STRUCTURED MORTGAGE TRUST 1997-2
COLLATERALIZED NOTES
NOTE PURCHASE AGREEMENT
New York, New York
November 3, 1997
PaineWebber Incorporated
1285 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Structured Mortgage Trust 1997-2, (the "Issuer"), a business
trust established under the laws of the State of Delaware, proposes to sell to
PaineWebber Incorporated, as initial purchaser (the "Initial Purchaser"), four
classes (each a "Class") of collateralized notes which (collectively, the
"Notes"), in each case in the aggregate principal amount of $24,224,526 of Class
A Notes, $14,000,000 of Class B Notes, $0 of Class C Notes, and $7,750,000 of
Class D Notes, but subject to Section 9 hereof. The Notes are issued pursuant to
an indenture, to be dated as of November 3, 1997 (the "Indenture"), by and
between the Issuer and LaSalle National Bank, a nationally banking association
as indenture trustee (the "Indenture Trustee").
The Notes will be secured by, and interest and principal of
the Notes will be paid out of the cash flow (commencing with the December 1997
payment) from $50,974,526 aggregate principal amount of Daiwa Securities America
Inc. Multifamily First Loss Ownership Securities ("Multifamily FLOWSsm") Series
1994-Multifamily FLOWSsm-1 certificate (the "Collateral"). The Collateral
indirectly represents the entire beneficial ownership in a trust (the "FNMA
Trust"), the assets of which (the "FNMA Trust Assets") consist of the Class C
and Class D certificates issued by the FNMA Multifamily REMIC Trust 1994-M2,
which have been pledged to the Federal National Mortgage Association ("FNMA") by
Daiwa Securities America Inc. in full satisfaction of a limited recourse
obligation (the "Daiwa Obligation"). The Xxxxxx Xxx MBS were delivered to FNMA
in exchange for FNMA Guaranteed ACESsm REMIC Pass-Through Certificates, FNMA
Multifamily REMIC Trust 1993-M2 and FNMA Multifamily REMIC Trust 1994-M2. The
entire ownership interest in the assets of the FNMA Trust, subject to the prior
claim of FNMA in respect of the Daiwa Obligation, is evidenced by a trust
receipt issued in exchange for the delivery of the FNMA Trust Assets to a
custodian pursuant to that certain Second Amended and Restated Credit Support
and Collateral Pledge Agreement, dated as of February 28, 1994, among FNMA,
Daiwa Finance Corp., Daiwa Securities America Inc., and Bank America National
Trust Company, as custodian.
The Collateral will be transferred from Commercial Assets,
Inc. (the "Company"), to CAX DTR Securitization Corp., a Delaware corporation
organized by the Company as a special purpose entity ("QRS"), pursuant to a
Contribution Agreement dated as of November 3, 1997 (the "Contribution
Agreement"), between QRS, as contributee, and the Company, as contributor. QRS
then will transfer the Collateral to the Issuer in exchange for the owner trust
certificates evidencing the entire beneficial ownership of the Issuer, which was
established pursuant to a trust agreement dated as of November 3, 1997 (the
"Trust Agreement"), between QRS and Wilmington Trust Company, a Delaware bank
and trust corporation, (the "Owner Trustee"), acting on behalf of the Issuer.
In order to facilitate the resale of the Notes by the Initial
Purchaser, the Initial Purchaser may require the Issuer to register the exchange
of the Notes for replacement Notes which collectively evidence the same
aggregate principal balance as the Notes originally sold but with different
principal balances, interest rates and allocations of principal and interest
among the various classes of Notes which will be described more fully in a
private offering memorandum (the "Private Offering Memorandum").
Capitalized terms used but not otherwise defined herein shall
have the respective meanings assigned to them in the Indenture.
1. Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties set forth herein, the Issuer
agrees to sell to the Initial Purchaser, and the Initial Purchaser agrees to
purchase from the Issuer on the Closing Date (as defined below), the Notes for a
purchase price and on payment terms set forth in Schedule A attached hereto.
2. Delivery and Payment. Delivery of and payment for the Notes
shall be made at the offices of O'Melveny & Xxxxx LLP, 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 at 10:00 a.m., New York City time, on November 3, 1997,
which date and time may be changed by agreement between the Initial Purchaser
and the Issuer (such date and time of delivery and payment for the Notes being
herein called the "Closing Date"). Delivery of the Notes shall be made to the
Initial Purchaser against payment by the Initial Purchaser of the purchase price
therefor in immediately available funds wired to such bank as may be designated
by the Issuer, or such other manner of payment as may be agreed upon by the
Issuer and the Initial Purchaser. The Notes to be so delivered shall be
definitive, fully registered Notes, registered in the name of the Initial
Purchaser and in such authorized denominations as the Initial Purchaser may have
requested in writing not less than two full business days in advance of the
Closing Date. The Issuer agrees to have the Notes available for inspection,
checking and packaging by the Initial Purchaser in New York, New York, not later
than 2:00 p.m. on the Business Day prior to the Closing Date.
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3. Conditions to the Obligation of the Initial Purchaser. The
obligation of the Initial Purchaser hereunder to purchase the Notes shall be
subject to the accuracy of the representations and warranties on the part of the
Issuer contained herein as of the date hereof, to the accuracy of the statements
of the Issuer made in any Note pursuant to the provisions hereof, to the
performance by the Issuer in all material respects of its obligations hereunder,
and to the following additional conditions:
(a) this Agreement, the Securitization Cooperation
Agreement, dated as of November 3, 1997, by and among the Issuer, the
Company, QRS and the Initial Purchaser, and the other Related
Agreements and each Class of the Notes shall have been duly authorized,
executed and delivered by the parties thereto (other than the Initial
Purchaser), shall be in full force and effect and no default shall
exist thereunder on the part of the Company, QRS, the Owner Trustee, or
the Issuer, and the Indenture Trustee shall have received a fully
executed copy thereof or, with respect to the Notes, a conformed
specimen of each Class thereof. The Related Agreements and the Notes
shall be in all material respects in the forms theretofore provided to
the Initial Purchaser;
(b) the Issuer shall have delivered to the Initial
Purchaser a certificate of a responsible officer of the Owner Trustee,
dated the Closing Date, to the effect that: (i) the representations and
warranties of the Issuer in each respective Related Agreement to which
it is a party are true and correct in all material respects at and as
of the Closing Date with the same effect as if made on the Closing
Date, and (ii) the Issuer has complied with all the Related Agreements
and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date.
