CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT (this "Agreement"), dated as of
November 3, 1997, by and between Commercial Assets, Inc., a Maryland corporation
(the "Company") and CAX DTR Securitization Corp., a Delaware corporation
("QRS").
WHEREAS, the Company is the record or beneficial owner of
$50,974,526 aggregate initial principal amount of Daiwa Securities America Inc.
Multifamily First Loss Ownership Securities ("Multifamily FLOWS_") Series
1994-Multifamily Flows_-1, pass-through certificates (the "Daiwa FLOWS
Certificates"), together with all related securities entitlements, contract
rights, general intangibles and accounts (the "Other Assets");
WHEREAS, QRS is a wholly-owned subsidiary of the Company;
WHEREAS, the Company desires to contribute its right, title
and interest in and to the Daiwa FLOWS Certificates and the Other Assets to QRS
pursuant to the terms hereof in exchange for all of the authorized and
outstanding capital stock of QRS;
WHEREAS, QRS is concurrently herewith, pursuant to a Trust
Agreement (the "Trust Agreement"), dated as of November 3, 1997, by and between
QRS and Wilmington Trust Company, a Delaware bank and trust corporation, as
owner trustee (the "Owner Trustee"), creating Structured Mortgage Trust 1997-2,
a Delaware business trust (the "Issuer");
WHEREAS, pursuant to the Trust Agreement, QRS will, subsequent
to the effectiveness of this Agreement, contribute all its right, title and
interest in and to the Daiwa FLOWS Certificates and the Other Assets to the
Issuer;
WHEREAS, contemporaneously with the contribution of the Daiwa
FLOWS Certificates and the Other Assets to the Issuer pursuant to the terms of
the Trust Agreement, the Issuer will issue four classes of collateralized notes
(the "Notes") pursuant to a trust indenture, dated as of November 3, 1997 (the
"Indenture"), between La Salle National Bank, a national banking corporation, as
indenture trustee (the "Indenture Trustee") and the Issuer, which Notes will be
secured by the Daiwa FLOWS Certificates and the Other Assets, and all of its
rights therein and with respect thereto;
WHEREAS, contemporaneously with the issuance of the Notes and
the pledge of the Daiwa FLOWS Certificates and the Other Assets, the Issuer will
sell the Notes to PaineWebber Incorporated (the "Initial Purchaser") pursuant to
a Note Purchase Agreement, dated as of November 3, 1997 (the "Note Purchase
Agreement") among, the Issuer, QRS, and the Initial Purchaser for consideration
and upon terms set forth in the Note Purchase Agreement and (as described
therein) in a document ancillary thereto; and
WHEREAS, capitalized terms used and not defined herein shall
have the respective meanings assigned to them in the Indenture.
NOW THEREFORE, in consideration of the premises and the mutual
covenants, representations and warranties made herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION I. Contribution and Transfer.
(a) The Company hereby contributes, conveys, assigns and
transfers to QRS, without recourse, and QRS hereby accepts, in each case as of
November 3, 1997 (the "Closing Date"), all of the Company's right, title and
interest in and to the Daiwa FLOWS Certificates and the Other Assets, including,
without limitation, all amounts distributable in respect of the Daiwa FLOWS
Certificates and the Other Assets payable from and after the date in December
1997 on which distributions are made on the Daiwa FLOWS Certificates (the "Daiwa
December 1997 Distribution Date") pursuant to the Daiwa Pooling Agreement;
provided, however, that all such amounts distributed on such date shall belong
to QRS.
(b) The Company and QRS intend that the conveyance of the
Daiwa FLOWS Certificates and the Other Assets by the Company to QRS as provided
herein be, and be construed as, an absolute contribution and transfer of the
Daiwa FLOWS Certificates and the Other Assets by the Company to QRS and not as a
pledge of the Daiwa FLOWS Certificates and the Other Assets by the Company to
QRS or any assignee of QRS (including, without limitation, QRS, the Owner
Trustee, individually or on behalf of the Issuer, the Issuer, the Indenture
Trustee, individually or on behalf of any Holder or all Holders, or any Holder),
as security for any debt or other obligation owing from QRS to the Company.
