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EXECUTION COPY
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ASSET BACKED FUNDING CORPORATION
$1,386,432,000
(Approximate)
Asset-Backed Certificates,
Series 2006-HE1
December 12, 2006
UNDERWRITING AGREEMENT
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Banc of America Securities LLC
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Ladies and Gentlemen:
SECTION 1. Introductory. Asset Backed Funding Corporation, a Delaware
corporation (the "Company"), proposes to sell to Banc of America Securities LLC
("BAS" or the "Underwriter") $1,386,432,000 aggregate Certificate Principal
Balance of its Asset-Backed Certificates identified in Schedule I hereto (the
"Offered Certificates") having the Original Certificate Principal Balances set
forth in Schedule I (subject to an upward or downward variance, not to exceed
5%, of the precise Original Certificate Principal Balances within such range to
be determined by the Company in its sole discretion). The Offered Certificates,
together with the Class B, Class CE, Class P, Class R and Class R-X (the
"Non-Offered Certificates") are collectively referred to herein as the
"Certificates" and evidence the entire ownership interest in the assets of a
trust estate (the "Trust Estate") consisting primarily of a pool of fixed and
adjustable interest rate mortgage loans as described in Schedule I (the "Initial
Mortgage Loans") to be acquired by the Company pursuant to a mortgage loan
purchase agreement (the "Mortgage Loan Purchase Agreement"), dated as of
November 1, 2006 by and between the Company, as purchaser and Bank of America,
National Association, as seller and funds in the Pre-Funding Accounts. As of the
close of business on the date specified in Schedule I as the cut-off date (the
"Cut-off Date"), the Initial Mortgage Loans will have the aggregate principal
balance set forth in Schedule I. On or before February 28, 2007, the Company may
sell and the Securities Administrator will be obligated to purchase, on behalf
of the Trust, additional mortgage loans (the "Additional Mortgage Loans" and
together with the Initial Mortgage Loans, the "Mortgage Loans"). This
Underwriting Agreement shall hereinafter be referred to as the "Agreement."
Elections will be made to treat the assets of the Trust Estate (exclusive of the
arrangements intended to protect against basis risk for certain of the
Certificates, the Cap Carryover Reserve Account, the Supplemental Interest
Trust, the Interest Rate Swap Agreement, the Swap Account, the Additional
Mortgage Loan Interest, the Pre-Funding Accounts and certain other assets
specified in the Pooling and Servicing Agreement) as multiple separate real
estate mortgage investment conduits (each, a "REMIC"). The Certificates are to
be issued pursuant to a pooling and servicing agreement, dated as of November 1,
2006 (the "Pooling and Servicing Agreement"), among the Company, as depositor,
Option One Mortgage Corporation, as a servicer ("Option One"), JPMorgan Chase
Bank, National Association, as a servicer ("JPM Chase Bank"), Xxxxxx Loan
Servicing LP, as a servicer ("Xxxxxx," and together with Option One and JPM
Chase Bank, the "Servicers," and each of Xxxxxx, Option One and JPM Chase Bank
individually, a "Servicer"), Xxxxx Fargo Bank, N.A., as master servicer (the
"Master Servicer") and securities administrator (the "Securities
Administrator"), and U.S. Bank National Association, as trustee (the "Trustee").
The Offered Certificates will be issued in the denominations specified in
Schedule I. The Pooling and Servicing Agreement, this Agreement, and the
Mortgage Loan Purchase Agreement are collectively referred to herein as the
"Basic Documents."
Capitalized terms used herein that are not otherwise defined herein have
the meanings assigned thereto in the Pooling and Servicing Agreement.
SECTION 2. Representations and Warranties of the Company. The Company
represents and warrants to the Underwriter as follows:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act") and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement on Form S-3 (the file number of which is set forth in Schedule I
hereto), which has become effective, for the registration under the Act of
the Offered Certificates. Such registration statement, as amended to the
date of this Agreement, meets the requirements set forth in Rule 415(a)(1)
under the Act and complies in all other material respects with Rule
415(a)(1). The Company proposes to file with the Commission pursuant to
Rule 424 under the Act a supplement to the form of prospectus included in
such registration statement relating to the Offered Certificates and the
plan of distribution thereof and has previously advised you of all further
information (financial and other) with respect to the Company to be set
forth therein. Such registration statement, including the exhibits thereto,
as amended to the date of this Agreement, is hereinafter called the
"Registration Statement"; the prospectus first required to be filed to
satisfy the condition set forth in Rule 172(c) and pursuant to Rule 424(b)
under the Act is hereinafter called the "Basic Prospectus"; and such
supplement to the Basic Prospectus, in the form required to be filed to
satisfy the condition set forth in Rule 172(c) and pursuant to Rule 424(b)
under the Act, is hereinafter called the "Prospectus Supplement" and,
collectively with the Basic Prospectus, the "Final Prospectus." Any
reference herein to the Registration Statement, the Basic Prospectus or the
Final Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which
were filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or before the date of this Agreement, or the issue date
of the Basic Prospectus or the Final Prospectus, as the case may be; and
any reference herein to the terms "amend," "amendment" or "supplement" with
respect to the Registration Statement, the Basic Prospectus or the Final
Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the date of this Agreement, or the
issue date of the Basic Prospectus or the Final Prospectus, as the case may
be, and deemed to be incorporated therein by reference.
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(b) At or prior to the time when sales to investors of the Offered
Certificates were first made (the "Time of Sale"), the Company had prepared
the information (collectively, the "Time of Sale Information") listed in
Schedule II hereto. If, subsequent to the date of this Agreement, the
Company or any Underwriter has determined that such information included an
untrue statement of 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 and have
terminated their old purchase contracts and entered into new purchase
contracts with purchasers of the Offered Certificates, then "Time of Sale
Information" will refer to the information available to purchasers at the
time of entry into the first such new purchase contract, including any
information that corrects such material misstatements or omissions
("Corrective Information") and "Time of Sale" will refer to the time and
date on which such new purchase contracts were entered into.
(c) As of the date hereof, when the Final Prospectus is first filed
pursuant to Rule 424 under the Act, when, prior to the Closing Date (as
hereinafter defined), any amendment to the Registration Statement becomes
effective (including the filing of any document incorporated by reference
in the Registration Statement), when any supplement to the Final Prospectus
is filed with the Commission and at the Closing Date, (i) the Registration
Statement, as amended as of any such time, and the Final Prospectus, as
amended or supplemented as of any such time, will comply in all material
respects with the Act and the respective rules thereunder, (ii) the
Registration Statement, as amended as of any such time, will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, and (iii) the Final Prospectus, as amended or
supplemented as of any such time, will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to the
information contained in or omitted from the Registration Statement or the
Final Prospectus or any amendment thereof or supplement thereto in reliance
upon and in conformity with information furnished in writing to the Company
by or on behalf of the Underwriter specifically for use in connection with
the preparation of the Registration Statement or the Final Prospectus.
