN BLAKELY $62,886.58
5190015281 A2 DENNIS BRYAN PITTMAN $56,105.86
5190016799 A2 HASAN ABU-EIDEH $47,637.75
5190017391 A2 DEBRA A PENDLETON $52,313.78
5190019078 A2 JULIUS BROWN JR $66,000.00
5190019106 A2 MARTY LOCKLEAR $62,928.43
5190021226 A2 DAWN ANN DODD $44,608.09
5190022910 A2 VERNON L LAWTON JR $51,874.61
5190023044 A2 JOHN TONEY $85,734.85
5190024378 A2 RICKY DALE CRAINE SR $47,786.27
5190025057 A2 DONALD R HARRIS $51,179.84
5190025149 A2 TIMOTHY W TAYLOR $57,877.19
5190028359 A2 TOY W SKIPPER $50,901.80
5190031937 A2 GAIL ENWRIGHT $84,372.86
5190032993 A2 HOMER C ABERNATHY $96,779.66
5190033145 A2 DIANNA ALLEN $59,348.99
5190033682 A2 LISA A ASKEW $52,456.10
5190034608 A2 FLORIE YOUNG $44,565.03
5190034719 A2 MERRY ANN KISH $55,622.73
5190035257 A2 MILLIE G MARTIN $49,124.38
5190035692 A2 JOSEPH R HUTCHINSON $69,822.98
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
5190036607 A2 JEFFREY A BLUE $93,564.02
5190037122 A2 MARY E BIVENS $76,343.26
5190037759 A2 EDNA R KENNEDY $67,638.02
5190038860 A2 SHELDY B AYE $59,960.19
5190039837 A2 KEVIN W BLANCHARD $136,302.15
5200910406 A2 THEODORE CHRISS $122,523.47
5200938751 A2 JAMES T HOLT $65,556.53
5200938807 A2 PAULETTE RODGERS ASHLEY $48,644.01
5200951583 A2 DALE D DEMONT $89,749.93
5200964367 A2 TODD ABBEY $62,338.24
5200965991 A2 TAMMYLYNNKUHN ROGERS SANDERSON $65,777.83
5200967644 A2 MICHAEL W RUTH $133,094.58
5200970502 A2 NANCY P TUCKER $51,059.96
5200971420 A2 EDELTRAUT HERNINA EDWARDS $155,054.59
5200973027 A2 MICHAEL PRESLEY $59,970.42
5200974173 A2 STACEY FOXX $123,863.75
5200976428 A2 NIEL SORENSEN $67,163.21
5200979413 A2 LEONEL G PEREZ $67,260.27
5300967114 A2 RICHARD DURIN CATALINE $65,566.97
5500961166 A2 STACEY L MOLENCUPP $59,146.16
5500972927 A2 JAMES M RANSOM $99,564.48
5500973872 A2 PATRICK ROGERS $62,365.84
5500978266 A2 DANNY OWEN $58,500.00
5590025258 A2 JAMES A MILLS $58,822.26
5600921281 A2 SUSAN B KESSLER $108,729.93
5600979853 A2 ALBERT J MARSHALL $75,164.91
5700969838 A2 ROBERT C CONGER $45,000.00
$39,277,999.04
</TABLE>
<PAGE>
EXHIBIT B
OFFICER'S CERTIFICATE
I, Laird Minor, 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 Sale and Servicing Agreement and the Indenture.
(2) The Company's chief executive office is located at 3901 Pelham
Road, Greenville, South Carolina 29615.
Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to such terms in the Sale and Servicing Agreement dated
as of May 1, 1999, among Prudential Securities Secured Financing Corporation,
as Depositor, HomeGold, Inc., as Servicer, Fairbanks Capital Corp., as Back-up
Servicer and First Union National Bank, as Indenture Trustee.
IN WITNESS WHEREOF, I have set my hand this [ ]the day of May, 1999.
EMERGENT MORTGAGE HOLDINGS
CORPORATION
By:________________________
Name: Laird Minor
Title: Vice President
B-1
<PAGE>
PURCHASE AGREEMENT AND ASSIGNMENT
among
EMERGENT MORTGAGE HOLDINGS CORPORATION
as Purchaser
HOMEGOLD, INC.
as Seller
and
HOMEGOLD FINANCIAL, INC.
dated as of
May 1, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
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....................................................................................2
SECTION 1.6 ACTION BY OR CONSENT OF NOTEHOLDERS............................................................2
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...............................................................3
SECTION 2.2 PURCHASE PRICE.................................................................................3
ARTICLE III REPRESENTATIONS AND WARRANTIES........................................................................3
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER...................................................3
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER....................................................6
SECTION 3.3 INDEMNIFICATION................................................................................8
SECTION 3.4 REPRESENTATIONS AND WARRANTIES OF HOMEGOLD FINANCIAL...........................................9
ARTICLE IV COVENANTS OF THE SELLER...............................................................................10
SECTION 4.1 PROTECTION OF TITLE OF PURCHASER, THE DEPOSITOR AND THE TRUST.................................10
SECTION 4.2 OTHER LIENS OR INTERESTS......................................................................11
SECTION 4.3 COSTS AND EXPENSES............................................................................12
ARTICLE V REPURCHASES............................................................................................12
SECTION 5.1 REPURCHASE OF MORTGAGE LOANS UPON BREACH OF WARRANTY..........................................12
SECTION 5.2 REASSIGNMENT OF PURCHASED MORTGAGE LOANS......................................................13
SECTION 5.3 WAIVERS.......................................................................................13
ARTICLE VI MISCELLANEOUS.........................................................................................13
SECTION 6.1 LIABILITY OF THE SELLER.......................................................................13
SECTION 6.2 MERGER OR CONSOLIDATION OF ANY SELLER OR PURCHASER............................................13
SECTION 6.3 LIMITATION ON LIABILITY OF THE SELLER AND OTHERS..............................................14
SECTION 6.4 AMENDMENT.....................................................................................14
SECTION 6.5 NOTICES.......................................................................................15
SECTION 6.6 MERGER AND INTEGRATION........................................................................16
SECTION 6.7 SEVERABILITY OF PROVISIONS....................................................................16
SECTION 6.8 INTENTION OF THE PARTIES......................................................................16
SECTION 6.9 GOVERNING LAW.................................................................................16
SECTION 6.10 COUNTERPARTS..................................................................................16
SECTION 6.11 CONVEYANCE OF THE MORTGAGE LOANS AND THE OTHER CONVEYED PROPERTY TO THE TRUST.................16
SECTION 6.12 NONPETITION COVENANT..........................................................................17
SECTION 6.13 MISCELLANEOUS.................................................................................17
</TABLE>
i
<PAGE>
Schedules
- ---------
Schedule A - Schedule of Mortgage Loans Conveyed
- -------------------------------------------------
Schedule B - Schedule of Representations
- -----------------------------------------
ii
<PAGE>
PURCHASE AGREEMENT AND ASSIGNMENT
THIS PURCHASE AGREEMENT AND ASSIGNMENT, dated as of May 1, 1999,
executed among Emergent Mortgage Holdings Corporation, a Delaware corporation
(the "Purchaser"), HomeGold, Inc., a South Carolina corporation (the "Seller")
and HomeGold Financial, Inc., a South Carolina corporation ("HomeGold
Financial").
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 Sale 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.
"Mortgage Loans" means the mortgage loans listed on the Schedule of
Mortgage Loans Conveyed which were identified as of May 1, 1999 and any mortgage
loan substituting or replacing a Mortgage Loan pursuant to the terms of the Sale
and Servicing Agreement.
"Other Conveyed Property" means all monies at any time paid or payable
on the Mortgage Loans or in respect thereof after the Cut-off Date (including
amounts due on or before the Cut-off Date but received by the Seller after the
Cut-off Date), the insurance policies relating to the Mortgage Loans and all
Insurance Proceeds, the Mortgage Files, and any REO Property, together with all
collections thereon and proceeds thereof.
<PAGE>
"Purchaser" means Emergent Mortgage Holdings Corporation.
"Related Documents" means the Unaffiliated Seller's Agreement, the
Insurance Agreement and the Indemnification Agreement among the Seller, the
Purchaser, Prudential Securities Incorporated, the Depositor, HomeGold
Financial, HomeGold Home Equity Loan Trust 1999-1 and Financial Securities
Assurance Corporation relating to the Policy.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of May 1, 1999, among Prudential Securities Secured Financing
Corporation, as Depositor, HomeGold, Inc., as Originator and Servicer, Fairbanks
Capital Corp., as Back-up Servicer and First Union National Bank, as Indenture
Trustee, as the same may be amended, modified or supplemented from time to time.
"Schedule of Mortgage Loans Conveyed" means the schedule of Mortgage
Loans and related mortgage notes 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 HomeGold, Inc.
Section 1.3 Usage of Terms. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement or the Sale 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 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 the Seller.
Section 1.6 Action by or Consent of Noteholders. Whenever any provision
of this Agreement refers to action to be taken, or consented to, by Noteholders,
such provision shall be deemed to refer to Noteholders of record as of the
Record Date immediately preceding the date on which such action is to be taken,
or consent given, by Noteholders. Solely for the
<PAGE>
purposes of any action to be taken, or consented to, by Noteholders, any Note
registered in the name of the Seller or any Affiliate thereof shall be deemed
not to be outstanding and shall not be taken into account in determining whether
the requisite percentage of the Note Principal Balance necessary to effect any
such action or consent has been obtained; provided, however, that, solely for
the purpose of determining whether the Indenture Trustee is entitled to rely
upon any such action or consent, only Notes which the Indenture Trustee knows to
be so owned shall be so disregarded.
Section 1.7 Material Adverse Effect. Whenever a determination is to be
made under this Agreement as to whether a given event, action, course of conduct
or set of facts or circumstances could or would have a material adverse effect
on the Trust or the Noteholders (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. Subject to the terms and
conditions of this Agreement, the Seller hereby sells, to Purchaser without
recourse (but without limitation of its obligations in this Agreement), and
Purchaser hereby purchases, all right, title and interest of the Seller in and
to the Mortgage Loans and the Other Conveyed Property relating thereto. It is
the intention of the Seller and Purchaser that the transfer and assignment
contemplated by this Agreement shall constitute a sale of such Mortgage Loans
and the Other Conveyed Property relating thereto from the Seller to Purchaser,
conveying good title thereto free and clear of any Liens, and such Mortgage
Loans and Other Conveyed Property shall not be part of the Seller's estate in
the event of the filing of a bankruptcy petition by or against the Seller under
any bankruptcy or similar law.
Section 2.2 Purchase Price. Simultaneously with the conveyance of the
Mortgage Loans and the Other Conveyed Property relating thereto to Purchaser,
Purchaser has paid or caused to be paid to or upon the order of Seller, as full
consideration therefor, the net proceeds of the issuance of the Notes, by wire
transfer of immediately available funds (representing the proceeds to Purchaser
from the sale of the Mortgage Loans to the Depositor). Any excess of the value
of the Mortgage Loans and the Other Conveyed Property over such amount shall be
a capital contribution from the Seller to the Purchaser.
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
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Trust, under the Sale and Servicing Agreement and on which the Trust will rely
in issuing the Notes and pledging the Mortgage Loans and the Other Conveyed
Property to the Indenture Trustee and on which the Insurer will rely in issuing
the Policy. Such representations are made (i) as of the execution and delivery
of this Agreement and (ii) as of the Closing Date, but shall survive the sale,
transfer and assignment of the Mortgage Loans and the Other Conveyed Property
hereunder, the sale, transfer and assignment thereof by the Seller to the
Depositor under the Unaffiliated Seller's Agreement and the sale, transfer
thereof by the Depositor to the Trust under the Sale and Servicing Agreement and
the pledge thereof by the Trust to the Indenture Trustee. 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 Trust, all of Purchaser's
rights under this Agreement and that the Trust will assign to the Indenture
Trustee all of the Purchaser's rights under this Agreement and that the
Indenture Trustee, to the extent provided in the Indenture, will be entitled to
enforce this Agreement directly against the Seller in the Trust's or the
Indenture Trustee's own name on behalf of the Noteholders and the Insurer.
(a) Schedule of Representations. The representations and warranties
made by the Seller and set forth on the Schedule of Representations are
true and correct;
(b) Organization and Good Standing. The Seller has been duly organized
and is validly existing as a corporation in good standing under the laws of
the State of South Carolina, with power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is currently conducted, and had at all relevant times and now has,
power, authority and legal right to enter into and perform its obligations
under this Agreement;
(c) Due Qualification. The Seller is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of its property or the conduct of its business requires such
qualification;
(d) Power and Authority. The Seller has the power and authority to
execute and deliver this Agreement and to carry out its terms; the Seller
has full power and authority to sell and assign the Mortgage Loans and
Other Conveyed Property to be sold and assigned to and deposited with
Purchaser hereunder and has duly authorized such sale and assignment to
Purchaser by all necessary corporate action and the execution, delivery and
performance of this Agreement has been duly authorized by the Seller by all
necessary corporate action;
(e) No False Statement. Neither this Agreement nor the information
contained in the Prospectus Supplement, other than under the captions "The
Insurer" and "Plan of Distribution," nor any statement, report or other
document prepared by the Seller and furnished or to be furnished pursuant
to this Agreement or in connection with the transactions contemplated
hereby contains any untrue statement or alleged untrue statement of any
material fact or omits to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading;
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(f) Valid Sale; Binding Obligations. This Agreement has been duly
executed and delivered, shall effect a valid sale, transfer and assignment
of the Mortgage Loans and the Other Conveyed Property, enforceable against
the Seller and creditors of and purchasers from the Seller, and this
Agreement constitutes the legal, valid and binding obligation of the Seller
enforceable in accordance with its respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and by equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding in
equity or at law;
(g) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms of this Agreement does not
conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or bylaws of the Seller, or any material
indenture, agreement, mortgage, deed of trust or other instrument to which
the Seller is a party or by which it is bound or any of its properties are
subject, or result in the creation or imposition of any lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than this Agreement or
violate any law, order, rule or regulation applicable to the Seller of any
court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Seller or
any of its properties, or in any way materially adversely affect the
interest of the Noteholders or the Indenture 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 Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the Related
Documents, (iii) seeking any determination or ruling that might materially
and adversely affect the performance by the 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 Certificate 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 Notes;
(i) No Consents. The Seller is not required to obtain the consent of
any other party or any consent, license, approval or authorization, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement except such consents as have been
obtained;
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(j) Approvals. All approvals, authorizations, orders or other actions
of any person, corporation or other organization, or of any court,
governmental agency or body or official, required in connection with the
execution and delivery by the Seller of this Agreement and the consummation
of the transactions contemplated hereby have been or will be taken or
obtained on or prior to the Closing Date; and
(k) Chief Executive Office. The chief executive office of HomeGold,
Inc. is located at 3901 Pelham Road, Greenville, South Carolina 29615.
Section 3.2 Representations and Warranties of Purchaser. Purchaser
makes the following representations and warranties, on which Seller relies in
selling, assigning, transferring and conveying the Mortgage Loans and the Other
Conveyed Property to Purchaser hereunder. Such representations are made (i) as
of the execution and delivery of this Agreement and (ii) as of the Closing Date,
but shall survive the sale, transfer and assignment of the Mortgage Loans and
the Other Conveyed Property hereunder, the sale, transfer and assignment thereof
by Purchaser to the Depositor under the Unaffiliated Seller's Agreement and the
sale thereof by the Depositor to the Trust, under the Sale and Servicing
Agreement and the pledge thereof by the Trust to the Indenture Trustee under the
Indenture.
(a) Organization and Good Standing. Purchaser has been duly organized
and is validly existing and in good standing as a corporation under the
laws of the State of Delaware, with the power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and has, full power, authority and legal right to acquire and own
the Mortgage Loans and the Other Conveyed Property, and to transfer the
Mortgage Loans and the Other Conveyed Property to the Depositor pursuant to
the Unaffiliated Seller's Agreement;
(b) Due Qualification. Purchaser is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions where the failure to do so
would materially and adversely affect Purchaser's ability to acquire the
Mortgage Loans or the Other Conveyed Property or the validity or
enforceability of the Mortgage Loans and the Other Conveyed Property or to
perform Purchaser's obligations hereunder and under the Related Documents;
(c) Power and Authority. Purchaser has the power, authority and legal
right to execute and deliver this Agreement and to carry out the terms
hereof and to acquire the Mortgage Loans and the Other Conveyed Property
hereunder; and the execution, delivery and performance of this Agreement
and all of the documents required pursuant hereto have been duly authorized
by Purchaser by all necessary action;
(d) No Consent Required. Purchaser is not required to obtain the
consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery or
performance of this Agreement and the Related Documents, except for such as
have been obtained, effected or made;
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(e) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, subject, as to enforceability, to applicable
bankruptcy, insolvency, reorganization, conservatorship, receivership,
liquidation and other similar laws and to general equitable principles;
(f) No Violation. The execution, delivery and performance by Purchaser
of this Agreement, the consummation of the transactions contemplated by
this Agreement and the Related Documents and the fulfillment of the terms
of this Agreement and the Related Documents do not and will not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under, the
certificate of incorporation or bylaws of Purchaser, or conflict with or
breach any of the terms or provisions of, or constitute (with or without
notice or lapse of time) a default under, any indenture, agreement,
mortgage, deed of trust or other instrument to which Purchaser is a party
or by which Purchaser is bound or to which any of its properties are
subject, or result in the creation or imposition of any lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument (other than the Unaffiliated
Seller's Agreement, or violate any law, order, rule or regulation,
applicable to Purchaser or its properties, of any federal or state
regulatory body, any court, administrative agency, or other governmental
instrumentality having jurisdiction over Purchaser or any of its
properties; and
(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 issuance of the Notes or the
consummation of any of the transactions contemplated by this Agreement or
any of the Related Documents, (iii) seeking any determination or ruling
that might materially and adversely affect the performance by 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 the Notes or
other similar securities issued by the Trust, 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 Indenture Trustee
on behalf of the Trust.
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Section 3.3 Indemnification.
(a) The Seller shall defend, indemnify and hold harmless Purchaser, the
Depositor, the Trust, the Owner Trustee, the Noteholders, the Indenture
Trustee and the Insurer from and against any and all costs, expenses,
losses, damages, claims, and liabilities, arising out of or resulting from
any breach of any of the Seller's representations and warranties contained
herein;
(b) The Seller shall defend, indemnify and hold harmless Purchaser, the
Depositor, the Trust, the Owner Trustee, the Noteholders, the Indenture
Trustee and the 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
Trust, the Owner Trustee, the Noteholders, the Indenture Trustee and the
Insurer against any and all costs, expenses, losses, damages, claims and
liabilities arising out of or resulting from any action taken, or any
action failed to be taken that is required to be taken under this
Agreement, by it in respect of any portion of the Trust Property other than
in accordance with this Agreement;
(d) The Seller agrees to pay, and shall defend, indemnify and hold
harmless Purchaser, the Depositor, the Trust, the Owner Trustee, the
Noteholders, the Indenture Trustee and the Insurer from and against any
taxes that may at any time be asserted against such Person 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 Mortgage Loan and Other Conveyed Property to the Trust
under the Sale and Servicing Agreement and the pledge of the Mortgage Loans
and Other Conveyed Property to the Indenture Trustee under the Indenture or
the issuance and original sale of the Notes or the Certificate, or asserted
with respect to ownership of the Mortgage Loans and Other Conveyed Property
or the Trust, in each case which shall be indemnified by the Seller
pursuant to clause (e) below, or federal, state or other income taxes,
arising out of distributions on the Certificate or transfer taxes arising
in connection with a transfer of the Certificate) 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, Trust, the Owner Trustee, the
Noteholders, the Indenture Trustee 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 to the Depositor under the Unaffiliated Seller's
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Agreement and the conveyance or ownership of the Mortgage Loans and Other
Conveyed Property to the Trust under the Sale and Servicing Agreement and
the pledge of the Mortgage Loans and Other Conveyed Property to the
Indenture Trustee under the Indenture or the issuance and original sale of
the Notes pursuant to the Indenture or the Certificate pursuant to the
Trust Agreement, 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 a transfer of the
Certificate) and costs and expenses in defending against the same, arising
by reason of the acts to be performed by each Seller under this Agreement
or imposed against such Persons;
(f) The Seller shall defend, indemnify, and hold harmless Purchaser,
the Depositor, the Trust, the Owner Trustee, the Noteholders, the Indenture
Trustee and the 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 such Person through, the negligence, willful misfeasance, or bad faith
of the Seller in the performance of its duties under this Agreement or by
reason of reckless disregard of each Seller's obligations and duties under
this Agreement;
(g) The Seller shall indemnify, defend and hold harmless Purchaser, the
Depositor, the Trust, the Owner Trustee, the Noteholders, the Indenture
Trustee and the Insurer 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
Notes or the issuance of the Certificate ; and
(h) The Seller shall indemnify, defend and hold harmless Purchaser, the
Depositor, the Trust, the Owner Trustee, the Noteholders, the Indenture
Trustee and the Noteholders from and against any loss, liability or expense
imposed upon, or incurred by, such Person 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 HomeGold Financial.
