$215,000,000
BLOCK MORTGAGE FINANCE, INC.
Block Mortgage Finance
Asset-Backed Certificates, Series 1997-2,
Class A-1 Class A-2 Class A-3 Class A-4 Class A-5 Class
A-6
UNDERWRITING AGREEMENT
July 25, 1997
Xxxxxx Xxxxxxx & Co. Incorporated
as Representative of the Several
Underwriters listed herein
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Block Mortgage Finance, Inc. (the "Depositor"), a wholly-owned, special
purpose subsidiary of Companion Mortgage Corporation (in such capacity
"Companion" or in its capacity as the seller the "Seller", as applicable), has
authorized the issuance and sale of Block Mortgage Finance Asset-Backed
Certificates, Series 1997-2, Class A-1, Class A-2, Class A-3, Certificates,
Class A-4 Certificates and Class A-5 Certificates (collectively, the "Fixed Rate
Certificates") and Class A-6 Certificates (the "Adjustable Rate Certificates"
and together with the Fixed Rate Certificates, the "Class A Certificates"), and
the Class R Certificates (the "Class R Certificates"). As used herein, the Class
A Certificates and Class R Certificates are herein collectively referred to as
the "Certificates." The Certificates evidence in the aggregate the beneficial
interest in a pool of fixed and adjustable rate mortgage loans (the "Mortgage
Loans"). The Fixed Rate Certificates will represent an undivided ownership
interest in the group of Mortgage Loans (the "Fixed Rate Group") which are
secured by fixed-rate first and second mortgages primarily on one- to
four-family residential dwellings. The Adjustable Rate Certificates will
represent an undivided ownership interest in the group of Mortgage Loans (the
"Adjustable Rate Group" and, together with the Fixed Rate Group, the "Loan
Groups") which are secured by adjustable-rate first mortgages primarily on one-
to four-family residential dwellings.
Only the Class A Certificates are being purchased by the several
underwriters named in Schedule A hereto (collectively, the "Underwriters"), at
the price set forth in Schedule A.
The Certificates will be issued under a pooling and servicing agreement
(the "Pooling and Servicing Agreement"), dated as of July 1, 1997 among the
Depositor, Companion Mortgage Corporation, as seller (the "Seller"), Block
Financial Corporation, as master servicer (the "Master Servicer"), and Bankers
Trust Company of California, N.A., as trustee (the "Trustee"). The Master
Servicer will enter into two separate subservicing agreements, both dated as of
July 1, 1997 (the "Sub-Servicing Agreements"), one with NF Investments, Inc.
("NFI") and the other with Option One Mortgage Corporation ("Option One" and
together with NFI, the "Sub- Servicers") to provide for the subservicing of the
Mortgage Loans. The Seller, pursuant to the terms of the Pooling and Servicing
Agreement, will transfer to the Depositor all of its right, title and interest
in and to the Mortgage Loans as of the Cut-Off Date and the collateral securing
each Mortgage Loan. The Depositor, pursuant to the Pooling and Servicing
Agreement will transfer all of its right, title and interest in and to the
Mortgage Loans as of the Cut-off Date and the collateral securing each Mortgage
Loan to the Trustee. The Certificates will evidence fractional undivided
interests in the property held in trust for the holders of such Certificates
(the "Trust"). The assets of the Trust will include, among other things: the
Mortgage Loans to be conveyed by the Depositor to the Trust on the Closing Date;
such amounts as may be held by the Master Servicer in the Collection Account
(other than investment earnings thereon) and any other accounts held by or
maintained by the Master Servicer with respect to the servicing of the Mortgage
Loans and the other assets of the Trust; and such amounts as may be held by the
Trustee in the Distribution Account (other than investment earnings thereon) and
any other accounts held by the Trustee for the Trust. The aggregate undivided
interest in the Trust represented by the Class A Certificates initially will be
equal to $215,000,000 of principal (subject to a variance of plus or minus 5%),
which will represent 100% of the outstanding principal balances of the Mortgage
Loans as of July 1, 1997 (the "Cut-Off Date"). The Class A Certificates will
have the benefit of two financial guaranty insurance policies (each, a "Policy")
issued by MBIA Insurance Corporation, (the "Certificate Insurer") the principal
operating subsidiary of MBIA Inc., a New York Stock Exchange listed company,
pursuant to an Insurance Agreement (the "Insurance Agreement") dated as of July
, 1997 among the Seller, the Master Servicer, the Depositor, the Trustee and the
Certificate Insurer. In addition to the Insurance Agreement, the Seller, the
Master Servicer, the Underwriters and the Certificate Insurer will enter into an
Indemnification Agreement (the "Indemnification Agreement") dated as of July ,
1997. A Form of the Pooling and Servicing Agreement has been filed as an exhibit
to the Registration Statement (hereinafter defined).
The Trust will include two segregated asset pools, with respect to which
elections will be made to treat the assets of each as a "real estate mortgage
investment conduit" (a "REMIC") for federal income tax purposes. The Class A
Certificates and the
Class X Certificates will represent beneficial ownership of "regular interests"
in the Master REMIC and the Class R Certifi- xxxxx will represent beneficial
ownership of "residual interests" in each of the Subsidiary REMIC and the Master
REMIC.
Capitalized terms used but not defined herein shall have the meanings given
to them in the Pooling and Servicing Agreement.
This Underwriting Agreement, the Pooling and Servicing Agreement, the
Sub-Servicing Agreements, the Insurance Agreement and the Indemnification
Agreement are referred to collectively herein as the "Agreements". The Master
Servicer, the Seller, and the Depositor are referred to collectively herein as
the "Transaction Parties".
The Depositor filed with the Securities and Exchange Commission (the
"Commission") on October 15, 1996, a registration statement on Form S-3 (No.
333-14041), including a form of prospectus and prospectus supplement relating to
the Class A Certificates, and filed with the Commission amendment No. 1 to such
registration statement on December 31, 1996 and amendment No. 2 to such
registration statement on January 21, 1997, and pursuant to the provisions
hereof shall file such post-effective amendments thereto as may hereafter be
required pursuant to the Securities Act of 1933, as amended (the "1933 Act"),
and the rules and regulations of the Commission thereunder (the "Rules and
Regulations"). Such registration statement (as amended) is referred to herein as
the "Registration Statement"; the prospectus and prospectus supplement relating
to the offering of the Class A Certificates constituting a part of the
Registration Statement filed by the Depositor are collectively referred to
herein as the "Prospectus" and each of the prospectus and prospectus supplement
are referred to as the "Base Prospectus" and the "Prospectus Supplement,"
respectively; "Amendment No. 1" and Amendment No. 2" referred to herein mean the
amendment No. 1 to such Registration Statement filed with the Commission on
December 31, 1996 and the amendment No. 2 to such Registration Statement filed
with the Commission on January 21, 1997, respectively; and any reference herein
to any amendment or supplement with respect to the Registration Statement or the
Prospectus shall be deemed to refer to and include any information deemed to be
a part thereof pursuant to Rule 430A under the 1933 Act.
SECTION 1. Representations and Warranties of the Master Servicer, the
Seller and the Depositor. Each of the Master Servicer, the Seller, and the
Depositor, as to itself, and the Master Servicer, individually, with respect to
(a), (b), (o), (q), (r) and (s) below, represents and warrants to, and agrees
with the Underwriters that:
(a) The Registration Statement, as amended by
Amendment No. 1 and Amendment No. 2, has become effective
under the 1933 Act. The Registration Statement complies,
and all amendments to the Registration Statement at the
time such amended Registration Statement becomes effective
will comply, in all material respects with the
requirements of the 1933 Act and the Rules and
Regulations. The Registration Statement at the time such Registration Statement
became effective did not, and any amendment to the Registration Statement at the
time such amended Registration Statement becomes effective will not, 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 not misleading.
The Prospectus as of the date hereof does, and the Prospectus as amended or
supplemented as of the Closing Date will, comply in all material respects with
the requirements of the 1933 Act and the Rules and Regulations. The Prospectus
as of the date hereof did not, and the Prospectus as amended or supplemented as
of the Closing Date will not, contain any untrue statement of a material fact or
omit 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;
provided, however, that the representations and warranties in this subsection
shall not apply to statements in, or omissions from, the Registration Statement
or Prospectus made in reliance upon and in conformity with information furnished
to the Depositor in writing by the Underwriters or the Certificate Insurer
expressly for use in the Registration Statement or Prospectus. The Seller and
the Depositor acknowledge that the statements set forth in the last paragraph of
the cover page of the Prospectus Supplement and in the Section "Underwriting" in
the Prospectus Supplement constitute the only information furnished in writing
by the Underwriters for inclusion in the Prospectus. The conditions to the use
by the Depositor of a registration statement on Form S-3 under the 1933 Act, as
set forth in the General Instructions to Form S-3, have been satisfied with
respect to the Registration Statement and the Prospectus. There are no contracts
or documents of the Depositor or its affiliates that are required to be filed as
exhibits to the Registration Statement pursuant to the 1933 Act or the Rules and
Regulations that have not been so filed on or prior to the effective date of the
Registration Statement.
