Exhibit 1.1
FIRST ALLIANCE MORTGAGE COMPANY
AND
PRUDENTIAL SECURITIES INCORPORATED
UNDERWRITING AGREEMENT
FOR
FIRST ALLIANCE MORTGAGE LOAN TRUST 1998-1A
MORTGAGE LOAN ASSET BACKED NOTES
$56,400,000 ADJUSTABLE RATE
MORTGAGE LOAN ASSET BACKED NOTES, SERIES 1998-1A
March 10, 1998
March 10, 1998
First Alliance Mortgage Company
17305 Von Karman Avenue
Irvine, California 92614
Prudential Securities Incorporated
One New York Plaza, 15th Floor
New York, New York 10292
First Alliance Mortgage Company (the "Seller" or the "Sponsor") hereby
confirms its agreement to sell certain mortgage loan asset backed Notes to
Prudential Securities Incorporated (the "Underwriter") as described herein
relating to the First Alliance Mortgage Loan Trust 1998-1A (the "Issuer"). The
Notes, together with certain instruments evidencing the residual interest in the
Trust Estate (the "Certificates"), will evidence in the aggregate the entire
beneficial interest in a trust estate (the "Trust Estate") consisting of a pool
(the "Mortgage Pool") of closed-end mortgage loans (the "Initial Mortgage
Loans") and such amounts as may be held by the Indenture Trustee in the
Pre-Funding Account ("Pre-Funding Account"), the Capitalized Interest Account
(the "Capitalized Interest Account") and any other accounts held by the
Indenture Trustee for the Trust. The Initial Mortgage Loans shall have, as of
the close of business on March 1, 1998 (the "Cut-Off Date"), an aggregate
principal balance of $42,199,745.53. The Notes are to be issued under an
indenture dated as of March 1, 1998 (the "Indenture") between First Alliance
Mortgage Loan Trust 1998-1A, as Issuer, and The Chase Manhattan Bank, as
Indenture Trustee (the "Indenture Trustee"). On the Closing Date, approximately
$12,400,254.47 will be deposited in the name of the Indenture Trustee in the
Pre-Funding Account from the sale of the Notes. It is intended that additional
Mortgage Loans satisfying the criteria specified in the Sale and Servicing
Agreement (the "Subsequent Mortgage Loans") will be purchased by the Issuer for
inclusion in the Mortgage Pool from the Seller from time to time on or before
March 31, 1998 from funds on deposit in the Pre-Funding Account at the time of
execution and delivery of each Subsequent Transfer Agreement (the "Subsequent
Transfer Agreement"). Funds in the Capitalized Interest Account will be applied
by the Indenture Trustee to cover shortfalls in interest during the Funding
Period.
On or prior to the date of issuance of the Notes, the Seller will
obtain a financial guaranty insurance policy (the "Policy") issued by MBIA
Insurance Corporation (the "Insurer") which will unconditionally and irrevocably
guarantee to the Indenture Trustee for the benefit of the holders of the Notes
full and complete payment of all amounts payable on the Notes. All capitalized
terms used but not otherwise defined herein have the respective meanings set
forth in the form of Sale and Servicing Agreement heretofore delivered to the
Underwriter.
1. Securities. The Notes will be issued in a single class. The
Certificates will be issued by the Issuer pursuant to the Trust Agreement dated
as of March 1, 1998 between the Seller and Wilmington Trust Company, as Owner
Trustee (the "Trust Agreement"). The Notes and the Certificates are hereinafter
referred to as the "Securities."
2. Representations and Warranties of the Seller. The Seller represents
and warrants to, and covenants with, the Underwriter that:
A. The Seller has filed with the Securities and Exchange Commission
(the "Commission"), a registration statement (No. 333-44585) on Form S-3 for the
registration under the Securities Act of 1933, as amended (the "Act"), of
Mortgage Loan Asset Backed Certificates and Notes (issuable in series), which
registration statement, as amended at the date hereof, has become effective.
Such registration statement, as amended to the date of this Agreement, meets the
requirements set forth in Rule 415(a)(1)(vii) under the Act and complies in all
other material respects with such Rule. The Seller proposes to file with the
Commission pursuant to Rule 424(b)(5) under the Act a supplement dated March 10,
1998 to the prospectus dated March 10, 1998 relating to the Notes and the method
of distribution thereof and has previously advised the Underwriter of all
further information (financial and other) with respect to the Notes to be set
forth therein. Such registration statement, including the exhibits thereto, as
amended at the date hereof, is hereinafter called the "Registration Statement";
such prospectus dated March 10, 1998, in the form in which it will be filed with
the Commission pursuant to Rule 424(b)(5) under the Act is hereinafter called
the "Basic Prospectus"; such supplement dated March 10, 1998 to the Basic
Prospectus, in the form in which it will be filed with the Commission pursuant
to Rule 424(b)(5) of the Act, is hereinafter called the "Prospectus Supplement";
and the Basic Prospectus and the Prospectus Supplement together are hereinafter
called the "Prospectus." The Seller will file with the Commission (i) promptly
after receipt from the Underwriter of any Computational Material (as defined
herein) a Form 8-K incorporating such Computational Materials and (ii) within
fifteen days of the issuance of the Securities a report on Form 8-K setting
forth specific information concerning the related Mortgage Loans (the "8-K").
B. As of the date hereof, when the Registration Statement became
effective, when the Prospectus Supplement is first filed pursuant to Rule
424(b)(5) under the Act, and at the Closing Date, (i) the Registration
Statement, as amended as of any such time, and the Prospectus, as amended or
supplemented as of any such time, will comply in all material respects with the
applicable requirements of the Act and the rules thereunder and (ii) the
Registration Statement, as amended as of any such time, did not and will not
contain any untrue statement of a material fact and did not and will not omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and the Prospectus, as amended or supplemented
as of any such time, did not and will not contain an untrue statement of a
material fact and did not and will not omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the Seller makes
no representations or warranties as to the information contained in or omitted
from the Registration Statement or the Prospectus or any amendment thereof or
supplement thereto in reliance upon and in conformity with the information
furnished in writing to the Seller by or on behalf of any Underwriter
specifically for use in connection with the preparation of the Registration
Statement and the Prospectus.
C. The Seller is duly organized, validly existing and in good standing
under the laws of the State of California, has full power and authority
(corporate and other) to own its properties and conduct its business as now
conducted by it, and as described in the Prospectus, and is duly qualified to do
business in each jurisdiction in which it owns or leases real property (to the
extent such qualification is required by applicable law) or in which the conduct
of its business requires such qualification except where the failure to be so
qualified does not involve (i) a material risk to, or a material adverse effect
on, the business, properties, financial position, operations or results of
operations of the Seller or (ii) any risk
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whatsoever as to the enforceability of any Mortgage Loan.
D. There are no actions, proceedings or investigations pending, or, to
the knowledge of the Seller, threatened, before any court, governmental agency
or body or other tribunal (i) asserting the invalidity of this Agreement, the
Securities, the Insurance Agreement, the Indemnification Agreement dated March
10, 1998 (the "Indemnification Agreement") among the Seller, the Insurer and the
Underwriter, the Trust Agreement or of the Sale and Servicing Agreement, (ii)
seeking to prevent the issuance of the Securities or the consummation of any of
the transactions contemplated by this Agreement, the Sale and Servicing
Agreement, the Trust Agreement or any Subsequent Transfer Agreement, (iii) which
may, individually or in the aggregate, materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement, the Securities, the Sale and Servicing
Agreement, the Trust Agreement or any Subsequent Transfer Agreement, or (iv)
which may affect adversely the federal income tax attributes of the Securities
as described in the Prospectus.
E. The execution and delivery by the Seller of this Agreement, the
Indemnification Agreement, the Insurance Agreement, the Trust Agreement and the
Sale and Servicing Agreement, the issuance of the Securities and the transfer
and delivery of the Mortgage Loans to the Issuer by the Seller are within the
corporate power of the Seller and have been, or will be, prior to the Closing
Date duly authorized by all necessary corporate action on the part of the Seller
and the execution and delivery of such instruments, the consummation of the
transactions therein contemplated and compliance with the provisions thereof
will not result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute or any agreement or instrument to
which the Seller or any of its affiliates is a party or by which it or any of
them is bound or to which any of the property of the Seller or any of its
affiliates is subject, the Seller's charter or bylaws, or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Seller, any of its affiliates or any of its or their
properties; and no consent, approval, authorization or order of, or filing with,
any court or governmental agency or body or other tribunal is required for the
consummation of the transactions contemplated by this Agreement or the
Prospectus in connection with the issuance and sale of the Securities by the
Seller except pursuant to the Act. Neither the Seller nor any of its affiliates
is a party to, bound by or in breach or violation of any indenture or other
agreement or instrument, or subject to or in violation of any statute, order,
rule or regulation of any court, governmental agency or body or other tribunal
having jurisdiction over the Seller or any of its affiliates, which materially
and adversely affects, or may in the future materially and adversely affect, (i)
the ability of the Seller to perform its obligations under the Sale and
Servicing Agreement, the Trust Agreement, this Agreement, the Insurance
Agreement, the Indemnification Agreement and any Subsequent Transfer Agreement
or (ii) the business, operations, results of operations, financial position,
income, properties or assets of the Seller, taken as a whole.
