EXHIBIT 1.1
EXECUTION COPY
ACCREDITED HOME LENDERS, INC.
AND
XXXXXX BROTHERS INC.
UNDERWRITING AGREEMENT
FOR
ACCREDITED MORTGAGE LOAN TRUST 2000-1
MORTGAGE-BACKED NOTES
7.94% CLASS A-1 NOTES
CLASS A-2 VARIABLE RATE NOTES
February 24, 2000
February 24, 2000
Accredited Home Lenders, Inc.
00000 Xxxxxx xx Xxxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Xxxxxx Brothers Inc.
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Accredited Home Lenders, Inc. (the "Sponsor") has entered into a Trust
Agreement dated as of February 1, 2000 (the "Trust Agreement") with Wilmington
Trust Company (the "Owner Trustee") creating Accredited Mortgage Loan Trust
2000-1(the "Trust"), a statutory business trust established under the laws of
the State of Delaware. The Trust has been established for the purpose of issuing
Asset Backed Notes, Class A-1 (the "Class A-1 Notes") and Class A-2 (the "Class
A-2 Notes," and together with the Class A-1 Notes, the "Notes") and certain
ownership interests (the "Ownership Interests" and, together with the Notes, the
"Securities").
Only the Notes are being purchased by Xxxxxx Brothers Inc. (the
"Underwriter") in the amount set forth on Schedule A hereto.
Each class of Notes will be secured by the assets of a Sub-Trust of the
Trust consisting of a pool of closed-end mortgage loans (the "Mortgage Loans")
conveyed to the Trust by the Sponsor pursuant to a sale and servicing agreement
dated as of February 1, 2000 (the "Sale and Servicing Agreement") among the
Trust, the Sponsor, as Sponsor and in its capacity as master servicer (the
"Master Servicer") and Advanta Mortgage Corp. USA in its capacity as backup
servicer (the "Backup Servicer").
The Notes will be issued pursuant to an indenture to be dated as of
February 1, 2000 (the "Indenture") between the Trust, as issuer and Norwest Bank
Minnesota, National Association, as indenture trustee (the "Indenture Trustee").
The Ownership Interest will evidence fractional undivided interests in the
property held in the Trust. The aggregate principal balance of the Notes will be
equal to $173,476,000, which represents approximately 100% of the outstanding
principal balances of the Mortgage Loans as of the close of business on January
31, 2000 (the "Cut-Off Date") after giving effect to scheduled payments due on
February 1, 2000 plus amounts deposited in the pre-funding accounts.
The Notes will have the benefit of a note guaranty insurance policy
(the "Policy") issued by Financial Security Assurance Inc. (the "Note Insurer")
pursuant to an insurance and indemnity agreement (the "Insurance and Indemnity
Agreement") to be dated as of February 1, 2000 among the Sponsor, the Master
Servicer, the Indenture Trustee and the Insurer.
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It is intended that additional Mortgage Loans satisfying the
criteria specified in the Sale and Servicing Agreement, will be purchased by
the Trust for inclusion in both Group 1 and Group 2 from the Sponsor from
time to time on or before March 31, 2000 from funds on deposit in pre-funding
accounts (the "Pre-Funding Accounts") at the time of execution and delivery
of each Subsequent Transfer Agreement ("Subsequent Transfer Agreement").
Funds in capitalized interest accounts (the "Capitalized Interest Accounts")
will be applied by the Trustee to cover shortfalls in interest during the
Funding Period.
All capitalized terms used but not otherwise defined herein have the
respective meanings set forth in the form Sale and Servicing Agreement,
heretofore delivered to the Underwriter.
1. REPRESENTATIONS AND WARRANTIES OF THE SPONSOR. The Sponsor
represents and warrants to, and covenants with, the Underwriter that:
A. The Sponsor has filed with the Securities and Exchange Commission
(the "Commission"), a registration statement (No. 333-07219) on Form S-3 for the
registration under the Securities Act of 1933, as amended (the "Act"), of Asset
Backed Notes and Certificates (issuable in series), which registration
statement, as amended at the date hereof, has become effective. Such
registration statement, as amended to the date of this Agreement, meets the
requirements set forth in Rule 415(a)(1)(vii) under the Act and complies in all
other material respects with such Rule. The Sponsor proposes to file with the
Commission pursuant to Rule 424(b)(5) under the Act, a supplement dated February
24, 2000 to the prospectus dated February 24, 2000 relating to the Notes and the
method of distribution thereof and has previously advised the Underwriter of all
further information (financial and other) with respect to the Notes to be set
forth therein. Such registration statement, including the exhibits thereto, as
amended at the date hereof, is hereinafter called the "Registration Statement";
such prospectus dated February 24, 2000, in the form in which it will be filed
with the Commission pursuant to Rule 424(b)(5) under the Act is hereinafter
called the "Basic Prospectus"; such supplement dated February 24, 2000 to the
Basic Prospectus, in the form in which it will be filed with the Commission
pursuant to Rule 424(b)(5) of the Act, is hereinafter called the "Prospectus
Supplement"; and the Basic Prospectus and the Prospectus Supplement together are
hereinafter called the "Prospectus." There are no contracts or documents of the
Sponsor which are required to be filed as exhibits to the Registration Statement
pursuant to the Act or the Rules and Regulations which have not been so filed or
incorporated by reference therein on or prior to the effective date of the
Registration Statement. The conditions for use by the Sponsor of the
Registration Statement on Form S-3 under the Act have been satisfied. The
Sponsor will file with the Commission (i) promptly after receipt from the
Underwriter of any Derived Information (as defined herein) a Form 8-K
incorporating such Derived Information and (ii) within fifteen days of the
issuance of the Notes a report on Form 8-K setting forth specific information
concerning the related Mortgage Loans (the "8-K").
B. As of the date hereof, when the Registration Statement became
effective, when the Prospectus Supplement is first filed pursuant to Rule
424(b)(5) under the Act and at the Closing Date, (i) the Registration Statement,
as amended as of any such time, and the Prospectus, as amended or supplemented
as of any such time, will comply in all material respects with the applicable
requirements of the Act and the rules and regulations thereunder and (ii) the
Registration Statement, as amended as of any such time, did not and will not
contain any untrue
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statement of a material fact and did not and will not omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and the Prospectus, as amended or
supplemented as of any such time, did not and will not contain an untrue
statement of a material fact and did not and will not omit to state a
material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided,
however, that the Sponsor makes no representations or warranties as to the
information contained in or omitted from the Prospectus Supplement or any
amendment thereof or supplement thereto in reliance upon and in conformity
with the information furnished in writing to the Sponsor by or on behalf of
the Underwriter specifically for use in connection with the preparation of
the Prospectus Supplement.
C. The Sponsor is duly organized, validly existing and in good standing
under the laws of the State of California, has full power and authority
(corporate and other) to own its properties and conduct its business as now
conducted by it, and as described in the Prospectus, and is duly qualified to do
business in each jurisdiction in which it owns or leases real property (to the
extent such qualification is required by applicable law) or in which the conduct
of its business requires such qualification except where the failure to be so
qualified does not involve a material risk to, or a material adverse effect on,
the business, properties, financial position, operations or results of
operations of the Sponsor.
D. There are no actions, proceedings or investigations pending, or, to
the knowledge of the Sponsor, threatened, before any court, governmental agency
or body or other tribunal (i) asserting the invalidity of this Agreement, the
Notes, the Insurance and Indemnity Agreement, the Indemnification Agreement, the
Trust Agreement, the Indenture or of the Sale and Servicing Agreement, (ii)
seeking to prevent the issuance of the Notes or the consummation of any of the
transactions contemplated by this Agreement, the Trust Agreement, the Indenture,
the Sale and Servicing Agreement or any Subsequent Transfer Agreement, (iii)
which may, individually or in the aggregate, materially and adversely affect the
performance by the Sponsor of its obligations under, or the validity or
enforceability of, this Agreement, the Notes, the Trust Agreement, the Sale and
Servicing Agreement or any Subsequent Transfer Agreement, or (iv) which may
affect adversely the federal income tax attributes of the Notes as described in
the Prospectus.
