Execution Copy
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Exhibit 1.1
HEADLANDS MORTGAGE COMPANY
HEADLANDS MORTGAGE SECURITIES INC.
REVOLVING HOME EQUITY LOAN ASSET-BACKED NOTES
Series 1998-1
Class A and Class S
UNDERWRITING AGREEMENT
New York, New York
March 20, 1998
Greenwich Capital Markets Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Dear Sirs:
Headlands Mortgage Securities Inc., a Delaware corporation (the "Sponsor"),
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proposes to cause Headlands Home Equity Loan Trust 1998-1 (the "Trust") to sell
to you its Revolving Home Equity Loan Asset-Backed Notes in the series and
classes, in the respective original principal amounts and with the designations
set forth in Schedule I hereto (the "Designated Notes"). Only the Designated
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Notes are being purchased by you hereunder. The Designated Notes, will be
issued pursuant to an Indenture (the "Indenture"), dated as of March 1, 1998,
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between the Trust and The First National Bank of Chicago, as indenture trustee
(the "Indenture Trustee"). The Trust will be formed pursuant to a Trust
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Agreement (the "Trust Agreement") to be dated as of March 13, 1998 and entered
into between the Sponsor and Wilmington Trust Company, as Owner Trustee. The
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Designated Notes and a certificate issued to the Sponsor (the "Certificate")
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will be secured by certain Mortgage Loans to be transferred by the Sponsor to
the Trust pursuant to a sale and servicing agreement (the "Sale and Servicing
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Agreement") dated March 13, 1998 among the Sponsor, the Trust, Headlands
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Mortgage Company (the "Company") and the Indenture Trustee and pledged by the
Trust to the Indenture Trustee under the Indenture. The Designated Notes are
described more fully in Schedule I hereto and in a prospectus supplement
furnished to you by the Company.
Capitalized terms used but not otherwise defined herein shall have the
respective meanings assigned to them in the Sale and Servicing Agreement.
1.
Representations and Warranties of the Company and the Sponsor. Each of the
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Company and the Sponsor represents and warrants to, and agrees with, you that:
(a) A registration statement on Form S-3 has been filed with the
Securities and Exchange Commission (the "Commission") (the file number of
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which is set forth in Schedule I hereto) for the registration of Asset-
Backed Securities, issuable in series under the Securities Act of 1933, as
amended (the "1933 Act"), which registration statement was declared
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effective on the date set forth in Schedule I hereto and copies of which
have heretofore been delivered to you. The Sponsor meets the requirements
for use of Form S-3 under the 1933 Act, and such registration statement, as
amended at the date hereof, meets the requirements set forth in Rule
415(a)(1)(x) under the 1933 Act and complies in all other material respects
with the 1933 Act and the rules and regulations thereunder (the "Rules and
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Regulations"). The Sponsor proposes to file with the Commission, with your
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consent, pursuant to Rule 424 under the 1933 Act, a supplement to the form
of prospectus included in such registration statement relating to the
Designated Notes and the plan of distribution thereof, and has previously
advised you of all further information (financial and other) with respect
to the Designated Notes and the Mortgage Pool to be set forth therein.
Such registration statement, including all exhibits thereto, as amended at
the date hereof, is referred to herein as the "Registration Statement";
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such prospectus in the form in which it appears in the Registration
Statement is referred to herein as the "Basic Prospectus" (except that if
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the prospectus filed by the Sponsor pursuant to Rule 424(b) under the 1933
Act differs from the prospectus on file at the time the Registration
Statement became effective, the term "Basic Prospectus" shall refer to such
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Rule 424(b) prospectus from and after the time it is mailed to the
Commission for filing); such form of prospectus supplemented by the
prospectus supplement (the "Prospectus Supplement") relating to the
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Designated Notes, in the form in which it shall be first filed with the
Commission pursuant to Rule 424(b) under the 1933 Act (including the Basic
Prospectus as so supplemented), is referred to herein as the "Final
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Prospectus".
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(b) As of the date hereof, as of the date on which the Final
Prospectus is first filed pursuant to Rule 424 under the 1933 Act, as of
the date on which, prior to the Closing Date (as hereinafter defined), any
amendment to the Registration Statement becomes effective, as of the date
on which any supplement to the Final Prospectus is filed with the
Commission, and at the Closing Date, (i) the Registration Statement, as
amended as of any such time, and the Final Prospectus, as amended or
supplemented as of any such time, complies and will comply as to form in
all material respects with the applicable requirements of the 1933 Act and
the Rules and Regulations thereunder, (ii) the Registration Statement, as
amended as of any such time, does not contain and will not contain any
untrue statement of a material fact and does not omit and will not omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading, and (iii) the Final
Prospectus, as amended or supplemented as of any such time, does not
contain and will not contain any untrue statement of a material fact and
does not omit and will not omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided,however,that the Sponsor makes no representations or
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warranties as to statements contained in or omitted from the
Registration Statement or the Final Prospectus or any amendment or
supplement thereto made in reliance upon and in conformity with information
furnished in writing to the Company by you specifically for use in the
Registration Statement and the Final Prospectus.
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(c) The documents incorporated by reference in the Final Prospectus,
when they became effective or were filed with the Commission, as the case
may be, conformed in all material respects to the requirements of the 1933
Act or the Securities Exchange Act of 1934 (the "1934 Act"), as applicable,
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and the rules and regulations of the Commission thereunder, and none of
such documents contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading; and any further documents so filed
and incorporated by reference in the Final Prospectus, when such documents
become effective or are filed with the Commission, as the case may be, will
conform in all material respects to the requirements of the 1933 Act or the
1934 Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(d) Since the respective dates as of which information is given in
the Final Prospectus, there has not been any material adverse change in the
general affairs, management, financial condition, or results of operations
of the Company, otherwise than as set forth or contemplated in the
Prospectus as supplemented or amended as of Closing Date.
(e) To the extent that the Underwriter (i) has provided to the
Company or the Sponsor Collateral term sheets (as hereinafter defined) that
such Underwriter has provided to a prospective investor, the Company or the
Sponsor has filed such Collateral term sheets as an exhibit to a report on
Form 8-K within two business days of its receipt thereof, or (ii) has
provided to the Company or the Sponsor Structural term sheets or
Computational Materials (each as defined below) that such Underwriter has
provided to a prospective investor, the Company or the Sponsor will file or
cause to be filed with the Commission a report on Form 8-K containing such
Structural term sheet and Computational Materials, as soon as reasonably
practicable after the date of this Agreement, but in any event, not later
than the date on which the Prospectus is filed with the Commission pursuant
to Rule 424 of the Rules and Regulations.
(f) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
California, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification, has
full power and authority (corporate and other) necessary to own or hold its
properties and to conduct its business as now conducted by it and to enter
into and perform its obligations under this Agreement, the Sale and
Servicing Agreement, the Mortgage Loan Purchase Agreement, dated as of
March 13, 1998 between the Company and the Sponsor (the "Purchase
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Agreement") and the Indemnification Agreement dated as of March 25, 1998
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(the "Indemnification and Contribution Agreement") between the Company,
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Ambac Assurance Corporation, the Sponsor and you.
(g) The Sponsor has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification, has
full power and authority (corporate or other) necessary to own and hold
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its properties and to conduct its business as now conducted by it and to
enter into and perform its obligations under this Agreement, the Trust
Agreement, the Sale and Servicing Agreement, the Purchase Agreement and the
Indemnification and Contribution Agreement.
