SECURITIZATION COOPERATION AGREEMENT
SECURITIZATION COOPERATION AGREEMENT (this "Agreement"), dated
as of November 3, 1997, by and among Commercial Assets, Inc., a Maryland
corporation (the "Company"), CAX DTR Securitization Corp. ("QRS"), a Delaware
corporation, Structured Mortgage Trust 1997-2 (the "Issuer"), a Delaware
Business Trust, and PaineWebber Incorporated, a Delaware corporation (the
"Initial Purchaser").
WHEREAS, capitalized terms used and not defined herein shall
have the meanings assigned to them in the Trust Indenture (the "Indenture"),
dated as of November 3, 1997, by and between the Issuer and LaSalle National
Bank, a national banking corporation, as Indenture Trustee; and
WHEREAS, the Company is the record or beneficial owner of the
Daiwa FLOWS Certificates and the Other Assets;
WHEREAS, QRS is a wholly-owned subsidiary of the Company;
WHEREAS, the Company desires, on or about November 3, 1997, to
contribute its right, title and interest in and to the Daiwa FLOWS Certificates
and the Other Assets to QRS pursuant to the terms of the Contribution Agreement
in exchange for all of the authorized and outstanding capital stock of QRS;
WHEREAS, QRS desires, on or about November 3, 1997, to deposit
the Daiwa FLOWS Certificates and the Other Assets with the Issuer pursuant to
the terms of the Trust Agreement in exchange for all of the equity of the
Issuer;
WHEREAS, the Issuer intends, contemporaneously with the
deposit of the Daiwa FLOWS Certificates and the Other Assets, to issue four
classes of collateralized notes (the "Notes") pursuant to the Indenture, which
Notes will be secured by the Daiwa FLOWS Certificates and the Other Assets, and
all of its rights therein and with respect thereto and which will be credit
enhanced by, among other things, the overcollateralization represented by the
equity interest of the Issuer;
WHEREAS, the Initial Purchaser desires to purchase the Notes
for resale to "qualified institutional buyers" as defined in Rule 144A under the
Securities Act of 1933, as amended, after the Notes have been assigned rating
levels by Duff & Xxxxxx Credit Rating Co. (the "Rating Agency") as set forth in
Exhibit A hereto (the "Desired Ratings"), which ratings the Initial Purchaser
believes are necessary to resell the Notes.
WHEREAS, in connection with the resale of the Notes it shall
be necessary to prepare a private offering memorandum (the "Private Offering
Memorandum");
WHEREAS, the Rating Agency shall not complete its rating
analysis of the Notes by November 3, 1997 and the Private Offering Memorandum
will not be completed by such date;
WHEREAS, the Initial Purchaser is nonetheless willing to
purchase the Notes on November 3, 1997 subject to the terms and conditions of
(i) the Note Purchase Agreement, dated as of November 3, 1997, by and among the
Initial Purchaser, QRS and the Issuer (including the condition that this
Agreement be executed and delivered by the parties hereto) and (ii) the Side
Letter Agreement, dated as of November 3, 1997, by and between the Initial
Purchaser and the Company, in reliance on the covenants of the Company, QRS and
the Issuer herein to cooperate in obtaining such ratings, to modify the Related
Agreements (or enter into additional agreements) as are necessary in order to
obtain the Desired Ratings and deliver the Private Offering Memorandum, together
with such opinions and representations as shall be necessary in connection
therewith to ensure compliance with federal and state securities laws.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, undertakings, 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. Representations and Warranties.
(a) Each of the Company, QRS and the Issuer
represents and warrants to the Initial Purchaser that:
(i) Such Person has been duly organized and
is validly existing as a corporation in good standing under
the laws of its State of jurisdiction;
(ii) Such Person has all requisite power and
authority (corporate and other) and all requisite
authorizations, approvals, orders, licenses, certificates and
permits of and from all governmental or regulatory officials
and bodies necessary to own its properties, to conduct its
business and to execute, deliver and perform its obligations
under this Agreement, and the other Related Agreements to
which it is a party, except such as may be required under
state securities or "blue sky" laws in connection with the
initial purchase and any reoffer or resale by the Initial
Purchaser; all such authorizations, approvals, orders,
licenses and certificates are in full force and effect and
(with respect to the Company only) contains no unduly
burdensome provisions; and there are no legal or governmental
proceedings pending or, to the best knowledge of such Person,
threatened, that would result in a material modification,
suspension or revocation thereof;
(iii) this Agreement, and each of the other
Related Agreements to which such Person is a party, has been
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duly authorized, executed and delivered by such Person, and,
assuming the due authorization by each other party hereto or
thereto, each such agreement constitutes a legal, valid,
binding and enforceable agreement of such Person, subject, as
to enforceability, to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights
generally and to general principles of equity regardless of
whether enforcement is sought in a proceeding in equity or at
law.