HomeGold Financial hereby represents and warrants to the Purchaser as of the
date of execution of this Agreement and as of the Closing Date, that:
(a) HomeGold Financial is a corporation duly organized, validly
existing and in good standing under the laws of the State of South
Carolina;
(b) HomeGold Financial has the corporate power and authority to
execute, deliver and perform, and to enter into and consummate all the
transactions contemplated by this Agreement;
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(c) This Agreement has been duly and validly authorized, executed and
delivered by HomeGold Financial, and constitutes the legal, valid and
binding agreement of HomeGold Financial, enforceable against HomeGold
Financial 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 HomeGold
Financial 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; and
(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
HomeGold Financial 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 HomeGold Financial is a party or by
which it is bound and which is material to HomeGold Financial, 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 HomeGold Financial.
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 Trust under the Sale and Servicing Agreement
and of the Indenture Trustee under the Indenture 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 Trust, the Indenture Trustee, and the 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
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Seller fails to perform its obligations under this subsection, Purchaser, the
Depositor, the Trust, the Owner Trustee or the Indenture 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,
the Trust, the Owner Trustee, the Depositor or the Indenture 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 Trust, the Owner Trustee, the Depositor or
the Indenture Trustee and the 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 Trust, the Owner Trustee, the
Depositor and the Insurer (so long as an Insurer Default shall not have
occurred and be continuing), and the Indenture Trustee at least 60 days'
prior written notice of any relocation of its principal executive office
if, as a result of such relocation, the applicable provisions of the UCC
would require the filing of any amendment of any previously filed financing
or continuation statement or of any new financing statement. The Seller
shall at all times maintain each office from which it services Mortgage
Loans and its principal executive office within the United States of
America.
(d) The Seller shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Mortgage Loans to
Purchaser, the conveyance of the Mortgage Loans by Purchaser to the
Depositor and the conveyance of the Mortgage Loans by the Depositor to the
Trust and the pledge of the Mortgage Loans to the Indenture Trustee on
behalf of the Noteholders and the Insurer, the Seller's master computer
records (including archives) that shall refer to a Mortgage Loan indicate
clearly that such Mortgage Loan has been sold to Purchaser and has been
conveyed by Purchaser to the Depositor and by the Depositor to the Trust
and pledged by the Trust to the Indenture Trustee on behalf of the
Noteholders and the Insurer. Indication of the Trust'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 pledged by the Trust to the Indenture
Trustee and is owned by the Trust.
Section 4.2 Other Liens or Interests. Except for the conveyances
contemplated 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
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Depositor, Trust and the Indenture 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 Trust within 60 days
following discovery or notice to the Seller of such breach pursuant to
Section 2.04 of the Sale and Servicing Agreement and the Seller shall pay
the Purchase Price as provided in the Sale and Servicing Agreement. In lieu
of repurchasing any such Mortgage Loan, the Seller may cause such Mortgage
Loan to be removed from the Trust and substitute one or more Qualified
Substitute Mortgage Loans in the manner provided in Section 2.05 of the
Sale and Servicing Agreement. To the extent the Seller fails to effect its
repurchase obligation, HomeGold Financial shall repurchase the related
Mortgage Loan and pay the Purchase Price to the Indenture Trustee on such
date. The provisions of this Section 5.1 are intended to grant the Trust
and the Indenture Trustee a direct right against the Seller to demand
performance hereunder, and in connection therewith the Seller and HomeGold
Financial waive any requirement of prior demand against the Depositor or
Purchaser with respect to such repurchase or substitution obligation. Any
such purchase or substitution resulting from a Seller Repurchase Event
shall take place in the manner specified in Section 2.05 of the Sale and
Servicing Agreement. Notwithstanding any other provision of this Agreement
or the Sale and Servicing Agreement to the contrary, the obligation of the
Seller and HomeGold Financial under this Section shall be performed in
accordance with the terms hereof notwithstanding the failure of the
Servicer, the Unaffiliated Seller, the Trust and the Depositor to perform
any of their respective obligations with respect to such Mortgage Loan
under the Sale 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 HomeGold
Financial, the Seller shall indemnify the Trust, the Owner Trustee, the
Depositor, the Indenture Trustee,
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the Noteholders and the Insurer against all costs, expenses, losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel, which may be asserted against or incurred by any of them as a
result of third party claims arising out of the events or facts giving rise
to a repurchase or substitution under Section 2.05 of the Sale and
Servicing Agreement and 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 the Depositor, the Trust and the Indenture
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 Trust's, the Depositor's,
and the Indenture 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 or pledged, as the case
may be, to Purchaser, the Depositor, Trust and the Indenture 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, the Trust or the Indenture Trustee. Such
assignment shall be a sale and assignment outright, and not for security. If,
following the reassignment of a Mortgage Loan, in any enforcement suit or legal
proceeding, it is held that the Seller may not enforce any such Mortgage Loan on
the ground that it shall not be a real party in interest or a holder entitled to
enforce the Mortgage Loan, the Servicer, the Trust and the Indenture 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, the Trust's or the Indentured Trustee's name or the names of the
Noteholders.
Section 5.3 Waivers. No failure or delay on the part of Purchaser, the
Depositor, the Trust or the Indenture 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 HomeGold
Financial may be merged or consolidated, (ii) resulting from any merger or
consolidation to which the Seller, Purchaser or HomeGold Financial is a party or
(iii) succeeding to the business of the Seller, Purchaser or HomeGold Financial,
in the case of Purchaser, which corporation has a certificate of incorporation
containing provisions relating to limitations on business and other matters
substantively identical to those contained in Purchaser's certificate of
incorporation, and in each
13
<PAGE>
of the foregoing cases such corporation shall execute an agreement of assumption
to perform every obligation of the Seller, Purchaser or HomeGold Financial, as
the case may be, under this Agreement, provided that, whether or not such
assumption agreement is executed, shall be the successor to the Seller,
Purchaser or HomeGold Financial, as the case may be, hereunder (without
relieving the Seller, Purchaser or HomeGold Financial 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 an Insurer Default shall
not have occurred and be continuing, Purchaser shall not merge or consolidate
with any other Person or permit any other Person to become the successor to
Purchaser's business without the prior written consent of the Insurer. The
Seller, Purchaser or HomeGold Financial shall promptly inform the other party,
the Indenture Trustee, and, so long as a an Insurer Default shall not have
occurred and be continuing, the Insurer of such merger, consolidation or
purchase and assumption. Notwithstanding the foregoing, as a condition to the
consummation of the transactions referred to in clauses (i), (ii) and (iii)
above, (x) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Sections 3.1, 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 HomeGold
Financial, as applicable, shall have delivered to the Trust, the Owner Trustee
and the Indenture Trustee an Officer's Certificate and an Opinion of Counsel
each stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section 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 HomeGold Financial, as
applicable, shall have delivered to the Trust, the Owner Trustee and the
Indenture 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 interests of the Trust and the Indenture Trustee in the Trust
Property and reciting the details of the filings or (B) no such action shall be
necessary to preserve and protect such interest.
Section 6.3 Limitation on Liability of the 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 HomeGold
Financial, with the prior written consent of the Insurer (so long as an
Insurer Default shall not have occurred and be continuing) but without the
consent of the Indenture Trustee, or any of the Noteholders (unless an
Insurer Default shall have occurred, in which event the consent of the
Noteholders 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
14
<PAGE>
Agreement; provided, however, that such action shall not, as evidenced by
an Opinion of Counsel delivered to the Indenture Trustee, adversely affect
in any material respect the interests of any Noteholder.
(b) This Agreement may also be amended from time to time by the Seller,
Purchaser and HomeGold Financial with the prior written consent of the
Insurer (so long as an Insurer Default shall not have occurred and be
continuing) and with the consent of the Indenture Trustee, and holders of
Notes evidencing a majority of the aggregate Note Principal Balance of the
then Outstanding Notes, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this
Agreement, or of modifying in any manner the rights of the Noteholders;
provided, however, that no such amendment shall (i) increase or reduce in
any manner the amount of, or accelerate or delay the timing of, collections
of payments on Mortgage Loans or distributions that shall be required to be
made on any Note or the Interest Rates or (ii) reduce the aforesaid
percentage required to consent to any such amendment or any waiver
hereunder, without the consent of the Holders of all Notes then
outstanding.
(c) Prior to the execution of any such amendment or consent, HomeGold
Financial 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
Indenture Trustee shall furnish written notification of the substance of
such amendment or consent to each Noteholder.
(e) It shall not be necessary for the consent of Noteholders pursuant
to this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Noteholders shall be subject
to such reasonable requirements as the Indenture Trustee, may prescribe,
including the establishment of record dates. The consent of any Holder of a
Note given pursuant to this Section or pursuant to any other provision of
this Agreement shall be conclusive and binding on such Holder and on all
future Holders of such Note and of any Note issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether or not notation
of such consent is made upon the Note.
Section 6.5 Notices. All demands, notices and communications to any of
the Seller, Purchaser or HomeGold Financial 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 HomeGold, Inc., 3901 Pelham Road, Greenville, South Carolina
29615, Attention: Laird Minor, (b) in the case of HomeGold Financial, to
HomeGold Financial, Inc., 3901 Pelham Road, Greenville, South Carolina 29615,
Attention: Kevin J. Mast, 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.
15
<PAGE>
Section 6.6 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement, the Sale and Servicing Agreement, the
Indenture 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 Sale and Servicing
Agreement, the Indenture and the Related Documents. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
Section 6.7 Severability of Provisions. If any one or more of the
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
Section 6.8 Intention of the Parties. The execution and delivery of
this Agreement shall constitute an acknowledgment by 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 Indenture Trustee, the Trust or
the Noteholders 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 relating thereto, together with its respective rights
under this Agreement, to the Depositor on the date hereof, and that the
Depositor intends, pursuant to the Sale and Servicing Agreement, to convey such
Mortgage Loans and the Other Conveyed Property, together with its respective
rights under this Agreement, to the Trust on the date hereof and that the Trust
intends pursuant to the Indenture, to pledge such Mortgage Loans and other
Conveyed Property together with its rights under this Agreement to the Indenture
Trustee. The Seller acknowledges and
16
<PAGE>
consents to such conveyance and pledge 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 Insurer, the Indenture Trustee and the
Noteholders. 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 Insurer, the Indenture Trustee, the
Trust, the Owner Trustee, and the Noteholders and that, notwithstanding anything
to the contrary in this Agreement, the Seller shall be directly liable to the
Depositor, the Owner Trustee, the Trust, the Insurer, the Indenture Trustee and
the Noteholders (notwithstanding any failure by the Servicer, Purchaser, the
Depositor or the Trust to perform its duties and obligations hereunder or under
the Sale and Servicing Agreement) and that the Trust and Indenture Trustee, may
enforce the duties and obligations of the Seller under this Agreement against
the Seller for the benefit of the Insurer, the Trust and the Noteholders.
Section 6.12 Nonpetition Covenant. Until one year and one day after the
termination of the Trust, neither the Seller, nor HomeGold Financial 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, the Depositor (or, in the case of the Seller and HomeGold Financial,
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, the Depositor (or
Purchaser) or any substantial part of its property, or ordering the winding up
or liquidation of the affairs of the Trust, the Depositor (or Purchaser).
Section 6.13 Miscellaneous. The parties agree that each of the Insurer,
the Owner Trustee, the Depositor, and the Indenture Trustee is an intended
third-party beneficiary of this Agreement to the extent necessary to enforce the
rights and to obtain the benefit of the remedies of the Purchaser under this
Agreement which are assigned to the Depositor pursuant to the Unaffiliated