(h) As of the date hereof, as of the date on which the Final
Prospectus is first filed pursuant to Rule 424 under the 1933 Act, as of
the date on which, prior to the Closing Date, any amendment to the
Registration Statement becomes effective, as of the date on which any
supplement to the Final Prospectus is filed with the Commission, and as of
the Closing Date, there has not and will not have been (i) any request by
the Commission for any further amendment to the Registration Statement or
the Final Prospectus or for any additional information, (ii) any issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threat of any proceeding for
that purpose or (iii) any notification with respect to the suspension of
the qualification of the Designated Notes for sale in any jurisdiction or
any initiation or threat of any proceeding for such purpose.
(i) KPMG Peat Marwick are independent public accountants with
respect to the Company as required by the 1933 Act and the Rules and
Regulations.
(j) This Agreement has been duly authorized, executed and delivered
by the Company and the Sponsor and constitutes a legal, valid, binding and
enforceable agreement of each of the Company and the Sponsor, subject as to
enforceability, to (i) bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally and (ii)
general principles of equity regardless of whether enforcement is sought in
a proceeding in equity or at law.
(k) The Sale and Servicing Agreement, the Indemnification and
Contribution Agreement and the Purchase Agreement when executed and
delivered as contemplated hereby and thereby, will have been duly
authorized, executed and delivered by each of the Company and the Sponsor,
and when so executed and delivered, will constitute legal, valid, binding
and enforceable agreements of each of the Company and the Sponsor, subject,
as to enforceability, to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
(ii) general principles of equity regardless of whether enforcement is
sought in a proceeding in equity or at law.
(l) The Trust Agreement when executed and delivered as contemplated
hereby and thereby will have been duly authorized, executed and delivered
by the Sponsor, and when so executed and delivered, will constitute a
legal, valid, binding and enforceable agreement of the Sponsor, subject, as
to enforceability, to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
(ii) general principles of equity regardless of whether enforcement is
sought in a proceeding in equity or at law.
(m) As of the Closing Date, the Designated Notes and the Indenture
will conform in all material respects to the respective descriptions
thereof contained in the Final Prospectus. As of the Closing Date, the
Designated Notes will be duly and validly authorized and, when duly and
validly executed, authenticated and delivered in accordance with the
Indenture and delivered to you against payment therefor as provided
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herein, will be duly and validly issued and outstanding and entitled to the
benefits of the Indenture. The Designated Notes will not be "mortgage
related securities," as such term is defined in the singular in the 1934
Act.
(n) The Indenture, when executed and delivered, will have been duly
qualified under the Trust Indenture Act of 1939.
(o) As of the Closing Date, each of the Mortgage Loans will meet the
criteria for selection described in the Final Prospectus, and on the
Closing Date the representations and warranties of the Company and the
Sponsor with respect to the Mortgage Loans contained in the Purchase
Agreement and the Sale and Servicing Agreement will be true and correct.
(p) Each of the Company and the Sponsor is not in violation of its
certificate of incorporation or by-laws or in default under any agreement,
indenture or instrument the effect of which violation or default would be
material to the Company or the Sponsor. Neither the issuance and sale of
the Designated Notes, nor the execution and delivery by the Company and the
Sponsor of this Agreement, the Sale and Servicing Agreement, the Purchase
Agreement or the Indemnification and Contribution Agreement, nor the
consummation by the Company and the Sponsor of any of the transactions
herein or therein contemplated, nor compliance by the Company and the
Sponsor with the provisions hereof or thereof, does or will conflict with
or result in a breach of any term or provision of the certificate of
incorporation or by-laws of the Company or the Sponsor or conflict with,
result in a breach, violation or acceleration of, or constitute a default
under, the terms of any indenture or other agreement or instrument to which
the Company or the Sponsor is a party or by which it is bound, or any
statute, order or regulation applicable to the Company or the Sponsor of
any court, regulatory body, administrative agency or governmental body
having jurisdiction over the Company or the Sponsor. Each of the Company
and the Sponsor is not 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 or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
it that materially and adversely affects, or may in the future materially
and adversely affect, (i) the ability of the Company or the Sponsor to
perform its obligations under this Agreement, the Purchase Agreement, the
Sale and Servicing Agreement or the Indemnification and Contribution
Agreement or (ii) the business, operations, financial conditions,
properties or assets of the Company.
(q) The execution and delivery by the Sponsor of the Trust Agreement
does not and will not conflict with or result in a breach of any term or
provision of the certificate of incorporation or bylaws of the Sponsor or
conflict with, result in a breach, violation or acceleration of, or
constitute a default under, the terms of any indenture or other agreement
or instrument to which the Sponsor is bound or is a party or any statute,
order or regulation applicable to the Sponsor.
(r) There are no actions or proceedings against, or investigations
of, the Company or the Sponsor pending, or, to the knowledge of the Company
or the Sponsor, threatened, before any court, arbitrator, administrative
agency or other tribunal (i) asserting the invalidity of this Agreement,
the Trust Agreement, the Sale and Servicing Agreement, the Purchase
Agreement, the Indemnification and Contribution Agreement,
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the Trust Agreement or the Designated Notes, (ii) seeking to prevent the
issuance of the Designated Notes or the consummation of any of the
transactions contemplated by this Agreement, the Trust Agreement, the
Purchase Agreement, the Sale and Servicing Agreement or the Indemnification
and Contribution Agreement, (iii) that are reasonably likely to be
adversely determined and that might materially and adversely affect the
performance by each of the Company and the Sponsor of its obligations
under, or the validity or enforceability of, this Agreement, the Sale and
Servicing Agreement, the Indemnification and Contribution Agreement, the
Trust Agreement or the Designated Notes or (iv) seeking to affect adversely
the federal income tax attributes of the Designated Notes as described in
the Final Prospectus.
(s) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the
United States is required for the issuance of the Designated Notes and the
sale of the Designated Notes to you, or the consummation by the Company or
the Sponsor of the other transactions contemplated by this Agreement, the
Sale and Servicing Agreement, the Purchase Agreement, the Trust Agreement
and the Indemnification and Contribution Agreement, except such consents,
approvals, authorizations, registrations or qualifications as may be
required under State securities or Blue Sky laws in connection with the
purchase and distribution of the Designated Notes by you or as have been
obtained.
(t) Each of the Company and the Sponsor possesses all material
licenses, certificates, authorities or permits issued by the appropriate
State, Federal or foreign regulatory agencies or bodies necessary to
conduct the business now conducted by it and as described in the Final
Prospectus, and neither the Company nor the Sponsor has received notice of
any proceedings relating to the revocation or modification of any such
license, certificates, authority or permit which if decided adversely to
the Company or the Sponsor would, singly or in the aggregate, materially
and adversely affect the conduct of its business, operations or financial
condition.
(u) Any taxes, fees and other governmental charges in connection
with the execution and delivery of this Agreement, the Purchase Agreement,
the Trust Agreement, the Sale and Servicing Agreement and the
Indemnification and Contribution Agreement or the execution, delivery and
sale of the Designated Notes have been or will be paid on or prior to the
Closing Date.
(v) Immediately prior to the assignment of the Mortgage Loans to the
Trust as contemplated by the Sale and Servicing Agreement, the Company (i)
had good title to, and was the sole owner of, each Mortgage Loan free and
clear of any pledge, mortgage, lien, security interest or other encumbrance
(collectively, "Liens"), (ii) had not assigned to any person any of its
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right, title or interest in such Mortgage Loans and (iii) will have the
power and authority to sell such Mortgage Loans to the Sponsor pursuant to
the Purchase Agreement and upon the execution and delivery of the Sale and
Servicing Agreement by the Sponsor, the Trust will have acquired all of the
Sponsor's and the Company's right, title and interest in and to the
Mortgage Loans.
