Ehibit 1.1
FIRST ALLIANCE MORTGAGE COMPANY
AND
PRUDENTIAL SECURITIES INCORPORATED,
AS REPRESENTATIVE OF THE SEVERAL UNDERWRITERS
UNDERWRITING AGREEMENT
FOR
FIRST ALLIANCE MORTGAGE LOAN TRUST 1997-4
MORTGAGE LOAN ASSET BACKED CERTIFICATES,
6.710% CLASS A-1 FIXED RATE GROUP CERTIFICATES
7.130% CLASS A-2 FIXED RATE GROUP CERTIFICATES
CLASS A-3 VARIABLE RATE GROUP CERTIFICATES
December 9, 1997
First Alliance Mortgage Company
00000 Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Prudential Securities Incorporated
As Representative of the Several Underwriters
Xxx Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
First Alliance Mortgage Company (the "Company" or the
"Sponsor") hereby confirms its agreement to sell certain mortgage loan asset
backed certificates to Prudential Securities Incorporated and First Union
Capital Markets Corp. (collectively, the "Underwriters") as described herein
relating to the First Alliance Mortgage Loan Trust 1997-4 (the "Trust").
Prudential Securities Incorporated will act as representative of the
Underwriters (in such capacity, the "Representative"). The certificates,
together with certain subordinate certificates to be issued by the Trust, will
evidence in the aggregate the entire beneficial interest in a trust estate (the
"Trust Estate") consisting of two segregated pools (the "Mortgage Pools") of
closed-end mortgage loans (the "Initial Mortgage Loans") and such amounts as may
be held by the Trustee in the Pre-Funding Account ("Pre-Funding Account"), the
Capitalized Interest Account (the "Capitalized Interest Account") and any other
accounts held by the Trustee for the Trust. The Initial Mortgage Loans shall
have, as of the close of business on December 1, 1997 (the "Cut-off Date"), an
aggregate principal balance of $80,012,569.85. The certificates are to be issued
under a pooling and servicing agreement dated as of December 1, 1997 (the
"Pooling and Servicing Agreement"), among the Company, in its individual
capacity and in its capacity as servicer (the "Servicer") and The Bank of New
York, in its capacity as trustee (the "Trustee"). On the Closing Date,
approximately $25,987,430.15 will be deposited in the name of the Trustee in the
Pre-Funding Account from the sale of the Certificates. It is intended that
additional Mortgage Loans satisfying the criteria specified in the Pooling and
Servicing Agreement (the "Subsequent Mortgage Loans") will be purchased by the
Trust for inclusion in both Group I and Group II from the Company from time to
time on or before December 31, 1997 from funds on deposit in the Pre-Funding
Account at the time of execution and delivery of each Subsequent Transfer
Agreement ("Subsequent Transfer Agreement"). Funds in the Capitalized Interest
Account will be applied by the Trustee to cover shortfalls in interest during
the Funding Period.
On or prior to the date of issuance of the Certificates, the
Company will obtain two certificate guaranty insurance policies (the "Policies")
issued by MBIA Insurance Corporation (the "Insurer") which
will unconditionally and irrevocably guarantee to the Trustee for the benefit of
the holders of the Class A-1 Certificates, the Class A-2 Certificates and the
Class A-3 Certificates full and complete payment of all amounts payable on the
Class A-1 Certificates, the Class A-2 Certificates and the Class A-3
Certificates. All capitalized terms used but not otherwise defined herein have
the respective meanings set forth in the form of Pooling and Servicing Agreement
heretofore delivered to the Underwriters.
1. Securities. The certificates will be issued in classes as
follows: (i) a senior class with respect to each Mortgage Loan Group consisting
of the Class A-1 Fixed Rate Group Certificates (the "Class A-1 Certificates"),
the Class A-2 Fixed Rate Group Certificates (the "Class A-2 Certificates") and
the Class A-3 Variable Rate Group Certificates (the "Class A-3 Certificates" and
collectively with the Class A-1 Certificates and the Class A-2 Certificates the
"Class A Certificates") and (ii) a residual class (the "Class R Certificates").
The Class A Certificates and the Class R Certificates are hereinafter referred
to as the "Certificates."
2. Representations and Warranties of the Company. The Company
represents and warrants to, and covenants with, the Underwriters that:
A. The Company has filed with the Securities and Exchange
Commission (the "Commission"), a registration statement (No. 33-99604) on Form
S-3 for the registration under the Securities Act of 1933, as amended (the
"Act"), of Mortgage Asset Backed 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 Company proposes to file with the
Commission pursuant to Rule 424(b)(5) under the Act a supplement dated December
9, 1997 to the prospectus dated September 10, 1996 relating to the Certificates
and the method of distribution thereof and has previously advised the
Underwriters of all further information (financial and other) with respect to
the Certificates 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 September 10, 1996, 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
December 9, 1997 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." The Company will
file with the Commission (i) promptly after receipt from any Underwriter of any
Computational Material (as defined herein) a Form 8-K incorporating such
Computational Materials and (ii) within fifteen days of the issuance of the
Certificates 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 thereunder and (ii) the
Registration Statement, as amended as of any such time, did not and will not
contain any untrue 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 Company makes
no representations or warranties as to the information contained in or omitted
from the Registration Statement or the Prospectus or any amendment thereof or
supplement thereto in reliance upon
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and in conformity with the information furnished in writing to the Company by or
on behalf of any Underwriter specifically for use in connection with the
preparation of the Registration Statement and the Prospectus.
C. The Company 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 (i) a material risk to, or a material adverse effect
on, the business, properties, financial position, operations or results of
operations of the Company or (ii) any risk whatsoever as to the enforceability
of any Mortgage Loan.
