STRUCTURED MORTGAGE TRUST 1997-1
Collateralized Notes
NOTE PURCHASE AGREEMENT
March 26, 1997
Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. Introductory. Structured Mortgage Trust 1997-1, a Delaware
business trust (the "Issuer"), proposes, subject to the terms and conditions
stated herein, to sell to Bear, Xxxxxxx & Co. Inc., as initial purchaser (the
"Initial Purchaser"), approximately $199,893,850 aggregate principal amount of
Collateralized Notes (the "Notes") in the classes listed on Annex I attached
hereto (each a "Class"). The Notes will be issued pursuant to an Indenture to be
dated as of March 27, 1997 (the "Indenture") by and between the Issuer and State
Street Bank and Trust Company, a Massachusetts banking corporation, as Trustee
(the "Trustee"). The Notes will be secured by and interest and principal of the
Notes will be paid out of the cash flow (commencing with the March 1997
payments) from certain subordinated mortgage-backed securities as set forth on
Exhibit A attached hereto (the "Collateral"). The Collateral will be transferred
from Asset Investors Corporation, a Maryland corporation (the "Company"), to
Asset Investors Secured Financing Corporation, a Delaware corporation organized
by the Company as a special purpose entity (the "SPE"), pursuant to a Pooled
Certificate Transfer Agreement to be dated as of March 26, 1997 (the "AIC/SPE
Transfer Agreement") and from the SPE to the Issuer pursuant to the Trust
Agreement referred to below and subsequently, pursuant to the Indenture, pledged
by the Issuer to the Trustee to hold on behalf of the holders of the Notes, as
described in the Memoranda (as defined below).
The Issuer has been established pursuant to the Trust
Agreement (the "Trust Agreement") dated as of March 26, 1997 among the Company,
the SPE and Wilmington Trust Company, as owner trustee (the "Owner Trustee").
In connection with the sale of the Notes, the Company and the
Issuer are preparing, in consultation with the Initial Purchaser, upon execution
of this Agreement, a confidential offering memorandum (the "Memorandum"),
describing, among other things, the Notes. Such Memorandum, including any
revisions, amendments or supplements thereto and any accompanying exhibits, are
herein referred to as the "Memoranda."
Capitalized terms used and not otherwise defined herein shall
have the meanings given them in the Indenture.
2. Representations, Warranties and Agreements of the Company
and the SPE. The Company and the SPE represent and warrant jointly and severally
to and agree with the Initial Purchaser that:
(a) The Company and the SPE have been duly organized and are
validly existing and in good standing under the laws of the respective states of
their organization and the Issuer is validly existing as a business trust under
the Laws of the State of Delaware, in each case with the power and authority to
own its respective assets and to conduct its respective business as such assets
and as such business are presently owned or conducted, and each of the Company,
the SPE and the Issuer, as the case may be, has or on or before the Closing Date
will have the power and authority to enter into and perform its obligations
under this Agreement, and those of the AIC/SPE Transfer Agreement, the Trust
Agreement and the Indenture (collectively, the "Transaction Documents") to which
it is a party.
(b) The Company is duly qualified to do business as a foreign
corporation, in good standing, and has obtained all necessary licenses and
approvals in each jurisdiction where the failure to do so would have a potential
adverse effect on the Company's ability to perform its obligations hereunder,
under the Transaction Documents to which it is a party or under the Special
Servicing and Collateral Fund Agreements which relate to the Collateral and to
which it is a party as identified on Exhibit B (the "Special Servicing
Agreements").
(c) The Company, the SPE and the Issuer have the power,
authority and legal right to execute and deliver each of the Transaction
Documents to which it is a party and to carry out its terms; and the execution,
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delivery, and performance of such Transaction Documents and all of the documents
required pursuant thereto have been duly authorized by the Company, the SPE or
the Issuer, as applicable, by all necessary action.
(d) This Agreement has been duly and validly executed and
delivered by the Company, the SPE and the Issuer and, as of the Closing Date,
the Transaction Documents, when delivered by the Company, the SPE and/or the
Issuer, as applicable, will have been duly and validly executed and delivered by
the Company, the SPE and/or the Issuer, as applicable, and in each case
constitute or will constitute legal, valid and binding agreements of the
Company, the SPE and/or the Issuer, as applicable, enforceable against the
Company, the SPE and/or the Issuer, as applicable, in accordance with their
terms, subject, as to the enforcement of remedies, to applicable bankruptcy,
insolvency, reorganization, moratorium, receivership and similar laws affecting
creditors' rights generally and to general principles of equity (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law) and subject, in the case of this Agreement, to public policy
constraints regarding indemnification.
(e) The Notes have been duly and validly authorized by all
required action of the Issuer and, assuming due execution, authentication and
delivery by the Trustee in accordance with the Indenture, will be validly issued
and outstanding and will be enforceable in accordance with their terms and
entitled to the benefits and security provided by the Indenture subject, as to
the enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium, receivership and similar laws affecting creditors'
rights generally and to general principles of equity (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at law).
The Notes will be in all material respects in the form contemplated by the
Indenture. The information with respect to the Collateral set forth on Exhibit A
attached hereto is true and correct.
(f) Neither the execution, sale and delivery of the Notes, nor
the execution, delivery and performance of the Company's, the SPE's and/or the
Issuer's obligations under the Transaction Documents or the Notes nor the
consummation of any transactions contemplated by any of the Transaction
Documents or the Notes, nor the fulfillment of the terms thereof will conflict
with or violate, result in a breach of or constitute a default under any
organizational or other constituent document of or any statute applicable to the
Company, the SPE or the Issuer or any law, order, rule or regulation applicable
to the Company, the SPE or the Issuer of any court, regulatory body,
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administrative agency or governmental body having jurisdiction over the Company,
the SPE or the Issuer or the terms of any indenture, agreement, mortgage, deed
of trust or other agreement or instrument to which the Company, the SPE or the
Issuer is a party or by which any of them or any of their respective properties
are bound.
(g) There are no actions, proceedings or investigations
pending, or, to the knowledge of the Company or the SPE, threatened, before any
court, regulatory body, administrative agency or other tribunal or governmental
instrumentality (i) asserting the invalidity of any of the Transaction Documents
or the Notes, (ii) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by any of the Transaction
Documents, (iii) seeking any determination or ruling that might materially and
adversely affect the performance by the Company, the SPE or the Issuer of its
obligations under, or the validity or enforceability of, any of the Transaction
Documents or the Notes or (iv) that may adversely affect the Federal or state
income, excise, franchise or similar tax attributes of the Notes.
(h) The issuance of the Notes pursuant to the Indenture and
the sale of the Notes to the Initial Purchaser pursuant to this Agreement, the
compliance by the Company, the SPE and/or the Issuer with the other provisions
of the Transaction Documents and the Notes and the consummation of the other
transactions herein or therein contemplated do not and will not, under any
statute, regulation or rule of general applicability or any decision, order,
decree or judgment of any judicial or other governmental body applicable to the
Company or the Issuer, require the consent, approval, authorization, order,
registration or qualification of or with any court or governmental authority
except as have been obtained.