(b) Since the respective dates as of which information is given in the
Prospectus, or the Prospectus as amended and supplemented at the Closing Date,
there has not been any material adverse change in the general affairs,
management, financial condition, or results of operations of any of the
Transaction Parties or of their subsidiaries or affiliates, otherwise than as
set forth in the Prospectus or the Prospectus as amended and supplemented at the
Closing Date.
(c) Such Transaction Party has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its respective
jurisdiction of incorporation, with the full right, power and authority
(corporate and other) to own, lease and operate its properties and conduct its
business as described in the Prospectus and to enter into and perform its
obligations under the Agreements to which it is a signatory, and, with respect
to the Depositor, to cause the Certificates to be issued; such Transaction Party
is duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction which requires such qualification, except where
failure to be so qualified would not have a material adverse effect on (A) its
business or financial condition, (B) its obligations under the Agreements to
which it is a signatory or (C) the Owners of the Certificates; such Transaction
Party is duly authorized and licensed under applicable law, including, without
limitation, those that regulate the business of originating, selling or
servicing first and junior lien mortgage loans, to conduct in the various
jurisdictions in which it does business, the business it currently conducts
therein and to perform its obligations as contemplated by the Agreements, except
where failure to be so qualified or licensed would not have a material adverse
effect on (A) its business or financial condition, (B) its obligations under the
Agreements to which it is a signatory or (C) the Owners of the Certificates.
(d) There are no legal or governmental proceedings pending to which such
Transaction Party is a party or of which any property of such Transaction Party
is the subject, which, could reasonably be expected to materially and adversely
affect (A) its financial position, shareholders' equity or results of
operations, (B) its obligations under the Agreements to which it is a signatory
or (C) the Owners of the Certificate; and to the best knowledge of such
Transaction Party, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(e) This Underwriting Agreement has been and, prior to the Closing Date,
the Agreements (other than this Underwriting Agreement) will have been, duly
authorized, executed and delivered by each Transaction Party which is a party to
such Agreements and when duly executed and delivered by the other parties
thereto will constitute, legal, valid and binding instruments enforceable
against such Transaction Party, in accordance with their respective terms,
subject as to enforceability (i) to applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors' rights
generally, (ii) to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and (iii) with
respect to rights of indemnity under this Agreement and the Indemnification
Agreement, to limitations of public policy under applicable securities laws.
(f) The issuance and delivery of the Certificates, the consummation of any
other of the transactions contemplated in the Agreements and the fulfillment of
the terms of the Agreements do not and will not conflict with or violate any
term or provision of the Certificate or Articles of Incorporation or Bylaws of
such Transaction Party; any statute, order or regulation applicable to such
Transaction Party of any court, regulatory body, administrative agency or
governmental body having jurisdiction over such Transaction Party; and do not
and will not conflict with, result in a breach or violation or the acceleration
of, or constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any of the property or assets of such
Transaction Party pursuant to the terms of, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which such Transaction
Party is a party or by which such Transaction Party may be bound or to which any
of the property or assets of such Transaction Party may be subject, except for
conflicts, violations, breaches, accelerations and
defaults which would not be, individually or in the aggregate, materially
adverse to such Transaction Party or the Owners of the Certificates or
materially adverse to the transactions contemplated by the Agreements.
(g) Deloitte & Touche LLP is an independent public accountant with respect
to the Master Servicer, the Seller, the Depositor and KPMG Peat Marwick, is an
independent public accountant with respect to Option One as required by the 1933
Act and the Rules and Regulations.
(h) The direction by the Depositor to the Trustee to execute, countersign,
issue and deliver the Certificates will, as of the Closing Date, be duly
authorized by the Depositor, and assuming the Trustee has been duly authorized
to do so, when executed, countersigned, issued and delivered by the Trustee in
accordance with the Pooling and Servicing Agreement, the Certificates will be
validly issued and outstanding and will be entitled to the benefits provided by
the Pooling and Servicing Agreement.
(i) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is required
for the issuance or sale of the Class A Certificates, or the consummation by
such Transaction Party of the other transactions contemplated by the Agreements,
except the registration under the 1933 Act of the Class A Certificates and such
consents, approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the issuance
of the Class A Certificates and the purchase and distribution of the Class A
Certificates by the Underwriters.
(j) Such Transaction Party 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 Prospectus, and such Transaction Party has not
received any notice of proceedings relating to the revocation or modification of
any such license, certificate, authority or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
materially and adversely affect the conduct of its business, operations or
financial condition.
(k) At the time of execution and delivery of the Pooling and Servicing
Agreement, the Seller (i) will have good and marketable title to each Mortgage
Loan being transferred by it to the Depositor, free and clear of any Lien, (ii)
will not have assigned to any person, other than the Depositor, any of its
right, title or interest in or to such Mortgage Loans and (iii) will have the
power and authority to sell such Mortgage Loans to the Depositor.
(l) At the time of execution and delivery of the Pooling and Servicing
Agreement, after giving effect to the sale of the Mortgage Loans from the Seller
to the Depositor pursuant to the Pooling and Servicing Agreement, the Depositor
(i) will have good and marketable title to each Mortgage Loan being transferred
by it
to the Trustee pursuant to the Pooling and Servicing Agreement, free and clear
of any Liens, (ii) will not have assigned to any person, other than the Trustee,
any of its right, title or interest in or to such Mortgage Loans and (iii) will
have the power and authority to sell such Mortgage Loans to the Trustee.
(m) Upon execution and delivery of the Pooling and Servicing Agreement by
all of the parties thereto, the Depositor will have acquired beneficial
ownership of all of the Seller's right, title and interest in and to the
Mortgage Loans, free of all Liens.
(n) Upon execution and delivery of the Pooling and Servicing Agreement by
all of the parties thereto, the Trustee will have acquired beneficial ownership
of all of the Depositor's right, title and interest in and to the Mortgage
Loans, and upon delivery to the Underwriters of the Class A Certificates and
payment of the purchase price therefore, the Underwriters will have good and
marketable title to the Class A Certificates, in each case free of Liens.
(o) As of the Closing Date, each of the Mortgage Loans will meet the
eligibility criteria described in the Prospectus and set forth in the Pooling
and Servicing Agreement.
(p) Such Transaction Party will not conduct its operations while any of the
Class A Certificates are outstanding in a manner that would require such
Transaction Party or the Trust to be registered as an "investment company" under
the Investment Company Act of 1940, as amended (the "1940 Act"), as in effect on
the date hereof or require the Trust to be registered under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act") as in effect on the date
hereof.
(q) On the Closing Date, the Certificates and the Pooling and Servicing
Agreement will conform in all material respects to the descriptions thereof
contained in the Prospectus.
(r) On the Closing Date, the Class A Certificates shall have been rated
"AAA" by Standard & Poor's Ratings Services and "Aaa" by Xxxxx'x Investors
Service, Inc.
(s) Any taxes, fees and other governmental charges in connection with the
execution, delivery and issuance of the Agreements and the Certificates have
been paid or will be paid at or prior to the Closing Date.
(t) On the Closing Date, each of the representations and warranties of the
Master Servicer, the Seller and the Depositor set forth in the Pooling and
Servicing Agreement and the Insurance Agreement will be true and correct in all
material respects.
SECTION 2. Purchase and Sale. The commitment of the Underwriters to
purchase the Class A Certificates pursuant to this Agreement shall be deemed to
have been made on the basis of the representations and warranties of the Master
Servicer, the Seller and the Depositor herein contained and shall be subject to
the
terms and conditions herein set forth. The Depositor agrees to instruct the
Trustee to issue, and agrees to sell to the Underwriters, and the Underwriters
agree, severally and not jointly (except as provided in Section 12 hereof), to
purchase from the Depositor, at the purchase price for each Class A Certificate
set forth on Schedule A hereto, the respective principal amount of Class A
Certificates set forth opposite the name of such Underwriter on Schedule A
hereto.
SECTION 3. Delivery and Payment. Payment of the purchase price for, and
delivery of, any Class A Certificates to be purchased by the Underwriters shall
be made at the office of Brown & Wood LLP, One World Trade Center, New York, New
York, or at such other place as shall be agreed upon by you and the Depositor,
at 10:00 A.M. New York City time on July 30, 1997 or at such other time or date
as shall be agreed upon in writing by you and the Depositor (the "Closing
Date"). The Class A Certificates will be delivered in book-entry form through
the facilities of The Depository Trust Company, CEDEL S.A. and the Euroclear
System. Payment shall be made to the Depositor by wire transfer of same day
funds payable to the account of the Depositor. Delivery of the Class A
Certificates shall be made to you for the respective accounts of the
Underwriters against payment of the purchase price thereof. Such Class A
Certificates shall be in such denominations and registered in such names as you
may request in writing at least one business day prior to the Closing Date. Such
Class A Certificates, which may be in temporary form, will be made available for
examination and packaging by you no later than 3:00 P.M. New York City time on
the first business day prior to the Closing Date.
SECTION 4. Offering by the Underwriters. It is understood that the
Underwriters propose to offer the Class A Certificates for sale to the public as
set forth in the Prospectus.
SECTION 5. Covenants of the Seller, the Depositor and the Master Servicer.