D. There are no actions, proceedings or investigations pending,
or, to the knowledge of the Company, threatened, before any court, governmental
agency or body or other tribunal (i) asserting the invalidity of this Agreement,
the Certificates, the Insurance Agreement, the Indemnification Agreement dated
December 9, 1997 (the "Indemnification Agreement") among the Company, the
Insurer and the Underwriters or of the Pooling and Servicing Agreement, (ii)
seeking to prevent the issuance of the Certificates or the consummation of any
of the transactions contemplated by this Agreement, the Pooling and Servicing
Agreement or any Subsequent Transfer Agreement, (iii) which may, individually or
in the aggregate, materially and adversely affect the performance by the Company
of its obligations under, or the validity or enforceability of, this Agreement,
the Certificates, the Pooling and Servicing Agreement or any Subsequent Transfer
Agreement, or (iv) which may affect adversely the federal income tax attributes
of the Certificates as described in the Prospectus.
E. The execution and delivery by the Company of this Agreement,
the Indemnification Agreement, the Insurance Agreement and the Pooling and
Servicing Agreement, the issuance of the Certificates and the transfer and
delivery of the Mortgage Loans to the Trustee by the Company are within the
corporate power of the Company and have been, or will be, prior to the Closing
Date duly authorized by all necessary corporate action on the part of the
Company 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 Company 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 Company or any of its
affiliates is subject, the Company's charter or bylaws, or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Company, any of its affiliates or any of its or their
properties; and no consent, 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 Certificates by the
Company except pursuant to the Act. Neither the Company 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 Company or any of its affiliates, which
materially and adversely affects, or may in the future materially and adversely
affect, (i) the ability of the Company to perform its obligations under the
Pooling and Servicing Agreement, this Agreement, the Insurance Agreement, the
Indemnification Agreement and any Subsequent Transfer Agreement or (ii) the
business, operations, results of operations, financial position, income,
properties or assets of the Company, taken as a whole.
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F. This Agreement and the Indemnification Agreement have been
duly executed and delivered by the Company, and the Pooling and Servicing
Agreement, the Insurance Agreement and any Subsequent Transfer Agreement will be
duly executed and delivered by the Company, and each constitutes and will
constitute the legal, valid and binding obligation of the Company 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 Certificates 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 Pooling and Servicing Agreement and sold to
the Underwriters as provided herein, will be validly issued and outstanding and
entitled to the benefits of the Pooling and Servicing Agreement.
H. At 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 Pooling and Servicing Agreement are hereby made to the Underwriters as
though set out herein, and at the dates specified in the Pooling and Servicing
Agreement, and any Subsequent Transfer Agreement, such representations and
warranties were or will be true and correct in all material respects.
I. The transfer of the Initial Mortgage Loans to the Trust at the
Closing Date will be treated by the Company for financial accounting and
reporting purposes as a sale of assets and not as a pledge of assets to secure
debt.
J. The Company 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 Company, 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 Company taken as a whole.
K. Any taxes, fees and other governmental charges in connection
with the execution and delivery of this Agreement, the Insurance Agreement, the
Indemnification Agreement, and the Pooling and Servicing Agreement or the
execution and issuance of the Certificates have been or will be paid at or prior
to the Closing Date.
L. 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
Company or its subsidiaries, taken as a whole, from December 31, 1996 to the
date hereof.
M. This Agreement and the Pooling and Servicing Agreement will
conform in all material respects to the descriptions thereof contained in the
Prospectus.
N. The Company 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
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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
Certificates for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose.
O. Each assignment of Mortgages required to be prepared pursuant
to the Pooling and Servicing Agreement is based on forms recently utilized by
the Company with respect to mortgaged properties located in the appropriate
jurisdiction and used in the regular course of the Company's business. Based on
the Company's experience with such matters it is reasonable to believe that 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
Pooling and Servicing Agreement.
P. The Company is current in all filings under the Securities
Exchange Act and is eligible to use the Registration Statement.
Any certificate signed by any officer of the Company and
delivered to the Representative in connection with the sale of the Certificates
hereunder shall be deemed a representation and warranty as to the matters
covered thereby by the Company to each person to whom the representations and
warranties in this Section 2 are made.
3. Agreements of the Representative. The Representative agrees
with the Company that upon the execution of this Agreement and authorization by
the Representative of the release of the Class A Certificates, the Underwriters
shall offer the Class A Certificates for sale upon the terms and conditions set
forth in the Prospectus as amended or supplemented.
4. Purchase, Sale and Delivery of the Certificates. The Company
hereby agrees, subject to the terms and conditions hereof, to sell the Class A
Certificates to the Underwriters, who, upon the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter stated,
hereby agree to purchase the entire aggregate principal amount of the Class A
Certificates in the amounts specified in Schedule A hereto. At the time of
issuance of the Certificates, the Initial Mortgage Loans will be sold by the
Company to the Trust pursuant to the Pooling and Servicing Agreement. The
Subsequent Mortgage Loans will be purchased by the Trust for inclusion in both
Mortgage Loan Groups, from time to time on or before December 31, 1997. The
Company will be obligated, under the Pooling and Servicing Agreement, to service
the Mortgage Loans either directly or through sub-servicers.
The Class A Certificates to be purchased by the Underwriters will
be delivered by the Company to the Underwriters (which delivery shall be made
through the facilities of The Depository Trust Company ("DTC")) against payment
of the purchase price therefor, equal to 99.680% of the aggregate principal
amount of the Class A-1 Certificates, 99.680% of the aggregate principal amount
of the Class A-2 Certificates, and 99.680% of the aggregate principal amount of
the Class A-3 Certificates, plus interest accrued at the Class A-1 Pass-Through
Rate on the Class A-1 Certificates and at the Class A-2 Pass-Through Rate on the
Class A-2 Certificates, in both cases from December 1, 1997 to, but not
including, the settlement date, by a same day federal funds wire payable to the
order of the Company. No accrued interest will be payable on the Class A-3
Variable Rate Group Certificates, which shall be dated their date of delivery.
The Underwriter's fee shall be 32 basis points of each of the Class A
Certificates.
Settlement shall take place at the offices of Xxxxx & Xxxxxx LLP,
0000 X Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, at 10:00 a.m. (E.S.T.), on December
22, 1997, or at such other time thereafter as the Representative and the Company
determine (such time being herein referred to as the "Closing Date").