Seller's Agreement and to the Trust pursuant to the Sale and Servicing Agreement
and to the Indenture Trustee for the benefit of the Noteholders pursuant to the
Indenture and to the extent necessary to obtain the benefit of the enforcement
of the obligations and covenants of the Seller under Section 3.3 and 5.1 of this
Agreement.
17
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.
EMERGENT MORTGAGE HOLDINGS
CORPORATION, as Purchaser
By: /s/ Laird Minor
--------------------------------------
Name: Laird Minor
Title: Vice President
HOMEGOLD, INC., as Seller
By: /s/ Laird Minor
--------------------------------------
Name: Laird Minor
Title: Executive Vice President
HOMEGOLD FINANCIAL, INC.
By: /s/ Kevin J. Mast
--------------------------------------
Name: Kevin J. Mast
Title: Executive Vice President, Chief
Financial Officer and Treasurer
[Signature Page to the Purchase Agreement and Assignment]
<PAGE>
SCHEDULE OF MORTGAGE LOANS CONVEYED
SCHEDULE A
A-1
<PAGE>
<TABLE>
<CAPTION>
account pool name1 curr_bal
<S> <C> <C> <C>
12 A1 WILLIAM THOMAS HALL $7,569.55
196 A1 CHARLES J WRIGHT $13,168.92
1715 A1 SICERO ALLEN $28,936.80
1902 A1 GARLEY S GRANT $22,749.21
1949 A1 JOE AIKEN $32,009.06
2004 A1 HAMMIE FARR $23,824.82
2267 A1 PATRICIA A HERRMANN $14,639.74
2281 A1 PAUL DANSBY $23,644.17
2342 A1 JACOB C HUNTER $23,496.27
2755 A1 WILLIAM D BRADEN $18,858.74
2775 A1 RAYMOND A OWENS $24,538.34
3037 A1 WILLIE R HARRIS $17,832.66
3089 A1 MILDRED BOYCE $16,214.63
3197 A1 WAYNE HOLCOMBE $7,377.22
3244 A1 CLEMMIE JEAN WOMBLE $18,085.05
3330 A1 JAMES M BOITER $21,940.00
3566 A1 CHARLES E CHILDRESS $14,804.65
3876 A1 GEORGE W HENDERSON $3,910.88
30094 A1 SAM GREGORY $10,089.20
35491 A1 EDNA V DUNCAN $1,403.06
60038 A1 BERNIDEAN W WILLIAMS $27,066.95
60065 A1 ALLSTATE PROPERTIES INC $12,174.43
60135 A1 ELLA B THOMPSON $5,907.85
60152 A1 OSCAR LEE OWENS $4,066.11
60254 A1 JIMMY DONALD ATKINS $11,308.26
60266 A1 ALICE FAYE LUNNY $9,699.47
60272 A1 LIZZIE MOORE TOLBERT $12,036.79
60291 A1 JO ELLEN TAYLOR SULLIVAN $6,261.35
60450 A1 EULA R WINN $2,312.43
60451 A1 ANDRE D HAWKINS $8,725.94
60454 A1 LOUISE MAUDE JOY $5,065.74
60612 A1 JOEL A SEABOLT $7,137.06
60697 A1 LENORA A HENRY $6,766.25
60699 A1 NANCY L FOSTER $29,355.91
60710 A1 MILDRED F MIDDLETON $22,573.32
60761 A1 WILLIE J WILLIAMS $23,976.54
60766 A1 WILLIE J WRIGHT $27,395.31
60852 A1 LEROY GAY $10,866.29
60867 A1 JAMES ROBIN DENNIS $13,324.48
60933 A1 HELEN HOWARD ISAAC $7,292.76
60950 A1 LINDA H BELL $5,681.57
61016 A1 FLOSSIE MAE ABERCROMBIE $9,377.09
61065 A1 JUDI E. MAULDIN $23,398.05
61159 A1 THOMAS H CAMPBELL JR $18,574.38
61191 A1 ROBERT J ZALEZNACK $22,513.77
61219 A1 ANNIE R COX $1,535.60
61248 A1 LUTHER S MCALISTER II $21,828.06
61285 A1 JOYCE M WALKER $16,391.86
61293 A1 WILLIE TRIBBLE $35,329.59
61485 A1 MILWEE PROPERTIES TRUST $64,349.27
61496 A1 WILLIE J SMITH $1,771.97
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
61524 A1 AUSTIN DAVIS $16,855.95
61608 A1 OLIVER E RAY $8,547.15
61624 A1 MICHAEL J LOVELL $18,091.40
61926 A1 DAVID J NEER SR $30,778.09
62217 A1 ROLAND C TURNER $2,528.11
62230 A1 MINNIE P BONNER $37,646.45
62288 A1 PHYLLIS B KELLY(EST OF) $34,044.07
62347 A1 RAYMOND J BULLOCK SR $6,179.22
62416 A1 NATHANIEL WALKER $14,524.31
62519 A1 CURTIS S LACKEY $1,281.35
62535 A1 EUNICE WHICHARD $37,782.23
62543 A1 KELLY BRYAN $33,531.49
62567 A1 LEVERN MCKENNEY $8,322.18
62590 A1 WILLIAM T MARVIN II $4,332.45
62667 A1 JAMES B HAWKINS $16,356.57
62676 A1 CHARLES MORANT $13,047.49
62679 A1 PEGGY ANN BARR $34,996.34
62689 A1 OSCAR TORRES $27,450.16
62694 A1 JEANETTE SELLERS $26,532.88
62815 A1 MARK SNOW $29,005.07
62885 A1 WILLIAM J MOORE $7,487.86
62914 A1 ROBERT S YOUNG $61,506.02
63012 A1 JOHN R LOVETT $29,280.80
63033 A1 BOYD E ISLER $4,245.48
63060 A1 JIMMY RAY ANDERS $14,659.45
63071 A1 JACQUELINE JACKSON $21,732.57
63122 A1 RODNEY D LANDIS $30,291.35
63131 A1 MARYLOU SHARP $22,836.12
63144 A1 ROBERT T STRAYER $28,524.57
63171 A1 WILLIAM BRISTOW JR $18,475.25
63209 A1 SCOTTY MCQUILLER $20,808.73
63260 A1 LINDA H WILLIAMS $41,732.17
63323 A1 WILLIAM E HAMILTON $18,729.18
63436 A1 HIRAM CRUZ $8,360.67
63547 A1 MITTIE VANN $40,448.40
63548 A1 MITTIE VANN $6,375.57
63597 A1 TONYA HAYNES $42,359.09
63609 A1 MINNIE D CLARK $40,901.79
63639 A1 CLAUDETTE B DRAKE $35,975.04
63796 A1 JOSEPH DAVIS JR $35,922.20
63807 A1 SUSAN LYNN FAUST $19,776.88
63870 A1 LEO E BROWN $37,845.60
63880 A1 MICHAEL LANCELEY $36,789.52
63883 A1 TALMO LEVY $23,737.23
63888 A1 HAZEL F PARRIS $15,777.72
64029 A1 ALLEN R JAMISON $31,768.43
64113 A1 CAROLYN C KELLY $41,452.33
64141 A1 LEROY MCMILLAN $41,320.90
64170 A1 JAMES F HART III $41,167.88
64202 A1 GEORGIA HARLEY $22,949.21
64238 A1 JOHNNIE MAE SMALLS $10,504.74
64263 A1 SANDRA MILLER $23,807.64
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
64287 A1 JENNIE LYBRAND $35,207.88
64291 A1 GERALD S ROSE $275,233.01
64306 A1 THOMAS M CROSBY $15,117.35
64312 A1 ISAAC N STRONG $11,272.48
64313 A1 VIOLA K BROWN $35,576.74
64338 A1 SADIE BENNETT $39,499.07
64369 A1 ROBERT S GOFF $32,196.04
64374 A1 MARY B TUCKER $34,081.05
64401 A1 PAMELA B FARLEY $16,121.20
64402 A1 RONALD L FARLEY $20,149.12
64403 A1 CHARLES H ELKINS $32,799.84
64406 A1 WILSON HAYNES SR $36,000.09
64470 A1 BLAND MCCALL $29,065.85
64497 A1 ROBERT L THOMPSON JR $10,730.26
64591 A1 CATHERINE GILMER $25,965.57
64596 A1 JOHN ALLEN HAYNESWORTH $32,636.65
64599 A1 JOHN W STALEY $41,956.36
64602 A1 SOMSAK SOMCHEEN $38,586.70
64625 A1 ALBERT S BLUNT $31,291.78
64631 A1 WILLIAM BORUM JR $36,829.29
64650 A1 DAVID GREEN $17,863.60
64798 A1 TIMOTHY SCOTT SMITH $29,479.63
64895 A1 BOBBY STEADMAN $24,431.55
64938 A1 JERRY SATTERFIELD $29,624.19
64948 A1 LUCILLE GASKIN $27,616.67
65057 A1 ERNEST WRIGHT (EST OF) $18,725.73
65234 A1 WILLIAM H FLEMING $32,326.01
65312 A1 R GRADY JEFFERY $36,541.03
65378 A1 RODNEY L BAILEY $43,000.36
65413 A1 BRYAN O'NEAL $39,060.90
65454 A1 JUDY G TUCKER $7,621.27
65578 A1 TOWNSELL GORE $20,987.02
65629 A1 BOBBY J BEARD $43,556.44
65753 A1 BARBARA J ROBINSON $15,758.72
65797 A1 GEORGIA A CONNER $43,899.18
65841 A1 MARSHALL A GREGG $40,658.86
65922 A1 MARGARET FALLAW $25,768.09
65964 A1 JOHNNY M CHAPPELL $13,730.25
65969 A1 WANDA H SCRUGGS $38,802.53
66009 A1 HARMON EARL ERTZBERGER $31,102.55
66015 A1 BARBARA M BOSTIC $38,559.65
66016 A1 GLORIA D CLARKSON $39,867.02
66025 A1 RICKY TYRONE MYERS $38,830.28
66032 A1 ALTON SELLERS $39,859.50
66070 A1 PENNY A COX $31,371.01
66071 A1 JAMES PRESCOTT $38,943.32
66108 A1 CORRESSA W WARREN $40,375.00
66140 A1 SAMMY C WINDHAM $40,508.39
66164 A1 DOROTHY LEWIS $19,602.88
66178 A1 IRENE RICHARDSON $36,537.98
66202 A1 MAJOR JACKSON $35,910.31
66255 A1 RICHARD H BLUME $21,028.13
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
66277 A1 LOIS B LANIER $27,062.43
66279 A1 MICHAEL W KELLY $43,751.31
66302 A1 ROZINA JAVIS $31,763.10
66310 A1 DONALD PRITCHARD $22,986.40
66322 A1 ROBERT LEWIS SINGLETON $32,975.80
66334 A1 MARY FRANCES TYLER $35,199.98
66344 A1 MICHAEL H GARTNER $25,470.38
66349 A1 LOLA MAE SUDDETH $40,823.57
102601 A1 LAURA D LLOYD $14,268.32
627221 A1 MICHAEL S LECLAIR $43,995.60
653821 A1 JACK WILSON $13,073.00
1002649 A1 DAVID E GRUBB $38,596.08
1002933 A1 MARIE G HIATT LOWERY $28,065.45
1002938 A1 BONIFACIO VILLEGAS $22,751.13
1003485 A1 MAURICE E SMITH $14,984.08
1003923 A1 SIMPSON SHAWN BAKER $8,824.44
1004047 A1 MARIE A JUGGER $8,713.16
1004314 A1 CLARENCE L HAMPSHIRE $28,684.20
1004419 A1 ELWOOD MURPHY $27,264.58
1004550 A1 SCOTT LEE GODWIN $24,613.88
1004790 A1 SHAWN PEPP $10,127.21
1005946 A1 ROGER F MORROW $19,922.98
1006125 A1 SHIRLEY WILLIAMS $42,137.13
4000999 A1 HARRY L FOX $35,365.37
4001078 A1 DANIEL D MCBRIDE $19,830.84
5001031 A1 MARK D FULLER $3,422.10
5004221 A1 DOUGLAS GARNER SR $17,873.07
5005618 A1 WILLIAM J STUTZ $51,445.18
5006005 A1 MICHAEL T BEAMISH $19,211.87
5006053 A1 JOSEPH M GEARY $36,001.50
5006058 A1 RANDY F MCCARRIER $26,318.37
5006067 A1 STEVEN L WINDHAM $32,079.94
5006729 A1 NEAL S GRAY $37,374.43
5007034 A1 DONNIE D RUSHING $42,689.38
5007122 A1 STEVE A ROGERS $27,138.37
5007380 A1 RICHARD G PATRICK $36,074.19
5007409 A1 ROY JOHNSON $20,490.64
5007643 A1 RALPH MICHAEL JACKSON $24,362.69
5008176 A1 MATTHEW P PALMER $25,822.13
5008199 A1 KENNETH J HESS $33,812.19
5008201 A1 MICHAEL L JAMES $26,744.72
5008317 A1 MICHAEL H GAGE $42,071.53
5008365 A1 DONALD L RIVENBURGH $34,597.01
5008402 A1 PAULA A GRESHAM-BEGUETTE $37,963.35
5008422 A1 JOHN T RUSSELL $72,730.59
5008588 A1 JEAN E ALLEN $23,865.06
5008629 A1 MICHAEL DAGUE $36,554.18
5008679 A1 KELLI J MANNEL $19,484.55
5008718 A1 FRANCIS B MALLO $41,070.26
5008736 A1 WILLIAM A WELKER $16,131.08
5008784 A1 RICHARD A TOTTEN $29,442.52
5008867 A1 FRED E BOURGEOIS $30,979.71
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
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<PAGE>
<TABLE>
<S> <C> <C> <C>
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<PAGE>
<TABLE>
<S> <C> <C> <C>
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21003446 A1 SCOTT E BECKWORTH $23,510.03
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21003924 A1 TERRY W MASON $18,741.67
21003932 A1 ALBERT WHITE III $29,853.19
21004022 A1 THOMAS V ROTOLE $35,303.48
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21005062 A1 MICHELLE D B FULBRIGHT $41,742.21
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22002720 A1 TIMOTHY D ROBINSON $13,241.56
22002735 A1 ALFRED KNIGHTEN $16,639.29
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22003457 A1 CRYSTAL F BONAR $33,417.04
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22003526 A1 THOMAS W ROSS $32,465.80
22003540 A1 DANNY O COULLIETTE $34,247.56
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22003767 A1 THADDEUS F WYGLENDOWSKI $35,552.83
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22003812 A1 STEVEN J HAAG $23,783.83
22003828 A1 LANCE W BILLOW $27,866.11
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<PAGE>
<TABLE>
<S> <C> <C> <C>
22003995 A1 SHEILA DIANE PEGRAM $40,921.48
22004139 A1 JUNIOR WAYNE HILL $24,181.58
22004174 A1 KURT T MOUNT $27,381.20
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23000066 A1 CAROLYN H LAMB $16,322.34
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23000226 A1 VICTOR M WILSON $38,644.60
23000345 A1 EDNA C DAWKINS $15,896.64
23000424 A1 KEVIN A MCKEE $48,656.87
23000466 A1 CURTIS TODD JONAS $31,909.19
23000952 A1 JOE M LUCERO $16,060.78
23001183 A1 DANIEL J CARPER $39,355.75
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50040241 A1 PAUL HICKMAN $6,418.53
50041541 A1 LEONARD L STRATTON $12,109.87
50043081 A1 LINDA BARRON $10,366.06
50045081 A1 JOSEPH SEOANE $33,508.63
50047461 A1 RONALD L BOOTH $7,249.60
50050181 A1 ROBERT YEAGER $13,578.30
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50062211 A1 RAYMOND J PERKINS $10,003.75
50066721 A1 LAWRENCE W DUVALL JR $8,605.93
50074261 A1 ALETHA O'CONNELL $11,342.28
50076771 A1 PATRICK L EVANS $23,174.42
50096801 A1 DONALD R MARSHALL $16,772.15
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90012601 A1 MINNIE PARKER $30,634.44
95000101 A1 JOHN FITZGERALD WILKIE $26,106.65
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95003000 A1 CARL R WEATHERLY $24,448.04
95003012 A1 JAMES W MITCHELL $36,800.36
95003337 A1 HARRY S MILLER $31,805.19
95003396 A1 DARLENE R CLARK $33,084.49
95003402 A1 DARRALL CRANE $39,544.50
95003406 A1 GEORGE PHILIP ECKLES $23,920.20
95003414 A1 JOHN E BROWN $38,165.11
95003416 A1 KENNETH E BYRD $36,560.73
95003431 A1 JIM MILLER $41,750.54
95003456 A1 HILTON W BRODERICK $35,647.62
95003457 A1 HILTON W BRODERICK $13,784.74
95003464 A1 DELORES LINEN GADSON $29,504.66
95003468 A1 TIMOTHY D HILL $37,700.07
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210004681 A1 EDDIE GENE WILKERSON $8,468.47
210006371 A1 BRIAN PURCELL $10,536.54
210006421 A1 RICHARD H STAFFORD $31,463.22
210029061 A1 EDWARD A BOOTEN $24,753.77
220026631 A1 WILLIAM E MANN $12,548.61
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<PAGE>
<TABLE>
<S> <C> <C> <C>
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230008331 A1 HERBERT M FERRELL $11,034.97
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2000918054 A1 DANIEL J LANDESS $21,903.38
2000918190 A1 GORDON LEROY ROTTMAN $33,278.97
2000928549 A1 DEBRA L STARCK $9,866.87
2000929798 A1 DOROTHY LUCAS $24,443.88
2000930087 A1 TERRY LYNN DISHMAN $9,736.68
2000930468 A1 DAVID WAYNE BROWN $10,082.45
2000931302 A1 OSCAR FLOYD ALBRITTON $12,225.72
2000932142 A1 ELIZABETH H WILLAMOWSKI $11,423.61
2000932887 A1 MARGARITA S WALTERS $10,119.69
2000934204 A1 DOUGLAS S BOWEN $14,045.73
2000936720 A1 LORI A ELLIOTT $8,793.20
2000936728 A1 LARRY L MCKINNEY JR $14,819.62
2000936892 A1 JACOB G SEAL SR $12,327.36
2000938050 A1 DONALD BEEMER $19,746.97
2000938755 A1 JAMES M NOETH $12,042.93
2000939114 A1 JENNY C BEAMON $20,413.85
2000940176 A1 JIMMY D RUSSELL $14,828.28
2000940395 A1 MICHAEL J MILLER $7,996.08
2000945188 A1 JAMES W MOORE $22,092.56
2000947504 A1 RONNIE DEAN CASSTEVENS $20,474.27
2090019430 A1 FELICIA LOVELACE $30,265.77
2100048911 A1 LARRY BASHAM $9,238.65
2100917449 A1 MARK TUGMAN $9,986.38
2100918818 A1 ALAN LEE HUTSELL $40,436.69
2100924278 A1 BARRIE KRAUSE $24,726.57
2100926130 A1 GEORGE T OVERSTREET $9,126.61
2100931304 A1 VALERIE LARSON-LOHR $20,013.80
2100931898 A1 BRADLEY J CONKLIN $8,235.14
2100932370 A1 JUAN JOSE BANDA $36,934.95
2100938653 A1 MARIA GUADALUPE BAEZA $10,527.51
2100940287 A1 CARMEN M STUDER $17,463.01
2100944824 A1 BEATRICE JOHNSON $33,131.07
2100947269 A1 JAMES R HUNT JR $40,360.03
2100947918 A1 COBY D THOMAS $39,401.70
2190020172 A1 MICHAEL J WALKER SR $36,792.71
2190022138 A1 MAGDIEL CORDERO CHAPA $19,709.36
2190022908 A1 ISRAEL FRANCO $28,270.08
2190023482 A1 JOHNNY MARMOLEJO $37,655.77
2190023878 A1 RANDOLPH CLARK $41,828.78
2190023993 A1 JERRY WILLIS $20,575.86
2190025427 A1 LUPE C GONZALEZ $20,668.14
2190030627 A1 JOHANNA ERIKA BENNIGHT $15,190.08
2190031122 A1 DAVID C YBARRA $34,155.11
2190032049 A1 BLANCA N RIVERA $9,428.68
2190033088 A1 CECILIA MARTIN MISER $31,459.19
2190033122 A1 JESSE GONZALES GONZALES $25,468.27
2190034464 A1 WARREN F.SCHMALENBERGER $241,191.11
2200915126 A1 WELBORN STANLEY MCCLELLION $41,531.50
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<PAGE>
<TABLE>
<S> <C> <C> <C>
2200917295 A1 CURTIS S LACKEY $18,816.04
2200918899 A1 DANNY EUGENE SANSBURY $30,280.78
2200921915 A1 KATHY E KARR $17,763.43
2200925040 A1 BEVERLY A BOUDREAU $9,530.53
2200927298 A1 VIOLA S ATKINS $9,874.09
2200928749 A1 JOHN C GRIFFIN $27,664.35
2200929715 A1 REGINALD GILLIARD $21,693.12
2200935074 A1 GEORGE M SMITH JR $10,856.66
2200935864 A1 MATTHEW W ANDREWS $10,455.17
2200940700 A1 CRAIG WILFONG $20,537.75
2200943334 A1 KENNETH ALLEN WILLEMS $17,013.11
2200950766 A1 BERTUS E MINER SR $12,554.05
2200951320 A1 PATRICIA PICKENS FULLER $40,926.35
2200953020 A1 GLENDA MIMS $29,936.89
2200953565 A1 BARBARA MONTANARO ROME PIERCE $34,908.33
2200953576 A1 GEORGE M LANKFORD $19,234.17
2200953896 A1 JAMES BIGGER $38,129.70
2200954370 A1 ROBERT A MILLER $8,070.62
2200955394 A1 JOSEPH E LAMB $27,689.53
2200956466 A1 CRAIG A WEAVER $14,793.82
2200957762 A1 JOHN L ALLENSWORTH $12,775.18
2200958507 A1 JOYCE W SMITH $15,386.45
2200959951 A1 HOWARD MUFUKA $35,196.68
2200960331 A1 JOSEPH DUBOSE $42,456.69