The Master Servicer, Seller and the Depositor each covenant, as to itself, with
each of the Underwriters for so long as the Class A Certificates are outstanding
as follows:
(a) If, at any time when the Prospectus, as amended or supplemented, is
required by the 1933 Act to be delivered in connection with sales of the Class A
Certificates by the Underwriters, any event shall occur or condition exist as a
result of which it is necessary, in the opinion of counsel to the Underwriters
or counsel for the Depositor, to further amend or supplement the Prospectus as
then amended or supplemented in order that the Prospectus as amended or
supplemented will not include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or if it shall be
necessary, in the opinion of any such counsel at any such time to amend or
supplement the Registration Statement or the Prospectus as then amended or
supplemented in order to comply with the requirements of the 1933 Act or the
Rules and Regulations thereunder, or if required by such Rules and Regulations,
including Rule 430A thereunder, to file a post-effective amendment to such
Registration Statement (including an amended Prospectus), the Depositor will
promptly prepare and file with the Commission such amendment or supplement as
may be necessary to correct such untrue statement or omission or to make the
Registration Statement or Prospectus comply with such requirements, and within
two business days will furnish to the Underwriters as many copies of the
Prospectus, as amended or supplemented, as reasonably requested.
(b) The Depositor will give you reasonable notice of its intention to file
any amendment to the Registration Statement or the Prospectus, as amended or
supplemented, pursuant to the 1933 Act relating to the Class A Certificates,
will furnish you with copies of any such amendment or supplement proposed to be
filed a reasonable time in advance of filing, and will not file any such
amendment or supplement to which you or your counsel shall reasonably object.
(c) The Depositor will notify you immediately, and confirm the notice in
writing, (i) of the effectiveness of any amendment to the Registration
Statement, (ii) of the mailing or the delivery to the Commission for filing of
any supplement to the Prospectus or the Prospectus as amended or supplemented,
(iii) of the receipt of any comments from the Commission with respect to the
Registration Statement or the Prospectus or the Prospectus as amended or
supplemented, (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information and (v) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. The Depositor will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible moment.
(d) The Depositor will deliver to you as many signed and as many conformed
copies of the Registration Statement (as originally filed) and of each amendment
thereto (including exhibits filed therewith or incorporated by reference therein
and documents incorporated by reference in the Prospectus) as you may reasonably
request.
(e) The Depositor will make generally available to holders of the Class A
Certificates as soon as practicable, but in any event not later than 120 days
after the close of the period covered thereby, an earnings statement 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 Seller, 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) The Depositor will endeavor, in cooperation with you, to qualify the
Class A Certificates for offering and sale under the applicable securities laws
of such states and other jurisdictions of the United States as you may
designate, and will maintain or cause to be maintained such qualifications in
effect for as long as
may be required for the distribution of the Class A Certificates. The Depositor
will file or cause the filing of such statements and reports as may be
reasonably required by the laws of each jurisdiction in which the Class A
Certificates have been qualified as above provided.
(g) None of the Master Servicer, the Seller or the Depositor will, without
your prior written consent, publicly offer or sell or contract to sell any
mortgage pass-through certificates, mortgage pass-through notes or
collateralized mortgage obligations or other similar securities representing
interests in or secured by other mortgage-related assets originated or owned by
any of them for a period of 30 days following the commencement of the offering
of the Class A Certificates to the public.
(h) So long as the Class A Certificates shall be outstanding, the Depositor
will deliver to the Underwriters the annual statement as to compliance delivered
to the Trustee pursuant to the Pooling and Servicing Agreement and the annual
statement of a firm of independent public accountants furnished to the Trustee
pursuant to the Pooling and Servicing Agreement, as soon as such statements are
furnished to the Trustee.
(i) The Depositor will apply the net proceeds from the sale of the Class A
Certificates in the manner set forth in the Prospectus.
(j) If, between the date hereof and the Closing Date, to the knowledge of
the Master Servicer, the Seller or the Depositor, there are any legal or
governmental proceedings instituted or threatened against such Transaction Party
which, could reasonably be expected to materially and adversely affect the
financial condition, shareholders' equity or results of operations of such
Transaction Party, or on its ability to perform its obligations under the
Agreements, the Master Servicer, the Seller or the Depositor, as applicable,
will give prompt written notice thereof to the Underwriters.
SECTION 6. Conditions to the Underwriters' Obligations. The obligations of
the Underwriters to purchase the Class A Certificates pursuant to this Agreement
are subject to the accuracy on and as of the Closing Date of the representations
and warranties on the part of the Master Servicer, the Seller and the Depositor
herein contained, to the material accuracy of the statements of officers of the
Master Servicer, the Seller and the Depositor, respectively, made pursuant
hereto, to the performance by the Master Servicer, the Seller and the Depositor
of all of their respective obligations hereunder and to the following conditions
at the Closing Date:
(a) (i) The Registration Statement shall have been declared effective under
the 1933 Act and no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission; any price-related information
previously omitted from the effective Registration Statement pursuant to Rule
430A under the 1933 Act shall have been transmitted to the Commission
for filing pursuant to Rule 424(b) under the 1933 Act within the prescribed time
period, and the Depositor shall have provided evidence satisfactory to the
Underwriters of such timely filing, or a post-effective amendment to the
Registration Statement providing such information shall have been promptly filed
with the Commission and declared effective in accordance with the requirements
of Rule 430A under the 1933 Act; and prior to the Closing Date the Depositor
shall have provided evidence satisfactory to the Underwriters of such
effectiveness and (ii) there shall not have come to your attention any facts
that would cause you to believe that the Prospectus, at the time it was required
to be delivered to a purchaser of the Class A Certificates, contained an untrue
statement of a material fact or omitted 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.
(b) The Underwriters shall have received the favorable opinion or opinions,
dated the date of the Closing Date, of Xxxxxxxx & Xxxxxx L.L.P., as special
counsel to the Master Servicer, the Seller and the Depositor (collectively, the
"Block Transaction Parties"), in form and substance satisfactory to the
Underwriters, to the effect that:
(i) The Depositor is a duly incorporated, validly existing corporation
and in good standing under the laws of the State of Delaware. The Master
Servicer is a duly incorporated, validly existing corporation and in good
standing under the laws of the State of Delaware. The Seller is a duly
incorporated, validly existing corporation and in good standing under the
laws of the State of Delaware.
(ii) The Depositor has all requisite power and authority under the
General Corporation Law of the State of Delaware to execute, deliver and
perform its obligations under each of the Pooling and Servicing Agreement,
the Insurance Agreement and the Underwriting Agreement. Block Financial has
all requisite power and authority under the General Corporation Law of the
State of Delaware to execute, deliver and perform its obligations under
each of the Agreements. The Seller has all requisite power and authority
under the General Corporation Law of the State of Delaware to execute,
deliver and perform its obligations under the Agreements to which it is a
party.
(iii) The execution, delivery and performance of the Underwriting
Agreement have been duly authorized by all requisite corporate action on
the part of the Depositor, and the Underwriting Agreement has been duly
executed and delivered by the Depositor. The execution, delivery and
performance of the Pooling and Servicing Agreement and the Insurance
Agreement have been duly authorized by all requisite corporate action on
the part of the Depositor, and each of the Pooling and Servicing Agreement
and the Insurance Agreement has been duly executed and delivered by the
Depositor and is the legally valid and binding obligation of the Depositor
enforceable against the Depositor in accordance with its terms. The
execution, delivery and performance of each of the
Underwriting Agreement and the Indemnification Agreement have been duly
authorized by all requisite corporate action on the part of the Master
Servicer, and the Underwriting Agreement and the Indemnification Agreement
have been duly executed and delivered by the Master Servicer. The
execution, delivery and performance of the Pooling and Servicing Agreement,
the Insurance Agreement and the Subservicing Agreements have been duly
authorized by all requisite corporate action on the part of the Master
Servicer, and each of the Pooling and Servicing Agreement, the Insurance
Agreement and the Subservicing Agreements has been duly executed and
delivered by the Master Servicer and is the legal, valid and binding
obligation of the Master Servicer enforceable against the Master Servicer
in accordance with its terms. The execution, delivery and performance of
each of the Underwriting Agreement and the Indemnification Agreement have
been duly authorized by all requisite corporate action on the part of the
Seller, and the Underwriting Agreement and the Indemnification Agreement
has been duly executed and delivered by the Seller. The execution, delivery
and performance of the Pooling and Servicing Agreement and the Insurance
Agreement have been duly authorized by all requisite corporate action on
the part of the Seller and each of the Pooling and Servicing Agreement and
the Insurance Agreement has been duly executed and delivered by the Seller
and is the legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its terms. Such opinions with respect
to the enforceability of such Agreements will be subject to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights, to general principles of equity and to
the qualifications previously provided by Xxxxxxxx & Xxxxxx L.L.P. and
approved by the counsel to the Underwriters.