Notwithstanding the foregoing sentence, in the event that the Daiwa FLOWS
Certificates and the Other Assets are for any reason deemed to be property of
the Company, then it is intended that (i) this Agreement shall be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code as in effect from time to time in the State of New York (the
"UCC"); (ii) the conveyance provided for in the foregoing sentence shall be
deemed to be a grant by the Company to QRS of a security interest in all of the
Company's right, title and interest, whether now owned or hereafter acquired, in
the Daiwa FLOWS Certificates and the Other Assets (together with any related
securities or entitlements, as defined in the UCC); (iii) the Company shall, to
the extent consistent with this Agreement, take all such actions as may be
necessary to create a first priority security interest in the Daiwa FLOWS
Certificates and the Other Assets and to maintain the perfection and priority of
such security interest throughout the term of this Agreement; (iv) the
possession of the Daiwa FLOWS Certificates and the Other Assets and such other
items of property as constitute instruments, money, negotiable documents, or
chattel paper by QRS shall be deemed to be "possession by the secured party" for
the purpose of perfecting such security interest pursuant to Section 9-305 of
the UCC; and (v) notifications to, and acknowledgements, receipts or
confirmations from any person holding such property shall be deemed to be
notifications to, or acknowledgments, receipts or continuations from, financial
intermediaries, bailees or agents of QRS for the purpose of perfecting such
security interest under applicable law.
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SECTION 2. Distribution Rights. Subsequent to all transactions
contemplated herein, in the Trust Agreement and in the Indenture (collectively,
the "Related Agreements"), QRS shall be entitled to all distributions,
including, without limitation, distributions of principal and interest, on the
Daiwa FLOWS Certificates and the Other Assets received on and after the Daiwa
December 1997 Distribution Date. All available distributions, including
interest, on the Daiwa FLOWS Certificates and the Other Assets due on or before
the Closing Date shall belong to the Company.
SECTION 3. Transfer of Daiwa FLOWS Certificates and the Other
Assets to the Owner Trustee. Following the contribution of the Daiwa FLOWS
Certificates and the Other Assets to QRS by the Company, ownership thereof shall
be vested in QRS and QRS intends to transfer the same to the Issuer.
Accordingly, QRS hereby directs the Company to, and the Company agrees to,
deliver to the Owner Trustee as soon as possible, but in any event prior to the
Closing Date, the Daiwa FLOWS Certificates and the Other Assets, together with
proxies executed in favor of "Structured Mortgage Trust 1997-2" and any
transferor documents and opinions of counsel ("Opinions of Counsel") in form and
substance meeting the requirements set forth in this Agreement, the other
Related Agreements, and the Pooling Agreement. Prior to the effectiveness of the
contribution provided for herein, the Owner Trustee shall hold the Daiwa FLOWS
Certificates and the Other Assets for the benefit of the Company.
SECTION 4. Representations and Warranties of the Company to
QRS. The Company hereby represents and warrants to QRS, as of the date of this
Agreement, as follows:
(a) the Company is duly incorporated, validly existing, and in
good standing under the laws of the State of Maryland and has the full power,
authority and legal right to transfer and convey the Daiwa FLOWS Certificates
and the Other Assets to QRS and has the full power, authority (corporate and
other) and legal right to execute and deliver, engage in the transactions
contemplated by, and perform and observe the terms and conditions of, this
Agreement;
(b) the Company acquired record or beneficial ownership of the
Daiwa FLOWS Certificates and the Other Assets in the ordinary course of its
business, in good faith, for value and without notice of any claim against or
claim to any of the Daiwa FLOWS Certificates on the part of any person;
(c) immediately prior to the transfer of the Daiwa FLOWS
Certificates and the Other Assets to QRS, the Company has no actual or
constructive knowledge or notice of any ownership interest (other than that of
the Company) in, will be the sole owner of, and will have good and marketable
title to, the Daiwa FLOWS Certificates and the Other Assets, subject to no prior
lien, mortgage, security interest, pledge, charge or other encumbrance (other
than any such encumbrance as will be discharged prior to such transfer and
subject to the prior claim of the Federal National Mortgage Association in
respect of the assets indirectly underlying the Daiwa FLOWS Certificates), and
on the Closing Date, the Company shall validly endorse and deliver the Daiwa
FLOWS Certificates and the Other Assets, as described in Section 3 hereof,
together with any other documents or certificates as may be required by this
Agreement, the Related Agreements, or the Pooling Agreement. Following the
contribution of the Daiwa FLOWS Certificates and the Other Assets to QRS, QRS
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will own the Daiwa FLOWS Certificates and the Other Assets free and clear of any
prior lien, mortgage, security interest, pledge, charge or other encumbrance;
