B&W Draft 1/19/97
$
BLOCK MORTGAGE FINANCE, INC.
Block Mortgage Finance
Asset-Backed Certificates, Series 1997-1,
Class A-1
Class A-2
Class A-3
Class A-4
UNDERWRITING AGREEMENT
January __, 1997
Xxxxxx Xxxxxxx & Co. Incorporated
c/x Xxxxxx Xxxxxxx & Co. Incorporated
as Representative of the Several
Underwriters listed herein
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Block Mortgage Finance, Inc. (the "Depositor"), a wholly-owned, special
purpose subsidiary of Companion Mortgage Corporation (the "Seller" or
"Companion"), has authorized the issuance and sale of Block Mortgage Finance
Asset-Backed Certificates, Series 1997-1, Class A-1, Class A-2 and Class A-3
Certificates (collectively, the "Fixed Rate Certificates") and Class A-4
Certificates (the "Adjustable Rate Certificates" and together with the Fixed
Rate Certificates, the "Class A Certificates"), Class X-1 and Class X-2
Certificates (the "Class X Certificates") and the Class R Certificates (the
"Class R Certificates" and together with the Class X Certificates, the "Private
Certificates"). As used herein, the Class A Certificates, Class X Certificates
and Class R Certificates are herein collectively referred to as the
"Certificates." The Certificates evidence in the aggregate the beneficial
interest in a pool of fixed and adjustable rate mortgage loans (the "Mortgage
Loans"). The Fixed Rate Certificates will represent an undivided ownership
interest in the group of Mortgage Loans (the "Fixed Rate Group") which are
secured by fixed-rate first and second mortgages primarily on one- to
four-family residential dwellings. The Adjustable Rate Certificates will
represent an undivided ownership interest in the group of Mortgage Loans (the
"Adjustable Rate Group" and together with the Fixed Rate Group, the "Loan
Groups")
which are secured by adjustable-rate first mortgages primarily on one- to
four-family residential dwellings.
Only the Class A Certificates are being purchased by the several
underwriters named in Schedule B hereto (collectively, the "Underwriters"), at
the price set forth in Schedule A.
The Certificates will be issued under a pooling and servicing agreement
(the "Pooling and Servicing Agreement"), dated as of January 1, 1997 among the
Depositor, the Seller, Block Financial Corporation, as master servicer (the
"Master Servicer"), and Bankers Trust Company of California N.A., as trustee
(the "Trustee"). The Seller, pursuant to the terms of the Pooling and Servicing
Agreement, will transfer to the Depositor all of its right, title and interest
in and to the Mortgage Loans as of the Cut-Off Date and the collateral securing
each Mortgage Loan. The Certificates will evidence fractional undivided
interests in the property held in trust for the holders of such Certificates
(the "Trust"). The assets of the Trust will include, among other things: the
Mortgage Loans conveyed to the Trust on January __, 1997 (the "Mortgage Loans")
and such amounts as may be held by the Trustee in the Certificate Account,
Distribution Account and any other accounts held by the Trustee for the Trust.
The aggregate undivided interest in the Trust represented by the Class A
Certificates initially will be equal to $[___________] of principal, which
represents 100% of the outstanding principal balances of the Mortgage Loans as
of [_____________] (the "Cut-Off Date") and the amount on deposit in the
Pre-Funding Account on the Closing Date. The Class A Certificates will have the
benefit of two financial guaranty insurance policies (each, a "Policy") issued
by MBIA Insurance Corporation, (the "Certificate Insurer") a principal
operating subsidiary of MBIA Inc., a New York Stock Exchange listed company,
pursuant to an Insurance Agreement (the "Insurance Agreement") dated as of
[_____________] among the Seller, the Master Servicer, the Depositor, H&R Block
Corporation, as guarantor, NF Investments Inc., as servicer and the Certificate
Insurer. Forms of the Pooling and Servicing Agreement have been filed as
exhibits to the Registration Statement (hereinafter defined).
An election will be made to treat the assets of the Trust as a "real
estate mortgage investment conduit" (the "REMIC") for federal income tax
purposes. The Class A Certificates and the Class X Certificates will represent
beneficial ownership of "regular interests" in the Master REMIC and the Class R
Certificates will represent beneficial ownership of "residual interests" in
each of the Subsidiary REMIC and the Master REMIC.
The Class A Certificates are more fully described in a Registration
Statement which the Depositor has furnished to the Underwriters. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Pooling and Servicing Agreement.
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This Underwriting Agreement, the Pooling and Servicing Agreement, the
Insurance Agreement and the Indemnification Agreement are referred to
collectively herein as the "Agreements".
The Depositor understands that the Underwriters propose to make a public
offering of the Class A Certificates as soon as the Underwriters deem advisable
after the date hereof.
The Depositor and the Trust have filed with the Securities and Exchange
Commission (the "Commission") on October 15, 1996 a registration statement on
Form S-3, including a form of prospectus relating to the Class A Certificates
(Nos. 333-14041) and have filed such amendments thereto as may have been
required to the date hereof, and pursuant to the provisions hereof shall file
such post-effective amendments thereto as may hereafter be required pursuant to
the Securities Act of 1933, as amended (the "1933 Act"), and the rules and
regulations of the Commission thereunder (the "Rules and Regulations"). Such
registration statement (as amended, if applicable) and the prospectus and
prospectus supplement relating to the offering of the Class A Certificates
constituting a part thereof filed by the Depositor are referred to herein as
the "Registration Statement" and the "Prospectus," respectively; and any
reference herein to any amendment or supplement with respect to the
Registration Statement or the Prospectus shall be deemed to refer to and
include any information deemed to be a part thereof pursuant to Rule 430A under
the 1933 Act.
SECTION 1. Representations and Warranties of the Depositor and the Seller.
Each of the Seller and the Depositor, each as to itself, represents and
warrants to, and agrees with the Underwriters that:
(a) The Registration Statement has become effective under the 1933 Act.
The Registration Statement complies, and any amendment to the Registration
Statement at the time such amended Registration Statement becomes effective
will comply, in all material respects with the requirements of the 1933 Act and
the Rules and Regulations. The Registration Statement at the time such
Registration Statement became effective did not, and any amendment to the
Registration Statement at the time such amended Registration Statement becomes
effective will not, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus as of its date did not, and
the Prospectus as amended or supplemented as of the Closing Time (as defined
herein) will not, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in this subsection
shall not apply to omissions of information from the Registration Statement or
Prospectus that are solely included in the Computational Materials distributed
by an Underwriter in violation of Section
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2(a) hereof or statements in, or omissions from, the Registration Statement or
Prospectus made in reliance upon and in conformity with information furnished to
the Depositor in writing by the Underwriters or the Certificate Insurer
expressly for use in the Registration Statement or Prospectus. Assuming
compliance by each Underwriter with Section 2(a) hereof, the conditions to the
use by the Depositor of a registration statement on Form S-3 under the 1933 Act,
as set forth in the General Instructions to Form S-3, have been satisfied with
respect to the Registration Statement and the Prospectus. There are no contracts
or documents of the Depositor that are required to be filed as exhibits to the
Registration Statement pursuant to the 1933 Act or the Rules and Regulations
that have not been so filed on or prior to the effective date of the
Registration Statement.
(b) Since the respective dates as of which information is given in the
Prospectus, or the Prospectus as amended and supplemented at the Closing Time,
there has not been any material adverse change in the general affairs,
management, financial condition, or results of operations of any of the
Servicer, the Master Servicer, the Seller or the Depositor or of their
subsidiaries, otherwise than as set forth in the Prospectus or the Prospectus
as amended and supplemented at the Closing Time.