(c) each of the Company and QRS shall have delivered
to the Initial Purchaser a certificate, dated the Closing Date, of a
senior executive officer acceptable to the Initial Purchaser, to the
effect that, to the best of such officer's knowledge after due inquiry
and reasonable investigation (i) the representations and warranties of
the Company and QRS, as applicable, in each respective Related
Agreement to which it is a party are true and correct in all material
respects at and as of the Closing Date with the same effect as if made
on the Closing Date, and (ii) the Company and QRS have complied with
all the agreements and satisfied all the conditions on its part to be
performed or satisfied under the Related Agreements at or prior to the
Closing Date.
(d) the Initial Purchaser shall have received from
Bartlit, Xxxx, Xxxxxx, Xxxxxxxxx & Xxxxx, special counsel for the
Company, QRS and the Issuer, favorable opinions dated the Closing Date
and reasonably satisfactory in form and substance to the Initial
Purchaser and its counsel, substantially to the effect that:
(i) each of the Company and QRS has been
duly organized and is validly existing and in good
standing under the laws of the State of its
respective organization with the power and authority
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to own its assets and to conduct its business as such
assets are then owned and such business is then
conducted, and, in each case, as contemplated by
Related Agreements to which it is a party, and to
enter into and perform its obligations under Related
Agreements to which it is a party.
(ii) each Related Agreement to which the
Company or QRS is a party has been duly and validly
authorized, executed and delivered by the Company
and/or QRS, as applicable, and each constitutes the
legal, valid and binding agreement of the Company
and/or QRS, as applicable, enforceable against the
Company and/or QRS, as applicable, in accordance with
its terms, subject, as to the enforcement of
remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium, receivership and similar
laws affecting creditors' rights generally and to
general principles of equity (regardless of whether
the enforcement of such remedies is considered in a
proceeding in equity or at law) and subject, in the
case of this Agreement, to public policy constraints
regarding indemnification;
(iii) with respect to each Related Agreement
to which the Issuer is a party and assuming that such
Related Agreement has been duly authorized, executed
and delivered by the Issuer, such Related Document
constitutes the legal, valid and binding agreement of
the Issuer enforceable against the Issuer in
accordance with its terms subject, as to the
enforcement of remedies, to applicable bankruptcy,
insolvency, reorganization, moratorium, receivership
and similar laws affecting creditors' rights
generally and to general principles of equity
(regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or
at law) and subject, in the case of this Agreement,
to public policy constraints regarding
indemnification;
(iv) when the Notes have been duly executed,
delivered and authenticated in accordance with the
Indenture and delivered and paid for pursuant to this
Agreement, the Notes will be validly issued,
outstanding, and entitled to the benefits of the
Indenture, except that (A) enforcement may be subject
to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect
relating to creditors' rights generally, and (B)
enforcement may be limited by general principles of
equity (regardless of whether enforcement is sought
in a proceeding in equity or at law);
(v) None of the execution and delivery of
the Related Agreements to which the Company, QRS or
the Issuer is a party or the Notes, the consummation
of the transactions contemplated by either the
Related Agreements or the Notes, nor the grant of the
security interest pursuant to the Indenture will (A)
conflict with or violate, or result in a breach of or
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constitute a default under any organizational or
other constituent document of or, to such counsel's
knowledge, any statute currently applicable to, the
Company, QRS, or the Issuer, as applicable, or, to
such counsel's knowledge, any order, rule or
regulation currently applicable to the Company, QRS,
or the Issuer, as the case may be, of any court,
regulatory body, administrative agency or
governmental body having jurisdiction over the
Company, QRS, or the Issuer, as the case may be, or
(B) to such counsel's knowledge, conflict with or
violate, result in a material breach of or constitute
a material default under the terms of any indenture,
agreement, mortgage, deed of trust or other agreement
or instrument to which the Company, QRS, or the
Issuer is a party or by which the Company, QRS, or
the Issuer or any of their respective properties are
bound;
(vi) to such counsel's knowledge, there are
no actions, proceedings or investigations pending or
threatened, before any court, regulatory body,
administrative agency or other tribunal or
governmental instrumentality (1) asserting the
invalidity of any of the Related Agreements or any
Class of the Notes, (2) seeking to prevent the
issuance of any Class of the Notes or the
consummation of any of the transactions contemplated
by any of the Related Agreements, or (3) seeking any
determination or ruling that might materially and
adversely affect the performance by the Company, QRS,
or the Issuer of its respective obligations under, or
the validity or enforceability of, any of the Related
Agreements or any Class of the Notes;
(vii) assuming compliance by the Initial
Purchaser with its agreements set forth in Section 7
hereof and that the Daiwa FLOWS Certificates have
been issued by a bankruptcy remote trust, the
issuance of the Notes pursuant to the Indenture and
the sale of each Class of the Notes to the Initial
Purchaser pursuant to this Agreement, the compliance
by the Company, QRS and the Issuer, as applicable,
with the Related Agreements and the Notes, and the
consummation of the other transactions herein or
therein contemplated do not and will not require the
consent, approval, authorization, order, registration
or qualification of or with any court or governmental
authority, except such approvals as have been
obtained, and such as may be required under state
securities laws or "blue sky" laws of any
jurisdiction in connection with the purchase and
distribution by the Initial Purchaser of the Notes;
(viii) the Indenture is not required to be
qualified under the Trust Indenture Act of 1939, as
amended;
(ix) the offer and sale of the Notes to the
Initial Purchaser and to persons purchasing directly
from the Initial Purchaser in connection with the
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Initial Purchaser's initial sale of each such Class
of the Notes, in each case in the manner and under
the circumstances contemplated by the Indenture, and
this Agreement are not transactions requiring
registration of any Class of the Notes under the
Securities Act;
(x) following execution and delivery of all
of the Related Agreements, all of the Company's and
QRS's right, title and interest in and to the
Collateral has been conveyed to the Issuer and the
Issuer has duly and validly pledged, assigned and
delivered the Collateral (whether by book entry or by
physical delivery) to the Indenture Trustee and the
Indenture Trustee has acquired a perfected first
priority security interest in the Collateral, subject
to no prior lien, mortgage, security interest,
pledge, adverse claim, charge or other encumbrance of
which such counsel has notice; and
(xi) the Company, QRS and the Issuer are
not, and none of the Company, QRS nor the Issuer will
become, as a result of the transactions contemplated
in the Indenture and this Agreement, an "investment
company" that is registered or is required to be
registered under the Investment Company Act (or an
"affiliated person" of any such "affiliated person")
as such terms are defined in the Investment Company
Act of 1940 (the "Investment Company Act").
(xii) all of the Collateral shall have been
contributed to QRS by the Company pursuant to the
Contribution Agreement, and shall have been
transferred by QRS to the Issuer, pursuant to the
Trust Agreement;
Such opinion may express its reliance as to factual matters on
representations and warranties made by, and on certificates or other
documents furnished by officers or authorized representatives of
parties to the Indenture and on certificates furnished by public
officials. Such opinion may assume the due authorization, execution and
delivery of the documents referred to therein by the parties thereto
other than the party on behalf of which such opinion is being rendered.