2200960398 A1 PATRICIA J WILSON $17,129.13
2200961553 A1 BILL W PATTERSON $26,316.22
2200963709 A1 FERNANDO HERRERA $35,864.99
2200970232 A1 CLOYCE J LIGHT $14,073.09
2200970872 A1 EARL BOLDEN $6,222.08
2200971268 A1 JODI C ROUSH $35,986.38
2200972323 A1 WAYNE ALTON SETTOON $204,000.00
2200972656 A1 THERESA M FLOWERS $29,432.08
2200973350 A1 THOMAS J SMITH $41,494.84
2200973420 A1 MELVIN CHAMBERLAIN $38,856.24
2200974757 A1 RONALD ULRIGG $43,572.37
2200975191 A1 HERMAN M LIPSCOMB II $64,077.29
2200975400 A1 DIANE M BERGER $42,846.18
2200975403 A1 JOHN CREED MANEY JR $27,485.03
2200975540 A1 ALLEN L MARX $43,905.37
2200975927 A1 WILLIE M CROMER $38,854.35
2200978715 A1 LARRY L EICKHOLT $40,800.00
2200979532 A1 JOSEPH DAVID STAFFORD $38,800.00
2290009890 A1 AARON MILTON $12,252.69
2290015142 A1 IRA L FLOYD $447,294.91
2290019481 A1 JAIME A ARREDONDO $36,908.29
2290020732 A1 JESUS ALONZO RUBIO $34,526.36
2290020787 A1 MIGUEL C BARRERA $26,201.28
2290029466 A1 CURTIS L WARREN $38,678.22
2290030828 A1 RENE A URIEGAS $22,912.84
2290034812 A1 JANET L HENDERSON $25,691.91
2290035453 A1 JIMMY BOLER $33,749.06
2290040520 A1 MICHEAL IRVIN $9,476.98
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<PAGE>
<TABLE>
<S> <C> <C> <C>
2300923630 A1 CARROLL A JACKSON $25,262.67
2300935750 A1 LEE CORPMAN $19,662.43
2300939109 A1 H VINCENT NELSON $53,641.94
2300941082 A1 DOLORES A SCHONEWOLF $6,934.23
5100900843 A1 HAZEL NORMAN $40,982.08
5100906647 A1 MAMIE VALENTINE $15,716.73
5100906950 A1 RUBEN BATTLE JR $40,009.89
5100912573 A1 SHERRY PARKER $28,196.82
5100914193 A1 ALONZO FALLS $27,352.99
5100915272 A1 MICHAEL L HARDEE $38,083.26
5100918693 A1 DAVID BRISTER $37,393.97
5100918717 A1 SANDRA W POTTER $20,799.51
5100922219 A1 FELIX PAGAN JR $22,401.00
5100922284 A1 KERRIE C THOMPSON $59,281.18
5100923644 A1 JOHN A COLE $14,425.08
5100924274 A1 MIQUEL A VILLARREAL $11,971.43
5100925014 A1 DEBRA REAVIS ROBINSON $16,401.14
5100925244 A1 NICHOLAS E CORBIN $40,247.81
5100925742 A1 JOEL DAVID WOODLE $43,468.24
5100925931 A1 ROBIN JACOBS $10,158.06
5100926329 A1 GEORGE E RIDDICK JR $16,174.12
5100927507 A1 RICKY ALVIN ANNAS $21,345.92
5100928171 A1 JUDITH J MONROE $20,946.03
5100928405 A1 ASHLEY BERNARD CANADY $11,095.04
5100928497 A1 CARL D MOORE $20,501.41
5100928875 A1 RICHARD ARTHUR KELLY $29,378.35
5100930542 A1 THERESA HARWARD $27,565.79
5100932005 A1 WALLACE BROWNLEE $40,822.52
5100932710 A1 FRENCH KEN MIXON $39,826.20
5100932996 A1 CAROLYN E CHAVIS $25,688.54
5100934618 A1 RONALD RASNAKE $6,804.92
5100934731 A1 LINDA H LANG $39,586.04
5100935460 A1 FREDDY L CAPE $36,173.74
5100935542 A1 RANDY PRIDEMORE $23,712.48
5100935544 A1 TOMMY W HOLDER $21,053.01
5100935647 A1 JOYCE ELDER $19,509.12
5100936594 A1 LENORA GILYARD $40,667.60
5100937777 A1 JOSEPH E WILLIAMS $13,771.12
5100938803 A1 JAMES E TRENT SR $19,053.44
5100939615 A1 DONALD R WINSTON $18,370.52
5100939649 A1 HIRAM BERNARD $15,808.27
5100939811 A1 ALLEN JENNINGS JR $40,678.20
5100940068 A1 DAVID ROBINSON JR $18,558.57
5100940183 A1 THOMAS G HEATH $26,682.83
5100941281 A1 SCOTT SOX $17,847.74
5100941392 A1 CLIFFORD T CORLEY $36,700.85
5100942746 A1 SILAS B DODSON $43,103.42
5100943362 A1 WILLIE JAMES JONES $41,268.17
5100943470 A1 WILLIE JAMES JONES $10,293.79
5100943878 A1 GUS E KALMAR $14,718.13
5100946532 A1 JACKIE E BROOME $18,011.64
5100947384 A1 RICHARD FOWLER $35,888.73
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<PAGE>
<TABLE>
<S> <C> <C> <C>
5100948307 A1 PATRICIA DURHAM $18,810.60
5100952581 A1 DOROTHY B BECKER $15,702.79
5100953048 A1 RABRON L WIGGINS JR $10,940.69
5100954427 A1 STACY S COX $8,793.28
5100957282 A1 WILLIE MOBLEY $18,193.98
5100958305 A1 SHERYL J MORTON $25,529.40
5100958654 A1 CHRISTOPHER J CORREIA $10,909.62
5100958739 A1 MICHAEL J O'LEARY $22,766.93
5100960051 A1 RODGER LEE $43,964.02
5100960368 A1 CYNTHIA E WAGONER $18,872.18
5100960583 A1 MARCUS T ROBINSON $22,899.92
5100960677 A1 CYNTHIA LYNN ROGERS $20,673.03
5100962919 A1 LOUISE WRIGHT OLIVER $8,942.31
5100965234 A1 WILLIE R BAILEY $30,342.11
5100966181 A1 MICHAEL M MATTHEWS $27,919.68
5100967373 A1 RYAN D MONTI $18,945.51
5100967678 A1 HAROLD ANDERSON $37,482.09
5100967908 A1 RALPH J EFIRD JR $35,859.61
5100968585 A1 MELVIN WARREN $43,975.46
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5100972752 A1 WILLIAM E FLOYD $39,956.03
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5100976385 A1 FRANK M DEMICK $377,204.35
5100976777 A1 WILLIAM R CURETON $26,954.28
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5190001621 A1 TIMOTHY W BAILEY $274,201.38
5190001760 A1 ROSLYN G BELLAMY $38,822.12
5190002243 A1 MARY E LEE FLOWERS $36,908.19
5190002583 A1 LUCINDA HOWELL $36,918.87
5190002593 A1 MARY LOU HANNA $37,634.12
5190003274 A1 BEVERLY A JOHNSON $35,990.76
5190003849 A1 HORACE KENNEDY $30,521.73
5190004232 A1 CHARLES S ELLIS $35,781.09
5190004586 A1 JENNIFER A BLACK $43,888.70
5190005531 A1 YVONNE K MOORE $20,461.85
5190005560 A1 EDGAR N FOSTER SR $30,931.14
5190006906 A1 SHIRLEY A ROBINSON $33,806.09
5190007238 A1 ANDREW DORCH $19,159.14
5190008811 A1 BRENDA SANDERS $38,301.90
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5190017426 A1 BARBARA H LEGG $34,861.11
5190017501 A1 ENOCH C PARTON $42,678.10
5190017741 A1 PATRICIA ANN ANDERSON $37,703.92
5190019270 A1 SANDY MYERS $43,876.16
5190020145 A1 ETHEL SMALL $35,211.22
5190020654 A1 ELVEE MOORE $10,630.74
5190023198 A1 SUSAN L BELL $43,954.70
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<PAGE>
<TABLE>
<S> <C> <C> <C>
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5190029684 A1 BRENDA D CARSON $32,861.58
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5200922184 A1 ELIZABETH B CUNNINGHAM $20,623.87
5200922496 A1 JANIE T BYERS $16,787.18
5200925391 A1 BRENDA WHALEY $13,017.98
5200928510 A1 JOHN CLAYTON KENNEDY $10,769.09
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5200946904 A1 PATRICIA D LEWIS $22,649.64
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5200948078 A1 JAMES W BOND $18,852.67
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5200954648 A1 ANNA BELL $33,553.88
5200955571 A1 STACY O COOK $11,501.88
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5200969318 A1 CHERYLE D HARRISON $18,355.25
5200972835 A1 BIRDIA BAKER $32,779.60
5200973363 A1 ELIZABETH KNIGHT $43,156.12
5200974624 A1 LARRY LOWE $23,152.17
5200976729 A1 WAYNE J MCCANTS $199,670.61
5200978192 A1 WAYNE J MCCANTS $35,188.84
5290008144 A1 MARK POOLE $10,459.68
5300914426 A1 EDNA PEARL HAYES $8,876.04
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5300955930 A1 CHRIS WHITSON $15,153.44
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5490005144 A1 BRYAN K WOODRING $25,415.81
5500926945 A1 RUSSELL A INMAN $33,461.34
5500933564 A1 JEFFREY COLE $14,410.82
5500972300 A1 THOMAS E BOOKHOUT $22,443.13
5500973286 A1 JAMES M RANSOM $18,645.61
5500979202 A1 JOSEPH G SUTULOVICH JR $20,994.30
5600929535 A1 BRENDA DENISE JONES $8,481.51
5600945382 A1 NAOMI HUDLEY $14,830.14
5600945520 A1 LISA M HILL $20,486.72
5600950034 A1 EVANGELINE LINDBERG $14,863.68
5600953300 A1 JAMES MOSBY JR $219,551.77
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<PAGE>
<TABLE>
<S> <C> <C> <C>
5700910530 A1 EDWARD MINTER $19,381.37
5700923481 A1 MICHAEL GALLIGAN $27,784.97
5700936586 A1 KEVIN AGUILAR $23,755.00
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$20,351,882.24
2258 A2 ULYSSES DUCKETT $94,224.25
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60770 A2 BERNHARD H SCHNEIDER $103,143.85
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60884 A2 JAMES L DAWKINS $138,229.13
61184 A2 ARMOND A TURNER $88,885.63
61201 A2 CALVIN JOHNSON JR $51,402.04
61373 A2 MARK BROWN $51,859.07
61456 A2 JOYCE BURNS $46,863.28
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61821 A2 WILLIAM RICHARD HORNE $59,440.64
61991 A2 ROGER L PHILLIPS $186,911.38
62159 A2 JANET C GIBSON $75,304.49
62251 A2 CHARLES H WILLIAMS $58,751.08
62287 A2 JAMES L BROWN SR(ESTOF) $42,959.78
62360 A2 JAMES A KELLETT $99,474.04
62382 A2 DANIEL W COOKE $50,710.68
62391 A2 SCHKHANN MITCHELL $54,344.20
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62444 A2 RONALD P HERRING $94,618.06
62551 A2 LEVIE MORANT(EST OF) $52,562.89
62563 A2 JOHN E BLANCHARD $43,868.38
62572 A2 JAMES MORTON $66,418.77
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62645 A2 CYNTHIA B HODGE $93,989.83
62660 A2 ROOSEVELT R RICE $62,892.01
62750 A2 RENEE H TINSLEY $75,471.06
62843 A2 JAMES F STREETMAN $41,654.55
62971 A2 LAWTON P ROGERS $48,664.88
62973 A2 JAMES F ANDERSON $147,040.91
63000 A2 ELSIE S JONES $86,611.60
63086 A2 SYLVESTER WEST $84,517.21
63089 A2 JEFF HENRY JR $88,613.28
63100 A2 JOHN B WANNAMAKER $60,785.42
63172 A2 SAMARA M SCOTT $51,075.26
63175 A2 THOMAS COLEMAN $92,665.06
63177 A2 JAMES CLARK $57,008.54
63249 A2 LEO SMITH JR $64,069.25
63267 A2 GARY W OWENS $65,700.16
63384 A2 LIONEL M THOMAS $47,020.00
63401 A2 RAYMOND R DOWNING $56,393.50
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<PAGE>
<TABLE>
<S> <C> <C> <C>
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63600 A2 STEVEN R KLEIN $123,042.32
63605 A2 CLIFTON M OUZTS $53,129.85
63629 A2 TED WILLIAMS $43,455.89
63641 A2 STEVEN R KLEIN $53,056.15
63667 A2 KENNY BLAKENEY $70,948.37
63716 A2 ROOSEVELT DOWNS $71,317.32
63720 A2 DOROTHY LUCILLE KING $53,528.51
63723 A2 MARION DRUMMOND $139,106.41
63754 A2 JOSEPH RICHARDSON $34,021.66
63759 A2 MARTHA ANN GRANT $56,292.30
63775 A2 EARNESTINE ROSS $42,427.31
63826 A2 THOMAS D BROADWATER $106,604.06
63833 A2 RANDALL J HARRIS $42,868.55
63857 A2 DEBRA M MICKENS $63,422.79
63866 A2 GEORGE H JONES JR $54,322.80
63908 A2 JODY F COX $57,911.41
63946 A2 JEFFREY CURENTON $66,974.67
64014 A2 JAMES HOOD JR $49,439.81
64040 A2 CARL GEORGE SMITH JR $44,143.78
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64089 A2 KEELA C JAMISON $51,543.64
64131 A2 W J WATFORD $57,155.04
64208 A2 JUSTIN W THARP $78,712.10
64209 A2 RAYNETTA B CHAVIS $46,153.50
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64257 A2 ELIJAH HANNIBAL $43,480.34
64275 A2 LARRY M GILREATH $49,581.23
64349 A2 WALLACE BERRY $43,478.81
64354 A2 DOROTHY LOUISE SCOTT $60,482.72
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64389 A2 REGINALD BROWN $55,744.09
64399 A2 LESTER FLOWERS $51,577.89
64417 A2 LEO S GALLANT $65,026.81
64421 A2 JAMES M MORRIS $51,113.14
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64438 A2 ALBERT JACKSON $59,969.97
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64546 A2 ROBERT E HEMINGWAY $54,576.86
64646 A2 JEFFERSON T ISAAC $47,720.81
64683 A2 ZEB B STARNES JR $46,819.82
64699 A2 ETHEL RICH BURNS $49,412.19
64799 A2 CURTIS SIDNEY SMITH JR $52,026.17
64811 A2 FRED C ROLLER IV $92,257.17
64942 A2 HANNA SNOW $51,119.31
64960 A2 ESSIE MAE KINSLER $52,168.27
65005 A2 EDWARD D BULLARD $135,875.77
65011 A2 MILDRED A MONROE $47,913.27
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<PAGE>
<TABLE>
<S> <C> <C> <C>
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65183 A2 MARY LEVINE $53,273.30
65248 A2 CLYDE WILLIAM JENNINGS $83,685.64
65353 A2 MICHAEL BLACKWELL $80,666.79
65395 A2 BARRY N SCOTT $65,741.00
65560 A2 LARRY P REID $51,371.14
65589 A2 GREGORY WILSON SR $108,375.44
65592 A2 GERALD GREEN $206,250.00
65607 A2 ERNEST R WASHINGTON $93,125.42
65712 A2 LOUIS SCOTT UTTER $59,499.31
65737 A2 EDWIN L GARDNER JR $108,722.16
65767 A2 LEROY F STEWART $70,230.07
65937 A2 ELLA MAE GILLIAN $56,867.37
65939 A2 BARBARA AMAKER $53,817.50
65947 A2 BILLY R COLLINS $57,707.26
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65954 A2 RUDOLPH F MARSHALL $55,205.11
65972 A2 BELISTA DIXON $51,274.78
65977 A2 EDWARD W BAGWELL $49,541.89
65980 A2 GYPSIE L MURDAUGH $61,623.44
65989 A2 CARL BARNES $50,994.23
65991 A2 SAMUEL L SCOTT $57,199.94
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66001 A2 TERRY G CHESTER $55,121.55
66007 A2 IVAN J HALL $64,700.35
66027 A2 SANDRA L ERICKSON $56,139.60
66038 A2 MELANIE O ATKINS $55,297.22
66050 A2 WILLIAM C SELF SR $46,363.34
66055 A2 BOBBY A CENTER $61,002.46
66057 A2 MICHAEL SHANE REINHARDT $61,404.27
66059 A2 RODNEY DAVIS $50,336.14
66061 A2 CHARLES E ROOF JR $99,902.85
66076 A2 TIMOTHY NIXON $45,624.41
66078 A2 ROBERT D HERRING $67,631.20
66082 A2 GERALDINE T ALLEN $47,964.90
66086 A2 BRYAN K BEELER $136,683.01
66092 A2 JAMES TODD $55,772.87
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66181 A2 DARREN J PRIDGEN $50,845.50
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66204 A2 GEORGE MILLER $46,148.89
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<PAGE>
<TABLE>
<S> <C> <C> <C>
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66297 A2 JOEL M BRUCE $50,782.37
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66308 A2 SHIRLEY S YOUNG $51,435.99
66329 A2 HALLIEQUE BRADFORD $46,793.93
66330 A2 GREGORY BELLAMY $59,047.69
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1002436 A2 PETER MINKS $99,060.37
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1003751 A2 TERRY M WRIGHT $44,390.60
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5007676 A2 JAMES E GORDON JR $63,463.55
5007708 A2 RODRIC J MYERS $50,212.85
5007991 A2 TIMOTHY J HENNING $64,709.65
5008113 A2 SOLOMON OLIVER CROMWELL $79,873.65
5008348 A2 SHARON S BUTLER $67,636.49
5008475 A2 REVA G THOMPSON $54,402.68
5008722 A2 DANIEL G JIMENEZ $48,342.44
5008766 A2 MICHAEL G EMBREY $48,048.63
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5008832 A2 SHERRY L STOUT $48,959.94
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5008846 A2 ROBERT W CURTISS $52,333.38
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<TABLE>
<S> <C> <C> <C>
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7001868 A2 STONEY GREG MULLINS $69,738.59
7001871 A2 GASPAR J RIVERA $55,931.98
7001881 A2 JOHN STEWART $57,316.20
7001893 A2 VICTOR H WILLIAMSON $100,295.87
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7002000 A2 EDWARD K TREMBLE $166,177.60
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7002054 A2 GLORIA T HESTER JOHNSON $54,741.61
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7002112 A2 LAMONT D GODFREY JR $49,183.48
7002113 A2 JONNETTA C BENEDICT $52,968.87
7002148 A2 TERRY BRUCE WILBER $54,687.23
7002159 A2 PAUL J GRAYSON $54,819.68
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9001292 A2 ALAN W GIBLER $107,586.09
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15000565 A2 JIMMY M SHAW $54,179.43
15000663 A2 JAMES R KIRVEN $52,913.46
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15000695 A2 CHARLES W HINSON $68,275.87
15000697 A2 JAMES G PEARSON $161,703.21
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15000718 A2 ROSE M DAVIS $56,586.83
15000732 A2 ALTON GEDDINGS $50,757.21
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21000369 A2 ARTHUR S GREENE JR $49,936.13
21001756 A2 TIMOTHY A HAYEN $56,052.49
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21002236 A2 DANNY RAY BOYETTE $55,266.34
21002499 A2 EMORY D NEAL $52,951.23
21002673 A2 KEVIN G EDWARDS $46,048.86
21002901 A2 WAYNE G KAROL $48,563.21
21003194 A2 CHRISTOPHER TAYLOR REED $43,447.71
21003305 A2 LARRY L GOODALL $41,444.66
21003316 A2 SHARON M GRAY $50,271.78
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<S> <C> <C> <C>