(d) The Time of Sale Information, at the Time of Sale did not, and at
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 Company makes no representation and
warranty with respect to the information contained in or omitted from the
Time of Sale Information or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of the Underwriter specifically for use in
connection with the preparation of the Time of Sale Information.
(e) The Company has been duly incorporated and is validly existing as
a corporation under the laws of the State of Delaware and has corporate and
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other power and authority to own its properties and conduct its business,
as now conducted by it, and to enter into and perform its obligations under
this Agreement and the other Basic Documents to which it is a party.
(f) The Company is not aware of (i) any request by the Commission for
any further amendment of the Registration Statement or the Basic Prospectus
or for any additional information or (ii) the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement.
(g) This Agreement has been duly authorized, executed and delivered by
the Company, and each of the other Basic Documents to which the Company is
a party, when delivered by the Company, will have been duly authorized,
executed and delivered by the Company, and will constitute a legal, valid
and binding agreement of the Company, enforceable against the Company 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 except as
rights to indemnity and contribution hereunder may be limited by federal or
state securities laws or principles of public policy.
(h) The Company is not, and on the date on which the first bona fide
offer of the Offered Certificates is made will not be, an "ineligible
issuer," as defined in Rule 405 under the Act.
(i) On the Closing Date, the Basic Documents will conform to the
description thereof contained in the Registration Statement, the Final
Prospectus and the Time of Sale Information; the Offered Certificates will
have been duly and validly authorized and, when such Offered Certificates
are duly and validly executed, issued and delivered in accordance with the
Pooling and Servicing Agreement, and sold to the Underwriter as provided
herein, will be validly issued and outstanding and entitled to the benefits
of the Pooling and Servicing Agreement.
(j) As of the Closing Date, the representations and warranties of the
Company set forth in the Pooling and Servicing Agreement will be true and
correct.
(k) Neither the execution and delivery by the Company of this
Agreement or any other of the Basic Documents nor the consummation by the
Company of the transactions contemplated herein or therein, nor the
issuance of the Offered Certificates or the public offering thereof as
contemplated in the Final Prospectus or the Time of Sale Information will
conflict in any material respect with or result in a material breach of, or
constitute a material default (with notice or passage of time or both)
under, or result in the imposition of any lien, pledge, charge, of the
property or assets of the Company (except as required or permitted pursuant
thereto or hereto), pursuant to any material mortgage, indenture, loan
agreement, contract or other instrument to which the Company is party or by
which it is bound, nor will such action result in any violation of any
provisions of any applicable law, administrative regulation or
administrative or court decree, the certificate of incorporation or by-laws
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of the Company. The Company is not in violation of its certificate of
incorporation, in default in any material respect in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note,
lease, trust agreement, transfer and servicing agreement or other
instrument to which a party or by which it may be bound, or to which any
material portion of its property or assets is subject.
(l) No legal or governmental proceedings are pending to which the
Company is a party or of which any property of the Company is subject,
which if determined adversely to the Company would, individually or in the
aggregate, have a material adverse effect on the financial position,
stockholders' equity or results of operations of the Company; and to the
best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(m) Since the date of which information is given in the Registration
Statement, there has not been any material adverse change in the business
or net worth of the Company.
(n) Any taxes, fees and other governmental charges in connection with
the execution and delivery of the Basic Documents and the execution,
delivery and sale of the Offered Certificates have been or will be paid at
or prior to the Closing Date.
(o) No consent, approval, authorization or order of, or registration,
filing or declaration with, any court or governmental agency or body is
required, or will be required, in connection with (i) the execution and
delivery by the Company of any Basic Document or the performance by the
Company of any of its obligations under the Basic Documents or (ii) the
offer, sale or delivery of the Offered Certificates except such as shall
have been obtained or made, as the case may be, or will be obtained or
made, as the case may be, prior to the Closing Date, or will not materially
adversely affect the ability of the Company to perform its obligations
under any Basic Document.
(p) The Company possesses, and will possess, all material licenses,
certificates, authorities or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct the
business now conducted by it and as described in the Final Prospectus and
the Time of Sale Information, except to the extent that the failure to have
such licenses, certificates, authorities or permits does not have a
material adverse effect on the Offered Certificates or the financial
condition of the Company, and the Company has not received, nor will it
have received as of the Closing Date, 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.
(q) On the Closing Date, (i) the Company will have good and marketable
title to the related Initial Mortgage Loans being transferred by it to the
Trust pursuant thereto, free and clear of any lien, (ii) the Company will
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not have assigned to any person any of its right, title or interest in such
Initial Mortgage Loans or in the Pooling and Servicing Agreement, and (iii)
the Company will have the power and authority to sell such Initial Mortgage
Loans to the Trust, and upon execution and delivery of the Pooling and
Servicing Agreement by the Trustee, the Company and the Servicer, the Trust
will have good and marketable title thereto, in each case free of liens.
(r) The properties and businesses of the Company conform, and will
conform, in all material respects, to the descriptions thereof contained in
the Final Prospectus and the Time of Sale Information.
(s) The Trust Fund (as defined in the Pooling and Servicing Agreement)
is not required to be registered under the Investment Company Act of 1940,
as amended.
(t) It is not necessary in connection with the offer, sale and
delivery of the Offered Certificates in the manner contemplated by this
Agreement to qualify the Pooling and Servicing Agreement under the Trust
Indenture Act of 1939, as amended.
(u) Other than the Final Prospectus, the Company (including its agents
and representatives other than the Underwriter) has not made, used,
prepared, authorized, approved or referred to and will not make, use,
prepare, authorize, approve or refer to any "written communication" (as
defined in Rule 405 under the Act) that constitutes an offer to sell or
solicitation of an offer to buy the Offered Certificates other than (i)
information included in the Time of Sale Information, (ii) any document not
constituting a prospectus pursuant to Section 2(a)(10)(a) of the Act or
Rule 134 under the Act or (iii) other written communication approved in
writing in advance by the Underwriter.