(i) No default exists on the part of the Company, the SPE or
the Issuer and no event has occurred which, with notice, lapse of time or both,
would constitute a default on the part of the Company, the SPE or the Issuer in
the due performance and observance of any term, covenant or condition of any
agreement to which the Company, the SPE or the Issuer is a party or by which any
of them is bound, which default is or would be material to the financial
condition, earnings, prospects, business or properties of the Company, the SPE
or the Issuer or which would have an adverse effect on the transactions
contemplated by the Transaction Documents.
(j) The Indenture is not required to be qualified under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
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(k) Any taxes, fees and other governmental charges in
connection with the execution and delivery of the Transaction Documents and the
execution, delivery and sale of the Notes have been or will be paid at or prior
to the Closing Date.
(l) The Memorandum as of its date will not, and any amendments
thereof or supplements thereto, as of their respective dates will not, and as of
the Closing Date the Memorandum as amended or supplemented, if amended or
supplemented, will not, include 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.
(m) The Company and the SPE have provided to the Initial
Purchaser all disclosure documents and trustee reports related to the
Collateral, to the extent such disclosure documents and trustee reports are
currently in the possession of the Company or the SPE and, upon request of the
Initial Purchaser, will provide to it copies of any additional disclosure
documents and pooling and servicing agreements or indentures related to the
Collateral. Neither the Company nor the Issuer has any knowledge that any such
disclosure documents or trustee reports are not true and correct in all material
respects.
(n) The Indemnity Agreements described in Exhibit C hereto
constitute the only indemnity or similar agreements procured by the Company
relating to the Collateral which are in effect on the date hereof, except for
two Indemnity Agreements dated August 30, 1995 and July 7, 1995 between the
Company and Xxxxxx Xxxxxxx & Co. Incorporated which, by their terms, is not
assignable. With the foregoing exception, the Company has the power and
authority to assign such agreements to the SPE, the SPE has the power and
authority to assign them to the Issuer and the Issuer has the power and
authority to assign them to the Trustee.
(o) Each Special Servicing Agreement is, and, to the extent a
consent has been received by the Company, following the transfer of the
Collateral to the SPE and then to the Issuer and thereafter the pledge thereof
to the Trustee will be, in full force and effect and the Company is entitled to
the benefits thereof and will exercise the rights provided therein on behalf of
the Trustee. Consents have been received from Servicers with respect to
approximately 72.1% of the aggregate Certificate Principal Balances of all of
the Pooled Certificates as of the Pooled Certificate Information Date.
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(p) The Notes meet the eligibility requirements set forth in
Rule 144A(d)(3) under the Securities Act of 1933, as amended (the "Securities
Act").
(q) None of the Company, the SPE nor the Issuer nor anyone
acting on their behalf, has offered, transferred, pledged, sold or otherwise
disposed of any Note of any Class, any interest in any Note of any Class or any
other similar security of any of them to, or solicited any offer to buy or
accept a transfer, pledge or other disposition of any Note of any Class, any
interest in any Note of any Class or any such other similar security from, or
otherwise approached or negotiated with respect to any Note of any Class, or any
other similar security of the Company, the SPE or the Issuer or of any entity
organized by the Company or the SPE, with any person in any manner, or made any
general solicitation by means of general advertising or in any other manner, or
taken any other action, that would constitute a distribution of the Notes under
the Securities Act or that would render the disposition of any Note of any Class
by the Initial Purchaser in accordance herewith a violation of Section 5 of the
Securities Act, or any state securities law, or require registration or
qualification pursuant thereto, require qualification of the Indenture under the
Trust Indenture Act or require registration of the Company or the Issuer under
the Investment Company Act of 1940, as amended, nor will the Company, the SPE or
the Issuer act, nor have any of them authorized or will any of them authorize
any person to act, in such manner with respect to any Note of any Class.
(r) The representations and warranties of the Company, the SPE
and the Issuer made or to be made in the Transaction Documents will be true and
correct as of the Closing Date. Such representations and warranties are made for
the benefit of the Initial Purchaser and each such representation and warranty
is so incorporated herein by this reference.
(s) Immediately prior to the pledge to the Trustee pursuant to
the Indenture, the Issuer will own the Collateral free and clear of any lien,
claim or encumbrance created by the Company, the SPE or the Issuer.
(t) On the Closing Date all of the trust certificates issued
by the Issuer will be held by the SPE and all outstanding securities of the SPE
will be held by AIC.
(u) The SPE's business purpose is limited as described in its
articles of incorporation and the SPE has one independent director.
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3. Purchase, Sale, and Delivery of Notes.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Issuer will sell to the Initial Purchaser, and the Initial Purchaser
agrees to purchase from the Issuer, all of the Notes at a purchase price at
least equal to the sum of (i) the Minimum Purchase Price, plus (ii) accrued
interest for the number of days in March 1997 up to but not including the
Closing Date based upon a year of 12 30-day months, plus (iii) the Issuer
Portion of any Excess Proceeds, and less (iv) the Placement and Structuring Fee.
For these purposes the "Minimum Purchase Price" means the sum
of the minimum purchase prices for each Class of Notes, as set forth on Annex I
hereto. The "Placement and Structuring Fee" means 1.8% of the sum of (i) the
Note Principal Balance of all of the Notes and (ii) the Imputed Principal
Balance of the Equity Interest. "Excess Proceeds" means the positive excess, if
any, of (A) the sum of (Y) the products of (i) the face amounts of the Class A,
Class B and Class C Notes and (ii) the price equivalent of the respective
average yield spread at pricing plus (Z) the face amount of the Class D Notes
multiplied by their actual average percentage price over (B) the sum of (Y) the
products of (i) the face amounts of the Class A, Class B and Class C Notes and
(ii) the price equivalent of the yield spread for each respective Class (+145
bps/10 year for the Class A Notes, +340 bps/10 year for the Class B Notes and
+725 bps/10 year for the Class C Notes, based on the yield of the 6.25% 10-Year
Treasury Note maturing February 15, 2007 as of February 20, 1997 of 6.387%) plus
(Z) 25% of the face amount of the Class D Notes. Yield spread shall be
determined for purposes of the foregoing assuming 175% PSA, 75% loss recovery
and 75% of the SDA curve. The "Issuer Portion of Excess Proceeds" means one
third of any Excess Proceeds in excess of $1.6 million.
Certain expenses required to be paid by the Company pursuant
to Section 6 hereof may be netted from the amounts paid to the Issuer hereunder.
