EXECUTION COPY
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-C2
UNDERWRITING AGREEMENT
Charlotte, North Carolina
November 19, 1997
▇▇▇▇▇▇ Brothers Inc.
Three World Financial Center
New York, New York 10285
As Representative of the several
Underwriters named in Schedule
II hereto
Dear Sirs:
First Union Commercial Mortgage Securities, Inc., a North Carolina
corporation (the "Company"), proposes to issue its Commercial Mortgage
Pass-Through Certificates, Series 1997-C2 (the "Certificates"), in 18 classes
(each, a "Class") as designated in the Prospectus Supplement (as defined below).
The Company further proposes to sell to the Underwriters named in Schedule II
hereto, for whom you are acting as Representative, the Certificates set forth in
Schedule I hereto (the "Underwritten Certificates") in the respective original
principal and notional amounts set forth in Schedule I. The Certificates will
represent in the aggregate the entire beneficial ownership interest in a trust
fund (the "Trust Fund") consisting primarily of a segregated pool (the "Mortgage
Pool") of mortgage loans (the "Mortgage Loans") secured by first liens on the
borrowers' fee or leasehold interests in multifamily and commercial properties
(the "Mortgaged Properties"). The Trust Fund will be created, the Certificates
will be issued and the Mortgage Pool will be serviced and administered pursuant
to a pooling and servicing agreement (the "Pooling and Servicing Agreement"), to
be dated as of November 1, 1997 (the "Cut-off Date"), among the Company, First
Union National Bank, as master servicer (the "Master Servicer"), CRIIMI MAE
Services Limited Partnership, as special servicer (the "Special Servicer"), ABN
AMRO Bank N.V., as fiscal agent and LaSalle National Bank as trustee (the
"Trustee"). Certain of the Mortgage Loans (the "LBHI Mortgage Loans") are owned,
as of the date hereof, by ▇▇▇▇▇▇ Brothers Holdings Inc. ("LBHI"), and the
remainder of the Mortgage Loans (the "First Union Mortgage Loans") are owned by
First Union National Bank ("First Union"; and together with LBHI, the "Mortgage
Loan Sellers"). The Mortgage Loans will be acquired by the Company, on or before
the Closing Date (as hereinafter defined), pursuant to (i) in the case of LBHI
Mortgage Loans, a mortgage loan purchase agreement (the "LBHI Mortgage Loan
Purchase Agreement"),
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dated as of November 1, 1997, between the Company and LBHI and (ii) in the case
of the First Union Mortgage Loans, a mortgage loan purchase agreement (the
"First Union Mortgage Loan Purchase Agreement"), dated as of November 1, 1997,
between First Union National Bank and the Company. The Underwritten Certificates
and the Mortgage Pool are described more fully in Schedule I hereto and in a
registration statement furnished to you by the Company.
Capitalized terms used but not otherwise defined herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.
1. Representations and Warranties. (I) The Company represents and warrants
to, and agrees with, each Underwriter that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement (No. 333-7854) on Form S-3 for
the registration of Commercial Mortgage Pass-Through Certificates, issuable
in series, including the Underwritten Certificates, under the Securities
Act of 1933, as amended (the "1933 Act"), which registration statement has
become effective and a copy of which, as amended to the date hereof, has
heretofore been delivered to you. The Company meets the requirements for
use of Form S-3 under the 1933 Act, and such registration statement, as
amended at the date hereof, meets the requirements set forth in Rule
415(a)(1)(x) under the 1933 Act and complies in all other material respects
with the 1933 Act and the rules and regulations thereunder. The Company
proposes to file with the Commission, with your consent, pursuant to Rule
424 under the 1933 Act, a supplement dated November 19, 1997 (the
"Prospectus Supplement") to the prospectus dated October 29, 1997 (the
"Basic Prospectus"), relating to the Underwritten Certificates and the
method of distribution thereof, and has previously advised you of all
further information (financial and other) with respect to the Underwritten
Certificates and the Mortgage Pool to be set forth therein. Such
registration statement (No. 333-7854), including all exhibits thereto, is
referred to herein as the "Registration Statement"; and the Basic
Prospectus and the Prospectus Supplement, together with any amendment
thereof or supplement thereto authorized by the Company prior to the
Closing Date for use in connection with the offering of the Underwritten
Certificates, are hereinafter called the "Prospectus". Any preliminary form
of the Prospectus Supplement that has heretofore been filed pursuant to
Rule 424 or, prior to the effective date of the Registration Statement,
pursuant to Rule 402(a) or 424(a), is hereinafter called a "Preliminary
Prospectus Supplement". If so stated in the Prospectus Supplement, the
Company will file with the Commission within fifteen days of the issuance
of the Underwritten Certificates a report on Form 8-K ("8-K") setting forth
specific information concerning the Mortgage Pool and the Underwritten
Certificates to the extent that such information is not set forth in the
Prospectus Supplement.
(b) As of the date hereof, as of the date on which the Prospectus
Supplement is first filed pursuant to Rule 424 under the 1933 Act, as of
the date on which, prior to the Closing Date, any amendment to the
Registration Statement becomes effective, as
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of the date on which any supplement to the Prospectus Supplement is filed
with the Commission, and as of the Closing Date, (i) the Registration
Statement, as amended as of any such time, and the Prospectus, as amended
or supplemented as of any such time, complies and will comply in all
material respects with the applicable requirements of the 1933 Act and the
rules and regulations thereunder, (ii) the Registration Statement, as
amended as of any such time, does not contain and will not contain any
untrue statement of a material fact and does not omit and will not 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 Prospectus, as
amended or supplemented as of any such time, does not contain and will not
contain any untrue statement of a material fact and does not omit and will
not omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representations or warranties as to statements contained in or omitted from
the Registration Statement or the Prospectus or any amendment or supplement
thereto made in reliance upon and in conformity with information furnished
in writing to the Company by or on behalf of any Underwriter through you
specifically for use in the Registration Statement and the Prospectus (such
information being identified in Section 8(b)).
(c) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of North
Carolina with corporate power and authority to own, lease or operate its
properties and to conduct its business as now conducted by it and to enter
into and perform its obligations under this Agreement and the Pooling and
Servicing Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business.
(d) As of the date hereof, as of the date on which the Prospectus
Supplement is first filed pursuant to Rule 424 under the 1933 Act, as of
the date on which, prior to the Closing Date, any amendment to the
Registration Statement becomes effective, as of the date on which any
supplement to the Prospectus Supplement is filed with the Commission, and
as of the Closing Date, there has not and will not have been (i) any
request by the Commission for any further amendment to the Registration
Statement or the Prospectus or for any additional information, (ii) any
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the institution or threat of any
proceeding for that purpose or (iii) any notification with respect to the
suspension of the qualification of the Underwritten Certificates for sale
in any jurisdiction or any initiation or threat of any proceeding for such
purpose.
(e) This Agreement has been duly authorized, executed and delivered by
the Company, and the Pooling and Servicing Agreement, when executed and
delivered as contemplated hereby and thereby, will have been duly
authorized, executed and delivered by the Company; and this Agreement
constitutes, and the Pooling and Servicing Agreement, when so executed and
delivered will constitute, legal, valid and
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binding agreements of the Company, enforceable against the Company in
accordance with their respective terms, except as enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, receivership,
moratorium or other similar laws affecting the enforcement of the rights of
creditors generally, (ii) general principles of equity, whether enforcement
is sought in a proceeding in equity or at law, and (iii) public policy
considerations underlying the securities laws, to the extent that such
public policy considerations limit the enforceability of the provisions of
this Agreement or the Pooling and Servicing Agreement that purport to
provide indemnification from securities law liabilities.
