Exhibit 1.1
FIRST ALLIANCE MORTGAGE COMPANY
AND
WHEAT FIRST SECURITIES, INC., acting through
FIRST UNION CAPITAL MARKETS, a division of
WHEAT FIRST SECURITIES, INC.
UNDERWRITING AGREEMENT
FOR
FIRST ALLIANCE MORTGAGE LOAN TRUST 1998-1F
MORTGAGE LOAN ASSET BACKED NOTES
$55,400,000 FIXED RATE
MORTGAGE LOAN ASSET BACKED NOTES, SERIES 1998-1F
March 10, 1998
March 10, 1998
First Alliance Mortgage Company
00000 Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Wheat First Securities, Inc., acting through
First Union Capital Markets, a division of
Wheat First Securities, Inc.
c/o First Union National Bank
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
First Alliance Mortgage Company (the "Seller" or the "Sponsor")
hereby confirms its agreement to sell certain mortgage loan asset backed Notes
to Wheat First Securities, Inc., acting through First Union Capital Markets, a
division of Wheat First Securities, Inc. (the "Underwriter") as described herein
relating to the First Alliance Mortgage Loan Trust 1998-1F (the "Issuer"). The
Notes, together with certain instruments evidencing the residual interest in the
Trust Estate (the "Certificates"), will evidence in the aggregate the entire
beneficial interest in a trust estate (the "Trust Estate") consisting of a pool
(the "Mortgage Pool") of closed-end mortgage loans (the "Initial Mortgage
Loans") and such amounts as may be held by the Indenture Trustee in the
Pre-Funding Account ("Pre-Funding Account"), the Capitalized Interest Account
(the "Capitalized Interest Account") and any other accounts held by the
Indenture Trustee for the Trust. The Initial Mortgage Loans shall have, as of
the close of business on March 1, 1998 (the "Cut-Off Date"), an aggregate
principal balance of $42,490,099.85. The Notes are to be issued under an
indenture dated as of March 1, 1998 (the "Indenture") between First Alliance
Mortgage Loan Trust 1998-1F, as Issuer, and The Chase Manhattan Bank, as
Indenture Trustee (the "Indenture Trustee"). On the Closing Date, approximately
$12,909,900.15 will be deposited in the name of the Indenture Trustee in the
Pre-Funding Account from the sale of the Notes. It is intended that additional
Mortgage Loans satisfying the criteria specified in the Sale and Servicing
Agreement (the "Subsequent Mortgage Loans") will be purchased by the Issuer for
inclusion in the Mortgage Pool from the Seller from time to time on or before
March 31, 1998 from funds on deposit in the Pre-Funding Account at the time of
execution and delivery of each Subsequent Transfer Agreement (the "Subsequent
Transfer Agreement"). Funds in the Capitalized Interest Account will be applied
by the Indenture Trustee to cover shortfalls in interest during the Funding
Period.
On or prior to the date of issuance of the Notes, the Seller
will obtain a financial guaranty insurance policy (the "Policy") issued by MBIA
Insurance Corporation (the "Insurer") which will unconditionally and irrevocably
guarantee to the Indenture Trustee for the benefit of the holders of the Notes
full and complete payment of all amounts payable on the Notes. All capitalized
terms used but not otherwise
defined herein have the respective meanings set forth in the form of Sale and
Servicing Agreement heretofore delivered to the Underwriter.
1. Securities. The Notes will be issued in a
single class. The Certificates will be issued by the Issuer pursuant to the
Trust Agreement dated as of March 1, 1998 between the Seller and Wilmington
Trust Company, as Owner Trustee (the "Trust Agreement"). The Notes and the
Certificates are hereinafter referred to as the "Securities."
2. Representations and Warranties of the Seller. The
Seller represents and warrants to, and covenants with, the Underwriter that:
A. The Seller has filed with the Securities and
Exchange Commission (the "Commission"), a registration statement (No. 333-44585)
on Form S-3 for the registration under the Securities Act of 1933, as amended
(the "Act"), of Mortgage Loan Asset Backed Certificates and Notes (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 Seller proposes
to file with the Commission pursuant to Rule 424(b)(5) under the Act a
supplement dated March 10, 1998 to the prospectus dated March 10, 1998 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 March 10, 1998, 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 March
10, 1998 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 Seller will file with the
Commission (i) promptly after receipt from the 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 Securities 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 Seller 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 and in conformity with
the information furnished in writing to the Seller by or on behalf of any
Underwriter specifically for use in connection with the preparation of the
Registration Statement and the Prospectus.
C. The Seller 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
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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
Seller 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 Seller, threatened, before any court,
governmental agency or body or other tribunal (i) asserting the invalidity of
this Agreement, the Securities, the Insurance Agreement, the Indemnification
Agreement dated March 10, 1998 (the "Indemnification Agreement") among the
Seller, the Insurer and the Underwriter, the Trust Agreement or of the Sale and
Servicing Agreement, (ii) seeking to prevent the issuance of the Securities or
the consummation of any of the transactions contemplated by this Agreement, the
Sale and Servicing Agreement, the Trust Agreement or any Subsequent Transfer
Agreement, (iii) which may, individually or in the aggregate, materially and
adversely affect the performance by the Seller of its obligations under, or the
validity or enforceability of, this Agreement, the Securities, the Sale and
Servicing Agreement, the Trust Agreement or any Subsequent Transfer Agreement,
or (iv) which may affect adversely the federal income tax attributes of the
Securities as described in the Prospectus.