Such opinion may be qualified as an opinion only on the laws of each
state in which the writer of the opinion is admitted to practice law
and on the federal law of the United States; Bartlit Xxxx Xxxxxx
Xxxxxxxxx & Xxxxx may rely on the opinion of Arent Fox Xxxxxxx Xxxxxxx
& Xxxx, special Maryland counsel to the Company, as to matters of
Maryland law (provided that such opinion shall be satisfactory to the
Initial Purchaser), may rely on the Opinion of Counsel of Xxxxxx &
Xxxxxxx (provided that such opinion shall be satisfactory to the
Initial Purchaser) with respect to matters of Illinois law and may rely
on the Opinion of Counsel of Xxxxxxxx Xxxxxx & Finger (provided that
such opinion shall be satisfactory to the Initial Purchaser) with
respect to matters of Delaware law necessary to render an opinion with
respect to perfection of a security interest.
(e) the Initial Purchaser shall have received a copy
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of the opinion of Arent Fox Xxxxxxx Xxxxxxx & Xxxx, special Maryland
counsel to the Company, dated the Closing Date, to the effect that the
Company does not require shareholder approval for the transactions
contemplated by the Related Agreements and for the sale to the Initial
Purchaser of collateralized mortgage backed securities described in
Schedule B attached hereto, which are expected to be sold by the
Company to the Initial Purchaser on November 3, 1997;
(f) the Initial Purchaser shall have received a copy
of the opinion of Xxxxxxxx Xxxxxx & Finger, counsel to the Owner
Trustee, dated the Closing Date, to the effect that:
(i) the Owner Trustee is a Delaware banking and trust
corporation duly incorporated and validly existing under the
laws of the State of Delaware;
(ii) the Owner Trustee has the full power and
authority to accept the office of owner trustee under the
Trust Agreement and to enter into and perform its obligations
under the Trust Agreement and the transactions contemplated
thereby;
(iii) the execution and delivery of the Trust
Agreement by the Owner Trustee and the performance by the
Owner Trustee of its obligations under the Trust Agreement
have been duly authorized by all necessary action of the Owner
Trustee and the Trust Agreement has been duly executed and
delivered by the Owner Trustee and constitutes a legal, valid
and binding obligation of the Owner Trustee enforceable
against the Owner Trustee in accordance with its terms, except
as the enforceability thereof may be (a) limited by
bankruptcy, insolvency, reorganization, moratorium,
liquidation or other similar laws affecting the rights of
creditors generally, and (b) subject to general principles of
equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(iv) the execution and delivery by the Owner Trustee
of the Trust Agreement and the consummation by the Owner
Trustee of the transactions contemplated thereby do not
require any consent, approval or authorization of, or any
registration or filing with, any applicable governmental
authority of the State of Delaware which has not been obtained
or done;
(v) neither the consummation by the Owner Trustee of
the transactions contemplated in the Trust Agreement, nor the
fulfillment of the terms thereof by the Owner Trustee will
conflict with, result in a breach or violation of, or
constitute a default under the articles of organization,
by-laws or other organizational documents of the Owner
Trustee;
(vi) the Notes have been authorized, executed and
delivered by the Owner Trustee on behalf of the Issuer in
accordance with the Trust Agreement and the Indenture;
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(vii) to the extent that Article 9 of the Uniform
Commercial Code as in effect in the State of Delaware (the
"Delaware UCC") is applicable (without regard to conflicts of
laws principles), and assuming that the security interest
created by the Indenture in the Issuer's rights under assigned
contract rights and other general intangibles has been duly
created and has attached, upon the filing of a UCC-1 financing
statement with the Secretary of State of the State of
Delaware, the Indenture Trustee will have a perfected security
interest in the Issuer's rights in such contract rights and
other general intangibles and the proceeds thereof; and such
security interest will be prior to any other security interest
granted by the Issuer that is perfected solely by the filing
of financing statements under the Delaware UCC;
(viii) no re-filing or other action is necessary
under the Delaware UCC in the State of Delaware in order to
maintain the perfection of the security interest referenced
above except for the filing of continuation statements at
five-year intervals;
(ix) under ss. 3805(b) of the Delaware Business Trust
Act, no creditor of any holder of Trust Certificates shall
have any right to obtain possession of, or otherwise exercise
legal or equitable remedies with respect to, the property of
the Issuer except in accordance with the terms of the Trust
Agreement, subject to (i) applicable bankruptcy, insolvency,
moratorium, receivership, reorganization, fraudulent
conveyance and similar laws relating to and affecting the
rights and remedies of creditors generally, (ii) principles of
equity (regardless of whether considered and applied in a
proceeding in equity or at law), and (iii) the effect of
applicable public policy on the enforceability of provisions
relating to indemnification or contribution;
(x) under ss. 3805(c) of the Delaware Business Trust
Act, and assuming that good title to the assets referred to
therein is conveyed to the Issuer pursuant to the Trust
Agreement as a true contribution and not as a security
arrangement, the Issuer, rather than any holder of the Trust
Certificates, is the owner of such assets, subject to (i)
applicable bankruptcy, insolvency, moratorium, receivership,
reorganization, fraudulent conveyance and similar laws
relating to and affecting the rights and remedies of creditors
generally, (ii) principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law),
and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or
contribution;
(xi) the execution and delivery by the Owner Trustee,
on behalf of the Issuer, of the Related Agreements to which
the Issuer is a party do not require any consent, approval or
authorization of, or any registration or filing with, any
8
governmental authority of the State of Delaware, except for
the filing of the Certificate of Trust with the Secretary of
State of the State of Delaware; and
(xii) neither the consummation by the Issuer of the
transactions contemplated by the Trust Agreement or the
transactions contemplated by the Related Agreements to which
the Issuer is a party, nor the fulfillment of the terms
thereof by the Issuer, will conflict with or result in a
breach or violation of any law of the State of Delaware.
Such opinion may contain such assumptions,
qualifications and limitations as are customary in opinions of this
type and are reasonably acceptable to counsel to the Initial Purchaser.
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction other than the Federal law
of the United States of America governing the banking and trust powers
of Wilmington Trust Company and the laws of the State of Delaware.