E. The execution and delivery by the Sponsor of this Agreement, the
Insurance and Indemnity Agreement, the Indemnification Agreement, the Trust
Agreement and the Sale and Servicing Agreement, the issuance of the Securities
and the transfer and delivery of the Mortgage Loans to the Trust by the Sponsor
and the consummation of the transactions contemplated by this Agreement, the
Insurance and Indemnity Agreement, the Indemnification Agreement, the Trust
Agreement, and the Sale and Servicing Agreement are within the corporate power
of the Sponsor and have been, or will be, prior to the Closing Date duly
authorized by all necessary corporate action on the part of the Sponsor and the
execution and delivery of such instruments, the consummation of the transactions
therein contemplated and compliance with the provisions thereof will not result
in a breach or violation of any of the terms and provisions of, or constitute a
default under, any statute or any agreement or instrument to which the Sponsor
or any of its affiliates is a party or by which it or any of them is bound or to
which any of the property of the Sponsor or any of its affiliates is subject,
the Sponsor's charter or bylaws, or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Sponsor, any of its affiliates or any of its or their properties; and no
consent,
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approval, authorization or order of, or filing with, any court or
governmental agency or body or other tribunal is required for the
consummation of the transactions contemplated by this Agreement or the
Prospectus in connection with the issuance and sale of the Securities by the
Sponsor except pursuant to the Act. Neither the Sponsor nor any of its
affiliates is a party to, bound by or in breach or violation of any indenture
or other agreement or instrument, or subject to or in violation of any
statute, order, rule or regulation of any court, governmental agency or body
or other tribunal having jurisdiction over the Sponsor or any of its
affiliates, which materially and adversely affects, or may in the future
materially and adversely affect, (i) the ability of the Sponsor to perform
its obligations under the Trust Agreement, the Sale and Servicing Agreement,
this Agreement, the Insurance and Indemnity Agreement and any Subsequent
Transfer Agreement or (ii) the business, operations, results of operations,
financial position, income, properties or assets of the Sponsor, taken as a
whole.
F. This Agreement has been duly executed and delivered by the Sponsor,
and on or prior to the Closing Date, the Trust Agreement, the Sale and Servicing
Agreement, the Indemnification Agreement and the Insurance and Indemnity
Agreement will be duly executed and delivered by the Sponsor, and each
constitutes and/or will constitute, as applicable, the legal, valid and binding
obligation of the Sponsor enforceable in accordance with their respective terms,
except as enforceability may be limited by (i) bankruptcy, insolvency,
liquidation, receivership, moratorium, reorganization or other similar laws
affecting the enforcement of the rights of creditors and (ii) general principles
of equity, whether enforcement is sought in a proceeding at law or in equity.
G. The Notes will conform in all material respects to the description
thereof to be contained in the Prospectus and will be duly and validly
authorized and, when duly and validly executed, authenticated, issued and
delivered in accordance with the Indenture and sold to the Underwriter as
provided herein, will be validly issued and outstanding and entitled to the
benefits of the Indenture.
H. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance of the Securities and the sale of the Notes
to the Underwriter, or for the consummation by the Sponsor, of the other
transactions contemplated by this Agreement, the Trust Agreement, the Indenture,
the Sale and Servicing Agreement, the Insurance and Indemnity Agreement, the
Indemnification Agreement and any Subsequent Transfer Agreement, other than
those that have been obtained.
I. On the Closing Date, the Initial Mortgage Loans will conform in all
material respects to the description thereof contained in the Prospectus and the
representations and warranties contained in this Agreement will be true and
correct in all material respects. The representations and warranties set out in
the Sale and Servicing Agreement are hereby made to the Underwriter as though
set out herein, and at the dates specified in the Sale and Servicing Agreement,
and in any Subsequent Transfer Agreement, such representations and warranties
were, or will be, true and correct in all material respects.
J. On the Closing Date, (x) the Sponsor will have good title to the
Initial Mortgage Loans free of any liens, (y) the Owner Trustee on behalf of the
Trust will have acquired
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ownership of the Sponsor's right, title and interest in the Initial Mortgage
Loans and (z) the Underwriter will have good title to the Notes free of any
liens.
K. The Sponsor possesses all material licenses, certificates, permits
or other authorizations issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct the business now operated by
it and as described in the Prospectus and there are no proceedings, pending or,
to the best knowledge of the Sponsor, threatened, relating to the revocation or
modification of any such license, certificate, permit or other authorization
which singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the business,
operations, results of operations, financial position, income, property or
assets of the Sponsor taken as a whole.
L. Any taxes, fees and other governmental charges in connection with
the execution and delivery of this Agreement, the Insurance and Indemnity
Agreement, the Trust Agreement, the Indemnification Agreement and the Sale and
Servicing Agreement or the execution and issuance of the Securities have been or
will be paid on or prior to the Closing Date.
M. There has not been any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Sponsor or its
subsidiaries, taken as a whole, from December 31, 1998, to the date hereof.
N. This Agreement, the Trust Agreement, the Indenture and the Sale and
Servicing Agreement will conform in all material respects to the descriptions
thereof contained in the Prospectus.
O. The Sponsor is not aware of (i) any request by the Commission for
any further amendment of the Registration Statement or the Prospectus or for any
additional information, (ii) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose or (iii) any notification with
respect to the suspension of the qualification of the Notes for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose.
P. Each assignment of Mortgages required to be prepared pursuant to the
Sale and Servicing Agreement is based on forms recently utilized by the Sponsor
with respect to mortgaged properties located in the appropriate jurisdiction and
used in the regular course of the Sponsor's business. Upon execution each such
assignment will be in recordable form and will be sufficient to effect the
assignment of the Mortgage to which it relates as provided in the Sale and
Servicing Agreement.
Q. The Sponsor is eligible to use the Registration Statement.
R. Neither the Sponsor nor the Trust created by the Trust Agreement is
an "investment company" within the meaning of such term under the Investment
Company Act of 1940 (the "1940 Act") and the rules and regulations of the
Commission thereunder.
S. On the Closing Date, the Notes shall have been rated in the highest
rating category by at least two nationally recognized rating agencies.
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T. The Sponsor is not in violation of its articles of incorporation
or by-laws or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Sponsor is a party or by which it or its properties may be bound, which
default might result in any material adverse changes in the financial
condition, earnings, affairs or business of the Sponsor or which might
materially and adversely affect the properties or assets, taken as a whole,
of the Sponsor.
U. To the best knowledge of the Sponsor, Deloitte & Touche LLP are
independent public accountants with respect to the Sponsor as required by the
Securities Act and the Rules and Regulations.
Any certificate signed by any officer of the Sponsor and delivered to
the Underwriter in connection with the sale of the Notes hereunder shall be
deemed a representation and warranty as to the matters covered thereby by the
Sponsor to each person to whom the representations and warranties in this
Section 1 are made.
2. AGREEMENTS OF THE UNDERWRITER. The Underwriter agrees with the
Sponsor that upon the execution of this Agreement and authorization by the
Underwriter of the release of the Notes, the Underwriter shall offer the Notes
for sale upon the terms and conditions set forth in the Prospectus as amended or
supplemented.
