Exhibit 1.1
EXECUTION COPY
ASSET BACKED FUNDING CORPORATION
$733,871,000
(Approximate)
C-BASS Mortgage Loan Asset-Backed Certificates,
Series 2006-CB6
July 28, 2006
UNDERWRITING AGREEMENT
Banc of America Securities LLC
214 North Tryon Street
Charlotte, North Carolina 28255
Ladies and Gentlemen:
SECTION 1. Introductory. Asset Backed Funding Corporation, a Delaware
corporation (the "Company"), proposes to sell to Banc of America Securities LLC
("BAS"), as representative (in such capacity, the "Representative") of BAS,
Goldman, Sachs & Co., Greenwich Capital Markets, Inc. and SG Americas
Securities, LLC (collectively, the "Underwriters"), $733,871,000 aggregate
Certificate Principal Balance of the C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2006-CB6 identified in Schedule I hereto (the "Offered
Certificates") having the Original Class Certificate Principal Balances set
forth in Schedule I (subject to an upward or downward variance, not to exceed
5%, of the precise Original Class Certificate Principal Balances within such
range to be determined by the Company in its sole discretion). The Offered
Certificates, together with the Class B-1, Class B-2, Class B-3, Class CE, Class
P, Class R and Class R-X Certificates (the "Non-Offered Certificates") are
collectively referred to herein as the "Certificates" and evidence the entire
ownership interest in the assets of a trust fund consisting primarily of two
pools of fixed and adjustable-rate mortgage loans, as described in Schedule I
(the "Mortgage Loans") to be acquired by the Company pursuant to a mortgage loan
purchase agreement (the "Mortgage Loan Purchase Agreement"), to be dated as of
July 1, 2006 between the Company and Credit-Based Asset Servicing and
Securitization LLC ("C-BASS"). As of the close of business on the date specified
in Schedule I as the cut-off date (the "Cut-off Date"), the Mortgage Loans will
have the aggregate principal balance set forth in Schedule I. This Underwriting
Agreement shall hereinafter be referred to as the "Agreement." Elections will be
made to treat the segregated pool of assets consisting of the Mortgage Loans and
certain other related assets (exclusive of the arrangements intended to protect
against basis risk for certain of the Certificates, the Cap Carryover Reserve
Account, the Supplemental Interest Trust, the Interest Rate Swap Agreement, the
Interest Rate Cap Agreement and the Swap Account) as multiple separate real
estate mortgage investment conduits (each, a "REMIC"). The Certificates are to
be issued pursuant to a pooling and servicing agreement, dated as of July 1,
2006 (the "Pooling Agreement"), among the Company, as depositor, Litton Loan
Servicing LP, as servicer (the "Servicer"),C-BASS and U.S. Bank National
Association, as trustee (the "Trustee"). The Offered Certificates will be issued
in the denominations specified in Schedule I.
The Pooling Agreement, this Agreement, the Mortgage Loan Purchase Agreement and
the purchase agreement, to be dated July 31, 2006, between BAS and the Company
(the "Purchase Agreement") are collectively referred to herein as the "Basic
Documents."
Capitalized terms used herein that are not otherwise defined herein have
the meanings assigned thereto in the Pooling Agreement.
SECTION 2. Representations and Warranties of the Company. The Company
represents and warrants to the Underwriters as follows:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act") and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement on such Form (the file number of which is set forth in Schedule I
hereto), which has become effective, for the registration under the Act of
the Offered Certificates. Such registration statement, as amended to the
date of this Agreement, meets the requirements set forth in Rule 415(a)(1)
under the Act and complies in all other material respects with said Rule.
The Company proposes to file with the Commission pursuant to Rule 424 under
the Act a supplement to the form of prospectus included in such
registration statement relating to the Offered Certificates and the plan of
distribution thereof and has previously advised the Representative of all
further information (financial and other) with respect to the Company to be
set forth therein. Such registration statement, including the exhibits
thereto, as amended to the date of this Agreement, is hereinafter called
the "Registration Statement"; the prospectus first required to be filed to
satisfy the condition set forth in Rule 172(c) and pursuant to Rule 424(b)
under the Act is hereinafter called the "Basic Prospectus"; and such
supplement to the Basic Prospectus, in the form required to be filed to
satisfy the condition set forth in Rule 172(c) and pursuant to Rule 424(b)
under the Act, is hereinafter called the "Prospectus Supplement" and,
collectively with the Basic Prospectus, the "Final Prospectus." Any
reference herein to the Registration Statement, the Basic Prospectus or the
Final Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which
were filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or before the date of this Agreement, or the issue date
of the Basic Prospectus or the Final Prospectus, as the case may be; and
any reference herein to the terms "amend," "amendment" or "supplement" with
respect to the Registration Statement, the Basic Prospectus or the Final
Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the date of this Agreement, or the
issue date of the Basic Prospectus or the Final Prospectus, as the case may
be, and deemed to be incorporated therein by reference.
(b) At or prior to the time when sales to investors of the Offered
Certificates were first made (the "Time of Sale"), the Company had prepared
the information (collectively, the "Time of Sale Information") listed in
Schedule II hereto. If, subsequent to the date of this Agreement, the
Company or any Underwriter has determined that such information included an
untrue statement of material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading and have
terminated their old purchase
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contracts and entered into new purchase contracts with purchasers of the
Offered Certificates, then "Time of Sale Information" will refer to the
information available to purchasers at the time of entry into the first
such new purchase contract, including any information that corrects such
material misstatements or omissions ("Corrective Information") and "Time of
Sale" will refer to the time and date on which such new purchase contracts
were entered into.
(c) As of the date hereof, when the Final Prospectus is first filed
pursuant to Rule 424 under the Act, when, prior to the Closing Date (as
hereinafter defined), any amendment to the Registration Statement becomes
effective (including the filing of any document incorporated by reference
in the Registration Statement), when any supplement to the Final Prospectus
is filed with the Commission and at the Closing Date, (i) the Registration
Statement, as amended as of any such time, and the Final Prospectus, as
amended or supplemented as of any such time, will comply in all material
respects with the Act and the respective rules thereunder, (ii) the
Registration Statement, as amended as of any such time, will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, and (iii) the Final Prospectus, as amended or
supplemented as of any such time, will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to the
information contained in or omitted from the Registration Statement or the
Final Prospectus or any amendment thereof or supplement thereto in reliance
upon and in conformity with information furnished in writing to the Company
by or on behalf of the Representative specifically for use in connection
with the preparation of the Registration Statement or the Final Prospectus.