(f) As of the Closing Date, the Underwritten Certificates and the
Pooling and Servicing Agreement will conform in all material respects to
the respective descriptions thereof contained in the Prospectus. As of the
Closing Date, the Underwritten Certificates will be duly and validly
authorized and, when duly and validly executed, authenticated and delivered
in accordance with the Pooling and Servicing Agreement to you against
payment therefor as provided herein, will be duly and validly issued and
outstanding and entitled to the benefits of the Pooling and Servicing
Agreement.
(g) As of the Closing Date, each of the Mortgage Loans will meet the
criteria for selection described in the Prospectus, and on the Closing Date
the representations and warranties of the Company with respect to the
Mortgage Loans contained in the Pooling and Servicing Agreement will be
true and correct in all material respects.
(h) The Company is not in violation of its certificate of
incorporation or by-laws or in default under any agreement, indenture or
instrument the effect of which violation or default would be material to
the Company or which violation or default would have a material adverse
affect on the performance of its obligations under this Agreement or the
Pooling and Servicing Agreement. Neither the issuance and sale of the
Underwritten Certificates, nor the execution and delivery by the Company of
this Agreement or the Pooling and Servicing Agreement, nor the consummation
by the Company of any of the transactions herein or therein contemplated,
nor compliance by the Company with the provisions hereof or thereof, does
or will conflict with or result in a breach of any term or provision of the
certificate of incorporation or by-laws of the Company or conflict with,
result in a breach, violation or acceleration of, or constitute a default
under, the terms of any indenture or other agreement or instrument to which
the Company is a party or by which it or any material asset is bound, or
any statute, order or regulation applicable to the Company of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Company.
(i) There is no action, suit or proceeding against the Company
pending, or, to the knowledge of the Company, threatened, before any court,
arbitrator, administrative agency or other tribunal (i) asserting the
invalidity of this Agreement, the Pooling and Servicing Agreement or the
Underwritten Certificates, (ii) seeking to
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prevent the issuance of the Underwritten Certificates or the consummation
of any of the transactions contemplated by this Agreement or the Pooling
and Servicing Agreement, (iii) that might materially and adversely affect
the performance by the Company of its obligations under, or the validity or
enforceability of, this Agreement, the Pooling and Servicing Agreement or
the Underwritten Certificates or (iv) seeking to affect adversely the
federal income tax attributes of the Underwritten Certificates as described
in the Prospectus.
(j) There are no contracts, indentures or other documents of a
character required by the 1933 Act or by the rules and regulations
thereunder to be described or referred to in the Registration Statement or
the Prospectus or to be filed as exhibits to the Registration Statement
which have not been so described or referred to therein or so filed or
incorporated by reference as exhibits thereto.
(k) No authorization, approval or consent of any court or governmental
authority or agency is necessary in connection with the offering, issuance
or sale of the Underwritten Certificates pursuant to this Agreement and the
Pooling and Servicing Agreement, except such as have been, or as of the
Closing Date will have been, obtained or such as may otherwise be required
under applicable state securities laws in connection with the purchase and
offer and sale of the Underwritten Certificates by the Underwriters and any
recordation of the respective assignments of the Mortgage Loans to the
Trustee pursuant to the Pooling and Servicing Agreement that have not been
completed.
(l) The Company possesses all material licenses, certificates,
authorities or permits issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct the business now
operated by it, and the Company has not received 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 any unfavorable decision, ruling or finding, would materially
and adversely affect the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company.
(m) Any taxes, fees and other governmental charges in connection with
the execution and delivery of this Agreement and the Pooling and Servicing
Agreement or the execution, delivery and sale of the Underwritten
Certificates (other than such federal, state and local taxes as may be
payable on the income or gain recognized therefrom) have been or will be
paid at or prior to the Closing Date.
(n) Immediately prior to the assignment of the Mortgage Loans to the
Trustee, the Company will have good title to, and will be the sole owner
of, each Mortgage Loan, free and clear of any pledge, mortgage, lien,
security interest or other encumbrance.
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(o) Neither the Company nor the Trust Fund is, and neither the
issuance and sale of the Underwritten Certificates in the manner
contemplated by the Prospectus nor the activities of the Trust Fund
pursuant to the Pooling and Servicing Agreement will cause the Company or
the Trust Fund to be, an "investment company" or under the control of an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "Investment Company Act").
(p) Under generally accepted accounting principles ("GAAP") and for
federal income tax purposes, the Company will report the transfer of the
Mortgage Loans to the Trustee in exchange for the Underwritten Certificates
and the sale of the Underwritten Certificates to the Underwriters pursuant
to this Agreement as a sale of the interests in the Mortgage Loans
evidenced by the Underwritten Certificates. The consideration received by
the Company upon the sale of the Underwritten Certificates to the
Underwriters will constitute reasonably equivalent value and fair
consideration for the Underwritten Certificates. The Company will be
solvent at all relevant times prior to, and will not be rendered insolvent
by, the sale of the Underwritten Certificates to the Underwriters and the
transfer of the Mortgage Loans to the Trustee on behalf of the Trust Fund.
The Company is not selling the Underwritten Certificates to the
Underwriters or transferring the Mortgage Loans to the Trustee on behalf of
the Trust Fund with any intent to hinder, delay or defraud any of the
creditors of the Company.
(q) At the Closing Date, the respective classes of Underwritten
Certificates shall have been assigned ratings no lower than those set forth
in Schedule I hereto by the nationally recognized statistical rating
organizations identified in Schedule I hereto (individually and
collectively, the "Rating Agency").
(r) At the Closing Date, each of the representations and warranties of
the Company set forth in the Pooling and Servicing Agreement will be true
and correct in all material respects.
(II) Each Underwriter represents and warrants to the Company that, as
of the date hereof and as of the Closing Date, (i) such Underwriter has
complied in all material respects with all of its obligations under Section
4 hereof and (ii) with respect to all Computational Materials and ABS Term
Sheets, if any, provided by such Underwriter to the Company pursuant to
Section 4(b)(iv), such Computational Materials and ABS Term Sheets are
accurate in all material respects (taking into account the assumptions
explicitly set forth in or otherwise referred to the Computational
Materials or ABS Term Sheets or in the Prospectus Supplement or the
Preliminary Prospectus Supplement, and provided that the underlying data
regarding the Mortgage Loans, and the related Mortgagors and Mortgaged
Properties, provided to the Underwriters by the Mortgage Loan Sellers is
accurate and complete in all material respects) and constitute a complete
set of all Computational Materials and ABS Term Sheets that are required to
be filed with the Commission pursuant to Section 5(g).
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2. Purchase and Sale. Subject to the terms and conditions and in reliance
upon the representations and warranties set forth herein, the Company agrees to
sell to the Underwriters, and the Underwriters agree, severally and not jointly,
to purchase from the Company, at the applicable purchase prices set forth in
Schedule I hereto, the respective principal and notional amounts of the
Underwritten Certificates set forth opposite the name of each Underwriter set
forth in Schedule II hereto, and any additional portions of the Underwritten
Certificates that any such Underwriter may be obligated to purchase pursuant to
Section 10, in all cases plus accrued interest as set forth in Schedule I.