(w) At the time of execution and delivery of the Indenture, (1) the
Trust will own the Mortgage Loans being pledged to the Indenture Trustee
pursuant thereto, free and clear of any Liens, except to the extent
permitted in the Indenture, and will not have
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assigned to any person other than the Indenture Trustee any of its right,
title or interest in the Mortgage Loans, (2) the Trust will have the power
and authority to pledge the Trust Estate to the Indenture Trustee and to
transfer the Notes to You and will have duly authorized such action by all
necessary corporate action, (3) upon execution and delivery by the Trust to
the Indenture Trustee of the Indenture, and delivery of the Notes to the
Trust, the Indenture Trustee will have a valid, perfected security interest
of first priority in the Trust Estate free of Liens other than Liens
permitted by the Indenture and (4) upon payment and delivery of the
Designated Notes to you, you will acquire ownership of the Designated
Notes, free of Liens other than Liens permitted by the Indenture or created
or granted by you.
(x) At the Closing Date, the execution and delivery of the Indenture
by the Trust will have been duly authorized by the Sponsor and upon due
execution and delivery thereof by the parties thereto, the Indenture will
constitute a legal, valid and binding agreement enforceable in accordance
with its terms, except as the same may be limited by bankruptcy,
reorganization, insolvency or other similar laws affecting creditors'
rights generally and by general principles of equity.
(y) At the Closing Date, the Trust will have assigned, pledged and
delivered to the Indenture Trustee under the Indenture all of its right,
title and interest in and to, among other things, (i) the Mortgage Loans,
and (ii) cash and/or other assets, if any, in the amount set forth in the
Indenture (the "Initial Collateral").
(z) The Trust has corporate power and authority to assign, pledge
and deliver the Initial Collateral to the Indenture Trustee under the
Indenture, and at the Closing Date will have duly authorized such
assignment, pledge and delivery to the Indenture Trustee by all necessary
corporate actions.
(aa) Neither the Company, the Sponsor nor the Trust is, and neither
the issuance and sale of the Designated Notes nor the activities of the
Trust pursuant to the Indenture will cause the Company, the Sponsor or the
Trust to be, an "investment company" or under the control of an "investment
company" as such terms are defined in the Investment Company Act of 1940,
as amended (the "Investment Company Act").
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(bb) At the Closing Date, each of the representations and warranties
of the Company and the Sponsor set forth in the Purchase Agreement and in
the Sale and Servicing Agreement will be true and correct in all material
respects.
(cc) At the Closing Date, the Designated Notes shall have been rated
in the highest rating category by at least two nationally recognized rating
agencies.
2. Purchase and Sale. The commitment of the Underwriter to purchase the
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Designated Notes pursuant to this Agreement shall be deemed to have been made on
the basis of the representations and warranties herein contained and shall be
subject to the terms and conditions herein contained and shall be subject to the
terms and conditions herein set forth. The Sponsor agrees to cause the Trust to
sell the Designated Notes to you, and you agree to purchase the Designated Notes
from the Trust, for the purchase price previously agreed between us, before
deducting expenses payable by the Company estimated at $350,000.
3. Delivery and Payment. Delivery of and payment for the Designated
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Notes shall
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be made at the office of Xxxxx Xxxxxxxxxx LLP prior to 12:00 p.m., Eastern
Standard Time, on the date specified in Schedule I hereto (or such later date
not later than seven business days after such specified date as you shall
designate), which date and time may be changed by agreement between you and the
Sponsor or as provided herein (such date and time of delivery and payment for
the Designated Notes being herein called the "Closing Date"). Delivery of the
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Designated Notes shall be made to you against payment by you of the purchase
price therefor in immediately available funds wired to such bank as may be
designated by the Sponsor, or such other manner of payment as may be agreed upon
by the Sponsor and you. The Designated Notes to be so delivered shall be in
definitive fully registered form, unless otherwise agreed, in such denominations
and registered in such names as you may have requested in writing not less than
two full business days in advance of the Closing Date.
The Sponsor agrees to have the Designated Notes available for inspection,
checking and packaging by you at the offices of Xxxxx Xxxxxxxxxx LLP, not later
than 4:00 p.m. on the business day prior to the Closing Date.
4. Offering of the Designated Notes. It is understood that you propose
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to offer the Designated Notes for sale to the public as set forth in the Final
Prospectus.
5. Covenants of the Company and the Sponsor. Each of the Company and the
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Sponsor covenants and agrees with you that:
(a) The Company and the Sponsor will prepare a supplement to the
Basic Prospectus setting forth the amount of Designated Notes covered
thereby and the terms thereof not otherwise specified in the Basic
Prospectus, the expected proceeds to the Company from the sale of such
Designated Notes, and such other information as you and the Company may
deem appropriate in connection with the offering of such Designated Notes.
The Company and the Sponsor will file promptly all reports and any
definitive proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d)
of the 1934 Act subsequent to the date of the Final Prospectus. The Company
and the Sponsor promptly will advise you or your counsel (i) when the Final
Prospectus shall have been filed or transmitted to the Commission for
filing pursuant to Rule 424, (ii) when any amendment to the Registration
Statement shall have become effective or any further supplement to the
Prospectus shall have been filed with the Commission, (iii) of any proposal
or request to amend or supplement the Registration Statement, the Basic
Prospectus or the Final Prospectus or any request by the Commission for any
additional information, (iv) when notice is received from the Commission
that any post-effective amendment to the Registration Statement has become
or will become effective, (v) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or post-
effective amendment thereto or the institution or threatening of any
proceeding for that purpose, (vi) of the receipt by the Company or the
Sponsor of any notification with respect to the suspension of the
qualification of the Designated Notes for sale in any jurisdiction or the
institution or threatening of any proceeding for that purpose, and (vii) of
the occurrence of any event that would cause the Registration Statement, as
then in effect, to contain an untrue statement of a material fact or omit
to state a material fact required to be stated
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therein or necessary in order to make the statements therein not
misleading, or that would cause the Final Prospectus, as then in effect, to
contain an 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, in light of the circumstances under which they were
made, not misleading. The Company and the Sponsor will use its best efforts
to prevent the issuance of any such stop order or suspension and, if
issued, to obtain as soon as possible the withdrawal thereof. The Company
and the Sponsor will cause the Final Prospectus to be transmitted to the
Commission for filing pursuant to Rule 424 under the 1933 Act or will cause
the Final Prospectus to be filed with the Commission pursuant to said Rule
424.
(b) If, at any time when a prospectus relating to the Designated
Notes is required to be delivered under the 1933 Act, any event occurs as a
result of which the Final Prospectus, as then amended or supplemented,
would contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, or if it shall be necessary to amend or supplement
the Final Prospectus to comply with the 1933 Act or the rules and
regulations thereunder, the Company and the Sponsor promptly will prepare
and file with the Commission, at the expense of the Company or the Sponsor,
as the case may be, 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, the Company and the Sponsor will use their best
efforts to cause such amendment to the Registration Statement to be made
effective as soon as possible.