(d) the execution and delivery by the Company of this
Agreement has been duly authorized by all necessary action on the part of the
Company and it is not necessary in connection with the conveyance of the Daiwa
FLOWS Certificates and the Other Assets or the other transactions contemplated
by this Agreement that the Company obtain the consent, approval, or
authorization of any of its shareholders;
(e) neither the execution and delivery of this Agreement by
the Company, nor the consummation by the Company of the transactions
contemplated hereby, nor compliance by the Company with the provisions hereof,
will: (i) conflict with or result in a breach of, or constitute a default under,
any of the provisions of the articles of incorporation or bylaws of, or any law,
governmental rule or regulation, or any judgment, decree or order binding on,
the Company or its properties, or any of the provisions of any indenture,
mortgage, deed of trust, contract or other instrument to which it is a party or
by which it is bound, or (ii) result in the creation or imposition of any lien,
charge or encumbrance upon any of its properties pursuant to the terms of any
such indenture, mortgage, deed of trust, contract or other instrument;
(f) this Agreement has been duly executed and delivered by the
Company and constitutes a legal, valid and binding agreement of the Company,
enforceable in accordance with its terms subject, as to enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency or other similar laws
affecting creditors' rights generally from time to time in effect, and to
general principles of equity;
(g) assuming compliance by the Initial Purchaser with its
agreements set forth in Section 7 of the Note Purchase Agreement and that the
Daiwa FLOWS Certificates have been issued by a bankruptcy remote trust, no
consent, approval, authorization or order of any court or governmental agency or
body or official is required for the execution, delivery and performance of or
compliance by the Company with this Agreement or any other transaction
contemplated hereby, except such as have been obtained, and except such as may
be required under the "blue sky" laws of any jurisdiction in connection with the
purchase and distribution of the Notes;
(h) no certificate or statement of an officer furnished
pursuant hereto in writing to QRS by the Company contains any untrue statement
of a material fact, or omits a material fact necessary to make such certificate
or statement not misleading;
(i) the Company has not dealt with any broker, investment
banker (other than the Initial Purchaser) agent (other than ▇▇▇▇▇▇ ▇▇▇, a
natural person and a consultant to the Company on certain matters) or any other
person that may be entitled to any commission or compensation in connection with
the sale of the Daiwa FLOWS Certificates and the Other Assets to QRS;
(j) there is no litigation pending or, to the Company's
knowledge, threatened against the Company, which would reasonably be expected to
adversely affect the transfer of the Daiwa FLOWS Certificates and the Other
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Assets or the execution, delivery, performance or enforceability of this
Agreement;
(k) no default exists on the part of the Company, and no event
has occurred which, with notice, the passage of time or both, would constitute a
default on the part of the Company in the due performance and observance of any
term, covenant or condition of any agreement to which the Company is a party or
by which it is bound, which default would have a material and adverse effect on
the Company's performance of this Agreement;
(l) the transfer of the Daiwa FLOWS Certificates and the Other
Assets to QRS will be classified as a contribution of assets to a wholly-owned
subsidiary under generally accepted accounting principles on the books and
records of the Company;
(m) the transfer, assignment and conveyance of the Daiwa FLOWS
Certificates and the Other Assets by the Company pursuant to this Agreement is
not subject to bulk transfer laws or any similar statutory provisions in effect
in any applicable jurisdiction;
(n) the information set forth in Schedule A hereto is true and
correct in all material respects as of the Closing Date;
(o) all conditions precedent and any restrictions upon the
transfer of the Daiwa FLOWS Certificates and the Other Assets provided for in
the Related Agreements or the Pooling Agreement have been satisfied and the
transfer of the Daiwa FLOWS Certificates and the Other Assets to the Owner
Trustee on behalf of the Issuer will be complete upon the execution of the Trust
Agreement by the parties thereto and their delivery to the Owner Trustee, on
behalf of the Issuer, pursuant to the terms thereof;
(p) subject to its continuing ownership of all of the equity
of QRS, the Company intends to relinquish all direct ownership rights in the
Daiwa FLOWS Certificates and the Other Assets transferred pursuant to this
Agreement; after the Closing Date, the Company will have no right to the Daiwa
FLOWS Certificates and the Other Assets, and, subject to Section 11, the Company
will have no right or obligation to repurchase or substitute any Daiwa FLOWS
Certificate or Other Asset;
(q) the Company's principal place of business and chief
executive office are located in Denver, Colorado; and
(r) the Company is not a "benefit plan investor" described in
or subject to the Department of Labor Regulations set forth in 29 C.F.R. Section
2510.3-101.