E. The execution and delivery by the Seller of this
Agreement, the Indemnification Agreement, the Insurance 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 Issuer by the Seller
are within the corporate power of the Seller and have been, or will be, prior to
the Closing Date duly authorized by all necessary corporate action on the part
of the Seller 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 Seller 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 Seller
or any of its affiliates is subject, the Seller's charter or bylaws, or any
order, rule or regulation of any court, governmental agency or body or other
tribunal having jurisdiction over the Seller, 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 Securities by
the Seller except pursuant to the Act. Neither the Seller 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 Seller or any of its affiliates, which
materially and adversely affects, or may in the future materially and adversely
affect, (i) the ability of the Seller to perform its obligations under the Sale
and Servicing Agreement, the Trust 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 Seller, taken as a whole.
F. This Agreement and the Indemnification Agreement
have been duly executed and delivered by the Seller, and the Sale and Servicing
Agreement, the Trust Agreement, the Insurance Agreement and any Subsequent
Transfer Agreement will be duly executed and delivered by the Seller, and each
constitutes and/or will constitute, as applicable, the legal, valid and binding
obligation of the Seller 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
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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 the and Servicing Agreement and sold to the Underwriter
as provided herein, will be validly issued and outstanding and entitled to the
benefits of the Indenture.
H. 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.
I. The transfer of the Initial Mortgage Loans to the
Issuer on the Closing Date will be treated by the Seller for financial
accounting and reporting purposes as a sale of assets and not as a pledge of
assets to secure debt, however, for federal income tax purposes, the Seller will
report the issuance of the Notes as indebtedness.
J. The Seller 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 Seller, 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 Seller 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, the Trust 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.
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 Seller or its subsidiaries, taken as a whole, from September 30, 1997 to the
date hereof.
M. This Agreement, the Indenture and the Sale and
Servicing Agreement will conform in all material respects to the descriptions
thereof contained in the Prospectus.
N. The Seller 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.
O. Each assignment of Mortgages required to be prepared
pursuant to the Sale and Servicing Agreement is based on forms recently utilized
by the Seller with respect to mortgaged properties located in the appropriate
jurisdiction and used in the regular course of the Seller's business. Based on
the Seller'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
Sale and Servicing Agreement.
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P. The Seller 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 Seller and
delivered to the Underwriter in connection with the sale of the Securities
hereunder shall be deemed a representation and warranty as to the matters
covered thereby by the Seller to each person to whom the representations and
warranties in this Section 2 are made.
3. Agreements of the Underwriter.
A. The Underwriter agrees with the Seller 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.
B. The Underwriter may prepare and provide to
prospective investors certain Computational Materials and ABS Term Sheets in
connection with the offering of the Notes, subject to the following conditions:
1. In connection with the use of Computational
Materials, the Underwriter shall comply with all applicable
requirements of the No-Action Letter, dated May 20, 1994, issued by the
Division of Corporation Finance of the Commission to Xxxxxx, Xxxxxxx
Acceptance Corporation I, Xxxxxx, Peabody & Co. Incorporated and Xxxxxx
Structured Asset Corporation, as made applicable to other issuers and
the Underwriter by the Division of Corporation Finance of the
Commission in response to the request of the Public Securities
Association ("PSA"), dated May 23, 1994 (collectively, the "Xxxxxx/PSA
Letters"), as well as the PSA Letter referred to below. In connection
with the use of ABS Term Sheets, the Underwriter shall comply with all
applicable requirements of the No-Action Letter, dated February 17,
1995, issued by the Division of Corporation Finance to the Commission
to PSA (the "PSA Letter" and, together with the Xxxxxx/PSA Letters, the
"No-Action Letters").
2. The term "Computational Materials" as used
herein shall have the meaning given to such term in the No-Action
Letters, but shall include only those Computational Materials that have
been prepared or delivered to prospective investors by or at the
direction of the Underwriter. The terms "ABS Term Sheets," "Collateral
Term Sheets" and "Structural Term Sheets" as used herein shall have the
meanings given to such terms in the PSA Letter, but shall include only
those ABS Term Sheets, Collateral Term Sheets or Structural Term Sheets
that have been prepared or delivered to prospective investors by or at
the direction of the Underwriter.
3. All Computational Materials and ABS Term
Sheets provided to prospective investors that are required to be filed
pursuant to the No-Action Letters shall bear a legend on each page in a
form previously agreed upon by the Seller and the Underwriter.
4. Any Computational Materials and ABS Term
Sheets are subject to review by and approval of the Seller prior to
their distribution to any prospective investors and a copy of such
Computational Materials and ABS Term Sheets as are delivered to
prospective investors shall, in addition to the foregoing delivery
requirements, be delivered to the Seller simultaneously with delivery
to prospective investors.
5. The Underwriter shall provide to the Seller,
for filing on Form 8-K as provided in Section 9 hereof, five copies (in
such format as required by the Seller) of all
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Computational Materials and ABS Term Sheets that are required to be
filed with the Commission pursuant to the No-Action Letters. Each
delivery of Computational Materials or ABS Term Sheets to the Seller
pursuant to this paragraph shall be effected by delivering four copies
of such material to counsel for the Seller on behalf of the Seller and
one copy of such materials to the Seller. The Underwriter may provide
copies of the foregoing in a consolidated or aggregate form that
includes all information required to be filed. All Computational
Materials and ABS Term Sheets described in this Section must be
provided to the Seller not later than 10:00 a.m., New York time, on the
Business Day before the date on which filing thereof is required
pursuant to the terms of this Agreement. The Underwriter agrees that it
will not provide to any investor or prospective investor in the Notes
any Computational Materials or ABS Term Sheets on or after the day on
which Computational Materials and ABS Term Sheets are required to be
provided to the Seller pursuant to this Section (other than copies of
Computational Materials or ABS Term Sheets previously submitted to the
Seller in accordance with this Section for filing pursuant to Section 9
hereof), unless such Computational Materials or ABS Term Sheets are
preceded or accompanied by the delivery of a Prospectus to such
investor or prospective investor.