(v) Any Issuer Free Writing Prospectus (as defined in Section
11(e)(i)) included in the Time of Sale Information complied in all material
respects with the Act and has been, or will be filed in accordance with
Rule 433 under the Act (to the extent required thereby).
SECTION 3. Purchase, Sale and Delivery of Offered Certificates. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Underwriter, and the Underwriter agrees to purchase from
the Company, the Offered Certificates at the purchase price set forth in
Schedule I hereto.
The Company will deliver the Offered Certificates to the Underwriter,
against payment of the purchase price therefor in same day funds wired to such
bank as may be designated by the Company, or by such other manner of payment as
may be agreed upon by the Company and the Underwriter, at the offices of Hunton
& Xxxxxxxx LLP, New York, New York, at 10:00 A.M., Eastern time, on December 14,
2006, or at such other place or time not later than seven full business days
thereafter as the Underwriter and the Company determine, such time being
referred to herein as the "Closing Date."
The Offered Certificates so to be delivered will be in such denominations
and registered in such names as the Underwriter requests two full business days
prior to the Closing Date and will be made available at the offices of Banc of
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America Securities LLC, Charlotte, North Carolina or, upon the Underwriter's
request, through the facilities of The Depository Trust Company.
SECTION 4. Offering by the Underwriter.
(a) It is understood that the Underwriter proposes to offer the
Offered Certificates subject to this Agreement for sale to the public
(which may include selected dealers) on the terms as set forth in the Final
Prospectus.
(b) The Underwriter represents and warrants to, and agrees with, the
Company, that:
(i) In relation to each Member State of the European Economic
Area which has implemented the Prospectus Directive (each, a "Relevant
Member State"), it has not made and will not make an offer of
Certificates to the public in that Relevant Member State prior to the
publication of a prospectus in relation to the Offered Certificates
which has been approved by the competent authority in that Relevant
Member State or, where appropriate, approved in another Relevant
Member State and notified to the competent authority in that Relevant
Member State, all in accordance with the Prospectus Directive, except
that it may, with effect from and including the relevant
implementation date, make an offer of Certificates to the public in
that Relevant Member State at any time:
a) to legal entities which are authorized or regulated to operate
in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities;
b) to any legal entity which has two or more of (1) an average of
at least 250 employees during the last financial year; (2) a
total balance sheet of more than (euro) 43,000,000 and (3) an
annual net turnover of more than (euro) 50,000,000, as shown in
its last annual or consolidated accounts; or
c) in any other circumstances which do not required the
publication by the issuer of a prospectus pursuant to Article 3
of the Prospectus Directive.
For the purposes of this representation, the expression an "offer of
Certificates to the public" in relation to any Offered Certificates in any
Relevant Member State means the communication in any form and by any means of
sufficient information on the terms of the offer and the Certificates to be
offered so as to enable an investor to decide to purchase or subscribe the
Certificates, as the same may be varied in that Member State by any measure
implementing the Prospectus Directive in that Member State and the expression
"Prospectus Directive" means the European Commission Directive 2003/71/EC and
includes any relevant implementing measure in each Relevant Member State.
(ii) It has only communicated or caused to be communicated and
will only communicate or cause to be communicated an invitation or
inducement to engage in investment activity (within the meaning of
Section 21 of the United Kingdom Financial Services and Markets Act
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2000 (the "FSMA")) received by it in connection with the issue or sale
of the Certificates in circumstances in which Section 21(1) of the
FSMA does not apply to the issuer.
(iii) It has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in relation
to the Offered Certificates in, from or otherwise involving the United
Kingdom.
SECTION 5. Covenants of the Company. The Company hereby covenants and
agrees with the Underwriter that:
(a) Prior to the termination of the offering of the Offered
Certificates, the Company will not file any amendment of the Registration
Statement or supplement (including the Final Prospectus) to the Basic
Prospectus unless the Company has furnished the Underwriter a copy for its
review prior to filing and will not file any such proposed amendment or
supplement to which the Underwriter reasonably objects. Subject to the
foregoing sentence, the Company will cause the Final Prospectus to be filed
with the Commission pursuant to Rule 424. The Company will advise the
Underwriter promptly (i) when the Final Prospectus shall have been filed
with the Commission pursuant to Rule 424, (ii) when any amendment to the
Registration Statement relating to the Offered Certificates shall have
become effective, (iii) of any request by the Commission for any amendment
of the Registration Statement or amendment of or supplement to the Final
Prospectus or for any additional information, (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding
for that purpose and (v) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Offered
Certificates for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose. The Company will use its best efforts
to prevent the issuance of any such stop order and, if issued, to obtain as
soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Offered
Certificates is required to be delivered under the Act, any event occurs as
a result of which the Final Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it shall be
necessary to amend or supplement the Final Prospectus to comply with the
Act or the Exchange Act or the respective rules thereunder, the Company
promptly will prepare and file with the Commission, subject to the first
sentence of paragraph (a) of this Section 5, an amendment or supplement
which will correct such statement or omission or an amendment which will
effect such compliance and will use its best efforts to cause any required
post-effective amendment to the Registration Statement containing such
amendment to be made effective as soon as possible.
(c) The Company will furnish to the Underwriter and counsel for the
Underwriter, without charge, executed copies of the Registration Statement
(including exhibits thereto) and each amendment thereto which shall become
effective on or prior to the Closing Date and, so long as delivery of a
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prospectus by the Underwriter or dealers may be required by the Act, as
many copies of the Final Prospectus and any amendments thereof and
supplements thereto as the Underwriter may reasonably request. The Company
will pay the expenses of printing all documents relating to the initial
offering.
(d) The Company will furnish such information as may be required and
otherwise cooperate in qualifying the Offered Certificates for sale under
the laws of such jurisdictions as the Underwriter may reasonably designate
and to maintain such qualifications in effect so long as required for the
distribution of the Offered Certificates; provided, however, that the
Company shall not be required to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would subject
it to general or unlimited service of process in any jurisdiction where it
is not now so subject.
SECTION 6. Conditions to the Obligations of the Underwriter. The
obligations of the Underwriter to purchase the Offered Certificates shall be
subject to the accuracy of the representations and warranties on the part of the
Company contained herein as of the date hereof, as of the date of the
effectiveness of any amendment to the Registration Statement filed prior to the
Closing Date (including the filing of any document incorporated by reference
therein) and as of the Closing Date, to the accuracy of the statements of the
Company made in any certificates delivered pursuant to the provisions hereof, to
the performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) The Underwriter shall have received from Deloitte & Touche LLP a
letter, dated the date hereof, confirming that they are independent public
accountants within the meaning of the Act and the rules and regulations of
the Commission promulgated thereunder and otherwise in form and substance
reasonably satisfactory to the Underwriter and counsel to the Underwriter.