F. This Agreement and the Indemnification Agreement have been duly
executed and delivered by the Seller, and the Sale and Servicing Agreement, the
Trust Agreement, the Insurance Agreement and any Subsequent Transfer Agreement
will be duly executed and delivered by the Seller, and each constitutes and/or
will constitute, as applicable, the legal, valid and binding obligation of the
Seller enforceable in accordance with their respective terms, except as
enforceability may be limited by (i) bankruptcy, insolvency, liquidation,
receivership, moratorium, reorganization or other similar laws affecting the
enforcement of the rights of creditors and (ii) general principles of equity,
whether enforcement is sought in a proceeding at law or in equity.
G. The Notes will conform in all material respects to the description
thereof to be contained in the Prospectus and will be duly and validly
authorized and, when duly and validly executed, authenticated, issued and
delivered in accordance with the Indenture and the Sale and Servicing Agreement
and sold to the Underwriter as provided herein, will be validly issued and
outstanding and entitled to the
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benefits of the Indenture.
H. On the Closing Date, the Initial Mortgage Loans will conform in all
material respects to the description thereof contained in the Prospectus and the
representations and warranties contained in this Agreement will be true and
correct in all material respects. The representations and warranties set out in
the Sale and Servicing Agreement are hereby made to the Underwriter as though
set out herein, and at the dates specified in the Sale and Servicing Agreement,
and in any Subsequent Transfer Agreement, such representations and warranties
were, or will be, true and correct in all material respects.
I. The transfer of the Initial Mortgage Loans to the Issuer on the
Closing Date will be treated by the Seller for financial accounting and
reporting purposes as a sale of assets and not as a pledge of assets to secure
debt, however, for federal income tax purposes, the Seller will report the
issuance of the Notes as indebtedness.
J. The Seller possesses all material licenses, certificates, permits or
other authorizations issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct the business now operated by
it and as described in the Prospectus and there are no proceedings, pending or,
to the best knowledge of the Seller, threatened, relating to the revocation or
modification of any such license, certificate, permit or other authorization
which singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the business,
operations, results of operations, financial position, income, property or
assets of the Seller taken as a whole.
K. Any taxes, fees and other governmental charges in connection with
the execution and delivery of this Agreement, the Insurance Agreement, the
Indemnification Agreement, the Trust Agreement and the Sale and Servicing
Agreement or the execution and issuance of the Securities have been or will be
paid on or prior to the Closing Date.
L. There has not been any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Seller or its
subsidiaries, taken as a whole, from September 30, 1997 to the date hereof.
M. This Agreement, the Indenture and the Sale and Servicing Agreement
will conform in all material respects to the descriptions thereof contained in
the Prospectus.
N. The Seller is not aware of (i) any request by the Commission for any
further amendment of the Registration Statement or the Prospectus or for any
additional information, (ii) 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 or (iii) any notification with
respect to the suspension of the qualification of the Notes for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose.
O. Each assignment of Mortgages required to be prepared pursuant to the
Sale and Servicing Agreement is based on forms recently utilized by the Seller
with respect to mortgaged properties located in the appropriate jurisdiction and
used in the regular course of the Seller's business. Based on the Seller's
experience with such matters it is reasonable to believe that upon execution
each such assignment will be in recordable form and will be sufficient to effect
the assignment of the Mortgage to which it relates as provided in the Sale and
Servicing Agreement.
P. The Seller is current in all filings under the Securities Exchange
Act and is eligible to use the Registration Statement.
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Any certificate signed by any officer of the Seller and delivered to
the Underwriter in connection with the sale of the Securities hereunder shall be
deemed a representation and warranty as to the matters covered thereby by the
Seller to each person to whom the representations and warranties in this Section
2 are made.
3. Agreements of the Underwriter.
A. The Underwriter agrees with the Seller that upon the execution of
this Agreement and authorization by the Underwriter of the release of the
Notes, the Underwriter shall offer the Notes for sale upon the terms and
conditions set forth in the Prospectus as amended or supplemented.
B. The Underwriter may prepare and provide to prospective investors
certain Computational Materials and ABS Term Sheets in connection with the
offering of the Notes, subject to the following conditions:
1. In connection with the use of Computational Materials, the
Underwriter shall comply with all applicable requirements of the
No-Action Letter, dated May 20, 1994, issued by the Division of
Corporation Finance of the Commission to Kidder, Peabody Acceptance
Corporation I, Kidder, Peabody & Co. Incorporated and Kidder Structured
Asset Corporation, as made applicable to other issuers and the
Underwriter by the Division of Corporation Finance of the Commission in
response to the request of the Public Securities Association ("PSA"),
dated May 23, 1994 (collectively, the "Kidder/PSA Letters"), as well as
the PSA Letter referred to below. In connection with the use of ABS
Term Sheets, the Underwriter shall comply with all applicable
requirements of the No-Action Letter, dated February 17, 1995, issued
by the Division of Corporation Finance to the Commission to PSA (the
"PSA Letter" and, together with the Kidder/PSA Letters, the "No-Action
Letters").
2. The term "Computational Materials" as used herein shall have
the meaning given to such term in the No-Action Letters, but shall
include only those Computational Materials that have been prepared or
delivered to prospective investors by or at the direction of the
Underwriter. The terms "ABS Term Sheets," "Collateral Term Sheets" and
"Structural Term Sheets" as used herein shall have the meanings given
to such terms in the PSA Letter, but shall include only those ABS Term
Sheets, Collateral Term Sheets or Structural Term Sheets that have been
prepared or delivered to prospective investors by or at the direction
of the Underwriter.
3. All Computational Materials and ABS Term Sheets provided to
prospective investors that are required to be filed pursuant to the
No-Action Letters shall bear a legend on each page in a form previously
agreed upon by the Seller and the Underwriter.
4. Any Computational Materials and ABS Term Sheets are subject to
review by and approval of the Seller prior to their distribution to any
prospective investors and a copy of such Computational Materials and
ABS Term Sheets as are delivered to prospective investors shall, in
addition to the foregoing delivery requirements, be delivered to the
Seller simultaneously with delivery to prospective investors.
5. The Underwriter shall provide to the Seller, for filing on
Form 8-K as provided in Section 9 hereof, five copies (in such format
as required by the Seller) of all Computational Materials and ABS Term
Sheets that are required to be filed with the Commission pursuant to
the No-Action Letters. Each delivery of Computational Materials or ABS
Term Sheets to the Seller pursuant to this paragraph shall be effected
by delivering four copies of such material
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to counsel for the Seller on behalf of the Seller and one copy of such
materials to the Seller. The Underwriter may provide copies of the
foregoing in a consolidated or aggregate form that includes all
information required to be filed. All Computational Materials and ABS
Term Sheets described in this Section must be provided to the Seller
not later than 10:00 a.m., New York time, on the Business Day before
the date on which filing thereof is required pursuant to the terms of
this Agreement. The Underwriter agrees that it will not provide to any
investor or prospective investor in the Notes any Computational
Materials or ABS Term Sheets on or after the day on which Computational
Materials and ABS Term Sheets are required to be provided to the Seller
pursuant to this Section (other than copies of Computational Materials
or ABS Term Sheets previously submitted to the Seller in accordance
with this Section for filing pursuant to Section 9 hereof), unless such
Computational Materials or ABS Term Sheets are preceded or accompanied
by the delivery of a Prospectus to such investor or prospective
investor.
6. All information included in the Computational Materials and
ABS Term Sheets shall be generated based on substantially the same
methodology and assumptions that are used to generate the information
in the Prospectus Supplement as set forth therein; provided, however,
that the Computational Materials and ABS Term Sheets may include
information based on alternative methodologies or assumptions specified
therein. If any Computational Materials or ABS Term Sheets that are
required to be filed were based on assumptions with respect to the
Mortgage Loans that are incorrect, that differ from the final
information about the Mortgage Pool in any material respect or on
Certificate structuring terms that were revised in any material respect
prior to the printing of the Prospectus, to the extent the Prospectus
Supplement does not specifically correct such inaccuracies, the
Underwriter shall prepare revised Computational Materials or ABS Term
Sheets, as the case may be, based on the final information about the
Mortgage Pool and structuring assumptions, circulate such revised
Computational Materials or ABS Term Sheets, as the case may be, to all
recipients of the preliminary versions thereof that indicated orally to
an Underwriter that they would purchase all or any portion of the Notes
and include such revised Computational Materials or ABS Term Sheets
(marked "as revised") in the materials delivered to the Seller pursuant
to 3.B.5.
7. The Seller shall not be obligated to file any Computational
Materials or ABS Term Sheets that (i) in the reasonable determination
of the Seller and the Underwriter and their respective counsel are not
required to be filed pursuant to the No-Action Letters or (ii) have
been determined to contain any material error or omission, provided
that, at the request of the Underwriter, the Seller will file
Computational Materials or ABS Term Sheets that contain a material
error or omission if clearly marked "superseded by materials dated
_____________" and accompanied by corrected Computational Materials or
ABS Term Sheets that are marked "material previously dated
__________________, as corrected." In the event that at any time when a
prospectus relating to the Notes is required to be delivered under the
Securities Act, any Computational Materials or ABS Term Sheets are
determined, in the reasonable judgment of the Seller or the Underwriter
to contain a material error or omission, the Underwriter shall prepare
a corrected version of such Computational Materials or ABS Term Sheets,
shall circulate such corrected version of such Computational Materials
or ABS Term Sheets to all recipients of the prior version thereof that
either indicated orally to such Underwriter that they would purchase
all or any portion of the Notes, or actually purchased all or any
portion thereof, and shall deliver copies of such Computational
Materials or ABS Term Sheets (marked "as corrected") to the Seller for
filing with the Commission is a subsequent Form 8-K submission (subject
to the Seller's obtaining an accountant's comfort letter in respect of
such corrected Computational Materials or ABS Term Sheets, which shall
be at the expense of the Underwriter).