(iv) The Depositor's execution, delivery and performance of its
obligations under the Pooling and Servicing Agreement, the Insurance
Agreement and the Underwriting Agreement will not (A) conflict with the
Certificate of Incorporation or By- laws of the Depositor or (B) violate
applicable provisions of federal, Missouri or New York statutory law or
regulation or the General Corporation Law of the State of Delaware, the
violation of which would have a material adverse effect on the ability of
the Depositor to perform its obligations under any of such agreements. The
Master Servicer's execution, delivery and performance of its obligations
under the Agreements will not (A) conflict with the Certificate of
Incorporation or Bylaws of the Master Servicer or (B) violate applicable
provisions of federal, Missouri or New York statutory law or regulation or
the General Corporation Law of the State of Delaware, the violation of
which would have a material adverse effect on the ability of the Master
Servicer to perform its obligations under the Agreements. The Seller's
execution, delivery and performance of its obligations under the Pooling
and Servicing Agreement, the Insurance Agreement or the Underwriting
Agreement will not (A) conflict with the Certificate of Incorporation or
Bylaws of the Seller or (B)
violate applicable provisions of federal, Missouri or New York statutory
law or regulation, or the General Corporation Law of the State of Delaware,
the violation of which would have a material adverse effect on the ability
of the Seller to perform its obligations under the Pooling and Servicing
Agreement, the Insurance Agreement or the Underwriting Agreement.
(v) To such counsel's knowledge, and based in part upon the Depositor's
written representations to such counsel, the Depositor's execution and
delivery of, and its performance of its obligations under, the Pooling and
Servicing Agreement, the Insurance Agreement and the Underwriting Agreement
will not conflict with, result in a breach or violation of, constitute a
default or an event of acceleration under, or result in the creation or
imposition of any lien, charge or encumbrance upon the property or assets
of the Depositor pursuant to the terms of, (A) any indenture, mortgage,
deed of trust, loan agreement or other material agreement or instrument
known to such counsel to which the Depositor is a party or by which it or
its property is bound or (B) any order, judgment or decree of any State of
Delaware, State of Missouri, State of New York or United States court,
administrative agency or governmental instrumentality applicable to the
Depositor which is known to such counsel, the conflict with which, or the
breach, violation, default, acceleration or creation or imposition of
which, would have a material adverse effect on the ability of the Depositor
to perform its obligations under any of such agreements. To such counsel's
knowledge, and based in part upon the Master Servicer's written
representations to such counsel, the Master Servicer's execution and
delivery of, and its performance of its obligations under, the Agreements
will not conflict with, result in a breach or violation of, constitute a
default or an event of acceleration under, or result in the creation or
imposition of any lien, charge or encumbrance upon the property or assets
of the Master Servicer pursuant to the terms of, (A) any indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument known to such counsel to which the Master Servicer is a party or
by which it or its property is bound or (B) any order, judgment or decree
of any State of Delaware, State of Missouri, State of New York or United
States court, administrative agency or governmental instrumentality
applicable to the Master Servicer which is known to such counsel, the
conflict with which, or the breach, violation, default, acceleration or
creation or imposition of which, would have a material adverse effect on
the ability of the Master Servicer to perform its obligations under the
Agreements. To such counsel's knowledge, and based in part upon the
Seller's representations to such counsel, the Seller's execution and
delivery of, and its performance of its obligations under, the Pooling and
Servicing Agreement, the Insurance Agreement and the Underwriting Agreement
will not conflict with, result in a breach or violation of, constitute a
default or an event of acceleration under, or result in the creation or
imposition of any lien, charge or encumbrance upon
the property or assets of the Seller pursuant to the terms of, (A) any
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument known to such counsel to which the Seller is a
party or by which it or its property is bound or (B) any order, judgment or
decree of any State of Delaware, State of Missouri, State of New York or
United States court, administrative agency or governmental instrumentality
applicable to the Seller which is known to such counsel, the conflict with
which, or the breach, violation, default, acceleration or creation or
imposition of which, would have a material adverse effect on the ability of
the Seller to perform its obligations under the Pooling and Servicing
Agreement, the Insurance Agreement or the Underwriting Agreement.
(vi) The direction by the Depositor to the Trustee to authenticate,
issue and deliver the Certificates has been duly authorized by the
Depositor, and the Certificates, when duly authorized, authenticated,
issued and delivered by the Trustee and paid for by the Underwriters in
accordance with the Pooling and Servicing Agreement and the Underwriting
Agreement, will be validly issued and outstanding and will be entitled to
the benefits provided by the Pooling and Servicing Agreement.
(vii) To such counsel's knowledge, and based in part upon the
Depositor's written representations to such counsel, the Depositor is not
required to obtain the consent, approval, authorization or order of, or to
register or file with, or to give notice to, any court or governmental
agency or body of the State of Delaware (under the General Corporation Law
thereof), the State of Missouri, the State of New York or the United States
of America in order to execute, deliver, perform and comply with the terms
of, or for the consummation of the transactions of the Depositor
contemplated by, the Pooling and Servicing Agreement, the Insurance
Agreement or the Underwriting Agreement except any consent, approval,
authorization, order, registration, filing or notice (A) as may be required
under state securities, real estate syndication or Blue Sky laws in
connection with the offering and sale of the Class A Certificates (as to
which we express no opinion whatsoever) or (B) which is a future obligation
of the Depositor pursuant to the terms of the Pooling and Servicing
Agreement, the Insurance Agreement or the Underwriting Agreement, such as,
by way of illustration, but not in limitation of the generality of the
foregoing, filing or recording an Uniform Commercial Code assignment of a
financing statement or an assignment of Mortgage with respect to a Mortgage
Loan; or if any such consent, approval, authorization, order, registration,
filing or notice (not described in the exception to the immediately
preceding clause) is required, the Depositor has obtained, made or given
the same. To such counsel's knowledge, and based in part upon the Master
Servicer's written representations to such counsel, the Master Servicer is
not required to obtain the consent, approval, authorization or order of, to
register or file with,
or to give notice to, any court or governmental agency or body of the State
of Delaware (under the General Corporation Law thereof), the State of
Missouri, the State of New York or the United States of America in order to
execute, deliver, perform and comply with the terms of, or for the
consummation of the transactions of the Master Servicer contemplated by,
the Agreements except any consent, approval, authorization, order,
registration, filing or notice (A) as may be required under state
securities, real estate syndication or Blue Sky laws in connection with the
offering and sale of the Class A Certificates (as to which we express no
opinion whatsoever) or (B) which is a future obligation of the Master
Servicer pursuant to the terms of an Agreement, such as, by way of
illustration, but not in limitation of the generality of the foregoing,
filing or recording an Uniform Commercial Code assignment of a financing
statement or an assignment of Mortgage with respect to a Mortgage Loan or
obtaining a consent, approval, order, etc. in connection with a
foreclosure; or if any such consent, approval, authorization, order,
registration, filing or notice (not described in the exception to the
immediately preceding clause) is required, the Master Servicer has
obtained, made or given the same. To such counsel's knowledge, and based in
part upon the Seller's written representations to such counsel, the Seller
is not required to obtain the consent, approval, authorization or order of,
to register or file with, or to give notice to, any court or governmental
agency or body of the State of Delaware (under the General Corporation Law
thereof), the State of Missouri, the State of New York or the United States
of America in order to execute, deliver, perform and comply with the terms
of, or for the consummation of the transactions of the Seller contemplated
by, the Pooling and Servicing Agreement, the Insurance Agreement or the or
the Underwriting Agreement except any consent, approval, authorization,
order, registration, filing or notice (A) as may be required under state
securities, real estate syndication or Blue Sky laws in connection with the
offering and sale of the Class A Certificates (as to which we express no
opinion whatsoever) or (B) which is a future obligation of the Seller
pursuant to the terms of Pooling and Servicing Agreement, the Insurance
Agreement or the Underwriting Agreement, such as, by way of illustration,
but not in limitation of the generality of the foregoing, filing or
recording an Uniform Commercial Code assignment of a financing statement or
an assignment of Mortgage with respect to a Mortgage Loan; or if any such
consent, approval, authorization, order, registration, filing or notice
(not described in the exception to the immediately preceding clause) is
required, the Seller has obtained, made or given the same.
(viii) The Registration Statement is effective under the 1933 Act, and
to such counsel's knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued under the 1933 Act or
proceedings therefore initiated or threatened by the Commission.
(ix) The conditions to the use by the Depositor of a registration
statement on Form S-3 under the 1933 Act, as set forth in the General
Instructions to Form S-3 have been satisfied with respect to the
Registration Statement. To such counsel's knowledge, and based in part upon
the Depositor's representations to such counsel, there are no contracts or
documents of any of the Transaction Parties which are required to be filed
as exhibits to the Registration Statement pursuant to the 1933 Act or the
Rules and Regulations thereunder which have not been so filed. The
statements set forth in each of the Base Prospectus and the Prospectus
Supplement under the captions "RISK FACTORS -- Legal Considerations" and
"ERISA CONSIDERATIONS" and the statements set forth in the Base Prospectus
under the caption "CERTAIN LEGAL ASPECTS OF THE PRIMARY ASSETS", in each
case insofar as such statements purport to summarize matters of state or
federal law or legal conclusions with respect thereto, have been prepared
or reviewed by such counsel and provide a fair summary of such law or
conclusions.