3. PURCHASE, SALE AND DELIVERY OF THE NOTES. The Sponsor hereby agrees,
subject to the terms and conditions hereof, to sell the Notes to the
Underwriter, who, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, hereby agrees to
purchase the entire aggregate principal amount of the Notes, consisting of the
Class A-1 Notes in the amount of $53,047,000 and the Class A-2 Notes in the
amount of $120,429,000. At the time of issuance of the Notes, the Initial
Mortgage Loans will be sold by the Sponsor to the Trust pursuant to the Sale and
Servicing Agreement. It is intended that the Subsequent Mortgage Loans will be
purchased by the Trust for inclusion in both Mortgage Loan Groups, from time to
time on or before March 31, 2000. The Master Servicer will be obligated, under
the Sale and Servicing Agreement, to service the Mortgage Loans either directly
or through sub-servicers.
The Notes to be purchased by the Underwriter will be delivered by the
Sponsor to the Underwriter (which delivery shall be made through the facilities
of The Depository Trust Company ("DTC")) against payment of the purchase price
therefor, set forth on Schedule 1 hereto, by a same day federal funds wire
payable to the order of the Sponsor.
Settlement shall take place at the offices of Xxxxx & Wood LLP, Xxx
Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, at 10:00 a.m. (E.S.T.), on February 29,
2000, or at such other time thereafter as the Underwriter and the Sponsor
determine (such time being herein referred to as the "Closing Date"). The Notes
will be prepared in definitive form and in such authorized denominations as the
Underwriter may request, registered in the name of Cede & Co., as nominee of
DTC.
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The Sponsor agrees to have the Notes available for inspection and
review by the Underwriter in New York City not later than 1:00 p.m. (E.S.T.)
on the business day prior to the Closing Date.
4. COVENANTS OF THE SPONSOR. The Sponsor covenants and agrees with the
Underwriter that:
A. The Sponsor will promptly advise the Underwriter and its counsel (i)
when any amendment to the Registration Statement shall have become effective,
(ii) of any request by the Commission for any amendment to the Registration
Statement or the Prospectus or for any additional information, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding for
that purpose and (iv) of the receipt by the Sponsor of any notification with
respect to the suspension of the qualification of the Notes for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Sponsor will not file any amendment to the Registration Statement
or supplement to the Prospectus after the date hereof and prior to the Closing
Date for the Notes unless the Sponsor has furnished the Underwriter and its
counsel copies of such amendment or supplement for their review prior to filing
and will not file any such proposed amendment or supplement to which the
Underwriter reasonably objects. The Sponsor will use its best efforts to prevent
the issuance of any stop order suspending the effectiveness of the Registration
Statement and, if issued, to obtain as soon as possible the withdrawal thereof.
B. If, at any time during the period in which the Prospectus is
required by law to be delivered, 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 necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Act or the rules under the Act, the Sponsor will
promptly prepare and file with the Commission, subject to Paragraph A of this
Section 4, an amendment or supplement that will correct such statement or
omission or an amendment that will effect such compliance and, if such amendment
or supplement is required to be contained in a post-effective amendment to the
Registration Statement, will use its best efforts to cause such amendment of the
Registration Statement to be made effective as soon as possible.
C. The Sponsor will furnish to the Underwriter, without charge,
executed copies of the Registration Statement (including exhibits thereto) and,
so long as delivery of a Prospectus by the Underwriter or a dealer may be
required by the Act, as many copies of the Prospectus, as amended or
supplemented, and any amendments and supplements thereto as the Underwriter may
reasonably request. The Sponsor will pay the expenses of printing (or otherwise
reproducing) all offering documents relating to the offering of the Notes.
D. As soon as practicable, but not later than sixteen months after the
date hereof, the Sponsor will cause the Trust to make generally available to
Noteholders an earning statement of the Trust covering a period of at least 12
months beginning after the effective date of the Registration Statement which
will satisfy the provisions of Section 11(a) of the Act and, at the option of
the Sponsor, will satisfy the requirements of Rule 158 under the Act.
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E. During a period of thirty calendar days from the date as of which
this Agreement is executed, neither the Sponsor nor any affiliate of the
Sponsor will, without the Underwriter's prior written consent (which consent
shall not be unreasonably withheld), enter into any agreement to offer or
sell mortgage loan asset-backed securities backed by mortgage loans, except
pursuant to this Agreement.
F. So long as any of the Notes are outstanding, the Sponsor will cause
to be delivered to the Underwriter (i) all documents required to be distributed
to Noteholders and (ii) from time to time, any other information concerning the
Trust filed with any government or regulatory authority that is otherwise
publicly available.
G. The Sponsor, whether or not the transactions contemplated hereunder
are consummated or this Agreement is terminated, will pay all expenses in
connection with the transactions contemplated herein, including, but not limited
to, the expenses of printing (or otherwise reproducing) all documents relating
to the offering, the reasonable fees and disbursements of its counsel and
expenses of the Underwriter (including the reasonable fees and disbursements of
Xxxxx & Xxxx LLP, as special counsel to the Underwriter) incurred in connection
with (i) the issuance and delivery of the Notes, (ii) preparation, printing,
reproducing and delivery of all documents specified in this Agreement, (iii) any
fees and expenses of the Owner Trustee, the Indenture Trustee, the Note Insurer
and any other credit support provider (including legal fees), accounting fees
and disbursements, and (iv) any fees charged by investment rating agencies for
rating and/or monitoring the Notes.
H. The Sponsor agrees that, so long as the Sponsor shall be acting as
the Master Servicer, it will deliver or cause to be delivered to the Underwriter
(i) the annual statement as to compliance delivered to the Indenture Trustee
pursuant to the Sale and Servicing Agreement, (ii) the annual statement of a
firm of independent public accountants furnished to the Indenture Trustee
pursuant to the Sale and Servicing Agreement as soon as such statement is
furnished to the Sponsor and (iii) any information required to be delivered by
the Sponsor or the Master Servicer to the Indenture Trustee in order for the
Indenture Trustee to prepare the report required pursuant to Section 7.03 of the
form of Indenture heretofore delivered to the Underwriter.
I. The Sponsor will enter into the Trust Agreement, the Sale and
Servicing Agreement, the Insurance and Indemnity Agreement, and all related
agreements on or prior to the Closing Date.
J. The Sponsor will endeavor to qualify the Notes for sale to the
extent necessary under any state securities or Blue Sky laws in any
jurisdictions as may be reasonably requested by the Underwriter, if any, and
will pay all expenses (including fees and disbursements of counsel) in
connection with such qualification and in connection with the determination of
the eligibility of the Notes for investment under the laws of such jurisdictions
as the Underwriter may reasonably designate, if any.
5. CONDITIONS OF THE UNDERWRITER'S OBLIGATION. The obligation of the
Underwriter to purchase and pay for the Notes as provided herein shall be
subject to the accuracy as of the date hereof and the Closing Date (as if made
at the Closing Date) of the representations and warranties of the Sponsor
contained herein (including those representations and warranties set
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forth in the Sale and Servicing Agreement and incorporated herein), to the
accuracy of the statements of the Sponsor made in any certificate or other
document delivered pursuant to the provisions hereof, to the performance by
the Sponsor of its obligations hereunder, and to the following additional
conditions:
A. The Registration Statement shall have become effective no later than
the date hereof, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened, and the Prospectus shall have
been filed pursuant to Rule 424(b).
B. The Underwriter shall have received the Trust Agreement, the Sale
and Servicing Agreement, the Indenture and the Notes in form and substance
satisfactory to the Underwriter, duly executed by all signatories required
pursuant to the respective terms thereof.
C.1. The Underwriter shall have received the favorable opinion of the
General Counsel to the Sponsor, with respect to the following items, dated the
Closing Date, to the effect that:
(a) The Sponsor has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of California, and is qualified to do business in each state necessary
to enable it to perform its obligations as Servicer under the Sale and
Servicing Agreement. The Sponsor has the requisite power and authority
to execute and deliver, engage in the transactions contemplated by, and
perform and observe the conditions of, this Agreement, the Trust
Agreement, the Sale and Servicing Agreement, any Subsequent Transfer
Agreement, the Indemnification Agreement and the Insurance and
Indemnity Agreement.