(g) The Initial Purchaser shall have received an
opinion of Xxxxxxxx Xxxxxx & Finger, special Delaware counsel for the
Issuer, dated the Closing Date, in form and substance satisfactory to
the Initial Purchaser and its counsel, to the effect that:
(i) the Trust Agreement is the legal, valid and
binding agreement of the Owner Trustee and QRS, enforceable
against the Owner Trustee and QRS in accordance with its terms
subject to (i) applicable bankruptcy, insolvency, moratorium,
receivership, reorganization, fraudulent conveyance and
similar laws relating to and affecting the rights and remedies
of creditors generally, (ii) principles of equity (regardless
of whether considered and applied in a proceeding in equity or
at law), and (iii) the effect of applicable public policy on
the enforceability of provisions relating to indemnification
or contribution;
(ii) the Certificate of Trust has been duly filed
with the Secretary of State of the State of Delaware, and the
Issuer has been duly formed and is validly existing as a
business trust under the Delaware Business Trust Act;
(iii) the Issuer has the power and authority under
the Trust Agreement and the Delaware Business Trust Act to
execute, deliver and perform its obligations under the Related
Agreements to which it is a party, the Notes, and the Trust
Certificates;
(iv) the Issuer has duly authorized and executed the
Related Agreements to which it is a party, the Notes, and the
Trust Certificates.
(v) the Issuer has the power under the Trust
Agreement and the Delaware Business Trust Act to pledge the
Collateral to the Indenture Trustee as security for the Notes;
9
and
(vi) the Trust Certificates have been executed and
delivered by the Owner Trustee on behalf of the Issuer in
accordance with the Trust Agreement, and when delivered to and
paid for pursuant to the Trust Agreement, the Trust
Certificates will be validly issued and outstanding, and the
holders of record of such Certificates will be entitled to the
benefits accorded by the Trust Agreement subject to (i)
applicable bankruptcy, insolvency, moratorium, receivership,
reorganization, fraudulent conveyance and similar laws
relating to and affecting the rights and remedies of creditors
generally, (ii) principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law),
and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or
contribution.
(h) the Initial Purchaser shall have received a copy
of the opinion of each of (i) Xxxxxx X. Xxxxxxxx, Esq., Senior Counsel
of the Indenture Trustee and (ii) Xxxxxx & Xxxxxxx, counsel to the
Indenture Trustee, dated the Closing Date and addressing the valid
existence of the Indenture Trustee under the laws of the jurisdiction
of its organization, the due authorization, execution and delivery of
the Indenture by the Indenture Trustee, and, subject to standard
limitations regarding laws affecting creditors' rights and general
principles of equity, the enforceability of the Indenture against the
Indenture Trustee. Such opinions may express their reliance as to
factual matters on representations and warranties made by, and on
certificates or other documents furnished by officers or authorized
representatives of parties to the Indenture and on certificates
furnished by public officials, and the opinion of Xxxxxx & Xxxxxxx may
rely on the opinion of Xxxxxx X. Xxxxxxxx, Esq., Senior Counsel of the
Indenture Trustee, as to due authorization and execution. Such opinions
may assume the due authorization, execution and delivery of the
documents referred to therein by the parties thereto other than the
party on behalf of which such opinion is being rendered. Each such
opinion may be qualified as an opinion only on the laws of each state
in which the writer of the opinion is admitted to practice law and the
federal law of the United States.
(i) the Initial Purchaser shall have received a copy
of the opinion of O'Melveny & Xxxxx LLP, special counsel to the Initial
Purchaser, dated the Closing Date and in form and substance reasonably
satisfactory to the Initial Purchaser.
(j) Bartlit Xxxx Xxxxxx Xxxxxxxxx & Xxxxx shall have
provided such true sale, first priority perfected security interest
and/or non-consolidation opinions to the Initial Purchaser as the
Initial Purchaser shall have requested; provided, however, that Bartlit
Xxxx Xxxxxx Xxxxxxxxx & Xxxxx may rely on the Opinion of Counsel of
Xxxxxx & Xxxxxxx (provided that such opinion shall be satisfactory to
the Initial Purchaser) with respect to matters of Illinois law and may
rely on the Opinion of Counsel of Xxxxxxxx Xxxxxx & Finger (provided
that such opinion shall be satisfactory to the Initial Purchaser) with
respect to matters of Delaware law necessary to render an opinion with
10
respect to perfection of a security interest.
(k) 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 Initial
Purchaser, and the Initial Purchaser shall have received such
information, certificates and documents as the Initial Purchaser may
have reasonably requested; and
(l) the Issuer shall have furnished such further
information, certificates, documents and opinions as the Initial
Purchaser may reasonably request.
If any of the conditions specified in this Section 3 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, if the Issuer is in breach of any covenants or agreements contained
herein, or if any of the opinions and certificates referred to above or
elsewhere in this Agreement shall not be in all material respects satisfactory
in form and substance to the Initial Purchaser and counsel for the Initial
Purchaser, this Agreement and all obligations of the Initial Purchaser hereunder
may be canceled by the Initial Purchaser at, or at any time prior to, the
Closing Date. Notice of such cancellation shall be given to the Issuer in
writing, delivered by hand, by messenger, mail, or by telecopy.
4. Covenants of QRS and the Issuer. In further consideration
of the agreements of the Initial Purchaser contained in this Agreement, QRS, and
the Issuer each covenants and agrees with the Initial Purchaser that:
(a) in connection with the resale of the Notes as
contemplated by Section 7, but subsequent to the Closing Date, QRS and
the Issuer will cause the Private Offering Memorandum to be prepared
setting forth the initial face amount of each Class of Notes covered
thereby and their terms and such other information as the Initial
Purchaser, QRS, and the Issuer deem appropriate in connection with the
exchange of the Notes issued on the Closing Date for Notes of equal
aggregate principal amount of Notes which will have been rated by the
Rating Agency;
(b) if, at any time prior to the completion of the
sale of the Notes by the Initial Purchaser, any event occurs as a
result of which the Private Offering Memorandum, 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 in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, QRS and/or
the Issuer will promptly notify the Initial Purchaser, and QRS, and the
Issuer shall prepare to furnish to the Initial Purchaser, in accordance
with Sections 4(e), 7(d) and 7(e), an amendment or supplement to the
Private Offering Memorandum that will correct such statement or
omission and shall furnish to the Initial Purchaser, without charge,
copies of the Private Offering Memorandum (including all exhibits and
documents incorporated by reference therein) and the Indenture and all
amendments or supplements to such documents, in each case as soon as
available and in such quantities as the Initial Purchaser may
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reasonably request;
(c) each of QRS, and the Issuer will immediately
inform the Initial Purchaser (i) of the receipt by any of them of any
communication from the Securities and Exchange Commission (the "SEC")
or any state securities authority concerning the offering or sale of
the Notes, and (ii) of the commencement of any lawsuit or proceeding to
which QRS, or the Issuer is a party relating to the offering or sale of
the Notes;
(d) to the extent, if any, that the rating provided
with respect to the Notes by the Rating Agency or any other statistical
rating agency which initially rates the Notes is conditional upon the
furnishing of documents or the taking of any other actions by the
Issuer, the Issuer shall use its best efforts to furnish such
documents, and to cause such documents to be furnished, and take any
such other actions; and
(e) during the period referred to in Section 4(b),
the Issuer will, at the Initial Purchaser's request, furnish through
the Initial Purchaser to any prospective purchaser of Notes from the
Initial Purchaser such information as is required to be delivered to
such prospective purchaser pursuant to Section 7(e).