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C. The Underwriter represents and warrants and agrees with the
Seller that, as of the date hereof and as of the Closing Date, that:
(i) the Computational Materials and ABS Term Sheets furnished to the
Seller pursuant to Section 3.B.5 constitute (either in original,
aggregated or consolidated form) all of the materials furnished to
prospective investors by the Underwriter prior to the time of delivery
thereof to the Seller that are required to be filed with the Commission
with respect to the Notes in accordance with the No-Action Letters, and
such Computational Materials and ABS Term Sheets comply with the
requirements of the No-Action Letters; (ii) on the date any such
Computational Materials and ABS Term Sheets with respect to such
Certificates (or any written or electronic materials furnished to
prospective investors on which the Computational Materials and ABS Term
Sheets are based) were last furnished to each prospective investor and
on the date of delivery thereof to the Seller pursuant to Section 3.B.5
and on the related Closing Date, such Computational Materials and ABS
Terms Sheets (or materials) were accurate in all material respects when
read in conjunction with the Prospectus (taking into account the
assumptions explicitly set forth in the Computational Materials),
except to the extent of any errors therein that are caused by errors in
the Mortgage Pool information provided to the Underwriter by the
Seller; (iii) the Underwriter has not and will not represent to
potential investors that any Computational Materials or ABS Term Sheets
were prepared or disseminated on behalf of the Seller; and (iv) all
Computational Materials and ABS Term Sheets (or underlying materials
distributed to prospective investors on which the Computational
Materials and ABS Term Sheets were based) contained and will contain
the legend in the form previously agreed upon by the Seller and the
Underwriter as required by Section 3.B.3.
Notwithstanding the foregoing, the Underwriter makes no
representation or warranty as to whether any Computational Materials or
ABS Term Sheets (or any written or electronic materials furnished to
prospective investors on which the Computational Materials or ABS Term
Sheets are based) included or will include any inaccurate statement
resulting directly from any error contained in the Mortgage Pool
information provided to the Underwriter by the Seller.
D. Each Underwriter that delivers any Computational Materials and
ABS Term Sheets to the Seller shall deliver to the Seller a
certificate, dated as of the date hereof, to the effect that the
representations and warranties of the Underwriter contained in this
Section 3 are true and correct as of such date. If the Underwriter does
not provide any Computational Materials or ABS Term Sheets to the
Seller pursuant to Section 3.B.5, the Underwriter shall be deemed to
have represented, as of the Closing Date, that it did not provide any
prospective investors with any information in written or electronic
form in connection with the offering of the Notes that is required to
be filed with the Commission in accordance with the No- Action Letters.
4. Purchase, Sale and Delivery of the Notes. The Seller hereby
agrees, subject to the terms and conditions hereof, to sell the Notes
to the Underwriter, who, upon the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter
stated, hereby agrees to purchase the entire aggregate principal amount
of the Notes in the amount of $54,600,000. At the time of issuance of
the Notes, the Initial Mortgage Loans will be sold by the Seller to the
Issuer pursuant to the Sale and Servicing Agreement. The Subsequent
Mortgage Loans will be purchased by the Issuer for inclusion in the
Mortgage Pool, from time to time on or before March 31, 1998. The
Seller will be obligated, under the Sale and Servicing Agreement, to
service the Mortgage Loans either directly or through sub-servicers.
The Notes to be purchased by the Underwriter will be delivered by the
Seller to the Underwriter (which delivery shall be made through the facilities
of The Depository Trust Company ("DTC")) against payment of the purchase price
therefor, equal to 99.70% of the aggregate principal amount of the Notes. No
accrued interest will be payable on the Notes, which shall be dated their date
of delivery. The Underwriter's fee shall be 0.30 basis points of each of the
Notes.
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Settlement shall take place at the offices of Arter & Hadden LLP, 1801
K Street, N.W., Washington, D.C. 20006, at 10:00 a.m. (E.S.T.), on March 27,
1998, or at such other time thereafter as the Underwriter and the Seller
determine (such time being herein referred to as the "Closing Date"). The Notes
will be prepared in definitive form and in such authorized denominations as the
Underwriter may request, registered in the name of Cede & Co., as nominee of
DTC.
The Seller agrees to have the Notes available for inspection and review
by the Underwriter in New York City not later than 1:00 p.m. (E.S.T.) on the
business day prior to the Closing Date.
5. Covenants of the Seller. The Seller covenants and agrees with the
Underwriter that:
A. The Seller will promptly advise the Underwriter and its counsel (i)
when any amendment to the Registration Statement shall have become effective,
(ii) of any request by the Commission for any amendment to the Registration
Statement or the Prospectus or for any additional information, (iii) 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 (iv) of the receipt by the Seller of any notification with
respect to the suspension of the qualification of the Notes for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Seller will not file any amendment to the Registration Statement or
supplement to the Prospectus after the date hereof and prior to the Closing Date
for the Securities unless the Seller has furnished the Underwriter and its
counsel copies of such amendment or supplement for their review prior to filing
and will not file any such proposed amendment or supplement to which the
Underwriter reasonably objects, unless such filing is required by law. The
Seller will use its best efforts to prevent the issuance of any stop order
suspending the effectiveness of the Registration Statement and, if issued, to
obtain as soon as possible the withdrawal thereof.
B. If, at any time during the period in which the Prospectus is
required by law to be delivered, any event occurs as a result of which the
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 the light of the circumstances under which they were
made, not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Act or the rules under the Act, the Seller will
promptly prepare and file with the Commission, subject to Paragraph A of this
Section 5, an amendment or supplement that will correct such statement or
omission or an amendment that will effect such compliance and, if such amendment
or supplement is required to be contained in a post-effective amendment to the
Registration Statement, will use its best efforts to cause such amendment of the
Registration Statement to be made effective as soon as possible.
C. The Seller will furnish to the Underwriter without charge, executed
copies of the Registration Statement (including exhibits thereto) and, so long
as delivery of a Prospectus by the Underwriter or a dealer may be required by
the Act, as many copies of the Prospectus, as amended or supplemented, and any
amendments and supplements thereto as the Underwriter may reasonably request.
The Seller will pay the expenses of printing (or otherwise reproducing) all
offering documents relating to the offering of the Notes.
D. As soon as practicable, but not later than sixteen months after the
date hereof, the Seller will cause the Trust to make generally available to
Owners of the Notes an earnings statement of the Trust covering a period of at
least 12 months beginning after the effective date of the Registration Statement
which will satisfy the provisions of Section 11(a) of the Act and, at the option
of the Seller, will satisfy the requirements of Rule 158 under the Act.
E. During a period of 20 calendar days from the date as of which this
Agreement is
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executed, neither the Seller nor any affiliate of the Seller will, without the
Underwriter's prior written consent (which consent shall not be unreasonably
withheld), enter into any agreement to offer or sell mortgage loan asset backed
securities backed by mortgage loans, except pursuant to this Agreement other
than the First Alliance Mortgage Loan Trust 1998-1A $54,600,400 Adjustable Rate
Mortgage Loan Notes.
F. So long as any of the Notes are outstanding, the Seller will cause
to be delivered to the Underwriter (i) all documents required to be distributed
to Owners of the Notes and (ii) from time to time, any other information
concerning the Trust filed with any government or regulatory authority that is
otherwise publicly available.
G. The Seller, whether or not the transactions contemplated hereunder
are consummated or this Agreement is terminated, will pay all expenses in
connection with the transactions contemplated herein, including, but not limited
to, the expenses of printing (or otherwise reproducing) all documents relating
to the offering, the reasonable fees and disbursements of its counsel and
expenses of the Underwriter incurred in connection with (i) the issuance and
delivery of the Notes, (ii) preparation of all documents specified in this
Agreement, (iii) any fees and expenses of the Owner Trustee, the Indenture
Trustee, the Insurer and any other credit support provider (including legal
fees), accounting fees and disbursements, and (iv) any fees charged by
investment rating agencies for rating the Notes.
H. The Seller agrees that, so long as any of the Notes shall be
outstanding, it will deliver or cause to be delivered to the Underwriter (i) the
annual statement as to compliance delivered to the Indenture Trustee pursuant to
the Sale and Servicing Agreement, (ii) the annual statement of a firm of
independent public accountants furnished to the Indenture Trustee pursuant to
the Sale and Servicing Agreement as soon as such statement is furnished to the
Seller and (iii) any information required to be delivered by the Seller or the
Servicer to prepare the report by the Indenture Trustee pursuant to Section 3.8
of the form of Sale and Servicing Agreement heretofore delivered to the
Underwriter.
I. The Seller will enter into the Sale and Servicing Agreement, the
Trust Agreement, the Insurance Agreement, and all related agreements on or prior
to the Closing Date.