3. Delivery and Payment. Delivery of and payment for the Underwritten
Certificates shall be made in the manner, at the location(s), on the date and at
the time specified in Schedule I hereto (or such later date not later than ten
business days after such specified date as you shall designate), which date and
time may be changed by agreement between you and the Company or as provided in
Section 10 hereof (such date and time of delivery and payment for the
Underwritten Certificates being herein called the "Closing Date"). Delivery of
the Underwritten Certificates shall be made either directly to you or through
the facilities of The Depository Trust Company ("DTC"), as specified in Schedule
I hereto, for the respective accounts of the Underwriters against payment by the
respective Underwriters through you of the purchase price therefor in
immediately available funds wired to such bank as may be designated by the
Company, or such other manner of payment as may be agreed upon by the Company
and you. Any Class of Underwritten Certificates to be delivered through the
facilities of DTC shall be represented by one or more global Certificates
registered in the name of Cede & Co., as nominee of DTC, which global
Certificate(s) shall be placed in the custody of DTC not later than 10:00 a.m.
(New York City time) on the Closing Date pursuant to a custodial arrangement to
be entered into between the Trustee or its agent and DTC. Unless delivered
through the facilities of DTC, the Underwritten Certificates shall be in fully
registered certificated form, in such denominations and registered in such names
as you may have requested in writing not less than one full business day in
advance of the Closing Date.
The Company agrees to have the Underwritten Certificates, including the
global Certificates representing the Underwritten Certificates to be delivered
through the facilities of DTC, available for inspection, checking and, if
applicable, packaging by you in New York, New York, not later than the close of
business (New York City time) on the business day preceding the Closing Date.
References herein, including, without limitation, in the Schedules hereto,
to actions taken or to be taken following the Closing Date with respect to any
Underwritten Certificates that are to be delivered through the facilities of DTC
shall include, if the context so permits, actions taken or to be taken with
respect to the interests in such Certificates as reflected on the books and
records of DTC.
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4. Offering by Underwriters.
(a) It is understood that the Underwriters propose to offer the
Underwritten Certificates for sale to the public, including, without limitation,
in and from the State of New York, as set forth in the Prospectus Supplement. It
is further understood that the Company, in reliance upon an exemption from the
Attorney General of the State of New York to be granted pursuant to Policy
Statement 104 and 105, has not and will not file the offering pursuant to
Section 352-e of the General Business Law of the State of New York with respect
to the Underwritten Certificates which are not "mortgage related securities" as
defined in the 1934 Act (as defined below). Each of the Underwriters therefore
covenants and agrees with the Company that sales of the Class C, D and E
Certificates made by such Underwriter in and from the State of New York will be
made only to institutional investors within the meaning of Policy Statement 105.
(b) Each Underwriter may prepare and provide to prospective investors
certain Computational Materials, Structural Term Sheets or Collateral Term
Sheets in connection with its offering of the Certificates, subject to the
following conditions:
(i) Such Underwriter shall comply with the requirements of the
no-action letter, dated May 20, 1994, issued by the Commission to ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ Acceptance Corporation I, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Co. Incorporated and
▇▇▇▇▇▇ Structured Asset Corporation, as made applicable to other issuers
and underwriters by the Commission in response to the request of the Public
Securities Association, dated May 25, 1994 (collectively, the "▇▇▇▇▇▇/PSA
Letter"), and the requirements of the no-action letter, dated February 17,
1995, issued by the Commission to the Public Securities Association (the
"PSA Letter" and, together with the ▇▇▇▇▇▇/PSA Letter, the "No-Action
Letters").
(ii) For purposes hereof, "Computational Materials" shall have the
meaning given such term in the No-Action Letters, but shall include only
those Computational Materials that have been prepared or delivered to
prospective investors by or at the direction of such Underwriter. For
purposes hereof, "ABS Term Sheets," "Structural Term Sheets" and
"Collateral Term Sheets" shall have the meanings given such terms in the
PSA Letter but shall include only those ABS Term Sheets, Structural Term
Sheets or Collateral Term Sheets that have been prepared for or delivered
to prospective investors by or at the direction of such Underwriter.
(iii) All Computational Materials and ABS Term Sheets provided to
prospective investors shall bear a legend in a form previously approved in
writing by the Company or its counsel.
(iv) Such Underwriter shall not distribute any such Computational
Materials or ABS Term Sheets unless the forms and methodology thereof are
in accordance with this Agreement. Such Underwriter shall provide to the
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Company, for filing on Form 8-K as provided in Section 5(g), copies (in
such format as required by the Company) of all Computational Materials and
ABS Term Sheets. The Underwriter may provide copies of the foregoing in a
consolidated or aggregated form including all information required to be
filed. All Computational Materials and ABS Term Sheets described in this
subsection (iv) must be provided to the Company (a) in paper or electronic
format suitable for filing with the Commission and (b) not later than 10:00
a.m. (New York City time) on a business day that is not less than one
business day before filing thereof is required pursuant to the terms of the
No-Action Letters.
(v) All information included in the Computational Materials and ABS
Term Sheets shall be generated based on substantially the same methodology
and assumptions as are used to generate the information in the Prospectus
Supplement as set forth therein; provided that the Computational Materials
and ABS Term Sheets may include information based on alternative
methodologies or assumptions if specified therein. If any Computational
Materials or ABS Term Sheets were based on assumptions with respect to the
Mortgage Pool that differ from the final Pool Information in any material
respect or on Underwritten Certificate structuring assumptions (except in
the case of Computational Materials when the different structuring terms
were hypothesized and so described) that were revised in any material
respect prior to the printing of the Prospectus, then to the extent that it
has not already done so, such Underwriter shall immediately inform the
Company and, upon the direction of the Company, and if not corrected by the
Prospectus, shall prepare revised Computational Materials and ABS Term
Sheets, as the case may be, based on the final Pool Information and
structuring assumptions, circulate such revised Computational Materials and
ABS Term Sheets to all recipients of the preliminary versions thereof, and
include such revised Computational Materials and ABS Term Sheets (marked,
"as revised") in the materials delivered to the Company pursuant to
subsection (iv) above.
(vi) The Company shall not be obligated to file any Computational
Materials or ABS Term Sheets that have been determined to contain any
material error or omission, provided that the Company will file
Computational Materials or ABS Term Sheets that contain a material error
or, when read together with the Prospectus, a material omission if clearly
marked (A) "superseded by materials dated ____________ __" and accompanied
by corrected Computational Materials or ABS Term Sheets that are marked
"material previously dated ___________ __, as corrected", or (B) if the
material error or omission is to be corrected in the Prospectus,
"superseded by materials contained in the Prospectus." If, within the
period during which the Prospectus relating to the Underwritten
Certificates is required to be delivered under the 1933 Act, any
Computational Materials or ABS Term Sheets are determined, in the
reasonable judgment of the Company or such Underwriter, to contain a
material error or, when read together with the Prospectus, a
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material omission, then (unless the material error or omission was
corrected in the Prospectus) the Underwriter shall prepare a corrected
version of such Computational Materials or ABS Term Sheets, shall circulate
such corrected Computational Materials or ABS Term Sheets to all recipients
of the prior versions thereof, and shall deliver copies of such corrected
Computational Materials or ABS Term Sheets (marked, "as corrected") to the
Company for filing with the Commission in a subsequent Form 8-K submission
(subject to the Company's obtaining an accountant's comfort letter in
respect of such corrected Computational Materials and ABS Term Sheets,
which shall be at the expense of such Underwriter).