(d) The Time of Sale Information, at the Time of Sale did not, and at
the Closing Date will not, contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representation and
warranty with respect to the information contained in or omitted from the
Time of Sale Information or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of the Representative specifically for use in
connection with the preparation of the Time of Sale Information.
(e) The Company has been duly incorporated and is validly existing as
a corporation under the laws of the State of Delaware and has corporate and
other power and authority to own its properties and conduct its business,
as now conducted by it, and to enter into and perform its obligations under
this Agreement and the other Basic Documents to which it is a party.
(f) The Company is not aware of (i) any request by the Commission for
any further amendment of the Registration Statement or the Basic Prospectus
or for any
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additional information or (ii) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement.
(g) This Agreement has been duly authorized, executed and delivered by
the Company, and each of the other Basic Documents to which the Company is
a party, when delivered by the Company, will have been duly authorized,
executed and delivered by the Company, and will constitute a legal, valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, subject, as to the enforcement of remedies, to
applicable bankruptcy, insolvency, reorganization, moratorium, receivership
and similar laws affecting creditors' rights generally and to general
principles of equity (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law), and except as
rights to indemnity and contribution hereunder may be limited by federal or
state securities laws or principles of public policy.
(h) The Company is not, and on the date on which the first bona fide
offer of the Offered Certificates is made will not be, an "ineligible
issuer," as defined in Rule 405 under the Act.
(i) On the Closing Date, the Basic Documents will conform to the
description thereof contained in the Registration Statement, the Final
Prospectus and the Time of Sale Information; the Offered Certificates will
have been duly and validly authorized and, when such Offered Certificates
are duly and validly executed, issued and delivered in accordance with the
Pooling Agreement, and sold to the Underwriters as provided herein, will be
validly issued and outstanding and entitled to the benefits of the Pooling
Agreement.
(j) As of the Closing Date, the representations and warranties of the
Company set forth in the Pooling Agreement will be true and correct.
(k) Neither the execution and delivery by the Company of this
Agreement or any other of the Basic Documents nor the consummation by the
Company of the transactions contemplated herein or therein, nor the
issuance of the Offered Certificates or the public offering thereof as
contemplated in the Final Prospectus or the Time of Sale Information will
conflict in any material respect with or result in a material breach of, or
constitute a material default (with notice or passage of time or both)
under, or result in the imposition of any lien, pledge, charge, of the
property or assets of the Company (except as required or permitted pursuant
thereto or hereto), pursuant to any material mortgage, indenture, loan
agreement, contract or other instrument to which the Company is party or by
which it is bound, nor will such action result in any violation of any
provisions of any applicable law, administrative regulation or
administrative or court decree, the certificate of incorporation or by-laws
of the Company. The Company is not in violation of its certificate of
incorporation, in default in any material respect in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note,
lease, trust agreement, transfer and servicing agreement or other
instrument to which a party or by
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which it may be bound, or to which any material portion of its property or
assets is subject.
(l) No legal or governmental proceedings are pending to which the
Company is a party or of which any property of the Company is subject,
which if determined adversely to the Company would, individually or in the
aggregate, have a material adverse effect on the financial position,
stockholders' equity or results of operations of the Company; and to the
best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(m) Since the date of which information is given in the Registration
Statement, there has not been any material adverse change in the business
or net worth of the Company.
(n) Any taxes, fees and other governmental charges in connection with
the execution and delivery of the Basic Documents and the execution,
delivery and sale of the Offered Certificates have been or will be paid at
or prior to the Closing Date.
(o) No consent, approval, authorization or order of, or registration,
filing or declaration with, any court or governmental agency or body is
required, or will be required, in connection with (i) the execution and
delivery by the Company of any Basic Document or the performance by the
Company of any of its obligations under the Basic Documents or (ii) the
offer, sale or delivery of the Offered Certificates except such as shall
have been obtained or made, as the case may be, or will be obtained or
made, as the case may be, prior to the Closing Date, or will not materially
adversely affect the ability of the Company to perform its obligations
under any Basic Document.
(p) The Company possesses, and will possess, all material licenses,
certificates, authorities or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct the
business now conducted by it and as described in the Final Prospectus and
the Time of Sale Information, except to the extent that the failure to have
such licenses, certificates, authorities or permits does not have a
material adverse effect on the Offered Certificates or the financial
condition of the Company, and the Company has not received, nor will it
have received as of the Closing Date, any notice of proceedings relating to
the revocation or modification of any such license, certificate, authority
or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely
affect the conduct of its business, operations or financial condition.
(q) On the Closing Date, (i) the Company will have good and marketable
title to the related Mortgage Loans being transferred by it to the Trust
pursuant thereto, free and clear of any lien, (ii) the Company will not
have assigned to any person any of its right, title or interest in such
Mortgage Loans or in the Pooling Agreement, and (iii) the Company will have
the power and authority to sell such Mortgage Loans to the Trust, and upon
execution and delivery of the Pooling Agreement by the Trustee, the Company
and the Servicer, the Trust will have good and marketable title thereto, in
each case free of liens.
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(r) The properties and businesses of the Company conform, and will
conform, in all material respects, to the descriptions thereof contained in
the Final Prospectus and the Time of Sale Information.
(s) The Trust Fund (as defined in the Pooling Agreement) is not
required to be registered under the Investment Company Act of 1940, as
amended.
(t) It is not necessary in connection with the offer, sale and
delivery of the Offered Certificates in the manner contemplated by this
Agreement to qualify the Pooling Agreement under the Trust Indenture Act of
1939, as amended.
(u) Other than the Final Prospectus, the Company (including its agents
and representatives other than the Underwriters) has not made, used,
prepared, authorized, approved or referred to and will not make, use,
prepare, authorize, approve or refer to any "written communication" (as
defined in Rule 405 under the Act) that constitutes an offer to sell or
solicitation of an offer to buy the Offered Certificates other than (i)
information included in the Time of Sale Information (ii) any document not
constituting a prospectus pursuant to Section 2(a)(10)(a) of the Act or
Rule 134 under the Act or (iii) other written communication approved in
writing in advance by the Representative.
(v) Any Issuer Free Writing Prospectus (as defined in Section
11(e)(i)) included in the Time of Sale Information complied in all material
respects with the Act and has been, or will be filed in accordance with
Rule 433 under the Act (to the extent required thereby).