(c) Each of the Servicer, the Master Servicer, the Seller and the
Depositor has been duly incorporated and is validly existing as a corporation
in good standing under the laws of its respective jurisdiction of
incorporation, with the full right, power and authority (corporate and other)
to own, lease and operate its properties and conduct its business as described
in the Prospectus and to enter into and perform its obligations under this
Agreement, the Pooling and Servicing Agreement, the Insurance Agreement and the
Indemnification Agreement, as applicable, and to cause the Certificates to be
issued; each of the Servicer, the Master Servicer and the Seller is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction which requires such qualification, except where failure to
be so qualified would not have a material adverse effect on the business or
financial condition of any of the Servicer, the Master Servicer or the Seller;
and [the Master Servicer and the Servicer are each duly authorized under the
statutes that regulate the business of making first and junior lien mortgage
loans or of financing the sale of goods (commonly called "small loan laws,"
"consumer finance laws," or "sales finance laws"),] or are permitted under the
general interest statutes and related laws and court decisions, to conduct in
the various jurisdictions in which any of them do business the businesses as
currently conducted therein by any of them.
(d) There are no legal or governmental proceedings pending to which the
Master Servicer, the Servicer, the Seller or the Depositor is a party or of
which any property of the Master Servicer, the Servicer, the Seller or the
Depositor is the subject, which if determined adversely to the Master Servicer,
the Servicer,
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the Seller or the Depositor would individually or in the aggregate have a
material adverse effect on the financial position, shareholders' equity or
results of operations of the Master Servicer, the Servicer, the Seller or the
Depositor; and to the best knowledge of the Depositor and the Seller, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(e) This Agreement has been duly authorized, executed and delivered by the
Seller and the Depositor, and the Pooling and Servicing Agreement, the
Insurance Agreement and the Indemnification Agreement, when executed and
delivered as contemplated hereby and thereby, will have been duly authorized,
executed and delivered by the Seller, the Depositor, the Master Servicer, the
Servicer, the Trustee, the Underwriter and the Certificate Insurer, as
appropriate, and this Agreement constitutes, and the Pooling and Servicing
Agreement, the Insurance Agreement and the Indemnification Agreement when
executed and delivered as contemplated herein and therein will constitute,
legal, valid and binding instruments enforceable against the Seller, the
Depositor, the Master Servicer or the Servicer, as applicable, in accordance
with their respective terms, subject as to enforceability (i) to applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting creditors' rights generally, (ii) to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law) and (iii) with respect to rights of indemnity under this Agreement and the
Indemnification Agreement, to limitations of public policy under applicable
securities laws.
(f) The issuance and delivery of the Certificates, the consummation of any
other of the transactions contemplated herein or in the Pooling and Servicing
Agreement, the Insurance Agreement and the Indemnification Agreement, and the
fulfillment of the terms of this Agreement, the Pooling and Servicing
Agreement, the Insurance Agreement and the Indemnification Agreement, do not
and will not conflict with or violate any term or provision of the Certificate
or Articles of Incorporation or Bylaws of the Master Servicer, the Servicer,
the Depositor or the Seller; any statute, order or regulation applicable to the
Master Servicer, the Servicer, the Depositor or the Seller of any court,
regulatory body, administrative agency or governmental body having jurisdiction
over the Master Servicer, the Servicer, the Depositor or the Seller; and do not
and will not conflict with, result in a breach or violation or the acceleration
of, or constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any of the property or assets of the
Master Servicer, the Servicer, the Depositor or the Seller pursuant to the
terms of, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Master Servicer, the Servicer, the
Depositor or the Seller is a party or by which the Master Servicer, the
Servicer, the Depositor or the Seller may be bound or to which any of the
property or assets of the Master Servicer, the Servicer, the Depositor or the
Seller may be subject,
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except for conflicts, violations, breaches, accelerations and defaults which
would not, individually or in the aggregate, be materially adverse to the Master
Servicer, the Depositor, the Servicer or the Seller or materially adverse to the
transactions contemplated by this Agreement.
(g) Deloitte & Touche LLP is an independent public accountant with respect
to the Master Servicer, the Servicer, the Depositor and the Seller as required
by the 1933 Act and the Rules and Regulations.
(h) The direction by the Depositor to the Trustee to execute, countersign,
issue and deliver the Certificates has been duly authorized by the Depositor,
and assuming the Trustee has been duly authorized to do so, when executed,
countersigned, issued and delivered by the Trustee in accordance with the
Pooling and Servicing Agreement, the Certificates will be validly issued and
outstanding and will be entitled to the benefits provided by the Pooling and
Servicing Agreement.
(i) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance or sale of the Class A Certificates, or the
consummation by the Master Servicer, the Servicer, the Depositor or the Seller
of the other transactions contemplated by this Agreement, the Pooling and
Servicing Agreement, the Insurance Agreement or the Indemnification Agreement,
as applicable except the registration under the 1933 Act of the Class A
Certificates and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the issuance of the Class A Certificates and the purchase and
distribution of the Class A Certificates by the Underwriters or as have been
obtained.
(j) The Master Servicer, the Servicer, the Depositor and the Seller
possesses all material licenses, certificates, authorities or permits issued by
the appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct the business now conducted by it and as described in the
Prospectus, and none of the Master Servicer, the Servicer, the Depositor or the
Seller has received notice of proceedings relating to the revocation or
modification of any such license, certificate, authority or permit which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling
or finding, would materially and adversely affect the conduct of its business,
operations or financial condition.
(k) At the time of execution and delivery of the Pooling and Servicing
Agreement, with respect to the Initial Mortgage Loans, and, with respect to the
Subsequent Mortgage Loans and Eligible Substitute Mortgage Loans, as of the
date on which such Mortgage Loan is transferred to the Trust (each, a "Transfer
Date"), the Seller (i) will have good and marketable title to the Trust Balance
of each such Mortgage Loan being transferred by it to the Depositor
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and to the Transferred Assets being transferred by it to the Trustee, free and
clear of any lien, mortgage pledge, charge, encumbrance, adverse claim or other
security interest (collectively "Liens"), other than, with respect to a second
or more junior lien Mortgage Loan, the Lien of the related Senior Lien, (ii)
will not have assigned to any person any of its right, title or interest in or
to such Trust Balances or Transferred Assets and (iii) will have the power and
authority to sell such Trust Balances to the Depositor and to assign the
Transferred Assets to the Trustee; and upon the consummation of the sale and the
assignment provided for pursuant to the terms of the Receivables Purchase
Agreement and the Transfer Agreement, respectively, the Seller and the Trustee
will have acquired beneficial ownership of all the related Subservicer's right,
title and interest in and to the Trust Balances and Transferred Assets,
respectively, other than the right or obligation to fund additional draws.
(l) At the time of execution and delivery of the Pooling and Servicing
Agreement, with respect to the Initial Mortgage Loans, and as of the applicable
Transfer Date, with respect to the Additional Mortgage Loans, the Depositor (i)
will have good and marketable title to the Trust Balance of each such Mortgage
Loan being transferred by it to the Trustee pursuant to the Pooling and
Servicing Agreement, free and clear of and Liens other than, with respect to a
second or more junior lien Mortgage Loan, the Lien of the related Senior Lien,
(ii) will not have assigned to any person any of its right, title or interest
in or to such Trust Balances or under the Pooling and Servicing Agreement or
the Certificates being issued pursuant thereto and (iii) will have the power
and authority to sell such Trust Balances to the Trustee and to sell the Class
A Certificates to the Underwriters, and upon execution and delivery of the
Pooling and Servicing Agreement by the Trustee, the Trustee will have acquired
beneficial ownership of all of the Depositor's right, title and interest in and
to the Mortgage Loans, other than the right or obligation to fund additional
draws, and upon delivery to the Underwriters of the Class A Certificates, the
Underwriters will have good and marketable title to the Class A Certificates,
in each case free of Liens except, in the case of the Mortgage Loans, to the
extent disclosed in the Prospectus.
(m) As of the Cut-Off Date for the Initial Mortgage Loans, each of the
Initial Mortgage Loans will meet the eligibility criteria described in the
Prospectus and the Pooling and Servicing Agreement and as of the Subsequent
Cut-Off Date for the Additional or Subsequent Mortgage Loans and any Eligible
Substitute Mortgage Loans and each of the Additional Mortgage Loans, as
applicable, will meet the eligibility criteria applicable thereto described in
the Pooling and Servicing Agreement.