In addition, an amount estimated to be at least sufficient to pay principal and
interest on the Notes and the Imputed Principal Payment and the Percentage Cash
Flow Payment on the Equity Interest on the April 1, 1997 Payment Date shall be
deducted from the amounts paid to the Issuer hereunder and provided to the
Trustee for deposit on the Closing Date in the Payment Account. For purposes of
determining the amount to be so deducted and deposited, it shall be assumed that
there are no losses on the Mortgage Loans and that prepayments are at a rate of
225% PSA. As provided in the Indenture, such amounts shall be invested in
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Eligible Investments. If such funds, including the proceeds of such Eligible
Investments, exceed the amount required for the initial payment Date, the excess
shall be paid to the Issuer on the Payment Date. If there are insufficient
funds, the Issuer shall provide any such excess. AIC and the SPE agree to make
such contributions as may be necessary to enable therefor.
(b) Delivery of and payment for each such Class of Notes being
purchased hereunder (the "Closing") shall be made at the offices of Stroock &
Stroock & Xxxxx LLP, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000 on March 27, 1997
or such later date as to which the Initial Purchaser and the Company shall agree
(such date and time of delivery and payment for the Notes being herein called
the "Closing Date"). Delivery of the Notes shall be made to the Initial
Purchaser through the book entry facilities of The Depository Trust Company
against payment by the Initial Purchaser of the Purchase Price by the wire
transfer of immediately available funds.
The Notes shall be issued in book entry form and in such
permitted denominations as the Initial Purchaser may request not less than two
Business Days (as defined in the Indenture) in advance of the Closing Date. The
Company agrees to have the Notes available for inspection, checking and
packaging by the Initial Purchaser in New York, New York, not later than 2:00
p.m. on the Business Day prior to the Closing Date.
The parties agree the settlement of the Notes sold pursuant to
this Agreement shall take place on the terms set forth herein and not as set
forth in Rule 15c6-1(a) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
4. Subsequent Sales by the Initial Purchaser. It is understood
that the Initial Purchaser proposes to sell the Notes to institutional investors
which meet the qualifications to be "Qualified Institutional Buyers" as defined
in Rule 144A promulgated under the Securities Act and to institutional
Accredited Investors as defined in Rule 5.01(a)(1)-(3) or (7) of Regulation D
under the Securities Act (such purchasers from the Initial Purchaser being
referred to as the "Subsequent Purchasers" and, together with the Initial
Purchaser, the "Purchasers") as set forth in the Memoranda.
5. Covenants of the Company, the SPE and the Issuer. The
Company, the SPE and the Issuer covenant and agree with the Initial Purchaser
that:
(a) In connection with the execution of this Agreement, the
Company, the SPE and the Issuer will cause the Memorandum to be
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prepared setting forth the initial face amount of each Class of Notes
covered thereby and their terms and such other information as the
Initial Purchaser, the Company, the SPE and the Issuer deem appropriate
in connection with the offering of the Notes.
(b) If at any time prior to the completion of the sale of the
Notes by the Initial Purchaser, any event occurs as a result of which
the Memorandum as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it
shall be necessary to amend or supplement the Memorandum to comply with
applicable law, the Company will notify the Initial Purchaser of the
same and the Company will promptly cause to be prepared and delivered
to the Initial Purchaser pursuant to paragraph (d) of this Section 5 an
amendment or supplement that will correct such statement or omission or
effect such compliance.
(c) Each of the Company, the SPE and the Issuer will
immediately inform the Initial Purchaser (A) of the receipt by any of
them of any communication from the Securities and Exchange Commission
(the "SEC") or any state securities authority concerning the offering
or sale of the Notes and (B) of the commencement of any lawsuit or
proceeding to which the Company, the SPE or the Issuer is a party
relating to the offering or sale of the Notes.
(d) Each of the Company, the SPE and the Issuer authorizes the
Initial Purchaser to deliver to prospective Subsequent Purchasers
copies of the Memorandum, any amendments thereof or supplements or
exhibits thereto, and any information obtained pursuant hereto in
connection with any offer or sale of the Notes by the Initial Purchaser
in accordance herewith. In connection with such delivery of copies of
the Memoranda, each of the Company, the SPE and the Issuer agrees to
furnish the Initial Purchaser, without charge, with as many copies of
the Memoranda and any amendment or supplement thereto as the Initial
Purchaser may reasonably request during the period from the first date
of the offering of the Notes until the completion of the sale thereof.
(e) The Company, the SPE and the Issuer will use their
reasonable best efforts to arrange for the qualification of each Class
of Notes for sale under the laws of such jurisdictions as the Initial
Purchaser may designate, will maintain such qualifications in effect so
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long as required for the sale of each Class of Notes and will arrange
for the determination of the legality of each Class of Notes for
purchase by institutional investors. The Company, the SPE and the
Issuer will advise promptly the Initial Purchaser of the receipt by the
Company, the SPE or the Issuer of any notification with respect to the
suspension of the qualification of any Class of Notes for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose.
(f) Until such time as the Initial Purchaser shall have sold
all of the Notes purchased by it on the Closing Date, the Company will
make available to prospective Subsequent Purchasers of such Notes the
opportunity to ask questions and receive answers concerning the terms
and conditions of the offering of the Notes, the condition (financial
or otherwise) of the Issuer and any other matters relating to the
matters described in the Memoranda and the transactions contemplated
hereby and in obtaining any additional information and documents that
the Company, the SPE or the Issuer possesses or can acquire without
unreasonable effort or expense with respect to any of the foregoing.
(g) For so long as any Class of Notes is outstanding, (1) the
Company will provide or cause to be provided to any holder of Notes of
any Class and any prospective purchaser thereof designated by such a
holder, upon the request of such holder or prospective purchaser, the
information ("Rule 144A Information") required to be provided to such
holder or prospective purchaser by Rule 144A(d)(4) under the Securities
Act; and (2) the Company shall update or shall cause to be updated such
information from time to time in order to prevent such information from
becoming false and misleading and will take such other actions as are
necessary to ensure that the safe harbor exemption from the
registration requirements of the Securities Act under Rule 144A is and
will be available for resales of the Notes conducted in accordance with
Rule 144A.
(h) For a period from the date of this Agreement until the
retirement of all Classes of Notes, the Company or the Issuer will
deliver or cause to be delivered to the Initial Purchaser the annual
statement of compliance and the annual independent certified public
accountants' report furnished to the Trustee or the Owner Trustee
pursuant to the Transaction Documents, as soon as such statements and
reports are furnished to the Trustee or the Owner Trustee.
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(i) So long as any Class of Notes is outstanding, the Company
or the Issuer will furnish or cause to be furnished to the Initial
Purchaser (A) as soon as practicable after the end of the fiscal year,
all documents required under the Indenture to be distributed to the
holders of each Class of Notes and (B) from time to time, any
information concerning the Company or the Issuer filed with any
government or regulatory authority which is otherwise publicly
available, as the Initial Purchaser may reasonably request.