(x) To such counsel's knowledge, and based in part upon the Depositor's
representations to such counsel, there are no actions, suits or proceedings
against the Depositor (or to which the property of the Depositor is
subject) pending or overtly threatened in writing before any court,
governmental agency or arbitrator which (A) question, directly or
indirectly, the validity or enforceability of any of the Pooling and
Servicing Agreement, the Insurance Agreement or the Underwriting Agreement
or (B) could reasonably be expected to materially and adversely affect the
Depositor's financial condition, business or properties taken as a whole or
the validity or enforceability of any of such Agreements or the
Certificates or (C) could reasonably be expected to materially and
adversely affect the ability of the Depositor to perform its obligations
under any of such agreements. To such counsel's knowledge, and based in
part upon the Master Servicer's representations to such counsel, there are
no actions, suits or proceedings against the Master Servicer (or to which
the property of the Master Servicer is subject) pending or overtly
threatened in writing before any court, governmental agency or arbitrator
which (D) question, directly or indirectly, the validity or enforceability
of any of the Agreements, or (E) could reasonably be expected to materially
and adversely affect the Master Servicer's financial condition, business or
properties taken as a whole or the validity or enforceability of any
Agreement or the Certificates or (F) could reasonably be expected to
materially and adversely affect the ability of the Master Servicer to
perform its obligations under the Agreements. To such counsel's knowledge,
and based in part upon the Seller's representations to such counsel, there
are no actions, suits or proceedings against the Seller (or to which the
property of the Seller is subject) pending or overly threatened in writing
before any court, governmental agency or arbitrator which (G) question,
directly or indirectly, the validity or enforceability of any of the
Pooling and Servicing Agreement,
the Insurance Agreement or the Underwriting Agreement or (H) could
reasonably be expected to materially and adversely affect the Seller's
financial condition, business or properties taken as a whole or the
validity or enforceability of any of such agreements or the Certificates or
(I) could reasonably be expected to materially and adversely affect the
ability of the Seller to perform its obligations under such agreements.
(xi) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended, and neither
the Depositor nor the Trust Fund is required to be registered under the
Investment Company Act of 1940, as amended.
(xii) In connection with such counsel's participation in the
preparation of the Registration Statement and the Prospectus, such counsel
has not independently verified the accuracy, completeness or fairness of
the statements contained therein, and, without limiting the generality of
the foregoing, such counsel has not, with the opinion recipients' consent,
reviewed any loan files relating to the Mortgage Loans. The limitations
inherent in such counsel's participation in the preparation of the
Registration Statement and the Prospectus and the knowledge available to
such counsel are such that such counsel is unable to assume, and does not
assume, any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement and the Prospectus.
On the basis of such counsel's participation in the preparation of the
Registration Statement and the Prospectus as described above and such
counsel's participation in conferences and telephone conversations with
representatives of the Depositor, the Seller, the Master Servicer, the
Underwriters and others at which the contents of the Registration Statement
and the Prospectus were discussed, and relying as to facts necessary to the
determination of materiality to the extent such counsel may do so in the
exercise of such counsel's professional responsibility upon the
certificates and statements of officers and other representatives of the
Depositor, the Seller, the Master Servicer and others, no facts have come
to such counsel's attention that lead such counsel to believe that as of
the date hereof, the Registration Statement or the Prospectus (excluding
any financial or statistical data contained therein, the sections of the
Base Prospectus and the Prospectus Supplement captioned "FEDERAL INCOME TAX
CONSEQUENCES", the section of the Base Prospectus captioned "PLAN OF
DISTRIBUTION" and the sections of the Prospectus Supplement captioned "NF
INVESTMENTS, INC.", "CREDIT ENHANCEMENT -- Certificate Insurance Policy",
"CREDIT ENHANCEMENT -- The Certificate Insurer", "UNDERWRITING" and "REPORT
OF EXPERTS", as to which such counsel does not comment) contains any untrue
statement of a material fact or omits to state 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.
Such counsel's opinion letters may express its reliance as to factual
matters upon the representations and warranties made by the Block Transaction
Parties and on certificates or other documents furnished by officers of the
Block Transaction Parties. In addition to the qualifications with respect to the
enforceability opinions under paragraph (iii) above, the other opinions set
forth in such opinion letters will be subject to such qualifications as Xxxxxxxx
& Xxxxxx L.L.P. customarily makes with respect to such opinions in the manner
that Xxxxxxxx & Xxxxxx L.L.P. customarily makes such qualifications.
(c) The Underwriters shall have received the favorable opinion of counsel
to NFI, dated the date of the Closing Date, addressed to the Underwriters and in
form and scope satisfactory to counsel to the Underwriters, to the effect that,
with respect to NFI:
(i) NFI has been organized and is subsisting and in good standing as a
corporation under the Business Corporation Law of the State of Georgia,
with the corporate power to conduct its business as described in the
Prospectus.
(ii) NFI has the corporate power to enter in to its Subservicing
Agreement with the Master Servicer.
(iii) NFI is duly authorized under relevant statues, laws and court
decisions, to conduct business in the various jurisdictions in which
management has certified, that it currently conducts business, except where
failure to be so permitted or failure to be so authorized will not have a
material adverse effect on its business or financial condition.
(iv) The Subservicing Agreement has been duly authorized and when it is
duly executed and delivered by NFI and the other parties thereto and when
the other parties thereto have duly authorized and executed the
Subservicing Agreement it will be enforceable against NFI in accordance
with its terms.
(v) Except as may be disclosed in the Subservicing Agreement, the
execution and delivery of the Subservicing Agreement by NFI will not
violate any provision of its Articles of Incorporation or By-laws or other
governing documents, or to our knowledge, any statute, order or regulation
applicable to NFI of any court or regulatory body, administrative agency or
governmental body having jurisdiction over NFI.
(vi) To such counsel's knowledge there are no actions, proceedings or
investigations pending before or, threatened by any court, administrative
agency or other tribunal to which NFI is a party or of which any of its
respective properties is the subject (A) which if determine adversely to
NFI would have a material adverse effect on the business or financial
condition of NFI, (B) asserting the invalidity of the Subservicing
Agreement, (C) seeking to prevent the consummation by NFI of any of the
transactions contemplated by
the Subservicing Agreement, or (D) which might materially and adversely
affect the performance by the NFI of its obligations under, or the validity
or enforceability of the Agreement.
(d) The Underwriters shall have received the favorable opinion of counsel
to Option One, dated the date of the Closing Date, addressed to the Underwriters
and in form and scope satisfactory to counsel to the Underwriters, to the effect
that, with respect to Option One:
(i) Option One is a duly incorporated, validly existing corporation and
in good standing under the laws of the State of California.
(ii) Option One has all requisite power and authority under the General
Corporation Law of the State of California to execute, deliver and perform
its obligations under its Subservicing Agreement.
(iii) The execution, delivery and performance of its Subservicing
Agreement have been duly authorized by all requisite corporate action on
the part of Option One, and its Subservicing Agreement has been duly
executed and delivered by Option One and is the legal, valid and binding
obligation of Option One enforceable against Option One in accordance with
its terms.
(iv) Option One's execution, delivery and performance of its
obligations under its Subservicing Agreement will not (A) conflict with the
Certificate of Incorporation or Bylaws of Option One or (B) violate
applicable provisions of federal, Missouri, or New York statutory law or
regulation or the General Corporation Law of the State of California, the
violation of which would have a material adverse effect on the ability of
Option One to perform its obligations under its Subservicing Agreement.
(v) To such counsel's knowledge, Option One's execution and delivery
of, and its performance of its obligations under, its Subservicing
Agreement will not conflict with, result in a breach or violation of,
constitute a default or an event of acceleration under, or result in the
creation or imposition of any lien, charge or encumbrance upon the property
or assets of Option One pursuant to the terms of, (A) any indenture,
mortgage, deed of trust, loan agreement or other material agreement (other
than servicing agreements entered into prior to the date of its
Subservicing Agreement) or instrument known to such counsel to which the
Depositor is a party or by which it or its property is bound or (B) any
order, judgment or decree of any State of Missouri, State of New York or
United States court, administrative agency or governmental instrumentality
applicable to Option One which is known to such counsel, the conflict with
which, or the breach, violation, default, acceleration or creation or
imposition of which, would have a material adverse effect on the ability of
Option One to perform its obligations under the Subservicing Agreement.
(vi) To such counsel's knowledge, Option One is not required to obtain
the consent, approval, authorization or order of, or to register or file
with, or to give notice to, any court or governmental agency or body of the
State of California (under the General Corporation Law thereof), the State
of Missouri, the State of New York or the United States of America in order
to execute, deliver, perform and comply with the terms of, or for the
consummation by Option One of the transactions contemplated by its
Subservicing Agreement, except any consent, approval, authorization, order,
registration, filing or notice (A) which is a future obligation of Option
One pursuant to the terms of its Subservicing Agreement, such as, by way of
illustration, but not in limitation of the generality of the foregoing,
filing or recording a Uniform Commercial Code assignment of a financing
statement or an assignment of Mortgage with respect to a Mortgage Loan or
obtaining a consent, approval, order, etc. in connection with a
foreclosure; or (B) if any such consent, approval, authorization, order,
registration or qualification (not described in the exception to the
immediately preceding clause) is required, Option One has obtained, made or
given the same.
(vii) To such counsel's knowledge, there are no actions, suits or
proceedings against Option One (or to which the property of Option One is
subject) pending or overtly threatened in writing before any court,
governmental agency or arbitrator which (A) question, directly or
indirectly, the validity or enforceability of its Subservicing Agreement or
(B) could reasonably be expected to materially and adversely affect Option
One's financial condition, business or properties taken as a whole or the
validity or enforceability of its Subservicing Agreement or (C) could
reasonably be expected to materially and adversely affect the ability of
Option One to perform its obligations under its Subservicing Agreement.