(vii) Such Underwriter shall be deemed to have represented, as of the
Closing Date, that except for Computational Materials and/or ABS Term
Sheets provided to the Company pursuant to subsection (iv) above, such
Underwriter did not provide any prospective investors with any information
in written or electronic form in connection with the offering of the
Underwritten Certificates that is required to be filed with the Commission
in accordance with the No-Action Letters.
(viii) In the event of any delay in the delivery by such Underwriter
to the Company of all Computational Materials and ABS Term Sheets required
to be delivered in accordance with subsection (iv) above, the Company shall
have the right to delay the release of the Prospectus to investors or to
the Underwriter, to delay the Closing Date and to take other appropriate
actions in each case as necessary in order to allow the Company to comply
with its agreement set forth in Section 5(g) to file the Computational
Materials and ABS Term Sheets by the time specified therein.
(ix) Computational Materials and ABS Term Sheets may be distributed by
the Underwriter through electronic means in accordance with SEC Release No.
33-7233 (the "Release").
(c) Each Underwriter further agrees that it shall promptly provide the
Company with such information as to matters of fact as the Company may
reasonably request to enable it to comply with its reporting requirements with
respect to each class of Underwritten Certificates to the extent such
information can in the good faith judgment of the Underwriter be determined by
it.
5. Covenants of the Company. The Company covenants and agrees with the
Underwriters that:
(a) The Company will not file any amendment to the Registration
Statement or any supplement to the Basic Prospectus relating to or
affecting the Underwritten Certificates, unless the Company has furnished a
copy to you for your review prior to filing, and will not file any such
proposed amendment or supplement to which you reasonably object. Subject to
the foregoing sentence, the Company will cause the
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Prospectus Supplement to be transmitted to the Commission for filing
pursuant to Rule 424 under the 1933 Act or will cause the Prospectus
Supplement to be filed with the Commission pursuant to said Rule 424. The
Company promptly will advise you or counsel for the Underwriters (i) when
the Prospectus Supplement shall have been filed or transmitted to the
Commission for filing pursuant to Rule 424, (ii) when any amendment to the
Registration Statement shall have become effective, (iii) of any request by
the Commission to amend the Registration Statement or supplement the
Prospectus Supplement or for any additional information in respect of the
offering contemplated hereby, (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
any post-effective amendment thereto which shall have become effective on
or prior to the Closing Date 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
Underwritten Certificates for sale in any jurisdiction or the institution
or threatening of any proceeding for that purpose. The Company will use its
best efforts to prevent the issuance of any such stop order or suspension
and, if issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Underwritten
Certificates is required to be delivered under the 1933 Act, any event
occurs as a result of which the Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or
if it shall be necessary to amend or supplement the Prospectus to comply
with the 1933 Act or the rules and regulations thereunder, the Company
promptly will prepare and file with the Commission, at the expense of the
Company, subject to paragraph (a) of this Section 5, an amendment or
supplement that will correct such statement or omission or an amendment
that will effect such compliance and, if such amendment or supplement is
required to be contained in a post-effective amendment to the Registration
Statement, the Company will use its best efforts to cause such amendment to
the Registration Statement to be made effective as soon as possible.
(c) The Company will furnish to you and to counsel for the
Underwriters, without charge, signed copies of the Registration Statement
(including exhibits thereto) and each amendment thereto which shall become
effective on or prior to the Closing Date, and to each other Underwriter a
copy of the Registration Statement (without exhibits thereto) and each such
amendment and, so long as delivery of a prospectus by an Underwriter or
dealer may be required by the 1933 Act, as many copies of any Preliminary
Prospectus Supplement, the Prospectus Supplement and the Basic Prospectus
and any amendments and supplements thereto as you may reasonably request.
(d) The Company will furnish such information, execute such
instruments and take such action, if any, as may be required to qualify the
Underwritten Certificates for sale under the laws of such jurisdictions as
you may designate and will
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maintain such qualifications in effect so long as required for the
distribution of the Underwritten Certificates; provided, however, that the
Company shall not be required to qualify to do business in any jurisdiction
where it is not now qualified or to take any action that would subject it
to general or unlimited service of process in any jurisdiction where it is
not now subject to such service of process.
(e) The Company will pay, or cause to be paid, all costs and expenses
in connection with the transactions herein contemplated, including, but not
limited to, the fees and disbursements of its counsel; the costs and
expenses of printing (or otherwise reproducing) and delivering the Pooling
and Servicing Agreement and the Underwritten Certificates; the fees and
disbursements of accountants for the Company; the costs and expenses in
connection with the qualification or exemption of the Underwritten
Certificates under state securities or "blue sky" laws, including filing
fees and reasonable fees and disbursements of counsel in connection
therewith, in connection with the preparation of any blue sky survey and in
connection with any determination of the eligibility of the Underwritten
Certificates for investment by institutional investors and the preparation
of any legal investment survey; the expenses of printing any such blue sky
survey and legal investment survey; the cost and expenses in connection
with the preparation, printing and filing of the Registration Statement
(including exhibits thereto), the Basic Prospectus, the Preliminary
Prospectus Supplement, if any, and the Prospectus Supplement, the
preparation and printing of this Agreement and the delivery to the
Underwriters of such copies of the Basic Prospectus and each Preliminary
Prospectus Supplement, if any, and Prospectus Supplement as you may
reasonably request; and the fees of the Rating Agency that are rating the
Underwritten Certificates. Except as provided above or in Section 7, the
Underwriters shall be responsible for paying all costs and expenses
incurred by them in connection with the purchase and sale of the
Underwritten Certificates.
(f) The Company will enter into the Pooling and Servicing Agreement on
or prior to the Closing Date, will enforce the rights of the Underwriters
as third party beneficiaries thereunder as set forth in Section 11.09
thereof and will not consent to any amendment of the Pooling and Servicing
Agreement that would adversely affect such rights of the Underwriters.
(g) The Company shall, as to itself, and the Company, or pursuant to
the Pooling and Servicing Agreement the Trustee will be required to, as to
the Trust Fund, satisfy and comply with all reporting requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder. The Company will also file with the Commission
a report on Form 8-K setting forth all Computational Materials and ABS Term
Sheets provided to the Company by an Underwriter and identified by it as
such within the time period allotted for such filing pursuant to the
No-Action Letters; provided, however, that prior to such filing of the
Computational Materials and ABS Term Sheets by the Company, each
Underwriter must comply with its obligations pursuant to Section 4(b). The
Company shall file any
-12-
corrected Computational Materials described in Section 4(b)(vi) as soon as
practicable following receipt thereof.
