SIDE LETTER AGREEMENT
This SIDE LETTER AGREEMENT (this "Agreement"), dated as of
November 3, 1997, by and between Commercial Assets, Inc., a Maryland corporation
(the "Company") and PaineWebber Incorporated (the "Initial Purchaser").
WHEREAS, Structured Mortgage Trust 1997-2, (the "Issuer"), a
business trust established under the laws of the State of Delaware pursuant to a
Trust Agreement, dated November 3, 1997, by and between Wilmington Trust
Company, a Delaware bank and trust corporation, as Owner Trustee, and CAX DTR
Securitization Corp., a Delaware corporation ("QRS"), as depositor, proposes to
sell to the Initial Purchaser the respective classes of collateralized notes
that are identified in Schedule I hereto (collectively, the "Notes") pursuant to
a Note Purchase Agreement, dated as of November 3, 1997, among the Issuer, QRS,
and the Initial Purchaser (the "Note Purchase Agreement") for consideration and
on terms set forth therein and in a document ancillary thereto (as described
therein). The Notes are to be issued pursuant to an indenture (the "Indenture"),
to be dated as of November 3, 1997, by and between the Issuer and LaSalle
National Bank, a national banking association, as indenture trustee (the
"Indenture Trustee");
WHEREAS, the Notes will be secured by, and interest on and
principal of the Notes will be paid out of the cash flow from and after (but not
including distributions made on) the November 1997 Certificate Distribution Date
from $50,974,526 aggregate principal amount of Daiwa Securities America Inc.
Multifamily First Loss Ownership Securities ("Multifamily FLOWS_") Series
1994-Multifamily FLOWS_-1 pass-through certificates (the "Collateral");
WHEREAS, the Collateral will be transferred from the Company
to QRS pursuant to a Contribution Agreement, dated as of November 3, 1997 (the
"Contribution Agreement"), between QRS, as contributee, and the Company, as
contributor. QRS will then transfer the Collateral to the Issuer pursuant to the
Trust Agreement in exchange for all of the equity of the Issuer;
WHEREAS, the contemplated transactions, as described above,
are in the commercial interest of the Company;
WHEREAS, the parties hereto desire to provide a xxxxxx
indemnity for the Initial Purchaser with regard to its purchase of the Notes
than the Contribution Agreement, the Trust Agreement, or the Note Purchase
Agreement currently provide for;
WHEREAS, each of the Issuer and QRS (each, along with the
Company, an "Indemnifying Party") have, as set forth in Section 8 of the Note
Purchase Agreement, jointly and severally agreed to indemnify (or in certain
circumstances, make contributions to) and hold harmless the Initial Purchaser,
its affiliates, and the respective directors, officers, agents and employees of
the Initial Purchaser and its affiliates and each other entity or person, if
any, controlling the Initial Purchaser or any of its affiliates (as such term
"control" is used in either Section 15 of the 1933 Act or Section 20 of the 0000
Xxx) under a number of situations and subject to certain conditions;
WHEREAS, the parties hereto desire to provide for mutual
rights of indemnification on terms substantially similar to those contained in
the Note Purchase Agreement; and
WHEREAS, capitalized terms used but not otherwise defined
herein shall have the respective meanings assigned to them in the Indenture.
NOW, THEREFORE, in consideration of the foregoing, and for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Indemnification and Contribution.
(a) The Company hereby agrees to indemnify (or in certain
circumstances, make contributions to) and hold harmless the Initial Purchaser,
its affiliates, and the respective directors, officers, agents and employees of
the Initial Purchaser and its affiliates and each other entity or person, if
any, controlling the Initial Purchaser or any of its affiliates (as such term
"control" is used in either Section 15 of the 1933 Act or Section 20 of the 1934
Act), to the same extent as the obligations of each Indemnifying Party under the
indemnity and contribution referenced in the sixth WHEREAS clause of this
Agreement. This indemnity will be in addition to, and shall not lessen or modify
the provisions of, any indemnification or contribution obligation of any other
party to the Initial Purchaser.
(b) The Initial Purchaser hereby agrees to indemnify and hold
harmless the Company and each person, if any, who controls the Company (as such
term "control" is used in Section 15 of the 1933 Act or Section 20 of the 1934
Act), to the same extent as the Initial Purchaser's obligations to the
Indemnifying Parties under the indemnity and contribution referenced in the
sixth WHEREAS clause of this Agreement, but only with respect to written
information furnished to the Company by the Initial Purchaser specifically for
use in connection with the preparation of the Private Offering Memorandum with
respect to the Notes or notes substituted therefor (the "Private Offering
Memorandum"). This indemnity will be in addition to, and shall not lessen or
modify the provisions of, any indemnification or contribution obligation of the
Initial Purchaser by any other party.