(c) The Company and the Sponsor will furnish to you and your
counsel, without charge, signed copies of the Registration Statement
(including exhibits thereto) and each amendment thereto which shall become
effective on or prior to the Closing Date, and so long as delivery of a
prospectus by you may be required by the 1933 Act, as many copies of any
Final Prospectus and any amendments and supplements thereto as you may
reasonably request.
(d) The Company and the Sponsor will file promptly with the
Commission any amendment to the Registration Statement or the Prospectus or
any supplement to the Prospectus that may, in your judgment or the judgment
of the Company or the Sponsor, be required by the 1933 Act or requested by
the Commission.
(e) The Company and the Sponsor will make generally available to
holders of the Designated Notes as soon as practicable, but in any event
not later than 90 days after the close of the period covered thereby, a
statement of earnings of the Trust (which need not be audited) complying
with Section 11(a) of the 1933 Act and the Rules and Regulations
(including, at the option of the Company and the Sponsor, Rule 158) and
covering a period of at least twelve consecutive months beginning not later
than the first day of the first fiscal quarter following the Closing Date.
(f) Each of the Company and the Sponsor agrees that, so long as the
Designated Notes shall be outstanding, it will deliver to you the annual
statement as to compliance delivered to the Indenture Trustee pursuant to
Section 3.09 of the Sale and Servicing Agreement and the annual statement
of a firm of independent public accountants delivered to the Indenture
Trustee pursuant to Section 3.10 of the Sale and Servicing Agreement, as
soon as such statements are furnished to the Company or the
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Sponsor.
(g) The Company and the Sponsor will furnish such information,
execute such instruments and use their best efforts to qualify the
Designated Notes for sale under the laws of such jurisdictions as you may
designate and will maintain such qualifications in effect so long as
required for the distribution of the Designated Notes; provided, however,
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that the Company and the Sponsor shall not be required to
qualify to do business in any jurisdiction where it is not now qualified or
to take any action that would subject it to general or unlimited service of
process in any jurisdiction where it is not now subject to such service of
process. Subject to the foregoing proviso, the Company and the Sponsor will
file or cause the filing of such statements and reports as may be required
by the laws of each jurisdiction in which the Designated Notes have been so
qualified.
(h) The Company and the Sponsor will enter into this Agreement, the
Sale and Servicing Agreement, the Purchase Agreement and the
Indemnification and Contribution Agreement on or prior to the Closing Date.
(i) The Sponsor will enter into the Trust Agreement on or prior to
the Closing Date.
(j) The Company and the Sponsor will apply the net proceeds from the
sale of the Designated Notes in the manner set forth in the Prospectus.
6. Conditions to the Obligations of the Underwriter. Your obligation
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hereunder to purchase the Designated Notes shall be subject to the accuracy of
the representations and warranties on the part of the Company and the Sponsor
contained herein as of the date hereof, as of the date of the effectiveness of
any amendment to the Registration Statement filed prior to the Closing Date and
as of the Closing Date, to the accuracy of the statements of the Company and the
Sponsor made in any certificates delivered pursuant to the provisions hereof, to
the performance by the Company and the Sponsor of its obligations hereunder and
to the following additional conditions:
(a) The Registration Statement shall have become effective and no
stop order suspending the effectiveness of the Registration Statement, as
amended from time to time, shall have been issued and not withdrawn and no
proceedings for that purpose shall have been instituted or threatened; and
the Final Prospectus shall have been filed or transmitted for filing with
the Commission in accordance with Rule 424 under the 1933 Act. Any request
of the Commission for inclusion of additional information in the
Registration Statement or the Prospectus shall have been complied with.
(b) You shall have received from Xxxxx Xxxxxxxxxx LLP, your counsel,
a favorable opinion, dated the Closing Date, to the effect that:
(i) The Registration Statement has become effective under the
1933 Act; to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued and not withdrawn, no proceedings for that purpose have been
instituted or threatened and not terminated; and the Registration
Statement and the Final Prospectus, as of their respective effective
or issue dates (other than the financial and statistical
10
information contained therein, as to which such counsel need express
no opinion), complied as to form in all material respects with the
applicable requirements of the 1933 Act and the Rules and Regulations;
(ii) To the best knowledge of such counsel, there are no
material contracts, indentures or other documents of a character
required to be described or referred to in the Registration Statement
or the Final Prospectus or to be filed as exhibits to the Registration
Statement other than those described or referred to therein or filed
or incorporated by reference as exhibits thereto;
(iii) The statements in the Basic Prospectus and the Final
Prospectus, as the case may be, under the headings "Certain Federal
Income Tax Consequences", "ERISA Considerations" and "Legal
Investment", to the extent that they constitute matters of New York or
federal law or legal conclusions with respect thereto, have been
reviewed by such counsel and constitute a fair and accurate summary
with respect to those consequences or aspects that are discussed;
(iv) The Indenture has been duly authorized, executed and
delivered, has been duly qualified under the Trust Indenture Act, and
constitutes a legal, valid and binding instrument enforceable against
the Sponsor in accordance with its terms (subject as to enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other law affecting creditors' rights generally from
time to time in effect); and the Designated Notes have been duly
authorized and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the
Underwriter pursuant to this Agreement will constitute legal, valid
and binding obligations of the Sponsor entitled to the benefits of the
Indenture.
Such counsel shall also state that nothing has come to its attention that
would lead it to believe that the Registration Statement (other than the
financial and statistical information contained therein, as to which such
counsel need not express an opinion), at the time it became effective, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Final Prospectus (other than (i) the financial and
statistical information contained therein or (ii) the information contained in
the Prospectus Supplement under the headings "DESCRIPTION OF THE MORTGAGE LOANS"
and "SERVICING OF THE MORTGAGE LOANS", as of its date, and on the date hereof,
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Such counsel may: (1) express its reliance as to factual matters on the
representations and warranties made by, and on certificates or other documents
furnished by officers of, the parties to this Agreement, the Trust Agreement,
the Indenture, the Sale and Servicing Agreement, the Purchase Agreement and the
Indemnification and Contribution Agreement; (2) assume the due authorization,
execution and delivery of the instruments and documents referred to therein by
the parties thereto other than the Company; (3) qualify such opinion only as to
the federal laws of the United States of America, the laws of the State of New
York and the general corporation law of the State of Delaware. Such counsel
shall also confirm that you may rely, on and as of the Closing Date, on any
opinion or opinions of such counsel submitted to the rating
11
agency or agencies rating the Designated Notes as if addressed to you and dated
the Closing Date.