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The Class A Certificates will be prepared in definitive form and in such
authorized denominations as the Representative may request, registered in the
name of Cede & Co., as nominee of DTC.
The Company agrees to have the Certificates available for
inspection and review by the Representative in New York City not later than 1:00
p.m. (E.S.T.) on the business day prior to the Closing Date.
5. Covenants of the Company. The Company covenants and agrees
with the Representative that:
A. The Company will promptly advise the Representative 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 Company of any
notification with respect to the suspension of the qualification of the Class A
Certificates for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Company 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 Certificates unless the Company has furnished
the Representative 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, unless such filing is
required by law. The Company 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 Company will
promptly prepare and file with the Commission, subject to Paragraph A of this
Section 5, 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 Company will furnish to the Representative, without
charge, executed copies of the Registration Statement (including exhibits
thereto) and, so long as delivery of a Prospectus by the Underwriters 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 Underwriters
may reasonably request. The Company will pay the expenses of printing (or
otherwise reproducing) all offering documents relating to the offering of the
Class A Certificates.
D. As soon as practicable, but not later than sixteen months
after the date hereof, the Company will cause the Trust to make generally
available to Certificate Owners of the Trust an earnings 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 Company, will satisfy the requirements of Rule
158 under the Act.
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E. During a period of 20 calendar days from the date as of which
this Agreement is executed, neither the Company nor any affiliate of the Company
will, without the Representative's prior written consent (which consent shall
not be unreasonably withheld), enter into any agreement to offer or sell
mortgage loan asset-backed certificates backed by mortgage loans, except
pursuant to this Agreement.
F. So long as any of the Class A Certificates are outstanding,
the Company will cause to be delivered to the Representative (i) all documents
required to be distributed to Certificate Owners of the Trust 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 Company, 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 Representative incurred in connection with (i) the issuance
and delivery of the Certificates, (ii) preparation of all documents specified in
this Agreement, (iii) any fees and expenses of the Trustee, the 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 the Class A Certificates.
H. The Company agrees that, so long as any of the Class A
Certificates shall be outstanding, it will deliver or cause to be delivered to
the Representative (i) the annual statement as to compliance delivered to the
Trustee pursuant to the Pooling and Servicing Agreement, (ii) the annual
statement of a firm of independent public accountants furnished to the Trustee
pursuant to the Pooling and Servicing Agreement as soon as such statement is
furnished to the Company and (iii) any information required to be delivered by
the Company or the Servicer to prepare the report by the Trustee pursuant to
Section 7.8 of the form of Pooling and Servicing Agreement heretofore delivered
to the Representative.
I. The Company will enter into the Pooling and Servicing
Agreement, the Insurance Agreement, and all related agreements on or prior to
the Closing Date.
J. The Company will endeavor to qualify the Class A Certificates
for sale to the extent necessary under any state securities or Blue Sky laws in
any jurisdictions as may be reasonably requested by the Representative, 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 Class A Certificates for investment under the laws of
such jurisdictions as the Representative may reasonably designate, if any.
6. Conditions of the Underwriters' Obligation. The obligation of
the Underwriters to purchase and pay for the Class A Certificates as provided
herein and on Schedule A hereto 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 Company contained herein (including those
representations and warranties set forth in the Pooling and Servicing Agreement
and incorporated herein), to the accuracy of the statements of the Company made
in any certificate or other document delivered pursuant to the provisions
hereof, to the performance by the Company 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
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proceedings for that purpose shall have been instituted or threatened, and the
Prospectus shall have been filed pursuant to Rule 424(b).
B. The Representative shall have received the Pooling and
Servicing Agreement and the Class A Certificates in form and substance
satisfactory to the Representative, duly executed by all signatories required
pursuant to the respective terms thereof.
C.1. The Underwriters shall have received the favorable opinion
of the Vice President and General Counsel to the Company, with respect to
the following items, dated the Closing Date, to the effect that:
(a) The Company 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 Pooling and Servicing Agreement. The Company
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 Pooling and
Servicing Agreement, any Subsequent Transfer Agreement, the
Insurance Agreement and the Indemnification Agreement among the
Company, the Insurer and the Underwriters.
(b) This Agreement, the Certificates, the Pooling and
Servicing Agreement, the Insurance Agreement and the
Indemnification Agreement have been duly and validly authorized,
executed and delivered by the Company, all requisite corporate
action having been taken with respect thereto, and each (other
than the Certificates) constitutes the valid, legal and binding
agreement of the Company enforceable against the Company in
accordance with its respective terms.
(c) Neither the transfer of the Initial Mortgage Loans to
the Trust, the issuance or sale of the Certificates nor the
execution, delivery or performance by the Company of the Pooling
and Servicing Agreement, this Agreement, any Subsequent Transfer
Agreement, the Insurance Agreement or the Indemnification
Agreement (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 Company; (ii) any term or
provision of any material agreement, contract, instrument or
indenture, to which the Company is a party or is bound; or (iii)
any order, judgment, writ, injunction or decree of any court or
governmental agency or body or other tribunal having jurisdiction
over the Company; or (B) results in, or will result in the
creation or imposition of any lien, charge or encumbrance upon
the Trust Estate or upon the Certificates, except as otherwise
contemplated by the Pooling and Servicing Agreement.
(d) The endorsement and delivery of each Note, and the
preparation, delivery and recording of an Assignment in
recordable form, with respect to each Mortgage (in the absence of
the delivery of the opinions described in Section 3.5(b)(ii)(y)
of the Pooling and Servicing Agreement), as and in the manner
contemplated by the Pooling and Servicing Agreement, is
sufficient fully to transfer to the Trustee for the benefit of
the Owners all right, title and interest of the Company in the
Note and Mortgage, as noteholder and mortgagee or assignee
thereof, and will be sufficient to permit the Trustee to avail
itself of all protection available under applicable law against
the claims of any present or future creditors of the Company and
to
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prevent any other sale, transfer, assignment, pledge or other
encumbrance of the Mortgage Loans by the Company 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 Pooling and Servicing Agreement, the Insurance
Agreement, this Agreement, the Indemnification Agreement or the
offer, issuance, sale or delivery of the Certificates or the
consummation of any other transaction contemplated thereby by the
Company, except such which have been obtained.