6. All information included in the Computational
Materials and ABS Term Sheets shall be generated based on substantially
the same methodology and assumptions that are used to generate the
information in the Prospectus Supplement as set forth therein;
provided, however, that the Computational Materials and ABS Term Sheets
may include information based on alternative methodologies or
assumptions specified therein. If any Computational Materials or ABS
Term Sheets that are required to be filed were based on assumptions
with respect to the Mortgage Loans that are incorrect, that differ from
the final information about the Mortgage Pool in any material respect
or on Certificate structuring terms that were revised in any material
respect prior to the printing of the Prospectus, to the extent the
Prospectus Supplement does not specifically correct such inaccuracies,
the Underwriter shall prepare revised Computational Materials or ABS
Term Sheets, as the case may be, based on the final information about
the Mortgage Pool and structuring assumptions, circulate such revised
Computational Materials or ABS Term Sheets, as the case may be, to all
recipients of the preliminary versions thereof that indicated orally to
an Underwriter that they would purchase all or any portion of the Notes
and include such revised Computational Materials or ABS Term Sheets
(marked "as revised") in the materials delivered to the Seller pursuant
to 3.B.5.
7. The Seller shall not be obligated to file any
Computational Materials or ABS Term Sheets that (i) in the reasonable
determination of the Seller and the Underwriter and their respective
counsel are not required to be filed pursuant to the No-Action Letters
or (ii) have been determined to contain any material error or omission,
provided that, at the request of the Underwriter, the Seller will file
Computational Materials or ABS Term Sheets that contain a material
error or omission if clearly marked "superseded by materials dated
_____________" and accompanied by corrected Computational Materials or
ABS Term Sheets that are marked "material previously dated
__________________, as corrected." In the event that at any time when a
prospectus relating to the Notes is required to be delivered under the
Securities Act, any Computational Materials or ABS Term Sheets are
determined, in the reasonable judgment of the Seller or the Underwriter
to contain a material error or omission, the Underwriter shall prepare
a corrected version of such Computational Materials or ABS Term Sheets,
shall circulate such corrected version of such Computational Materials
or ABS Term Sheets to all recipients of the prior version thereof that
either indicated orally to such Underwriter that they would purchase
all or any portion of the Notes, or actually purchased all or any
portion thereof, and shall deliver copies of such Computational
Materials or ABS Term Sheets (marked "as corrected") to the Seller for
filing with the Commission is a subsequent Form 8-K submission (subject
to the Seller's obtaining an
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accountant's comfort letter in respect of such corrected Computational
Materials or ABS Term Sheets, which shall be at the expense of the
Underwriter).
C. The Underwriter represents and warrants and agrees
with the Seller that, as of the date hereof and as of the Closing Date, that:
(i) the Computational Materials and ABS Term Sheets furnished to the Seller
pursuant to Section 3.B.5 constitute (either in original, aggregated or
consolidated form) all of the materials furnished to prospective investors by
the Underwriter prior to the time of delivery thereof to the Seller that are
required to be filed with the Commission with respect to the Notes in accordance
with the No-Action Letters, and such Computational Materials and ABS Term Sheets
comply with the requirements of the No-Action Letters; (ii) on the date any such
Computational Materials and ABS Term Sheets with respect to such Certificates
(or any written or electronic materials furnished to prospective investors on
which the Computational Materials and ABS Term Sheets are based) were last
furnished to each prospective investor and on the date of delivery thereof to
the Seller pursuant to Section 3.B.5 and on the related Closing Date, such
Computational Materials and ABS Terms Sheets (or materials) were accurate in all
material respects when read in conjunction with the Prospectus (taking into
account the assumptions explicitly set forth in the Computational Materials),
except to the extent of any errors therein that are caused by errors in the
Mortgage Pool information provided to the Underwriter by the Seller; (iii) the
Underwriter has not and will not represent to potential investors that any
Computational Materials or ABS Term Sheets were prepared or disseminated on
behalf of the Seller; and (iv) all Computational Materials and ABS Term Sheets
(or underlying materials distributed to prospective investors on which the
Computational Materials and ABS Term Sheets were based) contained and will
contain the legend in the form previously agreed upon by the Seller and the
Underwriter as required by Section 3.B.3.
Notwithstanding the foregoing, the Underwriter makes
no representation or warranty as to whether any Computational Materials or ABS
Term Sheets (or any written or electronic materials furnished to prospective
investors on which the Computational Materials or ABS Term Sheets are based)
included or will include any inaccurate statement resulting directly from any
error contained in the Mortgage Pool information provided to the Underwriter by
the Seller.
D. Each Underwriter that delivers any Computational
Materials and ABS Term Sheets to the Seller shall deliver to the Seller a
certificate, dated as of the date hereof, to the effect that the representations
and warranties of the Underwriter contained in this Section 3 are true and
correct as of such date. If the Underwriter does not provide any Computational
Materials or ABS Term Sheets to the Seller pursuant to Section 3.B.5, the
Underwriter shall be deemed to have represented, as of the Closing Date, that it
did not provide any prospective investors with any information in written or
electronic form in connection with the offering of the Notes that is required to
be filed with the Commission in accordance with the No-Action Letters.