SECTION 5. Representations and Warranties of QRS. As of the
date of this Agreement, QRS represents and warrants to the Company as follows:
(a) QRS is a corporation which has been duly organized and is
validly existing and in good standing under the laws of the State of Delaware
and is duly qualified to do business and is in good standing under the laws of
each jurisdiction that requires such qualification wherein it conducts any
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material business;
(b) the execution and delivery by QRS of this Agreement are
within the legal power of QRS and have been duly authorized by all necessary
action on the part of QRS; none of the execution and delivery of this Agreement
by QRS, the consummation by QRS of the transactions contemplated hereby, nor
compliance by QRS with the provisions hereof, will (i) conflict with or result
in a breach of, or constitute a default under, any of the provisions of QRS's
certificate of incorporation or by-laws, or any law, governmental rule or
regulation, or any judgment, decree, or order binding upon QRS or its
properties, or any of the provisions of any indenture, mortgage, deed of trust,
contract or other instrument or agreement to which it is a party or by which it
is bound, or (ii) result in the creation or imposition of any lien, charge or
encumbrance upon any of its properties pursuant to the terms of any such
indenture, mortgage, deed of trust, contract or other instrument or agreement;
(c) this Agreement has been duly executed and delivered by QRS
and constitutes a legal, valid and binding agreement of QRS, enforceable in
accordance with its terms, subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency or other similar laws affecting
creditors' rights generally from time to time in effect, and to general
principles of equity; and
(d) assuming compliance by the Initial Purchaser with its
agreements set forth in Section 7 of the Note Purchase Agreement and that the
Daiwa FLOWS Certificates have been issued by a bankruptcy remote trust, no
consent, approval, authorization or order of any court or governmental agency or
body or official is required for the consummation by QRS of the transactions
contemplated hereby, except such as have been obtained, and except such as may
be required under the "blue sky" laws of any jurisdiction in connection with the
purchase and distribution of the Notes.
SECTION 6. Covenants of the Company and QRS.
(a) The Company and QRS hereby covenant to observe all
appropriate formalities and procedures required by this Agreement and the laws
of their respective states of organization. In addition, each of the Company and
QRS will maintain its existence and identity separate from that of the other
party and each of the Company and QRS will take steps necessary to make it
apparent to third parties that each of the Company and QRS is an entity distinct
from the other party.
(b) Each of QRS and the Company covenants that it shall
cooperate with the tax administrator appointed pursuant to the Trust Indenture
and the Trust Agreement.
(c) neither the Company nor QRS will file a petition for
bankruptcy against or for appointment of a receiver of the other or encourage or
aid any other Person to do so.
(d) each of the Company and QRS will treat the Notes as debt
instruments for purposes of federal and state income tax, franchise tax and any
other tax measured in whole or in part by income.
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SECTION 7. Further Assurances. Upon request, and from time to
time, each of the Company and QRS shall execute and deliver all documents, make
all truthful oaths, testify in any proceedings and do all other acts that may be
reasonably necessary or desirable, in the reasonable opinion of QRS, the
Company, the Initial Purchaser, the Owner Trustee, or the Indenture Trustee to
carry out the terms of this Agreement to effect the transfer of the Daiwa FLOWS
Certificates and the Other Assets to QRS.