SECTION 2. Covenants.
(a) Cooperation with Respect to Securitization. Upon the
request of the Initial Purchaser, the Company, QRS, and the Owner Trustee on
behalf of the Issuer shall exercise its commercially reasonable efforts,
including without limitation promptly effecting any amendments to the Indenture,
the Trust Agreement, the Contribution Agreement, the Note Purchase Agreement, or
the Side Letter Agreement, or to the organizational documents of any party
hereto, or enter into additional agreements, and to deliver such certificates
and opinions and provide such other assistance, as reasonably requested by the
Initial Purchaser in order to comply with a Rating Agency requirement necessary
in order to obtain the Desired Ratings (each, an "Amendment"); provided,
however, that if any individual Amendment, or the Amendments taken as a whole,
will adversely change the value of the total consideration received by the
Company, QRS and the Issuer from the sale of Notes or the right of the Equity
Interest (as defined in the Indenture) relative to the Notes to receive payments
of Available Funds (as defined in the Indenture) pursuant to the Indenture as of
the Closing Date, then any such Amendment or Amendments shall be effected only
with the written consent of the Company, which consent shall not be unreasonably
withheld.
(b) Re-tranching of Notes. In order to facilitate the resale
of the Notes by the Initial Purchaser, the Initial Purchaser may require the
Issuer to register an exchange of the Notes for replacement Notes with the same
aggregate principal balance and weighted average coupon rate as the Notes
originally sold but with different principal balances, interest rates and/or
allocations of principal and interest among the various Classes of Notes, and
the Issuer shall cooperate in effectuating such exchange; provided, however,
that such exchange shall not adversely change the value of the total
consideration received by the Company, QRS and the Issuer from the sale of Notes
or the right of the Equity Interest (as defined in the Indenture) relative to
the Notes to receive payments of Available Funds (as defined in the Indenture)
pursuant to the Indenture as of the Closing Date.
(c) Covenants with Respect to the Private Offering Memorandum.
The Company, QRS, and the Issuer each covenants and agrees
with the Initial Purchaser that:
(1) the Company, QRS, and the Issuer will prepare the
Private Offering Memorandum and will deliver it to the Initial
Purchaser for delivery to subsequent investors identified by the
Initial Purchaser no later than the ___th day following the assignment
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of the Desired Ratings by the Rating Agency. The Private Offering
Memorandum will contain the material information regarding the Notes
that investors need in order to evaluate the risks and rewards of an
investment in the Notes and will contain no untrue statement of a
material fact and will not omit to state any material fact required to
be stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. In furtherance of the foregoing:
(a) on the date as of which the Private
Offering Memorandum is dated, each of the Company, QRS, and
the Owner Trustee on behalf of the Issuer shall deliver to the
Initial Purchaser a certificate of a responsible officer of
such Person, dated such date and acceptable to the Initial
Purchaser, to the effect that the signer of such certificate
has carefully examined the Private Offering Memorandum, this
Agreement and the other Related Agreements, and that: (i) the
representations and warranties of the applicable Person in
each Related Agreement are true and correct in all material
respects at and as of the date as of which the Private
Offering Memorandum is dated with the same effect as if made
on the date as of which the Private Offering Memorandum is
dated, except as disclosed in such certificate, provided that
such exceptions shall be reasonable acceptable to the Initial
Purchaser, (ii) the Private Offering Memorandum contains no
untrue statement of a material fact and does not omit to state
any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading,
except that no such representation or warranty shall be
required as to statements contained in or omitted from the
Private Offering Memorandum in reliance upon and in conformity
with information furnished in writing to the Issuer by the
Initial Purchaser specifically for use in the Private Offering
Memorandum and any amendment or supplement thereto, and (iii)
with respect to the Issuer only, subsequent to the date as of
which information is given the Private Offering Memorandum,
except as otherwise stated therein, there has been no material
adverse change in the condition, financial or otherwise,
earnings, affairs, regulatory situation or business prospects
of the Issuer, whether or not arising in the ordinary course
of business of the Issuer;
(b) on the date as of which the Private
Offering Memorandum is dated, the Company shall deliver to the
Initial Purchaser the opinion of Bartlit, Xxxx, Xxxxxx,
Xxxxxxxxx & Xxxxx, special counsel for the Company, QRS and
the Issuer an opinion (which may rely upon opinions of local
counsel to the same extent as the opinion delivered by it
pursuant to the Note Purchase Agreement) satisfactory in form
and substance to the Initial Purchaser reasonably (i)
confirming that the opinions rendered by such counsel on the
Closing Date and addressed to the Initial Purchaser pursuant
to the Note Purchase Agreement remain valid, or updating such
opinions to reflect applicable changes in law or fact as of
the date as of which the Private Offering Memorandum is dated,
and (ii) confirming that nothing has come to the attention of
such counsel that would lead such counsel to believe that the
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Private Offering Memorandum, as of its date, contains an
untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading (other than the sections concerning certain federal
income tax consequences, state tax considerations and ERISA
considerations, and other than financial statements, schedules
and other numerical, financial and statistical data contained
therein).