5. Representations and Warranties of the Issuer and QRS.
(a) The Issuer represents and warrants to the Initial
Purchaser that:
(i) the Issuer has been duly formed and is
validly existing as a business trust in good standing under
the laws of the State of Delaware;
(ii) the Issuer has all requisite power and
authority (corporate and other) and all requisite
authorizations, approvals, order, licenses, certificates and
permits of and from all governmental or regulatory officials
and bodies necessary to own the Trust Estate, to conduct its
business and to execute, deliver and perform its obligations
under this Agreement, the Contribution Agreement and the
Indenture, except such as may be required under state
securities or "blue sky" laws in connection with the initial
purchase and any reoffer or resale by the Initial Purchaser of
the Notes; all such authorizations, approvals, orders,
licenses and certificates are in full force and effect and
contain no unduly burdensome provisions, and there are no
legal or governmental proceedings pending or, to the best
knowledge of the Issuer, threatened, that would result in a
material modification, suspension or revocation thereof;
(iii) the Notes have been duly authorized,
and when issued and delivered pursuant to this Agreement, will
have been duly executed, issued and delivered and will be
entitled to the benefits provided by the Indenture, subject,
as to enforcement, to applicable bankruptcy, reorganization,
12
insolvency, moratorium and other laws affecting the rights of
creditors generally, and to general principles of equity
(regardless of whether enforcement is sought a proceeding in
equity or at law), and will in all material respects be in the
form contemplated by the Indenture;
(iv) this Agreement, and each of the other
Related Agreements to which the Issuer is a party, has been
duly authorized, executed and delivered by the Issuer; and
each such agreement, assuming the due authorization by each
other party hereto or thereto, constitutes a legal, valid,
binding and enforceable agreement of the Issuer, subject, as
to enforceability, to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights
generally and to general principles of equity regardless of
whether enforcement is sought in a proceeding in equity or at
law;
(v) as of the Closing Date, the Notes and
all Related Agreements will each conform in all material
respects to the respective descriptions thereof contained in
the Related Agreements and on the Closing Date, the Issuer
(pursuant to the Indenture) will assign to the Indenture
Trustee, for the benefit of the Holders, certain
representations and warranties with respect to the Collateral
made by QRS to the Issuer in the Contribution Agreement, and
the representations and warranties will be true and correct in
all material respects;
(vi) assuming compliance by the Initial
Purchaser with its agreements set forth in Section 7 hereof
and that the Daiwa FLOWS Certificates have been issued by a
bankruptcy remote trust, no filing or registration with, or
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 Issuer of the transactions contemplated by
the Related Agreements or the Indenture, except such as have
been or will have been made or obtained prior to the Closing
Date, 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 Notes by the Initial Purchaser, and except such
recordation of the assignment of the Security interest in the
Collateral to the Indenture Trustee pursuant to the Indenture
that have not yet been filed;
(vii) the Issuer 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,
the Trust Estate and its other 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 and adversely affect the conduct
of the business, results of operations, or the net worth or
13
condition (financial or otherwise) of the Issuer;
(viii) there are no legal or governmental
proceedings pending to which the Issuer is a party or of which
any property of the Issuer is the subject which, if determined
adversely to the Issuer, would individually or in the
aggregate have a material and adverse effect on the condition
(financial or otherwise), earnings, affairs, business or
business prospects of the Issuer and, to the best of the
Issuer's knowledge, no such proceedings are threatened or
contemplated by any governmental authorities or other persons;
(ix) as of the Closing Date, each of the
representations and warranties made by the Issuer in any
Related Agreement will be true and correct as of the date made
and as the Closing Date;
(x) at the time of execution and delivery of
the Indenture, the Issuer will have good and marketable title
to the Collateral, free and clear of any lien, mortgage,
pledge, charge, encumbrance, adverse claim or other security
interest (collectively "Liens") (but subject to the prior
claim of FNMA in respect of the Daiwa Obligation), and will
not have assigned to any person any of its right, title or
interest in the Collateral, in the Indenture, or the Notes,
and at such time the Issuer will have the power and authority
to transfer the Notes to the Initial Purchaser, and, upon
execution and delivery to the Indenture Trustee of the
Indenture and delivery to the Initial Purchaser of the Notes,
the Issuer will have good and marketable title to the
Collateral and the Initial Purchaser will have good and
marketable title to the Notes, in each case free and clear of
any Liens;
(xi) any taxes, fees and other governmental
charges in connection with the execution and delivery of the
Related Agreements, or the execution, delivery and sale of the
Notes have been or will be paid on or prior to the Closing
Date;
(xii) neither the Issuer nor the Initial
Purchaser is, and the activities of the Issuer pursuant to
this Agreement and the Indenture will not cause the Issuer or
the Initial Purchaser to become, an "investment company" or to
be under the control of an "investment company," as such terms
are defined in the 1940 Act;
(xiii) the Indenture is not required to be
qualified under the Trust Indenture Act of 1939, as amended;
(xiv) the offer or sale of the Notes to the
Initial Purchaser in the manner contemplated hereby is exempt
from registration under the 1933 Act; the Notes meet the
eligibility requirements of Rule 144A(d)(3) under the 1933
Act; and the Issuer has not offered or sold, and will not
14
offer or sell, any Securities or any Note in any manner that
would render the issuance and sale of the Notes hereunder or
the reoffer and resale of the Notes as contemplated by Section
7 hereof a violation of the 1933 Act or, assuming compliance
by the Initial Purchaser with its agreements and undertakings
set forth in Section 7 hereof, any state securities or "blue
sky" laws or registration requirements pursuant thereto, nor
has it authorized, nor will it authorize, any person to act in
such manner. The Issuer has not offered or sold, and will not
offer or sell, any Notes other than in accordance with the
restrictions on transfer set forth in the Legend thereupon and
in the Indenture;
(xv) neither the Issuer nor any person
acting on its behalf has engaged in any form of general
solicitation or general advertising (as those terms are used
in Rule 502(c) under the 0000 Xxx) in connection with any
offer or sale of the Notes in the United States.