SECTION 8. Conditions to Obligations of QRS. The obligation of
QRS hereunder to accept the contribution of the Daiwa FLOWS Certificates and the
Other Assets is subject to:
(a) the accuracy in all material respects of all of the
representations and warranties of the Company under this Agreement and
compliance in all material respects by the Company with all of its covenants and
obligations under this Agreement;
(b) receipt by QRS of the following documents (collectively,
the ("Closing Documents") in such forms as are agreed upon and acceptable to
QRS, duly executed by all signatories other than QRS as required pursuant to the
respective terms thereof:
(i) the execution and delivery of all
documents described herein, in the Related Agreements, and in
the Pooling Agreement;
(ii) Opinions of Counsel of Bartlit ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ ("Bartlit ▇▇▇▇") counsel to the
Company, each of which shall be addressed to QRS and shall be
in form and substance acceptable to QRS, the Owner Trustee, on
behalf of the Issuer, the Indenture Trustee, for the benefit
of the Holders, the Initial Purchaser, and the Rating Agency
(it being understood that such Opinions of Counsel shall
expressly provide that the Owner Trustee, on behalf of the
Issuer, the Indenture Trustee, for the benefit of the Holders,
and the Rating Agency shall be entitled to rely thereupon and
that with respect to matters of Maryland law such counsel may
rely upon the Opinion of Counsel of Arent Fox ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& ▇▇▇▇, special Maryland counsel to the Company, provided that
such Opinion of Counsel shall be in form and substance
acceptable to QRS, the Owner Trustee, on behalf of the Issuer,
the Indenture Trustee, for the benefit of the Holders, the
Initial Purchaser, and the Rating Agency), as to the following
matters:
(A) each of the Company and QRS has
been duly organized and is validly existing and in
good standing under the laws of the State of its
organization with the power and authority to own its
assets and to conduct its business as such assets are
then owned and such business is then conducted, and,
in each case, as contemplated by the Related
Agreements to which it is a party, and to enter into
and perform its obligations under the Related
Agreements to which it is a party;
7
(B) each Related Document to which
the Company or QRS is a party has been duly and
validly authorized, executed and delivered by the
Company and/or QRS, as applicable, and each
constitutes the legal, valid and binding agreement of
the Company and/or QRS, as applicable, enforceable
against the Company and/or the QRS, as applicable, in
accordance with its terms, subject, as to the
enforcement of remedies, to applicable bankruptcy,
insolvency, reorganization, moratorium, receivership
and similar laws affecting creditors' rights
generally and to general principles of equity
(regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or
at law) and subject, in the case of this Agreement,
to public policy constraints regarding
indemnification;
(C) none of the execution and
delivery of the Related Agreements to which the
Company or QRS is a party, or the consummation of the
transactions contemplated by either the Related
Agreements or the Notes, or the grant of the security
interest pursuant to the Indenture will (A) conflict
with or violate, or result in a breach of or
constitute a default under any organizational or
other constituent document of or, to such counsel's
knowledge, any statute currently applicable to the
Company or QRS, as applicable, or, to such counsel's
knowledge, any order, rule or regulation currently
applicable to the Company or QRS, as the case may be,
of any court, regulatory body, administrative agency
or governmental body having jurisdiction over the
Company or QRS, as the case may be, or (B) to such
counsel's knowledge, conflict with or violate, result
in a material breach of or constitute a material
default under the terms of any indenture, agreement,
mortgage, deed of trust or other agreement or
instrument to which the Company or QRS is a party or
by which the Company or QRS or any of their
respective properties are bound;
(D) the offer and sale of the Notes
to the Initial Purchaser and to persons purchasing
directly from the Initial Purchaser in connection
with the Initial Purchaser's initial sale of each
such class of the Notes, in each case in the manner
and under the circumstances contemplated by the
Private Offering Memorandum, this Agreement, and the
other Related Agreements, are not transactions
requiring registration of the Company or QRS under
the 1940 Act;
(E) the conveyance and transfer of
the Daiwa FLOWS Certificates and the Other Assets,
the creation and transfer of the equity in the
issuer, or any of the other transactions contemplated
by the Related Agreements, including the offer and
sale of the Notes to the Initial Purchaser and to
persons purchasing directly from the Initial
Purchaser in connection with the Initial Purchaser's
initial sale of each such class of the Notes, in each
case in the manner and under the circumstances
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contemplated by this Agreement, and the Related
Agreements, are not transactions requiring
registration of any class of the Notes, or the equity
of QRS or the Issuer, under the Securities Act of
1933;
(F) the conveyance and transfer of
the Daiwa FLOWS Certificates constitutes a true sale
thereof from the Company to QRS and, if such transfer
were to be adjudged not to be a true sale, QRS would
have a first priority perfected security interest in
the Daiwa FLOWS Certificates, and in a case under the
Bankruptcy Code in which the Company is a debtor, a
bankruptcy court would not cause a substantive
consolidation of the assets and liabilities of the
Issuer or QRS with the Company;
(G) to the best of its knowledge
after due inquiry and examination of the face of the
Trust Certificate, no consent, approval,
authorization or order of any court or governmental
agency or body or official is required for the
execution, delivery and performance of or compliance
by the Company with this Agreement or any other
transaction contemplated hereby, except such as have
been obtained, and except such as may be required
under the "blue sky" laws of any jurisdiction in
connection with the purchase and distribution of the
Notes; and
(H) to the best of its knowledge
after due inquiry, there is no litigation pending or
threatened against the Company which would reasonably
be expected to adversely affect the transfer of the
Daiwa FLOWS Certificates and the Other Assets or the
execution, delivery, performance or enforceability of
this Agreement;
(iii) a certificate of the Secretary of the
Company as to its certificate of incorporation, bylaws and
resolutions authorizing the subject transaction, together with
current certificates of good standing of the Company issued by
the Secretary of State of the States of Colorado and of
Maryland;
(c) the execution and delivery by the Company, QRS and the
Issuer of a Securitization Cooperation Agreement, dated the Closing Date, among
the Issuer, QRS, the Company and the Initial Purchaser and mutually satisfactory
to the Initial Purchaser and the Company.