(b) This Agreement, the Trust Agreement, the Sale and
Servicing Agreement and the Insurance and Indemnity Agreement have been
duly and validly authorized, executed and delivered by the Sponsor, all
requisite corporate action having been taken with respect thereto, and
each constitutes the valid, legal and binding agreement of the Sponsor
enforceable against the Sponsor in accordance with its respective
terms; and the Securities have been duly and validly authorized and
delivered by the Sponsor, all requisite corporate action having been
taken with respect thereto.
(c) Neither the transfer of the Initial Mortgage Loans to the
Trust, the issuance of the Securities or sale of the Notes, the
execution, delivery or performance by the Sponsor of the Trust
Agreement, the Sale and Servicing Agreement, this Agreement, any
Subsequent Transfer Agreement, the Indemnification Agreement or the
Insurance and Indemnity Agreement nor the consummation of the
transactions contemplated therein. (A) conflicts or will conflict with
or results or will result in a breach of, or constitutes or will
constitute a default under, (i) any term or provision of the articles
of incorporation or bylaws of the Sponsor; (ii) any term or provision
of any material agreement, contract, instrument or indenture, to which
the Sponsor is a party or by which it 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 Sponsor;
or (B) results in, or will result in the creation or imposition of any
lien, charge or
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encumbrance upon the Trust or upon the Notes, except as otherwise
contemplated by the Indenture and the Sale and Servicing Agreement.
(d) The endorsement and delivery of each Mortgage Note, and
the preparation, delivery and recording of an Assignment in recordable
form, with respect to each Mortgage, as and in the manner contemplated
by the Sale and Servicing Agreement, is sufficient fully to transfer to
the Indenture Trustee for the benefit of the Noteholders all right,
title and interest of the Sponsor in the Mortgage Note and Mortgage, as
noteholder and mortgagee or assignee thereof, and will be sufficient to
permit the Indenture Trustee to avail itself of all protection
available under applicable law against the claims of any present or
future creditors of the Sponsor and to prevent any other sale,
transfer, assignment, pledge or other encumbrance of the Mortgage Loans
by the Sponsor from being enforceable.
(e) No consent, approval, authorization or order of,
registration or filing with, or notice to, courts, governmental agency
or body or other tribunal is required under the laws of the State of
California, for the execution, delivery and performance of the Trust
Agreement, the Sale and Servicing Agreement, the Insurance and
Indemnity Agreement, the Indemnification Agreement, this Agreement or
the offer, issuance, sale or delivery of the Notes or the consummation
of any other transaction contemplated thereby by the Sponsor, except
such which have been obtained.
(f) The Sponsor possesses all material licenses, certificates,
permits or other authorizations issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct
the business now operated by it and as described in the Prospectus and
there are no proceedings, pending or, to such counsel's knowledge,
threatened, relating to the revocation or modification of any such
license, certificate, permit or other authorization which singly or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially and adversely affect the business,
operations, results of operations, financial position, income, property
or assets of the Sponsor taken as a whole.
(g) There are no actions, proceedings or investigations
pending or, to such counsel's knowledge, threatened against the Sponsor
before any court, governmental agency or body or other tribunal (i)
asserting the invalidity of the Trust Agreement, the Sale and Servicing
Agreement, the Insurance and Indemnity Agreement, the Indemnification
Agreement, this Agreement or the Notes, (ii) seeking to prevent the
issuance of the Notes or the consummation of any of the transactions
contemplated by the Trust Agreement, the Sale and Servicing Agreement,
the Indemnification Agreement, the Insurance and Indemnity Agreement or
this Agreement or (iii) which would materially and adversely affect the
performance by the Sponsor of obligations under, or the validity or
enforceability of, the Trust Agreement, the Sale and Servicing
Agreement, the Notes, the Indemnification Agreement, the Insurance and
Indemnity Agreement or this Agreement.
(h) The statements in the Prospectus under the caption
"MATERIAL LEGAL ASPECTS OF THE LOANS," to the extent that statements in
such section constitute
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matters of law or legal conclusions with respect thereto, have been
reviewed by attorneys under the supervision of General Counsel to
the Sponsor and are complete and correct in all material respects.
2. The Underwriter shall have received the favorable opinion of Xxxxx
Xxxxxxxxxx LLP, special counsel to the Sponsor, dated the Closing Date, to the
effect that:
(a) The Notes, assuming due execution and authentication by
the Trustee, and delivery and payment therefor pursuant to this
Agreement are validly issued and outstanding and are entitled to the
benefits of the Indenture.
(b) 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 by the Sponsor of the
Trust Agreement, the Sale and Servicing Agreement, this Agreement, any
Subsequent Transfer Agreement, the Insurance and Indemnity Agreement,
the Indemnification Agreement or the offer, issue, sale or delivery of
the Notes or the consummation of any other transaction contemplated
thereby by the Sponsor, except such which have been obtained.
(c) Neither the transfer of the Initial Mortgage Loans to the
Indenture Trustee, the issuance of the Securities or sale of the Notes,
nor the execution, delivery or performance by the Sponsor of the Trust
Agreement, the Sale and Servicing Agreement, the Insurance and
Indemnity Agreement, the Indemnification Agreement, any Subsequent
Transfer Agreement or this Agreement will (a) conflict with or result
in a breach of, or constitute a default under any law, rule or
regulation of the State of New York or the federal government, or (b)
to such counsel's knowledge, without independent investigation, results
in, or will result in, the creation or imposition of any lien, charge
or encumbrance upon the Trust or upon the Notes, except as otherwise
contemplated by the Indenture or the Sale and Servicing Agreement.
(d) Each Subsequent Transfer Agreement at the time of its
execution and delivery will be sufficient to convey all of the
Sponsor's right, title and interest in the Subsequent Mortgage Loans to
the Indenture Trustee and following the consummation of the transaction
contemplated by each Subsequent Transfer Agreement, the transfer of the
Subsequent Mortgage Loans by the Sponsor to the Trust will be a sale
thereof.
(e) The Registration Statement has become effective under the
Act, no objection to the use of Form S-3 with respect to the
Registration Statement was made by the Commission prior to the time it
became effective and, to the best of such counsel's knowledge, no stop
order has been issued and no proceedings therefor initiated or
threatened and the Registration Statement, the Basic Prospectus and the
Prospectus Supplement (other than the financial and statistical data
included therein, as to which such counsel need express no opinion), as
of the date on which the Registration Statement was declared effective
and as of the date hereof, complied and comply as to form in all
material respects with the requirements of the Act and the rules and
regulations thereunder, and such counsel does not know of any amendment
to the
11
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, the Basic Prospectus or the
Prospectus Supplement which has not been filed or described as
required.
(f) The Sale and Servicing Agreement and the Trust Agreement
conform in all material respects to the descriptions thereof contained
in the Prospectus Supplement and are not required to be qualified under
the Trust Indenture Act of 1939, as amended. The Indenture has been
duly qualified under the Trust Indenture Act of 1939, as amended.
(g) The Trust is not an "investment company" or under the
control of an investment company as such terms are defined in the
Investment Company Act of 1940, as amended, and the Trust is not
required to be registered under the Investment Company Act of 1940, as
amended.
(h) The statements in the Basic Prospectus set forth under the
captions "DESCRIPTION OF THE SECURITIES" and "SERVICING OF THE LOANS"
and the statements in the Prospectus Supplement set forth under the
captions "DESCRIPTION OF THE NOTES AND THE TRUST CERTIFICATES" and
"SERVICING OF THE MORTGAGE LOANS," to the extent such statements
purport to summarize certain provisions of the Notes or of the
Indenture and the Sale and Servicing Agreement, are fair and accurate
in all material respects.