2
2. Representations and Covenants of the Company.
(a) The Company hereby covenants that it will render any
assistance requested, appropriate, or necessary to draft, and will carefully
examine the Private Offering Memorandum and all amendments and supplements
thereto which are drafted, and will have complied or will comply with all
agreements and have satisfied or will satisfy all conditions on its part to be
performed or satisfied prior to, upon, or after the Closing Date set forth in
the Related Agreements, that it will represent and warrant that the Private
Offering Memorandum, when finalized, and as then amended or supplemented,
contains no untrue statement of a material fact and does 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 are made,
not misleading, except that no such representation or warranty shall be required
as to statements contained in or omitted from the Private Offering Memorandum in
reliance upon and in conformity with information furnished in writing to the
Company by the Initial Purchaser specifically for use in the Private Offering
Memorandum and any amendment or supplement thereto.
(b) If, at any time prior to the completion of the sale of the
Notes by the Initial Purchaser, any event occurs as a result of which the
Private Offering Memorandum, as then amended or supplemented, would include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, the
Company will promptly notify the Initial Purchaser, and the Company, in
conjunction with QRS and the Issuer, shall prepare to furnish to the Initial
Purchaser, in accordance with Section 4 of the Note Purchase Agreement, an
amendment or supplement to the Private Offering Memorandum that will correct
such statement or omission and shall furnish to the Initial Purchaser, without
charge, copies of the Private Offering Memorandum (including all exhibits and
documents incorporated by reference therein) and the Indenture and all
amendments or supplements to such documents, in each case as soon as available
and in such quantities as the Initial Purchaser may reasonably request.
(c) The Company will immediately inform the Initial Purchaser,
the Company, and the Issuer (i) of the receipt by it of any communication from
the Securities and Exchange Commission or any state securities authority
concerning the offering or sale of the Notes, and (ii) of the commencement of
any lawsuit or proceeding to which the Company, QRS, the Issuer, the Initial
Purchaser, the Owner Trustee or the Indenture Trustee is a party relating to the
offering or sale of the Notes.
(d) To the extent, if any, that the rating ultimately assigned
to the Notes by Duff & Xxxxxx Credit Rating Co. or another statistical rating
agency which initially rates the Notes is conditional upon the furnishing of
documents or the taking of any other actions by the Company, the Company shall
use its best efforts to furnish such documents, or cause such documents to be
furnished, and take any such other actions.
3
(e) During the period referred to in clause (b), the Issuer
will, at the Initial Purchaser's request, furnish through the Initial Purchaser
to any prospective purchaser of Notes from the Initial Purchaser such
information as is required to be delivered to such prospective purchaser
pursuant to Section 7(e) of the Note Purchase Agreement.
(f) The Company shall be responsible for and shall pay all of
the fees, disbursements and expenses of the Company and QRS's counsel and
accountants.
3. Survival of Certain Representations and Obligations. The
respective representations, warranties, agreements, covenants, indemnities and
other statements of the Company or the Initial Purchaser, and their respective
officers and agents, set forth in, or made pursuant to, this Agreement shall
remain in full force and effect, regardless of any investigation, or statement
as to the result thereof, made by or on behalf of either the Company or the
Initial Purchaser, or any of their respective officers or directors or any
controlling person of any of the foregoing, and shall survive the delivery of
and payment for the Notes. The provisions of Sections 1, 2 and 3 hereof shall
survive the termination or cancellation of this Agreement.
4. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Initial Purchaser, will be
mailed, delivered or telecopied to
PaineWebber Incorporated
1285 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
with a copy to:
O'Melveny & Xxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxxx, Esq.
or, if sent to the Company, will be mailed, delivered or telecopied to it at:
Commercial Assets, Inc.
0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxx
4
with a copy to:
Bartlit Xxxx Xxxxxx Xxxxxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
5. Applicable Law; Counterparts; Integration.
(a) THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND REFLECTS THE FULL
UNDERSTANDING OF THE PARTIES HERETO WITH RESPECT TO THE MATTERS REFERENCED
HEREIN.
(b) This Agreement may be executed in any number of
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall together constitute but one and the same instrument.
[Signatures Commence On The Following Page]
5
IN WITNESS WHEREOF, the Company and the Initial Purchaser have
caused this Side Letter Agreement to be executed by their duly authorized
respective officers as of the date first set forth above.
COMMERCIAL ASSETS, INC.,
a Maryland corporation,
By: /s/Xxxxx Xxxxxxx
-------------------------
Name: Xxxxx Xxxxxxx
Title: Sr. VP & CFO
S-1
PAINEWEBBER INCORPORATED,
a Delaware corporation,
By: /s/Xxxxxx X. Xxxxx
-------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Director
S-2
Schedule I
Notes
Class Par Amount Rate CUSIP
----- ---------- ---- -----
Class A $24,224,526 * N/A
Class B $14,000,000 * N/A
Class C $0 * N/A
Class D $7,750,000 * N/A
* Weighted Average Note Rate
I-1