(d) all consents required for the transfer of the Daiwa FLOWS
Certificates and the Other Assets to QRS have been obtained by the Company and
reasonably sufficient evidence thereof has been given to QRS.
SECTION 9. Conditions to Obligations of the Company. The
obligations of the Company hereunder to transfer the Daiwa FLOWS Certificates
and the Other Assets to QRS is subject to:
(a) the accuracy in all material respects of all of the
9
representations and warranties of QRS under this Agreement and compliance in all
material respects by QRS with all of its covenants and obligations under this
Agreement;
(b) the receipt by the Company on the date hereof of an
Opinion of Counsel of Bartlit ▇▇▇▇ as counsel to QRS, addressed to the Company,
that this Agreement has been duly authorized by all necessary action of QRS and
has been duly and validly executed and delivered by QRS and constitutes a valid,
legal and binding agreement of QRS, enforceable against QRS in accordance with
its terms, subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and,
as to enforceability, to general principles of equity regardless of whether
enforcement is sought in a proceeding in equity or at law (it being understood
that such Opinion of Counsel shall expressly provide that the Owner Trustee, on
behalf of the Issuer, the Indenture Trustee, for the benefit of the Holders, and
the Rating Agency shall be entitled to rely thereupon and that such Opinion of
Counsel shall be acceptable to each of the parties entitled to rely thereupon);
and
(c) satisfaction by QRS of all conditions of all of its
purchase obligations under this Agreement.
SECTION 10. Indemnification. In the event that either party
hereto breaches its representations, warranties, covenants or obligations set
forth herein in any material respect, each party hereto shall indemnify and hold
harmless the other from and against any loss, damages, penalties, fines,
forfeiture, legal fees and related costs, judgments, and other costs and
expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, such breach. Promptly after receipt by a
non-breaching party of notice of the commencement of any such action, the
non-breaching party will, if a claim in respect thereof is to be made against
the breaching party under this Section, notify the breaching party in writing of
the commencement thereof, but the failure of the non-breaching party to notify
the breaching party will not relieve the breaching party from any liability
hereunder unless such omission materially prejudices the rights of the breaching
party. In case any such action is brought against the non-breaching party, and
the non-breaching party notifies the breaching party of the commencement
thereof, the breaching party will be entitled to participate therein, and to
assume the defense thereof, with counsel reasonably satisfactory to the
breaching party, and after notice from the breaching party to the non-breaching
party of its election to assume the defense thereof, the non-breaching party
will not be liable to the breaching party under this Section for any legal or
other expenses subsequently incurred by the other party in connection with the
defense thereof other than reasonable costs of investigation.