Such counsel's opinion letters may express its reliance as to factual
matters upon the representations and warranties made by Option One and on
certificates or other documents furnished by officers of Option One. In addition
to the qualifications with respect to the enforceability opinions under
paragraph (iii) above, the other opinions set forth in such opinion letters will
be subject to such qualifications as Xxxxxxxx & Xxxxxx L.L.P. customarily makes
with respect to such opinions in the manner that Xxxxxxxx & Xxxxxx L.L.P.
customarily makes such qualifications.
(e) The Underwriters shall have received the favorable opinion of counsel
to the Trustee, dated the date of the Closing Date, addressed to the
Underwriters and in form and scope satisfactory to counsel to the Underwriters,
to the effect that:
(i) The Trustee has duly authorized, executed and delivered the Pooling
and Servicing Agreement and the Insurance Agreement, which constitute the
valid and legally binding agreements of the Trustee and are enforceable
against the Trustee in accordance with their terms, subject, as to
enforcement of remedies, (A) to applicable bankruptcy, insolvency,
reorganization, and other similar laws affecting the rights of creditors
generally and (B) to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
(ii) The Trustee has duly executed and countersigned the Certificates
issued on the date thereof on behalf of the Trust.
(iii) The execution and delivery by the Trustee of the Pooling and
Servicing Agreement and the Insurance Agreement and the performance by the
Trustee of its obligations thereunder do not conflict with or result in a
violation of the Organization Certificate or Bylaws of the Trustee.
(iv) The Trustee has full power and authority to execute and deliver
the Pooling and Servicing Agreement, and the Insurance Agreement and to
perform its obligations thereunder.
(v) To the best of such counsel's knowledge, there are no actions,
proceedings or investigations pending or threatened against or affecting
the Trustee before or by any court, arbitrator, administrative agency or
other governmental authority which, if adversely decided, would materially
and adversely affect the ability of the Trustee to carry out the
transactions contemplated in the Pooling and Servicing Agreement and the
Insurance Agreement.
(vi) No consent, approval or authorization of, or registration,
declaration or filing with, any court or governmental agency or body of the
United States of America or any state thereof is required for the
execution, delivery or performance by the Trustee of the Pooling and
Servicing Agreement and the Insurance Agreement.
(f) The Underwriters shall have received the favorable opinion or opinions,
dated the date of the Closing Date, of Brown & Wood LLP, as counsel for the
Underwriters, with respect to the issuance of the Class A Certificates and the
sale of the Class A Certificates to the Underwriters, the Registration
Statement, this Agreement, the Prospectus and such other related matters as the
Underwriters may require.
(g) The Underwriters shall have received the favorable opinion, dated the
date of the Closing Date, of Xxxxx Xxxx, special counsel for the Certificate
Insurer, in form and scope satisfactory to counsel for the Underwriters, to the
effect that:
(i) The Certificate Insurer is a stock insurance corporation, duly
incorporated and validly existing under the laws of the State of New York.
The Corporation is validly licensed and authorized to issue each of the
Policies and perform its obligations under each of the Policies in
accordance with the terms thereof, under the laws of the State of New York.
(ii) The execution and delivery by the Certificate Insurer of each of
the Policies, the Insurance Agreement and the Insurance Indemnification
Agreement are within the corporate power of the Certificate Insurer and
have been authorized by all necessary corporate action on the part of the
Certificate Insurer; each of the Policies has been duly executed and is the
valid and binding obligation of the Certificate Insurer enforceable in
accordance with its terms except that the enforcement of the Policies may
be limited by laws relating to bankruptcy, insolvency, reorganization,
moratorium, receivership and other similar laws affecting creditors' rights
generally and by general principles of equity.
(iii) The Certificate Insurer is authorized to deliver the Insurance
Agreement and the Insurance Indemnification Agreement and each of the
Insurance Agreement and the Insurance Indemnification Agreement has been
duly executed and is a valid and binding obligation of the Certificate
Insurer enforceable in accordance with its terms except that the
enforcement of the Insurance Agreement and the Insurance Indemnification
Agreement may be limited by laws relating to bankruptcy, insolvency,
reorganization, moratorium, receivership and other similar laws affecting
creditors' rights generally and by general principles of equity and, in the
case of the Insurance Indemnification Agreement, public policy
considerations as to rights of indemnification for violations of federal
and state securities laws.
(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
Certificate Insurer, the lack of which would adversely affect the validity
or enforceability of each of the Policies, the Insurance Agreement or the
Insurance Indemnification Agreement; to the extent required by applicable
legal requirements that would adversely affect the validity or
enforceability of each of the Policies, the form of each of the Policies
has been filed with, and approved by, all governmental authorities having
jurisdiction over the Certificate Insurer in connection with the Policies.
(v) To the extent that either of the Policies constitute a security
within the meaning of Section 2(1) of the 1933 Act, it is a security that
is exempt from the registration requirements of the 1933 Act.
(vi) The information set forth under the caption
"CREDIT ENHANCEMENT-Certificate Insurance Policies"
in the Prospectus
Supplement, insofar as such statements constitute a description of the
Policies, accurately summarizes the Policies.
(h) The Underwriters shall have received an opinion, dated the date of the
Closing Date, of Xxxxxxxx & Xxxxxx L.L.P. as counsel to the Master Servicer, the
Seller and the Depositor, addressed to the Certificate Insurer, Bankers Trust
Company of California, N.A., Standard & Poor's Ratings Services, a division of
The McGraw Hill Companies, Xxxxx'x Investors Service, Inc. and the Underwriters,
relating to the true sale of the Mortgage Loans (i) by the Seller to the
Depositor, and (ii) by the Depositor to the Trust.
(i) Each of the Transaction Parties shall have furnished to the
Underwriters a certificate signed on behalf of such Transaction Party by an
accounting or financial officer thereof, dated the date of the Closing Date, as
to (i) the accuracy of the representations and warranties of such Transaction
Party herein at and as of the Closing Date, (ii) there being no legal or
governmental proceedings pending, other than those, if any, referred to in the
Prospectus or the Prospectus as amended or supplemented, as the case may be, to
which such Transaction Party is a party or of which any property of such
Transaction Party is the subject, which, in the judgment of such Transaction
Party, have a reasonable likelihood of resulting in a material adverse change in
the financial condition, shareholders' equity or results of operations of such
Transaction Party or having a material adverse effect on the ability to perform
its obligations under the Agreements; and to the best knowledge of each such
Transaction Party, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others, (iii) the performance by such
Transaction Party of all of its respective obligations hereunder to be performed
at or prior to the Closing Date, and (iv) such other matters as you may
reasonably request.
(j) The Trustee shall have furnished to the Underwriters a certificate of
the Trustee, signed by one or more duly authorized officers of the Trustee,
dated the date of the Closing Date, as to the due authorization, execution and
delivery of the Pooling and Servicing Agreement by the Trustee and the
acceptance by the Trustee of the trust created by the Pooling and Servicing
Agreement and the due execution and delivery of the Certificates by the Trustee
thereunder and such other matters as you shall reasonably request.
(k) The Indemnification Agreement shall have been entered into between the
Certificate Insurer, the Seller, the Master Servicer and the Underwriters, in
which the Certificate Insurer will represent to the Underwriters, among other
representations, that (i) the information under the captions "CREDIT
ENHANCEMENT--The Certificate Insurer," and "CREDIT ENHANCEMENT--Certificate
Insurance Policies" (the "Insurer Information") in the Prospectus Supplement was
approved by the Certificate Insurer and is limited and does not purport to
provide the scope of disclosure required to be included in a prospectus for a
registrant under the Securities Act of 1933, in connection with the public offer
and sale of
securities of such registrant. Within such limited scope of disclosure, the
Insurer Information does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading and (ii) there
has been no change in the financial condition of the Certificate Insurer since
March 31, 1997 which would have a material adverse effect on the Certificate
Insurer's ability to meet its obligations under the Policies and shall contain
provisions, reasonably satisfactory to the Underwriters, for the indemnification
of the Underwriters.
(l) The Policies shall have been issued by the Certificate Insurer pursuant
to the Insurance Agreement and shall have been duly countersigned by an
authorized agent of the Certificate Insurer, if so required under
applicable state law or regulation.
(m) The Class A Certificates shall have been rated "AAA" by Standard &
Poor's Ratings Services and "Aaa" by Xxxxx'x Investors Service, Inc.
(n) Counsel to the Transaction Parties shall have furnished to the
Underwriters any opinions supplied to Standard & Poor's Ratings Services,
Xxxxx'x Investors Service, Inc. or the Certificate Insurer relating to the Class
A Certificates and such opinions shall state that
the Underwriters may rely thereon.
(o) The Underwriters shall have received from each of Deloitte & Touche
LLP, KPMG Peat Xxxxxxx, Xxxxxx & Xxxxx or other independent certified public
accountants acceptable to the Underwriters, a letter, dated as of the date of
this Agreement in the form heretofore agreed to.