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22003287 A2 TREVOR LEE BENOIT $48,610.97
22003500 A2 JAY R GERBER $60,686.67
22003711 A2 DAVID PENHOLLOW SR $63,666.12
22003772 A2 MICHAEL V MICHALAK $62,508.46
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22004072 A2 BYRON G WOLFE JR $74,260.65
22004103 A2 CAROLYN L KNICELY $47,820.08
22004209 A2 ROBERT G DONALD $44,383.18
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23000142 A2 JAMES R DANIELL JR $50,989.54
23000212 A2 EDWARD B WALTMAN $45,656.27
70014611 A2 RICHARD DAVID CHANCE $113,016.56
95000125 A2 TONY M ROBINSON $50,221.17
95000145 A2 LEROY CRUEL $61,406.78
95000150 A2 MARY ANN RANCE $93,365.39
95003011 A2 FRANCENIA T ELLIS $62,101.05
95003377 A2 BERNARD L FOOTMAN $58,290.43
95003394 A2 WALLACE L SMITH $50,136.79
95003404 A2 G WALTER WHITLOCK $47,416.34
95003413 A2 JOHN E BROWN $70,665.70
95003427 A2 STEVE J PILGRIM $44,674.74
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95003473 A2 RANDALL W LEOPARD $58,339.46
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1190009118 A2 JAMES L NASH $115,362.85
1190009144 A2 DANNY E MOORE $155,229.02
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2000931895 A2 DEBORAH W SINGLETON $128,884.65
2000950681 A2 VICTOR C LOMBARDO $73,855.99
2000954896 A2 PAULA K VAWTER $76,983.33
2090024811 A2 ANGELA CARTER $51,118.27
2100903738 A2 CATHERINE H VINCENT $87,027.99
2100905239 A2 NORMAN J JACKSON $59,003.27
2100910491 A2 ELMER L NEAL SR $49,162.65
2100912127 A2 JOSEPH ALBERT PYPE $47,319.14
2100920880 A2 JACK F SYKES $49,896.36
2100944662 A2 GEORGE E MOFFITT $47,062.85
2100946161 A2 ELOISA MOLINA DODGE $68,338.78
2100947032 A2 KENNETH LEROY MOORE $74,204.21
2100947048 A2 BRADY C WILLIAMS $75,461.42
2100947165 A2 ALICE R BOWERS $51,174.37
2100965988 A2 SCOTT R ANDERSEN $72,210.68
2190020853 A2 LEE D POST $59,625.68
2190020862 A2 RONALD J DUNCAN $53,876.78
2190022887 A2 BETTY KELLY $44,370.74
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<PAGE>
<TABLE>
<S> <C> <C> <C>
2190023129 A2 BARRY DON SHAW $55,080.73
2190025934 A2 RONALD EVAN BRANUM $63,389.89
2190026459 A2 CLARA R LONGORIA $56,793.25
2190027967 A2 MURRAY ARCHIE $50,736.59
2190030556 A2 RICARDO S RIVERA $42,048.58
2190034329 A2 DAVID H GUYTON $94,754.03
2190039387 A2 NEIL KENT CAREW $62,305.77
2200902431 A2 CAROL MODER $50,518.28
2200903367 A2 JOSEPH E GRANGER $129,275.25
2200905996 A2 PATRICK E POWELL $73,424.59
2200910081 A2 DAVID AVILA $52,681.30
2200910267 A2 FREDERICK L SAMUEL $69,415.08
2200912836 A2 EDWINA W VINCENT $47,128.16
2200915999 A2 ROBERT L WAGNER $64,058.89
2200917116 A2 LOTTIE M GUITARD $70,435.86
2200917158 A2 JOHN R NORDIN $49,044.97
2200919419 A2 TAMMY D EVERGETIS $104,241.73
2200922713 A2 PATSY FERNANDEZ $69,518.99
2200924919 A2 ROBERT STOKES $93,367.99
2200927810 A2 VIVIAN SILVERS $54,222.80
2200943607 A2 A BILLIE DOBBS $106,869.50
2200944422 A2 EVELYN M JEFFERSON $87,560.73
2200946319 A2 DAVID BOOTH $51,441.15
2200946446 A2 RONNIE WITHERSPOON $44,964.94
2200946688 A2 DONNA M CONYERS $62,000.06
2200947743 A2 MARY C BRUCE $62,248.05
2200948562 A2 DAVID LUNA $52,144.05
2200948645 A2 ROGER B BAYNE $63,224.80
2200956621 A2 JOHN BEERY $44,727.05
2200958079 A2 LONNIE MICHAEL HARRELL $119,513.18
2200958426 A2 JOHN D ROBERTS $50,303.12
2200958582 A2 FREDERIC ROBERT KINARD $91,476.21
2200962079 A2 PATRICIA W PARDOE $54,303.34
2200963943 A2 BENJAMIN F GARLAND $131,055.83
2200965878 A2 MARK D LYNCH $91,529.85
2200966913 A2 DOUGLAS R BORTON $48,863.02
2200967727 A2 PAUL R LANE $69,420.31
2200967935 A2 KATHY WARE $50,884.88
2200968091 A2 LARRY T TANNER $47,872.87
2200968309 A2 JAMES W BALES III $65,338.30
2200968628 A2 WILLIAM D FIDDLER $50,832.87
2200968687 A2 THOMAS MICHAEL HOLT $71,792.21
2200968905 A2 ROD SMITH $46,683.85
2200969182 A2 PATRICIA J DAVIS $48,874.88
2200969783 A2 DONA S SMITH $61,121.98
2200970566 A2 BRIAN FERRARO $87,887.82
2200970799 A2 LISA PATTERSON $47,762.04
2200971480 A2 JAMES CONANT $44,836.84
2200971714 A2 REBECCA ANN GOULD $62,380.05
2200972643 A2 BILLY RAY CRAIN $62,957.17
2200972758 A2 JOHN G ELLIOTT $74,859.90
2200973043 A2 MARY E OWENS $58,967.70
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
2200973808 A2 BILLY N MITCHELL $54,372.01
2200974166 A2 KEITH MICHAEL PINEL $64,750.52
2200974631 A2 MARY A BISHOP $45,025.57
2200974692 A2 RICHARD C WILLIAMS $79,843.63
2200974875 A2 JAMES R ADKINS $47,936.70
2200974898 A2 JOE THOMAS MOORE $78,066.49
2200975314 A2 BART W BROADWELL $89,555.33
2200975348 A2 EDITH PEARL EVANS $78,270.01
2200975712 A2 PAUL TOMLINSON $65,434.17
2200976074 A2 GARLAND R STANLEY $69,200.00
2200976350 A2 KEM R FOWLER $47,145.39
2200976659 A2 MARSHA F CHARBONEAU $111,852.31
2200976813 A2 MATTHEW BUTLER $58,627.58
2200976830 A2 ROBERT LEE EDWARDS $46,290.59
2200976974 A2 ELAINE A MARESCA $94,499.38
2200977040 A2 SANDRA M JONES $73,851.87
2200977679 A2 KENNETH R BAILEY $55,918.78
2200977701 A2 KEITH A BECKMAN $84,800.00
2200978068 A2 MARK A EVANS $77,993.63
2200979682 A2 CLIFFORD SWITZER $119,850.00
2200980130 A2 LARRY WILLIAMS $45,496.38
2200980407 A2 SCOTT A BONNETTE $71,023.14
2200981916 A2 DALE L COOK $70,160.67
2290018641 A2 ANN H SIMMONS $56,601.28
2290019940 A2 SHARON R BURK $75,663.12
2290026119 A2 J JASON THOMAS $43,378.47
2290030062 A2 IDOLUIS E CASARES $43,219.98
2290030125 A2 JOHN MARNEY WALLER JR $59,367.67
2290032860 A2 CYNTHIA D KNIGHT $60,712.23
2290033657 A2 PERNICE O SMITH $43,205.02
2290036955 A2 COLLIN W COFFEY $59,806.12
2290037776 A2 JORGE ARTURO SALINAS $65,575.25
2300931216 A2 FRANK GALICIA $57,873.33
5100902192 A2 MICHAEL S WALKER $190,500.00
5100905617 A2 THOMAS E ALEXANDER $78,401.13
5100905924 A2 RAYMOND C QUEEN $71,138.96
5100907974 A2 EVERETT HAWKINS $58,250.90
5100911528 A2 ROBERT L MCLEAN $70,945.34
5100912902 A2 GEROME R MCLEOD $45,764.51
5100913276 A2 WILLIE J WHITE $63,684.94
5100914459 A2 BAKITA S ACEVEDO $47,022.06
5100914486 A2 DAVID E BURNETTE $94,347.59
5100914848 A2 B F ALLISON $46,934.24
5100915468 A2 DONNA K CATHEY $73,279.13
5100915872 A2 WILLIAM J WALKER $99,944.99
5100916405 A2 RAYMOND C GILPIN $54,132.18
5100916423 A2 VICKI WATFORD $75,617.54
5100917511 A2 JAMES L ROYSTER $190,966.87
5100917746 A2 CHRIS E CATER $62,956.72
5100918293 A2 JEFFREY BAUGUS $48,970.05
5100919086 A2 JAMES COPELAND III $55,755.83
5100920340 A2 BARBARA L ADAMS $59,759.23
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
5100921098 A2 JUDY BROWN $65,274.50
5100921634 A2 ROY DALE BAKER $50,925.73
5100922982 A2 JOHN A COLE $123,666.02
5100923108 A2 WILLIAM D YOUNG $73,319.64
5100923418 A2 KEITH TESNAR $49,731.48
5100923652 A2 JAMES W PAUL $61,352.81
5100923826 A2 JASON BYRD $60,170.51
5100924214 A2 GEORGE C RIDDICK JR $73,336.77
5100924384 A2 STEPHAN M CURRY $69,311.59
5100925400 A2 CLIFTON FREEMAN $60,487.99
5100925463 A2 RONALD HOOVER $111,049.34
5100925739 A2 RENE BOUKNIGHT $48,550.29
5100925802 A2 DONALD W SEAY $52,956.16
5100925860 A2 CHARLES J LIVINGSTON $64,159.05
5100926417 A2 ALBERT BRISBONE $55,277.27
5100926752 A2 MICHAEL R AYERS $71,659.26
5100926761 A2 FRANCIS X GILL $47,778.23
5100928117 A2 TERESA P MONDS $55,301.21
5100928403 A2 ALLYSON PUTMAN $47,034.33
5100928640 A2 RICHARD J PEARCE $49,404.55
5100928842 A2 DARYL E PAINTER $62,761.23
5100928854 A2 MARK T VANGORDER $60,159.53
5100929293 A2 CINDY L HARVEY $62,410.74
5100929324 A2 MARSHA RUTHERFORD $93,116.80
5100930743 A2 HERBERT HICKS $63,749.17
5100930899 A2 TAMMY K CLARK $49,192.08
5100931625 A2 JOSEPH CASTRONOVO $60,136.72
5100931830 A2 WILLIAM O FRAZIER SR $53,764.60
5100932356 A2 WILLIE J DAVIS $51,818.13
5100933170 A2 GAIL PICKETT $44,784.44
5100933903 A2 AQUILLA LEWIS $95,681.41
5100934244 A2 EDWARD SCARFO $53,425.79
5100935747 A2 REGGIE MACK $68,576.39
5100937100 A2 RICHARD W DIVENS $49,774.85
5100937273 A2 ANNIE PATTERSON $65,669.45
5100937928 A2 CHRIS A SMITH $71,766.39
5100938902 A2 GRANT E GEHLBACH $111,537.96
5100938970 A2 JAMES BETHEA $60,982.59
5100939929 A2 ROXICE SULLIVAN $95,950.81
5100940022 A2 DAVID ROBINSON JR $55,718.13
5100941146 A2 ANTHONY COLEY $63,772.47
5100941185 A2 SCOTT SOX $71,789.36
5100941445 A2 EDMUND HOFFMAN III $45,440.99
5100942274 A2 DEWARD NORRIS LUNSFORD $94,778.95
5100942366 A2 PATRICIA CHAMBERS $55,036.46
5100942700 A2 DEBORAH L WHITSON $57,646.48
5100943385 A2 ADAM R DROBNIS $140,644.60
5100943404 A2 ASHLEY POLLARD $87,723.16
5100943834 A2 DAVID MORIARTY $78,242.26
5100943867 A2 GUS E KALMER $59,503.77
5100943872 A2 DALLAS BLEDSOE $74,580.65
5100944261 A2 MARION D COLEMAN $72,824.68
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
5100945495 A2 HAROLD T BOATWRIGHT JR $82,210.27
5100946256 A2 JACKIE E BROOME $54,283.38
5100947036 A2 DAVID BLACKSTONE $64,276.51
5100947354 A2 DANIEL WAYNE LEDFORD $76,371.10
5100947481 A2 MICHAEL L CUDD $55,842.65
5100949168 A2 PAUL REEVES $54,052.59
5100950124 A2 WILBUR L MILFORD $49,513.72
5100950634 A2 EDWARD THOMPSON $89,155.50
5100951078 A2 SAMUEL H JOHNSON $56,857.24
5100953344 A2 CHRISTOPHER E WILLIAMS $52,388.95
5100953946 A2 TRAVIS M SCOTT $47,023.97
5100954470 A2 DENISE SAPOUGH $66,247.14
5100954963 A2 EILENE M KENDALL $70,967.38
5100955358 A2 CRAIG E ALIBOZEK $57,878.74
5100957111 A2 HOWARD L MAJETTE $63,512.85
5100957153 A2 WILLIE MOBLEY $73,088.56
5100957160 A2 NORWOOD A WILLIAMS $74,495.17
5100957778 A2 GLORIA JEAN GOODMAN $58,388.67
5100958048 A2 KELLY THORNHILL $68,267.74
5100958873 A2 KELLY H WILLIAMS $52,435.34
5100959959 A2 DANIEL M HOLCOMBE $63,872.30
5100959973 A2 JERRY DUDLEY $80,765.04
5100960032 A2 CYNTHIA E WAGONER $75,848.35
5100961181 A2 WANDA BEARDSLEY $83,482.75
5100962993 A2 JERRY LOSAW $62,511.45
5100963754 A2 JOHNNY GOODE $68,522.02
5100964922 A2 MELVIN BRADLEY BURDETTE $56,602.95
5100965498 A2 RENEE C HOLLOWAY SINGLETON $74,052.62
5100966211 A2 JOHN R GARRETT $57,604.01
5100966856 A2 DORIS R GEROW $57,452.75
5100967056 A2 MAURICE E DILLARD $46,459.26
5100968878 A2 TERRI CALLAHAN ALLEN $46,973.78
5100968975 A2 SCOTT B NORGAN $62,486.15
5100969133 A2 CARLOS A THOMPSON $66,459.48
5100969147 A2 FREDDY W HOYLE $92,030.90
5100969208 A2 DENNIS B COX JR $45,507.26
5100969679 A2 WAYNE WILKERSON $58,346.87
5100969904 A2 BRENDA S PHILLIPS $60,744.70
5100970534 A2 TONY ARNOLD OVERCASH $75,962.53
5100970992 A2 JUANETTA FRAZIER $57,137.13
5100971510 A2 JANIE ROBINSON $63,968.13
5100971994 A2 KENNETH LEARY $70,506.67
5100974605 A2 ROBERT TEDDER $44,979.01
5100975056 A2 NOAH J HEWITT $59,973.45
5100975329 A2 RAY J WINBURN $46,380.12
5100975482 A2 CAROLYN W HOWELL $47,977.12
5100975513 A2 RODNEY G CLAY $60,772.46
5100975795 A2 JOHN A MCKIVER SR $61,108.25
5100976099 A2 EDWARD B BERGAMINI $120,150.00
5100976241 A2 JEFFREY JENKINS $143,921.17
5100976423 A2 HERTFORD MOORE JR $68,768.84
5100976553 A2 WILLIAM R CURETON $107,943.89
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
5100976627 A2 JANET BATKER $107,860.92
5100977061 A2 DEBORAH A NICHOLS $63,971.01
5100977201 A2 LUIS J CAMPOS $68,598.13
5100977405 A2 JAMES P WOOTEN $53,573.58
5100977414 A2 THOMAS H RILEY $75,027.42
5100978106 A2 LILLIE B DAVIS $59,080.85
5100978535 A2 YVONNE P MABRY $57,968.25
5100979657 A2 VALERIE SUTTON $47,679.02
5190001294 A2 EVANS LOCKLEAR $57,406.36
5190001651 A2 MARK A COSTNER $58,267.63
5190001983 A2 RICKEY WHITE $45,423.90
5190002062 A2 ROBERT L SAMPLES $50,019.22
5190002354 A2 VICKI BANKS $50,322.06
5190002752 A2 ALICE L KOON $51,197.41
5190003234 A2 MAMIE LEE JACOBS $57,941.61
5190003488 A2 DEBORAH PAINTER $71,506.77
5190003768 A2 JAMES MOORE $117,787.84
5190003992 A2 WILLIAM A BUDDIN $59,294.92
5190004546 A2 FREDERICK STROUD $102,976.55
5190004816 A2 WILLIE BRIGGS $62,398.84
5190005314 A2 WILLIAM LEE CRAWFORD $54,941.89
5190005948 A2 DORIS M MCPHERSON $48,391.06
5190006103 A2 DOUGLAS A HADDOCK $59,859.86
5190006349 A2 RANDY L CROUCH $132,518.82
5190007615 A2 DORIS L REESE $54,399.94
5190009849 A2 NICHOLAS SCOTT SAITZ $113,850.85
5190011763 A2 ANNIE MABBINS BENJAMIN $46,643.81
5190012334 A2 KAY E MADISON $54,092.12
5190012367 A2 MICHAEL TOLBERT $55,999.60
5190013376 A2 ROSS BRICE $56,396.21
5190014538 A2 NELSON SCOTT BISHOP $44,976.07
5190014728 A2 MARY ANN BLAKELY $62,886.58
5190015281 A2 DENNIS BRYAN PITTMAN $56,105.86
5190016799 A2 HASAN ABU-EIDEH $47,637.75
5190017391 A2 DEBRA A PENDLETON $52,313.78
5190019078 A2 JULIUS BROWN JR $66,000.00
5190019106 A2 MARTY LOCKLEAR $62,928.43
5190021226 A2 DAWN ANN DODD $44,608.09
5190022910 A2 VERNON L LAWTON JR $51,874.61
5190023044 A2 JOHN TONEY $85,734.85
5190024378 A2 RICKY DALE CRAINE SR $47,786.27
5190025057 A2 DONALD R HARRIS $51,179.84
5190025149 A2 TIMOTHY W TAYLOR $57,877.19
5190028359 A2 TOY W SKIPPER $50,901.80
5190031937 A2 GAIL ENWRIGHT $84,372.86
5190032993 A2 HOMER C ABERNATHY $96,779.66
5190033145 A2 DIANNA ALLEN $59,348.99
5190033682 A2 LISA A ASKEW $52,456.10
5190034608 A2 FLORIE YOUNG $44,565.03
5190034719 A2 MERRY ANN KISH $55,622.73
5190035257 A2 MILLIE G MARTIN $49,124.38
5190035692 A2 JOSEPH R HUTCHINSON $69,822.98
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
5190036607 A2 JEFFREY A BLUE $93,564.02
5190037122 A2 MARY E BIVENS $76,343.26
5190037759 A2 EDNA R KENNEDY $67,638.02
5190038860 A2 SHELDY B AYE $59,960.19
5190039837 A2 KEVIN W BLANCHARD $136,302.15
5200910406 A2 THEODORE CHRISS $122,523.47
5200938751 A2 JAMES T HOLT $65,556.53
5200938807 A2 PAULETTE RODGERS ASHLEY $48,644.01
5200951583 A2 DALE D DEMONT $89,749.93
5200964367 A2 TODD ABBEY $62,338.24
5200965991 A2 TAMMYLYNNKUHN ROGERS SANDERSON $65,777.83
5200967644 A2 MICHAEL W RUTH $133,094.58
5200970502 A2 NANCY P TUCKER $51,059.96
5200971420 A2 EDELTRAUT HERNINA EDWARDS $155,054.59
5200973027 A2 MICHAEL PRESLEY $59,970.42
5200974173 A2 STACEY FOXX $123,863.75
5200976428 A2 NIEL SORENSEN $67,163.21
5200979413 A2 LEONEL G PEREZ $67,260.27
5300967114 A2 RICHARD DURIN CATALINE $65,566.97
5500961166 A2 STACEY L MOLENCUPP $59,146.16
5500972927 A2 JAMES M RANSOM $99,564.48
5500973872 A2 PATRICK ROGERS $62,365.84
5500978266 A2 DANNY OWEN $58,500.00
5590025258 A2 JAMES A MILLS $58,822.26
5600921281 A2 SUSAN B KESSLER $108,729.93
5600979853 A2 ALBERT J MARSHALL $75,164.91
5700969838 A2 ROBERT C CONGER $45,000.00
$39,277,999.04
</TABLE>
<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 related Cut-off Date;
2. All of the original or certified documentation required to be
delivered to the Indenture Trustee, pursuant to the Sale and Servicing Agreement
(including all material documents related thereto) with respect to each Mortgage
Loan has been or will be delivered to the Indenture Trustee, in accordance with
the terms of such Sale and Servicing Agreement. Each of the documents and
instruments specified to be included therein has been duly executed and in due
and proper form, and each such document or instrument is in a form generally
acceptable to prudent mortgage lenders that regularly originate or purchase
mortgage loans comparable to the Mortgage Loans for sale to prudent investors in
the secondary market that invest in mortgage loans such as the Mortgage Loans;
3. Except as is otherwise disclosed on the Mortgage Loan Schedule, 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 an original Loan-to-Value Ratio in excess of
140%;
5. Each Mortgage is a valid and subsisting first or junior 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;
7. As of the related Cut-off Date, no Mortgage Loan is 30 or more days
delinquent.