(j) To the extent, if any, that the ratings to be provided
with respect to certain Classes of Notes by Xxxxx'x Investors Service,
Inc. ("Moody's") are conditional upon the furnishing of documents or
the taking of any other actions, the Company, the SPE and the Issuer
shall cooperate in all reasonable respects in connection with
furnishing such documents and taking any such other actions. At the
time any document is delivered by any of the Company, the SPE or the
Issuer to Moody's, a copy of such document shall be provided to the
Initial Purchaser.
6. Payment of Fees and Expenses.
The Company shall be responsible for and shall pay all of the
third party fees and expenses under the Transaction Documents, whether incurred
on behalf of itself, the SPE, the Issuer or the Initial Purchaser, including,
without limitation: (i) the preparation of the Transaction Documents; (ii) the
preparation, issuance and delivery of the Notes to the Initial Purchaser; (iii)
the fees, disbursements and expenses of the Company's, the SPE's, the Issuer's
and the Initial Purchaser's counsel and accountants; (iv) the qualification of
the Notes under state securities laws in accordance with the provisions of
Section 5(e), including filing fees and the fees and disbursements of counsel
for the Initial Purchaser in connection therewith and in connection with the
preparation of any related blue sky survey; (v) the printing and delivery to the
Initial Purchaser of copies of the Memoranda; (vi) any fees charged by Moody's
for the ratings of certain Classes of the Notes; (vii) the upfront fees of the
Trustee under the Indenture; (viii) the upfront fees of the Owner Trustee under
the Trust Agreement; (ix) the fees and expenses of Peabody & Xxxxxx incurred in
connection with the transfer of the Collateral to the Trustee; (x) any recording
fees to be paid in connection with the transactions contemplated by the
Transaction Documents; and (xi) any upfront fee to a Tax Administrator for the
preparation of tax documents in connection with the Notes (collectively, the
"Transaction Expenses").
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7. Representations, Warranties, and Agreements of the Initial
Purchaser. The Initial Purchaser represents and warrants to, and agrees with,
the Company, as of the date hereof and as of the Closing Date, that:
(a) The Initial Purchaser understands that the Notes have not
been and will not be registered under the Securities Act, in reliance upon an
exemption therefrom, or registered or qualified under the securities or "Blue
Sky" laws of any state.
(b) This Agreement has been duly authorized, executed and
delivered by the Initial Purchaser.
(c) The Initial Purchaser is a Qualified Institutional Buyer.
(d) The Initial Purchaser has advised the Company that the
Initial Purchaser is purchasing the Notes for its own account and presently
intends (but has no obligation) to reoffer and resell all or a portion of the
Notes at any time or from time to time to institutional investors which are
Qualified Institutional Buyers or Accredited Investors. The Initial Purchaser
agrees that it will comply with applicable laws and the transfer restrictions in
the Indenture in offering the Notes and will not make a public offering of any
Class of the Notes, and that the Initial Purchaser will not reoffer or resell
the Notes in a manner which would render the issuance and sale of any Class of
the Notes, whether or not considered together with any other such resale, a
violation of the Securities Act or any state securities or "Blue Sky" laws or
require registration pursuant thereto.
8. Conditions of the Obligations of the Initial Purchaser. The
obligations of the Initial Purchaser to purchase and pay for the Notes will be
subject to the accuracy of the representations and warranties on the part of the
Company and the SPE contained or incorporated herein as of the date hereof and
as of the Closing Date, to the accuracy of the statements of officers of the
Company and the SPE made pursuant to the provisions hereof, to the performance
by the Company and the SPE of their respective obligations hereunder and to the
following additional conditions precedent:
(a) Each of the Company and the SPE shall have delivered to
the Initial Purchaser a certificate, dated the Closing Date, of a senior
executive officer acceptable to the Initial Purchaser, to the effect that such
officer has carefully examined this Agreement and the Memorandum and that, to
the best of such officer's knowledge after due inquiry and reasonable
investigation (i) the representations and warranties of the Company and the SPE,
as applicable, in this Agreement and in the case of the Company in the Trust
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Agreement are true and correct in all material respects at and as of the Closing
Date with the same effect as if made on the Closing Date, (ii) the Company and
the SPE have complied with all the agreements and satisfied all the conditions
on its part to be performed or satisfied at or prior to the Closing Date and
(iii) nothing has come to the attention of such officer that would lead such
officer to believe that the Memorandum contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) On the Closing Date, the Transaction Documents and all
Classes of the Notes shall have been duly authorized, executed and delivered by
the parties thereto (other than the Initial Purchaser), shall be in full force
and effect and no default shall exist thereunder on the part of the Company, the
SPE or the Issuer, and the Trustee shall have received a fully executed copy
thereof or, with respect to the Notes, a conformed specimen of each Class
thereof. The Transaction Documents and the Notes shall be in all material
respects in the forms theretofore provided to the Initial Purchaser.
(c) The Initial Purchaser shall have received from Bartlit,
Xxxx, Xxxxxx, Xxxxxxxxx & Xxxxx, special counsel for the Company, the SPE and
the Issuer, favorable opinions, dated the Closing Date and reasonably
satisfactory in form and substance to the Initial Purchaser and its counsel,
substantially to the effect that:
(i) The SPE has been duly organized and each of the Company
and the SPE is validly existing and in good standing under the laws of
the State of its organization with the power and authority to own its
assets and to conduct its business as such assets are then owned and
such business is then conducted, and, in each case, as contemplated by
the Transaction Documents to which it is a party, and to enter into and
perform its obligations under the Transaction Documents to which it is
a party.
(ii) Each Transaction Document to which the Company or the SPE
is a party has been duly and validly authorized, executed and delivered
by the Company and/or the SPE, as applicable, and each constitutes the
legal, valid and binding agreement of the Company and/or the SPE, as
applicable, enforceable against the Company and/or the Issuer, as
applicable, in accordance with its terms, subject, as to the
enforcement of remedies, to applicable bankruptcy, insolvency,
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reorganization, moratorium, receivership and similar laws affecting
creditors' rights generally and to general principles of equity
(regardless of whether the enforcement of such remedies is considered
in a proceeding in equity or at law) and subject, in the case of this
Agreement, to public policy constraints regarding indemnification.
(iii) With respect to each Transaction Document to which the
Issuer is a party and assuming that such Transaction Document has been
duly authorized, executed and delivered by the Issuer, such Transaction
Document constitutes the legal, valid and binding agreement of the
Issuer enforceable against the Issuer in accordance with its terms
subject, as to the enforcement of remedies, to applicable bankruptcy,
insolvency, reorganization, moratorium, receivership and similar laws
affecting creditors' rights generally and to general principles of
equity (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law) and subject, in the
case of this Agreement, to public policy constraints regarding
indemnification.