J. The Seller will endeavor to qualify the Notes for sale to the extent
necessary under any state securities or Blue Sky laws in any jurisdictions as
may be reasonably requested by the Underwriter, if any, and will pay all
expenses (including fees and disbursements of counsel) in connection with such
qualification and in connection with the determination of the eligibility of the
Notes for investment under the laws of such jurisdictions as the Underwriter may
reasonably designate, if any.
6. Conditions of the Underwriter's Obligation. The obligation of the
Underwriter to purchase and pay for the Notes as provided herein shall be
subject to the accuracy as of the date hereof and the Closing Date (as if made
at the Closing Date) of the representations and warranties of the Seller
contained herein (including those representations and warranties set forth in
the Sale and Servicing Agreement and incorporated herein), to the accuracy of
the statements of the Seller made in any certificate or other document delivered
pursuant to the provisions hereof, to the performance by the Seller of its
obligations hereunder, and to the following additional conditions:
A. The Registration Statement shall have become effective no later than
the date hereof, and 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 threatened, and the Prospectus shall have
been filed pursuant to Rule 424(b).
B. The Underwriter shall have received the Sale and Servicing Agreement
and the
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Notes in form and substance satisfactory to the Underwriter, duly executed by
all signatories required pursuant to the respective terms thereof.
C.1. The Underwriter shall have received the favorable opinion of the
Vice President and General Counsel to the Seller, with respect to the following
items, dated the Closing Date, to the effect that:
(a) The Seller has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of
California, and is qualified to do business in each state necessary to
enable it to perform its obligations as Servicer under the Sale and
Servicing Agreement. The Seller has the requisite power and authority
to execute and deliver, engage in the transactions contemplated by, and
perform and observe the conditions of, this Agreement, the Sale and
Servicing Agreement, the Trust Agreement, any Subsequent Transfer
Agreement, the Insurance Agreement and the Indemnification Agreement.
(b) This Agreement, the Securities, the Sale and Servicing
Agreement, the Trust Agreement, the Insurance Agreement and the
Indemnification Agreement have been duly and validly authorized,
executed and delivered by the Seller, all requisite corporate action
having been taken with respect thereto, and each (other than the
Securities) constitutes the valid, legal and binding agreement of the
Seller enforceable against the Seller in accordance with its respective
terms.
(c) Neither the transfer of the Initial Mortgage Loans to the
Issuer, the issuance or sale of the Securities nor the execution,
delivery or performance by the Seller of the Sale and Servicing
Agreement, the Trust Agreement, this Agreement, any Subsequent Transfer
Agreement, the Insurance Agreement or the Indemnification Agreement (A)
conflicts or will conflict with or results or will result in a breach
of, or constitutes or will constitute a default under, (i) any term or
provision of the articles of incorporation or bylaws of the Seller;
(ii) any term or provision of any material agreement, contract,
instrument or indenture, to which the Seller is a party or is bound; or
(iii) any order, judgment, writ, injunction or decree of any court or
governmental agency or body or other tribunal having jurisdiction over
the Seller; or (B) results in, or will result in the creation or
imposition of any lien, charge or encumbrance upon the Trust Estate or
upon the Securities, except as otherwise contemplated by the Sale and
Servicing Agreement.
(d) The endorsement and delivery of each Mortgage Note, and the
preparation, delivery and recording of an Assignment in recordable
form, with respect to each Mortgage (in the absence of the delivery of
the opinions described in Section 2.5(b)(ii) of the Sale and Servicing
Agreement), as and in the manner contemplated by the Sale and Servicing
Agreement, is sufficient fully to transfer to the Trustee for the
benefit of the Owners all right, title and interest of the Seller in
the Mortgage Note and Mortgage, as noteholder and mortgagee or assignee
thereof, and will be sufficient to permit the Trustee to avail itself
of all protection available under applicable law against the claims of
any present or future creditors of the Seller and to prevent any other
sale, transfer, assignment, pledge or other encumbrance of the Mortgage
Loans by the Seller from being enforceable.
(e) No consent, approval, authorization or order of, registration
or filing with, or notice to, courts, governmental agency or body or
other tribunal is required under the laws of the State of California,
for the execution, delivery and performance of the Sale and
10
Servicing Agreement, the Trust Agreement, the Insurance Agreement, this
Agreement, the Indemnification Agreement or the offer, issuance, sale
or delivery of the Securities or the consummation of any other
transaction contemplated thereby by the Seller, except such which have
been obtained.
(f) There are no actions, proceedings or investigations pending
or, to such counsel's knowledge, threatened against the Seller before
any court, governmental agency or body or other tribunal (i) asserting
the invalidity of the Sale and Servicing Agreement, the Trust
Agreement, the Insurance Agreement, this Agreement, the Indemnification
Agreement or the Securities, (ii) seeking to prevent the issuance of
the Securities or the consummation of any of the transactions
contemplated by the Sale and Servicing Agreement, the Trust Agreement,
the Indemnification Agreement, the Insurance Agreement or this
Agreement or (iii) which would materially and adversely affect the
performance by the Seller of obligations under, or the validity or
enforceability of, the Sale and Servicing Agreement, the Trust
Agreement, the Securities, the Indemnification Agreement, the Insurance
Agreement or this Agreement.
(g) To the best of such counsel's knowledge, the Registration
Statement, the Prospectus Supplement and the Prospectus do not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein not misleading with respect to the statements set
forth in the Prospectus under the caption "Certain Legal Aspects of
Mortgage Loans and Related Matters".
2. The Underwriter shall have received the favorable opinion of Arter &
Hadden LLP, special counsel to the Seller, dated the Closing Date, to the effect
that:
(a) The Notes, assuming due execution by the Owner Trustee and due
authentication by the Indenture Trustee, and delivery and payment
therefor pursuant to this Agreement are validly issued and outstanding
and are entitled to the benefits of the Indenture.
(b) No consent, approval, authorization or order of, registration
or filing with, or notice to, any governmental authority or court is
required under federal laws or the laws of the State of New York, for
the execution, delivery and performance by the Seller of the Sale and
Servicing Agreement, the Trust Agreement, this Agreement, any
Subsequent Transfer Agreement, the Indemnification Agreement, the
Insurance Agreement or the offer, issue, sale or delivery of the Notes
or the consummation of any other transaction contemplated thereby by
the Seller, except such which have been obtained.
(c) Neither the transfer of the Initial Mortgage Loans to the
Issuer, the issuance or sale of the Notes, nor the execution, delivery
or performance by the Seller of the Sale and Servicing Agreement, the
Trust Agreement, the Insurance Agreement, any Subsequent Transfer
Agreement, the Indemnification Agreement or this Agreement will (a)
conflict with or result in a breach of, or constitute a default under
any law, rule or regulation of the State of New York or the federal
government, or (b) to such counsel's knowledge, without independent
investigation, results in, or will result in, the creation or
imposition of any lien, charge or encumbrance upon the Trust Estate or
upon the Notes, except as otherwise contemplated by the Indenture or
the Sale and Servicing Agreement.
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(d) Each Subsequent Transfer Agreement at the time of its
execution and delivery will be sufficient to convey all of the Seller's
right, title and interest in the Subsequent Mortgage Loans to the
Issuer and following the consummation of the transaction contemplated
by each Subsequent Transfer Agreement, the transfer of the Subsequent
Mortgage Loans by the Seller to the Issuer will be a sale thereof.
(e) The Registration Statement, the Prospectus and the Prospectus
Supplement (other than the financial and statistical data included
therein, as to which such counsel need express no opinion), as of the
date on which the Registration Statement was declared effective and as
of the date hereof, comply as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder, and
such counsel does not know of any amendment to the Registration
Statement required to be filed, or of any contracts, indentures or
other documents of a character required to be filed as an exhibit to
the Registration Statement or required to be described in the
Registration Statement, the Prospectus or the Prospectus Supplement
which has not been filed or described as required.
(f) The registration of the Issuer under the Investment Company
Act of 1940 is not presently required.
(g) The statements in the Prospectus set forth under the captions
"DESCRIPTION OF THE SECURITIES" and "THE POOLING AND SERVICING
AGREEMENT" and the statements in the Prospectus Supplement set forth
under the captions "DESCRIPTION OF THE NOTES" and "ADMINISTRATION," to
the extent such statements purport to summarize certain provisions of
the Notes or of the Sale and Servicing Agreement, are fair and accurate
in all material respects.
(h) Except as to any financial or statistical data contained in
the Registration Statement, the statements set forth in the Prospectus
under the caption "DESCRIPTION OF CREDIT ENHANCEMENT," and in the
Prospectus Supplement under the caption "THE NOTE INSURANCE POLICY AND
THE NOTE INSURER," and any Computational Materials as to which no
opinion or belief need be expressed, to the best of such counsel's
knowledge, the Registration Statement does not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein not misleading.
(i) Upon receipt by the Indenture Trustee on behalf of the Owners
of the Notes of the related Mortgage Notes, endorsed as described in
the Sale and Servicing Agreement, and the receipt by the Seller of the
purchase price for the Notes and for so long as the Indenture Trustee
maintains actual physical possession of such Mortgage Notes, (i) the
Issuer shall be vested with good and indefeasible title to, and shall
be the sole owner of, and shall obtain all right, title and interest of
the Seller in, each Mortgage Loan, (ii) in the event that the sale of
the Mortgage Loans were to be recharacterized as a financing secured by
the Mortgage Loans, the Indenture Trustee, on behalf of the Issuer, has
a first perfected security interest in the Mortgage Loans and (iii) in
the jurisdictions listed in such opinion, the recordation of the
assignments of the Mortgages is not required for the Issuer to obtain
such rights, as against creditors of, and purported transferees of, the
Seller.