6. Conditions to the Obligations of the Underwriters. The obligation of
each Underwriter hereunder to purchase the Underwritten 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, as of the date the Prospectus Supplement or any supplement thereto
is filed with the Commission 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 Registration Statement shall have become effective and no stop
order suspending the effectiveness of the Registration Statement, as
amended from time to time, shall have been issued and not withdrawn and no
proceedings for that purpose shall have been instituted or, to the
Company's knowledge, threatened; and the Prospectus Supplement shall have
been filed or transmitted for filing with the Commission in accordance with
Rule 424 under the 1933 Act;
(b) You shall have received from Sidley & ▇▇▇▇▇▇, counsel for the
Underwriters, a favorable opinion, dated the Closing Date, as to such
matters regarding the Underwritten Certificates as you may reasonably
request;
(c) The Company shall have delivered to you a certificate of the
Company, signed by an authorized officer of the Company and dated the
Closing Date, to the effect that: (i) the representations and warranties of
the Company in this Agreement are true and correct in all material respects
at and as of the Closing Date with the same effect as if made on the
Closing Date; and (ii) the Company has in all material respects complied
with all the agreements and satisfied all the conditions on its part that
are required hereby to be performed or satisfied at or prior to the Closing
Date;
(d) You shall have received with respect to the Company a good
standing certificate from the Secretary of State of the State of North
Carolina, dated not earlier than 30 days prior to the Closing Date;
(e) You shall have received from the Secretary or an assistant
secretary of the Company, in his individual capacity, a certificate, dated
the Closing Date, to the effect that: (i) each individual who, as an
officer or representative of the Company, signed this Agreement, the
Pooling and Servicing Agreement or any other document or certificate
delivered on or before the Closing Date in connection with the transactions
contemplated herein or in the Pooling and Servicing Agreement, was at the
respective times of such signing and delivery, and is as of the Closing
Date, duly elected or appointed, qualified and acting as such officer or
representative, and the signatures of such persons appearing on such
documents and certificates are their genuine signatures;
-13-
and (ii) no event (including, without limitation, any act or omission on
the part of the Company) has occurred since the date of the good standing
certificate referred to in paragraph 6(d) above which has affected the good
standing of the Company under the laws of the State of North Carolina. Such
certificate shall be accompanied by true and complete copies (certified as
such by the Secretary or an assistant secretary of the Company) of the
certificate of incorporation and by-laws of the Company, as in effect on
the Closing Date, and of the resolutions of the Company and any required
shareholder consent relating to the transactions contemplated in this
Agreement and the Pooling and Servicing Agreement;
(f) You shall have received from ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, special
counsel for the Company, a favorable opinion, dated the Closing Date and
satisfactory in form and substance to you and counsel for the Underwriters,
to the effect that:
(i) The Registration Statement and any amendments thereto have
become effective under the 1933 Act; to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement, as amended, has been issued and not withdrawn,
no proceedings for that purpose have been instituted or threatened and
not terminated; and the Registration Statement, the Basic Prospectus,
the Prospectus Supplement and each amendment or supplement thereto, as
of their respective effective or issue dates (other than the financial
statements, schedules and other financial and statistical information
contained therein as to which such counsel need express no opinion),
complied as to form in all material respects with the applicable
requirements of the 1933 Act and the rules and regulations thereunder;
and such counsel has no reason to believe that (A) the Registration
Statement (which, for purposes of this clause, shall be deemed not to
include any exhibits filed therewith), or any amendment thereto, at
the time it became effective, contained or, as of the date of such
opinion, contains any untrue statement of a material fact or omitted
or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or that (B)
the Prospectus, as amended or supplemented, contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (other than
the financial statements, schedules and other financial and
statistical information contained therein as to which such counsel
need express no opinion);
(ii) To the best knowledge of such counsel, there are no material
contracts, indentures or other documents of a character required to be
described or referred to in the Registration Statement, as amended, or
the Prospectus Supplement or to be filed as exhibits to the
Registration Statement, as amended, other than those described or
referred to therein or filed or incorporated by reference as exhibits
thereto;
-14-
(iii) To the best knowledge of such counsel, there are no
actions, proceedings or investigations pending before or threatened by
any court, administrative agency or other tribunal to which the
Company is a party or of which any of its properties is the subject
(a) which if determined adversely to the Company would have a material
adverse effect on the business or financial condition of the Company,
(b) asserting the invalidity of this Agreement, the Pooling and
Servicing Agreement or the Underwritten Certificates, (c) seeking to
prevent the issuance of the Underwritten Certificates or the
consummation by the Company of any of the transactions contemplated by
the Pooling and Servicing Agreement or this Agreement, as the case may
be, or (d) which might materially and adversely affect the performance
by the Company of its obligations under, or the validity or
enforceability of, the Pooling and Servicing Agreement, this Agreement
or the Underwritten Certificates;
(iv) Each of this Agreement and the Pooling and Servicing
Agreement has been duly authorized, executed and delivered by the
Company, and the Pooling and Servicing Agreement constitutes a valid,
legal, binding and enforceable agreement of the Company, subject, as
to enforceability, to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights
generally, to general principles of equity regardless of whether
enforcement is sought in a proceeding in equity or at law and public
policy considerations underlying the securities laws, to the extent
that such public policy considerations limit the enforceability of the
provisions of this Agreement or the Pooling and Servicing Agreement
that purport to provide indemnification from securities law
liabilities;
(v) The Underwritten Certificates, when duly and validly executed
and authenticated in the manner contemplated in the Pooling and
Servicing Agreement and delivered and paid for by the Underwriters as
provided herein, will be duly and validly issued and outstanding and
entitled to the benefits of the Pooling and Servicing Agreement;
(vi) The statements set forth in the Prospectus Supplement under
the headings "Description of the Certificates" and "Servicing of the
Mortgage Loans" and in the Basic Prospectus under the headings
"Description of the Certificates" and "Description of the Pooling
Agreements", insofar as such statements purport to summarize certain
provisions of the Underwritten Certificates and the Pooling and
Servicing Agreement, are true and correct in all material respects;
(vii) The statements set forth in the Basic Prospectus and the
Prospectus Supplement under the headings "Certain Federal Income Tax
Consequences", "ERISA Considerations" and "Legal Investment", to the
extent that they constitute matters of federal law or legal
conclusions with respect
-15-
thereto, are correct in all material respects with respect to those
consequences or aspects that are discussed;
(viii) Any Class of Underwritten Certificates will be "mortgage
related securities", as defined in Section 3(a)(41) of the 1934 Act,
so long as such Certificates are rated "AAA" or "AA" (or its
equivalent) by at least one nationally recognized statistical rating
organization;
(ix) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended, and
neither the Company nor the Trust Fund is required to be registered
under the Investment Company Act;
(x) No consent, approval, authorization or order of any State of
New York or federal court or governmental agency or body is required
for the consummation by the Company of the transactions contemplated
herein or in the Pooling and Servicing Agreement, except (A) such as
have been obtained under the 1933 Act, (B) such as may be required
under the blue sky laws of any jurisdiction in connection with the
offer and sale of the Underwritten Certificates by the Underwriters,
as to which such counsel need express no opinion; and (C) any
recordation of the assignments of the Mortgage Loans pursuant to the
Pooling and Servicing Agreement that has not yet been completed.
(xi) Assuming compliance with all provisions of the Pooling and
Servicing Agreement, for federal income tax purposes, REMIC I, REMIC
II and REMIC III will each qualify as a real estate mortgage
investment conduit (a "REMIC") under the Internal Revenue Code of 1986
(the "Code"), the Class R-I Certificates will be the sole class of
"residual interests" in REMIC I, the Class R-II Certificates will be
the sole class of "residual interests" in REMIC II, the Class A-1,
Class A-2, Class A-3, Class B, Class C, Class D, Class E, Class IO,
Class F, Class G, Class H, Class J, Class K, Class L and Class M
Certificates will be the "regular interests" in REMIC III, and the
Class R-III Certificates will be the sole class of "residual
interests" in the REMIC III; and
(xii) The Certificates conform in all material respects to the
description thereof contained in the Prospectus; and the Pooling and
Servicing Agreement conforms in all material respects to the
description thereof contained in the Prospectus.