(i) Except (i) as to any financial or statistical data
contained in the Registration Statement, (ii) the statements set forth
in the Basic Prospectus under the caption "CREDIT ENHANCEMENT," and in
the Prospectus Supplement under the captions "THE NOTE INSURANCE
POLICY" and "THE NOTE INSURER," and (iii) any Derived Information as to
which no opinion or belief need be expressed, to the best of such
counsel's knowledge, the Registration Statement does not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading and to the best of such counsel's
knowledge, the Basic Prospectus and the Prospectus Supplement do not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in light of
the circumstances under which such statements were made in order to
make the statements therein not misleading.
(j) A court would hold that the conveyance by the Sponsor of
all right, title and interest in the Mortgage Loans to the Trustee
(except for the Sponsor's right, title and interest in the principal
and interest due on such Mortgage Loans on or prior to the Cut-Off Date
and the right to scheduled payments of principal and interest on
February 1, 2000), constitutes a sale of the Mortgage Loans and not a
borrowing by the Sponsor secured by the pledge of the Mortgage Loans. A
court would find that, following such conveyance, the Mortgage Loans
and proceeds thereof (net of payments of principal and interest due on
such Mortgage Loans as hereinbefore specified) are not property of the
estate of the Sponsor within the meaning of Section 541 of the
Bankruptcy Code, and, further that the Indenture Trustee's rights with
respect to the Mortgage Loans and the
12
proceeds thereof would not subject it to the automatic stay
provisions of Section 362 of the Bankruptcy Code. Since the
conveyance of the Mortgage Loans (net of payments of scheduled
principal due and interest accrued as hereinbefore specified)
constitutes a sale of said Mortgage Loans then the payments
thereunder (net of payments of scheduled principal due on and
interest accrued as hereinbefore specified) are not property of the
estate of the Sponsor and the distributions of such payments by the
Indenture Trustee to the Noteholders are not preferential payments
made by, for, or on behalf of the Sponsor under the provisions of
Section 547 of the Bankruptcy Code.
(k) If a court characterized the transfer of the Mortgage
Loans to the Trust as a pledge of collateral rather than an absolute
sale or assignment, with respect to the Mortgage Loans and other
property included in the Trust on the date hereof, to the extent
governed by the laws of the State of California, a valid security
interest has been created in favor of the Trust, which security
interest of the Trust will be perfected and will constitute a first
perfected security interest, with respect to the Sponsor's right, title
and interest in and to the Mortgage Notes, upon endorsement and
delivery thereof to the Trust. With respect to the security interest of
the Trust in the Mortgage Notes, Delaware law would govern.
(l) To the best of the knowledge of such counsel, the
Commission has not issued any stop order suspending the effectiveness
of the Registration Statement or any order directed to any prospectus
relating to the Notes (including the Prospectus), and has not initiated
or threatened any proceeding for that purpose.
3. The Underwriter shall have received the favorable opinion of Xxxxx
and Wood LLP, special tax counsel to the Trust, dated the Closing Date, to the
effect that:
(a) The statements under the captions "SUMMARY OF PROSPECTUS
-- CERTAIN FEDERAL INCOME TAX CONSIDERATIONS" and "FEDERAL INCOME TAX
CONSEQUENCES" in the Basic Prospectus and under the captions "SUMMARY
OF TERMS -- FEDERAL INCOME TAX STATUS" and "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES" in the Prospectus Supplement as they relate to federal
tax matters are true and correct in all material respects.
(b) such other matters as the Underwriter may reasonably
request.
4. The Underwriter shall have received the favorable opinion of Xxxxx &
Xxxx LLP, special counsel to the Underwriter, dated the Closing Date, to the
effect that:
(a) The Notes, assuming due execution and authentication by
the Indenture Trustee, and delivery and payment therefor pursuant to
this Agreement, are validly issued and outstanding and are entitled to
the benefits of the Indenture.
(b) No fact has come to such counsel's attention which causes
them to believe that the Prospectus (other than the financial statement
and other financial and statistical data contained therein and any
Derived Information, as to which such counsel need express no opinion),
as of the date thereof, contained any untrue statement of a material
13
fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(c) Such other matters as the Underwriter may reasonably
request.
In rendering their opinions, the counsel described in this Paragraph
(C) may rely, as to matters of fact, on certificates of responsible officers of
the Sponsor, the Indenture Trustee and public officials. Such opinions may also
assume the due authorization, execution and delivery of the instruments and
documents referred to therein by the parties thereto other than the Sponsor.
D. The Underwriter shall have received a letter from Deloitte & Touche
LLP, dated on or before the Closing Date, in form and substance satisfactory to
the Underwriter and counsel for the Underwriter, to the effect that they have
performed certain specified procedures requested by the Underwriter with respect
to the information set forth in the Prospectus and certain matters relating to
the Sponsor.
E. The Notes shall have been rated in the highest rating category by
Xxxxx'x Investors Service, Inc. and by Standard & Poor's Ratings Service, a
division of The XxXxxx-Xxxx Companies, Inc., and such ratings shall not have
been rescinded. The Underwriter and its counsel shall have received copies of
any opinions of counsel supplied to the rating organizations relating to any
matters with respect to the Notes. Any such opinions shall be dated the Closing
Date and addressed to the Underwriter or accompanied by reliance letters to the
Underwriter or shall state that the Underwriter may rely upon them.
F. The Underwriter shall have received from the Sponsor a certificate,
signed by the president, a senior vice president or a vice president of the
Sponsor, dated the Closing Date, to the effect that the signer of such
certificate has carefully examined the Registration Statement, the Trust
Agreement, the Sale and Servicing Agreement and this Agreement and that, to the
best of his or her knowledge based upon reasonable investigation:
1. the representations and warranties of the Sponsor in this Agreement,
and in the Indemnification Agreement, as of the Closing Date, in the
Sale and Servicing Agreement, the Trust Agreement the Insurance and
Indemnity Agreement and in all related agreements, as of the date
specified in such agreements, are true and correct, and the Sponsor has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing Date;
2. there are no actions, suits or proceedings pending, or to the best
of such officer's knowledge, threatened against or affecting the
Sponsor which if adversely determined, individually or in the
aggregate, would be reasonably likely to adversely affect the Sponsor's
obligations under the Trust Agreement, the Sale and Servicing
Agreement, the Insurance and Indemnity Agreement, the Indemnification
Agreement, or under this Agreement in any material way; and no merger,
liquidation, dissolution or bankruptcy of the Sponsor is pending or
contemplated;
3. the information contained in the Registration Statement and
Prospectus relating to the Sponsor, the Mortgage Loans or the servicing
procedures of it or its affiliates or the
14
subservicer is true and accurate in all material respects and
nothing has come to his or her attention that would lead such
officer to believe that the Registration Statement and Prospectus
includes any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein not
misleading;
4. the information set forth in the Schedules of Mortgage Loans is true
and correct in all material respects;
5. there has been no amendment or other document filed affecting the
articles of incorporation or bylaws of the Sponsor since December 31,
1999, and no such amendment has been authorized. No event has occurred
which has affected the good standing of the Sponsor under the laws of
the State of California;
6. there has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Sponsor and its subsidiaries, taken as a whole, from
December 31, 1998;
7. on or prior to the Closing Date, there has been no downgrading, nor
has any notice been given of (A) any intended or potential downgrading
or (B) any review or possible changes in rating, the direction of which
has not been indicated, in the rating, if any, accorded the Sponsor or
in any rating accorded any securities of the Sponsor, if any, by any
"nationally recognized statistical rating organization," as such term
is defined for purposes of the Act; and
8. each person who, as an officer or representative of the Sponsor,
signed or signs the Registration Statement, the Trust Agreement, the
Sale and Servicing Agreement, this Agreement, the Insurance and
Indemnity Agreement, the Indemnification Agreement, or any other
document delivered pursuant hereto, on the date of such execution, or
on the Closing Date, as the case may be, in connection with the
transactions described in the Trust Agreement, the Sale and Servicing
Agreement, the Indemnification Agreement, the Insurance and Indemnity
Agreement and this Agreement was, at the respective times of such
signing and delivery, and is now, duly elected or appointed, qualified
and acting as such officer or representative, and the signatures of
such persons appearing on such documents are their genuine signatures.