(j) To the best of the knowledge of such counsel, the Commission
has not issued any stop order suspending the effectiveness of the
Registration Statement or any order directed to any prospectus relating
to the Securities (including the Prospectus), and
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has not initiated or threatened any proceeding for that purpose.
3. The Underwriter shall have received the favorable opinion of
Arter & Hadden LLP, special tax and bankruptcy counsel to the Seller,
dated the Closing Date, to the effect that:
(a) The statements under the captions "SUMMARY OF PROSPECTUS --
CERTAIN FEDERAL INCOME TAX CONSEQUENCES" and "CERTAIN FEDERAL INCOME
TAX CONSEQUENCES" in the Prospectus and under the captions "SUMMARY --
FEDERAL INCOME TAX ASPECTS" and "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES" in the Prospectus Supplement as they relate to federal
tax matters are true and correct in all material respects.
(b) For federal income tax purposes, the Notes will be treated as
newly originated debt obligations and not as representing an ownership
interest in the Trust Estate or an equity interest in the Issuer or the
Seller. In addition, for federal income tax purposes, the Issuer will
not be (i) classified as an association taxable as a corporation, (ii)
a taxable mortgage pool as defined in Section 7701(i) of the Internal
Revenue Code of 1986, as amended, or (iii) a "publicly traded
partnership" as defined in Treasury Regulation Section 1.7704-1.
(c) The Issuer will not be subject to tax upon its income or
assets by the taxing authority of New York State or New York City.
(d) The Issuer will not be subject to the California state income
tax.
(e) A court would hold that the conveyance by the Seller of all
right, title and interest in the Mortgage Loans to the Issuer (except
for the Seller's right, title and interest in the principal and
interest due on such Mortgage Loans on or prior to the Cut-Off Date),
constitutes a sale of the Mortgage Loans and not a borrowing by the
Seller secured by the pledge of the Mortgage Loans. A court would find
that, following such conveyance, the Mortgage Loans and proceeds
thereof (net of payments of principal and interest due on such Mortgage
Loans on or prior to the Cut-Off Date) are not property of the estate
of the Seller within the meaning of Section 541 of the Bankruptcy Code,
and, further that the Issuer's rights with respect to the Mortgage
Loans and the proceeds thereof would not subject it to the automatic
stay provisions of Section 362 of the Bankruptcy Code. Since the
conveyance of the Mortgage Loans (net of payments of scheduled
principal due and interest accrued on or prior to the Cut-Off Date)
constitutes a sale of said Mortgage Loans then the payments thereunder
(net of payments of scheduled principal due on and interest accrued on
or prior to the Cut-Off Date) are not property of the estate of the
Seller and the distributions of such payments by the Indenture Trustee
to the Owners of the Notes pursuant to the Indenture are not
preferential payments made by, for, or on behalf of the Seller under
the provisions of Section 547 of the Bankruptcy Code.
(f) If a court characterized the transfer of the Mortgage Loans to
the Issuer as a pledge of collateral rather than an absolute sale or
assignment, with respect to the Mortgage Loans and other property
included in the Trust Estate on the date hereof, to the extent governed
by the laws of the State of New York, a valid security interest has
been created in favor of the Indenture Trustee, on behalf of the Owners
of the Notes, which security interest will be perfected and will
constitute a first perfected security interest, with respect to the
Seller's right, title and interest in and to the Mortgage Notes, upon
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endorsement and delivery thereof to the Indenture Trustee, on behalf of
the Owners of the Notes. With respect to the security interest of the
Indenture Trustee, on behalf of the Owners of the Notes, in the
Mortgage Notes, New York law would govern.
4. The Underwriter shall have received the favorable opinion of
Dewey Ballantine LLP, special counsel to the Underwriter, dated the
Closing Date, to the effect that:
(a) The Notes, assuming due execution by the Owner Trustee and due
authentication by the Indenture Trustee, and delivery and payment
therefor pursuant to this Agreement, are validly issued and outstanding
and are entitled to the benefits of the Indenture.
(b) No fact has come to such counsel's attention which causes them
to believe that the Prospectus (other than the financial statement and
other financial and statistical data contained therein, as to which
such counsel need express no opinion), as of the date thereof,
contained any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) Such other matters as the Underwriter may reasonably request.
In rendering their opinions, the counsels described in this Paragraph C
may rely, as to matters of fact, on certificates of responsible officers of the
Seller, the Owner Trustee, the Indenture Trustee and public officials. Such
opinions may also assume the due authorization, execution and delivery of the
instruments and documents referred to therein by the parties thereto other than
the Seller.
D. The Underwriter shall have received a letter from Deloitte & Touche,
dated on or before the Closing Date, in form and substance satisfactory to the
Underwriter and counsel for the Underwriter, to the effect that they have
performed certain specified procedures requested by the Underwriter with respect
to the information set forth in the Prospectus and certain matters relating to
the Seller.
E. The Notes shall have been rated in the highest rating category by
Moody's Investors Service, Inc., and by Standard & Poor's Ratings Service, a
division of The McGraw-Hill Companies, and such ratings shall not have been
rescinded. The Underwriter and counsel for the Underwriter shall have received
copies of any opinions of counsel supplied to the rating organizations relating
to any matters with respect to the Notes. Any such opinions shall be dated the
Closing Date and addressed to the Underwriter or accompanied by reliance letters
to the Underwriter or shall state that the Underwriter may rely upon them.
F. The Underwriter shall have received from the Seller a certificate,
signed by the president, a senior vice president or a vice president of the
Seller, dated the Closing Date, to the effect that the signer of such
certificate has carefully examined the Registration Statement, the Sale and
Servicing Agreement, the Trust Agreement and this Agreement and that, to the
best of his or her knowledge based upon reasonable investigation:
1. the representations and warranties of the Seller in this
Agreement, and in the Indemnification Agreement, as of the Closing
Date, in the Sale and Servicing Agreement, the Trust Agreement, the
Insurance Agreement and in all related agreements, as of the date
specified in such agreements, are true and correct, and the Seller has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing Date;
14
2. there are no actions, suits or proceedings pending, or to the
best of such officer's knowledge, threatened against or affecting the
Seller which if adversely determined, individually or in the aggregate,
would be reasonably likely to adversely affect the Seller's obligations
under the Sale and Servicing Agreement, the Trust Agreement, the
Insurance Agreement, this Agreement or under the Indemnification
Agreement in any material way; and no merger, liquidation, dissolution
or bankruptcy of the Seller is pending or contemplated;
3. the information contained in the Registration Statement and
Prospectus relating to the Seller, the Mortgage Loans or the servicing
procedures of it or its affiliates or the subservicer is true and
accurate in all material respects and nothing has come to his or her
attention that would lead such officer to believe that the Registration
Statement and Prospectus includes any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
therein not misleading;
4. the information set forth in the Schedules of Mortgage Loans
required to be furnished pursuant to the Sale and Servicing Agreement
is true and correct in all material respects;
5. there has been no amendment or other document filed affecting
the articles of incorporation or bylaws of the Seller since August 1,
1996, and no such amendment has been authorized. No event has occurred
since March 23, 1998, which has affected the good standing of the
Seller under the laws of the State of California;
6. there has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Seller and its subsidiaries, taken as a whole, from
December 31, 1997;
7. on or prior to the Closing Date, there has been no downgrading,
nor has any notice been given of (A) any intended or potential
downgrading or (B) any review or possible changes in rating, the
direction of which has not been indicated, in the rating, if any,
accorded the Seller or in any rating accorded any securities of the
Seller, if any, by any "nationally recognized statistical rating
organization," as such term is defined for purposes of the Act; and
8. each person who, as an officer or representative of the Seller,
signed or signs the Registration Statement, the Sale and Servicing
Agreement, the Trust Agreement, this Agreement, the Indemnification
Agreement, the Insurance Agreement, or any other document delivered
pursuant hereto, on the date of such execution, or on the Closing Date,
as the case may be, in connection with the transactions described in
the Sale and Servicing Agreement, the Trust Agreement, the
Indemnification Agreement, the Insurance Agreement and this Agreement
was, at the respective times of such signing and delivery, and is now,
duly elected or appointed, qualified and acting as such officer or
representative, and the signatures of such persons appearing on such
documents are their genuine signatures.
The Seller shall attach to such certificate a true and correct copy of
its certificate or articles of incorporation, as appropriate, and bylaws which
are in full force and effect on the date of such certificate and a certified
true copy of the resolutions of its Board of Directors with respect to the
transactions contemplated herein.
G. The Underwriter shall have received an opinion of Richards, Layton &
Finger, counsel to the Owner Trustee, dated the Closing Date, in form and
substance satisfactory to the Underwriter and counsel for the Underwriter, to
the effect that:
15
1. The Owner Trustee is a Delaware banking corporation duly
incorporated and validly existing under the laws of the State of
Delaware.
2. The Owner Trustee has the full power and authority to accept
the office of owner trustee under the Trust Agreement and to enter into
and perform its obligations under the Trust Agreement and the
transactions contemplated thereby.