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;
B-1
<PAGE>
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. Except for Mortgage Loans as to which the policies under which they
were originated no title insurance was required, 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 or
junior 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 Sale and Servicing Agreement) with a generally
acceptable carrier that provides for fire and extended coverage representing
coverage not less than the least of (A) the outstanding principal balance of the
related Mortgage Loan and (B) the minimum amount required to compensate for
damage or loss on a replacement cost basis;
14. If any Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy (which may be a blanket policy of the type
described in the Sale and Servicing Agreement) in a form meeting the
requirements of the current guidelines of the Federal Insurance Administration
is in effect with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage not less than the least of (A) the
outstanding principal balance of the related Mortgage Loan and (B) the maximum
amount of insurance that is available under the Flood Disaster Protection Act of
1973;
2
<PAGE>
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 Sale and Servicing Agreement, any necessary
notifications of insurers, assignments of policies or interests therein, and
establishments of co-insured, joint loss payee and mortgagee rights in favor of
the servicer;
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 Indenture Trustee, subject to the provisions of Section
2.03 of the Sale 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 Indenture 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. All costs, fees and expenses incurred in making or closing or
recording such Mortgage Loans have been paid;
20. Except as otherwise required by law or pursuant to the statute
under which the related Mortgage Loan was made, the related Mortgage Note is not
and has not been secured by any collateral, pledged account or other security
except the lien of the corresponding Mortgage;
21. No Mortgage Loan was originated under a buydown plan;
22. No Mortgage Loan provides for negative amortization, has a shared
appreciation feature, or other contingent interest feature;
23. Each Mortgaged Property is located in the state identified in the
Schedule of Mortgage Loans and except as is described in the Mortgage Loan
Schedule, 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;
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25. Any advances made after the date of origination of a Mortgage Loan
but prior to the Cut-off Date, have been consolidated with the outstanding
principal amount secured by the related Mortgage, and the secured principal
amount, as consolidated, bears a single interest rate and single repayment term
reflected on the Schedule of Mortgage Loans. The consolidated principal amount
does not exceed the original principal amount of the related Mortgage Loan. No
Mortgage Note permits or obligates the Seller to make future advances to the
related Mortgagor at the option of the Mortgagor;
26. There is no proceeding pending or threatened for the total or
partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring, and each Mortgaged Property is undamaged by waste, fire,
earthquake or earth movement, flood, tornado or other casualty, so as to affect
adversely the value of the Mortgaged Property as security for the Mortgage Loan
or the use for which the premises were intended;
27. All of the improvements of any Mortgaged Property lie wholly within
the boundaries and building restriction lines of such Mortgaged Property, and no
improvements on adjoining properties encroach upon such Mortgaged Property, and,
if a title insurance policy exists with respect to such Mortgaged Property, are
stated in such title insurance policy and affirmatively insured;
28. No improvement located on or being part of any Mortgaged Property
is in violation of any applicable zoning law or regulation. All inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of each Mortgaged Property and, with respect to the use and
occupancy of the same, including but not limited to certificates of occupancy
and fire underwriting certificates, have been made or obtained from the
appropriate authorities and such Mortgaged Property is lawfully occupied under
the applicable law;
29. With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Seller or the Trust 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;
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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 in
effect at the time such Mortgage Loan was originated;
34. All parties to the Mortgage Note and the Mortgage had legal
capacity to execute the Mortgage Note and the Mortgage and each Mortgage Note
and Mortgage have been duly and properly executed by such parties;
35. The Seller has no actual knowledge that there exist on any
Mortgaged Property any hazardous substances, hazardous wastes or solid wastes,
as such terms are defined in the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act of
1976, or other federal, state or local environmental legislation;
36. None of the Mortgage Loans shall be due from the United States of
America or any State or from any agency, department, subdivision or
instrumentality thereof;
37. At the Cut-off Date, no Mortgagor had been identified by the Seller
as being the subject of a current bankruptcy proceeding;
38. By the Closing Date, the Seller will have caused the portions of
the Seller's servicing records relating to the Mortgage Loans to be clearly and
unambiguously marked to show that such Mortgage Loans are part of the Trust and
are owned by the Trust in accordance with the terms of the Sale and Servicing
Agreement and have been pledged to the Indenture Trustee in accordance with the
Indenture;
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 Notes. 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, or the Trust Administrator on
behalf of the Trustee, a first or second 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
Noteholders in any Mortgage Loan or the proceeds thereof;
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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 Group I Mortgage Loans as of the Cut-off Date:
the aggregated Stated Principal Balance was $20,351,882.24; each of the Stated
Principal Balances was at least $1,281.35 but no more than $447,294.91;the
average Stated Principal Balance was $29,973.32; the Mortgage Rates were at
least 8.000% but no more than 18.428%; the weighted average Mortgage Rate was
12.005%; the original Loan-to-Value Ratios were at least 4.98% but no more than
133.61%; the weighted average original Loan-to-Value Ratio was 60.72%; the
remaining terms to stated maturity were at least 11 months but no more than 359
months; the weighted average remaining term to stated maturity was approximately
182.74 months; the original terms to stated maturity were at least 35 months but
no more than 363 months; the weighted average original term to stated maturity
was approximately 198.55 months; and no more than 2.20% of the aggregate Stated
Principal Balance of the Mortgage Loans are secured by Mortgaged Properties
located in any one postal ZIP code area;
44. With respect to the Group II Mortgage Loans as of the Cut-off Date:
the aggregated Stated Principal Balance was $39,277,999.04; each of the Stated
Principal Balances was at least $14,406.87 but no more than $206,250.00: the
average Stated Principal Balance was $66,124.58; the Mortgage Rates were at
least 6.100% but no more than 18.990%; the weighted average Mortgage Rate was
1.649%; the original Loan-to-Value Ratios were at least 11.80% but no more than
138.18%; the weighted average original Loan-to-Value Ratio was 77.38%; the
remaining terms to stated maturity were at least 33 months but no more than 359
months; the weighted average remaining term to stated maturity was approximately
222.89 months; the original terms to stated maturity were at least 60 months but
no more than 370 months; the weighted average original term to stated maturity
was approximately 237.14 months; and no more than 2.05% of the aggregate Stated
Principal Balance of the Mortgage Loans are secured by Mortgaged Properties
located in any one postal ZIP code area;
45. No selection procedures adverse to the Noteholders or to the
Certificate Insurer have been utilized in selecting such Mortgage Loan from all
other similar Mortgage Loans originated by the Seller;
46. The related Mortgaged Property has not been subject to any
foreclosure proceeding or litigation;
47. 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
48. Except for Mortgage Loans as to which the policies under which they
were originated no appraisal was required, 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
such appraisal has been performed in accordance with the requirements of FNMA or
FHLMC.
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49. None of the Mortgage Loans is a "bond for title" obligation or
loan, provided that the Seller shall have 30 days after the Closing Date to cure
any breach of this representation.
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GLOSSARY OF DEFINED TERMS
The following words and phrases, unless otherwise defined in
the Sale and Servicing Agreement, the Trust Agreement or the Indenture, shall
have the meanings specified herein. For purposes of the Indenture, references
to the term "Trust" as used in this Glossary of Defined Terms shall be deemed
to be references to the Issuer.
"Accrued Note Interest": With respect to each Payment Date
and any Class A Note, interest accrued during the related Interest Accrual
Period at the applicable Class A Note Interest Rate for such Class A Note on
the Note Principal Balance of such Class A Note immediately prior to such
Payment Date.
"Accrued Shortfall Interest Carry Forward Amount: With
respect to any Payment Date and each Class of Notes, the amount of the
Shortfall Interest Deferred Amounts for such Class unpaid from preceding
Payment Dates together with interest thereon at the related Note Interest Rate
from such preceding Payment Dates to the current Payment Date.
"Act": The meaning specified in Section 12.3(a) of the
Indenture.
"Actual Owner": The meaning assigned to such term in Section
4.05 of the Sale and Servicing Agreement.
"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.
"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.
"Authorized Newspaper": A newspaper of general circulation in
the Borough of Manhattan, The City of New York, printed in the English language
and customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
"Authorized Officer": With respect to the Trust, the
Depositor, the Unaffiliated Seller, the Back-up Servicer and the Servicer, any
officer or agent acting pursuant to a power of attorney of the Owner Trustee on
behalf of the Trust, the Depositor, the Unaffiliated Seller or the Servicer, as
applicable, who is authorized to act for the Owner Trustee, the Depositor, the
Unaffiliated Seller, the Back-up Servicer or the Servicer, as applicable, in
matters relating to the Trust, the Depositor, the Unaffiliated Seller, the
Back-up Servicer or the Servicer, as the case may be, and who is identified on
the list of Authorized Officers delivered by each of the Owner Trustee, the
Depositor, the
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Unaffiliated Seller, the Back-up Servicer and the Servicer to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter).
"Available Distribution Amount": With respect to any Payment
Date for each Class of Notes, an amount equal to the excess of (i) the sum of
(a) the aggregate of the Monthly Payments, Liquidation Proceeds, Insurance
Proceeds, Principal Prepayments and other unscheduled recoveries of principal
and interest in respect of the Mortgage Loans in the related Group 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 for the related Group and deposited in the Distribution Account for
such Payment Date pursuant to Section 3.25 of the Sale and Servicing Agreement,
(c) the aggregate of any amounts deposited in the Distribution Account
allocable to the related Group by the Servicer in respect of Prepayment
Interest Shortfalls for such Payment Date pursuant to Section 3.26 of the Sale
and Servicing Agreement, (d) the aggregate of any Monthly Advances for the
related Group made by the Servicer for such Payment Date pursuant to Section
4.03 of the Sale and Servicing Agreement, (e) the aggregate of any advances for
the related Group made by the Indenture Trustee for such Payment Date pursuant
to Section 7.02 of the Sale and Servicing Agreement, and (f) the Stated
Principal Balance of any Mortgage Loan in the related Group that was purchased
during the related Collection Period pursuant to or as contemplated by Section
2.05, or 10.01 of the Sale and Servicing Agreement and the amount of any
shortfall deposited into the Collection Account and allocable to the related
Group in connection with the substitution of a Deleted Mortgage Loan in the
related Group pursuant to Section 2.05 of the Sale and Servicing Agreement
during the related Collection Period over (ii) the sum of (a) amounts
reimbursable or payable to the Depositor, the Servicer, the Back-Up Servicer,
the Indenture Trustee, the Owner Trustee, the Unaffiliated Seller or any
Sub-Servicer pursuant to Section 3.11 or Section 3.14 of the Sale and Servicing
Agreement or otherwise payable in respect of extraordinary Trust Property
expenses, and, in each case, allocable to the related Group, (b) Stayed Funds,
allocable to the related Group, (c) amounts deposited in the Collection Account
or the Distribution Account and allocable to the related Group as the case may
be, in error, (d) amounts reimbursable to the Indenture Trustee for an advance
made pursuant to Section 7.02(b) of the Sale and Servicing Agreement which
advance the Indenture Trustee has determined to be nonrecoverable from the
Stayed Funds in respect of which it was made, (e) the Insurer Premium allocable
to the related Group payable to the Insurer pursuant to Section 8.10(b) of the
Indenture, (f) the Indenture Trustee Fee payable from the Distribution Account
pursuant to Section 6.7 of the Indenture, and allocable to the related Group
and (g) the Owner Trustee's Fee payable pursuant to Section 12.1 of the Trust
Agreement and allocable to the related Group.
"Back-up Servicing Fee": For each Payment Date, an amount
equal to one-twelfth the product of (i) the Back-up Servicing Fee Rate,
multiplied by (ii) the aggregate Stated Principal Balance of the Mortgage Loans
and any REO Properties as of the preceding Payment Date (or, in the case of the
initial Payment Date, as of the Cut-off Date).
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"Back-up Servicing Fee Rate": With respect to each Group,
0.06% per annum.
"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.
"Back-up Servicer": Fairbanks Capital Corp. and its permitted
successors and assigns.
"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.
"Base Principal Distribution Amount" for any Payment Date for
each Class of Notes will be the lesser of:
(a) the excess of the Available Distribution Amount for such
Class over the Interest Distribution Amount (other than the Shortfall Interest
Deferred Amount and the Accrued Shortfall Interest Carry Forward Amount) for
such Class on such Payment Date; and
(b) the sum of:
(i) the principal portion of all monthly
payments on the Mortgage Loans in the related Group received during the related
Collection Period;
(ii) the principal portion of all proceeds
of the repurchase of a related Mortgage Loan from the related Group (or, in the
case of a substitution, certain amounts representing a principal adjustment) as
required by the Sale and Servicing Agreement during the related Collection
Period;
(iii) the principal portion of all other
unscheduled collections, including insurance proceeds, liquidation proceeds and
all full and partial principal prepayments, received during the related
Collection Period, to the extent applied as recoveries of principal on the
Mortgage Loans in the related Group, net of any portion that represents a
recovery of principal for which a Monthly Advance was made by the Servicer and
deposits during the related Collection Period into the Distribution Account, in
each case, with respect to the related Group;
(iv) the proceeds received by the Indenture
Trustee upon the exercise by the Servicer of its option to call the related
Class of Notes (to the extent such proceeds relate to principal);
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(v) any amount that the Insurer has elected
to pay as principal (including Liquidated Loan Losses) prior to any Remaining
Overcollateralization Deficit; minus
(vi) the amount of any
Overcollateralization Reduction Amount for such Class for such Payment Date.
"Basic Documents": The Sale and Servicing Agreement, the
Indenture, the Certificate of Trust, the Trust Agreement, the Indemnification
Agreement, the Insurance Agreement, the Underwriting Agreement and the other
documents and certificates delivered in connection therewith.
"BIF": The Bank Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or if at any time after the execution of this
instrument the Bank Insurance Fund is not existing and performing duties now
assigned to it, the body performing such duties on such date.
"Book Entry Notes": A beneficial interest in the Notes,
ownership and transfers of which shall be made through book entries by the
Depository as described in Section 2.9 of the Indenture.
"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 Insurer or the Corporate Trust Office of
the Indenture Trustee is located, are authorized or obligated by law or
executive order to be closed.
"Business Trust Statute": Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Codess.3801 et seq. as the same may be amended from time
to time.
"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": The Certificate executed and delivered by the
Owner Trustee on behalf of the Trust, and authenticated by the Owner Trustee,
pursuant to the Trust Agreement.
"Certificate of Trust": The certificate of trust of the Trust
as filed by the Initial Owner Trustee under the Business Trust Statute on
behalf of the Trust pursuant to the Trust Agreement.
"Certificate Register" and "Certificate Registrar": The
register maintained and the registrar appointed pursuant to Section 4.9 of the
Trust Agreement.
"Certificateholder" or "Holder": The Person in whose name the
Certificate is registered in the Certificate Register.
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"Class": Collectively, all of the Notes bearing the same
class designation.
"Class A Note": Any of the Class A-1 Notes and Class A-2
Notes executed by the Owner Trustee on behalf of the Trust and authenticated
and delivered by the Indenture Trustee pursuant to the Indenture.
"Class A Noteholder": Any Holder of a Class A-1 or Class A-2
Note.
"Class A Note Interest Rate": With respect to the Class A-1
Notes, the Class A-1 Interest Rate, and with respect to the Class A-2 Notes,
the Class A-2 Interest Rate.
"Class A Note Principal Balance": The aggregate of the Note
Principal Balance of all Notes as of the date of determination.
"Class A-1 Available Distribution Amount": The Available
Distribution Amount with respect to the Class A-1 Notes.
"Class A-1 Interest Distribution Amount": On any Payment
Date, the amount equal to (i) the aggregate Accrued Note Interest on the Class
A-1 Notes during the related Interest Accrual Period, reduced by the Shortfall
Interest Deferred Amount, if any, for such Payment Date in respect of such
Class plus (ii) to the extent the remaining Available Distribution Amount for
such Class for such Payment Date is sufficient for the payment thereof, the
Accrued Shortfall Interest Carry Forward Amount, if any, for such Payment Date
in respect of such Class.
"Class A-1 Interest Rate": For each Payment Date, a rate per
annum equal to 6.87% (for each Interest Accrual Period on or prior to the date
on which the Servicer could exercise its option to redeem the Notes as provided
in Article X of the Indenture) or 7.37% (for each Interest Accrual Period after
such date).
"Class A-1 Mortgage Loan Interest Shortfall Amount": With
respect to the Mortgage Loans in Group I and any Payment Date, the sum of (x)
the excess, if any, of the aggregate Prepayment Interest Shortfalls with
respect to Group I for the related Collection Period over the aggregate amount
of Compensating Interest paid by the Servicer in respect thereto and (y) the
aggregate amount of Civil Relief Act Interest Shortfalls in respect of which
the Servicer did not make a Monthly Advance.
"Class A-1 Note": Any one of the Class A-1 Notes executed by
the Owner Trustee on behalf of the Trust, and authenticated and delivered by
the Indenture Trustee, pursuant to the Indenture.
"Class A-1 Note Principal Balance": The Class Note Balance
for the Class A-1 Notes.
"Class A-2 Available Distribution Amount": The Available
Distribution Amount with respect to the Class A-2 Notes.
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"Class A-2 Interest Distribution Amount": On any Payment
Date, the amount equal to (i) the aggregate Accrued Note Interest on the Class
A-2 Notes during the related Interest Accrual Period, reduced by the Shortfall
Interest Deferred Amount, if any, for such Payment Date in respect of such
Class, plus (ii) to the extent the remaining Available Distribution Amount for
such Class for such Payment Date is sufficient for the payment thereof, the
Accrued Shortfall Interest Carry Forward Amount, if any, for such Payment Date
in respect of such Class.
"Class A-2 Interest Rate": For each Payment Date, a rate per
annum equal to 6.82% (for each Interest Accrual Period on or prior to the date
on which the Servicer could exercise its option to redeem the Notes as provided
in Article X of the Indenture) or 7.32% (for each Interest Accrual Period after
such date).
"Class A-2 Mortgage Loan Interest Shortfall Amount": With
respect to the Mortgage Loans in Group II and any Payment Date, the sum of (x)
the excess, if any, of the aggregate Prepayment Interest Shortfalls with
respect to Group II for the related Collection Period over the aggregate amount
of Compensating Interest paid by the Servicer in respect thereto and (y) the
aggregate amount of Civil Relief Act Interest Shortfalls in respect of which
the Servicer did not make a Monthly Advance.
"Class A-2 Note": Any one of the Class A-2 Notes executed by
the Owner Trustee on behalf of the Trust, and authenticated and delivered by
the Indenture Trustee, pursuant to the Indenture.
"Class A-2 Note Principal Balance": The Class Note Balance
for the Class A-2 Notes.
"Class Note Balance": As to any Class of Notes and any date
of determination, the aggregate of the Note Principal Balances of all Notes of
such Class as of such date of determination.
"Clean-Up Call Date": With respect to each Class of Notes,
the first Payment Date after the Note Principal Balance of such Class is less
than 10% of the Note Principal Balance of such Class as of the Closing Date.
"Closing Date": May 27, 1999.
"Code": The Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": The meaning specified in the Granting Clause of
the Indenture.
"Collection Account": The account or accounts created and
maintained by the Servicer pursuant to Section 3.10(a) of the Sale and
Servicing Agreement, which shall be entitled "First Union National Bank, as
Indenture Trustee, in trust for (A) registered holders of HomeGold Home Equity
Loan Trust Asset Backed Notes, Series 1999-1, and (B) Financial Security
Assurance, Inc." and which must be an Eligible Account.
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"Collection Period": With respect to each Class of Notes in
the case of any Payment Date and any Mortgage Loan, the calendar month
immediately preceding the calendar month in which such Payment Date occurs.
"Commission": The United States Securities and Exchange
Commission.
"Compensating Interest": Advances by the Servicer pursuant to
Section 3.26 of the Sale and Servicing
Agreement.
"Company": HomeGold, Inc.
"Corporate Trust Office": With respect to the Indenture
Trustee, the principal corporate trust office of the Indenture Trustee at which
at any particular time its corporate trust business in connection with the
Indenture shall be administered, which office at the date of the execution of
the Indenture is located at 230 South Tryon Street, 9th Floor, Charlotte, North
Carolina 28288-1179, Attention: Corporate Trust Department. With respect to the
Owner Trustee, the principal corporate trust office of the Owner Trustee at
which at any particular time its corporate trust business in connection with
the Trust Agreement shall be administered, which office at the date of the
execution of the Trust Agreement is located at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration.
"Cumulative Insurance Payments": As of any time of
determination, the aggregate of all Insurance Payments previously made by the
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 Insurer pursuant to Section
8.3 of the Indenture hereof as reimbursement for such amounts.
"Cumulative Loss Percentage": For any Payment 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 Maximum Collateral Amount.
"Cut-off Date": With respect to each Mortgage Loan, the
opening of business on May 1, 1999; and with respect to all Qualified
Substitute Mortgage Loans, 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.
"Default": Any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
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"Deficiency Amount": With respect to each Class of Class A
Notes as of any Payment Date (i) any shortfall in amounts available in the
Distribution Account to pay the Interest Payment Amount for such Class, net of
any Relief Act Interest Shortfalls and Prepayment Interest Shortfalls allocated
to such Class, (ii) the Remaining Overcollateralization Deficit, if any, for
such Payment Date for such Class and (iii) without duplication of the amount
specified in clause (ii), the applicable Note Principal Balance to the extent
unpaid on the final Payment Date for such Class of the Class A Notes or the
earlier termination of the Trust pursuant to the terms of the Trust Agreement.
"Deficiency Event": The inability of the Indenture Trustee to
make the Scheduled Payment on any Payment Date due to a shortage of funds for
such purpose then held in the Distribution Account and the failure of the
Insurer to pay in full a claim made in accordance with the Policy with respect
to such Payment 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 Notes": The meaning specified in Section 2.9 of
the Indenture.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
"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 90 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.