4. Purchase, Sale and Delivery of the Notes. The
Seller 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 in
the amount of $55,400,000. At the time of issuance of the Notes, the Initial
Mortgage Loans will be sold by the Seller to the Issuer pursuant to the Sale and
Servicing Agreement. The Subsequent Mortgage Loans will be purchased by the
Issuer for inclusion in the Mortgage Pool, from time to time on or before March
31, 1998. The Seller 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 Seller to the Underwriter (which delivery shall be made through
the facilities of The Depository Trust Company ("DTC")) against payment of the
purchase price therefor, equal to 100.227% of the aggregate principal
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amount of the Notes, including accrued interest thereon. The Notes shall be
dated their date of delivery. The Underwriter's fee shall be 25 basis points of
each of the Notes.
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 March 27, 1998, or at such other time thereafter as the Underwriter and the
Seller 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.
The Seller 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.
5. Covenants of the Seller. The Seller covenants and
agrees with the Underwriter that:
A. The Seller 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 Seller 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 Seller 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 Securities unless the Seller 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, unless such filing is required by law. The
Seller 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 Seller
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 Seller 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 Seller 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 Seller will cause the Trust to make generally
available to Owners of the Notes 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 Seller, will satisfy the
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requirements of Rule 158 under the Act.
E. During a period of 20 calendar days from the date as
of which this Agreement is executed, neither the Seller nor any affiliate of the
Seller 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 other than the First Alliance Mortgage Loan Trust 1998-1F
6.610% $55,400,400 Fixed Rate Mortgage Loan Notes.
F. So long as any of the Notes are outstanding, the
Seller will cause to be delivered to the Underwriter (i) all documents required
to be distributed to Owners of the Notes 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 Seller, 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 incurred in connection with (i) the
issuance and delivery of the Notes, (ii) preparation of all documents specified
in this Agreement, (iii) any fees and expenses of the Owner Trustee, the
Indenture 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 Notes.
H. The Seller agrees that, so long as any of the Notes
shall be outstanding, 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 Seller and (iii) any information required to be delivered by
the Seller or the Servicer to prepare the report by the Indenture Trustee
pursuant to Section 3.8 of the form of Sale and Servicing Agreement heretofore
delivered to the Underwriter.
I. The Seller will enter into the Sale and Servicing
Agreement, the Trust Agreement, the Insurance Agreement, and all related
agreements on or prior to the Closing Date.
J. The Seller 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.
6. 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 Seller contained herein (including those representations and warranties set
forth in the Sale and Servicing Agreement and incorporated herein), to the
accuracy of the statements of the Seller made in any certificate or other
document delivered pursuant to the provisions hereof, to the performance by the
Seller 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
9
pursuant to Rule 424(b).
B. The Underwriter shall have received the Sale and
Servicing Agreement 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 Vice President and General Counsel to the Seller, with respect to
the following items, dated the Closing Date, to the effect that:
(a) The Seller 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 Seller 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 Sale
and Servicing Agreement, the Trust Agreement, any Subsequent
Transfer Agreement, the Insurance Agreement and the
Indemnification Agreement.
(b) This Agreement, the Securities, the Sale
and Servicing Agreement, the Trust Agreement, the Insurance
Agreement and the Indemnification Agreement have been duly and
validly authorized, executed and delivered by the Seller, all
requisite corporate action having been taken with respect
thereto, and each (other than the Securities) constitutes the
valid, legal and binding agreement of the Seller enforceable
against the Seller in accordance with its respective terms.
(c) Neither the transfer of the Initial
Mortgage Loans to the Issuer, the issuance or sale of the
Securities nor the execution, delivery or performance by the
Seller of the Sale and Servicing Agreement, the Trust
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 Seller; (ii) any term or provision of any
material agreement, contract, instrument or indenture, to which
the Seller 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 Seller; 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 Securities,
except as otherwise contemplated by 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
(in the absence of the delivery of the opinions described in
Section 2.5(b)(ii) of the Sale and Servicing Agreement), as and
in the manner contemplated by the Sale and Servicing Agreement,
is sufficient fully to transfer to the Trustee for the benefit
of the Owners all right, title and interest of the Seller in
the Mortgage 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 Seller and to prevent any other sale, transfer, assignment,
pledge or other encumbrance of the Mortgage Loans by the Seller
from being enforceable.
10
(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 Sale and Servicing Agreement,
the Trust Agreement, the Insurance Agreement, this Agreement,
the Indemnification Agreement or the offer, issuance, sale or
delivery of the Securities or the consummation of any other
transaction contemplated thereby by the Seller, except such
which have been obtained.
(f) There are no actions, proceedings or
investigations pending or, to such counsel's knowledge,
threatened against the Seller before any court, governmental
agency or body or other tribunal (i) asserting the invalidity
of the Sale and Servicing Agreement, the Trust Agreement, the
Insurance Agreement, this Agreement, the Indemnification
Agreement or the Securities, (ii) seeking to prevent the
issuance of the Securities or the consummation of any of the
transactions contemplated by the Sale and Servicing Agreement,
the Trust Agreement, the Indemnification Agreement, the
Insurance Agreement or this Agreement or (iii) which would
materially and adversely affect the performance by the Seller
of obligations under, or the validity or enforceability of, the
Sale and Servicing Agreement, the Trust Agreement, the
Securities, 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 Underwriter shall have received the favorable
opinion of Xxxxx & Xxxxxx LLP, special counsel to the Seller, dated the
Closing Date, to the effect that:
(a) The Notes, assuming due execution by the
Owner Trustee and due 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 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 Seller of the Sale and
Servicing Agreement, the Trust Agreement, this Agreement, any
Subsequent Transfer Agreement, the Indemnification Agreement,
the Insurance Agreement or the offer, issue, sale or delivery
of the Notes or the consummation of any other transaction
contemplated thereby by the Seller, except such which have been
obtained.