(f) There are no actions, proceedings or investigations
pending or, to such counsel's knowledge, threatened against the
Company before any court, governmental agency or body or other
tribunal (i) asserting the invalidity of the Pooling and
Servicing Agreement, the Insurance Agreement, this Agreement, the
Indemnification Agreement or the Certificates, (ii) seeking to
prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by the Pooling and Servicing
Agreement, the Indemnification Agreement, the Insurance Agreement
or this Agreement or (iii) which would materially and adversely
affect the performance by the Company of obligations under, or
the validity or enforceability of, the Pooling and Servicing
Agreement, the Certificates, the Indemnification Agreement, the
Insurance Agreement or this Agreement.
(g) To the best of such counsel's knowledge, the
Registration Statement, the Prospectus Supplement and the
Prospectus 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 order to make the statements therein not misleading
with respect to the statements set forth in the Prospectus under
the caption "Certain Legal Aspects of Mortgage Loans and Related
Matters".
2. The Underwriters shall have received the favorable opinion of
Xxxxx & Xxxxxx LLP, special counsel to the Company, dated the Closing
Date, to the effect that:
(a) The Certificates, 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 Pooling and Servicing
Agreement.
(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 Company of the Pooling and Servicing
Agreement, this Agreement, any Subsequent Transfer Agreement, the
Indemnification Agreement, the Insurance Agreement or the offer,
issue, sale or delivery of the Certificates or the consummation
of any other transaction contemplated thereby by the Company,
except such which have been obtained.
(c) Neither the transfer of the Initial Mortgage Loans to
the Trustee, the issuance or sale of the Certificates, nor the
execution, delivery or performance by the Company of the Pooling
and Servicing Agreement, the Insurance Agreement, any Subsequent
Transfer Agreement, the Indemnification 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
9
investigation, results in, or will result in, the creation or
imposition of any lien, charge or encumbrance upon the Trust
Estate or upon the Certificates, except as otherwise contemplated
by the Pooling and Servicing Agreement.
(d) Each Subsequent Transfer Agreement at the time of its
execution and delivery will be sufficient to convey all of the
Company's right, title and interest in the Subsequent Mortgage
Loans to the Trustee and following the consummation of the
transaction contemplated by each Subsequent Transfer Agreement,
the transfer of the Subsequent Mortgage Loans by the Company to
the Trustee will be a sale thereof.
(e) The Registration Statement, the 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, 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 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 Prospectus or the Prospectus Supplement which has
not been filed or described as required.
(f) Neither the qualification of the Pooling and Servicing
Agreement under the Trust Indenture Act of 1939 nor the
registration of the Trust created by such Agreement under the
Investment Company Act of 1940 is presently required.
(g) The statements in the Prospectus set forth under the
captions "DESCRIPTION OF THE SECURITIES" and "THE POOLING AND
SERVICING AGREEMENT" and the statements in the Prospectus
Supplement set forth under the captions "DESCRIPTION OF THE
OFFERED CERTIFICATES" and "THE POOLING AND SERVICING AGREEMENT,"
to the extent such statements purport to summarize certain
provisions of the Certificates or of the Pooling and Servicing
Agreement, are fair and accurate in all material respects.
(h) Except as to any financial or statistical data
contained in the Registration Statement, the statements set forth
in the Prospectus under the caption "DESCRIPTION OF CREDIT
ENHANCEMENT," and in the Prospectus Supplement under the caption
"THE CERTIFICATE INSURANCE POLICIES AND THE CERTIFICATE INSURER,"
and any Computational Materials 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.
(i) Upon receipt by the Trustee of the related Notes,
endorsed as described in the Pooling and Servicing Agreement, and
the receipt by the Company of the purchase price for the
Certificates and for so long as the Trustee maintains actual
physical possession of such Notes, (i) the Trustee shall be
vested with good and indefeasible title to, and shall be the sole
owner of, and shall obtain all right, title and interest of the
Company in, each Mortgage Loan, (ii) in the event that the sale
of the Mortgage Loans were to be recharacterized as a financing
secured by the Mortgage Loans, the Trustee has a first perfected
security interest in the Mortgage Loans and (iii) the recordation
of the assignments of the Mortgages is not required
10
for the Trustee to obtain such rights, as against creditors of,
and purported transferees of, the Company.
(j) 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 Certificates (including the
Prospectus), and has not initiated or threatened any proceeding
for that purpose.
3. The Underwriters shall have received the favorable opinion of
Xxxxx & Xxxxxx LLP, special tax and bankruptcy counsel to the Company, dated the
Closing Date, to the effect that:
(a) Assuming the REMIC election is made in compliance with
the Pooling and Servicing Agreement, (i) the Trust, exclusive of
the Pre-Funding Account, the Group II Available Funds Cap
Carry-Forward Amount Account and the Capitalized Interest Account
(as defined in the Prospectus Supplement) will qualify as a real
estate mortgage investment conduit ("REMIC") (as defined in the
Internal Revenue Code of 1986, as amended (the "Code")) for
Federal income tax purposes and (ii) each Class of the Offered
Certificates (as defined in the Prospectus Supplement) will be
treated as "regular interests" in the REMIC and the R Class will
be treated as the sole "residual interest" in the REMIC.
(b) To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending that would
adversely affect the Trust Estate (exclusive of the Pre-Funding
Account, the Group II Available Funds Cap Carry-Forward Amount
Account and the Capitalized Interest Account) as a real estate
mortgage investment conduit ("REMIC") as such term is defined in
the Code.
(c) The statements under the captions "SUMMARY OF
PROSPECTUS -- CERTAIN FEDERAL INCOME TAX CONSEQUENCES" and
"CERTAIN FEDERAL INCOME TAX CONSEQUENCES" in the Prospectus and
under the captions "SUMMARY -- FEDERAL INCOME TAX ASPECTS" and
"CERTAIN FEDERAL INCOME TAX CONSEQUENCES" in the Prospectus
Supplement as they relate to federal tax matters are true and
correct in all material respects.