With respect to such opinion, such counsel may express its reliance as to
factual matters on the representations and warranties made by, and on
certificates or other documents furnished by officers of, the parties to this
Agreement and the Pooling and Servicing Agreement; may assume the due
authorization, execution and delivery of the instruments and documents referred
to therein by the parties thereto other than the
-16-
Company; may qualify such opinion only as to the federal laws of the United
States of America, the laws of the State of New York, the laws of the State of
North Carolina and the corporation law of the State of Delaware; and may, to the
extent deemed necessary by such counsel, rely on the opinion of counsel in the
regular employ of the Company or any affiliate of the Company or independent
North Carolina counsel. Such counsel shall also confirm that the Underwriters
may rely, on and as of the Closing Date, on any opinion or opinions of such
counsel submitted to any Rating Agency as if addressed to the Underwriters and
dated the Closing Date;
(g) You shall have received from ▇▇▇▇ ▇▇▇▇▇▇, counsel for the Company, a
favorable opinion, dated the Closing Date and satisfactory in form and substance
to you and counsel for the Underwriters, to the effect that:
(i) The Company is a corporation in good standing under the laws
of the State of North Carolina and has the corporate power and
authority to enter into and perform its obligations under this
Agreement and the Pooling and Servicing Agreement;
(ii) No consent, approval, authorization or order of the State of
North Carolina is required for the consummation by the Company of the
transactions contemplated herein or in the Pooling and Servicing
Agreement; and
(iii) Neither the issuance and sale of the Underwritten
Certificates, nor the execution or delivery of or performance under
this Agreement or the Pooling and Servicing Agreement, nor the
consummation of any other of the transactions contemplated herein or
therein will conflict with or result in a breach or violation of any
term or provision of, or constitute a default (or an event which with
the passing of time or notification, or both, would constitute a
default) under, the certificate of incorporation or by-laws of the
Company, or, to the knowledge of such counsel, any indenture or other
agreement or instrument to which the Company is a party or by which it
is bound, or any State of North Carolina or federal statute or
regulation applicable to the Company, or, to the knowledge of such
counsel, any order of any State of North Carolina or federal court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Company;
(h) You shall have received from Deloitte & Touche LLP, certified
public accountants, a letter dated the Closing Date and satisfactory
in form and substance to you and counsel for the Underwriters, to the
following effect:
(1) they have performed certain specified procedures as a
result of which they have determined that the information of an
accounting, financial or statistical nature set forth in the
Prospectus Supplement under the captions "Summary of the
Prospectus Supplement," "Description of the Mortgage Pool" and
"Yield and Maturity Considerations" and on Annex A agrees with
the data sheet or computer
-17-
tape prepared by or on behalf of the Mortgage Loan Sellers,
unless non-material deviations are otherwise noted in such
letter; and
(2) they have compared the data contained in the data sheet
or computer tape referred to in the immediately preceding clause
(1) to information contained in an agreed upon sampling of the
Mortgage Loan files and in such other sources as shall be
specified by them, and found such data and information to be in
agreement in all material respects, unless non-material
deviations are otherwise noted in such letter;
(i) You shall have received written confirmation from the Rating
Agency that the Underwritten Certificates have been assigned the
rating or ratings specified in Schedule I hereto, which rating or
ratings shall not have been withdrawn;
(j) You shall have received (A) with respect to the Trustee a
good standing or similar certificate from the Secretary of State of
the state of its organization or, if not applicable, an appropriate
federal official, dated not earlier than 30 days prior to the Closing
Date; and (B) with respect to the Fiscal Agent, a photocopy of or good
standing certificates issued by each of the State of New York and the
State of Illinois as to the authority of the Fiscal Agent to conduct
banking business;
(k) You shall have received (A) from the Secretary or an
assistant secretary of the Trustee, in his individual capacity, a
certificate, dated the Closing Date, to the effect that: (i) each
individual who, as an officer or representative of the Trustee, signed
the Pooling and Servicing Agreement or any other document or
certificate delivered on or before the Closing Date in connection with
the transactions contemplated in the Pooling and Servicing Agreement
or this Agreement was at the respective times of such signing and
delivery, and is as of the Closing Date, duly elected or appointed,
qualified and acting as such officer or representative, and the
signatures of such persons appearing on such documents or certificates
are their genuine signatures; and (ii) no event (including, without
limitation, any act or omission on the part of the Trustee) has
occurred since the date of the good standing or similar certificate
referred to in paragraph 6(j) above which has affected the good
standing of the Trustee under laws of the United States; and (B) with
respect to the Fiscal Agent, a photocopy of a power of attorney
executed by the Fiscal Agent in favor of the individuals signing the
Pooling and Servicing Agreement on behalf of the Fiscal Agent and
granting such individuals the authority to so bind the Fiscal Agent.
(l) You shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, counsel for the Trustee and the Fiscal Agent, a favorable
opinion, dated the Closing Date, in form and substance satisfactory to
you and counsel for the Underwriters, addressing such matters as you
and such counsel may reasonably require for the purpose of enabling
you and such counsel to pass upon the issuance and sale of the
Underwritten Certificates as herein contemplated and related
proceedings;
-18-
(m) You shall have received with respect to the Master Servicer a
good standing or similar certificate from the Secretary of State of
the state of its organization or, if not applicable, an appropriate
federal official, dated not earlier than 30 days prior to the Closing
Date;
(n) You shall have received from the Secretary or an assistant
secretary of the Master Servicer, in his individual capacity, a
certificate, dated the Closing Date, to the effect that: (i) each
individual who, as an officer or representative of the Master
Servicer, signed the Pooling and Servicing Agreement or any other
document or certificate delivered on or before the Closing Date in
connection with the transactions contemplated in the Pooling and
Servicing Agreement and this Agreement was at the respective times of
such signing and delivery, and is as of the Closing Date, duly elected
or appointed, qualified and acting as such officer or representative,
and the signatures of such persons appearing on such documents are
their genuine signatures; and (ii) no event (including without
limitation, any act or omission on the part of the Master Servicer)
has occurred since the date of the good standing or similar
certificate referred to in paragraph 6(m) above which has affected the
good standing of the Master Servicer under the laws of the State of
North Carolina.
(o) You shall have received from ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP,
counsel for the Master Servicer, a favorable opinion, dated the
Closing Date, in form and substance satisfactory to you and counsel
for the Underwriters, addressing such matters as you and such counsel
may reasonably require for the purpose of enabling you and such
counsel to pass upon the issuance and sale of the Underwritten
Certificates as herein contemplated and related proceedings;
(p) You shall have received with respect to the Special Servicer
a good standing or similar certificate from the Secretary of State of
the state of its organization or, if not applicable, an appropriate
federal official, dated not earlier than 30 days prior to the Closing
Date;
(q) You shall have received from the Secretary or an assistant
secretary of the Special Servicer, in his individual capacity, a
certificate, dated the Closing Date, to the effect that: (i) each
individual who, as an officer or representative of the Special
Servicer, signed the Pooling and Servicing Agreement or any other
document or certificate delivered on or before the Closing Date in
connection with the transactions contemplated in the Pooling and
Servicing Agreement was at the respective times of such signing and
delivery, and is as of the Closing Date, duly elected or appointed,
qualified and acting as such officer or representative, and the
signatures of such persons appearing on such documents are their
genuine signatures; and (ii) no event (including without limitation,
any act or omission on the part of the Special Servicer) has occurred
since the date of the good standing or similar certificate referred to
in paragraph 6(p) above which has affected the good standing of the
Special Servicer under the laws of the State of Maryland.