(xvi) Issuer has provided to the Initial
Purchaser all disclosure documents and trustee reports related
to the Collateral, to the extent such disclosure documents and
trustee reports are currently in the possession of Issuer and,
upon request of the Initial Purchaser, will provide to it
copies of any additional disclosure documents and pooling and
servicing agreements or indentures related to the Collateral.
The Issuer has no knowledge that any such disclosure documents
or trustee reports are not true and correct in all material
respects.
(b) QRS represents and warrants to the Initial
Purchaser that:
(i) QRS has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware;
(ii) QRS has all requisite power and
authority (corporate and other) and all requisite
authorizations, approvals, orders, licenses, certificates and
permits of and from all governmental or regulatory officials
and bodies necessary to own its properties, to conduct its
business and to execute, deliver and perform its obligations
under this Agreement and the other Related Agreements to which
it is a party, except such as may be required under state
securities or "blue sky" laws in connection with the initial
purchase and any reoffer or resale by the Initial Purchaser of
the Notes; all such authorizations, approvals, orders,
licenses and certificates are in full force and effect and
contain no unduly burdensome provisions; and there are no
legal or governmental proceedings pending or, to the best
knowledge of QRS, threatened, that would result in a material
modification, suspension or revocation thereof;
(iii) the Notes have been duly authorized,
and when issued and delivered pursuant to this Agreement, will
have been duly executed, issued and delivered and will be
15
entitled to the benefits provided by the Indenture, subject,
as to enforcement, to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting the rights of
creditors generally, and to general principles of equity
(regardless of whether enforcement is sought a proceeding in
equity or at law), and will in all material respects be in the
form contemplated by the Indenture;
(iv) this Agreement, and each of the other
Related Agreements to which it is a party, has been duly
authorized, executed and delivered by QRS, and, assuming the
due authorization by each other party hereto or thereto, each
such agreement constitutes a legal, valid, binding and
enforceable agreement of QRS, subject, as to enforceability,
to bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and to
general principles of equity regardless of whether enforcement
is sought in a proceeding in equity or at law;
(v) upon the execution and delivery of the
Contribution Agreement by QRS and the Company, QRS will have
acquired all right, title and interest in and to the
Collateral, and immediately prior to the transfer of the
Collateral to the Issuer as contemplated by the Trust
Agreement, QRS (A) will have good title to and will be the
sole owner of the Collateral, free and clear of any Lien (but
subject to the prior claim of FNMA in respect of the Daiwa
Obligation), (B) will not have assigned to any person other
than the Issuer any of its right, title or interest in the
Collateral and (C) will have the power and authority to
transfer the Collateral to the Issuer;
(vi) as of the Closing Date, the Notes and
all Related Agreements will each conform in all material
respects to the respective descriptions thereof contained in
the Related Agreements and on the Closing Date, QRS (pursuant
to the Trust Agreement) will assign to the Owner Trustee, on
behalf of the Issuer, certain representations and warranties
with respect to the Collateral made by the Company to QRS in
the Contribution Agreement, and the representations and
warranties will be true and correct in all material respects;
(vii) assuming compliance by the Initial
Purchaser with its agreements set forth in Section 7 hereof,
no filing or registration with, or 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 QRS of the transactions
contemplated by the Related Agreements except such as have
been or will have been made or obtained prior to the Closing
Date, 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 Notes by the Initial Purchaser, and except such
recordation of the assignment of the security interest in the
16
Collateral given to the Indenture Trustee pursuant to the
Indenture that has not yet been filed;
(viii) QRS 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 and adversely
affect the conduct of the business, results of operations, or
the net worth or condition (financial or otherwise) of QRS;
(ix) there are no legal or governmental
proceedings pending to which QRS is a party or of which any
property of QRS is the subject which, if determined adversely
to QRS, would individually or in the aggregate have a material
and adverse effect on the condition (financial or otherwise),
earnings, affairs, business or business prospects of QRS and,
to the best of the QRS' knowledge, no such proceedings are
threatened or contemplated by any governmental authorities or
other persons;
(x) as of the Closing Date, each of the
representations and warranties made by QRS in any Related
Agreement will be true and correct as of the date made and as
the Closing Date;
(xi) at the time of execution and delivery
of the Trust Agreement, QRS transferred good and marketable
title to the Collateral, free and clear of any lien (but
subject to the prior claim of the Federal National Mortgage
Association in respect of the assets underlying the Daiwa
FLOWS Certificates);
(xii) any taxes, fees and other governmental
charges in connection with the execution and delivery of this
Agreement, the Indenture, the Contribution Agreement, or the
Trust Agreement, or the execution, delivery and sale of the
Notes have been or will be paid on or prior to the Closing
Date;
(xiii) the Indenture is not required to be
qualified under the Trust Indenture Act of 1939, as amended;
(xiv) the offer or sale of the Notes to the
Initial Purchaser in the manner contemplated hereby is exempt
from registration under the 1933 Act; the Notes meet the
eligibility requirements of Rule 144A(d)(3) under the 1933
Act; and QRS has not offered or sold, and will not offer or
sell, any securities or any Note in any manner that would
render the issuance and sale of the Notes hereunder or the
reoffer and resale of the Notes as contemplated by Section 7
hereof a violation of the 1933 Act or, assuming compliance by
the Initial Purchaser with its agreements and undertakings set
forth in Section 7 hereof, any state securities or "blue sky"
17
laws or registration requirements pursuant thereto, nor has it
authorized, nor will it authorize, any person to act in such
manner.
(xv) neither QRS nor any person acting on
its behalf has engaged in any form of general solicitation or
general advertising (as those terms are used in Rule 502(c)
under the 0000 Xxx) in connection with any offer or sale of
the Notes in the United States;
(xvi) any taxes, fees and other governmental
charges in connection with the execution and delivery of the
Related Agreements or the execution, delivery and sale of the
Notes have been or will be paid at or prior to the Closing
Date; and
(xvii) QRS has provided to the Initial
Purchaser all disclosure documents and trustee reports related
to the Collateral, to the extent such disclosure documents and
trustee reports are currently in the possession of QRS and,
upon request of the Initial Purchaser, will provide to it
copies of any additional disclosure documents and pooling and
servicing agreements or indentures related to the Collateral.
QRS has no knowledge that any such disclosure documents or
trustee reports are not true and correct in all material
respects.
6. Conditions to the Obligation of the Issuer. The obligation
of the Issuer to sell the Notes to the Initial Purchaser will be subject to the
performance by the Initial Purchaser of its obligations hereunder.