(d) As a consequence of the qualification of the Trust
(exclusive of the Pre-Funding Account, the Group II Available
Funds Cap Carry-Forward Amount Account and the Capitalized
Interest Account) as a REMIC, the Class A Certificates will be
treated as "regular . . . interest(s) in a REMIC" under Section
7701(a)(19)(C) of the Code and "real estate assets" under Section
856(c) of the Code in the same proportion that the assets in the
Trust consist of qualifying assets under such Sections. In
addition, as a consequence of the qualification of the Trust
(exclusive of the Pre-Funding Account, the Group II Available
Funds Cap Carry-Forward Amount Account and the Capitalized
Interest Account) as a REMIC, interest on the Class A
Certificates will be treated as "interest on obligations secured
by mortgages on real property" under Section 856(c) of the Code
to the extent that such Class A Certificates are treated as "real
estate assets" under Section 856(c) of the Code.
(e) The Trust will not be subject to tax upon its income
or assets by the taxing authority of New York State or New York
City.
11
(f) The Trust will not be subject to the California state
income tax. While REMICs are subject to the California state
minimum franchise tax imposed under Article 2, Section 23153 of
the California Revenue and Taxation Code, such counsel does not
express an opinion as to whether the Trust is subject to such
tax.
(g) 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), 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 on
or prior to the Cut-Off Date) are not property of the estate of
the Sponsor within the meaning of Section 541 of the Bankruptcy
Code, and, further that the Trustee's rights with respect to the
Mortgage Loans and the 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 on or prior to
the Cut-Off Date) constitutes a sale of said Mortgage Loans then
the payments thereunder (net of payments of scheduled principal
due on and interest accrued on or prior to the Cut-Off Date) are
not property of the estate of the Sponsor and the distributions
of such payments by the Trustee to the Owners of the Certificates
are not preferential payments made by, for, or on behalf of the
Sponsor under the provisions of Section 547 of the Bankruptcy
Code.
(h) If a court characterized the transfer of the Mortgage
Loans to the Trustee 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 New York, a valid
security interest has been created in favor of the Trustee, which
security interest of the Trustee 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 Notes, upon
endorsement and delivery thereof to the Trustee. With respect to
the security interest of the Trustee in the Notes, New York law
would govern.
4. The Underwriters shall have received the favorable opinion of
Xxxxx Xxxxxxxxxx LLP, special counsel to the Underwriters, dated the
Closing Date, to the effect that:
(a) The Certificates, 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 Pooling and Servicing
Agreement.
(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, as to which such counsel need express no
opinion), as of the date thereof, contained any untrue statement
of a material 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 Underwriters may reasonably
request.
In rendering their opinions, the counsels described in this
Paragraph C may rely, as to matters of fact, on certificates of responsible
officers of the Company, the Trustee and public officials. Such
12
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 Company.
D. The Underwriter shall have received a letter from Deloitte &
Touche, dated on or before the Closing Date, in form and substance satisfactory
to the Underwriters and counsel for the Underwriters, to the effect that they
have performed certain specified procedures requested by the Underwriters with
respect to the information set forth in the Prospectus and certain matters
relating to the Company.
E. The Class A Certificates 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, and such ratings shall
not have been rescinded. The Underwriters and counsel for the Underwriters shall
have received copies of any opinions of counsel supplied to the rating
organizations relating to any matters with respect to the Class A Certificates.
Any such opinions shall be dated the Closing Date and addressed to the
Underwriters or accompanied by reliance letters to the Underwriter or shall
state that the Underwriters may rely upon them.
F. The Underwriters shall have received from the Company a
certificate, signed by the president, a senior vice president or a vice
president of the Company, dated the Closing Date, to the effect that the signer
of such certificate has carefully examined the Registration Statement, the
Pooling 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 Company in this
Agreement, and in the Indemnification Agreement, as of the Closing Date,
in the Pooling and Servicing Agreement, in the Insurance Agreement and in
all related agreements, as of the date specified in such agreements, are
true and correct, and the Company 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
Company which if adversely determined, individually or in the aggregate,
would be reasonably likely to adversely affect the Company's obligations
under the Pooling and Servicing Agreement, the Insurance Agreement, this
Agreement or under the Indemnification Agreement in any material way; and
no merger, liquidation, dissolution or bankruptcy of the Company is
pending or contemplated;
3. the information contained in the Registration Statement and
Prospectus relating to the Company, the Mortgage Loans or the servicing
procedures of it or its affiliates or the 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
required to be furnished pursuant to the Pooling and Servicing Agreement
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 Company since August 1,
1996, and no such amendment has been authorized. No event has occurred
since December 17, 1997, which has affected the good standing of the
Company under the laws of the State of California;
13
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 Company and its subsidiaries, taken as a whole, from
September 30, 1997;
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 Company or in
any rating accorded any securities of the Company, 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
Company, signed or signs the Registration Statement, the Pooling and
Servicing Agreement, this Agreement, the Indemnification Agreement, the
Insurance 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 Pooling and Servicing
Agreement, the Indemnification Agreement, the Insurance 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 Company 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 Underwriters shall have received the favorable opinion of
counsel to the Trustee, dated the Closing Date and in form and substance
satisfactory to the Underwriters, to the effect that:
1. the Trustee is a banking corporation duly organized, validly
existing and in good standing under the laws of the State of New York and
has the power and authority to enter into and to take all actions required
of it under the Pooling and Servicing Agreement;
2. the Pooling and Servicing Agreement has been duly authorized,
executed and delivered by the Trustee and the Pooling and Servicing
Agreement constitutes the legal, valid and binding obligation of the
Trustee, enforceable against the Trustee in accordance with its terms,
except as enforceability thereof may be limited by (A) bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement
of creditors' rights generally, as such laws would apply in the event of a
bankruptcy, insolvency or reorganization or similar occurrence affecting
the Trustee, and (B) general principles of equity regardless of whether
such enforcement is sought in a proceeding at law or in equity;
3. no consent, approval, authorization or other action by any
governmental agency or body or other tribunal is required on the part of
the Trustee in connection with its execution and delivery of the Pooling
and Servicing Agreement or the performance of its obligations thereunder;
4. the Certificates have been duly executed, authenticated and
delivered by the Trustee;
5. the execution and delivery of, and performance by the Trustee
of its obligations under, the Pooling and Servicing Agreement do not
conflict with or result in a violation of any statute or regulation
applicable to the Trustee, or the articles or bylaws of the Trustee, or to
the best knowledge
14
of such counsel, any governmental authority having jurisdiction over the
Trustee or the terms of any indenture or other agreement or instrument to
which the Trustee is a party or by which it is bound; and
6. in the event that the Servicer defaults in its obligation to
make advances under the Pooling and Servicing Agreement, the Trustee or
any affiliate of the Trustee, is not prohibited by a provision of its
Articles of Incorporation or Bylaws or by any provision of the banking and
trust laws of the United States of America or the State of New York, as
the case may be (or any rule, regulation, decree or order thereunder),
from assuming its obligation to make such advances.