(b) All actions required to be taken and all filings required to be
made by the Company under the Act prior to the sale of the Offered
Certificates shall have been duly taken and made. At and prior to the
Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted, or to the knowledge of the Company or
the Underwriter, shall have been contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business or properties
of the Company or the Servicer which, in the reasonable judgment of the
Underwriter, materially impairs the investment quality of the Offered
Certificates; (ii) any downgrading in the rating of the Servicer by any
"nationally recognized statistical rating organization" (as such term is
defined for purposes of Rule 436(g) under the Act), or any public
announcement that any such organization has under surveillance or review
its ratings of the Servicer (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 banking moratorium
declared by federal, North Carolina or New York authorities; or (v) any
outbreak or escalation of major hostilities in which the United States is
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involved, any declaration of war by Congress or any other substantial
national or international calamity or emergency if, in the reasonable
judgment of the Underwriter, the effects 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 Offered
Certificates.
(d) On or before the Closing Date, the Underwriter shall have received
evidence satisfactory to it that each class of Offered Certificates has
been given the ratings set forth on Schedule I hereto.
(e) The Underwriter shall have received a favorable opinion of Hunton
& Xxxxxxxx LLP, a special tax counsel for the Company, addressed to the
Underwriter and dated the Closing Date and reasonably satisfactory in form
and substance to the Underwriter and counsel to the Underwriter.
(f) The Underwriter shall have received a favorable opinion of Hunton
& Xxxxxxxx LLP, special counsel for the Company, addressed to the
Underwriter and dated the Closing Date and reasonably satisfactory in form
and substance to the Underwriter, with respect to the validity of the
Certificates, ERISA matters and such other related matters as the
Underwriter shall require, and the Company shall have furnished or caused
to be furnished to such counsel such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters.
(g) The Underwriter shall have received copies of any opinions of
counsel for the Company that the Company is required to deliver to any
Rating Agency. Any such opinions shall be dated the Closing Date and
addressed to the Underwriter or accompanied by reliance letters addressed
to the Underwriter.
(h) The Underwriter shall have received an opinion of counsel to the
Trustee, dated the Closing Date, in form and substance satisfactory to the
Underwriter and its counsel.
(i) The Underwriter shall have received a certificate dated the
Closing Date of the President, any Vice President or the Secretary of the
Company in which the officer shall state that, to the best of his or her
knowledge after reasonable investigation, (i) the representations and
warranties of the Company with respect to the Initial Mortgage Loans
contained in any Basic Document are true and correct, (ii) the
representations and warranties of the Company in this Agreement are true
and correct, (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date, (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued, (v) no
proceedings for that purpose have been instituted or are contemplated by
the Commission, and (vi) there has been no amendment or other document
filed affecting the Certificate of Incorporation or bylaws of the Company,
and no such amendment has been authorized.
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(j) At the Closing Date, the Certificates and the Pooling Agreement
will conform in all material respects to the descriptions thereof contained
in the Final Prospectus.
(k) The Underwriter shall not have discovered and disclosed to the
Company on or prior to the Closing Date that the Registration Statement or
the Final Prospectus or any amendment or supplement thereto contains an
untrue statement of a fact or omits to state a fact which, in the opinion
of counsel to the Underwriter, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(l) The Underwriter shall have received from Hunton & Xxxxxxxx LLP,
special counsel for the Underwriter, a letter dated the Closing Date with
respect to the Final Prospectus, in form and substance satisfactory to the
Underwriter.
(m) All corporate proceedings and other legal matters relating to the
authorization, form and validity of this Agreement, the Pooling and
Servicing Agreement, the Mortgage Loan Purchase Agreement, the
Certificates, the Registration Statement and the Final Prospectus, and all
other legal matters relating to this Agreement and the transactions
contemplated hereby, shall be reasonably satisfactory in all respects to
counsel for the Underwriter, and the Company shall have furnished to such
counsel all documents and information that they may reasonably request to
enable them to pass upon such matters.
(n) The Underwriter shall have received a certificate (upon which
Hunton & Xxxxxxxx LLP shall be entitled to rely in rendering its opinions
and letters under the Basic Documents) dated the Closing Date of an officer
of the Trustee in which such officer shall state that, to the best of such
officer's knowledge after reasonable investigation: (i) the Trustee is not
an affiliate of any other entity listed as a transaction party in the
Prospectus Supplement (ii) the information in the Prospectus Supplement
related to the Trustee (the "Trustee Disclosure") includes (a) the
Trustee's correct name and form of organization and (b) a discussion of the
Trustee's experience serving as trustee for asset-backed securities
transactions involving mortgage loans; and (iii) the Trustee Disclosure is
true and correct in all material respects and nothing has come to his or
her attention that that would lead such officer to believe that the Trustee
Disclosure contains any untrue statement of material fact or omits to state
a material fact necessary to make the statements therein not misleading.
(o) The Underwriter shall have received a certificate (upon which
Hunton & Xxxxxxxx LLP shall be entitled to rely in rendering its opinions
and letters under the Basic Documents) dated the Closing Date of an officer
of the Securities Administrator in which such officer shall state that, to
the best of such officer's knowledge after reasonable investigation: (i)
the Securities Administrator is not an affiliate of any other entity listed
as a transaction party in the Prospectus Supplement or any such affiliation
has been disclosed in the Prospectus Supplement, (ii) the information in
the Prospectus Supplement related to the Securities Administrator (the
"Securities Administrator Disclosure") includes (a) the Securities
Administrator's correct name and form of organization and (b) a discussion
of the Securities Administrator's experience serving as securities
administrator for asset-backed securities transactions involving mortgage
loans; and (iii) the Securities Administrator Disclosure is true and
11
correct in all material respects and nothing has come to his or her
attention that that would lead such officer to believe that the Securities
Administrator Disclosure contains any untrue statement of material fact or
omits to state a material fact necessary to make the statements therein not
misleading. The requirement to provide a certificate pursuant to the
preceding sentence shall be deemed satisfied if the Securities
Administrator represents and warrants that its Securities Administrator
Disclosure satisfies the relevant provisions of Regulation AB under the
Act.