7. Resales of Notes by the Initial Purchaser.
(a) The Initial Purchaser understands that the Notes have not
been registered under the 1933 Act, in reliance upon the exemption provided in
Section 4(2) thereof, and have not been registered or qualified under the
securities or "blue sky" laws of any state of other jurisdiction, in reliance
upon applicable state private placement exemptions. The Initial Purchaser also
agrees that it will not make a public offering of the Notes and that it will not
reoffer or resell the Notes in a manner that would require the registration of
the Notes under the 1933 Act or registration or qualification under any of the
securities or "blue sky" laws of any state or other jurisdiction. The Initial
Purchaser acknowledges that no action has been or will be taken by the Issuer,
QRS, or the Company that would permit a public offering of the Notes, or
possession or distribution of the Private Offering Memorandum, when prepared, or
any other offering materials in any jurisdiction where conditions or
requirements apply to such public offering and have not been fulfilled.
Accordingly, the Initial Purchaser agrees that it will observe all applicable
laws and regulations in each jurisdiction in or from which it purchases, offers,
sells or delivers the Notes or has in its possession or distributes the Private
18
Offering Memorandum, or any other offering materials, when the same is prepared.
(b) The Initial Purchaser acknowledges that the Issuer is
exempt from registration under the 1940 Act and agrees that it shall not reoffer
or resell the Notes in such a manner as to cause the Issuer to become subject to
registration under the 1940 Act.
(c) The Initial Purchaser agrees that it will not reoffer or
resell the Notes in a manner that would (i) cause the assets of the Issuer to be
regarded as plan assets and subject to the fiduciary responsibility provisions
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
the prohibited transaction provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), or any federal, state or local law which is, to a material
extent, similar to the foregoing provisions of ERISA or the Code ("Similar
Law"), (ii) give rise to a fiduciary duty under ERISA, Section 4975 of the Code,
or any Similar Law on the part of the Issuer, or (iii) constitute a prohibited
transaction under ERISA, Section 4975 of the Code, or any Similar Law.
(d) The Issuer authorizes the Initial Purchaser to deliver to
investors purchasing Notes from the Initial Purchaser ("Subsequent Noteholders")
copies of this Agreement, the Private Offering Memorandum, when prepared, any
amendments or supplements hereto or thereto, and any information obtained
pursuant hereto in connection with any reoffer or resale of the Notes by the
Initial Purchaser in accordance herewith; provided, however, that the Initial
Purchaser shall not use or disclose any such information in a manner
inconsistent with this Agreement. The Issuer agrees that any Subsequent
Noteholder may rely on the representations and warranties set forth in this
Agreement to the same extent as if such Subsequent Noteholder were a party
hereto.
(e) The Issuer shall cause the Indenture Trustee to provide to
any holder of the Notes, or to any prospective purchaser of the Notes, upon the
request of such holder, the information substantially equivalent in scope to the
information required at such time to be provided for securities qualifying for
resales under Rule 144A under the 1933 Act. This covenant is intended to be for
the benefit of the Holders from time to time of the Notes.
(f) Without prejudice to any other provision of this Section
7, the Issuer shall not have any responsibility for, and the Initial Purchaser
will obtain, any consent, approval or permission required for the purchase,
offer, sale or delivery by the Issuer of the Notes under the laws and
regulations in force in any jurisdiction to which it is subject or in or from
which it makes any purchase, offer, sale or delivery.
(g) The Initial Purchaser agrees to require that each
Subsequent Noteholder deliver letters or opinions of counsel, as required
pursuant to the Indenture, as a condition to the purchase of the Notes.
(h) The Initial Purchaser agrees during the period referred to
Section 4(b) to inform the Issuer if and when the Initial Purchaser has sold all
of the Notes.
19
(i) The Initial Purchaser understands that the Notes are
subject to the various restrictions on transfer described in the Indenture and
in the legend on the Note certificates and agrees to comply with such
restrictions on transfer. The Initial Purchaser has not engaged in and will not
engage in any form of general solicitation or general advertising (as those
terms are used in Rule 502(c) under the 0000 Xxx) in connection with any offer
or sale of the Notes.
(j) The Initial Purchaser agrees that there are no contracts,
agreements or understandings between the Initial Purchaser and any person
granting such person the right to require the Issuer or the Indenture Trustee to
file a registration statement under the 1933 Act with respect to any of the
Notes.
(k) The provisions of this Section 7 shall survive delivery of
and payment for the Notes.
20
8. Indemnification and Contribution.
(a) Each of the Issuer and QRS (each an "Indemnifying Party")
jointly and severally agrees to indemnify and hold harmless the Initial
Purchaser and its affiliates, and the respective directors, officers, agents and
employees of the Initial Purchaser and its affiliates and each other entity or
person, if any, controlling the Initial Purchaser or any of its affiliates
within the meaning of either Section 15 of the 1933 Act or Section 20 of the
1934 Act (the Initial Purchaser and each such entity or person being
collectively referred to as an "Indemnified Party"), from and against any
losses, claims, damages or liabilities (or actions in respect thereof) (i)
relating to or arising out of the action or inaction of the Issuer or QRS in
connection with this Agreement or any of the other Related Agreements, or (ii)
caused by any untrue statement or alleged untrue statement of a material fact
contained in the Private Offering Memorandum, when prepared, as the same may be
amended or supplemented (including but not limited to any documents deemed to be
incorporated therein by reference), or caused by any omission or alleged
omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading provided, however, that such untrue statement or alleged
untrue statement or omission or alleged omission is not based on information
furnished in writing to the Indemnifying Party by the Initial Purchaser
specifically for use in the Private Offering Memorandum, when prepared, and any
amendment or supplement thereto. The Indemnifying Parties will jointly and
severally reimburse any Indemnified Party for all reasonable expenses
(including, without limitation, fees and disbursements of counsel) incurred by
such Indemnified Party in connection with investigating, preparing or defending
any such action or claim, whether or not in connection with pending or
threatened litigation to which the Indemnified Party is a party, in each case,
as such expenses are incurred or paid. With respect to clause (i) above, an
Indemnifying Party will not, however, be responsible for any losses, claims,
damages or liabilities (or expenses relating thereto) that (x) directly result
from the non-receipt of a Private Offering Memorandum by an investor or
potential investor if such Private Offering Memorandums were provided in
sufficient quantities by the Issuer or QRS to (and actually received by) the
Initial Purchase in a timely manner, or (y) are finally judicially determined to
have resulted from the bad faith or gross negligence of any Indemnified Party.
Each Indemnifying Party also agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to an
Indemnifying Party for or in connection with this Agreement or the Indenture,
except for any such liability for losses, claims, damages or liabilities with
respect to clause (i) above incurred by such Indemnifying Party that are finally
judicially determined to have resulted from the bad faith or gross negligence of
such Indemnified Party.