(c) You shall have received a certificate, signed by the president,
a senior vice president or a vice president of the Company and the Sponsor,
dated the Closing Date, to the effect that the signer of such certificate
has carefully examined the Registration Statement, the Purchase Agreement,
the Trust Agreement, the Indenture, the Sale and Servicing Agreement, the
Indemnification and Contribution Agreement, and this Agreement and that, to
the best of his or her knowledge based upon reasonable investigation:
a. the representations and warranties of the Company and the Sponsor
in this Agreement, as of the Closing Date, and in the Sale and Servicing
Agreement, the Trust Agreement, the Purchase Agreement, and the
Indemnification and Contribution Agreement and in all related agreements,
as of the date specified in such agreements, are true and correct, and the
Company and the Sponsor has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or prior to
the Closing Date;
b. there are no actions, suits or proceedings pending, or to the
best of such officer's knowledge, threatened against or affecting the
Company or the Sponsor which if adversely determined, individually or in
the aggregate, would be reasonably likely to adversely affect the Company's
or the Sponsor's obligations under the Sale and Servicing Agreement, the
Indemnification and Contribution Agreement, the Purchase Agreement or this
Agreement in any material way or the Sponsor's obligations under the Trust
Agreement in any material way; and no merger, liquidation, dissolution or
bankruptcy of the Company or the Sponsor is pending or contemplated;
c. the information contained in the Registration Statement and the
Final Prospectus relating to the Company and the Sponsor, the Mortgage
Loans or the servicing procedures of it or its affiliates or 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 or Final Prospectus includes any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
therein not misleading;
d. the information set forth in the Schedule of Mortgage Loans
required to be furnished pursuant to the Purchase Agreement and the Sale
and Servicing Agreement is true and correct in all material respects;
e. there has been no amendment or other document filed affecting
the articles of incorporation or bylaws of the Company or the Sponsor since
December 31, 1997, and no such amendment has been authorized. No event has
occurred since December 31, 1997, which has affected the good standing of
the Company under the laws of the State of California or the good standing
of the Sponsor under the laws of the State of Delaware;
f. there has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company, the Sponsor and its subsidiaries, taken as a
whole, from December 31, 1997.
12
g. on or prior to the Closing Date, there has been no downgrading,
nor has any notice been given of (A) any intended or potential downgrading
or (B) any review or possible changes in rating the direction of which has
not been indicated, in the rating, if any, accorded the Company or its
affiliates or in any rating accorded any securities of the Company, if any,
by any "nationally recognized statistical rating organization," as such
term is defined for purposes of the 1933 Act;
h. each person who, as an officer or representative of the Company
or the Sponsor, signed or signs the Registration Statement, the Sale and
Servicing Agreement, the Trust Agreement, the Indemnification and
Contribution Agreement, this Agreement, the Purchase 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 and Contribution Agreement, the Purchase 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; and
i. No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the Company's or the Sponsor's knowledge, threatened.
The Company and the Sponsor shall attach to such certificate a true and
correct copy of its certificate or articles of incorporation, as appropriate,
and bylaws which are in full force and effect on the date of such certificate
and a certified true copy of the resolutions of its Board of Directors with
respect to the transactions contemplated herein.
(d) You shall have received from Xxxxx & Xxxxx, counsel to the
Company, an opinion, dated the Closing Date, to the effect that:
(i) Each of the Company and the Sponsor has been duly
organized and is validly existing as a corporation in good standing
under the laws of its state of incorporation and is qualified to do
business in each state necessary to enable it to perform its
obligations under the Sale and Servicing Agreement, this Agreement,
the Purchase Agreement, the Trust Agreement and the Indemnification
and Contribution Agreement and has all corporate power and authority
necessary to own or hold its properties and to conduct its business as
now conducted by it and to enter into and perform its obligations
under this Agreement, the Trust Agreement, the Sale and Servicing
Agreement, the Purchase Agreement and the Indemnification and
Contribution Agreement;
(ii) To the best knowledge of such counsel, there are no
actions, proceedings or investigations pending or threatened against
or affecting the Company or the Sponsor before or by any court,
arbitrator, administrative agency or other governmental authority
reasonably likely to be adversely determined that would materially and
adversely affect the ability of the Company or the Sponsor to carry
out the transactions contemplated in this Agreement, the Trust
Agreement, the Sale and Servicing Agreement, the Purchase Agreement or
the Indemnification and Contribution Agreement;
13
(iii) No consent, approval, authorization or order of, or
filing or registration with, any state or federal court or
governmental agency or body is required for the consummation by the
Company or the Sponsor of the transactions contemplated herein, except
such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Designated Notes
and except any recordation of the assignments of the Mortgage Loans to
the Indenture Trustee pursuant to the Sale and Servicing Agreement
that have not yet been completed;
(iv) Each of the Company and the Sponsor is not in violation of
its certificate of incorporation or by-laws or in default under any
agreement, indenture or instrument the effect of which violation or
default would be material to the Company or the Sponsor, and neither
the issuance and sale of the Designated Notes, nor the execution or
delivery of or performance under this Agreement, the Trust Agreement,
the Sale and Servicing Agreement, the Purchase Agreement or the
Indemnification and Contribution Agreement, nor the consummation of
any other of the transactions contemplated herein or therein will
conflict with or result in a breach or violation of any term or
provision of, or constitute a default (or an event which with the
passing of time or notification, or both, would constitute a default)
under, the certificate of incorporation or by-laws of the Company or
the Sponsor, or, to the knowledge of such counsel, any indenture or
other agreement or instrument to which the Company or the Sponsor or
any of its affiliates is a party or by which it or any of them is
bound, or any New York or federal statute or regulation applicable to
the Company or the Sponsor or any of its affiliates or, to the
knowledge of such counsel, any order of any New York or federal court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Company or the Sponsor or any of its affiliates;
(v) The Sale and Servicing Agreement, this Agreement, the
Purchase Agreement and the Indemnification and Contribution Agreement
have been duly authorized, executed and delivered by the Company and
the Sponsor and constitute legal, valid and binding agreements of the
Company and the Sponsor, enforceable against the Company and the
Sponsor in accordance with its terms, subject, as to enforceability,
to bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights generally and to general
principles of equity, regardless of whether enforcement is sought in a
proceeding in equity or at law;
(vi) The Trust Agreement has been duly authorized, executed and
delivered by the Sponsor and constitutes a legal, valid and binding
agreement of the Sponsor enforceable against the Sponsor in accordance
with its terms, subject as to enforceability, to bankruptcy,
insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally and to general principles or
equity, regardless of whether enforcement is sought in a proceeding in
equity or at law;
(vii) The direction by the Sponsor to the Indenture Trustee to
execute, authenticate and deliver the Designated Notes has been duly
authorized by the
14
Sponsor, and the Designated Notes, when executed and authenticated in
the manner contemplated in the Indenture, will be validly issued and
outstanding and entitled to the benefits of the Indenture;
(viii) The Designated Notes and the Indenture conform in all
material respects to the descriptions thereof contained in the Final
Prospectus; and
(ix) Neither the transfer of the Mortgage Loans to the Trust,
the pledge of the Mortgage Loans, the issuance or sale of the
Designated Notes nor the execution, delivery or performance by the
Company and the Sponsor of this Agreement, the Trust Agreement, the
Indemnification and Contribution Agreement, the Sale and Servicing
Agreement or the Purchase 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
certificate of incorporation or bylaws of the Company or the Sponsor;
(ii) any term or provision of any material agreement, contract,
instrument or indenture, to which the Company or the Sponsor is a
party or is bound and known to such counsel; or (iii) any order,
judgment, writ, injunction or decree of any court or governmental
agency or body or other tribunal having jurisdiction over the Company
or the Sponsor and known to such counsel; or (B) results in, or will
result in the creation or imposition of any lien, charge or
encumbrance upon the Trust or upon the Designated Notes, except as
otherwise contemplated by the Indenture.
Such counsel may: (1) express its reliance as to factual matters on the
representations and warranties made by, and on certificates or other documents
furnished by officers of, the parties to this Agreement, the Trust Agreement,
the Indenture, the Sale and Servicing Agreement, the Purchase Agreement and the
Indemnification and Contribution Agreement; (2) assume the due authorization,
execution and delivery of the instruments and documents referred to therein by
the parties thereto other than the Company; (3) qualify such opinion only as to
the federal laws of the United States of America, the laws of the State of New
York and the general corporation law of the State of Delaware. Such counsel
shall also confirm that you may rely, on and as of the Closing Date, on any
opinion or opinions of such counsel submitted to the rating agency or agencies
rating the Designated Notes as if addressed to you and dated the Closing Date.