SECTION 3. [Intentionally Omitted.]
SECTION 4. Conditions to Obligations of the Parties
Hereto.
The obligations of the parties hereto hereunder are subject to
the execution, delivery, and effectiveness of all other Related Agreements and
the sale of the Notes to the Initial Purchaser.
SECTION 5. Breach; Remedies.
(a) The default by the Company, QRS or the Issuer of any of
its covenants hereunder, and the continuance of such default or breach for a
period of seven days after receipt by the Company of a written notice from the
Initial Purchaser specifying such default or breach and requiring it to be
remedied shall be an "event of default" hereunder.
(b) It is understood and agreed that the undertakings set
forth in Section 2 shall survive delivery of the Notes to the Initial Purchaser,
and shall inure to the benefit of all parties hereto and that no adequate remedy
at law will be available to the Initial Purchaser upon such a breach. Upon the
discovery by a party hereto, the Owner Trustee, or the Indenture Trustee of a
breach of any undertaking, the party discovering such breach shall give prompt
written notice to all other parties 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 15 days of its discovery or its receipt of
notice of any breach of any undertaking, the breaching party shall cause such
breach to be cured or, in the event that such breaching party is unable to cure
such breach, the Company shall purchase, or shall cause QRS or the Issuer to
purchase, the Notes at a purchase price as set forth below. If such breach is of
a representation contained in Section 2(c)(1)(a) hereof, the purchase price
shall be an amount equal to the sum of (x) the par value of the Notes and (y)
the accrued interest on the Notes as of such date, payable in immediately
available funds. If such breach is of another obligation of the Company, QRS or
the Issuer pursuant to Section 2(a) or 2(c) of this Agreement, such purchase
price shall be 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.
SECTION 6. Incorporation by Reference.
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The obligations contained herein are in addition to, and do
not in any way lessen, weaken, or detract from the further assurances provisions
contained in each Related Agreement, including, without limitation, in Section 7
of the Contribution Agreement, Section 2 of the Side Letter Agreement, Section
8.2 of the Trust Agreement, and Section 9.04 of the Indenture, which are hereby
incorporated by reference. It is further agreed that the provisions of Section 4
of the Note Purchase Agreement are hereby incorporated herein by reference as if
stated herein.
SECTION 7. Notices.
All demands, notices and communications hereunder shall be in
writing and shall be delivered to the addressees set forth in the Related
Agreements, and dispatched in the manner set forth therein.
SECTION 8. 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 9. 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 10. Survival.
Each party hereto agrees that the representations, warranties,
undertakings and agreements made by it pursuant to Section 2(c)(1)(a) herein and
in any certificate or other instrument delivered pursuant hereto shall be deemed
to have been relied upon by the other parties, notwithstanding any investigation
heretofore or hereafter made by any other party or on any other party's behalf,
and that the representations, warranties and agreements made by any party hereto
in any such certificate or other instrument shall survive the delivery of and
payment for the Notes.
SECTION 11. Acknowledgement of Third Party Reliance. Each of
the parties hereto hereby acknowledges that all subsequent Holders, and their
respective successors and assigns, shall rely upon the representations,
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warranties and covenants made by it in this Agreement not as assignees but as
intended third-party creditor beneficiaries of this Agreement.
SECTION 12. 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 any party hereto may be merged or
consolidated or any person resulting from a merger, acquisition, or other
business combination involving any such party or any person succeeding to its
business shall be considered the successor of such party hereunder, without the
further act or consent of either 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 Following Page]
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IN WITNESS WHEREOF, the parties below have caused this
Securitization Cooperation 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/Xxxxx Xxxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President & Secretary
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COMMERCIAL ASSETS, INC.,
a Maryland corporation,
By: /s/Xxxxx Xxxxxxx
--------------------------
Name: Xxxxx Xxxxxxx
Title: Sr. VP & CFO
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STRUCTURED MORTGAGE TRUST 1997-2, a
Delaware business trust,
By: Wilmington Trust Company, not
individually, but solely in its
capacity as Owner Trustee,
By: /s/Xxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
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PAINEWEBBER INCORPORATED,
a Delaware corporation,
By: /s/Xxxxxx X. Xxxxx
----------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Director
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