-19-
(r) You shall have received from Peabody & ▇▇▇▇▇, counsel for the
Special Servicer, a favorable opinion, dated the Closing Date, in form
and substance satisfactory to you and counsel for the Underwriters,
addressing such matters as you and such counsel may reasonably require
for the purpose of enabling you and such counsel to pass upon the
issuance and sale of the Underwritten Certificates as herein
contemplated and related proceedings;
(s) You shall have received from each Mortgage Loan Seller and
its officers all such certificates as may be required to be delivered
thereby under the related Mortgage Loan Purchase Agreement;
(t) You shall have received from ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, counsel for First Union and LBHI, respectively, written
confirmation that the Underwriters may rely, as of the date rendered,
on any opinion or opinions of such counsel required to be delivered
under the Mortgage Loan Purchase Agreements or by or addressed to any
Rating Agency, in each case as if such opinion were addressed to the
Underwriters; and
(u) All proceedings in connection with the transactions
contemplated by this Agreement and all documents incident hereto,
including, without limitation, the Pooling and Servicing Agreement and
the Mortgage Loan Purchase Agreement, shall be satisfactory in form
and substance to you and counsel for the Underwriters, and you and
such counsel shall have received such additional information,
certificates and documents as you or they may have reasonably
requested.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, if
the Company is in breach of any covenants or agreements contained herein or if
any of the opinions and certificates referred to above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to you and counsel for the Underwriters, this Agreement and all
obligations of the Underwriters hereunder may be cancelled at, or at any time
prior to, the Closing Date by you. Notice of such cancellation shall be given to
the Company in writing, or by telephone or telegraph confirmed in writing.
7. Reimbursement of Underwriters' Expenses. If the sale of the Underwritten
Certificates provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 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 any of the Underwriters, the Company will reimburse the
Underwriters severally, upon demand, for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Underwritten
Certificates.
-20-
8. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Basic
Prospectus, any Preliminary Prospectus Supplement or the Prospectus
Supplement (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, that the foregoing indemnity with
respect to the Basic Prospectus or any Preliminary Prospectus Supplement
shall not inure to the benefit of any Underwriter (or to the benefit of any
person controlling such Underwriter) from whom the person asserting claims
giving rise to any such losses, claims, damages, expenses or liabilities
purchased Underwritten Certificates if such untrue statement or omission or
alleged untrue statement or omission made in the Basic Prospectus or such
Preliminary Prospectus Supplement is eliminated or remedied in the
Prospectus and, if required by law, a copy of the Prospectus shall not have
been furnished to such person at or prior to the written confirmation of
the sale of such Certificates to such person;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by such Underwriter or, if
more than one Underwriter is involved, by the Representative), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;
-21-
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information (as specified
in Section 8(b) below) furnished to the Company by any Underwriter
expressly for use in the Registration Statement (or any amendment thereto)
or in the Basic Prospectus, any Preliminary Prospectus Supplement or the
Prospectus Supplement (or any amendment or supplement thereto).
(b) Each Underwriter, severally but not jointly, agrees to indemnify and
hold harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or in the Basic Prospectus, any Preliminary
Prospectus Supplement or the Prospectus Supplement (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by such Underwriter expressly for use in the
Registration Statement (or any amendment thereto) or in the Basic Prospectus,
such Preliminary Prospectus Supplement or the Prospectus Supplement (or any
amendment or supplement thereto); provided that in no event shall either
Underwriter be liable for any such loss, liability, claim, damage or expense if
such untrue statement or omission or alleged untrue statement or omission
resulted from an untrue statement or omission in the underlying data regarding
the Mortgage Loans, or the related Mortgagors or Mortgaged Properties, provided
to the Underwriters by the Mortgage Loan Sellers. It is hereby acknowledged that
(i) the statements set forth in the first sentence of the penultimate paragraph
on the cover of the Prospectus Supplement, (ii) the statements in the third,
fourth and fifth paragraphs under the caption "Method of Distribution" in the
Prospectus Supplement and (iii) the statements in any Computational Materials
and ABS Term Sheets delivered by the Underwriters to the Company for filing with
the Commission pursuant to this Agreement and the No-Action Letters, constitute
the only written information furnished to the Company by such Underwriter
expressly for use in the Registration Statement (or any amendment thereto) or in
the Basic Prospectus, the Preliminary Prospectus Supplement or the Prospectus
Supplement (or any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action and, to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from the
indemnified party, to assume the defense thereof, with counsel satisfactory to
such indemnified party. In any such proceeding, any
-22-
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have agreed to
the retention of such counsel, or (ii) the indemnifying party shall not have
assumed the defense of such action, with counsel satisfactory to the indemnified
party, within a reasonable period following the indemnifying party's receiving
notice of such action, or (iii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. In
no event shall the indemnifying party or parties be liable for fees and expenses
of more than one counsel (or, in the event the Company is the indemnifying
party, one counsel for each Underwriter) (in addition to any local counsel)
separate from its or their own counsel for all indemnified parties in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
Unless it shall assume the defense of any proceeding, an indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent but, if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party shall indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. If an indemnifying party assumes the defense of any
proceeding, it shall be entitled to settle such proceeding with the consent of
the indemnified party or, if such settlement provides for release of the
indemnified party in connection with all matters relating to the proceeding that
have been asserted against the indemnified party in such proceeding by the other
parties to such settlement, without the consent of the indemnified party.
9. Contribution. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 8 hereof
is for any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, the Company and the Underwriters shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement incurred by the Company and
the Underwriters, as incurred, in such proportions that each Underwriter is
responsible for that portion represented by the percentage that such
Underwriter's share of the underwriting discounts and commissions pertaining to
the Underwritten Certificates bears to the aggregate of the initial public
offering prices of the Underwritten Certificates and the Company is responsible
for the balance; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation; and provided, further, that in no event shall either
Underwriter be obligated to contribute more than its share of the underwriting
discounts and commissions pertaining to the Underwritten Certificates. It is
hereby acknowledged that the respective Underwriters' obligations under this
Section 9 shall be several and not joint. For purposes of this Section, each
person, if any, who controls an Underwriter within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement,
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and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act shall have the same rights to contribution as the Company.