The Sponsor shall attach to such certificate a true and correct copy of
its certificate or articles of incorporation, as appropriate, and bylaws which
are in full force and effect on the date of such certificate and a certified
true copy of the resolutions of its Board of Directors with respect to the
transactions contemplated herein.
G. The Underwriter shall have received an opinion of counsel to the
Indenture Trustee, dated the Closing Date and in form and substance satisfactory
to the Underwriter and its counsel, to the effect that:
15
1. the Indenture 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;
2. the Indenture has been duly authorized, executed and delivered by
the Indenture Trustee and the Indenture constitutes the legal, valid
and binding obligation of such party, enforceable against it 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 such party, and (B)
general principles of equity regardless of whether such enforcement is
sought in a proceeding at law or in equity;
3. no consent, approval, authorization or other action by any
governmental agency or body or other tribunal is required on the part
of the Indenture Trustee in connection with its execution and delivery
of the Indenture or the performance of its obligations thereunder;
4. the Notes have been duly executed, authenticated and delivered by
the Indenture Trustee;
5. the execution and delivery of, and performance by the Indenture
Trustee of its obligations under, the Indenture do not conflict with or
result in a violation of any statute or regulation applicable to such
party, or the articles or bylaws of the such party, or to the best
knowledge of such counsel, any governmental authority having
jurisdiction over such party or the terms of any indenture or other
agreement or instrument to which the Indenture Trustee is a party or by
which it is bound; and
In rendering such opinion, such counsel may rely, as to matters of
fact, on certificates of responsible officers of the Sponsor, the Indenture
Trustee and public officials. Such opinion may also assume the due
authorization, execution and delivery of the instruments and documents referred
to therein by the parties thereto other than the Indenture Trustee, as the case
may be.
H. The Underwriter shall have received from the Indenture Trustee a
certificate, signed by the President, a senior vice president or an assistant
vice president of the Indenture Trustee, dated the Closing Date, to the effect
that each person who, as an officer or representative of the Indenture Trustee,
signed or signs the Notes, the Indenture or any other document delivered
pursuant hereto, on the date hereof or on the Closing Date, in connection with
the transactions described in the Indenture was, at the respective times of such
signing and delivery, and is now, duly elected or appointed, qualified and
acting as such officer or representative, and the signatures of such persons
appearing on such documents are their genuine signatures.
I. The Policy relating to the Notes 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.
16
J. [Reserved]
K. The Primary Mortgage Insurance Policy shall have been duly executed
and issued at or prior to the Closing Date and shall conform in all material
respects to the description thereof in the Prospectus.
L. The Underwriter shall have received a favorable opinion of the
internal counsel of the Primary Mortgage Insurer, dated the Closing date and in
form and substance satisfactory to counsel for the Underwriter, to the effect
that:
1. The Primary Mortgage Insurer is a mortgage insurance corporation,
duly incorporated and validly existing under the laws of the State of
Delaware. The Primary Mortgage Insurer is validly licensed and
authorized to issue the Primary Mortgage Insurance Policy and perform
its obligations under the Primary Mortgage Insurance Policy in
accordance with the terms thereof, under the laws of the State of New
York and Delaware.
2. The execution and delivery by the Primary Mortgage Insurer of the
Primary Mortgage Insurance Policy are within the corporate power of the
Primary Mortgage Insurer and have been authorized by all necessary
corporate action on the part of the Primary Mortgage Insurer; the
Primary Mortgage Insurance Policy has been duly executed and are the
valid and binding obligations of the Primary Mortgage Insurer
enforceable in accordance with their terms except that the enforcement
of the Primary Mortgage Insurance Policy may be limited by laws
relating to bankruptcy, insolvency, reorganization, moratorium,
receivership and other similar laws affecting creditors' rights
generally and by general principles of equity.
3. No consent, approval, authorization or order of any state or federal
court or governmental agency or body is required on the part of the
Primary Mortgage Insurer, the lack of which would adversely affect the
validity or enforceability of the Primary Mortgage Insurance Policy; to
the extent required by applicable legal requirements that would
adversely affect validity or enforceability of the Primary Mortgage
Insurance Policy, the form of the Primary Mortgage Insurance Policy has
been filed with, and approved by, all governmental authorities having
jurisdiction over the Primary Mortgage Insurer in connection with such
Primary Mortgage Insurance Policy.
4. To the extent any Primary Mortgage Insurance Policy constitutes a
security within the meaning of Section 2(1) of the Act, it is a
security that is exempt from the registration requirements of the Act.
In rendering this opinion, such counsel may rely, as to matters of
fact, on certificates of responsible officers of the Sponsor, the Indenture
Trustee, the Primary Mortgage Insurer and public officials. Such opinion may
assume the due authorization, execution and delivery of the instruments and
documents referred to therein by the parties thereto other than the Primary
Mortgage Insurer.
17
M. On or prior to the Closing Date, there has been no downgrading, nor
has any notice been given of (A) any intended or potential downgrading or (B)
any review or possible changes in rating, the direction of which has not been
indicated, in the rating, if any, accorded the Sponsor or in any rating accorded
any securities of the Sponsor, if any, by any "nationally recognized statistical
rating organization," as such term is defined for purposes of the Act.
N. On or prior to the Closing Date there shall not have occurred any
downgrading, nor shall any notice have been given of (A) any intended or
potential downgrading or (B) any review or possible change in rating the
direction of which has not been indicated, in the rating accorded the Note
Insurer's claims paying ability by any "nationally recognized statistical rating
organization," as such term is defined for purposes of the Act.
O. There has not occurred any change, or any development involving a
prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations, since December 31, 1998, (A) of the Sponsor or
(B) of the Note Insurer, that is in the Underwriter's judgment material and
adverse and that makes it in the Underwriter's judgment impracticable to market
the Notes on the terms and in the manner contemplated in the Prospectus.
P. The Underwriter shall have received the favorable opinion dated the
Closing Date of internal counsel of the Note Insurer ("Insurer Counsel") in form
and scope satisfactory to counsel for the Underwriter, to the effect that:
1. The Note Insurer is a stock insurance company, duly organized and
validly existing under the laws of the State of New York and is
licensed and has the power and authority to issue the Policy under the
laws of the State of New York.
2. The Policy has been duly authorized, executed and delivered and is
the valid and binding obligation of the Note 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 (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law).
3. The Note Insurer has the power and authority to perform its
obligations under the Insurance and Indemnity Agreement and the
Indemnification Agreement and the Insurance and Indemnity Agreement and
the Indemnification Agreement have been duly executed and are the valid
and binding obligations of the Note Insurer, each enforceable in
accordance with its terms, except that the enforcement of the Insurance
and Indemnity Agreement and the Indemnification Agreement 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, in the case
of the Indemnification Agreement, subject to principles of public
policy limiting the right to enforce the indemnification provisions
contained therein insofar as such provisions relate to indemnification
for liabilities arising under the securities laws.
