1
$212,629,523
(Approximate)
FIRST UNION RESIDENTIAL SECURITIZATION TRANSACTIONS, INC.
Mortgage Pass-Through Certificates, Series 1999-A
UNDERWRITING AGREEMENT
February 22, 1999
FIRST UNION CAPITAL MARKETS CORP.
One First Union Center DC-8
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PAINEWEBBER INCORPORATED
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Ladies and Gentlemen:
First Union Residential Securitization Transactions, Inc. (the
"DEPOSITOR"), a North Carolina corporation, is a wholly-owned, special-purpose
subsidiary of First Union National Bank ("FUNB"), a national banking
association. The Depositor has authorized the issuance and sale of its Mortgage
Pass-Through Certificates, Series 1999-A, consisting of (i) Class 1A, Class
1A-PO, Class 1A-WIO, Class A-R, Class A-LR, Class 2A, Class M, Class B-1 and
Class B-2 (the "OFFERED CERTIFICATES") and (ii) Class B-3, Class B-4 and Class
B-5 (the "NON-OFFERED CERTIFICATES"). The Offered Certificates and the
Non-Offered Certificates are collectively referred to herein as the
"CERTIFICATES". The Certificates evidence undivided interests in a trust fund
(the "TRUST FUND") consisting of two distinct pools of fixed-rate mortgage loans
(the "POOL 1 MORTGAGE LOANS" and the "POOL 2 MORTGAGE LOANS" and, together, the
"MORTGAGE LOANS"), secured by first deeds of trust and mortgages on properties
that are primarily one- to four-family residential properties.
The Offered Certificates are being purchased pursuant to this Agreement
by First Union Capital Markets Corp. ("FCMC"), and PaineWebber Incorporated
("PAINEWEBBER" and,
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together with FCMC, the "UNDERWRITERS"), severally, in the amount set forth
opposite their names on Schedule A, except that the amount purchased by each
Underwriter may change in accordance with Section 10 of this Agreement.
The Certificates will be issued under a pooling and servicing agreement
(the "POOLING AND SERVICING AGREEMENT"), dated as of February 1, 1999, among the
Depositor, FUNB, as seller (in such capacity, the "SELLER"), master servicer (in
such capacity, the "MASTER SERVICER") and trust administrator (in such capacity,
the "TRUST ADMINISTRATOR"), and Norwest Bank Minnesota, National Association, as
trustee and document custodian (the "Trustee"). The Offered Certificates will
evidence fractional undivided interests in the Trust Fund, and will receive
distributions of interest and principal from collections of interest and
principal on the Mortgage Loans. The assets of the Trust Fund will include,
among other things, the Mortgage Loans conveyed to the Trust Fund on February
25, 1999, and such amounts as may be held by the Trustee in any accounts held by
the Trustee for the Trust Fund. The aggregate undivided interest in the Trust
Fund represented by the Offered Certificates initially will be equal to
$212,629,523.24 of principal, which represents approximately 99.72563444% of the
actual principal balances of the Mortgage Loans as of February 1, 1999 (the
"CUT-OFF DATE"). Forms of the Pooling and Servicing Agreement have been filed as
exhibits to the Registration Statement (hereinafter defined).
One or more elections will be made to treat certain segregated pools of
assets of the Trust Fund as "real estate mortgage investment conduits" (each, a
"REMIC") within the meaning of Section 860D of the Internal Revenue Code of
1986, as amended (the "CODE") for federal income tax purposes. The Certificates
(other than the Class A-R and Class A-LR Certificates) will constitute "REGULAR
INTERESTS" in a REMIC, and the Class A-R and Class A-LR Certificates will
constitute "RESIDUAL INTERESTS" in REMIC II and REMIC I, respectively.
The Offered Certificates are more fully described in the Registration
Statement (defined below) which the Depositor has furnished to the Underwriters.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Pooling and Servicing Agreement.
Simultaneously with the execution of the Pooling and Servicing
Agreement, the Depositor will enter into a mortgage loan purchase agreement (the
"PURCHASE AGREEMENT") with the Seller, pursuant to which the Seller will
transfer to the Depositor all of its right, title and interest in and to the
Mortgage Loans as of the Cut-Off Date and the collateral securing each Mortgage
Loan.