"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.
"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.
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"Depository Institution": Any depository institution or trust
company, including the Indenture 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 Payment Date, the
fifth Business Day prior to such Payment 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 the performance of any construction work thereon or any use of such REO
Property in a trade or business conducted by the Trust other than through an
Independent Contractor; provided, however, that the Indenture Trustee (or the
Servicer on behalf of the Indenture Trustee) shall not be considered to
Directly Operate an REO Property solely because the Indenture Trustee (or the
Servicer on behalf of the Indenture 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.
"Distribution Account": The trust account established and
maintained by the Indenture Trustee pursuant
to Section 8.7 of the Indenture.
"Due Date": With respect to each Payment 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 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.
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"ERISA": Employee Retirement Income Security Act of 1974, as
amended
"Escrow Payments": As defined in Section 3.09 of the Sale and
Servicing Agreement.
"Estate in Real Property": A fee simple estate in a parcel of
land.
"Excess Overcollateralization Amount": With respect to each
Group of Mortgage Loans and any Payment Date, the excess, if any, of (i) the
Overcollateralization Amount for the related Class of Notes for such Payment
Date over (ii) the Specified Overcollateralization Amount for such Class for
such Payment Date.
"Exchange Act": The Securities Exchange Act of 1934, as
amended.
"Expense Account": The account established and maintained
pursuant to Section 8.10 of the Indenture.
"Expenses": The meaning assigned to such term in Section 12.2
of the Trust Agreement.
"FDIC": Federal Deposit Insurance Corporation or any
successor thereto.
"FHLMC": Federal Home Loan Mortgage Corporation or any
successor thereto.
"Final Maturity Date": With respect to any Class of the Class
A Notes the Final Scheduled Payment Date or, if earlier, the Redemption Date.
"Final Payment Date": With respect to any Class of the Class
A Notes the earlier of the Final Maturity Date and the Payment Date with
respect to such Class on which the principal of and all accrued but unpaid
interest on the Notes of such Class shall be paid in full.
"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 Unaffiliated Seller, the Depositor, the Servicer or the
Insurer pursuant to or as contemplated by Section 2.05, 3.18(d) or 10.01) of
the Sale and Servicing Agreement, 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.
"Final Scheduled Payment Date": In the case of the Class A-1
Notes, the Payment Date in July 2029 and in the case of the Class A-2 Notes,
the Payment Date in August 2029.
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"FNMA": Federal National Mortgage Association or any
successor thereto.
"Grant": Mortgage, pledge, bargain, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon and a
security interest in and right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of the Collateral or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Collateral and all other
monies payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights and
options, to bring proceedings in the name of the Granting party or otherwise
and generally to do and receive anything that the Granting party is or may be
entitled to do or receive thereunder or with respect thereto.
"Group": Group I or Group II, as the case may be.
"Group I": The group of Mortgage Loans pledged to the
Indenture Trustee and assigned to Group I, as reflected on the Mortgage Loan
Schedule.
"Group I Mortgage Loans": The Mortgage Loans assigned to
Group I.
"Group II": The group of Mortgage Loans pledged to the
Indenture Trustee and assigned to Group II, as reflected on the Mortgage Loan
Schedule.
"Group II Mortgage Loans": The Mortgage Loans assigned to
Group II.
"HomeGold Financial": HomeGold Financial, Inc., a South
Carolina corporation.
"Indebtedness": With respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles,
recorded as capital leases; (c) current liabilities of such Person in respect
of unfunded vested benefits under plans covered by Title IV of ERISA; (d)
obligations issued for or liabilities incurred on the account of such Person;
(e) obligations or liabilities of such Person arising under acceptance
facilities; (f) obligations of such Person under any guarantees, endorsements
(other than for collection or deposit in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds to invest in any Person or otherwise to assure a creditor against
loss; (g) obligations of such Person secured by any lien on property or assets
of such Person, whether or not the obligations have been assumed by such
Person; or (h) obligations of such Person under any interest rate or currency
exchange agreement.
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"Indemnification Agreement": The Indemnification Agreement
dated as of May 19, 1999 among the Trust, the Insurer, the Unaffiliated Seller,
the Company, HomeGold Financial, Inc., the Depositor and Prudential Securities
Incorporated.
"Indemnified Parties": The meaning assigned to such term in
Section 12.2 of the Trust Agreement.
"Indenture": The Indenture dated as of May 1, 1999 between
the Trust and the Indenture Trustee relating to the Notes.
"Indenture Trustee": First Union National Bank, a national
banking association, or its successor-in-interest, or any successor trustee
appointed as provided in the Indenture.
"Indenture Trustee Trust Secured Obligations": All amounts
and obligations which the Trust may at any time owe to the Indenture Trustee
for the benefit of the Noteholders under this Indenture or the Notes.
"Indenture Trustee's Fee": The amount payable to the
Indenture Trustee on each Payment Date pursuant to Section 6.7 of the Indenture
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 Indenture Trustee hereunder, which amount shall equal one twelfth
of the product of (i) the Indenture Trustee's Fee Rate, multiplied by (ii) the
aggregate Stated Principal Balance of the Mortgage Loans and any REO Properties
as of the preceding Payment Date (or, in the case of the initial Payment Date,
as of the Cut-off Date).
"Indenture Trustee's Fee Rate": 0.015% per annum.
"Independent": When used with respect to any specified
Person, any such Person who (a) is in fact independent of the Trust, the
Unaffiliated Seller, the Depositor, the Servicer and their respective
Affiliates, (b) does not have any direct financial interest or any material
indirect financial interest in the Trust, the Unaffiliated Seller, the
Depositor, the Servicer or any Affiliate thereof, and (c) is not connected with
the Trust, the Unaffiliated Seller, the Depositor, 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 Trust, the Unaffiliated
Seller, 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 Trust, the Unaffiliated Seller, the Depositor or the Servicer or
any Affiliate thereof, as the case may be.
"Independent Certificate": A certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 12.1 of the
Indenture, prepared by an Independent appraiser or other expert appointed
pursuant to an Trust Order and approved by the Indenture Trustee in the
exercise of reasonable care, and such opinion or certificate shall
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state that the signer has read the definition of "Independent" in this
Indenture and that the signer is Independent within the meaning thereof.
"Independent Contractor": Either (i) any Person (other than
the Servicer) that would be an "independent contractor" with respect to the
Trust within the meaning of Section 856(d)(3) of the Code, so long as the Trust
does not receive or derive any income from such Person and provided that the
relationship between such Person and the Trust Property 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 Indenture 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 856(e)(1) of the Code, or cause any income
realized in respect of such REO Property to fail to qualify as Rents from Real
Property.
"Insurance Agreement": The Insurance and Indemnity Agreement,
dated as of May 1, 1999, among the Trust, the Depositor, the
Originator/Servicer, the Unaffiliated Seller, HomeGold Financial, HomeGold
Residual Holdings Corporation and the Insurer, as amended or supplemented in
accordance with the provisions thereof.
"Insurance Payment": Any payment made by the Insurer under
the Policy with respect to the Class A Notes.
"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.
"Insured Payment": With respect to either Class of Notes as
of any Payment Date (i) the Interest Distribution Amount (other than the
Shortfall Interest Deferred Amount and the Accrued Shortfall Interest Carry
Forward Amount for the related Interest Accrual Period), (ii) the Remaining
Overcollateralization Deficit, if any, for such Payment Date and (iii) without
duplication of the amount specified in clause (ii), the applicable Note
Principal Balance to the extent unpaid on the Final Scheduled Payment Date for
such Class or the earlier termination of the Trust pursuant to the terms of the
Trust Agreement.
"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.
"Insurer Default": The existence and continuance of any of
the following:
(a) the Insurer fails to make a payment required under the
Policy in accordance with its terms; or
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(b) the 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 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 Insurer of all or any material portion of its property.
"Insurer Issuer Secured Obligations": All amounts and
obligations which the Trust may at any time owe to or on behalf of the Insurer
under the Indenture, the Insurance Agreement or any other Basic Document.
"Insurer Premium": The Policy premium payable pursuant to
Section 8.10(b) of the Indenture.
"Insurer Premium Rate": 0.25% per annum.
"Insurer Premium Supplement": The premium supplement payable
to the Insurer pursuant to Section 5.02 of the Insurance Agreement.
"Interest Accrual Period": With respect to any Payment Date,
the calendar month immediately preceding the month in which such Payment Date
occurs.
"Interest Distribution Amount": With respect to any Payment
Date, the Class A-1 Interest Distribution Amount or the Class A-2 Interest
Distribution Amount, as the case may be, for such Payment Date.
"Investment Account": As defined in Section 3.14 of the Sale
and Servicing Agreement.
"Issuer": The Trust until a successor replaces it and,
thereafter, means the successor and, for purposes of any provision contained in
the Indenture and required by the TIA, each other obligor on the Notes.
"Issuer Order" and "Issuer Request": A written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
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"Issuer Secured Obligations": The Insurer Issuer Secured
Obligations and the Indenture Trustee Issuer Secured Obligations.
"Issuer Secured Parties": Each of the Indenture Trustee in
respect of the Indenture Trustee Issuer Secured Obligations and the Insurer in
respect of the Insurer Issuer Secured Obligations.
"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 Property by reason of its being purchased, sold
or replaced pursuant to or as contemplated by Section 2.05 or Section 10.01 of
the Sale and Servicing Agreement. 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 Property by
reason of its being purchased pursuant to Section 10.01 of the Sale and
Servicing Agreement.
"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 Originator certifying that the
original Mortgage Note has been lost, misplaced or destroyed (together with a
copy of the related Mortgage Note).
"Majority Certificateholder": Any single Holder of the
Certificate representing the greatest Percentage Interest in the Certificate.
"Maximum Collateral Amount": With respect to each Group the
Original Pool Balance of such Group.
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"Monthly Advance": As to any Mortgage Loan or REO Property,
any advance made by the Servicer in respect of any Payment Date pursuant to
Section 4.03 of the Sale and Servicing Agreement.
"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 of the
Sale and Servicing Agreement; 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 lien on, or security interest in, a Mortgaged Property securing a
Mortgage Note.
"Mortgage File": The mortgage documents listed in Section
2.03 of the Sale and Servicing Agreement 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 Indenture Trustee pursuant to Section 2.01, Section 2.02 or Section
2.05(d) of the Sale and Servicing Agreement as from time to time held as a part
of the Trust Property, 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 Property on such date. The Mortgage Loan
Schedule shall set forth following information with respect to each Mortgage
Loan:
1. the Originator's or Servicer's Mortgage Loan identifying number;
2. the Mortgagor's name;
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;
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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;
21. whether the Mortgage Loan has a due-on-sale clause;
22. the program code; and
23. the lien priority of the Mortgage Loan.
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 in each Group: (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.
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"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.
"Mortgage Schedule": The meaning ascribed thereto in the Sale
and Servicing Agreement.
"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 each Class of
Notes, the excess of the (x) the Available Distribution Amount for such Class
over (y) the Interest Distribution Amount (other than the Shortfall Interest
Deferred Amount and the Accrued Shortfall Interest Carry Forward Amount) and
the Base Principal Distribution Amount for such Class.
"Net Mortgage Loan Interest Shortfall Amount": The Class A-1
Mortgage Interest Shortfall or the Class A-2 Mortgage Loan Interest Shortfall
Amount, as applicable.
"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 Property, including any lease renewed or extended on behalf of the
Trust Property if the Trust Property has the right to renegotiate the terms of
such lease.
"Nonrecoverable Monthly Advance": Any Monthly Advance or
Servicing Advance previously made or proposed to be made in respect of a
Mortgage Loan in a Group 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 in such Group
or REO Property as provided herein.
"Non-United States Person": Any Person other than a United
States Person.
"Note": A Class A-1 Note or Class A-2 Note.
"Note Factor": With respect to each Class of Notes as of any
Payment Date, a fraction, expressed as a decimal carried to six places, the
numerator of which is
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the Class Note Balance of the related Notes on such Payment Date (after giving
effect to any distributions of principal in reduction of the Class Note Balance
of the related Notes to be made on such Payment Date), and the denominator of
which is the related Class Note Balance of the related Notes as of the Closing
Date.
"Note Owner": With respect to a Book-Entry Note, the Person
who is the beneficial owner of such Note 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.
"Note Paying Agent": The Indenture Trustee or any other
Person that meets the eligibility standards for the Indenture Trustee specified
in Section 6.11 of the Indenture and is authorized by the Trust to make
payments to and distributions from the Distribution Account, including payment
of principal of or interest on the Notes on behalf of the Trust.
"Note Principal Balance": With respect to each Class of Notes
as of any date of determination, the Note Principal Balance of such Class A
Note on the Payment Date immediately prior to such date of determination, minus
all distributions allocable to principal made thereon on such immediately prior
Payment Date for such Class (or, in the case of any date of determination up to
and including the first Payment Date, the initial Note Principal Balance of
such Class, as stated on the face thereof).
"Note Register" and "Note Registrar": The register maintained
and the registrar appointed pursuant to Section 2.3 of the Indenture.
"Noteholder" or "Holder": The Person in whose name a Note is
registered in the Note Register, and the Insurer to the extent of Cumulative
Insurance Payments.
"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 Trust (or Owner Trustee on
behalf of the Trust), the Servicer, the Unaffiliated 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 Indenture Trustee, the Insurer or the Owner Trustee, as the
case may be.
"Original Pool Balance": With respect to each Group, an
amount equal to the aggregate of the Stated Principal Balances of the Mortgage
Loans in such Group as of the Cut-off Date.
"Originator": HomeGold, Inc.
"Outstanding": As of the date of determination, all Notes
theretofore authenticated and delivered under the Indenture except:
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(i) Notes theretofore canceled by the Note Registrar or delivered to the
Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture Trustee
or any Note Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision therefor,
satisfactory to the Indenture Trustee has been made); and
(iii) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to the Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a protected or bona fide purchaser;
provided, however, that Notes which have been paid with proceeds of the Policy
shall continue to remain Outstanding for purposes of this Indenture until the
Insurer has been paid as subrogee or reimbursed pursuant to the Insurance
Agreement as evidenced by a written notice from the Insurer delivered to the
Indenture Trustee, and the Insurer shall be deemed to be the Holder thereof to
the extent of any payments thereon made by the Insurer; provided, further, that
in determining whether the Holders of the requisite Outstanding Amount of the
Notes have given any request, demand, authorization, direction, notice, consent
or waiver hereunder or under any Basic Document, Notes owned by the Trust, the
Unaffiliated Seller or the Servicer or any Affiliate thereof shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Notes that a Responsible Officer either actually knows to be so owned or has
received written notice thereof shall be so disregarded and Notes so owned that
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Indenture Trustee the pledgee's right so
to act with respect to such Notes and that the pledgee is not the Trust, the
Unaffiliated Seller or the Servicer or any Affiliate of any thereof.
"Outstanding Amount": The aggregate Note Principal Balance of
all Notes, or Class of Notes, as applicable, Outstanding at the date of
determination.
"Overcollateralization Amount": With respect to each Class of
Notes and to any Payment Date, the excess, if any, of (a) the aggregate Stated
Principal Balances of the Mortgage Loans in the related Group as of the close
of business on the last day of the related Collection Period over (b) the Note
Principal Balance of such Class of Notes as of such Payment Date (after taking
into account the payment of the amounts described in clauses (b)(i) through
(iv) of the definition of Principal Distribution Amount for such Class on such
Payment Date); provided, however, that such amount shall not be less than zero.
"Overcollateralization Deficit": The amount, if any, by which
the aggregate Note Principal Balance of both Classes of Notes on a Payment
Date, after
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payment of the Base Principal Distribution Amount, but before taking into
account any principal payment funded from Net Monthly Excess Cash Flow, the
Reserve Account or any Insured Payment, exceeds the aggregate principal balances
of the Mortgage Loans in both Groups as of the close of business on the last day
of the related Collection Period. For purposes of determining the amount to be
paid on account of the Overcollateralization Deficit to the Holders of each
Class of Notes on the Payment Date, the Overcollateralization Deficit shall be
allocated to each Class pro rata based on the amount by which the Note Principal
Balance of each Class on such Payment Date, after payment of the Base Principal
Distribution Amount but before taking into account any principal payment funded
from Net Monthly Excess Cashflow, the Reserve Account or any Insured Payment,
exceeds the aggregate principal balances of the Mortgage Loans in the related
Group as of the close of business on the last day of the related Collection
Period.
"Overcollateralization Deficiency Amount": With respect to
each Class of Notes and to any Payment Date, the excess, if any, of (a) the
Specified Overcollateralization Amount for such Class applicable to such
Payment Date over (b) the Overcollateralization Amount for such Class
applicable to such Payment Date prior to taking into account the payment of any
Overcollateralization Increase Amounts for such Class on such Payment Date.
"Overcollateralization Increase Amount": With respect to each
Class of Notes and to any Payment Date, the lesser of (a) the
Overcollateralization Deficiency Amount for such Class as of such Payment Date
(after taking into account the payment of the Base Principal Distribution
Amount for such Class, on such Payment Date, exclusive of the payment of any
Overcollateralization Increase Amount for such Class) and (b) the amount of Net
Monthly Excess Cashflow available for such Payment Date reduced by any
Cumulative Insurance Payments or payments allocated to the
Overcollateralization Deficit.
"Overcollateralization Reduction Amount": With respect to
each Class of Notes and to any Payment Date, an amount equal to the lesser of
(a) the Excess Overcollateralization Amount for such Class and (b) the Base
Principal Distribution Amount of such Class.
"Owner Trustee": Wilmington Trust Company, not in its
individual capacity but solely as owner trustee under the Trust Agreement, and
any successor to it as owner trustee thereunder.
"Owner Trustee Fees": The amounts payable to the Owner
Trustee as contemplated in Section 12.1 of the Trust Agreement.
"Ownership Interest": As to any Note, any ownership or
security interest in such Note, including any interest in such Note as the
Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial, as owner or as pledgee. As to the Certificate, any
ownership or security interest in the Certificate, including any
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interest in the Certificate as the Holder thereof and any other interest
therein, whether direct or indirect, legal or beneficial, as owner or as
pledgee.
"Owner Trust Estate": (i) the sum deposited in the Collection
Account pursuant to Section 2.5 of the Trust Agreement, (ii) all right, title
and interest of the Trust in and to the property and rights assigned to the
Trust pursuant to Article II of the Sale and Servicing Agreement, (iii) all
funds on deposit from time to time in any of the Trust Accounts or the
Certificate Distribution Account and (iv) all other property of the Trust from
time to time, including any rights of the Owner Trustee and the Trust pursuant
to the Sale and Servicing Agreement.
"Payment Date": The 15th day of any month, or if such 15th
day is not a Business Day, the Business Day immediately following such 15th
day, commencing in June 1999.
"Percentage Interest": With respect to the Certificate, the
undivided percentage ownership of the Certificate evidenced by the Certificate,
as set forth in the Certificate.
"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 Indenture
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 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 noninterest-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
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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
(vii) if previously confirmed in writing to the Indenture 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 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": shall mean any Person designated as a
Permitted Transferee in accordance with the provisions of Article IV of the
Trust Agreement.
"Permitted Trust Investments": means non-assessable,
non-recourse debt or equity investment securities, held for income and/or
appreciation, in respect of which the Trust, as holder, shall not be liable for
the debts, liabilities or other obligations of the issuer thereof.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof or, in respect of
provisions of the Trust Agreement relating to matters of Constructive
Ownership, an individual, a trust qualified under Section 501(c)(17) of the
Code, the portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the Code or a
private foundation within the meaning of Section 509(a) of the Code.