(p) Prior to the Closing Date, Brown & Wood LLP, as counsel for the
Underwriters, 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 of the Class A Certificates and the sale of the Class A Certificates to
the Underwriters 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 Transaction Parties in connection with the issuance
of the Class A Certificates and the sale of the Class A Certificates to the
Underwriters as herein contemplated shall be satisfactory in form and substance
to the Underwriters and Brown & Wood LLP.
(q) Since the respective dates as of which information is given in the
Prospectus, there shall not have been any change, or any development involving a
prospective change, in or affecting the general affairs, management, financial
condition, stockholders' equity or results of operations of any of the
Transaction Parties or the Certificate Insurer otherwise than as set forth or
contemplated in the Prospectus, the effect of which is in the judgment of the
Underwriters so material and adverse as to make it impracticable or inadvisable
to proceed with the public offering or
the delivery of the Class A Certificates on the terms and
in the manner contemplated in the Prospectus.
(r) Subsequent to the execution and delivery of this Underwriting
Agreement, there shall not have occurred any downgrading in the rating of any
securities of the Seller and the Master Servicer, or any public announcement
that any such organization has under surveillance or review its rating of any
securities of any of the Transactional Parties or the Certificate Insurer (other
than an announcement with positive implications of a possible upgrade, and no
implication of a possible downgrade, of such rating).
(s) Prior to the Closing Date, each of the Transaction Parties shall have
furnished to you such further information, certificates and documents as you may
reasonably request.
If any condition specified in this Section 6 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by you by
notice to the Depositor at any time at or prior to the Closing Date, and such
termination shall be without liability of any party to any other party except as
provided in Section 7.
SECTION 7. Payment of Expenses. Block Financial Corporation agrees to pay
all expenses incident to the performance of their obligations under this
Agreement, including without limitation those related to (i) the filing of the
Registration Statement and all amendments thereto, (ii) the preparation,
issuance and delivery of the Certificates, (iii) the fees and disbursements of
Xxxxxxxx & Xxxxxx L.L.P., as special counsel for the Transactional Parties, and
of Deloitte & Touche LLP, accountants of the Master Servicer, the Seller and the
Depositor, (iv) the first $10,000.00 of fees and expenses, of Brown and Wood
LLP, as special tax counsel for the Depositor, (v) the qualification of the
Class A Certificates under securities and Blue Sky laws and the determination of
the eligibility of the Class A Certificates for investment in accordance with
the provisions of subsection 5(f) including filing fees, (vi) the printing and
delivery to the Underwriters, in such quantities as you may reasonably request,
of copies of the Registration Statement and Prospectus and all amendments and
supplements thereto, and of any Blue Sky Survey, (vii) the delivery to the
Underwriters, in such quantities as you may reasonably request, of copies of the
Agreements, (viii) the fees charged by nationally recognized statistical rating
agencies for rating the Class A Certificates, (ix) the reasonable fees and
expenses of the Trustee and its counsel and (x) the reasonable fees and expenses
of the Certificate Insurer and its counsel.
If this Agreement is terminated by you in accordance with the provisions of
Section 6, the Master Servicer, the Seller and the Depositor shall reimburse you
for all reasonable out-of-pocket expenses, including the fees and disbursements
of Brown & Wood LLP, as counsel for the Underwriters.
SECTION 8. Indemnification. (a) Block Financial
Corporation and the Depositor jointly and severally agree
to indemnify and hold harmless the Underwriters and each
person, if any, who controls the Underwriters within the
meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the information deemed to be a part
of the Registration Statement pursuant to Rule 430A under the 1933 Act, if
applicable, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, unless (a) such untrue statement or omission or alleged untrue
statement or omission was made in reliance upon and in conformity with
written information furnished to the Depositor by the Underwriters or the
Certificate Insurer expressly for use in the Registration Statement (or any
amendment thereto), on (b) such untrue statement or omission or alleged
untrue statement or omission was made in any Preliminary Prospectus and
corrected in the Prospectus and (A) any such loss, claim, damage or
liability suffered or incurred by an Underwriter resulted from an action,
claim or suit by any person who purchased the Class A Certificates from
such Underwriter in the offering and (B) such Underwriter failed to deliver
or provide a copy of the Prospectus dated July 29, 1997 to such person at
or prior to the confirmation of the sale of such Class A Certificates in
any case where such delivery is required by the 1933 Act;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Depositor; and
(iii) against any and all reasonable expense whatsoever (including the
reasonable fees and disbursements of counsel chosen by you) as reasonably
incurred in investigating, preparing to defend or defending against or
appearing as a third party witness with respect to any litigation, or
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue statement
or omission, as such expense is
incurred and to the extent that any such expense is
not paid under (i) or (ii) above.
This indemnity agreement will be in addition to any liability which any of
the Master Servicer, the Seller or the Depositor may otherwise have.
(b) (i) Each of the Underwriters severally and not jointly agrees to
indemnify and hold harmless Block Financial Corporation and the Depositor, each
of their directors, each of their officers who signed the Registration
Statement, and each person, if any, who controls Block Financial Corporation
and/or the Depositor within the meaning of Section 15 of the 1933 Act (each, an
"Indemnified Party") against any and all loss, liability, claim, damage and
expense, as incurred, described in the indemnity contained in subsection (a)(i)
of this Section 8, arising out of any untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the Seller
and/or to the Depositor by such Underwriter expressly for use in the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto). The parties acknowledge that the statements
set forth in the last paragraph of the cover page of the Prospectus Supplement
and in the Section "Underwriting" in the Prospectus Supplement constitute the
only information furnished in writing by the Underwriters for inclusion in the
Prospectus.
(ii) Each Underwriter individually agrees to indemnify and hold
harmless each Indemnified Party against any and all loss, liability, claim,
damage and expense, as incurred, described in the indemnity contained in
subsection (a)(ii) of this Section 8, arising out of any untrue statements or
omissions, or alleged untrue statements or omissions, made in the Computational
Materials prepared and used by such Underwriter; provided, however, that such
Computational Materials shall not include any Mortgage Loan Information or any
errors in the mathematical calculations reflected in such Computational
Materials to the extent such errors result from such Mortgage Loan Information;
and provided further, that any such omission or alleged omission relating to the
Computational Materials shall be determined by reading such Computational
Materials in conjunction with the Prospectus as an integral document and in
light of the circumstances under which such statements in the Computational
Materials and Prospectus were made. "Computational Materials" shall mean the
"Computational Materials" as defined in the No-Action Letter of May 20, 1994
issued by the Commission to Xxxxxx, Xxxxxxx Acceptance Corporation I, Xxxxxx,
Xxxxxxx & Co. Incorporated and Xxxxxx Structured Asset Corporation, the
No-Action Letter of May 27, 1994 issued by the Commission to the Public
Securities Association and the No-Action Letter of March 9, 1995 issued by the
Commission to the Public Securities Association (the "SEC No-Action Letters").
"Computational Materials" shall include only those Computational Materials that
have been prepared or delivered to prospective investors by or at the direction
of the Underwriters. In connection
with the use of Computational Materials, the Underwriters shall comply with all
applicable requirements of the SEC No-Action Letters. "Mortgage Loan
Information" shall mean information relating to the Mortgage Loans furnished by
Block Financial Corporation, the Depositor, the Master Servicer or the Seller to
either of the Underwriters upon which the mathematical calculations reflected in
the Computational Materials of the Underwriters are based. All information
included in the Computational Materials shall be generated based on
substantially the same methodology and assumptions that are used to generate the
information in the Prospectus Supplement as set forth therein; provided,
however, that the Computational Materials may include information based on
alternative methodologies or assumptions if specified therein. The Depositor
will timely file with the Commission in current reports on Form 8-K under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act") all
information with respect to the Securities which constitutes Computational
Materials, in accordance with and in the time frames set forth in the SEC
No-Action Letters, provided, however, that the Depositor shall not be obligated
to file any Computational Materials with the Commission that (i) in the
reasonable determination of the Depositor and the Underwriters are not required
to be filed pursuant to the SEC No-Action Letters or (ii) have been determined
to contain any material error or omission, provided that, at the request of an
Underwriter, the Depositor will file Computational Materials that contain a
material error or omission if clearly marked "superseded by materials dated
________" and accompanied by corrected Computational Materials that are marked
"material previously dated _________, as corrected".
(c) Each indemnified party shall give prompt notice to each indemnifying
party of any action commenced against it with respect to which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have hereunder unless it has been
materially prejudiced by such failure to notify or from any liability which it
may have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action. In no
event shall the indemnifying parties be liable for the fees and expenses of more
than one counsel for all indemnified parties in connection with any one action
or separate but similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances, unless (i) if the defendants
in any such action include one or more of the indemnified parties and the
indemnifying party, and one or more of the indemnified parties shall have
employed separate counsel after having reasonably concluded that there may be
legal defenses available to it or them that are different from or additional to
those available to the indemnifying party or to one or more of the other
indemnified parties or (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the commencement of
the action.