(e) You shall have received from KPMG Peat Marwick, certified public
accountants, one or more letters, including bring-down letters, dated the
date hereof and satisfactory in form and substance to you and your counsel,
to the effect that such accountants have performed certain specified
procedures regarding certain information of an accounting, financial or
statistical nature set forth in the Prospectus Supplement.
(f) You shall have received a rating letter assigning a rating on
the Class A Notes and S Notes of "AAA" and "AAAr", respectively, from
Standard & Poor's Rating Group and "Aaa" and "Aaa", respectively, from
Xxxxx'x Investors Service, Inc., which ratings shall not have been
withdrawn.
(g) You shall have received from counsel for the Indenture Trustee a
favorable opinion, dated the Closing Date, in form and substance
satisfactory to you and your counsel, to the effect that the Indenture has
been duly authorized, executed and
15
delivered by the Indenture Trustee and constitutes a legal, valid, binding
and enforceable agreement of the Indenture Trustee, subject, as to
enforceability, to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights in general and by general
principles of equity regardless of whether enforcement is considered in a
proceeding in equity or at law, and as to such other matters as may be
agreed upon by you and the Indenture Trustee.
(h) You shall have received from counsel for the Owner Trustee a
favorable opinion, dated the Closing Date, in form and substance
satisfactory to you and your counsel, to the effect that the Trust
Agreement has been duly authorized, executed and delivered by the Owner
Trustee and constitutes a legal, valid, binding and enforceable agreement
of the Owner Trustee, subject as to enforceability to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights in general and by general principles of equity regardless
of whether enforcement is considered in a proceeding in equity or at law,
and as to such other matters as may be agreed upon by you and the Owner
Trustee.
(i) You shall have received from the Indenture Trustee a
certificate, signed by the President, a senior vice president or a vice
president of the Indenture Trustee, dated the Closing Date, to the effect
that each person who, as an officer or representative of the Indenture
Trustee, signed or signs the Designated Notes, the Indenture or any other
document delivered pursuant hereto, on the date hereof or on the Closing
Date, in connection with the transactions described in the Indenture was,
at the respective times of such signing and delivery, and is now, duly
elected or appointed, qualified and acting as such officer or
representative, and the signatures of such persons appearing on such
documents are their genuine signatures.
(j) You shall have received from the Owner Trustee a certificate,
signed by the President, a senior vice president or a 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
Trust Agreement, the Certificates or any other document delivered pursuant
hereto, on the date hereof or on the Closing Date, in connection with the
transactions described in the Trust 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 Designated 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) You shall have received a favorable opinion of in-house counsel
to the Insurer, dated the Closing Date and in form and substance
satisfactory to your counsel, to the effect that:
(i) The Insurer is an insurance corporation, duly incorporated
and validly existing under the laws of the State of New York. The
Insurer is validly licensed to do business in New York and is
authorized to issue the Policy and perform its obligations under the
Policy in accordance with the terms thereof.
16
(ii) The execution and delivery by the Insurer of the Policy,
and the Indemnification and Contribution 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.
(iii) The Insurer is authorized to deliver the Indemnification
and Contribution Agreement, and such agreement has been duly executed
and delivered and constitute the legal, valid and binding obligations
of the Insurer enforceable in accordance with its terms except that
the enforcement of the Indemnification and Contribution 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.
(iv) No consent, approval, authorization or order of any state
or federal court or governmental agency or body is required on the
part of the Insurer, the lack of which would adversely affect the
validity or enforceability of the Policy; to the extent required by
applicable legal requirements that would adversely affect validity or
enforceability of the Policy, the form of the Policy has been filed
with, and approved by, all governmental authorities having
jurisdiction over the Insurer in connection with the Policy.
(v) The Policy is not required to be registered under the
0000 Xxx.
(vi) The information set forth under the caption "THE INSURER
AND THE POLICY" in the Prospectus forming a part of the Registration
Statement, 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 Company, the Indenture Trustee, the
Insurer and public officials. Such opinion may assume the due authorization,
execution and delivery of the instruments and documents referred to therein by
the parties thereto other than the Insurer.
(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 Insurer's claims
paying ability by any "nationally recognized statistical rating
organization," as such term is defined for purposes of the 1933 Act.
(n) On or prior to the Closing Date, there has been no downgrading,
nor has any notice been given of (A) any intended or potential downgrading
or (B) any review or possible changes in rating the direction of which has
not been indicated, in the rating, if any, accorded the Company or in any
rating accorded any securities of the Company, if any, by any "nationally
recognized statistical rating organization," as such term is defined
17
for purposes of the 0000 Xxx.
(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 Company and its subsidiaries or (B) the Insurer,
that is in your judgment material and adverse and that makes it in
your judgment impracticable to market the Designated Notes on the
terms and in the manner contemplated in the Prospectus.
(p) You 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
Indemnification and Contribution Agreement and the related documents
and that, to the best of his or her knowledge based on reasonable
investigation:
(i) There are no actions, suits or proceedings pending
or threatened against or affecting the Insurer which, if
adversely determined, individually or in the aggregate, would
adversely affect the Insurer's performance under the Policy or
the Indemnification and Contribution Agreement;
(ii) Each person who as an officer or representative of
the Insurer, signed or signs the Policy, the Indemnification and
Contribution 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, 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;
(iii) The tables regarding the Insurer's capitalization
set forth under the heading "THE INSURER AND THE POLICY"
presents fairly the capitalization of the Insurer as of December
31, 1997;
(iv) The audited balance sheet of the Insurer as of
December 31, 1997 and the related statement of income and
retained earnings for the fiscal year then ended, and the
accompanying footnotes, together with opinion of KPMG Peat
Marwick, an independent certificated public accountant, copies
of which are included in the Prospectus Supplement, fairly
present in all material respects the financial condition of the
Insurer as of such date and for the period covered by such
statements in accordance with generally accepted accounting
principles consistently applied; the unaudited balance sheet of
the Insurer as of - December 31, 1997 and the related statement
of income and retained earnings for the three-month period then
ended, copies of which are included in the Prospectus
Supplement, fairly present in all material respects the
financial condition of the Insurer as of such date and for the
period covered by such statements in accordance with generally
accepted accounting principles applied consistently with those
principles applied in preparing the December 31, 1997 audited
statements.
(v) to the best knowledge of such officer, since
December 31, 1997, no
18
material adverse change has occurred in the financial position
of the Insurer other than as set forth in the Prospectus
Supplement.
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) You shall have received such further information,
certificates, documents and opinions as you may reasonably have requested
not less than three business days prior to the Closing Date.
(r) All proceedings in connection with the transactions
contemplated by this Agreement and all documents incident hereto shall be
satisfactory in form and substance to you and your counsel, and you and
such counsel shall have received such information, certificates and
documents as you or they may have reasonably requested.
(s) Prior to the Closing Date, your counsel shall have been
furnished with such documents and opinions as they may reasonably require
for the purpose of enabling them to pass upon the issuance and sale of the
Designated Notes as herein contemplated and related proceedings or in order
to evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained,
and all proceedings taken by the Company in connection with the issuance
and sale of the Designated Notes as herein contemplated shall be
satisfactory in form and substance to you and your counsel.