(iv) When the Notes have been duly executed, delivered and
authenticated in accordance with the Indenture and delivered and paid
for pursuant to this Agreement, the Notes will be validly issued,
outstanding and entitled to the benefits of the Indenture, except that
(A) enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (B) enforcement may
be limited by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(v) None of the execution and delivery of the Transaction
Documents to which the Company, the SPE or the Issuer is a party, or
consummation of the transactions contemplated by either the Transaction
Documents or the Notes, or the grant of the security interest pursuant
to the Indenture will (A) conflict with or violate, or result in a
breach of or constitute a default under any organizational or other
constituent document of or, to such counsel's knowledge, any statute
currently applicable to the Company, the SPE or the Issuer, as
applicable, or, to such counsel's knowledge, any order, rule or
regulation currently applicable to the Company or the Issuer, as the
- 14 -
case may be, of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Company, the SPE or the
Issuer, as the case may be, or (B) to such counsel's knowledge,
conflict with or violate, result in a material breach of or constitute
a material default under the terms of any indenture, agreement,
mortgage, deed of trust or other agreement or instrument to which the
Company, the SPE or the Issuer is a party or by which the Company, the
SPE or the Issuer or any of their respective properties are bound.
(vi) To such counsel's knowledge, there are no actions,
proceedings or investigations pending or threatened, before any court,
regulatory body, administrative agency or other tribunal or
governmental instrumentality (1) asserting the invalidity of any of the
Transaction Documents or any Class of the Notes, (2) seeking to prevent
the issuance of any Class of the Notes or the consummation of any of
the transactions contemplated by any of the Transaction Documents or
(3) seeking any determination or ruling that might materially and
adversely affect the performance by the Company, the SPE or the Issuer
of their respective obligations under, or the validity or
enforceability of, any of the Transaction Documents or any Class of the
Notes.
(vii) The issuance of the Notes pursuant to the Indenture and
the sale of each Class of the Notes to the Initial Purchaser pursuant
to this Agreement, the compliance by the Company, the SPE and the
Issuer, as applicable, with the Transaction Documents and the Notes and
the consummation of the other transactions herein or therein
contemplated do not and will not require the consent, approval,
authorization, order, registration or qualification of or with any
court or governmental authority, except such approvals as have been
obtained, and such as may be required under state securities laws or
"blue sky" laws of any jurisdiction in connection with the purchase and
distribution by the Initial Purchaser of the Notes.
(viii) The Indenture is not required to be qualified under the
Trust Indenture Act.
(ix) The offer and sale of the Notes to the Initial Purchaser
and to persons purchasing directly from the Initial Purchaser in
connection with the Initial Purchaser's initial sale of each such Class
of the Notes, in each case in the manner and under the circumstances
contemplated by the Memorandum, the Indenture and this Agreement are
not transactions requiring registration of any Class of the Notes under
the Securities Act.
- 15 -
(x) Following execution and delivery of all of the Transaction
Documents, all of the Company's and the SPE's right, title and interest
in and to the Pooled Certificates have been conveyed to the Issuer and
the Issuer has duly and validly pledged, assigned and, with the
exception of three lost Pooled Certificates described in the
Memorandum, delivered the Pooled Certificates (whether by book entry or
by physical delivery) to the Trustee and the Trustee has acquired a
perfected first priority security interest in the Collateral, subject
to no prior lien, mortgage, security interest, pledge, adverse claim,
charge or other encumbrance of which such counsel has notice.
(xi) The Company is not, and neither the SPE nor the Issuer
will become, as a result of the transactions contemplated in the
Indenture and this Agreement, an "investment company" that is
registered or is required to be registered under the Investment Company
Act (or an "affiliated person" of any such "affiliated person") as such
terms are defined in the Investment Company Act.
Such opinion may: (a) express its reliance as to factual
matters on certificates of government officials and the representations and
warranties made by, and on the certificates or other documents furnished by,
officers of the parties to the Transaction Documents; (b) assume the due
authorization, execution and delivery of the instruments and documents referred
to therein by the parties thereto other than the Company and the SPE; and (c) be
based upon assumptions and subject to qualifications typically made by Bartlit
Xxxx Xxxxxx Xxxxxxxxx & Xxxxx with respect to the opinion described in clause
(x) above. Alternatively, the opinion in clause (x) or the portion thereof
governed by Massachusetts law may be rendered by Peabody & Xxxxxx. "To such
counsel's knowledge" shall mean the actual knowledge of the Bartlit Xxxx Xxxxxx
Xxxxxxxxx & Xxxxx attorneys involved in the representation of the Company, the
SPE and the Issuer in connection with the transactions contemplated hereby,
without independent investigation. Bartlit Xxxx Xxxxxx Xxxxxxxxx & Xxxxx may
rely on special Maryland counsel as to matters of Maryland law and on counsel to
the Owner Trustee as to matters of Delaware law as they pertain to the Issuer
and on Peabody & Xxxxxx as to matters of Massachusetts law.
Such counsel shall also confirm that nothing has come to the
attention of such counsel that would lead such counsel to believe that the
Memorandum, as of its date, and at the Closing Date, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (other than financial statements,
- 16 -
schedules and other numerical, financial and statistical data contained therein,
and the matters referred to in the second full paragraph of Section 8(g) of this
Agreement as to which such counsel need express no view).
(d) The Initial Purchaser shall have received from Peabody &
Xxxxxx, counsel to the Trustee, a favorable opinion, dated the Closing Date and
reasonably satisfactory in form and substance to the Initial Purchaser and its
counsel, to the effect that:
(i) The Trustee has been duly organized and is validly
existing and in good standing as a banking corporation under the laws
of the Commonwealth of Massachusetts, with full power and authority to
execute and deliver the Transaction Documents to which it is a party
and perform its obligations thereunder.
(ii) The Indenture has been duly and validly authorized, executed
and delivered by the Trustee and constitutes the legal, valid and
binding agreement of the Trustee enforceable against the Trustee in
accordance with its terms, subject, as to the enforcement of remedies,
to applicable bankruptcy, insolvency, reorganization, moratorium,
receivership and similar laws affecting creditors' rights generally and
to general principles of equity (regardless of whether the enforcement
of such remedies is considered in a proceeding in equity or at law).
(iii) 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 the Commonwealth of Massachusetts is
required for the execution, delivery or performance by the Trustee of
the Indenture.
(iv) Neither the authentication and delivery of each Class of the
Notes by the Trustee nor the execution and delivery by the Trustee of
the Indenture and the performance by the Trustee of the respective
terms thereof conflict with or result in a violation of (A) any law or
regulation of the United States of America or the Commonwealth of
Massachusetts governing the banking or trust powers of the Trustee and
(B) the charter documents or by-laws of the Trustee.
(v) Each Class of the Notes have been duly authenticated and
delivered by the Trustee in accordance with the Indenture.
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(vi) 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
Transaction Documents.
(e) The Initial Purchaser shall have received from Xxxxxxxx,
Xxxxxx & Finger, counsel to the Owner Trustee, a favorable opinion, dated the
Closing Date and reasonably satisfactory in form and substance to the Initial
Purchaser and its counsel, to the effect that:
(i) The Owner Trustee is a Delaware banking corporation duly
incorporated and validly existing under the laws of the State of
Delaware.