(p) The Underwriter shall have received a certificate (upon which
Hunton & Xxxxxxxx LLP shall be entitled to rely in rendering its opinions
and letters under the Basic Documents) dated the Closing Date of an officer
of each Servicer and the Master Servicer in which such officer shall state
that, to the best of such officer's knowledge after reasonable
investigation: (i) the Servicer or Master Servicer is not an affiliate of
any other entity listed as a transaction party in the Prospectus Supplement
or any such affiliation has been disclosed in the Prospectus Supplement;
(ii) the information in the Prospectus Supplement related to the Servicer
or Master Servicer (the "Servicer Disclosure") includes (a) the Servicer's
or Master Servicer's correct name and form of organization, (b) the correct
length of time that the Servicer or Master Servicer has been servicing or
master servicing mortgage loans; and (c) a discussion of the Servicer's or
Master Servicer's experience in servicing or master servicing mortgage
loans; (iii) except as set forth in the Servicer Disclosure, (a) there are
no other servicers responsible for calculating or making distributions to
the holders of the Offered Certificates, performing work-outs or
foreclosures, or any other material aspect of servicing the mortgage loans,
(b) there have been no material changes to the Servicer's or Master
Servicer's servicing or master servicing policies and procedures during the
last three years, (c) no additional information regarding the Servicer's or
Master Servicer's financial condition could have a material affect on
performance of the Offered Certificates, (d) no commingling of funds on
deposit in the servicer custodial accounts or master servicing custodial
account will be permitted by the Servicer or Master Servicer, (e) no
additional information with respect to any special or unique factors
involved in servicing or master servicing the mortgage loans could have a
material affect on performance of the Offered Certificates, and (f) no
additional information with respect to the Servicer's or Master Servicer's
process for handling delinquencies, losses, bankruptcies and recoveries
could have a material affect on performance of the Offered Certificates;
(iv) for any Servicer or Master Servicer identified in the Prospectus
Supplement as responsible for calculating or making distributions to the
holders of the Offered Certificates, performing work-outs or foreclosures,
or any other material aspect of servicing the mortgage loans, the
certifications in clauses (ii) and (iii) above are made with respect to
such Servicer or Master Servicer; and (v) the Servicer Disclosure is true
and correct in all material respects and nothing has come to his or her
attention that that would lead such officer to believe that the Servicer
Disclosure contains any untrue statement of material fact or omits to state
a material fact necessary to make the statements therein not misleading.
The requirement to provide a certificate pursuant to the preceding sentence
shall be deemed satisfied if the Servicer or Master Servicer represents and
warrants that its Servicer Disclosure satisfies the relevant provisions of
Regulation AB under the Act.
12
The Company will provide or cause to be provided to the Underwriter such
conformed copies of such opinions, certificates, letters and documents as the
Underwriter may reasonably request.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriter.
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 the
Underwriter by notice to the Company 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. Reimbursement of the Underwriter's Expenses. If the sale of the
Offered Certificates provided for herein is not consummated because any
condition to the obligations of the Underwriter set forth in Section 6 hereof is
not satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof
other than by reason of a default by the Underwriter, the Company will reimburse
the Underwriter upon demand for all out-of-pocket expenses (including reasonable
fees and disbursements of counsel) that shall have been reasonably incurred by
the Underwriter in connection with the proposed purchase and sale of the Offered
Certificates.
SECTION 8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the Underwriter
and any person who controls the Underwriter within the meaning of either
the Act or the Exchange Act against any and all losses, claims, damages or
liabilities, to which they may become subject under the Act, the Exchange
Act or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement for the registration of the Offered Certificates as
originally filed or in any amendment thereof, or in the Basic Prospectus or
the Final Prospectus or the Time of Sale Information, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained
in any Issuer Free Writing Prospectus (as defined in Section 11(e)(i)) or
any Issuer Information (as defined in Section 11(b)) contained in any Free
Writing Prospectus prepared by or on behalf of the Underwriter or in any
Free Writing Prospectus which is required to be filed pursuant to Section
11(e) or Section 11(g), or the omission or alleged omission to state a
material fact required to make the statements therein, in light of the
circumstances under which they were made, not misleading, which was not
corrected by Corrective Information subsequently supplied by the Company to
the Underwriter within a reasonable period of time prior to the Time of
Sale, and (iii) any breach of a representation and warranty Section 2(h),
and agrees to reimburse the Underwriter and any such controlling person for
any legal or other expenses reasonably incurred by them in connection with
13
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises
out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and
in conformity with written information furnished to the Company by or on
behalf of the Underwriter specifically for use in connection with the
preparation thereof. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) The Underwriter agrees to indemnify and hold harmless the Company,
each of its directors, each of its officers who signs the Registration
Statement and each person who controls the Company within the meaning of
either the Act or the Exchange Act, to the same extent as the foregoing
indemnity from the Company to the Underwriter, but only with reference to
(i) any untrue statements or alleged untrue statements of a material fact,
or omissions or alleged omissions to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, in the information furnished in writing to
the Company by the Underwriter specifically for use in connection with the
preparation of the Registration Statement, the Prospectus, the Time of Sale
Information or any revision or amendment thereof or supplement thereto and
(ii) any untrue statements or alleged untrue statements of a material fact
in any Free Writing Prospectus prepared by or on behalf of the Underwriter,
or omissions or alleged omissions to state a material fact necessary to
make the statements therein (when read in conjunction with the Time of Sale
Information), in light of the circumstances under which they were made, not
misleading; provided, that the Underwriter shall not be obligated to so
indemnify and hold harmless to the extent such loss, liability, claim,
damage or expense is caused by a misstatement or omission resulting from an
error or omission in any Issuer Information which was not corrected by
Corrective Information subsequently supplied by the Company to the
Underwriter within a reasonable period of time prior to the Time of Sale.
The Company acknowledges that the statements set forth in the Prospectus
Supplement in the first sentence of the last paragraph on the cover page
and in the first sentence of the second paragraph and the first sentence of
the third paragraph under the heading "Method of Distribution" constitute
the only information furnished in writing by or on behalf of the
Underwriter for inclusion in the documents referred to in the foregoing
indemnity (other than any Free Writing Prospectus furnished to the Company
by the Underwriter).
(c) Promptly after receipt by an indemnified party under this Section
8 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 8, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than under this Section 8. 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 it may elect by written
14
notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified 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 its
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 8 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 counsel, approved by the Underwriter
in the case of subparagraph (a), representing the indemnified parties under
subparagraph (a) who are parties to such action), (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 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).