In rendering such opinion, such counsel may rely, as to matters
of fact, on certificates of responsible officers of the Company, the 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 Trustee.
H. The Underwriters shall have received from the Trustee a
certificate, signed by the President, a senior vice president or an assistant
vice president of the Trustee, dated the Closing Date, to the effect that each
person who, as an officer or representative of the Trustee, signed or signs the
Certificates, the Pooling and Servicing Agreement or any other document
delivered pursuant hereto, on the date hereof or on the Closing Date, in
connection with the transactions described in the Pooling and Servicing
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.
I. The Policies relating to the Class A Certificates 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.
J. The Underwriters shall have received a favorable opinion of
Xxxxx Xxxx, counsel to the Insurer, dated the Closing Date and in form and
substance satisfactory to counsel for the Underwriters, to the effect that:
1. The Insurer is a stock insurance corporation, duly
incorporated and validly existing under the laws of the State of New York.
The Insurer is validly licensed and authorized to issue the Policies and
perform its obligations under the Policies in accordance with the terms
thereof, under the laws of the State of New York.
2. The execution and delivery by the Insurer of the Policies, the
Insurance Agreement and the Indemnification Agreement are within the
corporate power of the Insurer and have been authorized by all necessary
corporate action on the part of the Insurer; the Policies have been duly
executed and are the valid and binding obligations of the Insurer
enforceable in accordance with their terms except that the enforcement of
the Policies 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. The Insurer is authorized to deliver the Insurance Agreement,
and the Indemnification Agreement, and the Insurance Agreement and the
Indemnification Agreement have been duly executed and are the valid and
binding obligations of the Insurer enforceable in accordance with their
terms except that the enforcement of the Insurance Agreement and the
Indemnification Agreement may be limited by laws relating to bankruptcy,
insolvency, reorganization, moratorium, receivership and other
15
similar laws affecting creditors' rights generally and by general
principles of equity and by public policy considerations relating to
indemnification for securities law violations.
4. No consent, approval, authorization or order of any state or
federal court or governmental agency or body is required on the part of
the Insurer, the lack of which would adversely affect the validity or
enforceability of the Policies; to the extent required by applicable legal
requirements that would adversely affect validity or enforceability of the
Policies, the form of each Policy has been filed with, and approved by,
all governmental authorities having jurisdiction over the Insurer in
connection with such Policy.
5. To the extent the Policies constitute securities within the
meaning of Section 2(1) of the Act, they are securities that are exempt
from the registration requirements of the Act.
6. The information set forth under the caption "THE CERTIFICATE
INSURANCE POLICIES AND THE CERTIFICATE INSURER" in the Prospectus
Supplement dated December 9, 1997, insofar as such statements constitute a
description of the Policies, accurately summarizes the Policies.
In rendering this opinion, such counsel may rely, as to matters
of fact, on certificates of responsible officers of the Company, the Trustee,
the 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 Insurer.
K. 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 Company or in
any rating accorded any securities of the Company, if any, by any "nationally
recognized statistical rating organization," as such term is defined for
purposes of the Act.
L. 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 Insurer's
claims paying ability by any "nationally recognized statistical rating
organization," as such term is defined for purposes of the Act.
M. There has not occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise, or in
the earnings, business or operations, since September 30, 1997, of (A) the
Company, its subsidiaries and affiliates or since September 30, 1997, of (B) the
Insurer, that is in the Underwriters' judgment material and adverse and that
makes it in the Underwriter's judgment impracticable to market the Class A
Certificates on the terms and in the manner contemplated in the Prospectus.
N. The Underwriters shall have received from the Insurer a
certificate, signed by the President, a senior vice president or a vice
president of the Insurer, dated the Closing Date, to the effect that the signer
of such certificate has carefully examined the Policies, the Insurance
Agreement, the Indemnification Agreement and the related documents and that, to
the best of his or her knowledge based on reasonable investigation:
16
1. each person who as an officer or representative of the
Insurer, signed or signs the Policies, the Insurance Agreement, the
Indemnification Agreement or any other document delivered pursuant hereto,
on the date thereof, or on the Closing Date, in connection with the
transactions described in this Agreement was, at the respective times of
such signing and delivery, and is now a duly authorized representative of
the Insurer and is authorized to execute and deliver this certificate.
2. The financial data presented in the table set forth under the
heading "THE CERTIFICATE INSURANCE POLICIES AND THE CERTIFICATE INSURER"
in the Prospectus Supplement presents fairly the financial position of the
Insurer as of December 31, 1996 and September 30, 1997, respectively, and
to the best of the Insurer's knowledge since such date, no material and
adverse change has occurred in the financial position of the Insurer other
than as set forth in then Prospectus Supplement.