SECTION 9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 8 is for any reason held to be
unenforceable by the indemnified parties although applicable in accordance with
its terms, Block Financial Corporation and the Depositor on the one hand, and
the Underwriters, on the other, shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by Block Financial Corporation and/or the Depositor
and one or more of the Underwriters, in such proportion as shall be appropriate
to reflect the relative benefits to Block Financial Corporation and the
Depositor on the one hand and the Underwriters on the other in connection with
the matter to which the indemnification relates, which relative benefits shall
be deemed to be in such proportions the Underwriters shall be responsible for
that portion represented by the percentage that the underwriting discount on the
cover of the Prospectus on the Closing Date bears to the initial public offering
price for the Class A Certificates as set forth thereon, and Block Financial
Corporation and the Depositor shall be jointly and severally responsible for the
balance or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law or otherwise prohibited hereby, 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 Block Financial Corporation and the
Depositor on the one hand and the Underwriters or Underwriter, as applicable, on
the other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, or actions in respect thereof, as well
as any other relevant equitable considerations; provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by Block Financial Corporation
or the Depositor, on the one hand, or the Underwriters, on the other hand, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. Block Financial
Corporation, the Depositor and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this Section 9 were to be determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to in the first sentence of this
Section 9. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
the first sentence of this Section 9 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating, preparing to defend or defending against any action or claim that
is the subject of this Section 9. Notwithstanding the provisions of this Section
9, no Underwriter shall be required to contribute any amount in excess of the
amount by which the total underwriting commission received by such Underwriter
for the sale of the Class A Certificates underwritten by such Underwriter and
distributed to the public were offered to the public exceeds the amount of any
damages which such
Underwriter has otherwise been required to pay in respect of such losses,
liabilities, claims, damages and expenses. The Underwriters' obligations in this
Section 9 to contribute are several in proportion to their respective
underwriting obligations and not joint. Each party entitled to contribution
agrees that upon the service of a summons or other initial legal process upon it
in any action instituted against it in respect to which contribution may be
sought, it shall promptly give written notice of such service to the party or
parties from whom contribution may be sought, but the omission so to notify such
party or parties of any such service shall not relieve the party from whom
contribution may be sought for any obligation it may have hereunder or otherwise
(except as specifically provided in Section 8 hereof). For purposes of this
Section 9, each person, if any, who controls any Underwriter within the meaning
of Section 14 of the 1933 Act shall have the same rights to contribution as such
Underwriter, and each respective director of Block Financial Corporation and/or
the Depositor, each respective officer of Block Financial Corporation and/or the
Depositor who signed the Registration Statement, and each person, if any, who
controls Block Financial Corporation and/or the Depositor within the meaning of
Section 14 of the 1933 Act shall have the same rights to contribution as Block
Financial Corporation and/or the Depositor.
SECTION 10. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or
any statement set forth in any of the certificates of officers of the Seller or
the Depositor submitted pursuant hereto shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of the
Underwriters or controlling person thereof, or by or on behalf of the Master
Servicer, the Seller or the Depositor and shall survive delivery of any
Underwritten Certificates to the Underwriters.
SECTION 11. Termination of Agreement. This Agreement shall be subject to
termination by notice given by you to the Depositor if (i) any change, or any
development involving a prospective change, in or affecting particularly the
business or properties of the Trust, any of the Transaction Parties or the
Certificate Insurer which, in your judgment, materially impairs the investment
quality of the Class A Certificates or makes it impractical or inadvisable to
market the Class A Certificates; (ii) any downgrading in the rating of any
securities of the Trust, the Transactions Parties or the Certificate Insurer,
the Seller or the Depositor by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act), or any
public announcement that any such organization has under surveillance or review
its rating of any securities of the Trust, any of the Transaction Parties or the
Certificate Insurer (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating); (iii) any suspension or limitation of trading in securities generally
on the New York Stock Exchange, or any setting of minimum prices for trading on
such exchange; (iv) any suspension of trading of any securities of the Trust,
the Transaction Parties or the
Certificate Insurer on any exchange or in the over-the-counter market; (v) any
banking moratorium declared by Federal or New York authorities; or (vi) any
outbreak or escalation of major hostilities in which the United States is
involved, any declaration of war by Congress, or any other substantial national
or international calamity or emergency if, in your judgment, the effect of any
such outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the sale of and payment
for the Class A Certificates. In the event of any such termination, the covenant
set forth in subsection 5(b), the provisions of Section 7, the indemnity
agreement set forth in Section 8, and the provisions of Sections 9 and 14 shall
remain in effect.
SECTION 12. Default by One or More of the Underwriters. If one of the
Underwriters participating in the public offering of the Class A Certificates
shall fail on the Closing Date to purchase the Class A Certificates which it is
obligated to purchase hereunder (the "Defaulted Certificates"), then the
non-defaulting Underwriter shall have the right, within 24 hours thereafter, to
make arrangements for it, or any other underwriter, to purchase all, but not
less than all, of the Defaulted Certificates in such amounts as may be agreed
upon and upon the terms herein set forth. If, however, you have not completed
such arrangements within such 24-hour period, then:
(i) if the aggregate principal amount of Defaulted Certificates does
not exceed 10% of the aggregate principal amount of the Class A
Certificates to be purchased pursuant to this Agreement, the non-defaulting
Underwriter named in this Agreement shall be obligated to purchase the full
amount thereof, or
(ii) if the aggregate principal amount of Defaulted Certificates
exceeds 10% of the aggregate principal amount of the Class A Certificates
to be purchased pursuant to this Agreement, this Agreement shall terminate,
without any liability on the part of the non-defaulting Underwriter.
No action taken pursuant to this Section 12 shall relieve the defaulting
Underwriter from the liability with respect to any default of such Underwriter
under this Agreement.
In the event of a default by any Underwriters as set forth in this Section
12, either you or the Seller shall have the right to postpone the Closing Date
for a period not exceeding five Business Days in order that any required changes
in the Registration Statement or Prospectus or in any other documents or
arrangements may be effected.
SECTION 13. Notices. All notices and other
communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the
Underwriters shall be directed to them at the address set
forth on the first page hereof. Notices to the Master
Servicer, the Seller or the Depositor shall be
directed to Block Mortgage Finance, Inc., 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxx
Xxxx, Xxxxxxxx 00000, to the attention of the Secretary, with a copy to the
Treasurer.
SECTION 14. Parties. This Agreement shall inure to the benefit of and be
binding upon the Underwriters, the Master Servicer, the Seller and the
Depositor, and their respective successors. Nothing expressed or mentioned in
this Agreement is intended nor shall it be construed to give any person, firm or
corporation, other than the parties hereto and their respective successors and
the controlling persons and officers and directors referred to in Sections 8 and
9 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or with respect to this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties and their respective
successors and said controlling persons and officers and directors and their
heirs and legal representatives (to the extent of their rights as specified
herein) and except as provided above for the benefit of no other person, firm or
corporation. No purchaser of Class A Certificates from the Underwriters shall be
deemed to be a successor by reason merely of such purchase.
SECTION 15. Governing Law and Time. This Agreement shall be governed by the
law of the State of New York and shall be construed in accordance with such law.
Specified times of day refer to New York City time.
SECTION 16. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original of any party whose signature appears
on it, and all of which shall together constitute a single instrument.
If the foregoing is in accordance with the Underwriters' understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement among the
Underwriters, the Master Servicer, the Seller and the Depositor in accordance
with its terms.
Very truly yours,
BLOCK MORTGAGE FINANCE, INC. as
Depositor
By: ____________________________________
Name: __________________________________
Title: _________________________________
COMPANION MORTGAGE CORPORATION, as Seller
By: ____________________________________
Name: __________________________________
Title: _________________________________
BLOCK FINANCIAL CORPORATION, as Master Servicer
By: ____________________________________
Name: __________________________________
Title: _________________________________
CONFIRMED AND ACCEPTED, as of
the date first above written:
XXXXXX XXXXXXX & CO. INCORPORATED
as Representative of the Underwriters
By: ____________________________________
Name: __________________________________
Title: _________________________________
Schedule A
Underwriting
Class A-1 Class A-2 Class A-3 Class A-4 Class A-5 Class A-6
--------- --------- --------- ---------- --------- ---------
Underwriter Certificates Certificates Certificates Certificate Certificates Certificates
----------- ------------ ------------ ------------ ------------ ------------ ------------
Xxxxxx Xxxxxxx
& Co.
Incorporated
Certificate
Balance......... $22,668,000 $12,139,500 $6,252,500 $8,475,500 $5,503,500 $52,461,000
Price to Public..... 100.000000% 99.968750% 99.984375% 99.68750% 100.000000% 100.000000%
Underwriting
Discount............ 0.1700% 0.26500% 0.40006% 0.952546% 0.4520% 0.3000%
Purchase Price...... $22,629,464 $12,103,537 $6,226,513 $8,428,330 $5,478,624 $52,303,617
Salomon Brothers Inc
Certificate
Balance(1).......... $22,668,000 $12,139,500 $6,252,500 $8,475,500 $5,503,500 $52,461,000
Price to Public..... 100.000000% 99.968750% 99.984375% 99.968750% 100.000000% 100.000000%
Underwriting
Discount............ 0.1700% 0.26508% 0.400% 0.52546% 0.4520% 0.3000%
Purchase Price...... $22,629,464 $12,103,537 $6,226,513 $8,428,330 $5,478,624 $52,303,617
------------------
Subject to a permitted variance of plus or minus 5%, dependent upon the
principal balance of the Mortgage Loans as of the Cut-off Date in the Trust Fund
on the Closing Date.