SECTION 3. Purchase, Sale and Delivery of Offered Certificates. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, the aggregate Certificate Principal
Balance of the Offered Certificates at a purchase price set forth in Schedule I
hereto.
The Company will deliver the Offered Certificates to the Representative,
against payment of the purchase price therefor in same day funds wired to such
bank as may be designated by the Company, or by such other manner of payment as
may be agreed upon by the Company and the Representative, at the offices of
Hunton & Williams LLP, Charlotte, North Carolina, at 10:00 A.M., Eastern time,
on July 31, 2006, or at such other place or time not later than seven full
business days thereafter as the Representative and the Company determine, such
time being referred to herein as the "Closing Date."
The Offered Certificates so to be delivered will be in such denominations
and registered in such names as the Representative requests two full business
days prior to the Closing Date and will be made available at the offices of Banc
of America Securities LLC, Charlotte, North Carolina or, upon the
Representative's request, through the facilities of The Depository Trust
Company.
SECTION 4. Offering by the Underwriters.
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(a) It is understood that the Underwriters propose to offer the
Offered Certificates subject to this Agreement for sale to the public
(which may include selected dealers) on the terms as set forth in the Final
Prospectus.
(b) Each Underwriter represents and warrants to, and agrees with, the
Company, that:
(i) In relation to each Member State of the European Economic
Area which has implemented the Prospectus Directive (each, a "Relevant
Member State"), it has not made and will not make an offer of
Certificates to the public in that Relevant Member State prior to the
publication of a prospectus in relation to the Offered Certificates
which has been approved by the competent authority in that Relevant
Member State or, where appropriate, approved in another Relevant
Member State and notified to the competent authority in that Relevant
Member State, all in accordance with the Prospectus Directive, except
that it may, with effect from and including the relevant
implementation date, make an offer of Certificates to the public in
that Relevant Member State at any time:
(A) to legal entities which are authorized or regulated to
operate in the financial markets or, if not so authorized or
regulated, whose corporate purpose is solely to invest in
securities;
(B) to any legal entity which has two or more of (1) an
average of at least 250 employees during the last financial year;
(2) a total balance sheet of more than (euro) 43,000,000 and (3)
an annual net turnover of more than (euro) 50,000,000, as shown
in its last annual or consolidated accounts; or
(C) in any other circumstances which do not required the
publication by the issuer of a prospectus pursuant to Article 3
of the Prospectus Directive.
For the purposes of this representation, the expression an "offer of
Certificates to the public" in relation to any Offered Certificates in any
Relevant Member State means the communication in any form and by any means of
sufficient information on the terms of the offer and the Certificates to be
offered so as to enable an investor to decide to purchase or subscribe the
Certificates, as the same may be varied in that Member State by any measure
implementing the Prospectus Directive in that Member State and the expression
"Prospectus Directive" means the European Commission Directive 2003/71/EC and
includes any relevant implementing measure in each Relevant Member State.
(ii) It has only communicated or caused to be communicated and
will only communicate or cause to be communicated an invitation or
inducement to engage in investment activity (within the meaning of
Section 21 of the United Kingdom Financial Services and Markets Act
2000 (the "FSMA")) received by it in connection with the issue or sale
of the Certificates in circumstances in which Section 21(1) of the
FSMA does not apply to the issuer.
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(iii) It has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in relation
to the Offered Certificates in, from or otherwise involving the United
Kingdom.
SECTION 5. Covenants of the Company. The Company hereby covenants and
agrees with the Underwriters that:
(a) Prior to the termination of the offering of the Offered
Certificates, the Company will not file any amendment of the Registration
Statement or supplement (including the Final Prospectus) to the Basic
Prospectus unless the Company has furnished the Representative a copy for
its review prior to filing and will not file any such proposed amendment or
supplement to which the Representative, on behalf of the Underwriters,
reasonably objects. Subject to the foregoing sentence, the Company will
cause the Final Prospectus to be filed with the Commission pursuant to Rule
424. The Company will advise the Representative promptly (i) when the Final
Prospectus shall have been filed with the Commission pursuant to Rule 424,
(ii) when any amendment to the Registration Statement relating to the
Offered Certificates shall have become effective, (iii) of any request by
the Commission for any amendment of the Registration Statement or amendment
of or supplement to the Final Prospectus or for any additional information,
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (v) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Offered Certificates for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose. The
Company will use its best efforts to prevent the issuance of any such stop
order and, if issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Offered
Certificates is required to be delivered under the Act, any event occurs as
a result of which the Final Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it shall be
necessary to amend or supplement the Final Prospectus to comply with the
Act or the Exchange Act or the respective rules thereunder, the Company
promptly will prepare and file with the Commission, subject to the first
sentence of paragraph (a) of this Section 5, an amendment or supplement
which will correct such statement or omission or an amendment which will
effect such compliance and will use its best efforts to cause any required
post-effective amendment to the Registration Statement containing such
amendment to be made effective as soon as possible.
(c) The Company will furnish to the Representative and counsel for the
Underwriters, without charge, executed copies of the Registration Statement
(including exhibits thereto) and each amendment thereto which shall become
effective on or prior to the Closing Date and, so long as delivery of a
prospectus by the Underwriters or dealers may be required by the Act, as
many copies of the Final Prospectus and any amendments thereof and
supplements thereto as the Underwriters may reasonably request. The Company
will pay the expenses of printing all documents relating to the initial
offering.
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(d) The Company will furnish such information as may be required and
otherwise cooperate in qualifying the Offered Certificates for sale under
the laws of such jurisdictions as the Representative may reasonably
designate and to maintain such qualifications in effect so long as required
for the distribution of the Offered Certificates; provided, however, that
the Company shall not be required to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which
would subject it to general or unlimited service of process in any
jurisdiction where it is not now so subject.
SECTION 6. Conditions to the Obligations of the Underwriters. The
obligation of the Underwriters to purchase the Offered Certificates shall be
subject to the accuracy of the representations and warranties on the part of the
Company contained herein as of the date hereof, as of the date of the
effectiveness of any amendment to the Registration Statement filed prior to the
Closing Date (including the filing of any document incorporated by reference
therein) and as of the Closing Date, to the accuracy of the statements of the
Company made in any certificates delivered pursuant to the provisions hereof, to
the performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) The Underwriters shall have received from Deloitte & Touche LLP
(i) a letter, dated the date hereof, confirming that they are independent
public accountants within the meaning of the Act and the rules and
regulations of the Commission promulgated thereunder and otherwise in form
and substance reasonably satisfactory to the Underwriters and counsel to
the Underwriters.