(c) Neither the transfer of the Initial
Mortgage Loans to the Issuer, the issuance or sale of the
Notes, nor the execution, delivery or performance by the Seller
of the Sale and Servicing Agreement, the Trust 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 investigation, results in, or will result in, the
creation or imposition of any lien,
11
charge or encumbrance upon the Trust Estate 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 Seller's right, title and interest in the Subsequent
Mortgage Loans to the Issuer and following the consummation of
the transaction contemplated by each Subsequent Transfer
Agreement, the transfer of the Subsequent Mortgage Loans by the
Seller to the Issuer 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) The registration of the Issuer under the
Investment Company Act of 1940 is not 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 NOTES" and "ADMINISTRATION," to the extent such
statements purport to summarize certain provisions of the Notes
or of the Sale 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 NOTE INSURANCE POLICY AND THE NOTE 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 Indenture Trustee on
behalf of the Owners of the Notes of the related Mortgage
Notes, endorsed as described in the Sale and Servicing
Agreement, and the receipt by the Seller of the purchase price
for the Notes and for so long as the Indenture Trustee
maintains actual physical possession of such Mortgage Notes,
(i) the Issuer 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 Seller 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 Indenture Trustee, on behalf of the Issuer, has a first
perfected security interest in the Mortgage Loans and (iii) in
the jurisdictions listed in such opinion, the recordation of
the assignments of the Mortgages is not required for the Issuer
to obtain such rights, as against creditors of, and purported
transferees of, the Seller.
12
(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 Securities
(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 & Xxxxxx LLP, special tax and bankruptcy counsel to the Seller,
dated the Closing Date, to the effect that:
(a) 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.
(b) For federal income tax purposes, the Notes
will be treated as newly originated debt obligations and not as
representing an ownership interest in the Trust Estate or an
equity interest in the Issuer or the Seller. In addition, for
federal income tax purposes, the Issuer will not be (i)
classified as an association taxable as a corporation, (ii) a
taxable mortgage pool as defined in Section 7701(i) of the
Internal Revenue Code of 1986, as amended, or (iii) a "publicly
traded partnership" as defined in Treasury Regulation Section
1.7704-1.
(c) The Issuer will not be subject to tax upon
its income or assets by the taxing authority of New York State
or New York City.
(d) The Issuer will not be subject to the
California state income tax.
(e) A court would hold that the conveyance by
the Seller of all right, title and interest in the Mortgage
Loans to the Issuer (except for the Seller'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 Seller 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 Seller within the meaning of
Section 541 of the Bankruptcy Code, and, further that the
Issuer'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 Seller and the distributions
of such payments by the Indenture Trustee to the Owners of the
Notes pursuant to the Indenture are not preferential payments
made by, for, or on behalf of the Seller under the provisions
of Section 547 of the Bankruptcy Code.
(f) If a court characterized the transfer of
the Mortgage Loans to the Issuer 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 Estate
on the date hereof, to the extent governed by the laws of the
State of New York, a valid security interest has been
13
created in favor of the Indenture Trustee, on behalf of the
Owners of the Notes, which security interest will be perfected
and will constitute a first perfected security interest, with
respect to the Seller's right, title and interest in and to the
Mortgage Notes, upon endorsement and delivery thereof to the
Indenture Trustee, on behalf of the Owners of the Notes. With
respect to the security interest of the Indenture Trustee, on
behalf of the Owners of the Notes, in the Mortgage Notes, New
York law would govern.
4. The Underwriter shall have received the favorable
opinion of Xxxxx Xxxxxxxxxx LLP, special counsel to the Underwriter,
dated the Closing Date, to the effect that:
(a) The Notes, assuming due execution by the
Owner Trustee and due 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, 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 Underwriter 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 Seller, the Owner Trustee, 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 Seller.
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 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 Seller.
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, and such ratings shall
not have been rescinded. The Underwriter and counsel for the Underwriter 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 Seller
a certificate, signed by the president, a senior vice president or a vice
president of the Seller, dated the Closing Date, to the effect that the signer
of such certificate has carefully examined the Registration Statement, the Sale
and Servicing Agreement, the Trust 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 Seller in
this Agreement, and in the Indemnification Agreement, as of the Closing
Date, in the Sale and Servicing Agreement, the Trust Agreement, the
Insurance Agreement and in all related agreements, as of the date
specified in such
14
agreements, are true and correct, and the Seller 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 Seller which if adversely determined, individually or in
the aggregate, would be reasonably likely to adversely affect the
Seller's obligations under the Sale and Servicing Agreement, the Trust
Agreement, the Insurance Agreement, this Agreement or under the
Indemnification Agreement in any material way; and no merger,
liquidation, dissolution or bankruptcy of the Seller is pending or
contemplated;
3. the information contained in the Registration
Statement and Prospectus relating to the Seller, 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 Sale 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 Seller since
August 1, 1996, and no such amendment has been authorized. No event has
occurred since March 23, 1998, which has affected the good standing of
the Seller 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 Seller and its subsidiaries, taken as a whole, from
December 31, 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 Seller or in any rating accorded any securities of the
Seller, 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 Seller, signed or signs the Registration Statement, the Sale and
Servicing Agreement, the Trust 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 Sale and Servicing Agreement, the Trust
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 Seller 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.