(t) Subsequent to the execution and delivery of this Agreement
none of the following shall have occurred: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the over-the-counter market shall have been suspended or minimum prices
shall have been established on either of such exchanges or such market by
the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction; (ii) a banking moratorium shall
have been declared by Federal or state authorities; (iii) the United States
shall have become engaged in hostilities, there shall have been an
escalation of hostilities involving the United States or there shall have
been a declaration of a national emergency or war by the United States; or
(iv) there shall have occurred such a material adverse change in general
economic, political or financial conditions (or the effect of international
conditions on the financial markets of the United States shall be such) as
to make it, in the judgment of the Underwriter, impractical or inadvisable
to proceed with the public offering or delivery of the Designated Notes on
the terms and in the manner contemplated in the Prospectus.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, if
the Company or the Sponsor is in breach of any covenants or agreements contained
herein or if any of the opinions and certificates referred to above or elsewhere
in this Agreement shall not be in all material respects reasonably satisfactory
in form and substance to you and your counsel, this Agreement and all your
obligations hereunder may be canceled by you at, or at any time prior to, the
Closing Date. Notice of such cancellation shall be given to the Company and the
Sponsor in writing, or by telephone or facsimile transmission confirmed in
writing.
7. Payment of Expenses. The Sponsor or the Company agrees to pay: (a)
-------------------
the costs
19
incident to the authorization, issuance, sale and delivery of the
Designated Notes and any taxes payable in connection therewith; (b) the costs
incident to the preparation, printing and filing under the 1933 Act of the
Registration Statement and any amendments and exhibits thereto; (c) the costs of
distributing the Registration Statement as originally filed and each amendment
thereto and any post-effective amendments thereof (including, in each case,
exhibits), the Basic Prospectus, the Final Prospectus and any amendment or
supplement to the Prospectus or any document incorporated by reference therein,
all as provided in this Agreement; (d) the costs of reproducing and distributing
this Agreement; (e) the fees and expenses of qualifying the Designated Notes
under the securities laws of the several jurisdictions as provided in Section
5(g) hereof and of preparing, printing and distributing a Blue Sky Memorandum
(including related fees and expenses of your counsel); (f) any fees charged by
securities rating services for rating the Designated Notes; and (g) all other
costs and expenses incident to the performance of the obligations of the
Company.
8. Indemnification and Contribution. (a) Each of the Company and the
--------------------------------
Sponsor agrees to indemnify and hold you harmless and each person, if any, who
controls you within the meaning of Section 15 of the 1933 Act from and against
any and all loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of the Designated Notes), to
which you or any such controlling person may become subject, under the 1933 Act
or otherwise, insofar as such loss, claim, damage, liability or action arises
out of, or is based upon, (i) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, (iii) any untrue
statement or alleged untrue statement of a material fact contained in the Final
Prospectus or (iv) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading and
shall reimburse you and each such controlling person promptly upon demand for
any legal or other expenses reasonably incurred by you or such controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company and the Sponsor shall not be
-------- -------
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in any Basic
Prospectus, the Final Prospectus or the Registration Statement in reliance upon
and in conformity with written information (including any Derived Information)
furnished to the Company or the Sponsor by you specifically for inclusion
therein; and provided, further, that as to any Basic Prospectus this indemnity
-------- -------
shall not inure to your benefit or the benefit of any controlling person on
account of any loss, claim, damage, liability or action arising from the sale of
the Designated Notes to any person by you if you failed to send or give a copy
of the Final Prospectus, as amended or supplemented, to that person within the
time required by the 1933 Act, and the untrue statement or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact in the Preliminary Prospectus was corrected in the Final
Prospectus, unless such failure resulted from non-compliance by the Company or
the Sponsor with Section 5(c). For purposes of the last proviso to the
immediately preceding sentence, the term "Final Prospectus" shall not be deemed
to include the documents incorporated therein by reference, and you shall not be
obligated to send or give any supplement or amendment to any document
incorporated therein by reference to any person other than a person to whom you
had delivered such incorporated document or documents in response to a written
request therefor. The foregoing
20
indemnity agreement is in addition to any liability which each of the Company
and the Sponsor may otherwise have to you or any person who controls you.
(b) You agree to indemnify and hold harmless each of the Company and
the Sponsor, each of its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company
and the Sponsor within the meaning of Section 15 of the 1933 Act against
any and all loss, claim, damage or liability, or any action in respect
thereof, to which the Company, the Sponsor or any such director, officer or
controlling person may become subject, under the 1933 Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or
is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, (ii) the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, (iii)
any untrue statement or alleged untrue statement of a material fact
contained in the Final Prospectus or (iv) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, but in each case only to the extent
that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company and the Sponsor by or on your behalf
specifically for inclusion therein and provided that such written
information was not based upon Company-Provided Information, and shall
reimburse the Company and the Sponsor and any such director, officer or
controlling person for any legal or other expenses reasonably incurred by
the Company and the Sponsor or any director, officer or controlling person
in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses
are incurred. The foregoing indemnity agreement is in addition to any
liability which you may otherwise have to each of the Company and the
Sponsor or any such director, officer or controlling person.
(c) Promptly after receipt by any indemnified party under this
Section 8 of notice of any claim or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against any indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify an indemnifying party
-------- -------
shall not relieve it from any liability which it may have under this
Section 8 except to the extent it has been materially prejudiced by such
failure, and provided, further, that the failure to notify any indemnifying
-------- -------
party shall not relieve it from any liability which it may have to any
indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party shall not be
liable to the indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
21
Any indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to local counsel) at any time for all such indemnified parties, which
firm shall be designated in writing by you, if the indemnified parties under
this Section 8 consist of you or any of your controlling persons, or by the
Company, if the indemnified parties under this Section 8 consist of the Company,
the Sponsor, or any of the Company's directors, officers or controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section 8(a), (b) and (c), shall use its best efforts to cooperate
with the indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any 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, 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.
(d) You agree to deliver to the Company or the Sponsor no later than
the date on which the Prospectus Supplement is required to be filed
pursuant to Rule 424 with a copy of its Derived Information (defined below)
------- -----------
for filing with the Commission on Form 8-K.
(e) You agree, assuming all Company-Provided Information (defined
below) is accurate and complete in all material respects, to indemnify and
hold harmless the Company, the Sponsor, each of the Company's and the
Sponsor's officers and directors and each person who controls the Company
and the Sponsor within the meaning of Section 15 of the 1933 Act against
any and all losses, claims, damages or liabilities, joint or several, to
which they may become subject under the 1933 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are
22
based upon any untrue statement of a material fact contained in the Derived
Information provided by you, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party for any legal or other expenses
reasonably incurred by him, her or it in connection with investigating or
defending or preparing to defend any such loss, claim, damage, liability or
action as such expenses are incurred. Your obligations under this Section
8(e) shall be in addition to any liability which you may otherwise have.
(f) Each of the Company and the Sponsor agree to indemnify and hold
harmless the Underwriter, each of the Underwriter's officers and directors
and each person who controls the Underwriter within the meaning of Section
15 of the 1933 Act against any and all losses, claims, damages or
liabilities, joint or several, to which they may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement of a material fact contained in the Company-Provided
----------------
Information provided by the Company or the Sponsor, or arise out of or are
-----------
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and agrees to reimburse each such indemnified party for any
legal or other expenses reasonably incurred by him, her or it in connection
with investigating or defending or preparing to defend any such loss,
claim, damage, liability or action as such expenses are incurred. Your
obligation under this Section 8(f) shall be in addition to any liability
which you may otherwise have.