(n) Neither the Master Servicer, the Servicer, the Seller, the Depositor
nor the Trust created by the Pooling and Servicing Agreement will conduct their
operations while any of the Class A Certificates are outstanding in a manner
that would require the Master Servicer, the Seller, the Servicer, the Depositor
or the
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Trust to be registered as an "investment company" under the Investment Company
Act of 1940, as amended (the "1940 Act"), as in effect on the date hereof or
require the Trust to be registered under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act") as in effect on the date hereof.
(o) At the Closing Time, the Certificates and the Pooling and Servicing
Agreement will conform in all material respects to the descriptions thereof
contained in the Prospectus.
(p) At the Closing Time, the Class A Certificates shall have been rated in
the highest rating category by at least two nationally recognized rating
agencies.
(q) Any taxes, fees and other governmental charges in connection with the
execution, delivery and issuance of this Agreement, the Pooling and Servicing
Agreement, the Insurance Agreement and the Certificates have been paid or will
be paid at or prior to the Closing Time.
(r) At the Closing Time, each of the representations and warranties of the
Seller and the Depositor with respect to the Initial Mortgage Loans set forth
in the Pooling and Servicing Agreement and the Insurance Agreement will be true
and correct in all material respects.
Any certificate signed by an officer of the Master Servicer, the
Depositor, the Servicer or the Seller and delivered to you or counsel for the
Underwriters in connection with an offering of the Class A Certificates shall
be deemed, and shall state that it is, a representation and warranty as to the
matters covered thereby to each person to whom the representations and
warranties in this Section 1 are made.
SECTION 2. Representations and Warranties of the Underwriters. Each
Underwriter severally, and not jointly, represents and warrants to, and agrees
with the other Underwriter, the Master Servicer, the Seller and the Depositor
that:
(a) During the period commencing on the effective date of the Registration
Statement and ending on the date the Prospectus is delivered to a prospective
investor, such Underwriter has not furnished and will not furnish, in writing
or by electronic transmission, Computational Materials relating to the Class A
Certificates to any such prospective investor except as otherwise contained in
the Preliminary Prospectus dated January __, 1997 relating to the Class A
Certificates. For purposes of this Underwriting Agreement, "Computational
Materials" shall mean any "written ABS Term Sheet" or "computational materials"
as such terms are defined in the letter dated February 17, 1995 of the Office
of Chief Counsel, Division of Corporation Finance of the Securities and
Exchange Commission to the Public Securities Association (including computer
generated tables displaying information relating to the yield, average life,
duration, expected maturity,
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interest rate sensitivity or cash flow characteristics of the Class A
Certificates under a variety of possible prepayment scenarios, certain factual
information regarding the financial terms of the offering, including the
anticipated ratings for each class of Certificates, as well as background
information concerning the Mortgage Loans, or any descriptive data about the
underlying Mortgage Loans, such as their individual and weighted average
coupons, maturities and loan-to-value ratios or geographical distribution of the
Mortgage Properties related thereto, and the proposed structure of the Class A
Certificates); provided, however, that Computational Materials shall not be
deemed to include any materials which do not otherwise constitute a prospectus
within the meaning of Section 2(10) under the 1933 Act or which are permitted by
the Rules and Regulations, including, but not limited to, Rule 134 and Rule 139
thereunder.
(b) Each Underwriter acknowledges that the Master Servicer, the Seller and
the Depositor will not be deemed to have breached any representation and
warranty or to have failed to satisfy any other agreement contained herein, to
the extent any such breach or failure on the part of such party resulted solely
from an Underwriter's breach of the representation and warranty set forth in
clause (a) above; provided, however, that the rights and obligations otherwise
available pursuant to Sections 9 and 10 hereof are not limited solely as a
result of an Underwriter's breach of the representation and warranty set forth
in clause (a) above.
SECTION 3. Purchase and Sale. The commitment of the Underwriters to
purchase the Class A Certificates pursuant to this Agreement shall be deemed to
have been made on the basis of the representations and warranties of the Master
Servicer, the Depositor and the Seller herein contained and shall be subject to
the terms and conditions herein set forth. The Depositor agrees to instruct the
Trustee to issue, and agrees to sell to the Underwriters, and the Underwriters
agree, severally and not jointly (except as provided in Section 13 hereof), to
purchase from the Depositor, at the purchase price for each Class A Certificate
set forth on Schedule A hereto, the respective principal amount of Class A
Certificates set forth opposite the name of such Underwriter on Schedule A
hereto.
SECTION 4. Delivery and Payment. Payment of the purchase price for, and
delivery of, any Class A Certificates to be purchased by the Underwriters shall
be made at the office of Brown & Wood LLP, One World Trade Center, New York,
New York, or at such other place as shall be agreed upon by you, the Depositor,
the Seller and the Master Servicer, at 10:00 a.m. New York City time on January
__, 1997 or at such other time or date as shall be agreed upon in writing by
you, the Depositor, the Seller and the Master Servicer (the "Closing Date").
The Class A Certificates will be delivered in book-entry form through the
facilities of The Depository Trust Company, CEDEL S.A. and the Euroclear
System. Payment shall be made to the Depositor by wire transfer of same day
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funds payable to the account of the Depositor. Delivery of the Class A
Certificates shall be made to you for the respective accounts of the
Underwriters against payment of the purchase price thereof. Such Class A
Certificates shall be in such denominations and registered in such names as you
may request in writing at least one business day prior to the Closing Date.
Such Class A Certificates, which may be in temporary form, will be made
available for examination and packaging by you no later than 3:00 p.m. New York
City time on the first business day prior to the Closing Date.
SECTION 5. Offering by the Underwriters. It is understood that the
Underwriters propose to offer the Class A Certificates for sale to the public
as set forth in the Prospectus.
SECTION 6. Covenants of the Seller, the Depositor and the Master Servicer.
The Seller, the Depositor and the Master Servicer covenant with each of the
Underwriters as follows:
(a) If at any time when the Prospectus as amended or supplemented is
required by the 1933 Act to be delivered in connection with sales of the Class
A Certificates by the Underwriters, any event shall occur or condition exist as
a result of which it is necessary, in the opinion of your counsel or counsel
for the Depositor, to further amend or supplement the Prospectus as then
amended or supplemented in order that the Prospectus as amended or supplemented
will not include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it shall be
necessary, in the opinion of any such counsel at any such time to amend or
supplement the Registration Statement or the Prospectus as then amended or
supplemented in order to comply with the requirements of the 1933 Act or the
Rules and Regulations thereunder, or if required by such Rules and Regulations,
including Rule 430A thereunder, to file a post-effective amendment to such
Registration Statement (including an amended Prospectus), the Depositor will
promptly prepare and file with the Commission such amendment or supplement as
may be necessary to correct such untrue statement or omission or to make the
Registration Statement comply with such requirements, and within two business
days will furnish to the Underwriters as many copies of the Prospectus, as
amended or supplemented, as you shall reasonably request; provided, however,
that the Depositor shall not be required to amend or supplement the
Registration Statement or the Prospectus as a result of any Underwriter's
breach of the representation and warranty set forth in Section 2(a) hereof.
(b) The Depositor will give you reasonable notice of its intention to file
any amendment to the Registration Statement, the Prospectus or the Prospectus
as amended or supplemented, pursuant to the 1933 Act, will furnish you with
copies of any such amendment or supplement proposed to be filed a reasonable
time in advance of filing, and will not file any such amendment or supplement
to which you or your counsel shall object.
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(c) The Depositor will notify you immediately, and confirm the notice in
writing, (i) of the effectiveness of any amendment to the Registration
Statement, (ii) of the mailing or the delivery to the Commission for filing of
any supplement to the Prospectus or the Prospectus as amended or supplemented,
(iii) of the receipt of any comments from the Commission with respect to the
Registration Statement or the Prospectus or the Prospectus as amended or
supplemented, (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information and (v) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. The Depositor will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible moment.