(ii) The Owner Trustee has the full power and authority to
accept the office of owner trustee under the Trust Agreement and to
enter into and perform its obligations under the Trust Agreement and
the transactions contemplated thereby.
(iii) The execution and delivery of the Trust Agreement by the
Owner Trustee and the performance by the Owner Trustee of its
obligations under the Trust Agreement have been duly authorized by all
necessary action of the Owner Trustee and the Trust Agreement has been
duly executed and delivered by the Owner Trustee and constitutes a
legal, valid and binding obligation of the Owner Trustee enforceable
against the Owner Trustee in accordance with its terms, except as the
enforceability thereof may be (a) limited by bankruptcy, insolvency,
reorganization, moratorium, liquidation or other similar laws affecting
the rights of creditors generally, and (b) subject to general
principals of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(iv) The execution and delivery by the Owner Trustee of the
Trust Agreement and the consummation by the Owner Trustee of the
transactions contemplated thereby do not require any consent, approval
or authorization of, or any registration or filing with, any applicable
governmental authority of the State of Delaware which has not been
obtained or done.
- 18 -
(v) Neither the consummation by the Owner Trustee of the
transactions contemplated in the Trust Agreement, nor the fulfillment
of the terms thereof by the Owner Trustee will conflict with, result in
a breach or violation of, or constitute a default under the articles of
organization, by-laws or other organizational documents of the Owner
Trustee.
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Initial Purchaser. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the Federal law of the United States of America
governing the banking and trust powers of WTC and the laws of the State of
Delaware.
(f) The Initial Purchaser shall have received an opinion of
Xxxxxxxx, Xxxxxx & Finger, special Delaware counsel for the Issuer, dated the
Closing Date, in form and substance satisfactory to the Initial Purchaser and
its counsel, to the effect that:
(i) The Trust Agreement is the legal, valid and binding
agreement of the Owner Trustee, the Company and the SPE, enforceable
against the Owner Trustee, the Company and the SPE in accordance with
its terms subject to (i) applicable bankruptcy, insolvency, moratorium,
receivership, reorganization, fraudulent conveyance and similar laws
relating to and affecting the rights and remedies of creditors
generally, (ii) principles of equity (regardless of whether considered
and applied in a proceeding in equity or at law), and (iii) the effect
of applicable public policy on the enforceability of provisions
relating to indemnification or contribution.
(ii) The Certificate of Trust has been duly filed with the
Secretary of State of the State of Delaware. The Issuer has been duly
formed and is validly existing as a business trust under the Delaware
Business Trust Act.
(iii) The Issuer has the power and authority under the Trust
Agreement and the Delaware Business Trust Act to execute, deliver and
perform its obligations under the Transaction Documents to which it is
a party, the Notes and the Trust Certificates.
(iv) The Issuer has duly authorized and executed the
Transaction Documents to which it is a party, the Notes and the Trust
Certificates.
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(v) The Issuer has the power under the Trust Agreement and
the Delaware Business Trust Act to pledge the Trust Estate to the
Trustee as security for the Notes.
(vi) The Trust Certificates have been executed, and
delivered by the Owner Trustee on behalf of the Trust upon the order of
the Company in accordance with the Trust Agreement and when delivered
to and paid for pursuant to the Trust Agreement, the Trust Certificates
will be validly issued and outstanding, and the holders of record of
such Certificates will be entitled to the benefits accorded by the
Trust Agreement subject to (i) applicable bankruptcy, insolvency,
moratorium, receivership, reorganization, fraudulent conveyance and
similar laws relating to and affecting the rights and remedies of
creditors generally, (ii) principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law), and (iii)
the effect of applicable public policy on the enforceability of
provisions relating to indemnification or contribution.
(vii) The Notes have been authorized, executed and delivered
by the Owner Trustee on behalf of the Trust upon the order of the
Company in accordance with the Trust Agreement and the Indenture.
(viii) To the extent that Article 9 of the Uniform Commercial
Code as in effect in the State of Delaware (the "Delaware UCC") is
applicable (without regard to conflicts of laws principles), and
assuming that the security interest created by the Indenture in the
Issuer's rights in the Indemnity Agreements and other general
intangibles has been duly created and has attached, upon the filing of
a UCC-1 financing statement with the Secretary of State of the State of
Delaware, the Trustee will have a perfected security interest in the
Trust's rights in such Indemnity Agreements and other general
intangibles and the proceeds thereof; and such security interest will
be prior to any other security interest granted by the Issuer that is
perfected solely by the filing of financing statements under the
Delaware UCC.
(ix) No re-filing or other action is necessary under the
Delaware UCC in the State of Delaware in order to maintain the
perfection of the security interest referenced above except for the
filing of continuation statements at five-year intervals.
- 20 -
(x) Under ss. 3805(b) of the Delaware Business Trust Act,
no creditor of any holder of Trust Certificates shall have any right to
obtain possession of, or otherwise exercise legal or equitable remedies
with respect to, the property of the Issuer except in accordance with
the terms of the Trust Agreement subject to (i) applicable bankruptcy,
insolvency, moratorium, receivership, reorganization, fraudulent
conveyance and similar laws relating to and affecting the rights and
remedies of creditors generally, (ii) principles of equity (regardless
of whether considered and applied in a proceeding in equity or at law),
and (iii) the effect of applicable public policy on the enforceability
of provisions relating to indemnification or contribution.
(xi) Under ss. 3805(c) of the Delaware Business Trust Act,
and assuming that good title to the assets referred to therein is
conveyed to the Issuer pursuant to the Trust Agreement as a true
contribution and not as a security arrangement, the Issuer, rather than
any holder of the Trust Certificates, is the owner of such assets
subject to (i) applicable bankruptcy, insolvency, moratorium,
receivership, reorganization, fraudulent conveyance and similar laws
relating to and affecting the rights and remedies of creditors
generally, (ii) principles of equity (regardless of whether considered
and applied in a proceeding in equity or at law), and (iii) the effect
of applicable public policy on the enforceability of provisions
relating to indemnification or contribution.
(xii) The execution and delivery by the Owner Trustee on
behalf of the Issuer, of the Transaction Documents to which the Issuer
is a party do not require any consent, approval or authorization of, or
any registration or filing with, any governmental authority of the
State of Delaware, except for the filing of the Certificate of Trust
with the Secretary of State.
(xiii) Neither the consummation by the Issuer of the
transactions contemplated by the Trust Agreement or, the transactions
contemplated by the Transaction Documents to which the Trust is a party
nor the fulfillment of the terms thereof by the Issuer will conflict
- 21 -
with or result in a breach or violation of any law of the State of
Delaware.
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Initial Purchaser. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the laws of the State of Delaware.