15
G. The Underwriter shall have received an opinion of
Xxxxxxxx, Xxxxxx & Finger, counsel to the Owner Trustee, dated the Closing Date,
in form and substance satisfactory to the Underwriter and counsel for the
Underwriter, to the effect that:
1. The Owner Trustee is a Delaware banking corporation
duly incorporated and validly existing under the laws of the State of
Delaware.
2. The Owner Trustee has the full power and authority
to accept the office of owner trustee under the Trust Agreement and to
enter into and perform its obligations under the Trust Agreement and
the transactions contemplated thereby.
3. The execution and delivery of the Trust Agreement by
the Owner Trustee and the performance by the Owner Trustee of its
obligations under the Trust Agreement have been duly authorized by all
necessary action of the Owner Trustee, and the Trust Agreement has been
duly executed and delivered by the Owner Trustee.
4. The Trust Agreement constitutes valid and binding
obligations of the Owner Trustee enforceable against the Owner Trustee
in accordance with its terms, except as the enforceability thereof may
be (a) limited by bankruptcy, insolvency, reorganization, moratorium,
liquidation or other similar laws affecting the rights of creditors
generally, and (b) subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity
or at law).
5. The execution and delivery by the Owner Trustee of
the Trust Agreement and the consummation of the transactions
contemplated thereby do not require any consent, approval or
authorization of, or any registration or filing with, any applicable
governmental authority of the State of Delaware which has not been
obtained or done.
6. Neither the consummation by the Owner Trustee of the
transactions contemplated in the Trust Agreement, nor the fulfillment
of the terms thereof by the Owner Trustee will conflict with, result in
a breach or violation of, or constitute a default under the Articles of
Association, Bylaws or other organizational documents of the Owner
Trustee.
H. The Underwriter shall have received an opinion of
Xxxxxxxx, Xxxxxx & Finger, special Delaware counsel for the Issuer dated the
Closing Date, in form and substance satisfactory to the Underwriter and counsel
for the Underwriter, to the effect that:
1. The Trust Agreement is the legal, valid and binding
agreement of the Owner Trustee and the Seller, enforceable against the
Owner Trustee and the Seller in accordance with its terms subject to
(i) applicable bankruptcy, insolvency, moratorium, receivership,
reorganization, fraudulent conveyance and similar laws relating to and
affecting the rights and remedies of creditors generally, (ii)
principles of equity (regardless of whether considered and applied in a
proceeding in equity or at law), and (iii) the effect of applicable
public policy on the enforceability of provisions relating to
indemnification or contribution.
2. The Certificate of Trust has been duly filed with
the Secretary of State of the State of Delaware. The Issuer has been
duly formed and is validly existing as a business trust under the
Delaware Business Trust Act.
3. The Issuer has the power and authority under the
Trust Agreement and the Delaware Business Trust Act to execute, deliver
and perform its obligations under the Trust Agreement, the
16
Indenture, the Sale and Servicing Agreement, the Notes and the
Certificates and to issue the Securities.
4. The Issuer has duly authorized and executed the
Trust Agreement, the Indenture, the Sale and Servicing Agreement, the
Notes and the Certificates.
5. The Issuer has the power under the Trust Agreement
and the Delaware Business Trust Act to pledge the Trust Estate to the
Indenture Trustee as security for the Notes.
6. The Certificates have been executed, authorized and
delivered by the Owner Trustee upon the order of the Seller in
accordance with the Trust Agreement.
7. To the extent that Article 9 of the Uniform
Commercial Code as in effect in the State of Delaware (the "Delaware
UCC") is applicable (without regard to conflicts of laws principles),
and assuming that the security interest created by the Indenture in the
Collateral has been duly created and has attached, upon the filing of a
UCC-1 financing statement with the Secretary of State of the State of
Delaware, the Indenture Trustee will have a perfected security interest
in such Collateral and the proceeds thereof; and such security interest
will be prior to any other security interest granted by the Issuer that
is perfected solely by the filing of financing statements under the
Delaware UCC, excluding purchase money security interests under Section
9-312 of the Delaware UCC and temporarily perfected security interests
in proceeds under Section 9-306 of the Delaware UCC.
8. No re-filing or other action is necessary under the
Delaware UCC in the State of Delaware in order to maintain the
perfection of the security interest referenced above except for the
filing of continuation statements at five-year intervals.
9. Under Section 3805(b) of the Delaware Business Trust
Act, no creditor of any holder of the Certificate shall have any right
to obtain possession of, or otherwise exercise legal or equitable
remedies with respect to, the property of the Issuer except in
accordance with the terms of the Trust Agreement subject to (i)
applicable bankruptcy, insolvency, moratorium, receivership,
reorganization, fraudulent conveyance and similar laws relating to and
affecting the rights and remedies of creditors generally, (ii)
principles of equity (regardless of whether considered and applied in a
proceeding in equity or at law), and (iii) the effect of applicable
public policy on the enforceability of provisions relating to
indemnification or contribution.
10. Under Section 3805(c) of the Delaware Business
Trust Act, and assuming that the Sale and Servicing Agreement conveys
good title to the Mortgage Loans to the Issuer as a true sale and not
as a security arrangement, the Issuer, rather than the holders of the
Certificates is the owner of the Mortgage Loans subject to (i)
applicable bankruptcy, insolvency, moratorium, receivership,
reorganization, fraudulent conveyance and similar laws relating to and
affecting the rights and remedies of creditors generally, (ii)
principles of equity (regardless of whether considered or applied in a
proceeding in equity or at law), and (iii) the effect of applicable
public policy on the enforceability of provisions relating to
indemnification or contribution.