3. The audited financial statements dated as of December 31, 1996
and the unaudited financial statements dated as of September 30, 1997
incorporated by reference into the Prospectus Supplement are true and
accurate.
4. The information which relates to the Insurer or the Policies
under the caption titled "THE CERTIFICATE INSURANCE POLICIES AND THE
CERTIFICATE INSURER" in the Prospectus Supplement is true and correct in
all material respects.
5. There are no actions, suits, proceedings or investigations
pending or, to the best of the Insurer's knowledge, threatened against it
at law or in equity or before or by any court, governmental agency, board
or commission or any arbitrator which, if decided adversely, would
materially and adversely affect its condition (financial or otherwise) or
operations or which would materially and adversely affect its ability to
perform its obligations under the Policies or the Insurance Agreement
dated as of December 1, 1997 (the "Insurance Agreement") among the
Insurer, First Alliance Mortgage Company, as Company, First Alliance
Mortgage Company, as Servicer, and The Bank of New York, as Trustee.
6. The execution and delivery of the Insurance Agreement and the
Policies and the compliance with the terms and provisions thereof will not
conflict with, result in a breach of, or constitute a default under any of
the terms, provisions or conditions of the Restated Charter or By-Laws of
the Insurer or of any agreement, indenture or instrument to which the
Insurer is a party.
7. The issuance of the Policies and the execution, delivery and
performance of the Insurance Agreement have been duly authorized by all
necessary corporate proceedings. No further approvals or filings of any
kind, including, without limitation, any further approvals or further
filing with any governmental agency or other governmental authority, or
any approval of the Insurer's board of directors or stockholders, are
necessary for the Policies and the Insurance Agreement to constitute the
legal, valid and binding obligations of the Insurer.
The officer of the Insurer certifying to items 2 and 3 shall be
an officer in charge of a principal financial function.
The Insurer shall attach to such certificate a true and correct
copy of its certificate or articles of incorporation, as appropriate, and its
bylaws, all of which are in full force and effect on the date of such
certificate.
17
O. The Underwriters shall have received from Xxxxx Xxxxxxxxxx
LLP, special counsel to the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Certificates, the
Prospectus and such other related matters as the Underwriters shall reasonably
require.
P. The Underwriters and counsel for the Underwriters shall have
received copies of any opinions of counsel to the Company or the Insurer
supplied to the Trustee relating to matters with respect to the Certificates or
the Policies. Any such opinions shall be dated the Closing Date and addressed to
the Underwriter or accompanied by reliance letters to the Underwriters or shall
state that the Underwriters may rely thereon.
Q. The Underwriters shall have received such further information,
certificates and documents as the Underwriters 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 6 shall not
have been fulfilled in all respects when and as provided in this Agreement, if
the Company 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 Underwriters and counsel to the Underwriters, this
Agreement and all obligations of the Underwriters hereunder, may be canceled on,
or at any time prior to, the Closing Date by the Underwriters. Notice of such
cancellation shall be given to the Company in writing, or by telephone or
telegraph confirmed in writing.
7. Expenses. If the sale of the Class A Certificates provided for
herein is not consummated by reason of a default by the Company in its
obligations hereunder, then the Company will reimburse the Underwriters, upon
demand, for all reasonable out-of-pocket expenses (including, but not limited
to, the reasonable fees and expenses of Xxxxx Xxxxxxxxxx LLP) that shall have
been incurred by each of them in connection with their investigation with regard
to the Company and the Class A Certificates and the proposed purchase and sale
of the Class A Certificates.
8. Indemnification and Contribution. A. Regardless of whether any
Class A Certificates are sold, the Company will indemnify and hold harmless each
Underwriter, each of its respective officers and directors and each person who
controls such 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 reimburse each such indemnified party 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 Company 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
18
furnished to the Company by or on behalf of an Underwriter specifically for use
in connection with the preparation thereof.
B. Regardless of whether any Class A Certificates are sold, each
Underwriter severally agrees to indemnify and hold harmless the Company, each of
its officers and directors and each person, if any, who controls the Company
within the meaning of the Act or the 1934 Act against any losses, claims,
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 Company by or on behalf
of such Underwriter specifically for use in the preparation thereof and so
acknowledged in writing, and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company 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 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
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
Underwriters in the case of parties indemnified pursuant to Paragraph A and by
the Company 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 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
19
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. If the indemnification provided for in this Section 8 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 Company and the related Underwriters from the sale of
the Certificates 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 Company and of the related Underwriters 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 Company and the related
Underwriters shall be deemed to be in such proportion so that the related
Underwriter is responsible for that portion determined by 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 Class A Certificates purchased by such Underwriter
over the aggregate purchase price of the Class A Certificates specified in
Section 4 of this Agreement and the denominator of which is (y) the Aggregate
Resale Price of the Class A Certificates purchased by such Underwriter and the
Company 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 Class A Certificates 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
Class A Certificates so purchased), determined on the basis of such principal
amounts, paid to the related Underwriter by all subsequent purchasers that
purchased the Class A Certificates on or prior to such date of determination.
The relative fault of the Company and the related 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 Company or by the related
Underwriter and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
E. The Company and the Underwriters 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 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 8, the Underwriters shall not be required to contribute any amount in
excess of the amount by which the Aggregate Resale Price exceeds the amount of
any damages that the Underwriters have otherwise been required to pay by reason
of any untrue or alleged untrue statement or omission or alleged omission.
20
F. Each Underwriter agrees to provide the Company no later than
two Business Days prior to the day on which such materials are required to be
filed with a copy of any Computational Materials (as defined below) produced by
such Underwriter for filing with the Commission on Form 8-K.
G. Each Underwriter severally agrees, assuming all information
provided to it by the Company is accurate and complete in all material respects,
to indemnify and hold harmless the Company, each of the Company's officers and
directors and each person who controls the Company 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 Computational Materials
provided by such Underwriter and agrees to reimburse each such indemnified party
for any legal or other expenses reasonably incurred by him, her or it in
connection with investigating or defending or preparing to defend any such loss,
claim, damage, liability or action as such expenses are incurred. The
obligations of an Underwriter under this Section 8(G) shall be in addition to
any liability which such Underwriter may otherwise have.