(d) The Depositor will deliver to you as many signed and as many conformed
copies of the Registration Statement (as originally filed) and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated by reference in the Prospectus) as
you may reasonably request.
(e) The Depositor will make generally available to holders of the Class A
Certificates as soon as practicable, but in any event not later than 120 days
after the close of the period covered thereby, an earnings statement of the
Trust (which need not be audited) complying with Section 11(a) of the 1933 Act
and the Rules and Regulations (including, at the option of the Seller, Rule
158) and covering a period of at least twelve consecutive months beginning not
later than the first day of the first fiscal quarter following the Closing
Date.
(f) The Depositor will endeavor, in cooperation with you, to qualify the
Class A Certificates for offering and sale under the applicable securities laws
of such states and other jurisdictions of the United States as you may
designate, and will maintain or cause to be maintained such qualifications in
effect for as long as may be required for the distribution of the Class A
Certificates. The Depositor will file or cause the filing of such statements
and reports as may be required by the laws of each jurisdiction in which the
Class A Certificates have been qualified as above provided.
(g) Neither the Depositor nor the Master Servicer will, without your prior
written consent, publicly offer or sell or contract to sell any mortgage
pass-through certificates, mortgage pass-through notes or collateralized
mortgage obligations or other similar securities representing interests in or
secured by other mortgage-related assets originated or owned by the Depositor
or the Master Servicer for a period of five days following the commencement of
the offering of the Class A Certificates to the public.
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(h) So long as the Class A Certificates shall be outstanding, the
Depositor will deliver to the Underwriters the annual statement as to
compliance delivered to the Trustee pursuant to Section ___ of the Pooling and
Servicing Agreement and the annual statement of a firm of independent public
accountants furnished to the Trustee pursuant to Section ____ of the Pooling
and Servicing Agreement, as soon as such statements are furnished to the
Trustee.
(i) The Depositor will apply the net proceeds from the sale of the Class A
Certificates in the manner set forth in the Prospectus.
(j) If, between the date hereof and the Closing Date, to the knowledge of
the Master Servicer, the Seller or the Depositor there are any legal or
governmental proceedings instituted or threatened against the Master Servicer,
the Seller or the Depositor which, if determined adversely to the Master
Servicer, the Seller or the Depositor, would individually or in the aggregate
have a material adverse effect on the financial condition, shareholders' equity
or results of operations of the Master Servicer, the Seller or the Depositor,
the Master Servicer, the Seller and the Depositor, as applicable, will give
prompt written notice thereof to the Underwriters.
SECTION 7. Conditions to the Underwriters' Obligations. The obligations of
the Underwriters to purchase the Class A Certificates pursuant to this
Agreement are subject to the accuracy on and as of the Closing Date of the
representations and warranties on the part of the Master Servicer, the
Depositor and the Seller herein contained, to the material accuracy of the
statements of officers of the Seller, the Depositor and the Master Servicer,
respectively, made pursuant hereto, to the performance by the Seller, the
Depositor and the Master Servicer of all of their respective obligations
hereunder and to the following conditions at the Closing Date:
(a)(i) The Registration Statement shall have been declared effective under
the 1933 Act and no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, any price-related information
previously omitted from the effective Registration Statement pursuant to Rule
430A under the 1933 Act shall have been transmitted to the Commission for
filing pursuant to Rule 424(b) under the 1933 Act within the prescribed time
period, and the Depositor shall have provided evidence satisfactory to the
Underwriters of such timely filing, or a post-effective amendment to the
Registration Statement providing such information shall have been promptly
filed with the Commission and declared effective in accordance with the
requirements of Rule 430A under the 1933 Act, and prior to the Closing Date the
Depositor shall have provided evidence satisfactory to the Underwriters of such
effectiveness and (ii)there shall not have come to your attention any facts
that would cause you to believe that the Prospectus, at the time it was
required to be delivered to
12
a purchaser of the Class A Certificates, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) The Underwriters shall have received the favorable opinion, dated the
date of the Closing Date, of _________________, L.L.P., as special counsel to
the Depositor and the Master Servicer, in the form attached hereto as Exhibit
A.
(c) The Underwriters shall have received the favorable opinion, dated the
date of the Closing Date, of the Master Servicer, in form and substance
satisfactory to the Underwriters, to the effect that:
(i) the Master Servicer has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power to own its properties, to conduct its
business as described in the Prospectus and to enter into and perform its
obligations under this Agreement, the Pooling and Servicing Agreement and
the Insurance Agreement.
(ii) The Depositor has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with corporate power to own its properties, to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under this Agreement, the Pooling and Servicing Agreement and the
Insurance Agreement.
(iii) the Master Servicer has full corporate power and authority to
serve in the capacity of master servicer of the Mortgage Loans as
contemplated in the Pooling and Servicing Agreement.
(iv) The Depositor and the Master Servicer is duly authorized under
relevant statutes, laws and court decisions, to conduct in the various
jurisdictions in which they do business the respective businesses therein
currently conducted by them, except where failure to be so permitted or
failure to be so authorized will not have a material adverse effect on the
business or financial condition of the Depositor or the Master Servicer,
and the Master Servicer is duly authorized under the statutes which
regulate the business of making loans or of financing the sale of goods
(commonly called "small loan laws," "consumer finance laws" or "sales
finance laws"), or are permitted under the general interest statutes and
related laws and court decisions, to conduct in the various jurisdictions
in which it does business the businesses as currently conducted therein by
it.
(v) Neither the Depositor nor the Master Servicer is in violation of
its Certificate or Articles of Incorporation or
13
Bylaws or, to the best of such counsel's knowledge, in default in the
performance or observance of any material obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument known to such counsel to which
the Depositor or Master Servicer is a party or by which it or its
properties may be bound, which default might result in any material adverse
changes in the financial condition, earnings, affairs or business of the
Depositor or the Master Servicer or which might materially and adversely
affect the properties or assets, taken as a whole, of the Depositor or of
the Master Servicer.
(vi) This Agreement, the Pooling and Servicing Agreement and the
Insurance Agreement have been duly authorized, executed and delivered by
the Seller, the Depositor, and the Master Servicer and, assuming the due
authorization, execution and delivery of such agreements by the other
parties thereto, such agreements constitute the valid and binding
obligation of each of the Seller, the Depositor and the Master Servicer
and, enforceable against each of the Seller, the Depositor and the Master
Servicer, in accordance with their respective terms, and in accordance
with their terms, except that in each case as to enforceability (A) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, (B) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought and (C) the enforceability as to rights to
indemnification under this Agreement and the Insurance Agreement (to the
extent indemnification under such Agreements relates to liability under
the 1933 Act) may be subject to limitations of public policy under
applicable securities laws.
(vii) The issuance and delivery of the Certificates, the consummation
of any other of the transactions contemplated herein or in the Pooling and
Servicing Agreement or the Insurance Agreement, or the fulfillment of the
terms of this Agreement, the Pooling and Servicing Agreement or the
Insurance Agreement do not and will not conflict with or violate any term
or provision of the Certificate or Articles of Incorporation or Bylaws of
the Depositor or, to the best of such counsel's knowledge, any statute,
order or regulation applicable to the Depositor of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
the Depositor and do not and will not conflict with, result in a breach or
violation or the acceleration of, or constitute a default under, or result
in the creation or imposition of any lien, charge or encumbrance upon any
of the property or assets of the Depositor pursuant to the terms of, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which
14
the Depositor is a party or by which the Depositor may be bound or to which
any of the property or assets of the Depositor may be subject except for
conflicts, violations, breaches, accelerations and defaults which would
not, individually or in the aggregate, be materially adverse to the
Depositor or materially adverse to the transactions contemplated by this
Agreement.