(g) The Initial Purchaser shall have received from Stroock &
Stroock & Xxxxx LLP, counsel for the Initial Purchaser, a favorable opinion,
dated the Closing Date and satisfactory in form and substance to the Initial
Purchaser and shall include therein an opinion substantially to the effect that:
The statements in the Memorandum under the headings "SUMMARY
-- ERISA Considerations," "ERISA CONSIDERATIONS" and "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES", to the extent that they constitute statements of matters of law
or legal conclusions with respect thereto, have been prepared or reviewed by
such counsel and provide a fair and accurate summary of such law or conclusions.
(h) The Initial Purchaser shall have received from E&Y,
Xxxxxxx Xxxxxxxxx certified public accountants, letters, dated as of the date of
the Memorandum and as of the Closing Date, respectively, and satisfactory in
form and substance to the Initial Purchaser and its counsel to the effect that
they have performed certain specified procedures, all of which have been agreed
to by the Initial Purchaser, as a result of which the Initial Purchaser has
determined that certain information set forth in the Memorandum agrees with
calculations performed by such accountants.
(i) The Notes shall have been rated as follows by Xxxxx'x:
Class of Notes Xxxxx'x Rating
-------------- --------------
Class A Notes "Baa3"
Class B Notes "Ba2"
Class C Notes "B3"
Class D Notes Unrated
(j) The Initial Purchaser shall have received a certificate of
the Trustee, as to the due authorization, execution and delivery of the
Indenture and each Class of the Notes.
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(k) Bartlit Xxxx Xxxxxx Xxxxxxxxx & Xxxxx and/or Peabody &
Xxxxxx shall have provided such true sale, first perfected security interest
and/or non-consolidation opinions to Xxxxx'x as it shall have requested. The
Initial Purchaser shall have received any and all opinions of counsel supplied
to Xxxxx'x in connection with the rating of certain Classes of the Notes. Any
such opinions shall be addressed to the Initial Purchaser or shall indicate that
the Initial Purchaser may rely on such opinions as though they were addressed to
the Initial Purchaser, and shall be dated the Closing Date.
(l) All proceedings in connection with the transactions
contemplated by this Agreement, and all documents incidental hereto and thereto,
shall be reasonably satisfactory in form and substance to the Initial Purchaser
and its counsel, and the Initial Purchaser and its counsel shall have received
such information, certificates and documents as they may reasonably request.
If any of the conditions specified in this Section 8 shall not
have been fulfilled in all material respects when and as provided by this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Initial Purchaser and its counsel,
this Agreement and all obligations of the Initial Purchaser hereunder may be
canceled at, or at any time prior to, the Closing Date by the Initial Purchaser.
Notice of such cancellation shall be given to the Company in writing, or by
telephone or telegraph confirmed in writing.
9. Indemnification and Contribution.
(a) The Company and the SPE jointly and severally agree to
indemnify and hold harmless the Initial Purchaser against all losses, claims,
damages, or liabilities, joint or several, to which the Initial Purchaser may
become subject, under the Securities Act, the Exchange Act, or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Memorandum, or any Rule 144A
Information provided by the Company, the SPE or the Issuer to any holder or
prospective purchaser of any Class of the Notes pursuant to Section 5(a)(vi), or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact necessary to make
the statements therein not misleading, and will reimburse the Initial Purchaser
- 23 -
for any legal or other expenses reasonably incurred by it in connection with
investigating or defending against such loss, claim, damage, liability, or
action; provided, however, that (i) the Company and the SPE shall not be liable
for any indemnification obligation pursuant to this Section 9(a) to the extent
but only to the extent that any such loss, claim, damage, or liability arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in the Memorandum or any Rule 144A Information
provided by the Company or the Issuer to any holder or prospective purchaser of
any Class of the Notes pursuant to Section 5(g), or any amendment or supplement
thereto in reliance upon and in conformity with written information furnished to
the Company, the SPE or the Issuer by the Initial Purchaser specifically for use
in the preparation thereof, and (ii) such indemnity with respect to the
Memorandum shall not inure to the benefit of the Initial Purchaser (or any
person controlling the Initial Purchaser) from whom the person asserting any
such loss, claim, damage or liability purchased such Class of the Notes which
are the subject thereof if such person did not receive, in the event it is
amended or supplemented, the Memorandum as amended or supplemented at or prior
to the confirmation of the sale of such Class of the Notes to such person, if
such Memorandum as amended or supplemented was timely forwarded to the Initial
Purchaser as required by this Agreement and the untrue statement or omission of
a material fact contained in such Memorandum was corrected in the Memorandum as
amended or supplemented.
(b) The Initial Purchaser will indemnify and hold harmless the
Company, the SPE and the Issuer against any losses, claims, damages, or
liabilities to which any of them may become subject, under the Securities Act,
the Exchange Act or otherwise, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Memorandum, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made therein in
reliance upon and in conformity with written information furnished to the
Company, the SPE or the Issuer by the Initial Purchaser specifically for use in
the preparation thereof, and will reimburse the Company, the SPE or the Issuer
for any legal or other expenses reasonably incurred by the Company or the Issuer
in connection with investigating or defending against any such loss, claim,
damage, liability or action; provided, however, that in no case shall the
- 24 -
Initial Purchaser be liable or responsible for any amount in excess of the sum
of the Placement and Structuring Fee and the Excess Proceeds in excess of the
Issuer Portion of the Excess Proceeds received by the Initial Purchaser pursuant
to this Agreement. The Company, the SPE and the Issuer and the Initial Purchaser
acknowledge that the only information furnished to the Company, the SPE or the
Issuer by the Initial Purchaser specifically for use in the preparation of the
Memorandum is the information under the heading "PLAN OF DISTRIBUTION" in the
Memorandum.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party (unless such failure to notify
materially prejudices the indemnifying party or its ability to defend against
such claim). In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that the indemnifying party may elect, by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel satisfactory to
such indemnified party (which may be counsel representing the indemnifying
party); provided, however, that if the defendants in any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying party
to such indemnified party of the indemnifying party's election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 9 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate firm plus appropriate local
- 25 -
counsel, approved by the Initial Purchaser in the case of paragraph (a) of this
Section 9, representing the indemnified parties under such paragraph (a) who are
parties to such action), (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party; and except that, if clause (i)
or (iii) is applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii). The indemnifying party shall not be
liable for any settlement of any action effected without its prior written
consent, which consent shall not be unreasonably withheld, but if settled with
such consent, the indemnifying party shall indemnify the indemnified party from
and against any indemnifiable losses, claims, damages and liabilities by reason
of such settlement. No indemnifying party who has elected to assume the defense
of such action shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened action in respect of
which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party unless such settlement
includes an unconditional release of such indemnified party from all liability
on any claims that are the subject matter of such action.