(d) To provide for just and equitable contribution in circumstances in
which the indemnification provided for in paragraphs (a) or (b) of this
Section 8 is due in accordance with its terms but is for any reason held by
a court to be unavailable from the Company or the Underwriter on the
grounds of policy or otherwise, the Company or the Underwriter shall
contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) to which the Company or the Underwriter
may be subject, as follows:
(i) in the case of any losses, claims, damages and liabilities
(or actions in respect thereof) which do not arise out of or are not
based upon any untrue statement or omission of a material fact in any
Free Writing Prospectus, in such proportion as is appropriate to
reflect the relative benefit received by the Company or the
Underwriter; and
(ii) in the case of any losses, claims, damages and liabilities
(or actions in respect thereof) which arise out of or are based upon
any untrue statement or omission of a material fact in any Free
Writing Prospectus, in such proportion as is appropriate to reflect
the relative fault of the Company and the Underwriter in connection
with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. 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 in such Free Writing
Prospectus results from information prepared by the Company or the
15
Underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
Notwithstanding anything to the contrary in this paragraph (d), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls the Underwriter within the meaning of either the Act or the Exchange
Act shall have the same rights to contribution as the Underwriter and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, and each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to the preceding
sentence of this paragraph (d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this paragraph (d), notify such
party or parties from whom contribution may be sought, but the omission to so
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this paragraph (d).
SECTION 9. Representations and Indemnities to Survive.
The respective agreements, representations, warranties, indemnities and
other statements of the Company and its respective officers and of the
Underwriter set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of the
Underwriter or the Company or any of the officers, directors or controlling
persons referred to in Section 8 hereof, and will survive delivery of and
payment for the Offered Certificates. The provisions of Sections 7 and 8 hereof
and this Section 9 shall survive the termination or cancellation of this
Agreement.
SECTION 10. Effectiveness of Agreement and Termination. This Agreement
shall become effective upon the execution and delivery hereof by the parties
hereto.
This Agreement shall be subject to termination in the absolute discretion
of the Underwriter, by notice given to the Company prior to delivery of and
payment for the Offered Certificates, if prior to such time (i) trading in
securities generally on the New York Stock Exchange shall have been suspended or
limited or minimum prices shall have been established on such Exchange, (ii) a
banking moratorium shall have been declared by federal authorities or (iii)
there shall have occurred any outbreak or material escalation of hostilities or
other calamity or crisis the effect of which on the financial markets of the
United States is such as to make it, in the reasonable judgment of the
Underwriter, impracticable to market the Offered Certificates.
SECTION 11. Offering Communications; Free Writing Prospectuses.
(a) Unless preceded or accompanied by a prospectus satisfying the
requirements of Section 10(a) of the Act, the Underwriter shall not convey
or deliver any written communication to any person in connection with the
16
initial offering of the Certificates, unless such written communication (i)
is made in reliance on Rule 134 under the Act, (ii) constitutes a
prospectus satisfying the requirements of Rule 430B under the Act or (iii)
constitutes a "free writing prospectus," as defined in Rule 405 under the
Act (a "Free Writing Prospectus"). Without limitation thereby, without the
prior written consent of the Company (which consent may be withheld for any
reason), the Underwriter shall not convey or deliver in connection with the
initial offering of the Certificates any "ABS informational and
computational material," as defined in Item 1101(a) of Regulation AB under
the Act ("ABS Informational and Computational Material"), in reliance upon
Rules 167 and 426 under the Act.
(b) (i) The Underwriter shall deliver to the Company, no later than
two business days prior to the date of first use thereof, (A) any Free
Writing Prospectus prepared by or on behalf of the Underwriter that
contains any "issuer information," as defined in Rule 433(h) under the Act
and footnote 271 of the Commission's Securities Offering Reform Release No.
33-8591("Issuer Information"), and (B) any Free Writing Prospectus or
portion thereof that contains only a description of the final terms of the
Certificates.
(ii) Notwithstanding the provisions of Section 11(b)(i), any Free
Writing Prospectus described therein that contains only ABS
Informational and Computational Material, may be delivered by the
Underwriter to the Company not later than the later of (a) two
business days prior to the due date for filing of the Prospectus
pursuant to Rule 424(b) under the Act or (b) the date of first use of
such Free Writing Prospectus.
(c) The Underwriter represents and warrants to the Company that the
Free Writing Prospectuses to be furnished to the Company by the Underwriter
pursuant to Section 11(b)(i) or (ii) will constitute all Free Writing
Prospectuses of the type described therein that were furnished to
prospective investors by the Underwriter in connection with its offer and
sale of the Certificates.
(d) The Underwriter represents and warrants to the Company that each
Free Writing Prospectus required to be provided by it to the Company
pursuant to Section 11(b), when read in conjunction with the Time of Sale
Information, did not, as of the Time of Sale, include any untrue statement
of a material fact or omit any material fact required to be stated therein
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading; provided however,
that the Underwriter makes no representation to the extent such
misstatements or omissions were the result of any inaccurate Issuer
Information supplied by the Company to the Underwriter which information
was not corrected by Corrective Information subsequently supplied by the
Company to the Underwriter within a reasonable period of time prior to the
Time of Sale.
(e) The Company agrees to file with the Commission the following:
17
(i) Any Free Writing Prospectus that constitutes an "issuer free
writing prospectus," as defined in Rule 433(h) under the Act (an
"Issuer Free Writing Prospectus");
(ii) Any Free Writing Prospectus or portion thereof delivered by
the Underwriter to the Company pursuant to Section 11(b) hereof; and
(iii) Any Free Writing Prospectus for which the Company or any
person acting on its behalf provided, authorized or approved
information that is prepared and published or disseminated by a person
unaffiliated with the Company or any other offering participant that
is in the business of publishing, radio or television broadcasting or
otherwise disseminating communications.
(f) Any Free Writing Prospectus required to be filed pursuant to
Section 11(e) by the Company shall be filed with the Commission not later
than the date of first use of the Free Writing Prospectus, except that:
(i) any Free Writing Prospectus or portion thereof required to be
filed that contains only the description of the final terms of the
Certificates may be filed by the Company within two days of the later
of the date such final terms have been established for all classes of
Certificates and the date of first use;
(ii) any Free Writing Prospectus or portion thereof required to
be filed that contains only ABS Informational and Computational
Material may be filed by the Company with the Commission not later
than the later of the due date for filing the final Prospectus
relating to the Certificates pursuant to Rule 424(b) under the Act or
two business days after the first use of such Free Writing Prospectus;
(iii) any Free Writing Prospectus required to be filed pursuant
to Section 11(e)(iii) may, if no payment has been made or
consideration has been given by or on behalf of the Company for the
Free Writing Prospectus or its dissemination, be filed by the Company
with the Commission not later than four business days after the
Company becomes aware of the publication, radio or television
broadcast or other dissemination of the Free Writing Prospectus; and
(iv) the Company shall not be required to file (A) Issuer
Information contained in any Free Writing Prospectus of an offering
participant other than the Issuer, if such information is included or
incorporated by reference in a prospectus or Free Writing Prospectus
previously filed with the Commission that relates to the offering of
the Certificates, or (B) any Free Writing Prospectus or portion
thereof that contains a description of the Certificates or the
offering of the Certificates which does reflect the final terms
thereof.