(viii) The consummation of any of the transactions contemplated
herein or in the Pooling and Servicing Agreement or the Insurance
Agreement, or the fulfillment of the terms of this Agreement or the
Pooling and Servicing Agreement or the Insurance Agreement, do not and
will not conflict with or violate any term or provision of the Certificate
or Articles of Incorporation or Bylaws of the Master Servicer or, to the
best of such counsel's knowledge, any statute, order or regulation
applicable to the Master Servicer, and do not and will not conflict with,
result in a breach or violation or the acceleration of, or constitute a
default under, or result in the creation or imposition of any lien, charge
or encumbrance upon any of the property or assets of the Master Servicer
pursuant to the terms of, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to which
the Master Servicer is a party or by which the Master Servicer may be
bound or to which any of the property or assets of the Master Servicer may
be subject except for conflicts, violations, breaches, accelerations and
defaults which would not, individually or in the aggregate, be materially
adverse to the Master Servicer or materially adverse to the transactions
contemplated by this Agreement.
(ix) The direction by the Depositor to the Trustee to execute, issue,
countersign and deliver the Certificates has been duly authorized by the
Depositor and, assuming that the Trustee has been duly authorized to do so
and when executed and countersigned and delivered by the Trustee against
payment of the agreed upon consideration therefor in accordance with the
Pooling and Servicing Agreement, the Certificates will be validly issued
and outstanding and will be entitled to the benefits of the Pooling and
Servicing Agreement.
(x) To the best of such counsel's knowledge, no consent, approval,
authorization, order, registration or qualification of or with any court
or governmental agency or body of the United States is required for the
issuance of the Class A Certificates and the sale of the Class A
Certificates to the Underwriters, or the consummation by the Seller, the
Depositor and the Master Servicer of the other transactions contemplated
by this Agreement, the Pooling and Servicing Agreement and the Insurance
Agreement, except the registration under the 1933 Act of the Class A
Certificates and such consents, approvals, authorizations, registrations
or qualifications as may be required under State securities or Blue Sky
laws in connection with the issuance of the Class A Certificates and the
purchase
15
and distribution of the Class A Certificates by the Underwriters or as have
been obtained.
(xi) The Registration Statement is effective under the 1933 Act and
to the best of such counsel's knowledge and information, no stop order
suspending the effectiveness of the Registration Statement has been issued
under the 1933 Act or proceedings therefor initiated or threatened by the
Commission.
(xii) The conditions to the use by the Depositor of a registration
statement on Form S-3 under the 1933 Act, as set forth in the General
Instructions to Form S-3, have been satisfied with respect to the
Registration Statement and the Prospectus. To the best of such counsel's
knowledge, there are no contracts or documents of the Depositor which are
required to be filed as exhibits to the Registration Statement pursuant to
the 1933 Act or the Rules and Regulations thereunder which have not been
so filed. The statements in the Prospectus under the caption "Risk
Factors--Legal Considerations" and under the caption "Certain Legal
Aspects of the Primary Assets", to the extent that statements in such
sections constitute matters of law or legal conclusions with respect
thereto, have been reviewed by attorneys under such counsel's supervision
and are complete and correct in all material respects.
(xiii) There are no actions, proceedings or investigations pending
before or, to the best knowledge of such counsel, threatened by any court,
administrative agency or other tribunal to which the Master Servicer, the
Depositor or the Seller is a party or of which any of their respective
properties is the subject (A) which if determined adversely to the Master
Servicer, the Depositor or the Seller would have a material adverse effect
on the business or financial condition of the Master Servicer, the
Depositor or the Seller, (B) asserting the invalidity of the Pooling and
Servicing Agreement and the Insurance Agreement, or the Certificates, (C)
seeking to prevent the issuance of the Certificates or the consummation by
the Master Servicer, the Depositor or the Seller of any of the
transactions contemplated by the Pooling and Servicing Agreement, the
Insurance Agreement and this Agreement, as the case may be, or (D) which
might materially and adversely affect the performance by the Master
Servicer, the Depositor or the Seller of their respective obligations
under, or the validity or enforceability of, the Pooling and Servicing
Agreement, the Insurance Agreement, this Agreement, or the Certificates.
(xiv) The Registration Statement at the time it became effective, and
any amendment thereto at the time such amendment becomes effective (other
than the information set forth under "Credit Enhancement--Description of
the Certificate Insurer," "Experts" and financial statements and
16
other financial and statistical information contained therein, as to which
such counsel need express no opinion), complied as to form in all material
respects with the applicable requirements of the 1933 Act and the Rules and
Regulations thereunder.
(xv) Such counsel has no reason to believe that (A) the Registration
Statement and the Prospectus, as of the date the Registration Statement
became effective, or the Registration Statement (excluding the exhibits
thereto) as of the date that the most recent post-effective amendment
thereto became effective, contained or contains any untrue statement of a
material fact or omitted or omits to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading or (B) the Prospectus, as of its date and the date of such
opinion, contained or contains any untrue statement of a material fact or
omitted 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 (it being understood that such counsel need
express no opinion as to information set forth under the caption "Credit
Enhancement--Description of the Certificate Insurer," "Experts" and the
financial statements or other financial and statistical data contained or
incorporated by reference in the Registration Statement).
Such opinion may express its reliance as to factual matters on the
representations and warranties made by the parties hereto, and on certificates
or other documents furnished by officers of such parties to the instruments and
documents referred to therein. Such opinion may be qualified, insofar as it
concerns the enforceability of the documents referred to therein, to the extent
that such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights in general, or by general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law) and no
opinion need be given as to the enforceability of Section 9 of this Agreement.
(d) The Underwriters shall have received the favorable opinion of counsel
to the Trustee, dated the date of the Closing Date, addressed to the
Underwriters and in form and scope satisfactory to counsel to the Underwriters,
to the effect that:
(i) The Trustee has duly authorized, executed and delivered the
Pooling and Servicing Agreement, and the Insurance Agreement, which
constitute the valid and legally binding agreements of the Trustee, are
enforceable against the Trustee in accordance with their terms, subject,
as to enforcement of remedies, (A) to applicable bankruptcy, insolvency,
reorganization, and other similar laws affecting the rights of creditors
generally and (B) to general principles of equity (regardless of whether
such
17
enforceability is considered in a proceeding in equity or at law).
(ii) The Trustee has duly executed and countersigned the Certificates
issued on the date thereof on behalf of the Trust.
(iii) The execution and delivery by the Trustee of the Pooling and
Servicing Agreement, and the Insurance Agreement and the performance by
the Trustee of its obligations thereunder do not conflict with or result
in a violation of the Organization Certificate or Bylaws of the Trustee.
(iv) The Trustee has full power and authority to execute and deliver
the Pooling and Servicing Agreement, and the Insurance Agreement and to
perform its obligations thereunder.
(v) To the best of such counsel's knowledge, there are no actions,
proceedings or investigations pending or threatened against or affecting
the Trustee before or by any court, arbitrator, administrative agency or
other governmental authority which, if adversely decided, would materially
and adversely affect the ability of the Trustee to carry out the
transactions contemplated in the Pooling and Servicing Agreement, and the
Insurance Agreement.
(vi) No consent, approval or authorization of, or registration,
declaration or filing with, any court or governmental agency or body of
the United States of America or any state thereof is required for the
execution, delivery or performance by the Trustee of the Pooling and
Servicing Agreement, and the Insurance Agreement.
(e) The Underwriters shall have received the favorable opinion or
opinions, dated the date of the Closing Date, of Brown & Wood LLP, as counsel
for the Underwriters, with respect to the issuance of the Class A Certificates
and the sale of the Class A Certificates to the Underwriters, the Registration
Statement, this Agreement, the Prospectus and such other related matters as the
Underwriters may require.
(f) The Underwriters shall have received the favorable opinion, dated the
date of the Closing Date, of Xxxxx Xxxx, special counsel for the Certificate
Insurer, in form and scope satisfactory to counsel for the Underwriters, to the
effect that:
(i) The Certificate Insurer is duly incorporated, validly existing
and in good standing under the laws of the State of New York.
(ii) The Certificate Insurer has the corporate power to execute and
deliver, and to take all action required of it under, the Insurance
Agreement, the Insurance Indemnification Agreement (as defined herein) and
the Policy.