11. The execution and delivery by the Owner Trustee of
the Trust Agreement and, on behalf of the Issuer, of the Indenture and
the Sale and Servicing Agreement do not require any consent, approval
or authorization of, or any registration or filing with, any
governmental authority of the State of Delaware, except for the filing
of the Certificate of Trust with the Secretary of State.
12. Neither the consummation by the Owner Trustee of
the transactions contemplated
17
by the Trust Agreement or, on behalf of the Issuer, the transactions
contemplated by the Indenture and the Sale and Servicing Agreement nor
the fulfillment of the terms thereof by the Owner Trustee will conflict
with or result in a breach or violation of any law of the State of
Delaware.
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriter. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the State of Delaware.
I. The Underwriter shall have received the favorable
opinion of counsel to the Indenture Trustee, dated the Closing Date, addressed
to the Underwriter and in form and scope satisfactory to counsel to the
Underwriter, to the effect that:
1. The Indenture Trustee is a banking corporation duly
incorporated and validly existing under the laws of the State of New
York.
2. The Indenture Trustee has the full corporate trust
power to execute, deliver and perform its obligations under the
Indenture.
3. The execution and delivery by the Indenture Trustee
of the Indenture and the performance by the Indenture Trustee of its
obligations under the Indenture have been duly authorized by all
necessary corporate action of the Indenture Trustee.
4. The Indenture is a valid and legally binding
obligation of the Indenture Trustee enforceable against the Indenture
Trustee.
5. The execution and delivery by the Indenture Trustee
of the Indenture does not (a) violate the Organization Certificate of
the Indenture Trustee or the Bylaws of the Indenture Trustee, (b) to
such counsel's knowledge, violate any judgment, decree or order of any
New York or United States federal court or other New York or United
States federal governmental authority by which the Indenture Trustee is
bound or (c) assuming the non-existence of any judgment, decree or
order of any court or other governmental authority that would be
violated by such execution and delivery, violate any New York or United
States federal statute, rule or regulation or require any consent,
approval or authorization of any New York or United States federal
court or other New York or United States federal governmental
authority.
6. The Notes have been duly authenticated and delivered
by the Indenture Trustee.
7. If the Indenture Trustee were acting as Servicer
under the Sale and Servicing Agreement as of the date of such opinion,
the Indenture Trustee would have full corporate trust power to perform
the obligations of the Servicer under the Sale and Servicing Agreement;
and
8. To the best of such counsel's knowledge, there are
no actions, proceedings or investigations pending or threatened against
or affecting the Indenture Trustee before or by any court, arbitrator,
administrative agency or other governmental authority which, if decided
adversely to the Indenture Trustee, would materially and adversely
affect the ability of the Indenture Trustee to carry out the
transactions contemplated in the Indenture.
In rendering such opinion, such counsel may rely, as to matters
of fact, on certificates of responsible officers of the Seller, the Indenture
Trustee and public officials. Such opinion may also assume
18
the due authorization, execution and delivery of the instruments and documents
referred to therein by the parties thereto other than the Indenture Trustee.
J. The Underwriter shall have received from the Owner
Trustee a certificate, signed by the President, a senior vice president or an
assistant vice president of the Owner Trustee, dated the Closing Date, to the
effect that each person who, as an officer or representative of the Owner
Trustee, signed or signs the Securities, the Sale and Servicing Agreement, the
Trust Agreement, and 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 Sale 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.
K. 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.
L. The Underwriter 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 Underwriter, 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
Policy and perform its obligations under the Policy 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
Policy, 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 Policy
has been duly executed and is the valid and binding obligation of the
Insurer enforceable in accordance with its terms except that the
enforcement of the Policy may be limited by laws relating to
bankruptcy, insolvency, reorganization, moratorium, receivership and
other similar laws affecting creditors' rights generally and by general
principles of equity.
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 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 Policy; to the extent required by
applicable legal requirements that would adversely affect validity or
enforceability of the Policy, the form of the Policy has been filed
with, and approved by, all governmental authorities having jurisdiction
over the Insurer in connection with such Policy.
5. To the extent the 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.
19
6. The information set forth under the caption "THE
NOTE INSURANCE POLICY AND THE NOTE INSURER" in the Prospectus
Supplement, 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 Seller, 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.
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 Seller or in
any rating accorded any securities of the Seller, 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
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, 1997,
of (A) the Seller, its subsidiaries and affiliates or since December 31, 1997,
of (B) the 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 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 Policy, the Insurance Agreement, the Indemnification
Agreement and the related documents and that, to the best of his or her
knowledge based on reasonable investigation:
1. each person who as an officer or representative of
the Insurer, signed or signs the Policy, 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 NOTE INSURANCE POLICY AND THE NOTE 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 the 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.
20
4. The information which relates to the Insurer or the
Policy under the caption titled "THE NOTE INSURANCE POLICY AND THE NOTE
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
Policy or the Insurance Agreement.
6. The execution and delivery of the Insurance
Agreement and the Policy 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 Policy 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 Policy 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.
Q. The Underwriter shall have received from Xxxxx
Xxxxxxxxxx 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 counsel for the Underwriter
shall have received copies of any opinions of counsel to the Seller or the
Insurer supplied to the Indenture Trustee relating to matters with respect to
the Securities 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.