10. Default by an Underwriter. If any one or more Underwriters shall fail
to purchase and pay for any of the Underwritten Certificates agreed to be
purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally (in the respective proportions which the portion of the Underwritten
Certificates set forth opposite their names in Schedule II hereto bears to the
aggregate amount of Underwritten Certificates set forth opposite the names of
all the remaining Underwriters) to purchase the Underwritten Certificates that
the defaulting Underwriter or Underwriters agreed but failed to purchase;
provided, however, that in the event that the amount of Underwritten
Certificates that the defaulting Underwriter or Underwriters agreed but failed
to purchase shall exceed 10% of the aggregate principal amount of Underwritten
Certificates set forth in Schedule II hereto, the remaining Underwriters shall
have the right to purchase all, but shall not be under any obligation to
purchase any, of the Underwritten Certificates, and if such nondefaulting
Underwriters do not purchase all of the Underwritten Certificates, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company, except as provided in Section 11. In the event of a default by any
Underwriter as set forth in this Section 10, the Closing Date for the
Underwritten Certificates shall be postponed for such period, not exceeding ten
business days, as you shall determine in order that the required changes in the
Registration Statement and the Prospectus Supplement or in any other documents
or arrangements may be effected. Nothing contained in this Agreement shall
relieve any defaulting Underwriter of its liability, if any, to the Company and
any nondefaulting Underwriter for damages occasioned by its default hereunder.
11. Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement, or
contained in certificates of officers of the Company submitted pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter, or by or on behalf of the
Company, or by or on behalf of any of the controlling persons and officers and
directors referred to in Sections 8 and 9, and shall survive delivery of the
Underwritten Certificates to the Underwriters.
12. Termination of Agreement; Survival.
(a) The Underwriters may terminate this Agreement, by notice to the
Company, at any time at or prior to the Closing Date (i) if there has been,
since the date of this Agreement or since the respective dates as of which
information is given in the Registration Statement and the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any outbreak of
hostilities or escalation thereof or other calamity or crisis the effect of
which is such
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as to make it, in the reasonable judgment of the Representative,
impracticable to market the Underwritten Certificates or to enforce
contracts for the sale of the Underwritten Certificates, or (iii) if
trading generally on the New York Stock Exchange has been suspended, or if
a banking moratorium has been declared by either federal or New York
authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party,
except as provided in Section 11.
(c) The provisions of Section 5(e) regarding the payment of costs and
expenses and the provisions of Sections 8 and 9 hereof shall survive the
termination of this Agreement.
13. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Underwriters shall be
directed to you at Three World Financial Center, New York, New York 10285,
attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇; and notices to the Company shall be directed to
it at First Union Commercial Mortgage Securities, Inc., One First Union Center,
Charlotte, North Carolina 28288-0166, attention of President; or, in either
case, such other address as may hereafter be furnished by either the
Representative or the Company to the other such party in writing.
14. Parties. This Agreement shall inure to the benefit of and be binding
upon each of the Underwriters and the Company and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Underwriters
and the Company and their respective successors and the controlling persons and
officers and directors referred to in Sections 8 and 9 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters and the Company and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Underwritten Certificates from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
15. Applicable Law; Counterparts. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State. This Agreement may be
executed in any number of counterparts, each of which shall for all purposes be
deemed to be an original and all of which shall together constitute but one and
the same instrument.
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If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this letter and
your acceptance shall represent a binding agreement among the Company and the
several Underwriters.
Very truly yours,
FIRST UNION COMMERCIAL MORTGAGE
SECURITIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
The foregoing Agreement is hereby confirmed and accepted as of the date
first above written.
▇▇▇▇▇▇ BROTHERS INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
For itself and the other Underwriters named in Schedule II to the foregoing
Agreement.
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SCHEDULE I
Underwriting Agreement dated November 19, 1997:
As used in this Schedule I, the term "Registration Statement" refers to
registration statement No. 333-7854 filed by the Company on Form S-3 and
declared effective on October 29, 1997. The term "Basic Prospectus" refers to
the form of prospectus in the Registration Statement or such later form as most
recently filed by the Company pursuant to Rule 424(b) under the Securities Act
of 1933, as amended. The term "Prospectus Supplement" refers to the supplement
dated November 19, 1997 to the Basic Prospectus, relating to the mortgage
pass-through certificates being sold pursuant to the Underwriting Agreement (the
"Underwritten Certificates").
Mortgage Pool:
Approximately 422 commercial mortgage loans, having an aggregate principal
balance, after giving effect to payments of principal due on or before November
1, 1997 (the "Cut-off Date"), of approximately $2,203,502,325 (the "Initial Pool
Balance"), and otherwise complying in all material respects with the description
thereof set forth in the Prospectus Supplement.
Title, Purchase Price and Description of Underwritten Certificates:
First Union-▇▇▇▇▇▇ Brothers Commercial Mortgage Trust, Commercial Mortgage
Pass-Through Certificates, Series 1997-C1, Class A-1, Class A-2, Class A-3,
Class B, Class C, Class D, Class E and Class IO.
Initial Pass Purchase
Aggregate Certificate Through Price
Designation Principal Balance Rate Rating Percentage
----------- --------------------- ------- ------ ----------
Class A-1 ....... $220,000,000 6.479% Aaa/AAA/AAA(1) 100.49693%(2)
Class A-2 ....... 384,000,000 6.600% Aaa/AAA/AAA(1) 100.48939%(2)
Class A-3 ....... 982,521,000 6.650% Aaa/AAA/AAA(1) 100.49703%(2)
Class B ......... 110,175,000 6.790% Aa2/AA/AA(1) 100.45746%(2)
Class C ......... 110,175,000 7.020% A2/A/A(1) 100.34044%(2)
Class D ......... 121,194,000 7.120% Baa2/BBB/BBB(1) 98.99917%(2)
Class E ......... 33,052,000 7.120% Baa3/BBB-/BBB-(1) 98.11290%(2)
Class IO ........ (3) Variable Aaa/NR/AAA(1) N/A
-----------
(1) By each of ▇▇▇▇▇'▇ Investors Service, Inc., Standard & Poor's Ratings
Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and Duff & ▇▇▇▇▇▇
Credit Rating Co.
(2) There shall be added to the purchase price for each Class of Underwritten
Certificates accrued interest, if any, at the initial Pass-Through Rate for
such Class from the Cut-off Date up to, but not including, the Closing
Date.
(3) The Class IO Certificates will not have a Certificate Principal Balance nor
will they entitle the holders thereof to receive distributions of
principal.
Credit Support and Other Terms and Conditions of the Underwritten Certificates:
As described in the Prospectus Supplement.
Closing Time, Date and Location: 10:00 a.m. (New York City time) on November 25,
1997 at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, One Citicorp Center, ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; except that delivery of the Underwritten
Certificates shall be made through the facilities of The Depository Trust
Company.
Initial Public Offering Price: The Underwritten Certificates will be offered to
the public in negotiated transactions or otherwise at varying prices to be
determined at the time of sale.
SCHEDULE II
Underwriting Agreement dated November 19, 1997
Approximate Aggregate
Principal or Notional
Amount of Certificates to
Underwriters Class be Purchased
------------ ----- -------------------------
First Union Capital Markets Corp.
Class A-1 $ 110,000,000.00
Class A-2 $ 192,000,000.00
Class A-3 $ 491,260,500.00
Class B $ 55,087,500.00
Class C $ 55,087,500.00
Class D $ 60,597,000.00
Class E $ 16,626,000.00
Class IO $1,101,751,162.50
▇▇▇▇▇▇ Brothers Inc.
Class A-1 $ 110,000,000.00
Class A-2 $ 192,000,000.00
Class A-3 $ 491,260,500.00
Class B $ 55,087,500.00
Class C $ 55,087,500.00
Class D $ 60,597,000.00
Class E $ 16,526,000.00
Class IO $1,101,751,162.50