3. The execution and delivery of the Trust Agreement by the Owner
Trustee and the performance by the Owner Trustee of its obligations
under the Trust Agreement have been duly authorized by all necessary
action of the Owner Trustee, and the Trust Agreement has been duly
executed and delivered by the Owner Trustee.
4. The Trust Agreement constitutes valid and binding obligations
of the Owner Trustee enforceable against the Owner Trustee in
accordance with its terms, except as the enforceability thereof may be
(a) limited by bankruptcy, insolvency, reorganization, moratorium,
liquidation or other similar laws affecting the rights of creditors
generally, and (b) subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity
or at law).
5. The execution and delivery by the Owner Trustee of the Trust
Agreement and the consummation of the transactions contemplated thereby
do not require any consent, approval or authorization of, or any
registration or filing with, any applicable governmental authority of
the State of Delaware which has not been obtained or done.
6. Neither the consummation by the Owner Trustee of the
transactions contemplated in the Trust Agreement, nor the fulfillment
of the terms thereof by the Owner Trustee will conflict with, result in
a breach or violation of, or constitute a default under the Articles of
Association, Bylaws or other organizational documents of the Owner
Trustee.
H. The Underwriter shall have received an opinion of Richards, Layton &
Finger, special Delaware counsel for the Issuer dated the Closing Date, in form
and substance satisfactory to the Underwriter and counsel for the Underwriter,
to the effect that:
1. The Trust Agreement is the legal, valid and binding agreement
of the Owner Trustee and the Seller, enforceable against the Owner
Trustee and the Seller in accordance with its terms subject to (i)
applicable bankruptcy, insolvency, moratorium, receivership,
reorganization, fraudulent conveyance and similar laws relating to and
affecting the rights and remedies of creditors generally, (ii)
principles of equity (regardless of whether considered and applied in a
proceeding in equity or at law), and (iii) the effect of applicable
public policy on the enforceability of provisions relating to
indemnification or contribution.
2. The Certificate of Trust has been duly filed with the Secretary
of State of the State of Delaware. The Issuer has been duly formed and
is validly existing as a business trust under the Delaware Business
Trust Act.
3. The Issuer has the power and authority under the Trust
Agreement and the Delaware Business Trust Act to execute, deliver and
perform its obligations under the Trust Agreement, the Indenture, the
Sale and Servicing Agreement, the Notes and the Certificates and to
issue the Securities.
4. The Issuer has duly authorized and executed the Trust
Agreement, the Indenture,
16
the Sale and Servicing Agreement, the Notes and the Certificates.
5. The Issuer has the power under the Trust Agreement and the
Delaware Business Trust Act to pledge the Trust Estate to the Indenture
Trustee as security for the Notes.
6. The Certificates have been executed, authorized and delivered
by the Owner Trustee upon the order of the Seller in accordance with
the Trust Agreement.
7. To the extent that Article 9 of the Uniform Commercial Code as
in effect in the State of Delaware (the "Delaware UCC") is applicable
(without regard to conflicts of laws principles), and assuming that the
security interest created by the Indenture in the Collateral has been
duly created and has attached, upon the filing of a UCC-1 financing
statement with the Secretary of State of the State of Delaware, the
Indenture Trustee will have a perfected security interest in such
Collateral and the proceeds thereof; and such security interest will be
prior to any other security interest granted by the Issuer that is
perfected solely by the filing of financing statements under the
Delaware UCC, excluding purchase money security interests under Section
9-312 of the Delaware UCC and temporarily perfected security interests
in proceeds under Section 9-306 of the Delaware UCC.
8. No re-filing or other action is necessary under the Delaware
UCC in the State of Delaware in order to maintain the perfection of the
security interest referenced above except for the filing of
continuation statements at five-year intervals.
9. Under Section 3805(b) of the Delaware Business Trust Act, no
creditor of any holder of the Certificate shall have any right to
obtain possession of, or otherwise exercise legal or equitable remedies
with respect to, the property of the Issuer except in accordance with
the terms of the Trust Agreement subject to (i) applicable bankruptcy,
insolvency, moratorium, receivership, reorganization, fraudulent
conveyance and similar laws relating to and affecting the rights and
remedies of creditors generally, (ii) principles of equity (regardless
of whether considered and applied in a proceeding in equity or at law),
and (iii) the effect of applicable public policy on the enforceability
of provisions relating to indemnification or contribution.
10. Under Section 3805(c) of the Delaware Business Trust Act, and
assuming that the Sale and Servicing Agreement conveys good title to
the Mortgage Loans to the Issuer as a true sale and not as a security
arrangement, the Issuer, rather than the holders of the Certificates is
the owner of the Mortgage Loans subject to (i) applicable bankruptcy,
insolvency, moratorium, receivership, reorganization, fraudulent
conveyance and similar laws relating to and affecting the rights and
remedies of creditors generally, (ii) principles of equity (regardless
of whether considered or applied in a proceeding in equity or at law),
and (iii) the effect of applicable public policy on the enforceability
of provisions relating to indemnification or contribution.
11. The execution and delivery by the Owner Trustee of the Trust
Agreement and, on behalf of the Issuer, of the Indenture and the Sale
and Servicing Agreement do not require any consent, approval or
authorization of, or any registration or filing with, any governmental
authority of the State of Delaware, except for the filing of the
Certificate of Trust with the Secretary of State.
12. Neither the consummation by the Owner Trustee of the
transactions contemplated by the Trust Agreement or, on behalf of the
Issuer, the transactions contemplated by the Indenture and the Sale and
Servicing Agreement nor the fulfillment of the terms thereof by the
Owner Trustee will conflict with or result in a breach or violation of
any law of the State of Delaware.
17
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriter. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the State of Delaware.
I. The Underwriter shall have received the favorable opinion of counsel
to the Indenture Trustee, dated the Closing Date, addressed to the Underwriter
and in form and scope satisfactory to counsel to the Underwriter, to the effect
that:
1. The Indenture Trustee is a banking corporation duly
incorporated and validly existing under the laws of the State of New
York.
2. The Indenture Trustee has the full corporate trust power to
execute, deliver and perform its obligations under the Indenture.
3. The execution and delivery by the Indenture Trustee of the
Indenture and the performance by the Indenture Trustee of its
obligations under the Indenture have been duly authorized by all
necessary corporate action of the Indenture Trustee.
4. The Indenture is a valid and legally binding obligation of the
Indenture Trustee enforceable against the Indenture Trustee.
5. The execution and delivery by the Indenture Trustee of the
Indenture does not (a) violate the Organization Certificate of the
Indenture Trustee or the Bylaws of the Indenture Trustee, (b) to such
counsel's knowledge, violate any judgment, decree or order of any New
York or United States federal court or other New York or United States
federal governmental authority by which the Indenture Trustee is bound
or (c) assuming the non-existence of any judgment, decree or order of
any court or other governmental authority that would be violated by
such execution and delivery, violate any New York or United States
federal statute, rule or regulation or require any consent, approval or
authorization of any New York or United States federal court or other
New York or United States federal governmental authority.
6. The Notes have been duly authenticated and delivered by the
Indenture Trustee.
7. If the Indenture Trustee were acting as Servicer under the Sale
and Servicing Agreement as of the date of such opinion, the Indenture
Trustee would have full corporate trust power to perform the
obligations of the Servicer under the Sale and Servicing Agreement; and
8. To the best of such counsel's knowledge, there are no actions,
proceedings or investigations pending or threatened against or
affecting the Indenture Trustee before or by any court, arbitrator,
administrative agency or other governmental authority which, if decided
adversely to the Indenture Trustee, would materially and adversely
affect the ability of the Indenture Trustee to carry out the
transactions contemplated in the Indenture.
In rendering such opinion, such counsel may rely, as to matters of
fact, on certificates of responsible officers of the Seller, the Indenture
Trustee and public officials. Such opinion may also assume the due
authorization, execution and delivery of the instruments and documents referred
to therein by the parties thereto other than the Indenture Trustee.
J. The Underwriter shall have received from the Owner Trustee a
certificate, signed
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by the President, a senior vice president or an assistant vice president of the
Owner Trustee, dated the Closing Date, to the effect that each person who, as an
officer or representative of the Owner Trustee, signed or signs the Securities,
the Sale and Servicing Agreement, the Trust Agreement, and the Indenture or any
other document delivered pursuant hereto, on the date hereof or on the Closing
Date, in connection with the transactions described in the Sale and Servicing
Agreement was, at the respective times of such signing and delivery, and is now,
duly elected or appointed, qualified and acting as such officer or
representative, and the signatures of such persons appearing on such documents
are their genuine signatures.
K. The Policy relating to the Notes shall have been duly executed and
issued at or prior to the Closing Date and shall conform in all material
respects to the description thereof in the Prospectus.
L. The Underwriter shall have received a favorable opinion of Kutak
Rock, counsel to the Insurer, dated the Closing Date and in form and substance
satisfactory to counsel for the Underwriter, to the effect that:
1. The Insurer is a stock insurance corporation, duly incorporated
and validly existing under the laws of the State of New York. The
Insurer is validly licensed and authorized to issue the Policy and
perform its obligations under the Policy in accordance with the terms
thereof, under the laws of the State of New York.