H. The Company and each Underwriter each expressly waive, and
agree not to assert, any defense to their respective indemnification and
contribution obligations under this Section 8 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.
I. The obligations of the Company under this Section 8 shall be
in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
each Underwriter within the meaning of the Act or the 1934 Act; and the
obligations of each Underwriter under this Section 8 shall be in addition to any
liability that such Underwriter may otherwise have and shall extend, upon the
same terms and conditions, to each director of the Company and to each person,
if any, who controls the Company within the meaning of the Act or the 1934 Act;
provided, however, that in no event shall the Company or any Underwriter be
liable for double indemnification.
9. Information Supplied by the Underwriters. The statements set
forth in the last paragraph on the front cover page of the Prospectus regarding
market-making and under the heading "Underwriting" in the Supplement (to the
extent such statements relate to the Underwriters), together with the
Computational Materials, constitute the only information furnished by the
Underwriter to the Company for the purposes of Sections 2(B) and 8(A) hereof.
The Underwriters confirm that such statements (to such extent) are correct.
The Company will cause any Computational Materials (as defined
below) with respect to the Class A Certificates which are delivered by any
Underwriter to the Company to be filed with the Commission on a Current Report
on Form 8-K (the "Form 8-K -- Computational Materials") not later than the date
on which such materials are required to be filed pursuant to the Xxxxxx/PSA
Letters (as defined below), provided, however, that the Company shall have no
obligation to file any materials which, in the reasonable determination of the
Company after consultation with such Underwriter, (i) are not required to be
filed pursuant to the Xxxxxx/PSA Letters or (ii) contain any erroneous
information or untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; it being understood, however, that the Company shall have no
obligation to review or pass upon the accuracy or adequacy of, or to correct,
any Computational Materials provided by any Underwriter to the Depositor as
aforesaid. For purposes hereof, as to each Underwriter, the term "Computational
Materials" shall mean those materials delivered by an Underwriter to the Company
within the meaning of the no-action letter dated May 20, 1994 issued by the
Division of Corporation Finance of the
21
Commission to Xxxxxx, Xxxxxxx Acceptance Corporation I and certain affiliates,
the no-action letter dated May 27, 1994 issued by the Division of Corporation
Finance of the Commission to the Public Securities Association and the no-action
letter of February 17, 1995 issued by the Commission to the Public Securities
Association (together, the "Xxxxxx/PSA Letters") for which the filing of such
material is a condition of the relief granted in such letters.
10. Notices. All communications hereunder shall be in writing
and, if sent to the Representative, shall be mailed or delivered or telecopied
and confirmed in writing to the Representative at Prudential Securities
Incorporated, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxx Xxxx;
and, if sent to the Company, shall be mailed, delivered or telegraphed and
confirmed in writing to the Company at the address set forth above, Attention:
Director of Secondary Marketing.
11. Survival. All representations, warranties, covenants and
agreements of the Company contained herein or in agreements or certificates
delivered pursuant hereto, the agreements of the Underwriters and the Company
contained in Section 8 hereof, and the representations, warranties and
agreements of the Underwriters contained in Section 3 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Underwriters or any controlling persons, or any subsequent
purchaser or the Company or any of its officers, directors or any controlling
persons, and shall survive delivery of and payment for the Certificates. The
provisions of Sections 5, 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
12. Termination. The Underwriters 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 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 Company 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 Representative'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 Representative's
reasonable judgment impractical to market the Class A Certificates. Any such
termination shall be without liability of any other party except that the
provisions of Paragraph G of Section 5 (except with respect to expenses of the
Underwriters) and Sections 7 and 8 hereof shall at all times be effective. If
the Underwriters elect to terminate this Agreement as provided in this Section
12, the Company shall be notified promptly by the Underwriters by telephone,
telegram or facsimile transmission, in any case, confirmed by letter.
13. 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 Underwriters), and the officers and directors and controlling persons
referred to in Section 8 hereof and their respective successors and assigns, and
no other persons will have any right or obligations hereunder.
14. 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
22
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.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall together constitute but one and the same
instrument.
16. 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.
23
IN WITNESS WHEREOF, the parties hereto hereby execute this Underwriting
Agreement, as of the day and year first above written.
FIRST ALLIANCE MORTGAGE COMPANY
By: /s/ Xxxx Xxxxx
------------------------------------
Name: Xxxx Xxxxx
Title: Executive Vice President, CFO
PRUDENTIAL SECURITIES INCORPORATED,
As Representative of the Several Underwriters
By: /s/ Xxx Xxxx
------------------------------------
Name: Xxx Xxxx
Title: Managing Director
{UNDERWRITING AGREEMENT SIGNATURE PAGE}
Schedule A
CLASS A-1 CERTIFICATES (1)
Underwriters Principal Purchase Price
------------ --------- --------------
Prudential Securities Incorporated $26,400,000 $26,315,520.00
First Union Capital Markets Corp. 17,600,000 17,543,680.00
----------
Total $44,000,000 $43,859,200.00
=========== ==============
CLASS A-2 CERTIFICATES (2)
Underwriters Principal Purchase Price
------------ --------- --------------
Prudential Securities Incorporated $7,200,000 $7,176,960.00
First Union Capital Markets Corp. 4,800,000 4,784,640.00
---------
Total $12,000,000 $11,961,600.00
=========== ==============
CLASS A-3 CERTIFICATES
Underwriters Principal Purchase Price
------------ --------- --------------
Prudential Securities Incorporated $30,000,000 $29,904,000.00
First Union Capital Markets Corp. 20,000,000 19,936,000.00
----------
Total $50,000,000 $49,840,000.00
=========== ==============
(1) Plus accrued interest from December 1, 1997 to (but not including) December
22, 1997 at the Class A-1 Pass-Through Rate.
(2) Plus accrued interest from December 1, 1997 to (but not including) December
22, 1997 at the Class A-2 Pass-Through Rate.