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 6
shall not have been fulfilled in all respects when and as provided in this
Agreement, if the Seller 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 counsel to the Underwriter, 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
21
Seller in writing, or by telephone or telegraph confirmed in writing.
7. Expenses. If the sale of the Notes provided for
herein is not consummated by reason of a default by the Seller in its
obligations hereunder, then the Seller 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 Xxxxxxxxxx LLP) that shall have
been incurred by the Underwriter in connection with its investigation with
regard to the Seller and the Notes and the proposed purchase and sale of the
Notes.
8. Indemnification and Contribution. Regardless of
whether any Notes are sold, the Seller 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 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 Seller 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 Seller 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 Seller, each of its
officers and directors and each person, if any, who controls the Seller 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 Seller by or on behalf of the Underwriter
specifically for use in the preparation thereof and so acknowledged in writing,
and will reimburse the Seller for any legal or other expenses reasonably
incurred by the Seller 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
22
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
Underwriter in the case of parties indemnified pursuant to Paragraph A and by
the Seller 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 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 Seller 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 Seller 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 Seller and the
Underwriter shall be deemed to be in such proportion so that the 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 Notes purchased by the Underwriter over the aggregate purchase
price of the Notes specified in Section 4 of this Agreement and the denominator
of which is (y) the Aggregate Resale Price of the Notes purchased by the
Underwriter and the Seller 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
23
"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 Seller 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 Seller 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 Seller and the Underwriter 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 Underwriter 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 Underwriter have otherwise been required to pay by reason
of any untrue or alleged untrue statement or omission or alleged omission.
F. The Underwriter agrees to provide the Seller 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 produced by such
Underwriter for filing with the Commission on Form 8-K.
G. The Underwriter severally agrees, assuming all
information provided to it by the Seller is accurate and complete in all
material respects, to indemnify and hold harmless the Seller, each of the
Seller's officers and directors and each person who controls the Seller 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 the 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 the Underwriter under this Section 8(G) shall be in addition
to any liability which the Underwriter may otherwise have.
H. The Seller and the 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 Seller under this Section 8
shall be in addition to any liability which the Seller 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 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 Seller and to each person, if
any, who controls the Seller within the meaning of the Act or the 1934 Act;
provided, however, that in no event shall the Seller or the Underwriter be
liable for double indemnification.
9. Information Supplied by the Underwriter. The
statements set forth in the last
24
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 Underwriter), together with the Computational
Materials, constitute the only information furnished by the Underwriter to the
Seller for the purposes of Sections 2(B) and 8(A) hereof. The Underwriter
confirms that such statements (to such extent) are correct.
The Seller will cause any Computational Materials with
respect to the Certificates that are delivered to the Seller as provided in
Section 3.B.5 to be filed with the Commission on a Current Report on Form 8-K at
or before the time of filing of the Prospectus pursuant to Rule 424(b) under the
Securities Act; to cause any ABS Term Sheets with respect to the Certificates
that are delivered to the Seller as provided in Section 3.B.5 to be filed with
the Commission on one or more Current Reports on Form 8-K (i) at or before the
time of filing of the Prospectus pursuant to Rule 424(b) of the Rules and
Regulations in the case of Structural Term Sheets, and (ii) within two Business
Days of first use in the case of Collateral Term Sheets. Prior to any such
filing of Computational Materials or ABS Term Sheets (other than any Collateral
Term Sheets that are not based on Mortgage Pool information provided to the
Underwriter by the Seller) by the Seller, however, the Underwriter must comply
with their obligations pursuant to Section 3.B and the Seller must receive a
letter from independent, certified public accountants, satisfactory in form and
substance to the Seller and its counsel, to the effect that such accountants
have performed certain specified procedures, all of which have been agreed to by
the Seller, as a result of which they determined that all information that is
included in the Computational Materials and ABS Term Sheets (if any) provided by
the Underwriter to the Seller for filing on Form 8-K, as provided in Section 3.B
and this Section 9, is accurate except as to such matters that are not deemed by
the Seller to be material. The Seller shall file any corrected Computational
Materials or ABS Term Sheets described in Section 3.B.7 as soon as practicable
following receipt thereof.
10. 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 Wheat First
Securities, Inc., acting through First Union Capital Markets, a division of
Wheat First Securities, Inc., c/o First Union National Bank, Xxx Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000, Attn: Xxxxxxx Xxxxxxxx; and, if
sent to the Seller, shall be mailed, delivered or telegraphed and confirmed in
writing to the Seller at the address set forth above, Attention: Director of
Secondary Marketing.
11. Survival. All representations, warranties,
covenants and agreements of the Seller contained herein or in agreements or
certificates delivered pursuant hereto, the agreements of the Underwriter and
the Seller contained in Section 8 hereof, and the representations, warranties
and agreements of the Underwriter 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 Underwriter or any controlling persons, or any subsequent
purchaser or the Seller or any of its officers, directors or any controlling
persons, and shall survive delivery of and payment for the Notes. The provisions
of Sections 5, 7 and 8 hereof shall survive the termination or cancellation of
this Agreement.
12. 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 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 Seller 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
25
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 5 (except with respect to expenses of the Underwriter) and Sections 7
and 8 hereof shall at all times be effective. If the Underwriter elects to
terminate this Agreement as provided in this Section 12, the Seller shall be
notified promptly by the Underwriter 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 Note from the Underwriter), 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 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.
26
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
WHEAT FIRST SECURITIES, INC.
By: /s/ Xxxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Senior Vice President
{UNDERWRITING AGREEMENT SIGNATURE PAGE}