18
4. No consent, approval, authorization, filing or order of any state or
federal court or governmental agency or body is required on the part of
the Note Insurer the lack of which would adversely affect the validity
and enforceability of the Policy.
5. The execution, delivery and performance by the Note Insurer of its
obligations under the Policy do not contravene any provision of the
restated charter or By-Laws of the Note Insurer. The execution,
delivery and performance by the Note Insurer of its obligations under
the Policy do not, to the extent that either of the following would
affect the validity or enforceability of the Policy, (a) contravene any
law or government regulation or order presently binding on the Note
Insurer or (b) contravene any provision of or constitute a default
under any indenture, contract or other instrument to which the Note
Insurer is a party or by which it is bound.
6. To the extent that the Policy constitutes a security within the
meaning of Section 2(l) of the Securities Act, it is a security exempt
from the registration requirements of the Securities Act.
7. The description of the Policy in the Prospectus Supplement under the
headings "THE NOTE INSURER" and "THE NOTE INSURANCE POLICY" is, to the
extent that such description constitutes statements of matters of law
or legal conclusions with respect thereto, accurate in all material
respects; provided, however, that no opinion need be expressed as to
the accuracy of any financial statements or other financial or
statistical data contained in or omitted from the Prospectus
Supplement, including such statements or other information included
under such caption or in any appendix to the Prospectus Supplement.
8. The information set forth under the captions "THE NOTE INSURANCE
POLICY" and "THE NOTE INSURER" in the Prospectus Supplement dated
February 24, 2000, insofar as such statements constitute a description
of the Policy, accurately summarizes the Policy.
In rendering this opinion, such counsel may rely, as to matters of
fact, on certificates of responsible officers of the Sponsor, the Indenture
Trustee, the Note Insurer and public officials. Such opinion may assume the due
authorization, execution and delivery of the instruments and documents referred
to therein by the parties thereto other than the Note Insurer.
Q. The Underwriter shall have received from Xxxxx & Xxxx LLP, special
counsel to the Underwriter, such opinion or opinions, dated the Closing Date,
with respect to the issuance and sale of the Notes, the Prospectus and such
other related matters as the Underwriter shall reasonably require.
R. The Underwriter and its counsel shall have received copies of any
opinions of counsel to the Sponsor or the Note Insurer supplied to the Trustee
relating to matters with respect to the Notes or the Policy. Any such opinions
shall be dated the Closing Date and addressed to the Underwriter or accompanied
by reliance letters to the Underwriter or shall state that the Underwriter may
rely thereon.
19
S. The Underwriter shall have received such further information,
certificates and documents as the Underwriter may reasonably have requested not
fewer than three (3) full business days prior to the Closing Date.
If any of the conditions specified in this Section 5 shall not have
been fulfilled in all respects when and as provided in this Agreement, if the
Sponsor is in breach of any covenants or agreements contained herein or if any
of the opinions and certificates mentioned above or elsewhere in this Agreement
shall not be in all material respects reasonably satisfactory in form and
substance to the Underwriter and its counsel, this Agreement and all obligations
of the Underwriter hereunder, may be canceled on, or at any time prior to, the
Closing Date by the Underwriter. Notice of such cancellation shall be given to
the Sponsor in writing, or by telephone or telegraph confirmed in writing.
6. EXPENSES. If the sale of the Notes provided for herein is not
consummated by reason of a default by the Sponsor in its obligations hereunder,
then the Sponsor will reimburse the Underwriter, upon demand, for all reasonable
out-of-pocket expenses (including, but not limited to, the reasonable fees and
expenses of Xxxxx & Wood LLP) that shall have been incurred by the Underwriter
in connection with its investigation with regard to the Sponsor, the Notes and
the proposed purchase and sale of the Notes.
7. INDEMNIFICATION AND CONTRIBUTION. A. Regardless of whether any Notes
are sold, the Sponsor will indemnify and hold harmless the Underwriter, each of
its respective officers and directors and each person who controls the
Underwriter within the meaning of the Act or the Securities Exchange Act of 1934
(the "1934 Act"), against any and all losses, claims, damages, or liabilities
(including the cost of any investigation, legal and other expenses incurred in
connection with any amounts paid in settlement of any action, suit, proceeding
or claim asserted), joint or several, to which they may become subject, under
the Act, the 1934 Act or other federal or state law or regulation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained (i) in the Registration
Statement, or any amendment thereof or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein, not misleading or (ii) in the Basic
Prospectus or the Prospectus Supplement or any amendment thereto or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and will
promptly reimburse each such indemnified party upon demand for any legal or
other expenses reasonably incurred by it in connection with investigating or
defending against such loss, claim, damage, liability or action; PROVIDED,
HOWEVER, that the Sponsor shall 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 an
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Sponsor by or on behalf of the Underwriter specifically for use
in connection with the preparation thereof.
B. Regardless of whether any Notes are sold, the Underwriter agrees to
indemnify and hold harmless the Sponsor, each of its officers and directors and
each person, if any, who controls the Sponsor within the meaning of the Act or
the 1934 Act against any losses, claims,
20
damages or liabilities to which they or any of them become subject under the
Act, the 1934 Act or other federal or state law or regulation, at common law
or otherwise, to the same extent as the foregoing indemnity, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in (i) the Registration Statement, or any amendment
thereof or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact necessary to make the
statements therein not misleading or in (ii) the Basic Prospectus or the
Prospectus Supplement or any amendment thereto or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, in each case to
the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made therein in reliance
upon and in conformity with written information furnished to the Sponsor by
or on behalf of the Underwriter specifically for use in the preparation
thereof and so acknowledged in writing, and will promptly reimburse the
Sponsor upon demand for any legal or other expenses reasonably incurred by
the Sponsor in connection with investigating or defending against such loss,
claim, damage, liability or action.
C. In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Paragraphs A and B above such person (hereinafter called the
indemnified party) shall promptly notify the person against whom such indemnity
may be sought (hereinafter called the indemnifying party) in writing thereof;
but the omission to notify the indemnifying party shall not relieve such
indemnifying party from any liability which it may have to any indemnified party
otherwise than under such Paragraph. 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 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 indemnifying party has not retained counsel reasonably
satisfactory to the indemnified party, (ii) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel,
or (iii) the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the 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 fees and expenses of
more than one separate firm for all such indemnified parties, and that all such
fees and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by the Underwriter in the case of parties indemnified
pursuant to Paragraph A and by the Sponsor in the case of parties indemnified
pursuant to Paragraph B. The 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 is a final judgment for the plaintiff, the
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
21
expenses of counsel as contemplated above, the 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 such indemnifying party 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. No
indemnifying party shall, 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.
D. The Underwriter agrees to provide the Sponsor, for its review, no
later than two Business Days prior to the date on which the information required
to be filed in accordance with the terms of the No-Action Letters (as defined
herein) with a copy of its Derived Information for filing with the Commission on
Form 8-K.
E. The Underwriter agrees, assuming all Sponsor-Provided Information
(as defined below) is accurate and complete in all material respects, to
indemnify and hold harmless the Sponsor, each of the Sponsor's officers and
directors and each person who controls the Sponsor within the meaning of Section
15 of the Securities Act against any and all losses, claims, damages or
liabilities, joint or several, to which they may become subject under the
Securities 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 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 such
indemnified party for any legal or other expenses reasonably incurred by him,
her or it in connection with investigating or defending or preparing to defend
any such loss, claim, damage, liability or action as such expenses are incurred.
The obligations of the Underwriter under this Section 7(E) shall be in addition
to any liability which the Underwriter may otherwise have.
The procedures set forth in Section 7(C) shall be equally applicable to
this Section 7(E).