2. The execution and delivery by the Insurer of the Policy, the
Insurance Agreement and the Indemnification Agreement are within the
corporate power of the Insurer and have been authorized by all
necessary corporate action on the part of the Insurer; the Policy has
been duly executed and is the valid and binding obligation of the
Insurer enforceable in accordance with its terms except that the
enforcement of the Policy may be limited by laws relating to
bankruptcy, insolvency, reorganization, moratorium, receivership and
other similar laws affecting creditors' rights generally and by general
principles of equity.
3. The Insurer is authorized to deliver the Insurance Agreement
and the Indemnification Agreement, and the Insurance Agreement and the
Indemnification Agreement have been duly executed and are the valid and
binding obligations of the Insurer enforceable in accordance with their
terms except that the enforcement of the Insurance Agreement and the
Indemnification Agreement may be limited by laws relating to
bankruptcy, insolvency, reorganization, moratorium, receivership and
other similar laws affecting creditors' rights generally and by general
principles of equity and by public policy considerations relating to
indemnification for securities law violations.
4. No consent, approval, authorization or order of any state or
federal court or governmental agency or body is required on the part of
the Insurer, the lack of which would adversely affect the validity or
enforceability of the Policy; to the extent required by applicable
legal requirements that would adversely affect validity or
enforceability of the Policy, the form of the Policy has been filed
with, and approved by, all governmental authorities having jurisdiction
over the Insurer in connection with such Policy.
5. To the extent the Policy constitutes a security within the
meaning of Section 2(1) of the Act, it is a security that is exempt
from the registration requirements of the Act.
6. The information set forth under the caption "THE NOTE INSURANCE
POLICY AND THE NOTE INSURER" in the Prospectus Supplement, insofar as
such statements constitute a description of the Policy, accurately
summarizes the Policy.
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In rendering this opinion, such counsel may rely, as to matters of
fact, on certificates of responsible officers of the Seller, the Insurer and
public officials. Such opinion may assume the due authorization, execution and
delivery of the instruments and documents referred to therein by the parties
thereto other than the Insurer.
M. On or prior to the Closing Date, there has been no downgrading, nor
has any notice been given of (A) any intended or potential downgrading or (B)
any review or possible changes in rating, the direction of which has not been
indicated, in the rating, if any, accorded the Seller or in any rating accorded
any securities of the Seller, if any, by any "nationally recognized statistical
rating organization," as such term is defined for purposes of the Act.
N. On or prior to the Closing Date there shall not have occurred any
downgrading, nor shall any notice have been given of (A) any intended or
potential downgrading or (B) any review or possible change in rating the
direction of which has not been indicated, in the rating accorded the Insurer's
claims paying ability by any "nationally recognized statistical rating
organization," as such term is defined for purposes of the Act.
O. There has not occurred any change, or any development involving a
prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations, since December 31, 1997, of (A) the Seller,
its subsidiaries and affiliates or since December 31, 1997, of (B) the Insurer,
that is in the Underwriter's judgment material and adverse and that makes it in
the Underwriter's judgment impracticable to market the Notes on the terms and in
the manner contemplated in the Prospectus.
P. The Underwriter shall have received from the Insurer a certificate,
signed by the President, a senior vice president or a vice president of the
Insurer, dated the Closing Date, to the effect that the signer of such
certificate has carefully examined the Policy, the Insurance Agreement, the
Indemnification Agreement and the related documents and that, to the best of his
or her knowledge based on reasonable investigation:
1. each person who as an officer or representative of the Insurer,
signed or signs the Policy, the Insurance Agreement, the
Indemnification Agreement or any other document delivered pursuant
hereto, on the date thereof, or on the Closing Date, in connection with
the transactions described in this Agreement was, at the respective
times of such signing and delivery, and is now a duly authorized
representative of the Insurer and is authorized to execute and deliver
this certificate.
2. The financial data presented in the table set forth under the
heading "THE NOTE INSURANCE POLICY AND THE NOTE INSURER" in the
Prospectus Supplement presents fairly the financial position of the
Insurer as of December 31, 1996 and September 30, 1997, respectively,
and to the best of the Insurer's knowledge since such date, no material
and adverse change has occurred in the financial position of the
Insurer other than as set forth in the Prospectus Supplement.
3. The audited financial statements dated as of December 31, 1996
and the unaudited financial statements dated as of September 30, 1997
incorporated by reference into the Prospectus Supplement are true and
accurate.
4. The information which relates to the Insurer or the Policy
under the caption titled "THE NOTE INSURANCE POLICY AND THE NOTE
INSURER" in the Prospectus Supplement is true and correct in all
material respects.
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5. There are no actions, suits, proceedings or investigations
pending or, to the best of the Insurer's knowledge, threatened against
it at law or in equity or before or by any court, governmental agency,
board or commission or any arbitrator which, if decided adversely,
would materially and adversely affect its condition (financial or
otherwise) or operations or which would materially and adversely affect
its ability to perform its obligations under the Policy or the
Insurance Agreement.
6. The execution and delivery of the Insurance Agreement and the
Policy and the compliance with the terms and provisions thereof will
not conflict with, result in a breach of, or constitute a default under
any of the terms, provisions or conditions of the Restated Charter or
By-Laws of the Insurer or of any agreement, indenture or instrument to
which the Insurer is a party.
7. The issuance of the Policy and the execution, delivery and
performance of the Insurance Agreement have been duly authorized by all
necessary corporate proceedings. No further approvals or filings of any
kind, including, without limitation, any further approvals or further
filing with any governmental agency or other governmental authority, or
any approval of the Insurer's board of directors or stockholders, are
necessary for the Policy and the Insurance Agreement to constitute the
legal, valid and binding obligations of the Insurer.
The officer of the Insurer certifying to items 2 and 3 shall be an
officer in charge of a principal financial function.
The Insurer shall attach to such certificate a true and correct copy of
its certificate or articles of incorporation, as appropriate, and its bylaws,
all of which are in full force and effect on the date of such certificate.
Q. The Underwriter shall have received from Dewey Ballantine LLP,
special counsel to the Underwriter, such opinion or opinions, dated the Closing
Date, with respect to the issuance and sale of the Notes, the Prospectus and
such other related matters as the Underwriter shall reasonably require.
R. The Underwriter and counsel for the Underwriter shall have received
copies of any opinions of counsel to the Seller or the Insurer supplied to the
Indenture Trustee relating to matters with respect to the Securities or the
Policy. Any such opinions shall be dated the Closing Date and addressed to the
Underwriter or accompanied by reliance letters to the Underwriter or shall state
that the Underwriter may rely thereon.
S. The Underwriter shall have received such further information,
certificates and documents as the Underwriter may reasonably have requested not
fewer than three (3) full business days prior to the Closing Date.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all respects when and as provided in this Agreement, if the
Seller is in breach of any covenants or agreements contained herein or if any of
the opinions and certificates mentioned above or elsewhere in this Agreement
shall not be in all material respects reasonably satisfactory in form and
substance to the Underwriter and counsel to the Underwriter, this Agreement and
all obligations of the Underwriter hereunder, may be canceled on, or at any time
prior to, the Closing Date by the Underwriter. Notice of such cancellation shall
be given to the Seller in writing, or by telephone or telegraph confirmed in
writing.
7. Expenses. If the sale of the Notes provided for herein is not
consummated by reason of a default by the Seller in its obligations hereunder,
then the Seller will reimburse the Underwriter, upon
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demand, for all reasonable out-of-pocket expenses (including, but not limited
to, the reasonable fees and expenses of Dewey Ballantine LLP) that shall have
been incurred by the Underwriter in connection with its investigation with
regard to the Seller and the Notes and the proposed purchase and sale of the
Notes.
8. Indemnification and Contribution. A. Regardless of whether any Notes
are sold, the Seller will indemnify and hold harmless the Underwriter, each of
its respective officers and directors and each person who controls the
Underwriter within the meaning of the Act or the Securities Exchange Act of 1934
(the "1934 Act"), against any and all losses, claims, damages, or liabilities
(including the cost of any investigation, legal and other expenses incurred in
connection with any amounts paid in settlement of any action, suit, proceeding
or claim asserted), joint or several, to which they may become subject, under
the Act, the 1934 Act or other federal or state 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 an untrue statement or
alleged untrue statement of a material fact contained (i) in the Registration
Statement, or 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
necessary to make the statements therein, not misleading or (ii) in the Basic
Prospectus or the Prospectus Supplement or any amendment thereto or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and will
reimburse each such indemnified party for any legal or other expenses reasonably
incurred by it in connection with investigating or defending against such loss,
claim, damage, liability or action; provided, however, that the Seller shall 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 an 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 Seller by or on behalf of
the Underwriter specifically for use in connection with the preparation thereof.
B. Regardless of whether any Notes are sold, the Underwriter agrees to
indemnify and hold harmless the Seller, each of its officers and directors and
each person, if any, who controls the Seller within the meaning of the Act or
the 1934 Act against any losses, claims, damages or liabilities to which they or
any of them become subject under the Act, the 1934 Act or other federal or state
law or regulation, at common law or otherwise, to the same extent as the
foregoing indemnity, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in (i) the Registration
Statement, or 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
necessary to make the statements therein not misleading or in (ii) the Basic
Prospectus or the Prospectus Supplement or any amendment thereto or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, in each case to
the extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made therein in reliance upon and
in conformity with written information furnished to the Seller by or on behalf
of the Underwriter specifically for use in the preparation thereof and so
acknowledged in writing, and will reimburse the Seller for any legal or other
expenses reasonably incurred by the Seller in connection with investigating or
defending against such loss, claim, damage, liability or action.