(b) In case any proceeding (including any governmental
investigation) shall be instituted involving any Indemnified Party, such
Indemnified Party shall promptly notify each Indemnifying Party in writing and
the Indemnifying Party, upon request of the Indemnified Party, shall retain
counsel reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party and any others the Indemnifying Party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
21
such proceeding. In any such proceeding, any Indemnified Party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Party unless (i) the Issuer and the
Indemnified Party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both an Indemnifying Party and an Indemnified Party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
Indemnifying Party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm (in addition to any local counsel) for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by the Initial
Purchaser. An Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, such Indemnifying
Party agrees to indemnify the Indemnified Party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Party shall have requested an
Indemnifying Party to reimburse the Indemnified Party for fees and expenses of
counsel as contemplated by the third sentence of this paragraph, such
Indemnifying Party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by the Issuer of the aforesaid
request and (ii) such Indemnifying Party shall not have reimbursed the
Indemnified Party in accordance with such request prior to the date of such
settlement. An Indemnifying Party shall not, without the prior written consent
of the Indemnified Party, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Party from all liability on claims that are the subject matter of such
proceeding.
(c) If the indemnification provided for in the first paragraph
of Section 8(a) is unavailable to an Indemnified Party in respect of any losses,
claims, damages or liabilities referred to therein, then the Indemnifying Party
in lieu of indemnifying such Indemnified Party thereunder, shall contribute to
the amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Indemnifying Party, on the one
hand, and the Indemnified Party on the other hand, from the sales of the Notes
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 and of the Indemnified Party in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party, on the one hand, and the Indemnified
Party, on the other hand (i) in the case of any untrue or alleged untrue
statement of a material fact or any omission or alleged omission to state a
material fact, shall be determined by reference to, among other things, whether
such statement or omission relates to information supplied by an Indemnifying
22
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and (ii) in the
case of any other action or omission, shall be determined by reference to, among
other things, whether such action or omission was taken or omitted to be taken
by the Indemnifying Party or by the Indemnified Party and the parties' relative
intent, knowledge, access to information and opportunity to prevent such action
or omission.
(d) QRS, the Issuer and the Initial Purchaser agree that it
would not be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding any of the provisions of this Section 8, in no
event shall the Initial Purchaser's aggregate contribution to the amount paid or
payable exceed the aggregate amount of fees actually received by it under this
Agreement.
(e) The Initial Purchaser will indemnify and hold harmless the
Issuer, QRS and each person, if any, who controls any such party within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, to the same
extent as the foregoing indemnity from the Indemnifying Party to the Indemnified
Party, but only with reference to written information furnished to the Issuer as
herein stated by the Initial Purchaser specifically for use in connection with
the preparation of the documents referred to in the foregoing indemnity. This
indemnity will be in addition to any liability that the Initial Purchaser may
otherwise have.
9. Survival of Certain Representations and Obligations. The
respective representations, warranties, agreements, covenants, indemnities and
other statements of the Issuer, its officers, and the Initial Purchaser set
forth in, or made pursuant to, this 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 the Initial Purchaser, the Issuer 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 Notes. The provisions of Sections 8,
9 and 14 shall survive the termination or cancellation of this Agreement.
10. No Bankruptcy Filing. Each of the QRS and the Initial
Purchaser agrees not to cause the filing of a petition or otherwise institute
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceeding under any federal or state bankruptcy or similar
law against the Issuer until at least one year and one day after the payment in
full of all Classes of the Notes issued under the Indenture.
11. Issuance of Substitute Notes. In order to facilitate
resales of Notes by the Initial Purchaser to Holders, the Initial Purchaser may,
at its option, exchange the Notes without charge for one or more classes of
substitute notes to be issued pursuant to the Indenture ("Substitute Notes")
23
that may have different initial principal balances, interest rates or maturities
than those of the Notes; provided, however, that QRS will cooperate in preparing
or effectuating any amendment to the Indenture or the Private Placement
Memorandum necessary in connection with such reallocation; further provided that
the issuance of Substitute Notes will not decrease the amount of Equity Interest
relative to the aggregate Note Principal Balance or the right of the Equity
Interest relative to the Notes to receive payments of Available Funds pursuant
to the Indenture as of the Closing Date.
12. Right to Sell in Various Jurisdictions. The Issuer shall
have no responsibility with respect to the right of the Initial Purchaser or any
other person to offer or sell the Notes in any jurisdiction. In the event that
QRS furnishes notification to the Initial Purchaser pursuant to Section 4(b)
hereof, the Initial Purchaser shall not make any further distribution of the
Private Offering Memorandum until such time as the Issuer shall have furnished
to the Initial Purchaser copies of an amendment or supplement to the Private
Offering Memorandum in accordance with the provision of Section 7 hereof.
13. Payment of Fees and Expenses. Subject to the terms of the
Side Letter Agreement, QRS shall be responsible for and shall pay all of the
fees, disbursements and expenses of the Company's and QRS' counsel and
accountants.
14. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Initial Purchaser, will be
mailed, delivered or telecopied to
PaineWebber Incorporated
1285 Avenue of the Xxxxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: 000-000-0000
Telephone: 000 000-0000
Attention: Xxxxxx X. Xxxxx
or, if sent to QRS, will be mailed, delivered or telecopied to it at:
CAX DTR Securitization Corp.
0000 X. Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxx
or, if sent to the Issuer, will be mailed, delivered or telecopied to it at:
Structured Mortgage Trust 1997-2
c/o Wilmington Trust Company
Xxxxxx Square
0000 Xxxxx Xxxxxx Xxxxxx
00
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Corporate Trust Department
15. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and their successors and assigns, and no other person
will have any right or obligation hereunder.
16. Applicable Law; Counterparts. THIS AGREEMENT WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
This Agreement may be executed in any number of counterparts, each of which
shall for all purposes be deemed to be an original and all of which shall
together constitute but one and the same instrument.
17. Time of the Essence. Time shall be of the essence of this
Agreement.
[Signatures Commence On Following Page]
25
If the foregoing is in accordance with your understanding or
our agreement, please sign and return to us a counterpart hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the Issuer,
QRS and the Initial Purchaser.
Very truly yours,
STRUCTURED MORTGAGE TRUST 1997-2,
a Delaware business trust,
By: Wilmington Trust Company, not
individually, but solely in its
capacity as Owner Trustee,
By: /s/Xxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
CAX DTR SECURITIZATION CORP.,
a Delaware corporation,
By: /s/Xxxxx Xxxxxxxxx
----------------------------
Name: Xxxxx Xxxxxxxxx
Title: President & Secretary
Agreed to and accepted as of
the date set forth above at
New York, New York
PAINEWEBBER INCORPORATED,
a Delaware corporation,
as Purchaser
By: /s/Xxxxxx X. Xxxxx
--------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Director
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