F. If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages
or liabilities referred to herein, then each indemnifying party, in lieu of
indemnifying such indemnified party, 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 Sponsor and the Underwriter from the sale
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 relative benefits referred to in clause (i) above but also the
relative fault of the Sponsor and of the Underwriter 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 benefits received by the Sponsor and the Underwriter
shall be deemed to be in such proportion so that the Underwriter is
responsible for that portion determined by
22
multiplying the total amount of such losses, claims, damages and liabilities,
including legal and other expenses, by a fraction, the numerator of which is
(x) the excess of the Aggregate Resale Price of the Notes purchased by the
Underwriter over the aggregate purchase price of the Notes specified in
Section 3 of this Agreement and the denominator of which is (y) the Aggregate
Resale Price of the Notes purchased by the Underwriter and the Sponsor is
responsible for the balance, provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of the immediately preceding
sentence, the "Aggregate Resale Price" of the Notes at the time of any
determination shall be the weighted average of the purchase prices (in each
case expressed as a percentage of the aggregate principal amount of the Notes
so purchased), determined on the basis of such principal amounts, paid to the
Underwriter by all subsequent purchasers that purchased the Notes on or prior
to such date of determination. The relative fault of the Sponsor and the
Underwriter shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Sponsor or by the Underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
G. The Sponsor and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 7 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 Paragraph D. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in Paragraph D 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 the provisions of this Section 7, the
Underwriter shall not be required to contribute any amount in excess of the
amount of the underwriting discounts and commissions received by the Underwriter
in connection with its purchase of the Notes.
H. For purposes of this Section 7, the term "Derived Information" means
such portion, if any, of the information required to be delivered to the Sponsor
pursuant to Section 7(D) for filing with the Commission on Form 8-K as:
(i) is not contained in the Prospectus without taking into
account information incorporated therein by reference; and
(ii) does not constitute Sponsor-Provided Information.
(iii) is of the type of information defined as Collateral term
sheets, structural term sheets or Computational Materials (as such
terms are interpreted in the No-Action Letters (as defined below)).
"Sponsor-Provided Information" means the information contained on any computer
tape furnished to the Underwriter by the Sponsor concerning the assets
comprising the Trust.
The terms "Collateral term sheet" and "Structural term sheet" shall
have the respective meanings assigned to them in the February 13, 1995 letter
(the "PSA Letter") of Cleary, Gottlieb,
23
Xxxxx & Xxxxxxxx on behalf of the Public Securities Association (which
letter, and the SEC staff's response thereto, were publicly available
February 17, 1995). The term "Collateral term sheet" as used herein includes
any subsequent Collateral term sheet that reflects a substantive change in
the information presented. The term "Computational Materials" has the meaning
assigned to it in the May 17, 1994 letter (the "Xxxxxx letter" and together
with the PSA Letter, the "No-Action Letters") of Xxxxx & Xxxx LLP on behalf
of Xxxxxx, Peabody & Co., Inc. (which letter, and the SEC staff's response
thereto, were publicly available May 20, 1994).
I. The Sponsor and the Underwriter each expressly waive, and agree not
to assert, any defense to their respective indemnification and contribution
obligations under this Section 7 which they might otherwise assert based upon
any claim that such obligations are unenforceable under federal or state
securities laws or by reasons of public policy.
J. The obligations of the Sponsor under this Section 7 shall be in
addition to any liability which the Sponsor may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Underwriter within the meaning of the Act or the 1934 Act; and the obligations
of the Underwriter under this Section 7 shall be in addition to any liability
that the Underwriter may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Sponsor and to each person, if any, who
controls the Sponsor within the meaning of the Act or the 1934 Act; provided,
however, that in no event shall the Sponsor or the Underwriter be liable for
double indemnification.
8. INFORMATION SUPPLIED BY THE UNDERWRITER. The statements set forth in
the second, third, fourth and fifth paragraphs under the heading "PLAN OF
DISTRIBUTION" in the Prospectus Supplement (to the extent such statements relate
to the Underwriter), constitute the only information furnished by the
Underwriter to the Sponsor for the purposes of Sections 1(B) and 7(A) hereof.
9. NOTICES. All communications hereunder shall be in writing and, if
sent to the Underwriter, shall be mailed or delivered or telecopied and
confirmed in writing to the Underwriter at Xxxxxx Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Xxxxxx X. Xxxxxxx and, if
sent to the Sponsor, shall be mailed, delivered or telegraphed and confirmed in
writing to the Sponsor at the address set forth above, Attention: Xxxxx Xxxxxxx.
10. SURVIVAL. All representations, warranties, covenants and
agreements of the Sponsor contained herein or in agreements or certificates
delivered pursuant hereto, the agreements of the Underwriter and the Sponsor
contained in Section 7 hereof, and the representations, warranties and
agreements of the Underwriter contained in Section 2 hereof, shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of the Underwriter or any controlling persons, or any
subsequent purchaser or the Sponsor or any of its officers, directors or any
controlling persons, and shall survive delivery of and payment for the Notes.
The provisions of Sections 4, 6 and 7 hereof shall survive the termination or
cancellation of this Agreement.
11. TERMINATION. The Underwriter shall have the right to terminate
this Agreement by giving notice as hereinafter specified at any time at or
prior to the Closing Date if (a) trading
24
generally shall have been suspended or materially limited on or by, as the
case may be, any of the New York Stock Exchange, the American Stock Exchange,
the National Association of Securities Dealers, Inc., the Chicago Board
Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of
Trade, (b) trading of any securities of the Sponsor shall have been suspended
on any exchange or in any over-the-counter market, (c) a general moratorium
on commercial banking activities shall have been declared by either federal
or New York State authorities, (d) there shall have occurred any outbreak or
escalation of hostilities or any change in financial markets or any calamity
or crisis which, in the Underwriter's reasonable judgment, is material and
adverse, and, in the case of any of the events specified in clauses (a)
through (d), such event singly or together with any other such event makes it
in the Underwriter's reasonable judgment impractical to market the Notes. Any
such termination shall be without liability of any other party except that
the provisions of Paragraph G of Section 4 (except with respect to expenses
of the Underwriter) and Sections 6 and 7 hereof shall at all times be
effective. If the Underwriter elects to terminate this Agreement as provided
in this Section 11, the Sponsor shall be notified promptly by the Underwriter
by telephone, telegram or facsimile transmission, in any case, confirmed by
letter.
12. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns
(which successors and assigns do not include any person purchasing a Certificate
from the Underwriter), and the officers and directors and controlling persons
referred to in Section 7 hereof and their respective successors and assigns, and
no other persons will have any right or obligations hereunder.
13. APPLICABLE LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York. Any
action or proceeding brought to enforce or arising out of any provision of this
Agreement shall be brought only in a state or federal court located in the
Borough of Manhattan, New York City, New York, and the parties hereto expressly
consent to the jurisdiction of such courts and agree to waive any defense or
claim of FORUM NON CONVENIENS they may have with respect to any such action or
proceeding brought.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall together constitute but one and the same
instrument.
15. AMENDMENTS AND WAIVERS. This Agreement may be amended, modified,
altered or terminated, and any of its provisions waived, only in a writing
signed on behalf of the parties hereto.
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IN WITNESS WHEREOF, the parties hereto hereby execute this Underwriting
Agreement, as of the day and year first above written.
ACCREDITED HOME LENDERS, INC.
By: /s/ XXXXX XXXXXXX
------------------------------
XXXXXX BROTHERS INC.
By: /s/ XXXXXX X. XXXXXXX
------------------------------
26
SCHEDULE A
Initial Principal Amount of Notes
Purchased by Underwriter
UNDERWRITER CLASS A-1 CLASS A-2
----------------------------------- -----------------------------
Xxxxxx Brothers Inc................ $53,047,000 $120,429,000
Purchase Price for Class A-1 Notes - 99.984375%.
Purchase Price for Class A-2 Notes - 100.00000%.
1