18
(iii) The execution, delivery and performance by the Certificate
Insurer of the Insurance Agreement, the Insurance Indemnification
Agreement and the Policy do not require the consent or approval of, the
giving of notice to, the prior registration with, or the taking of any
other action in respect of, any state or other governmental agency or
authority that has not previously been obtained or effected.
(iv) The Policy, the Insurance Agreement and the Insurance
Indemnification Agreement have been duly authorized, executed and
delivered by the Certificate Insurer and, assuming due authorization,
execution and delivery of the Insurance Agreement and the Insurance
Indemnification Agreement by the parties thereto (other than the
Certificate Insurer), each of the Policy, the Insurance Agreement and the
Insurance Indemnification Agreement constitutes the legally valid and
binding obligation of the Certificate Insurer, enforceable in accordance
with its respective terms subject, as to enforcement, to (A) bankruptcy,
reorganization, insolvency, moratorium and other similar laws relating to
or affecting the enforcement of creditors' rights generally, including,
without limitation, laws relating to fraudulent transfers or conveyances,
preferential transfers and equitable subordination, presently or from time
to time in effect, and general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law), as
such laws may be applied in any such proceeding with respect to the
Certificate Insurer, (B) the qualification that the remedy of specific
performance may be subject to equitable defenses and to the discretion of
the court before which any proceedings with respect thereto may be brought
and (C) the enforceability of rights to indemnification under the
Insurance Indemnification Agreement may be subject to limitations of
public policy under applicable securities laws.
(v) The Policy is not required to be registered under
the 1933 Act.
(g) The Underwriters shall have received an opinion, dated the date of the
Closing Date, of Xxxxxxxx & Xxxxxx, L.L.P. as special counsel to the Seller,
the Depositor and the Master Servicer, addressed to the Seller, the Depositor
and satisfactory to the Certificate Insurer, Standard & Poor's Ratings Services
and Xxxxx'x Investors Service, Inc., relating to the sale of the Mortgage Loans
by the Seller to the Depositor and by the Depositor to the Trust and such
counsel shall have consented to reliance by the Certificate Insurer, Standard &
Poor's Ratings Services and Xxxxx'x Investors Service, Inc. and the
Underwriters on such opinion as though such opinion had been addressed to each
such party.
(h) Each of the Seller, the Depositor and the Master Servicer shall have
furnished to the Underwriters a certificate signed on behalf of the Seller, the
Depositor and the Master Servicer by an
19
accounting or financial officer thereof, dated the date of the Closing Date, as
to (i) the accuracy of the representations and warranties of the Master
Servicer, the Depositor and the Seller herein at and as of the Closing Date,
(ii) there being no legal or governmental proceedings pending, other than those,
if any, referred to in the Prospectus or the Prospectus as amended or
supplemented, as the case may be, to which the Seller, the Depositor or the
Master Servicer is a party or of which any property of the Seller, the Depositor
or the Master Servicer is the subject, which, in the judgment of the Seller, the
Depositor or the Master Servicer, as applicable, have a reasonable likelihood of
resulting in a material adverse change in the financial condition, shareholders'
equity or results of operations of the Seller, the Depositor and the Master
Servicer; and to the best knowledge of each of the Seller, the Depositor or the
Master Servicer, as applicable, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others, (iii) the
performance by the Seller, the Depositor and the Master Servicer of all of their
respective obligations hereunder to be performed at or prior to the Closing
Date, and (iv) such other matters as you may reasonably request.
(i) The Trustee shall have furnished to the Underwriters a certificate of
the Trustee, signed by one or more duly authorized officers of the Trustee,
dated the date of the Closing Date, as to the due authorization, execution and
delivery of the Pooling and Servicing Agreement by the Trustee and the
acceptance by the Trustee of the trust created by the Pooling and Servicing
Agreement and the due execution and delivery of the Certificates by the Trustee
thereunder and such other matters as you shall reasonably request.
(j) An Insurance Indemnification Agreement shall have been entered into
between the Certificate Insurer, the Master Servicer, the Depositor, the Seller
and the Underwriters, in which the Certificate Insurer will represent to the
Underwriters, among other representations, that (i) the information under the
captions "Description of the Certificate Insurer," and "Credit
Enhancement--Description of the Certificate Insurance Policies" in the
Prospectus was approved by the Certificate Insurer and does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make such statements therein, in the light of the circumstances under which
they were made, not misleading and (ii) there has been no change in the
financial condition of the Certificate Insurer since September 30, 1996 which
would have a material adverse effect on the Certificate Insurer's ability to
meet its obligations under the Policy.
(k) The Policies shall have been issued by the Certificate Insurer
pursuant to the Insurance Agreement and shall have been duly countersigned by
an authorized agent of the Certificate Insurer, if so required under applicable
state law or regulation.
20
(l) The Class A Certificates shall have been rated "AAA" by Standard &
Poor's Ratings Services and "Aaa" by Xxxxx'x Investors Service, Inc.
(m) Counsel and special counsel to the Master Servicer, the Depositor and
the Seller shall have furnished to the Underwriters any opinions supplied to
the rating agencies relating to certain matters with respect to the Class A
Certificates.
(n) The Underwriters shall have received from Deloitte & Touche LLP, or
other independent certified public accountants acceptable to the Underwriters,
a letter, dated as of the date of this Agreement in the form heretofore agreed
to.
(o) Prior to the Closing Date, Brown & Wood LLP, as counsel for the
Underwriters, shall have been furnished with such documents and opinions as
they may reasonably require for the purpose of enabling them to pass upon the
issuance of the Class A Certificates and the sale of the Class A Certificates
to the Underwriters as herein contemplated and related proceedings or in order
to evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained; and
all proceedings taken by the Seller, the Depositor and the Master Servicer in
connection with the issuance of the Class A Certificates and the sale of the
Class A Certificates to the Underwriters as herein contemplated shall be
satisfactory in form and substance to the Underwriters and Brown & Wood LLP.
(p) Since the respective dates as of which information is given in the
Prospectus, there shall not have been any change, or any development involving
a prospective change, in or affecting the general affairs, management,
financial condition, stockholders' equity or results of operations of the
Seller, the Depositor or the Master Servicer otherwise than as set forth or
contemplated in the Prospectus, the effect of which is in the judgment of the
Underwriters so material and adverse as to make it impracticable or inadvisable
to proceed with the public offering or the delivery of the Class A Certificates
on the terms and in the manner contemplated in the Prospectus.
(q) Prior to the Closing Date, the Seller, the Depositor and the Master
Servicer shall have furnished to you such further information, certificates and
documents as you may reasonably request.
If any condition specified in this Section 7 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by you
by notice to the Depositor at any time at or prior to the Closing Date, and
such termination shall be without liability of any party to any other party
except as provided in Section 8.
SECTION 8. Payment of Expenses. The Seller, the Depositor and the Master
Servicer jointly and severally agree to pay all
21
expenses incident to the performance of their obligations under this Agreement,
including without limitation those related to (i)the filing of the Registration
Statement and all amendments thereto, (ii)the preparation, issuance and delivery
of the Certificates, (iii)the fees and disbursements of Xxxxxxxx & Xxxxxx,
L.L.P./Brown & Wood LLP, as special counsel for the Seller, the Depositor and
the Master Servicer, and Deloitte & Touche LLP, accountants of the Seller, the
Depositor and the Master Servicer, (iv)the qualification of the Class A
Certificates under securities and Blue Sky laws and the determination of the
eligibility of the Class A Certificates for investment in accordance with the
provisions of subsection 6(f) including filing fees, and the fees and
disbursements of Brown & Wood LLP, as counsel for the Underwriters, (v)the
printing and delivery to the Underwriters, in such quantities as you may
reasonably request, of copies of the Registration Statement and Prospectus and
all amendments and supplements thereto, and of any Blue Sky Survey, (vi)the
delivery to the Underwriters, in such quantities as you may reasonably request,
of copies of the Pooling and Servicing Agreement, the Insurance Agreement and
Insurance Indemnification Agreement, (vii)the fees charged by nationally
recognized statistical rating agencies for rating the Class A Certificates,
(viii)the fees and expenses of the Trustee and its counsel and (ix)the fees and
expenses of the Certificate Insurer and its counsel.