(b) All actions required to be taken and all filings required to be
made by the Company under the Act prior to the sale of the Offered
Certificates shall have been duly taken and made. At and prior to the
Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted, or to the knowledge of the Company or
the Underwriters, shall have been contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business or properties
of the Company or the Servicer which, in the reasonable judgment of the
Underwriters, materially impairs the investment quality of the Offered
Certificates; (ii) any downgrading in the rating of the Servicer by any
"nationally recognized statistical rating organization" (as such term is
defined for purposes of Rule 436(g) under the Act), or any public
announcement that any such organization has under surveillance or review
its rating of the Servicer (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any suspension or limitation of trading
in securities generally on the New York Stock Exchange, or any setting of
minimum prices for trading on such exchange; (iv) any banking moratorium
declared by federal, North Carolina or New York authorities; or (v) any
outbreak or escalation of major hostilities in which the United States is
involved, any declaration of war by Congress or any other substantial
national or international calamity or emergency if, in the reasonable
judgment of the Underwriters, the effects of any such outbreak, escalation,
declaration, calamity or
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emergency makes it impractical or inadvisable to proceed with completion of
the sale of and payment for the Offered Certificates.
(d) On or before the Closing Date, the Underwriters shall have
received evidence satisfactory to them that each class of Offered
Certificates has been given the ratings set forth on Schedule I hereto.
(e) The Underwriters shall have received a favorable opinion of Hunton
& Williams LLP, a special tax counsel for the Company, addressed to the
Underwriters and dated the Closing Date and reasonably satisfactory in form
and substance to the Underwriters and counsel to the Underwriters.
(f) The Underwriters shall have received a favorable opinion of Hunton
& Williams LLP, special counsel for the Company, addressed to the
Underwriters and dated the Closing Date and reasonably satisfactory in form
and substance to the Underwriters, with respect to the validity of the
Certificates, ERISA matters and such other related matters as the
Underwriters shall require, and the Company shall have furnished or caused
to be furnished to such counsel such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters.
(g) The Underwriters shall have received copies of any opinions of
counsel for the Company that the Company is required to deliver to any
Rating Agency. Any such opinions shall be dated the Closing Date and
addressed to the Underwriters or accompanied by reliance letters addressed
to the Underwriters.
(h) The Underwriters shall have received an opinion of counsel to the
Trustee, dated the Closing Date, in form and substance satisfactory to the
Underwriters and its counsel.
(i) The Underwriters shall have received a certificate dated the
Closing Date of the President, any Vice President or the Secretary of the
Company in which the officer shall state that, to the best of his or her
knowledge after reasonable investigation, (i) the representations and
warranties of the Company with respect to the Mortgage Loans contained in
any Basic Document are true and correct, (ii) the representations and
warranties of the Company in this Agreement are true and correct, (iii) the
Company has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied hereunder at or prior to the Closing
Date, (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued, (v) no proceedings for that purpose have been
instituted or are contemplated by the Commission, and (vi) there has been
no amendment or other document filed affecting the Certificate of
Incorporation or bylaws of the Company, and no such amendment has been
authorized.
(j) At the Closing Date, the Certificates and the Pooling Agreement
will conform in all material respects to the descriptions thereof contained
in the Final Prospectus.
(k) The Underwriters shall not have discovered and disclosed to the
Company on or prior to the Closing Date that the Registration Statement or
the Final Prospectus or
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any amendment or supplement thereto contains an untrue statement of a fact
or omits to state a fact which, in the opinion of counsel to the
Underwriters, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(l) The Underwriters shall have received from Hunton & Williams LLP,
special counsel for the Underwriters, a letter dated the Closing Date with
respect to the Final Prospectus, in form and substance satisfactory to the
Underwriters.
(m) All corporate proceedings and other legal matters relating to the
authorization, form and validity of this Agreement, the Pooling Agreement,
the Mortgage Loan Purchase Agreement, the Certificates, the Registration
Statement and the Final Prospectus, and all other legal matters relating to
this Agreement and the transactions contemplated hereby, shall be
reasonably satisfactory in all respects to counsel for the Underwriters,
and the Company shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass upon
such matters.
(n) The Underwriters shall have received a certificate (upon which
Hunton & Williams LLP shall be entitled to rely in rendering its opinions
and letters under the Basic Documents) dated the Closing Date of an officer
of the Trustee in which such officer shall state that, to the best of such
officer's knowledge after reasonable investigation: (i) the Trustee is not
an affiliate of any other entity listed as a transaction party in the
Prospectus Supplement (ii) the information in the Prospectus Supplement
related to the Trustee (the "Trustee Disclosure") includes (a) the
Trustee's correct name and form of organization and (b) a discussion of the
Trustee's experience serving as trustee for asset-backed securities
transactions involving mortgage loans; and (iii) the Trustee Disclosure is
true and correct in all material respects and nothing has come to his or
her attention that that would lead such officer to believe that the Trustee
Disclosure contains any untrue statement of material fact or omits to state
a material fact necessary to make the statements therein not misleading.
(o) The Underwriters shall have received a certificate (upon which
Hunton & Williams LLP shall be entitled to rely in rendering its opinions
and letters under the Basic Documents) dated the Closing Date of an officer
of C-BASS (the "Originator") in which such officer shall state that, to the
best of such officer's knowledge after reasonable investigation: (i) except
as disclosed in the Prospectus Supplement, the Originator is not an
affiliate of any other entity listed as a transaction party in the
Prospectus Supplement; (ii) the information in the Prospectus Supplement
related to the Originator (the "Originator Disclosure") includes the
Originator's correct name, form of organization and length of time
originating mortgage loans; (iii) the description of the Originator's
origination program includes (a) experience in originating mortgage loans,
(b) size and composition of the Originator's origination portfolio, and (c)
the Originator's credit-granting or underwriting criteria for the mortgage
loans; (iv) except as set forth in the Originator Disclosure, no additional
information regarding the Originator's origination program could have a
material adverse affect on the performance of the Mortgage Loans or the
Offered Certificates; and (v) the Originator Disclosure is true and correct
in all material respects and nothing has come to his or her attention that
that
11
would lead such officer to believe that the Originator Disclosure contains
any untrue statement of material fact or omits to state a material fact
necessary to make the statements therein not misleading.