(g) The Underwriter shall file with the Commission any Free Writing
Prospectus that is used or referred to by it and distributed by or on
behalf of the Underwriter in a manner reasonably designed to lead to its
broad, unrestricted dissemination not later than the date of the first use
of such Free Writing Prospectus.
18
(h) Notwithstanding the provisions of Section 11(g), the Underwriter
shall file with the Commission any Free Writing Prospectus for which the
Underwriter or any person acting on its behalf provided, authorized or
approved information that is prepared and published or disseminated by a
person unaffiliated with the Company or any other offering participant that
is in the business of publishing, radio or television broadcasting or
otherwise disseminating written communications and for which no payment was
made or consideration given by or on behalf of the Company or any other
offering participant, not later than four business days after the
Underwriter becomes aware of the publication, radio or television broadcast
or other dissemination of the Free Writing Prospectus.
(i) Notwithstanding the provisions of Sections 11(e) and 11(g),
neither the Company nor the Underwriter shall be required to file any Free
Writing Prospectus that does not contain substantive changes from or
additions to a Free Writing Prospectus previously filed with the
Commission.
(j) The Company and the Underwriter each agree that any Free Writing
Prospectuses prepared by the Underwriter shall contain the following legend
and any other legend that the Underwriter shall deem necessary or
appropriate:
The depositor has filed a registration statement (including a
prospectus) with the SEC for the offering to which this communication
relates. Before you invest, you should read the prospectus in that
registration statement and other documents the depositor has filed
with the SEC for more complete information about the issuer and this
offering. You may get these documents for free by visiting XXXXX on
the SEC Web site at xxx.xxx.xxx. Alternatively, the depositor, any
underwriter or any dealer participating in the offering will arrange
to send you the prospectus if you request it by calling toll-free
1-800-294-1322 or you e-mail a request to
xx.xxxxxxxxxx_xxxxxxxxxxxx@xxxxxxxxxxxxxx.xxx.
The Company and the Underwriter each agree that any Free Writing Prospectus
prepared by the Underwriter and that is not an Issuer Free Writing Prospectus or
that does not contain Issuer Information shall also contain the following
legend:
Neither the issuer of the securities nor any of its affiliates
prepared, provided, approved or verified any statistical or numerical
information presented herein, although that information may be based
in part on loan level data provided by the issuer or its affiliates.
(k) In the event that the Company becomes aware that, as of the Time
of Sale, any Issuer Free Writing Prospectus contains any untrue statement
of a material fact or omits to state a material fact necessary in order to
make the statements contained therein (when read in conjunction with the
Time of Sale Information), in light of the circumstances under which they
were made, not misleading (a "Defective Issuer Free Writing Prospectus"),
the Company shall notify the Underwriter within one business day after
discovery and the Company shall, if requested by the Underwriter, prepare
19
and deliver to the Underwriter a Free Writing Prospectus that corrects the
material misstatement or omission in the Defective Issuer Free Writing
Prospectus (such corrected Issuer Free Writing Prospectus, a "Corrected
Issuer Free Writing Prospectus").
(l) In the event that the Underwriter become aware that, as of the
Time of Sale, any Free Writing Prospectus prepared by or on behalf of the
Underwriter delivered to an investor in any Certificates contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements contained therein (when read in
conjunction with the Time of Sale Information), in light of the
circumstances under which they were made, not misleading, when considered
in conjunction with the Time of Sale Information (together with a Defective
Issuer Free Writing Prospectus, a "Defective Free Writing Prospectus"), the
Underwriter shall notify the Company thereof within one business day after
discovery.
(m) The Underwriter shall, if requested by the Company;
(i) if the Defective Free Writing Prospectus was a Free Writing
Prospectus prepared by or on behalf of the Underwriter, prepare a Free
Writing Prospectus which corrects the material misstatement in or
omission from the Defective Free Writing Prospectus (together with a
Corrected Issuer Free Writing Prospectus, a "Corrected Free Writing
Prospectus");
(ii) deliver the Corrected Free Writing Prospectus to each
investor which received the Defective Free Writing Prospectus prior to
entering into a contract of sale with such investor;
(iii) notify such investor in a prominent fashion that the prior
contract of sale with the investor has been terminated, and of the
investor's rights as a result of termination of such agreement;
(iv) provide such investor with an opportunity to affirmatively
agree to purchase the Offered Certificates on the terms described in
the Corrected Free Writing Prospectus; and
(v) comply with any other requirements for reformation of the
original contract of sale with such investor, as described in Section
IV.A.2.c of the Commission's Securities Offering Reform Release No.
33-8591.
(n) The Company and the Underwriter agree to retain all Free Writing
Prospectuses that they have used and that are not required to be filed
pursuant to this Section 11 for a period of three years following the
initial bona fide offering of the Certificates.
(o) The Underwriter covenants with the Company that after the final
Prospectus is available the Underwriter shall not distribute any written
information concerning the Offered Certificates to a prospective purchaser
of Offered Certificates unless such information is preceded or accompanied
by the Final Prospectus.
20
SECTION 12. 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 BAS shall be
directed to Banc of America Securities LLC, 000 Xxxxx Xxxxx Xxxxxx,
XX0-000-00-00, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxx;
notices to the Company shall be directed to it at Asset Backed Funding
Corporation, 000 Xxxxx Xxxxx Xxxxxx, XX0-000-00-00, Xxxxxxxxx, Xxxxx Xxxxxxxx
00000, Attention: Associate General Counsel, with a copy to the Treasurer.
SECTION 13. Parties. This Agreement shall inure to the benefit of and be
binding upon the Company, the Underwriter, any controlling persons referred to
herein and their respective successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person, firm or corporation any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. No purchaser
of Offered Certificates from the Underwriter shall be deemed to be a successor
by reason merely of such purchase.