The procedures set forth in Section 8(c) shall be equally applicable to
this Section 8(f).
(g) For purposes of this Section 8, the term Derived Information
-------------------
means such portion, if any, of the information delivered to the Company or
the Sponsor pursuant to Section 8(d) for filing with the Commission on Form
8-K as:
(i) is not contained in the Final Prospectus without taking
into account information incorporated therein by reference;
(ii) does not constitute Company-Provided Information; and
(iii) is of the type of information defined as Collateral term
sheets, Structural term sheets or Computational Materials (as such
terms are interpreted in the No-Action Letters).
"Company-Provided Information" means any computer tape furnished to the
Underwriter by the Company concerning the Mortgage Loans comprising the Trust or
any other information furnished by the Company to the Underwriter that is relied
on or is reasonably anticipated by the parties hereto to be relied on by the
Underwriter in the course of the Underwriter's preparation of its Derived
Information or the written information to be included in the prospectus
supplement by the Underwriter as set forth in Section 8(i) herein.
The terms "Collateral term sheet" and "Structural term sheet" shall have
the respective meanings assigned to them in the February 13, 1995 letter (the
"PSA Letter") of Cleary, Gottlieb,
23
Xxxxx & Xxxxxxxx on behalf of the Public Securities Association (which letter,
and the SEC staff's response thereto, were publicly available February 17,
1995). The term "Collateral term sheet" as used herein includes any subsequent
Collateral term sheet that reflects a substantive change in the information
presented. The term "Computational Materials" has the meaning assigned to it in
the May 17, 1994 letter (the "Xxxxxx letter" and together with the PSA Letter,
the "No-Action Letters") of Xxxxx & Xxxx on behalf of Xxxxxx, Peabody & Co.,
Inc. (which letter, and the SEC staff's response thereto, were publicly
available May 20, 1994).
(h) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or (b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein,
then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate
to reflect the relative benefits received by the Company and the Sponsor on
the one hand and you on the other from the offering of the Designated Notes
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law or if the indemnified party failed to give the notice
required under Section 8(c), in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Sponsor on the one hand and
you on the other with respect to the statements or omissions which resulted
in such loss, claim, damage or liability, or action in respect thereof, as
well as any other relevant equitable considerations.
The relative benefits of you and the Company and the Sponsor shall be
deemed to be in such proportion so that you are responsible for that portion
represented by the percentage that the underwriting discount appearing on the
cover page of the Final Prospectus bears to the public offering price appearing
on the cover page of the Final Prospectus.
The relative fault of each of you and the Company and the Sponsor shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company, the Sponsor or by you, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission and other equitable
considerations.
The Company, the Sponsor and you agree that it would not be just and
equitable if contributions pursuant to this Section 8(h) were to be determined
by pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to herein. The amount paid
or payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 8(h)
shall be deemed to include, for purposes of this Section 8(h), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
In no case shall you be responsible for any amount in excess of the
underwriting discount applicable to the Designated Notes purchased by you
hereunder. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
24
(i) You confirm that the information set forth (i) in the Prospectus
Supplement relating to market making and (ii) in the fourth paragraph under
the caption "Underwriting" in the Prospectus Supplement, together with the
Derived Information, is correct and constitutes the only information
furnished in writing to the Company or the Sponsor by you or on your behalf
specifically for inclusion in the Registration Statement and the Final
Prospectus.
9. Termination.
-----------
(a) This Agreement shall be subject to termination in your absolute
discretion, by notice given to the Company or the Sponsor prior to delivery
of and payment for the Designated Notes, if, prior to such time, (i)
trading of securities generally on the New York Stock Exchange or the
American Stock Exchange shall have been suspended or materially limited,
(ii) a general moratorium on commercial banking activities in New York
shall have been declared by either federal or New York State authorities or
(iii) there shall have occurred any material outbreak or declaration of
hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in your
reasonable judgment, impracticable to market the Designated Notes on the
terms specified herein.
(b) If the sale of the Designated Notes shall not be consummated because
any condition to your obligations set forth in Section 6 hereof is not
satisfied or because of any refusal, inability or failure on the part of
the Company or the Sponsor to perform any agreement herein or comply with
any provision hereof other than by reason of your default, the Company and
the Sponsor shall reimburse you for the reasonable fees and expenses of
your counsel and for such other out-of-pocket expenses as shall have been
incurred by you in connection with this Agreement and the proposed purchase
of the Designated Notes, and upon demand the Company and the Sponsor shall
pay the full amount thereof to you.
(c) This Agreement will survive delivery of and payment for the
Designated Notes. The provisions of Section 7 and this Section 9(c) shall
survive the termination or cancellation of this Agreement.
10. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to you, will be mailed, delivered or
transmitted by facsimile and confirmed to you at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxxx 00000, attention: Mortgage Finance Department; or, if sent to (i)
the Sponsor, will be mailed, delivered or transmitted by facsimile and confirmed
to it at 000 Xxxxxxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000,
attention: Finance Department or (ii) the Company, will be mailed, delivered or
transmitted by facsimile and confirmed to it at 000 Xxxxxxxx Xxxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000, attention: Finance Department.
11. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons and their successors and assigns, and no
other person will have any right or obligation hereunder.
12. Applicable Law; Counterparts. This Agreement will be governed by and
----------------------------
construed in accordance with the laws of the State of New York. This Agreement
may be
25
executed in any number of counterparts, each of which shall for all purposes be
deemed to be an original and all of which shall together constitute but one and
the same instrument.
13. Survival. The respective indemnities, representations, warranties and
--------
agreements of the Company and you contained in this Agreement, or made by or on
behalf of them, respectively, pursuant to this Agreement, shall survive the
delivery of and payment for the Designated Notes and shall remain in full force
and effect, regardless of any investigation made by or on behalf of any of them
or any person controlling any of them.
14. Definition of the Term "Business Day". For purposes of this Agreement,
------------------------------------
"Business Day" means any day on which the New York Stock Exchange, Inc. is open
for trading.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW,
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
16. Headings. The headings herein are inserted for convenience of
--------
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
26
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this letter and
your acceptance shall represent a binding agreement between the Company, the
Sponsor and you.
Very truly yours,
HEADLANDS MORTGAGE COMPANY
By:/s/ Xxxxx Xxxxxxx
-----------------
Name: Xxxxx Xxxxxxx
Title: Executive Vice President
HEADLANDS MORTGAGE SECURITIES INC.
By:/s/ Xxxxxxx Xxxxxx
------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written.
GREENWICH CAPITAL MARKETS INC.
By: /s/ Xxxxx Xxxxxxx
-----------------
Name: Xxxxx Xxxxxxx
Title: Senior Vice President
27
SCHEDULE I
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Underwriting Agreement dated March 23, 1998.
As used in this Agreement, the term "Registration Statement" refers to the
Registration Statement on Form S-3 (File No. 333-28031) filed on July 11, 1997
and declared effective by the Commission on July 17, 1998.
Closing Date: March 25, 1998.
-------------------------------------------------------------------------------
Title, Purchase Price and Description of Designated Notes:
Headlands Mortgage Securities Inc. Revolving Home Equity Loan Asset-Backed
Designated Notes, Series 1998-1, $191,584,000 Class A Variable Rate Notes
and Class S 1.25% Notes.
Initial Cut-off Date Principal Balance: $156,395,696.03
Cut-off Date: 3/13/98.