If this Agreement is terminated by you in accordance with the provisions
of Section 7, the Seller, the Depositor and the Master Servicer shall reimburse
you for all reasonable out-of-pocket expenses, including the fees and
disbursements of Brown & Wood LLP, as counsel for the Underwriters.
SECTION 9. Indemnification. (a) The Master Servicer, the Depositor
and the Seller jointly and severally agree to indemnify and hold harmless
the Underwriters and each person, if any, who controls the Underwriters within
the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the information deemed to
be a part of the Registration Statement pursuant to Rule 430A under the
1933 Act, if applicable, or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement
or alleged untrue statement of a material fact contained in the Prospectus
(or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading, unless (a) such untrue statement or omission or
alleged untrue statement or omission was made in reliance upon and in
22
conformity with written information furnished to the Depositor, or
information electronically transmitted to the Depositor, by the
Underwriters or the Certificate Insurer expressly for use in the
Registration Statement (or any amendment thereto), (b) such loss,
liability, claim, damage or expense is incurred by an Underwriter solely
as a result of the distribution by it of Computational Materials in
violation of Section 2(a) hereof or (c) such untrue statement or omission
or alleged untrue statement or omission was made in any Preliminary
Prospectus and corrected in the Prospectus and (1) any such loss, claim,
damage or liability suffered or incurred by an Underwriter resulted from
an action, claim or suit by any person who purchased the Class A
Certificates from such Underwriter in the offering and (2) such
Underwriter failed to deliver or provide a copy of the Prospectus dated
January __, 1997 to such person at or prior to the confirmation of the
sale of such Class A Certificates in any case where such delivery is
required by the 1933 Act;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Depositor; and
(iii) against any and all expense whatsoever (including the fees and
disbursements of counsel chosen by you) as reasonably incurred in
investigating, preparing to defend or defending against or appearing as a
third party witness with respect to any litigation, or investigation or
proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or omission, as
such expense is incurred and to the extent that any such expense is not
paid under (i) or (ii) above.
This indemnity agreement will be in addition to any liability which the
Depositor may otherwise have.
(b) Each of the Underwriters severally agrees to indemnify and hold
harmless the Seller and the Depositor, each of their directors, each of their
officers who signed the Registration Statement, and each person, if any, who
controls the Seller and/or the Depositor within the meaning of Section 15 of
the 1933 Act (each, an "Indemnified Party") against any and all loss,
liability, claim, damage and expense, as incurred, described in the indemnity
contained in subsection (a) of this Section 9, arising out of any untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Seller and/or to the Depositor by such
Underwriter
23
expressly for use in the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto). The parties hereto
acknowledge that the only information supplied to the Seller and/or to the
Depositor by the Underwriters expressly for use in the Registration Statement or
the Prospectus is limited to the information set forth in the second sentence of
the fourth paragraph on the cover, the third paragraph on page 2, and the second
paragraph under the caption "Underwriting" in the Prospectus. In addition, each
Underwriter severally agrees to indemnify and hold harmless each Indemnified
Party against any and all loss, liability, claim, damage and expense, as
incurred, arising solely out of any breach of such Underwriter's representation
and warranty set forth in Section 2(a) hereof. This indemnity agreement will be
in addition to any liability that the Underwriters may otherwise have.
(c) Each indemnified party shall give prompt notice to each indemnifying
party of any action commenced against it with respect to which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have hereunder unless it has been
materially prejudiced by such failure to notify or from any liability which it
may have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action. In no
event shall the indemnifying parties be liable for the fees and expenses of
more than one counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, unless (i) if the
defendants in any such action include one or more of the indemnified parties
and the indemnifying party, and one or more of the indemnified parties shall
have employed separate counsel after having reasonably concluded that there may
be legal defenses available to it or them that are different from or additional
to those available to the indemnifying party or to one or more of the other
indemnified parties or (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the commencement of
the action.
SECTION 10.Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 9 is for any reason held to be unenforceable by the indemnified parties
although applicable in accordance with its terms, the Master Servicer, the
Depositor and the Seller on the one hand, and the Underwriters (or Underwriter,
if such loss, liability, claim, damage or expense arises solely as a result of
such Underwriter's breach of the representation and warranty set forth in
Section 2(a) hereof), on the other, shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Seller and/or the Depositor and one or more
of the Underwriters (i) except for any Underwriter's indemnification arising
solely from a breach of its representation and warranty set
24
forth in Section 2(a) hereof, in such proportion as shall be appropriate to
reflect the relative benefits to the Master Servicer, the Depositor and the
Seller on the one hand and the Underwriters on the other in connection with the
matter to which the indemnification relates, which relative benefits shall be
deemed to be in such proportions the Underwriters shall be responsible for that
portion represented by the percentage that the underwriting discount on the
cover of the Prospectus at the Closing Time bears to the initial public offering
price for the Class A Certificates as set forth thereon, and the Master
Servicer, the Depositor and the Seller shall be jointly and severally
responsible for the balance or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law or otherwise prohibited hereby, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Master Servicer, the
Depositor and the Seller on the one hand and the Underwriters or Underwriter, as
applicable, on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, or actions in respect
thereof, as well as any other relevant equitable considerations; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Master
Servicer, the Depositor or the Seller, on the one hand, or the Underwriters, on
the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Master Servicer, the Depositor, the Seller and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
Section 10 were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take into account the equitable considerations
referred to in the first sentence of this Section 10. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to in the first sentence of this Section 10
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating, preparing to defend or
defending against any action or claim that is the subject of this Section 10.
Notwithstanding the provisions of this Section 10, except for any loss, claim,
damage, liability or expense resulting solely from any Underwriter's breach of
the representation and warranty set forth in Section 2(a) hereof, [no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Class A Certificates underwritten by such
Underwriter and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
in respect of such losses,
25
liabilities, claims, damages and expenses.] The Underwriters' obligations in
this Section 10 to contribute are several in proportion to their respective
underwriting obligations and not joint, and no Underwriter shall be required to
contribute to any loss, liability, claim, damage or expense as a result of
another Underwriter's breach of the representation and warranty set forth in
Section 2(a) hereof. Each party entitled to contribution agrees that upon the
service of a summons or other initial legal process upon it in any action
instituted against it in respect to which contribution may be sought, it shall
promptly give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
of any such service shall not relieve the party from whom contribution may be
sought for any obligation it may have hereunder or otherwise (except as
specifically provided in Section 9 hereof). For purposes of this Section 10,
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act shall have the same rights to contribution as such
Underwriter, and each respective director of the Seller and/or the Depositor,
each respective officer of the Seller and/or the Depositor who signed the
Registration Statement, and each person, if any, who controls the Seller and/or
the Depositor within the meaning of Section 15 of the 1933 Act shall have the
same rights to contribution as the Seller and/or the Depositor.
SECTION 11. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or contained in certificates of officers of the Seller, the Depositor
or the Master Servicer submitted pursuant hereto shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
the Underwriters or controlling person thereof, or by or on behalf of the
Seller, the Depositor or the Master Servicer and shall survive delivery of any
Underwritten Certificates to the Underwriters.
SECTION 12. Termination of Agreement. You, as representative of the
Underwriters, may terminate this Agreement, immediately upon notice to the
Depositor, at any time at or prior to the Closing Date (i) if there has been an
outbreak or material escalation of hostilities involving the United States of
America where armed conflict appears imminent, or the declaration by the United
States of America of a national emergency or war, if the effect of any such
event in the Underwriters' reasonable judgment makes it impracticable or
inadvisable to proceed with the public offering of the Class A Certificates or
(ii) if trading generally on the New York Stock Exchange has been suspended, or
minimum prices have been established by the exchange or by order of the
Commission or any other governmental authority, or if a banking moratorium has
been declared by either federal or New York State authorities. In the event of
any such termination, the covenant set forth in subsection 6(b), the provisions
of Section 8, the indemnity agreement set forth in Section 9, and the
provisions of Sections 10 and 15 shall remain in effect.