(p) The Underwriters shall have received a certificate (upon which
Hunton & Williams LLP shall be entitled to rely in rendering its opinions
and letters under the Basic Documents) dated the Closing Date of an officer
of the Servicer in which such officer shall state that, to the best of such
officer's knowledge after reasonable investigation: (i) except as
disclosed, in the Prospectus Supplement, the Servicer is not an affiliate
of any other entity listed as a transaction party in the Prospectus
Supplement; (ii) the information in the Prospectus Supplement related to
the Servicer (the "Servicer Disclosure") includes (a) the Servicer's
correct name and form of organization, (b) the correct length of time that
the Servicer has been servicing mortgage loans; and (c) a discussion of the
Servicer's experience in servicing mortgage loans; (iii) except as set
forth in the Servicer Disclosure, (a) there are no other servicers
responsible for calculating or making distributions to the holders of the
Offered Certificates, performing work-outs or foreclosures, or any other
material aspect of servicing the mortgage loans, (b) there have been no
material changes to the Servicer's servicing policies and procedures during
the last three years, (c) no additional information regarding the
Servicer's financial condition could have a material affect on performance
of the Mortgage Loans or the Offered Certificates, (d) no commingling of
funds on deposit in collection accounts will be permitted by the Servicer,
(e) no additional information with respect to any special or unique factors
involved in servicing the mortgage loans could have a material affect on
performance of the Offered Certificates, and (f) no additional information
with respect to the Servicer's process for handling delinquencies, losses,
bankruptcies and recoveries could have a material affect on performance of
the Offered Certificates; (iv) for the Servicer identified in the
Prospectus Supplement as responsible for calculating or making
distributions to the holders of the Offered Certificates, performing
work-outs or foreclosures, or any other material aspect of servicing the
mortgage loans, the certifications in clauses (ii) and (iii) above are made
with respect to the Servicer; and (v) the Servicer Disclosure is true and
correct in all material respects and nothing has come to his or her
attention that that would lead such officer to believe that the Servicer
Disclosure contains any untrue statement of material fact or omits to state
a material fact necessary to make the statements therein not misleading.
The Company will provide or cause to be provided to the each Underwriter
such conformed copies of such opinions, certificates, letters and documents as
such Underwriter may reasonably request.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
If any condition specified in this Section 6 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Underwriters by notice to the Company at any time at or prior to the Closing
Date, and such termination shall be without liability of any party to any other
party except as provided in Section 7.
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SECTION 7. Reimbursement of the Underwriters' Expenses. If the sale of the
Offered Certificates provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth in Section 6 hereof
is not satisfied or because of any refusal, inability or failure on the part of
the Company to perform any agreement herein or comply with any provision hereof
other than by reason of a default by the Underwriters, the Company will
reimburse the Underwriters upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been reasonably
incurred by it in connection with the proposed purchase and sale of the Offered
Certificates.
SECTION 8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and any person who controls each Underwriter within the meaning of either
the Act or the Exchange Act against any and all losses, claims, damages or
liabilities to which it may become subject under the Act, the Exchange Act
or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement for the registration of the Offered Certificates as
originally filed or in any amendment thereof, or in the Basic Prospectus or
the Final Prospectus or the Time of Sale Information, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained
in any Issuer Free Writing Prospectus (as defined in Section 11(e)(i) or
any Issuer Information (as defined in Section 11(b)) contained in any Free
Writing Prospectus prepared by or on behalf of any Underwriter or in any
Free Writing Prospectus which is required to be filed pursuant to Section
11(e) or Section 11(g), or the omission or alleged omission to state a
material fact required to make the statements therein, in light of the
circumstances under which they were made, not misleading, which was not
corrected by Corrective Information subsequently supplied by the Company to
the Underwriters within a reasonable period of time prior to the Time of
Sale, and (iii) any breach of the representation and warranty in Section
2(h), and agrees to reimburse each Underwriter and any such controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable
in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Representative specifically for use in
connection with the preparation thereof. This indemnity agreement will be
in addition to any liability which the Company may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signs the
Registration Statement and each person who controls the Company within the
meaning of either the Act or the
13
Exchange Act, to the same extent as the foregoing indemnity from the
Company to the Underwriters, but only with reference to (i) any untrue
statements or alleged untrue statements of a material fact, or omissions or
alleged omissions to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, in the information furnished in writing to the Company by the
Representative specifically for use in connection with the preparation of
the Registration Statement, the Prospectus, the Time of Sale Information or
any revision or amendment thereof or supplement thereto and (ii) any untrue
statements or alleged untrue statements of a material fact in any Free
Writing Prospectus prepared by or on behalf of such Underwriter, or
omissions or alleged omissions to state a material fact necessary to make
the statements therein (when read in conjunction with the Time of Sale
Information), in light of the circumstances under which they were made, not
misleading; provided, that such Underwriter shall not be obligated to so
indemnify and hold harmless to the extent such loss, liability, claim,
damage or expense is caused by a misstatement or omission resulting from an
error or omission in any Issuer Information which was not corrected by
Corrective Information subsequently supplied by the Company to the
Underwriters within a reasonable period of time prior to the Time of Sale.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than under this Section 8. In case any such action is
brought against any indemnified party, and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled
to participate therein, and, to the extent that it may elect by written
notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses available
to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assert
such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed
separate counsel in connection with the assertion of legal defenses in
accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for
the expenses of more than one separate counsel, approved by the
Representative in the case of subparagraph (a), representing the
indemnified parties under subparagraph (a) who are parties to such action),
(ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
within
14
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party; and except that
if clause (i) or (iii) is applicable, such liability shall be only in
respect of the counsel referred to in such clause (i) or (iii).