SECTION 14. Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW (BUT WITH REFERENCE TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH BY ITS TERMS
APPLIES TO THIS AGREEMENT).
SECTION 15. No Advisory or Fiduciary Responsibility. The Company
acknowledges and agrees that: (i) the purchase and sale of the Offered
Certificates pursuant to this Agreement, including the determination of the
public offering price of the Offered Certificates and any related discounts and
commissions, is an arm's-length commercial transaction between the Company, on
the one hand, and the Underwriter on the other hand, and the Company is capable
of evaluating and understanding and understands and accepts the terms, risks and
conditions of the transactions contemplated by this Agreement; (ii) in
connection with each transaction contemplated hereby and the process leading to
such transaction the Underwriter is and has been acting solely as a principal
and is not the agent or fiduciary of the Company or its affiliates,
stockholders, creditors or employees or any other party; (iii) the Underwriter
has not assumed, nor will it assume, an advisory or fiduciary responsibility in
favor of the Company with respect to any of the transactions contemplated hereby
or the process leading thereto (irrespective of whether the Underwriter has
advised or is currently advising the Company on other matters) or any other
obligation to the Company except the obligations expressly set forth in this
Agreement; (iv) the Underwriter and its affiliates may be engaged in a broad
range of transactions that involve interests that differ from those of the
Company and that the Underwriter has no obligation to disclose any of such
interests by virtue of any fiduciary or advisory relationship; and (v) the
Underwriter has not provided any legal, accounting, regulatory or tax advice
with respect to the offering contemplated hereby and the Company has consulted
its own legal, accounting, regulatory and tax advisors to the extent it deemed
appropriate.
21
The Company hereby waives and releases, to the fullest extent permitted by
law, any claims that the Company may have against the Underwriter with respect
to any breach or alleged breach of fiduciary duty.
SECTION 16. Miscellaneous.
(a) This Agreement supersedes all prior agreements and understandings
(whether written or oral) between the Company and the Underwriter with
respect to the subject matter hereof.
(b) Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated except by a writing signed by the party against
whom enforcement of such change, waiver, discharge or termination is
sought.
(c) This Agreement may be signed in any number of counterparts each of
which shall be deemed an original, which taken together shall constitute
one and the same instrument.
(d) The headings of the Sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed a part of this
Agreement.
SECTION 17. Non-Petition.
The Underwriter hereby agrees not to cause or participate in the filing of
a petition in bankruptcy against the Company for the non-payment to the
Underwriter of any amounts provided by this Agreement or otherwise until one
year and one day after the payment in full of all amounts due on the
Certificates in accordance with the terms of the Pooling and Servicing
Agreement.
22
If the foregoing is in accordance with your understanding of our agreement,
please sign this Agreement and return it to us.
Very truly yours,
ASSET BACKED FUNDING CORPORATION
By: /s/ Xxxxx X. Good
------------------------------------------
Name: Xxxxx X. Good
Title: Vice President
The foregoing Agreement is hereby
confirmed and accepted as of the date
first written above.
BANC OF AMERICA SECURITIES LLC
By: /s/ Xxxxxxx X. Xxxxx-Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxx-Xxxxxx
Title: Vice President
SCHEDULE I
----------
Offered Certificates: Class X-0, Xxxxx X-0X, Xxxxx X-0X, Class A-2C, Class A-
-------------------- 2D, Class M-1, Class M-2, Class M-3, Class M-4, Class M-
5, Class M-6, Class M-6, Class M-7, Class M-8 and Class
M-9.
Registration Statement
File Number: 333-130524
-----------
Original Certificate Principal Balance of the Offered Certificates:
------------------------------------------------------------------
Original Certificate
Class Principal Balance
--------------- ----------------------------------
Class A-1 $305,011,000
Class A-2A $436,171,000
Class A-2B $110,873,000
Class A-2C $184,930,000
Class A-2D $121,135,000
Class M-1 $46,815,000
Class M-2 $43,934,000
Class M-3 $27,369,000
Class M-4 $23,767,000
Class M-5 $23,047,000
Class M-6 $21,607,000
Class M-7 $18,726,000
Class M-8 $12,244,000
Class M-9 $10,803,000
Purchase Price: $1,382,846,271
--------------
I-1
Classes of Book-Entry
Offered Certificates: Class A-1, Class A-2A, Class A-2B, Class A-2C, Class A-
-------------------- 2D, Class M-1, Class M-2, Class M-3, Class M-4, Class M-
5, Class M-6, Class M-6, Class M-7, Class M-8 and Class
M-9.
Description of Initial
Mortgage Loans: A pool of fixed and adjustable rate, first and second
-------------- lien residential mortgage loans having an aggregate
principal balance as of the Cut-off Date of
approximately $1,124,547,588. In addition, certain other
Mortgage Loans may be purchased by the Securities
Administrator, on behalf of the Trust, from the Company
from time to time on or before February 28, 2007 and
included in the Mortgage Pool. The Mortgage Loans are
secured by one- to four-family residential properties.
Denominations: The Offered Certificates will be issued in book-entry
------------- form. Each such Class of Offered Certificates will be
evidenced by one or more certificates registered in the
name of Cede & Co. in the aggregate amount equal to the
Original Certificate Principal Balance of such Class.
Interests in such Classes of Offered Certificates may
be purchased by investors in minimum denominations of
$25,000 and integral multiples of $1.
Cut-off Date: November 1, 2006.
------------
Offered Certificate Ratings:
---------------------------
Class Fitch Xxxxx'x S&P
----- ----- ------- ---
Class A-1 AAA Aaa AAA
Class A-2A AAA Aaa AAA
Class A-2B AAA Aaa AAA
Class A-2C AAA Aaa AAA
Class A-2D AAA Aaa AAA
Class M-1 AA+ Aa1 AA+
Class M-2 AA Aa2 AA
Class M-3 AA- Aa3 AA-
Class M-4 A+ A1 A+
Class M-5 A A2 A
Class M-6 A- A3 A-
Class M-7 BBB+ Baa1 BBB+
Class M-8 BBB Baa2 BBB
Class X-0 XXX- Xxx0 XXX-
X-0
SCHEDULE II
-----------
DISCLOSURE PACKAGE
------------------
1. Free Writing Prospectus, filed and accepted by the SEC on December 1,
2006, with a filing date of December 4, 2006 and accession number
0001379434-06- 000024.
2. Free Writing Prospectus, filed and accepted by the SEC on December 4,
2006, with a filing date of December 4, 2006 and accession number
0001379434-06- 000027.
II-1