"Plan": The meaning assigned to such term in Section 4.10 of
the Trust Agreement.
"Policy": The Financial Guaranty Insurance Policy (No.
50816-N) issued by the Insurer relating to the Class A Notes, including any
endorsements thereto, attached as Exhibit C to the Indenture.
"Policy Payments Account": The account established pursuant
to Section 11.4(b) of the Indenture.
"Predecessor Note": With respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under
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Section 2.4 of the Indenture in lieu of a mutilated, lost, destroyed or stolen
Note shall be deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Note.
"Preference Claim": The meaning ascribed thereto in the
Indenture.
"Prepayment Assumption": The Prepayment Assumption assumes
that the pool of loans prepays in the first month at a constant annual
prepayment rate of 2.4% and increases by an additional 2.4% each month
thereafter until the tenth month, where it remains at a constant annual
prepayment rate equal to 24%.
"Prepayment Interest Shortfall": With respect to each Class
of Notes and to any Payment Date, for each Mortgage Loan in the related Group
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 3.26 of the Sale and
Servicing Agreement.
"Principal Distribution Amount": With respect to each Class
of Notes and to any Payment Date, the sum of:
(i) the Base Principal Distribution Amount for such Class
and such Payment Date;
(ii) the Overcollateralization Deficit allocable to that
Class, but only to the extent that it can be funded on such
Payment Date from Net Monthly Excess Cashflow available from
both Groups, if any, available from the Reserve Account,
(iii) such Class' pro rata portion of any Remaining
Overcollateralization Deficit on such Payment Date, to the
extent funded by the Insurer as an Insured Payment, and
(iv) the Overcollateralization Increase Amount for such
Class, but only to the extent it can be funded on such
Payment Date from Net Monthly Excess Cashflow available from
the related Group;
"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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"Proceeding": Any suit in equity, action at law or other
judicial or administrative proceeding.
"Purchase Agreement and Assignment": The Purchase Agreement
and Assignment dated as of May 1, 1999 among the Originator, HomeGold Financial
and the Unaffiliated Seller.
"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.05 or
10.01 of the Sale and Servicing Agreement, and as confirmed by an Officers'
Certificate from the Servicer to the Indenture 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 of the Sale and
Servicing Agreement), (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 8.3
of the Indenture, through the next date corresponding to such Due Date which is
on or after the date on which such 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 next date corresponding to such Due Date
which is on or after the date on which such REO Property was acquired, plus (2)
REO Imputed Interest for such REO Property from such corresponding date through
the next such corresponding date which is on or after the date on 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 8.3 of the Indenture, (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 3.18(b) of the Sale and Servicing Agreement, and (v) in
the case of a Mortgage Loan required to be purchased pursuant to Section 2.05
of the Sale and Servicing Agreement, expenses reasonably incurred or to be
incurred by the Servicer or the Indenture 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) [intentionally left blank], (v) have a
Loan-to-Value Ratio as of the date of substitution
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equal to or lower than the Loan-to-Value Ratio of the Deleted Mortgage Loan as
of such date, (vi) have a risk grading determined by the Unaffiliated Seller,
with the approval of the Insurer, at least equal to the risk grading assigned
on the Deleted Mortgage Loan, and (vii) 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
Insurer, notice of which designation shall be given to the Indenture Trustee,
the Trust, the Unaffiliated Seller and the 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 Payment 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 3.18(b) of the Sale and
Servicing Agreement, minus (iv) the proceeds, if any, received in respect of
such Mortgage Loan during the calendar month in which such Final Recovery
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 of the Sale and Servicing Agreement.
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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, 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 Payment 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 3.18(b) of the Sale and
Servicing Agreement, 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 3.25 of the Sale and
Servicing Agreement 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 3.25 of the Sale and Servicing Agreement.
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.
A Realized Loss within the meaning of the foregoing
provisions shall constitute a Realized Loss regardless of how such Realized
Loss shall have arisen (e.g., whether by virtue of any default, bankruptcy,
fraud, special hazard or any other reason).
"Record Date": With respect to each Payment Date, the last
Business Day of the month immediately preceding the month in which such Payment
Date occurs.
"Redemption Date": In the case of a redemption of a Class of
Notes pursuant to Article X of the Indenture, the Payment Date for such
redemption as provided in Article X of the Indenture.
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"Redemption Price": As of any date, an amount equal to the
unpaid principal amount of the then outstanding principal amount of the related
Class of Notes, plus accrued and unpaid interest thereon to but excluding such
date.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of
which were not used to purchase the related Mortgaged Property.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Relief Act Interest Shortfall": With respect to any Payment
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": On any Payment
Date with respect to a Class of Notes, such Class' allocable portion of any
Overcollateralization Deficit, after taking into account the payment of the
related Principal Distribution Amount (including any portion thereof funded
from the Net Monthly Excess Cashflow, or from amounts, if any available from
the Reserve Account but excluding the amount of any Insured Payment) as of such
Payment Date.
"Remittance Report": As defined in Section 4.02 of the Sale
and Servicing Agreement.
"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 3.25 of the Sale and
Servicing Agreement.
"REO Disposition": The sale or other disposition of an REO
Property on behalf of the Trust.
"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
Property, 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 Payment 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 price paid in connection with a purchase of
some or all of the Mortgage Loans and REO Properties
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pursuant to Section 10.01 of the Sale and Servicing Agreement that is allocable
to such REO Property) or otherwise, net of any portion of such amounts (i)
payable pursuant to Section 3.25(c) of the Sale and Servicing Agreement in
respect of the proper operation, management and maintenance of such REO
Property or (ii) payable or reimbursable to the Servicer pursuant to Section
3.25(d) of the Sale and Servicing Agreement 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 through foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.25 of the Sale and Servicing Agreement.
"Request for Release": A release signed by a Servicing
Officer, in the form of Exhibit E -1 or Exhibit E-2.
"Reserve Account": That certain account, which shall be an
Eligible Account, established pursuant to Section 8.18 of this Indenture.
"Reserve Interest Rate": The rate per annum that the
Indenture Trustee determines to be either (i) the arithmetic mean (rounded
upwards if necessary to the nearest whole multiple of 0.0625%) of the one-month
U.S. dollar lending rates which New York City banks selected by the Indenture
Trustee are quoting on the relevant Interest Determination Date to the
principal London offices of leading banks in the London interbank market or, in
the event that the Indenture Trustee can determine no such arithmetic mean,
(ii) the lowest one-month U.S. dollar lending rate which New York City banks
selected by the Indenture Trustee are quoting on such Interest Determination
Date to leading European banks.
"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 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)).
"Responsible Officer": When used with respect to the
Indenture Trustee, any officer of the Corporate Trust Department of the
Indenture Trustee, including any Senior Vice President, any Assistant Vice
President, any Assistant Secretary, any Trust Officer or any other officer of
the Indenture 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. When used with respect to the Owner
Trustee, any officer of the Corporate Trust Department of the Owner Trustee,
including any Senior Vice President, any Assistant Vice President, any
Assistant Secretary, any Trust Officer or any other officer of the Initial
Owner Trustee customarily performing
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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": As of any Payment Date, the
average of the Delinquency Percentages for both Groups as of the last day of
each of the three (or one or two, in the case of the first and second Payment
Dates) most recently ended Collection Periods.
"Rolling Loss Percentage": As of any Payment Date, the
percentage equivalent of a fraction, the numerator of which is the aggregate
amount of Realized Losses for both Groups incurred during the preceding twelve
Collection Periods, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans in both Groups as of the first day of
the twelfth preceding Collection Period.
"SAIF": The Savings Association Insurance Fund, as from time
to time constituted, created under the Financial Institutions Reform, Recovery
and Enhancement Act of 1989, or if at any time after the execution of this
instrument the Savings Association Insurance Fund is not existing and
performing duties now assigned to it, the body performing such duties on such
date.
"Sale and Servicing Agreement": The Sale and Servicing
Agreement dated as of May 1, 1999, among the Trust, the Depositor, the
Servicer, the Back-up Servicer and the Indenture Trustee, as the same may be
amended or supplemented from time to time.
"Scheduled Payment": As defined in the Policy.
"Secretary of State": The Secretary of State of the State of
Delaware.
"Security Majority": A majority by principal amount of the
Noteholders so long as the Notes are outstanding and a majority by Percentage
Interest of the Certificateholders thereafter.
"Securityholder" or "Holder": A Noteholder and/or
Certificateholder, as the context requires.
"Servicer": HomeGold, Inc., a South Carolina corporation, or
any successor servicer appointed as provided in the Sale and Servicing
Agreement, in its capacity as Servicer under the Sale and Servicing Agreement.
"Servicer Event of Default": One or more of the events
described in Section 7.01 of the Sale and Servicing Agreement.
"Servicer Extension Notice": As described in Section 7.01 of
the Sale and Servicing Agreement.
"Servicer Remittance Date": With respect to any Payment Date,
12:00 noon New York time on the fourth Business Day prior to such Payment Date.
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"Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09 of the Sale and Servicing Agreement.
"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, 3.16, 3.18 and 3.25
of the Sale and Servicing Agreement. 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": With respect to each Group, 0.50% per
annum, provided that if the Back-up Servicer has assumed the duties of Servicer
and (i) the Mortgage Loans that are more than 30 days delinquent are equal to
or greater than 12% but less than 18% of all Mortgage Loans (measured by the
aggregate Stated Principal Balance as of the time of servicing transfer), the
Servicing Fee Rate shall increase to 0.65% per annum or (ii) if the Mortgage
Loans that are more than 30 days delinquent are equal to or exceed 18% of all
Mortgage Loans (measured by the aggregate Stated Principal Balance as of the
time of servicing transfer) the Servicing Fee Rate shall increase to 0.75% 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 furnished by
the Servicer to the Indenture Trustee and the Insurer and the Depositor on the
Closing Date, as such list may from time to time be amended.
"Shortfall Interest Deferred Amount": For any Payment Date
with respect to any Class A Note, the amount, if any, of interest accrued
during the related Interest Accrual Period on the Note Principal Balance of
such Class A Note at the related Class A Note Interest Rate that is not
available for payment on such Payment Date out of the Available Distribution
Amount due to Relief Act Interest Shortfalls and, to the extent not funded by
the Servicer, Prepayment Interest Shortfalls.
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"Single Security": With respect to any Class of Notes, a
hypothetical Note of such Class evidencing a Percentage Interest for such Class
corresponding to an initial Note Principal Balance of $1,000. With respect to
the Certificates, a hypothetical Certificate evidencing a 100% Percentage
Interest in the Certificates.
"S&P": Standard & Poor's Ratings Services, a division of
McGraw-Hill Inc., or its successor in interest.
"Specified Overcollateralization Amount": With respect each
Class of Notes and to any Payment Date, an amount equal to 13.50% of the
Maximum Collateral Amount of the Mortgage Loans in the related Group, subject
to the following: (i) if the Step Up Trigger for such Class of Notes has
occurred with respect to such Payment Date, the Specified Overcollateralization
Amount for such Class of Notes for such Payment Date will be an amount equal to
20% of the Maximum Collateral Amount of the Mortgage Loans in the related
Group, and (ii) if the Step Down Trigger has occurred, the Specified
Overcollateralization Amount for such Class of Notes for such Payment Date will
be an amount equal to the greatest of (A) 0.50% of the Original Pool Balance of
the Mortgage Loans in the related Group, (B) the lesser of (x) 13.50% of the
Maximum Collateral Amount of the Mortgage Loans in the related Group and (y)
the Stepped Down Specified Overcollateralization Percentage of the aggregate
Stated Principal Balance of the Mortgage Loans in such Group as of such Payment
Date, and (C) the product of three and the Stated Principal Balance of the
Mortgage Loan with the highest Stated Principal Balance in such Group as of
such Payment Date.
"Stated Principal Balance": With respect to any Mortgage
Loan: (a) as of any date of determination up to but not including the Payment
Date on which 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 8.3 of the
Indenture on or before such date of determination, (ii) all Principal
Prepayments received after the Cut-off Date, to the extent distributed pursuant
to Section 8.3 of the Indenture 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 3.18, to
the extent distributed pursuant to Section 8.3 of the Indenture 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 Payment 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 Payment 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, minus the aggregate
amount of REO Principal Amortization in respect of such REO Property for all
previously ended calendar months, to the extent
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distributed pursuant to Section 8.3 of the Indenture on or before such date of
determination, and (b) as of any date of determination coinciding with or
subsequent to the Payment 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) of the Sale and
Servicing Agreement.
"Step Down Cumulative Loss Test": The Step Down Cumulative
Loss Test for both Groups will be met with respect to a Payment Date as
follows: (i) for the 30th through the 41st Payment Dates, if the Cumulative
Loss Percentage for both Groups for such Payment Date is 3.00% or less, (ii)
for the 42nd through the 53rd Payment Dates, if the Cumulative Loss Percentage
for both Groups for such Payment Date is 3.75% or less, (iii) for the 54th
through the 65th Payment Dates, if the Cumulative Loss Percentage for such
Payment Date is 4.50% or less, and (iv) for 66th Payment Date and any Payment
Date thereafter, if the Cumulative Loss Percentage for both Groups for such
Payment Date is 5.50% or less.
"Step Down Rolling Delinquency Test": The Step Down Rolling
Delinquency Test for both Groups will be met with respect to a Payment Date if
the Rolling Delinquency Percentage for both Groups for such Payment Date is
11.00% or less.
"Step Down Rolling Loss Test": The Step Down Rolling Loss
Test for both Groups will be met with respect to a Payment Date if the Rolling
Loss Percentage for both Groups for such Payment Date is less than 1.25%.
"Step Down Trigger": For any Payment Date after the 30th
Payment Date, the Step Down Trigger for both Groups 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 for such Group is met. In no event will the
Step Down Trigger be deemed to have occurred for the 30th Payment Date or any
preceding Payment Date.
"Step Up Cumulative Loss Test": The Step Up Cumulative Loss
Test for both Groups will be met with respect to a Payment Date as follows (i)
for the 1st through the 12th Payment Dates, if the Cumulative Loss Percentage
for both Groups for such Payment Date is more than 1.50%, (ii) for the 13th
through the 24th Payment Dates, if the Cumulative Loss Percentage for both
Groups for such Payment Date is more than 2.25%, (iii) for the 25th through the
36th Payment Dates, if the Cumulative Loss Percentage for Groups for such
Payment Date is more than 3.50%, (iv) for the 37th through the 48th Payment
Dates, if the Cumulative Loss Percentage for both Groups for such Payment Date
is more than 4.75%, and (v) for the 49th Payment Date and any Payment Date
thereafter, if the Cumulative Loss Percentage for both Groups for such Payment
Date is more than 6.50%.
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"Step Up Rolling Delinquency Test": The Step Up Rolling
Delinquency Test for both Groups will be met with respect to a Payment Date if
the Rolling Delinquency Percentage for both Groups for such Payment Date is
more than 15.00%.
"Step Up Rolling Loss Test": The Step Up Rolling Loss Test
for both Groups will be met with respect to a Payment Date if the Rolling Loss
Percentage for both Groups for such Payment Date is 1.50% or more.
"Step Up Trigger": For any Payment Date, the Step Up Trigger
for both Groups 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 for both Groups with respect to such Payment Date.
"Stepped Down Specified Overcollateralization Percentage":
For any Payment Date for which the Step Down Trigger for both Groups has
occurred, a percentage equal to (i) the percentage equivalent of a fraction,
the numerator of which is 13.50% of the Maximum Collateral Amount for both
Groups, and the denominator of which is the aggregate Stated Principal Balance
of the Mortgage Loans in both Groups as of such Payment 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 27.00%, multiplied
by (B) the number of consecutive Payment Dates through and including the
Payment Date for which the Stepped Down Specified Overcollateralization
Percentage both Groups is being calculated, up to a maximum of six, for which
the Step Down Trigger for both Groups has occurred, and the denominator of
which is six.
"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 of the Sale and Servicing Agreement.
"Sub-Servicing Account": An account established by a
Sub-Servicer which meets the requirements set forth in Section 3.08 of the Sale
and Servicing Agreement 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 of the Sale and Servicing Agreement.
"Substitution Shortfall Amount": As defined in Section
2.05(d) of the Sale and Servicing Agreement.
"Tax Returns": Any and all other information reports or
returns that may be required to be furnished to the Certificateholder or filed
with the Internal Revenue Service or any other governmental taxing authority
under any applicable provisions of federal, state or local tax laws.
"Termination Date": The latest of (i) the termination of the
Policy and the return of the Policy to the Insurer for cancellation, (ii) the
date on which the Indenture Trustee shall have received payment and performance
of all Insurer Trust Secured
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obligations and (iii) the date on which the Indenture Trustee shall have
received payment and performance of all Indenture Trustee Trust Secured
Obligations.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in the
Certificate or a Note, as the case may be.
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Security.
"Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in the Certificate or Note, as the case may be.
"Transition Cost": Any documented expenses reasonably
incurred by the Back-up Servicer or Indenture Trustee in connection with a
transfer of servicing from the Servicer to a successor Servicer as successor
Servicer pursuant to Section 7.02 of the Sale and Servicing Agreement, but not
to exceed $5,000 with respect to any single succession.
"Treasury Regulations": Regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust": The trust established by the Trust Agreement.
"Trust Accounts": The Collection Account, the Distribution
Account, the Reserve Account and the Expense Account.
"Trust Agreement": The Amended and Restated Trust Agreement
dated as of May 1, 1999 between the Unaffiliated Seller and the Owner Trustee
relating to the establishment of the Trust.
"Trust Indenture Act" or "TIA": The Trust Indenture Act of
1939, as amended and as in force on the date hereof, unless otherwise
specifically provided.
"Trust Interest": A beneficial interest in the Trust
representing the interest in the Trust of the Certificateholder.
"Trust Property": The two segregated pools 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
Indenture 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
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are deposited therein from time to time and any investments thereof, and (vi)
the Indenture Trustee's rights under the Policy, together with any and all
income, proceeds and payments with respect thereto. Notwithstanding the
foregoing, however, the Trust Property specifically excludes all payments and
other collections of principal and interest on the Mortgage Loans received on
or before the Cut-off Date.
"Unaffiliated Seller": Emergent Mortgage Holdings
Corporation, or its successor-in-interest, in its capacity as Unaffiliated
Seller under the Unaffiliated Seller's Agreement and the Trust Agreement.
"Unaffiliated Seller's Agreement": The agreement dated as of
May 1, 1999 among the Unaffiliated Seller, the Depositor and HomeGold Financial
and providing for the sale of the Mortgage Loans from the Unaffiliated Seller
to the Depositor.
"Underwriting Agreement": The Underwriting Agreement dated
May 19, 1999 among the Trust, the Depositor and Prudential Securities
Incorporated relating to the issuance and sale of the Notes.
"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 3.16 of the Sale and Servicing Agreement.
"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 Servicer 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 Servicer in the
event any such review appraisal
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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 voting rights hereunder of Holders of
the Notes or, so long as no Insurer Default shall have occurred and be
continuing, of the Insurer in the place and stead of the Holders of the Notes,
as provided in the Sale and Servicing Agreement and the Indenture.
<PAGE>
PRICEWATERHOUSECOOPERS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Telephone (212) 596 8000
Facsimile (212) 596 8910
CONSENT OF INDEPENDENT ACCOUNTANTS
-----------
We consent to the incorporation by reference in the Prospectus Supplement of
HomeGold, Inc. relating to the HomeGold Equity Loan Trust 1999-1 of our
report dated January 26, 1999 on our audits of the consolidated financial
statements of Financial Security Assurance Inc. and Subsidiaries as of
December 31, 1998 and 1997, and for each of the three years in the period
ended December 31, 1998. We also consent to the reference to our Firm under
the caption "Experts."
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
May 24, 1999