(d) To provide for just and equitable contribution in circumstances in
which the indemnification provided for in paragraphs (a) or (b) of this
Section 8 is due in accordance with its terms but is for any reason held by
a court to be unavailable from the Company or any Underwriter on the
grounds of policy or otherwise, the Company or such Underwriter shall
contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) to which the Company or such Underwriter
may be subject, as follows:
(i) in the case of any losses, claims, damages and liabilities
(or actions in respect thereof) which do not arise out of or are not
based upon any untrue statement or omission of a material fact in any
Free Writing Prospectus, in such proportion as is appropriate to
reflect the relative benefit received by each of the Company and such
Underwriter; and
(ii) in the case of any losses, claims, damages and liabilities
(or actions in respect thereof) which arise out of or are based upon
any untrue statement or omission of a material fact in any Free
Writing Prospectus, in such proportion as is appropriate to reflect
the relative fault of the Company and such Underwriter in connection
with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault
shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact in such Free Writing
Prospectus results from information prepared by the Company or such
Underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
Notwithstanding anything to the contrary in this paragraph (d), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls any Underwriter within the meaning of either the Act or the Exchange
Act shall have the same rights to contribution as such Underwriter and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, and each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to the preceding
sentence of this paragraph (d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this paragraph (d), notify such
party or parties from whom contribution may be sought, but the omission to so
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this paragraph (d).
15
SECTION 9. Representations and Indemnities to Survive; No Fiduciary Duty.
The respective agreements, representations, warranties, indemnities and
other statements of the Company and its respective officers and of the
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or the Company or any of the officers, directors or controlling
persons referred to in Section 8 hereof, and will survive delivery of and
payment for the Offered Certificates. The provisions of Sections 7 and 8 hereof
and this Section 9 shall survive the termination or cancellation of this
Agreement.
SECTION 10. Effectiveness of Agreement and Termination. This Agreement
shall become effective upon the execution and delivery hereof by the parties
hereto.
This Agreement shall be subject to termination in the absolute discretion
of the Representative, by notice given to the Company prior to delivery of and
payment for the Offered Certificates, if prior to such time (i) trading in
securities generally on the New York Stock Exchange shall have been suspended or
limited or minimum prices shall have been established on such Exchange, (ii) a
banking moratorium shall have been declared by federal authorities or (iii)
there shall have occurred any outbreak or material escalation of hostilities or
other calamity or crisis the effect of which on the financial markets of the
United States is such as to make it, in the reasonable judgment of the
Representative, impracticable to market the Offered Certificates.
SECTION 11. Offering Communications; Free Writing Prospectuses.
(a) Unless preceded or accompanied by a prospectus satisfying the
requirements of Section 10(a) of the Act, no Underwriter shall convey or
deliver any written communication to any person in connection with the
initial offering of the Certificates, unless such written communication (i)
is made in reliance on Rule 134 under the Act, (ii) constitutes a
prospectus satisfying the requirements of Rule 430B under the Act or (iii)
constitutes a "free writing prospectus," as defined in Rule 405 under the
Act (a "Free Writing Prospectus"). Without limitation thereby, without the
prior written consent of the Company (which consent may be withheld for any
reason), no Underwriter shall convey or deliver in connection with the
initial offering of the Certificates any "ABS informational and
computational material," as defined in Item 1101(a) of Regulation AB under
the Act ("ABS Informational and Computational Material"), in reliance upon
Rules 167 and 426 under the Act.
(b) (i) Each Underwriter shall deliver to the Company, no later than
two business days prior to the date of first use thereof, (A) any Free
Writing Prospectus prepared by or on behalf of such Underwriter that
contains any "issuer information," as defined in Rule 433(h) under the Act
and footnote 271 of the Commission's Securities Offering Reform Release No.
33-8591 ("Issuer Information"), and (B) any Free Writing Prospectus or
portion thereof that contains only a description of the final terms of the
Certificates.
(ii) Notwithstanding the provisions of Section 11(b)(i), any Free
Writing Prospectus described therein that contains only ABS
Informational and
16
Computational Material, may be delivered by any Underwriter to the
Company not later than the later of (a) two business days prior to the
due date for filing of the Prospectus pursuant to Rule 424(b) under
the Act or (b) the date of first use of such Free Writing Prospectus.
(c) Each Underwriter represents and warrants to the Company that the
Free Writing Prospectuses to be furnished to the Company by such
Underwriter pursuant to Section 11(b)(i) or (ii) will constitute all Free
Writing Prospectuses of the type described therein that were furnished to
prospective investors by such Underwriter in connection with its offer and
sale of the Certificates.
(d) Each Underwriter represents and warrants to the Company that each
Free Writing Prospectus required to be provided by it to the Company
pursuant to Section 11(b), when read in conjunction with the Time of Sale
Information, did not, as of the Time of Sale, include any untrue statement
of a material fact or omit any material fact required to be stated therein
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading; provided however,
that such Underwriter makes no representation to the extent such
misstatements or omissions were the result of any inaccurate Issuer
Information supplied by the Company to such Underwriter which information
was not corrected by Corrective Information subsequently supplied by the
Company to each Underwriter within a reasonable period of time prior to the
Time of Sale.
(e) The Company agrees to file with the Commission the following:
(i) Any Free Writing Prospectus that constitutes an "issuer free
writing prospectus," as defined in Rule 433(h) under the Act (an
"Issuer Free Writing Prospectus");
(ii) Any Free Writing Prospectus or portion thereof delivered by
any Underwriter to the Company pursuant to Section 12(b) hereof; and
(iii) Any Free Writing Prospectus for which the Company or any
person acting on its behalf provided, authorized or approved
information that is prepared and published or disseminated by a person
unaffiliated with the Company or any other offering participant that
is in the business of publishing, radio or television broadcasting or
otherwise disseminating communications.
(f) Any Free Writing Prospectus required to be filed pursuant to
Section 11(e) by the Company shall be filed with the Commission not later
than the date of first use of the Free Writing Prospectus, except that:
(i) any Free Writing Prospectus or portion thereof required to be
filed that contains only the description of the final terms of the
Certificates may be filed by the Company within two days of the later
of the date such final terms have been established for all classes of
Certificates and the date of first use;
17
(ii) any Free Writing Prospectus or portion thereof required to
be filed that contains only ABS Informational and Computational
Material may be filed by the Company with the Commission not later
than the later of the due date for filing the final Prospectus
relating to the Certificates pursuant to Rule 424(b) under the Act or
two business days after the first use of such Free Writing Prospectus;
(iii) any Free Writing Prospectus required to be filed pursuant
to Section 11(e)(iii) may, if no payment has been made or
consideration has been given by or on behalf of the Company for the
Free Writing Prospectus or its dissemination, be filed by the Company
with the Commission not later than four business days after the
Company becomes aware of the publication, radio or television
broadcast or other dissemination of the Free Writing Prospectus; and
(iv) the Company shall not be required to file (A) Issuer
Information contained in any Free Writing Prospectus of an offering
participant other than the Issuer, if such information is included or
incorporated by reference in a prospectus or Free Writing Prospectus
previously filed with the Commission that relates to the offering of
the Certificates, or (B) any Free Writing Prospectus or portion
thereof that contains a description of the Certificates or the
offering of the Certificates which does reflect the final terms
thereof.