26
SECTION 13. Default by One or More of the Underwriters. If one or more of
the Underwriters participating in the public offering of the Class A
Certificates shall fail at the Closing Date to purchase the Class A
Certificates which it is (or they are) obligated to purchase hereunder (the
"Defaulted Certificates"), then such of the non-defaulting Underwriters shall
have the right, within 24 hours thereafter, to make arrangements for one or
more of the non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Certificates in such amounts as
may be agreed upon and upon the terms herein set forth. If, however, you have
not completed such arrangements within such 24-hour period, then:
(i) if the aggregate principal amount of Defaulted Certificates does
not exceed 10% of the aggregate principal amount of the Class A
Certificates to be purchased pursuant to this Agreement, the
non-defaulting Underwriters named in this Agreement shall be obligated to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of
all such non-defaulting Underwriters, or
(ii) if the aggregate principal amount of Defaulted Certificates
exceeds 10% of the aggregate principal amount of the Class A Certificates
to be purchased pursuant to this Agreement, this Agreement shall
terminate, without any liability on the part of any non-defaulting
Underwriters.
No action taken pursuant to this Section 13 shall relieve any defaulting
Underwriter from the liability with respect to any default of such Underwriter
under this Agreement.
In the event of a default by any Underwriters as set forth in this Section
13, either you or the Seller shall have the right to postpone the Closing Date
for a period not exceeding five Business Days in order that any required
changes in the Registration Statement or Prospectus or in any other documents
or arrangements may be effected.
SECTION 14. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to them at the address set forth on the first
page hereof. Notices to the Seller, the Depositor or the Master Servicer shall
be directed to Block Mortgage Finance, Inc., 0000 Xxxx Xxxxxx, Xxxxx 000,
Xxxxxx Xxxx, Xxxxxxxx 00000, to the attention of the Secretary, with a copy to
the Treasurer.
SECTION 15. Parties. This Agreement shall inure to the benefit of and be
binding upon the Underwriters, the Seller, the Depositor and the Master
Servicer, and their respective successors. Nothing expressed or mentioned in
this Agreement is intended nor shall it be construed to give any person, firm
or corporation,
27
other than the parties hereto and their respective successors and the
controlling persons and officers and directors referred to in Sections 9 and 10
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or with respect to this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties and their respective
successors and said controlling persons and officers and directors and their
heirs and legal representatives (to the extent of their rights as specified
herein) and except as provided above for the benefit of no other person, firm or
corporation. No purchaser of Class A Certificates from the Underwriters shall be
deemed to be a successor by reason merely of such purchase.
SECTION 16. Governing Law and Time. This Agreement shall be governed by
the law of the State of New York and shall be construed in accordance with such
law. Specified times of day refer to New York City time.
SECTION 17. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original of any party whose signature appears
on it, and all of which shall together constitute a single instrument.
28
If the foregoing is in accordance with the Underwriters' understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
among the Underwriters, the Seller, HFC and the Subservicers in accordance with
its terms.
Very truly yours,
BLOCK MORTGAGE FINANCE, INC. as
Depositor
By:________________________________________
Name:
Title:
COMPANION MORTGAGE CORPORATION, as
Seller
By:________________________________________
Name:
Title:
BLOCK FINANCIAL CORPORATION, as
Master Servicer
By:________________________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as of the date first above written:
XXXXXX XXXXXXX & CO. INCORPORATED
as Representative of the Underwriters
By:________________________________
Name:
Title:
Schedule A
----------
Underwriting
------------
Class A-1 Class A-2 Class A-3 Class A-4 Class A-5
Underwriter Certificates Certificates Certificates Certificates Certificates
----------- ------------ ------------ ------------ ------------ ------------
Xxxxxx Xxxxxxx & Co. $ $ $ $ $
Incorporated...........
Salomon Brothers Inc... $ $ $ $ $
EXHIBIT A
Opinion of _________________ pursuant to
Section 7(b) of the Underwriting Agreement
January __, 1997
XXXXXX XXXXXXX & CO. INCORPORATED
as Representative of the Underwriters
c/o Morgan Xxxxxxx & Co. Incorporated
1585 Broadway
New York, New York 10036
Re: Block Asset Backed
Certificates, Series 1997-1,
-----------------------------
Ladies and Gentlemen:
We address this opinion to you pursuant to Section 7(b) of the Underwriting
Agreement dated January ___, 1997 (the "Underwriting Agreement") among
______________ and the underwriters referred to therein (together, the
"Underwriters"). Pursuant to the Pooling and Servicing Agreement referred to
below, the Seller will sell to the Depositor, and the Depositor will sell to
the Trust all of their right, title and interest in and to the Mortgage Loans.
Capitalized terms not defined herein have the meanings ascribed to them in the
Underwriting Agreement.
As special counsel for the Seller and the Depositor, we have, among other
things (i) participated in the preparation of the Agreement and (ii) cooperated
with officers of the Seller and the Depositor, representative of the
Underwriters and independent accountants in the preparation of the Registration
Statement on Form S-3 (Registration Nos. 333-14041) filed with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), the Prospectus dated January ___, 1997 and the Prospectus
Supplement, dated January __, 1997, each in the form in which it was
transmitted for filing with the Commission pursuant to Rule 424(b) of the Rules
and Regulations under the Act (together the "Final Prospectus").
We advise you that in our opinion:
[(i) The Agreement is not required to be qualified under the Trust Indenture
Act;]
[(ii) Neither the Seller nor the Trust created by the Agreement is an
"investment company" or under the "control"
A-1
of an "investment company" as such terms are defined in the Investment Company
Act of 1940;]
[(iii) The Certificates and the Agreement conform in all material respects
to the respective descriptions thereof in the Final Prospectus; and]
(iv) The statements in the Final Prospectus under the captions "Prospectus
Summary--Federal Income Tax Consequences" and "Federal Income Tax Consequences"
to the extent that they constitute matters of law or legal conclusions with
respect thereto, have been prepared or reviewed by us and correctly represent
our opinion.
The opinions set forth herein are subject to the following qualifications:
No opinion is expressed as to the effect of the compliance or noncompliance
of the Seller, the Depositor or the Trustee with any state or federal laws or
regulations applicable to them because of their legal or regulatory status or
the nature of their respective businesses, or to the due authorization,
execution and delivery of the Agreement and the Certificates. As to such
matters, we have relied upon the opinion of ____________________ of even date
herewith, delivered pursuant to Section 7(c) of the Underwriting Agreement, and
have made no independent investigation of the matters referred to in such
opinion.
In expressing the foregoing opinions, we have examined originals, or copies
of originals certified to our satisfaction, of such agreements, documents,
certificates and other statements of public officials and responsible officers
of each of the Seller, the Depositor and the Trustee and other papers and
matters of fact and law as we have deemed relevant and necessary as a basis for
the opinions we expressed herein. We have relied, with respect to factual
matters, on representations and warranties made by, and on certificates and
other documents furnished by responsible officers of each of the Trustee, the
Seller and the Depositor. In expressing the foregoing opinions, we have
assumed, with your permission, (i) the authenticity of all documents submitted
to us as originals and the conformity with the original documents of any copies
of such documents submitted to us for our examination, (ii) that each of the
Seller, the Depositor and the Trustee has been duly organized and is validly
existing and in good standing under the laws of its jurisdiction of
incorporation and (iii) the due execution and delivery, pursuant to due
authorization, of the agreements and documents referred to above by the
Trustee.
A-2
The opinions expressed herein are only with respect to federal laws of the
United States and the laws of the State of New York. We consent to the reliance
on this opinion by Standard & Poor's Ratings Services and Xxxxx'x Investors
Service, Inc. Subject to the foregoing sentence, this opinion is being
delivered solely for the benefit of the persons to whom it is addressed.
Accordingly, it may not be quoted, filed with any government authority or other
regulatory agency or otherwise circulated or utilized for any purpose without
our prior written consent.
Very truly yours,