C. In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Paragraphs A and B above such person (hereinafter called the
indemnified party) shall promptly notify the person against whom such indemnity
may be sought (hereinafter called the indemnifying party) in writing thereof;
but the omission to notify the indemnifying party shall not relieve such
indemnifying party from any liability which it may have to any indemnified party
otherwise than under such Paragraph. The indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the
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indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention of such
counsel, or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm for all such indemnified parties, and
that all such fees and expenses shall be reimbursed as they are incurred. Such
firm shall be designated in writing by the Underwriter in the case of parties
indemnified pursuant to Paragraph A and by the Seller in the case of parties
indemnified pursuant to Paragraph B. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there is a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated above, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
D. If the indemnification provided for in this Section 8 is unavailable
to an indemnified party in respect of any losses, claims, damages or liabilities
referred to herein, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Seller and the Underwriter from the sale of the Notes or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only relative benefits referred
to in clause (i) above but also the relative fault of the Seller and of the
Underwriter in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations.
The relative benefits received by the Seller and the Underwriter shall
be deemed to be in such proportion so that the Underwriter is responsible for
that portion determined by multiplying the total amount of such losses, claims,
damages and liabilities, including legal and other expenses, by a fraction, the
numerator of which is (x) the excess of the Aggregate Resale Price of the Notes
purchased by the Underwriter over the aggregate purchase price of the Notes
specified in Section 4 of this Agreement and the denominator of which is (y) the
Aggregate Resale Price of the Notes purchased by the Underwriter and the Seller
is responsible for the balance, provided, however, that 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 the immediately preceding
sentence, the "Aggregate Resale Price" of the Notes at the time of any
determination shall be the weighted average of the purchase prices (in each case
expressed as a percentage of the aggregate principal amount of the Notes so
purchased), determined on the basis of such principal amounts, paid to the
Underwriter by all subsequent purchasers that purchased the Notes on or prior to
such date of determination. The relative fault of the Seller and the Underwriter
shall be determined by reference to, among other things, whether the untrue or
alleged
23
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Seller or by the related
Underwriter and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
E. The Seller and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in Paragraph D. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in Paragraph D shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, the
Underwriter shall not be required to contribute any amount in excess of the
amount by which the Aggregate Resale Price exceeds the amount of any damages
that the Underwriter have otherwise been required to pay by reason of any untrue
or alleged untrue statement or omission or alleged omission.
F. The Underwriter agrees to provide the Seller no later than two
Business Days prior to the day on which such materials are required to be filed
with a copy of any Computational Materials produced by such Underwriter for
filing with the Commission on Form 8-K.
G. The Underwriter severally agrees, assuming all information provided
to it by the Seller is accurate and complete in all material respects, to
indemnify and hold harmless the Seller, each of the Seller's officers and
directors and each person who controls the Seller within the meaning of Section
15 of the Securities Act against any and all losses, claims, damages or
liabilities, joint or several, to which they may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement of a material fact contained in the Computational Materials
provided by the Underwriter and agrees to reimburse each such indemnified party
for any legal or other expenses reasonably incurred by him, her or it in
connection with investigating or defending or preparing to defend any such loss,
claim, damage, liability or action as such expenses are incurred. The
obligations of the Underwriter under this Section 8(G) shall be in addition to
any liability which the Underwriter may otherwise have.
H. The Seller and the Underwriter each expressly waive, and agree not
to assert, any defense to their respective indemnification and contribution
obligations under this Section 8 which they might otherwise assert based upon
any claim that such obligations are unenforceable under federal or state
securities laws or by reasons of public policy.
I. The obligations of the Seller under this Section 8 shall be in
addition to any liability which the Seller may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Underwriter within the meaning of the Act or the 1934 Act; and the obligations
of the Underwriter under this Section 8 shall be in addition to any liability
that such Underwriter may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Seller and to each person, if any, who
controls the Seller within the meaning of the Act or the 1934 Act; provided,
however, that in no event shall the Seller or the Underwriter be liable for
double indemnification.
9. Information Supplied by the Underwriter. The statements set forth in
the last paragraph on the front cover page of the Prospectus regarding
market-making and under the heading "Underwriting" in the Supplement (to the
extent such statements relate to the Underwriter), together with the
Computational Materials, constitute the only information furnished by the
Underwriter to the Seller for the purposes of Sections 2(B) and 8(A) hereof. The
Underwriter confirms that such statements (to such extent) are correct.
24
The Seller will cause any Computational Materials with respect to the
Certificates that are delivered to the Seller as provided in Section 3.B.5 to be
filed with the Commission on a Current Report on Form 8-K at or before the time
of filing of the Prospectus pursuant to Rule 424(b) under the Securities Act; to
cause any ABS Term Sheets with respect to the Certificates that are delivered to
the Seller as provided in Section 3.B.5 to be filed with the Commission on one
or more Current Reports on Form 8-K (i) at or before the time of filing of the
Prospectus pursuant to Rule 424(b) of the Rules and Regulations in the case of
Structural Term Sheets, and (ii) within two Business Days of first use in the
case of Collateral Term Sheets. Prior to any such filing of Computational
Materials or ABS Term Sheets (other than any Collateral Term Sheets that are not
based on Mortgage Pool information provided to the Underwriter by the Seller) by
the Seller, however, the Underwriter must comply with their obligations pursuant
to Section 3.B and the Seller must receive a letter from independent, certified
public accountants, satisfactory in form and substance to the Seller and its
counsel, to the effect that such accountants have performed certain specified
procedures, all of which have been agreed to by the Seller, as a result of which
they determined that all information that is included in the Computational
Materials and ABS Term Sheets (if any) provided by the Underwriter to the Seller
for filing on Form 8-K, as provided in Section 3.B and this Section 9, is
accurate except as to such matters that are not deemed by the Seller to be
material. The Seller shall file any corrected Computational Materials or ABS
Term Sheets described in Section 3.B.7 as soon as practicable following receipt
thereof.
10. Notices. All communications hereunder shall be in writing and, if
sent to the Underwriter, shall be mailed or delivered or telecopied and
confirmed in writing to the Underwriter at Prudential Securities Incorporated,
One New York Plaza, New York, New York 10292, Attention: Len Blum; and, if sent
to the Seller, shall be mailed, delivered or telegraphed and confirmed in
writing to the Seller at the address set forth above, Attention: Director of
Secondary Marketing.
11. Survival. All representations, warranties, covenants and agreements
of the Seller contained herein or in agreements or certificates delivered
pursuant hereto, the agreements of the Underwriter and the Seller contained in
Section 8 hereof, and the representations, warranties and agreements of the
Underwriter contained in Section 3 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of the
Underwriter or any controlling persons, or any subsequent purchaser or the
Seller or any of its officers, directors or any controlling persons, and shall
survive delivery of and payment for the Notes. The provisions of Sections 5, 7
and 8 hereof shall survive the termination or cancellation of this Agreement.
12. Termination. The Underwriter shall have the right to terminate this
Agreement by giving notice as hereinafter specified at any time at or prior to
the Closing Date if (a) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (b) trading of any securities of the
Seller shall have been suspended on any exchange or in any over-the-counter
market, (c) a general moratorium on commercial banking activities shall have
been declared by either federal or New York State authorities, (d) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis which, in the Underwriter's
reasonable judgment, is material and adverse, and, in the case of any of the
events specified in clauses (a) through (d), such event singly or together with
any other such event makes it in the Underwriter's reasonable judgment
impractical to market the Notes. Any such termination shall be without liability
of any other party except that the provisions of Paragraph G of Section 5
(except with respect to expenses of the Underwriter) and Sections 7 and 8 hereof
shall at all times be effective. If the Underwriter elects to terminate this
Agreement as provided in this Section 12, the Seller shall be notified promptly
by the Underwriter by telephone, telegram or facsimile transmission, in any
case, confirmed by letter.
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13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns
(which successors and assigns do not include any person purchasing a Note from
the Underwriter), and the officers and directors and controlling persons
referred to in Section 8 hereof and their respective successors and assigns, and
no other persons will have any right or obligations hereunder.
14. Applicable Law; Venue. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York. Any
action or proceeding brought to enforce or arising out of any provision of this
Agreement shall be brought only in a state or federal court located in the
Borough of Manhattan, New York City, New York, and the parties hereto expressly
consent to the jurisdiction of such courts and agree to waive any defense or
claim of forum non conveniens they may have with respect to any such action or
proceeding brought.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall together constitute but one and the same
instrument.
16. Amendments and Waivers. This Agreement may be amended, modified,
altered or terminated, and any of its provisions waived, only in a writing
signed on behalf of the parties hereto.
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IN WITNESS WHEREOF, the parties hereto hereby execute this Underwriting
Agreement, as of the day and year first above written.
FIRST ALLIANCE MORTGAGE COMPANY
By: /s/ Mark Mason
-----------------------------
Name: Mark Mason
Title: Executive Vice President/CFO
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Evan J. Mitnick
------------------------------
Name: Evan J. Mitnick
Title: VP-IBG
{UNDERWRITING AGREEMENT SIGNATURE PAGE}
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