(g) Each Underwriter shall file with the Commission any Free Writing
Prospectus that is used or referred to by it and distributed by or on
behalf of such Underwriter in a manner reasonably designed to lead to its
broad, unrestricted dissemination not later than the date of the first use
of such Free Writing Prospectus.
(h) Notwithstanding the provisions of Section 11(g), each Underwriter
shall file with the Commission any Free Writing Prospectus for which such
Underwriter or any person acting on its behalf provided, authorized or
approved information that is prepared and published or disseminated by a
person unaffiliated with the Company or any other offering participant that
is in the business of publishing, radio or television broadcasting or
otherwise disseminating written communications and for which no payment was
made or consideration given by or on behalf of the Company or any other
offering participant, not later than four business days after such
Underwriter becomes aware of the publication, radio or television broadcast
or other dissemination of the Free Writing Prospectus.
(i) Notwithstanding the provisions of Sections 11(e) and 11(g),
neither the Company nor any Underwriter shall be required to file any Free
Writing Prospectus that does not contain substantive changes from or
additions to a Free Writing Prospectus previously filed with the
Commission.
(j) The Company and each Underwriter each agree that any Free Writing
Prospectuses prepared by such Underwriter shall contain the following
legend and any other legend:
18
The depositor has filed a registration statement (including a
prospectus) with the SEC for the offering to which this communication
relates. Before you invest, you should read the prospectus in that
registration statement and other documents the depositor has filed
with the SEC for more complete information about the issuer and this
offering. You may get these documents for free by visiting EDGAR on
the SEC Web site at www.sec.gov. Alternatively, the depositor, any
underwriter or any dealer participating in the offering will arrange
to send you the prospectus if you request it by calling toll-free
1-xxx-xxx-xxxx or you e-mail a request to [____________].
The Company and each Underwriter each agree that any Free Writing Prospectus
prepared by such Underwriter and that is not an Issuer Free Writing Prospectus
or that does not contain Issuer Information shall also contain the following
legend:
Neither the issuer of the securities nor any of its affiliates
prepared, provided, approved or verified any statistical or numerical
information presented herein, although that information may be based
in part on loan level data provided by the issuer or its affiliates.
(k) In the event that the Company becomes aware that, as of the Time
of Sale, any Issuer Free Writing Prospectus contains any untrue statement
of a material fact or omits to state a material fact necessary in order to
make the statements contained therein (when read in conjunction with the
Time of Sale Information), in light of the circumstances under which they
were made, not misleading (a "Defective Issuer Free Writing Prospectus"),
the Company shall notify each Underwriter within one business day after
discovery and the Company shall, if requested by such Underwriter, prepare
and deliver to such Underwriter a Free Writing Prospectus that corrects the
material misstatement or omission in the Defective Issuer Free Writing
Prospectus (such corrected Issuer Free Writing Prospectus, a "Corrected
Issuer Free Writing Prospectus").
(l) In the event that any Underwriter become aware that, as of the
Time of Sale, any Free Writing Prospectus prepared by or on behalf of such
Underwriter delivered to an investor in any Certificates contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements contained therein (when read in
conjunction with the Time of Sale Information), in light of the
circumstances under which they were made, not misleading, when considered
in conjunction with the Time of Sale Information (together with a Defective
Issuer Free Writing Prospectus, a "Defective Free Writing Prospectus"),
such Underwriter shall notify the Company thereof within one business day
after discovery.
(m) Each Underwriter shall, if requested by the Company;
(i) if the Defective Free Writing Prospectus was a Free Writing
Prospectus prepared by or on behalf of such Underwriter, prepare a
Free Writing
19
Prospectus which corrects the material misstatement in or omission
from the Defective Free Writing Prospectus (together with a Corrected
Issuer Free Writing Prospectus, a "Corrected Free Writing
Prospectus");
(ii) deliver the Corrected Free Writing Prospectus to each
investor which received the Defective Free Writing Prospectus prior to
entering into a contract of sale with such investor;
(iii) notify such investor in a prominent fashion that the prior
contract of sale with the investor has been terminated, and of the
investor's rights as a result of termination of such agreement;
(iv) provide such investor with an opportunity to affirmatively
agree to purchase the Certificates on the terms described in the
Corrected Free Writing Prospectus; and
(v) comply with any other requirements for reformation of the
original contract of sale with such investor, as described in Section
IV.A.2.c of the Commission's Securities Offering Reform Release No.
33-8591.
(n) The Company and each Underwriter agree to retain all Free Writing
Prospectuses that they have used and that are not required to be filed
pursuant to this Section 11 for a period of three years following the
initial bona fide offering of the Certificates.
(o) Each Underwriter covenants with the Company that after the final
Prospectus is available such Underwriter shall not distribute any written
information concerning the Offered Certificates to a prospective purchaser
of Offered Certificates unless such information is preceded or accompanied
by the Final Prospectus.
SECTION 12. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Representative shall be directed to Banc of America Securities LLC, 214 North
Tryon Street, NC1-027-21-04, Charlotte, North Carolina 28255, Attention: Daniel
B. Goodwin; and notices to the Company shall be directed to it at Asset Backed
Funding Corporation, 214 North Tryon Street, Charlotte, North Carolina 28255,
Attention: Associate General Counsel, with a copy to the Treasurer.
SECTION 13. Parties. This Agreement shall inure to the benefit of and be
binding upon the Company, each Underwriter, any controlling persons referred to
herein and their respective successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person, firm or corporation any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. No purchaser
of Offered Certificates from an Underwriter shall be deemed to be a successor by
reason merely of such purchase.
SECTION 14. APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, AND THE
20
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
LAW (BUT WITH REFERENCE TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW, WHICH BY ITS TERMS APPLIES TO THIS AGREEMENT).