(d) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages, or liabilities referred to in subsection (a) or (b) above, (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company, the SPE and the Issuer on the one hand and the Initial Purchaser
on the other from the offering of the Notes or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, the SPE and the Issuer on the
one hand and the Initial Purchaser on the other in connection with the
statements or omissions that resulted in such losses, claims, damages, or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company, the SPE and the Issuer on the one
hand and the Initial Purchaser on the other shall be deemed to be in the same
proportion as the Gross Proceeds from the offering of the Notes (before
deducting expenses) received by the Company and the Issuer bear to the sum of
- 26 -
the Placement and Structuring Fee and the Excess Proceeds in excess of the
Issuer Portion of the Excess Proceeds (before deducting expenses) received by
the Initial Purchaser. The 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 the Company, the SPE and the Issuer on the one hand or
the Initial Purchaser on the other and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such untrue
statement or omission. The Company, the SPE, the Issuer and the Initial
Purchaser agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were to be determined by pro rata allocation or
by any other method of allocation that does not take account of the equitable
considerations referred to in the first sentence of this subsection (d). The
amount paid by an indemnified party as a result of the losses, claims, damages,
or liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending against any
action or claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), the Initial Purchaser shall not be required
to contribute any amount in excess of the Underwriting Fees. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) The obligations of the Company, the SPE and the Issuer
under this Section 9 shall be in addition to any liability which the Company,
the SPE or the Issuer may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls the Initial Purchaser
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act.
10. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or the Issuer or their respective officers and of the
Initial Purchaser set forth in or made pursuant to this Agreement or contained
in certificates of officers of the Company, the SPE, the Issuer or the Initial
Purchaser submitted pursuant hereto shall remain operative and in full force and
effect, regardless of any investigation or statement as to the results thereof,
made by or on behalf of the Initial Purchaser or of the Company, the SPE or the
- 27 -
Issuer or any of their respective representatives, officers or directors or any
controlling person, and will survive delivery of and payment for the Notes. The
provisions of Sections 6 and 9 hereof shall survive the termination or
cancellation of this Agreement.
11. No Bankruptcy Filing. Each of the Company, the SPE and the
Initial Purchaser agrees not to cause the filing of a petition or otherwise
institute any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceeding under any federal or state bankruptcy or similar
law against the Issuer until at least 91 days after the payment in full of all
Classes of the Notes issued under the Indenture. The Company will not institute
against the SPE any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other proceedings under any United States federal or
state bankruptcy or similar law.
12. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Initial Purchaser by notice given
to the Company, the SPE and the Issuer prior to delivery of and payment for the
Notes if there has occurred any of the following: (i) any suspension or
limitation of trading in securities generally on the New York or American Stock
Exchanges, or any setting of minimum or maximum prices or maximum ranges for
trading of securities shall have been required on the New York or American Stock
Exchanges by the New York or American Stock Exchanges or by order of the SEC or
any other governmental authority having jurisdiction; (ii) any declaration of a
banking moratorium by Federal or New York authorities or of any banking
moratorium in foreign exchange trading by major international banks or persons;
or (iii) any outbreak or escalation of major hostilities in which the United
States is involved or any declaration of war by Congress, or any other
substantial national or international calamity or emergency if, in the judgment
of the Initial Purchaser, the effect of any such change makes it impractical or
inadvisable to proceed with completion of the sale of and payment for the Notes.
13. Notices. All communications hereunder shall be in writing
and effective only on receipt, and if sent to the Initial Purchaser shall be
delivered, mailed or telecopied and confirmed to the Initial Purchaser at Bear,
Xxxxxxx & Co. Inc. at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx
X. Xxxxxxxxx (facsimile number: (000) 000-0000), with a copy in the case of
communications under Section 10 to Stroock & Stroock & Xxxxx LLP, 000 Xxxxxx
Xxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Xxxxxxxx, Esq. (facsimile
number: (000) 000-0000); if to the Company or the SPE, shall be delivered,
mailed or telecopied and confirmed to Asset Investors Corporation, or Asset
Investors Secured Financing Corporation, 0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000,
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Xxxxxx, Xxxxxxxx 00000 Attention: Xxxxx Xxxxxxx (facsimile number: (303)
771-3461); and if to the Issuer, shall be delivered, mailed or telecopied and
confirmed to Structured Mortgage Trust 1997-1, c/o Wilmington Trust Company, as
Owner Trustee, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000-0000 Attention: Corporate Trust Administration (facsimile number:
(000) 000-0000), with a copy to the Company at the above address.
14. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 10 and no
other person will have any right or obligations hereunder.
15. Severability of Provisions. Any covenant, provision,
agreement or term of this Agreement that is prohibited or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
16. Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties hereto with respect to the matters
and transactions contemplated hereby and supersedes all prior agreements and
understandings whatsoever relating to such matters and transactions.
17. Amendment. Neither this Agreement nor any term hereof may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
18. Headings. The headings in this Agreement are for the
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
19. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
20. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which shall
together constitute one instrument.
21. Limited Liability. It is expressly understood and agreed
by the parties hereto that (a) this Agreement is executed and delivered by
Wilmington Trust company, not individually or personally but solely as trustee
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of Structured Mortgage Trust 1997-1 under the Trust Agreement dated as of March
26, 1997, with Asset Investors Corporation, as Depositor, and Asset Investors
Secured Financing Corporation, in the exercise of the powers and authority
conferred and vested in it, (b) each of the representations, undertakings and
agreements herein made on the part of the Issuer is made and intended not as
personal representations, undertakings and agreements by Wilmington Trust
Company but is made and intended for the purpose of binding only the Issuer, (c)
nothing herein contained shall be construed as creating any liability on
Wilmington Trust Company, individually or personally, to perform any covenant
either expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties hereto and by any Person claiming by, through or
under the parties hereto and (d) under no circumstances shall Wilmington Trust
Company be personally liable for the payment of any indebtedness or expenses of
the Issuer or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Issuer under this
Agreement or any other related document.
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If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed duplicate hereof,
whereupon it will become a binding agreement among the Company, the Issuer and
the Initial Purchaser in accordance with its terms.
Very truly yours,
ASSET INVESTORS CORPORATION
By: /s/ Xxxxxx X. Xxx
---------------------------------------
Name: Xxxxxx X. Xxx
Title: President and Chief Operating Officer
ASSET INVESTORS SECURED
FINANCING CORPORATION
By: /s/ Xxxxxx X. Xxx
---------------------------------------
Name: Xxxxxx X. Xxx
Title: President and Chief Operating Officer
STRUCTURED MORTGAGE TRUST 1997-1
By: WILMINGTON TRUST COMPANY
not in its individual
capacity but as Owner
Trustee
By:_________________________
Name: _________________
Title: ________________
The foregoing Note Purchase
Agreement is hereby confirmed
and accepted as of the date
first written above.
BEAR, XXXXXXX & CO. INC.
By: /s/ Xxxxxx Xxxxxx
--------------------------
Name:
Title:
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