SECTION 11. Repurchase Obligation. It is understood and agreed
that the representations and warranties set forth herein shall survive delivery
of the Daiwa FLOWS Certificates and the Other Assets to QRS, the subsequent
transfer to the Owner Trustee, on behalf of the Issuer, and the further
assignment to the Indenture Trustee, for the benefit of the Holders, of the
Daiwa FLOWS Certificates and the Other Assets and the issuance and sale of Notes
by the Issuer to the Initial Purchaser and shall inure to the benefit of the
Owner Trustee, on behalf of the Issuer, and the Indenture Trustee, for the
benefit of the Holders, notwithstanding any restrictive or qualified endorsement
or assignment. Upon the discovery by a party hereto, the Owner Trustee, or the
Indenture Trustee of a breach of any of such representations and warranties that
10
materially and adversely affects the interests of any such person or the
Holders, the party discovering such breach shall give prompt written notice to
the other party hereto, the Owner Trustee, and the Indenture Trustee, whereupon
the breaching party shall promptly take such action as is necessary to cure such
breach. Within 60 days of its discovery of or its receipt of notice of any
breach of the representations and warranties contained herein, the breaching
party shall cause such breach to be cured in all material respects or, in the
event the Company is unable to cure such breach, the breaching party shall
purchase the Daiwa Flows Certificates at a purchase price (the "Purchase Price")
calculated as follows: if the Purchase Price is paid prior to the date on which
the Notes are retranched and resold as contemplated by the Cooperation
Agreement, the Purchase Price shall equal to the sum of (x) $39,951,986.00 plus
(y) all costs and expenses of the Initial Purchaser incidental to or consequent
upon such breach, including without limitation all third party costs and
expenses, hedging costs and lost interest income, and (z) the accrued interest
on the Notes as of such date, in each case payable in immediately available
funds. If such Purchase Price is paid following the date on which the Notes are
retranched and resold as contemplated by the Cooperation Agreement, the Purchase
Price shall equal to the sum of (x) the par value of the Notes plus (y) the
accrued interest on the Notes as of such date, in each case payable in
immediately available funds. The obligations of the breaching party set forth in
this Section 11 with respect to a breach of a representation contained herein
shall constitute the sole remedy respecting such breach available to QRS, the
Company, the Owner Trustee, on behalf of the Issuer, the Issuer, the Indenture
Trustee, on behalf of any Holder or the Holders, or any Holder, provided,
however, that this Section 11 shall in no way weaken, reduce, or pre-empt the
indemnification provisions set forth in Section 10, which shall continue in full
force and effect.
SECTION 12. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by telecopy, as follows:
(a) If to the Company:
Commercial Assets, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
Bartlit ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
(b) If to QRS:
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CAX DTR Securitization Corp.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
Bartlit ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Any party may alter the address to which communications or
copies are to be sent by giving notice of such change of address in conformity
with the provisions of this Section for the giving of notice.
SECTION 13. Severability of Provisions. Any part, provision,
representation or warranty contained in this Agreement that is prohibited or
that is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining parts,
provisions, representations or warranties hereof. Any part, provision,
representation or warranty contained in this Agreement that is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining parts, provisions,
representations or warranties hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS THEREOF.
SECTION 15. Survival. Each of the Company and QRS agrees that
the representations, warranties and agreements made by it herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to
have been relied upon by the other party, notwithstanding any investigation
heretofore or hereafter made by the other party or on the other party's behalf,
and that the representations, warranties and agreements made by the Company or
QRS herein or in any such certificate or other instrument shall survive the
delivery of and payment for the Daiwa FLOWS Certificates and the Other Assets.
SECTION 16. Acknowledgement of Third Party Reliance. Each of
the Company and QRS hereby acknowledges that the Initial Purchaser and all
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subsequent Holders shall rely upon the representations, warranties and covenants
made by it in this Agreement not as assignees but as intended third-party
creditor beneficiaries of this Agreement. The Company hereby consents to the
assignment of this Agreement by QRS to the Owner Trustee, on behalf of the
Issuer, and to the Indenture Trustee, for the benefit of the Holders, from time
to time. This Agreement shall inure to the benefit of and be binding upon the
parties hereto, the Owner Trustee, on behalf of the Issuer, the Indenture
Trustee, for benefit of the Holders and their respective successors and assigns.
SECTION 17. Miscellaneous.
(a) This Agreement may be executed in separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which together shall constitute one and the same instrument.
(b) Any person into which the Company or QRS may be merged or
consolidated or any person resulting from a merger, acquisition or other
business combination involving the Company or QRS, respectively, shall be
considered the successor of the Company or of QRS, respectively, hereunder,
without further act or consent of any other party.
(c) This Agreement supersedes all prior agreements and
understandings relating to the subject matter hereof. Neither this Agreement nor
any term hereof may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought. The headings in this
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof.
[Signatures Appear on the Next Page]
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IN WITNESS WHEREOF, QRS and the Company have caused this
Contribution Agreement to be executed by their respective officers thereunto
duly authorized as of the date written above.
CAX DTR SECURITIZATION CORP.,
a Delaware corporation,
By: /s/▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President & Secretary
S-1
COMMERCIAL ASSETS, INC.,
a Maryland corporation,
By: /s/▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Sr. VP & CFO
S-2