SECTION 15. No Advisory or Fiduciary Responsibility. The Company
acknowledges and agrees that: (i) the purchase and sale of the Offered
Certificates pursuant to this Agreement, including the determination of the
public offering price of the Offered Certificates and any related discounts and
commissions, is an arm's-length commercial transaction between the Company, on
the one hand, and each Underwriter on the other hand, and the Company is capable
of evaluating and understanding and understands and accepts the terms, risks and
conditions of the transactions contemplated by this Agreement; (ii) in
connection with each transaction contemplated hereby and the process leading to
such transaction each Underwriter is and has been acting solely as a principal
and is not the agent or fiduciary of the Company or its affiliates,
stockholders, creditors or employees or any other party; (iii) no Underwriter
has assumed, nor will it assume, an advisory or fiduciary responsibility in
favor of the Company with respect to any of the transactions contemplated hereby
or the process leading thereto (irrespective of whether any Underwriter has
advised or is currently advising the Company on other matters) or any other
obligation to the Company except the obligations expressly set forth in this
Agreement; (iv) each Underwriter and its affiliates may be engaged in a broad
range of transactions that involve interests that differ from those of the
Company and that such Underwriter has no obligation to disclose any of such
interests by virtue of any fiduciary or advisory relationship; and (v) no
Underwriter has provided any legal, accounting, regulatory or tax advice with
respect to the offering contemplated hereby and the Company has consulted its
own legal, accounting, regulatory and tax advisors to the extent it deemed
appropriate.
The Company hereby waives and releases, to the fullest extent permitted by
law, any claims that the Company may have against any Underwriter with respect
to any breach or alleged breach of fiduciary duty.
SECTION 16. Miscellaneous.
(a) This Agreement supersedes all prior agreements and understandings
(whether written or oral) between the Company and any Underwriter with
respect to the subject matter hereof.
(b) Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated except by a writing signed by the party against
whom enforcement of such change, waiver, discharge or termination is
sought.
(c) This Agreement may be signed in any number of counterparts each of
which shall be deemed an original, which taken together shall constitute
one and the same instrument.
21
(d) The headings of the Sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed a part of this
Agreement.
SECTION 17. Non-Petition.
Each Underwriter hereby agrees not to cause or participate in the filing of
a petition in bankruptcy against the Company for the non-payment to such
Underwriter of any amounts provided by this Agreement or otherwise until one
year and one day after the payment in full of all amounts due on the
Certificates in accordance with the terms of the Pooling Agreement.
22
If the foregoing is in accordance with your understanding of our agreement,
please sign and return a counterpart hereof to us, whereupon this letter shall
constitute a binding agreement between each of the Underwriters and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in an Agreement among
Underwriters, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
ASSET BACKED FUNDING CORPORATION
By: /s/ Bruce W. Good
---------------------------------
Name: Bruce W. Good
Title: Vice President
The foregoing Agreement is hereby confirmed and accepted as of the date first
written above.
BANC OF AMERICA SECURITIES LLC
Acting on behalf of itself in its capacity as
an Underwriter and as the Representative
of the Underwriters
By: /s/ Juanita L. Deane-Warner
--------------------------------
Name: Juanita L. Deane-Warner
Title: Vice President
SCHEDULE I
Offered Certificates: Class A-I, Class A-II-1, Class A-II-2, Class
A-II-3, Class A-II-4, Class M-1, Class M-2,
Class M-3, Class M-4, Class M-5, Class M-6,
Class M-7 and Class M-8.
Registration Statement File
Number: 333-130524
Original Class Certificate Principal Balance of the Offered Certificates:
Original Class
Class Certificate Principal Balance
------------ -----------------------------
Class A-I $ 50,000,000
Class A-II-1 $311,240,000
Class A-II-2 $ 70,805,000
Class A-II-3 $138,684,000
Class A-II-4 $ 42,131,000
Class M-1 $ 25,764,000
Class M-2 $ 30,838,000
Class M-3 $ 12,101,000
Class M-4 $ 12,882,000
Class M-5 $ 12,101,000
Class M-6 $ 10,540,000
Class M-7 $ 10,149,000
Class M-8 $ 6,636,000
Purchase Price: $733,871,000. Banc of America Securities LLC,
Greenwich Capital Markets, Inc., Goldman, Sachs
& Co. and SG Americas Securities, LLC will
acquire approximately 55%, 15%, 15% and 15%,
respectively, of each class of Offered
Certificates.
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Classes of Book-Entry Offered
Certificates: Class A-I, Class A-II-1, Class A-II-2, Class
A-II-3, Class A-II-4, Class M-1, Class M-2,
Class M-3, Class M-4, Class M-5, Class M-6,
Class M-7 and Class M-8 Certificates.
Description of Mortgage Loans: A pool of fixed and adjustable rate, first and
second-lien sub-prime mortgage loans having an
aggregate principal balance as of the Cut-off
Date of approximately $782,564,698.
Denominations: The Offered Certificates will be issued in
book-entry form. Each such Class of
Certificates will be evidenced by one or more
certificates registered in the name of Cede &
Co. in the aggregate amount equal to the
Original Class Certificate Principal Balance of
such Class. Interests in such Classes of
Offered Certificates may be purchased by
investors in minimum denominations of $100,000
and integral multiples of $1.
Certificate Ratings:
CLASS MOODY'S S&P FITCH DBRS
------------ ------- ---- ----- ---------
Class A-I Aaa AAA AAA AAA
Class A-II-1 Aaa AAA AAA AAA
Class A-II-2 Aaa AAA AAA AAA
Class A-II-3 Aaa AAA AAA AAA
Class A-II-4 Aaa AAA AAA AAA
Class M-1 Aa1 AA+ AA+ AA(high)
Class M-2 Aa2 AA AA AA
Class M-3 Aa3 AA- AA- AA(low)
Class M-4 A1 A+ A+ A(high)
Class M-5 A2 A A A
Class M-6 A3 A- A- A(low)
Class M-7 Baa1 BBB+ BBB+ BBB(high)
Class M-8 Baa2 BBB BBB BBB
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SCHEDULE II
TIME OF SALE INFORMATION
1. Free Writing Prospectus, in the form of a RMBS New Issue Term Sheet,
received and accepted by the Commission on July 24, 2006, with a filing
date of July 25, 2006, and accession number 0001125282-06-004281.
2. Free Writing Prospectus, in the form of a RMBS New Issue Term Sheet,
received and accepted by the Commission on July 25, 2006, with a filing
date of July 25, 2006, and accession number 0001125282-06-004288.
3. Free Writing Prospectus, in the form of a Prospectus, received and
accepted by the Commission on July 26, 2006, with a filing date of July
27, 2006, and accession number 0001125282-06-004348.
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