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR
The Depositor represents and warrants to, and agrees with, the
Underwriters that:
(a) A Registration Statement on Form S-3 (No. 333-3574), as amended,
has (i) been prepared by the Depositor in conformity with the requirements of
the Securities Act of 1933, as amended (the "SECURITIES ACT"), and the rules and
regulations (the "RULES AND REGULATIONS") of the United States Securities and
Exchange Commission (the "COMMISSION") thereunder,
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(ii) been filed with the Commission under the Securities Act and (iii) as
amended by Pre-Effective Amendment No. 2 thereto, became effective under the
Securities Act. Copies of such Registration Statement have been delivered by the
Depositor to the Underwriters. As used in this Agreement, "EFFECTIVE TIME" means
the date and the time as of which such Registration Statement, or the most
recent post-effective amendment thereto, if any, was declared effective by the
Commission; "EFFECTIVE DATE" means the date of the Effective Time; "REGISTRATION
STATEMENT" means such registration statement at the Effective Time, including
any documents incorporated by reference therein at such time; and "PROSPECTUS"
means the final prospectus, dated July 24, 1998, as first supplemented by a
prospectus supplement, dated February 22, 1999 (the "PROSPECTUS SUPPLEMENT"),
relating to the Offered Certificates, as first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations. Reference made herein to
the Prospectus shall be deemed to refer to and include any documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Securities Act, as of the date of the Prospectus and any reference to any
amendment or supplement to the Prospectus shall be deemed to refer to and
include any document filed under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), after the date of the Prospectus and incorporated by
reference in the Prospectus; and any reference to any amendment to the
Registration Statement shall be deemed to include any report of the Depositor
filed with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act
after the Effective Time that is incorporated by reference in the Registration
Statement. The Commission has not issued, and the Depositor has not received any
notification that the Commission intends to issue any order preventing or
suspending the use of the Registration Statement. There are no contracts or
documents of the Depositor which are required to be filed as exhibits to the
Registration Statement pursuant to the Securities Act or the Rules and
Regulations which have not been so filed or incorporated by reference therein on
or prior to the Closing Date (defined below). The conditions for use of Form
S-3, as set forth in the General Instructions thereto, have been satisfied.
To the extent that any Underwriter (A) has provided to the Depositor
Collateral Term Sheets (defined below) that such Underwriter has provided to a
prospective investor, the Depositor has filed such Collateral Term Sheets as an
exhibit to a report on Form 8-K within two business days of its receipt thereof,
or (B) has provided to the Depositor Structural Term Sheets or Computational
Materials (each as defined below) that such Underwriter has provided to a
prospective investor, the Depositor will file or cause to be filed with the
Commission a report on Form 8-K containing such Structural Term Sheets and
Computational Material as soon as reasonably practicable after the date of this
Agreement, but in any event not later than the date on which the Prospectus is
filed with the Commission pursuant to Rule 424 of the Rules and Regulations.
(b) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform in all respects to the requirements of the Securities
Act and the Rules and Regulations. The Registration Statement, as of the
Effective Date thereof and of any amendment thereto, did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading. The
Prospectus as of its date, and as
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amended or supplemented as of the Closing Date, does not and will not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that no
representation or warranty is made as to information contained in or omitted
from the Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Depositor in writing by the
Underwriters expressly for use therein. The parties hereto acknowledge that the
only information provided by the Underwriters is that information described in
Section 8(h) of this Agreement.
(c) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Prospectus, when such
documents become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the Securities Act
or the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and will not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(d) Since the respective dates as of which information is given in the
Prospectus, there has not been any material adverse change in the general
affairs, management, financial condition, or results of operations of the
Depositor, otherwise than as set forth or contemplated in the Prospectus as
supplemented or amended as of the Closing Date.
(e) The Depositor has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification, and has all
power and authority necessary to own or hold its properties, to conduct the
business in which it is engaged and to enter into and perform its obligations
under this Agreement, the Pooling and Servicing Agreement and the Purchase
Agreement, and to cause the Certificates to be issued.
(f) There are no actions, proceedings or investigations pending before
or, to the knowledge of the Depositor, threatened by any court, administrative
agency or other tribunal to which the Depositor is a party or of which any of
its properties is the subject (i) which if determined adversely to the Depositor
would have a material adverse effect on the business or financial condition of
the Depositor, (ii) asserting the invalidity of this Agreement, the Pooling and
Servicing Agreement, the Purchase Agreement or the Certificates, (iii) seeking
to prevent the issuance of the Certificates or the consummation by the Depositor
of any of the transactions contemplated by, the Pooling and Servicing Agreement,
the Purchase Agreement or this Agreement, as the case may be, or (iv) which
might materially and adversely affect the
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performance by the Depositor of its obligations under, or the validity or
enforceability of, the Pooling and Servicing Agreement, the Purchase Agreement,
this Agreement or the Certificates.
(g) This Agreement has been, and the Pooling and Servicing Agreement
and the Purchase Agreement when executed and delivered as contemplated hereby
and thereby will have been, duly authorized, executed and delivered by the
Depositor, and this Agreement constitutes, and the Pooling and Servicing
Agreement and the Purchase Agreement, when executed and delivered as
contemplated herein, will constitute, legal valid and binding instruments
enforceable against the Depositor in accordance with their respective terms,
subject as to enforceability to (i) applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors' rights
generally, (ii) general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law), and (iii) with respect to rights
of indemnity under this Agreement and the Purchase Agreement, limitations of
public policy under applicable securities laws.
(h) The execution, delivery and performance of this Agreement, the
Pooling and Servicing Agreement and the Purchase Agreement by the Depositor and
the consummation of the transactions contemplated hereby and thereby, and the
issuance and delivery of the Certificates do not and will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Depositor is a party, by
which the Depositor is bound or to which any of the property or assets of the
Depositor or any of its subsidiaries is subject, nor will such actions result in
any violation of the provisions of the articles of incorporation or bylaws of
the Depositor or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Depositor or any of its
properties or assets.
(i) Deloitte & Touche LLP are independent public accountants with
respect to the Depositor as required by the Securities Act and the Rules and
Regulations.
(j) The direction by the Depositor to the Trustee to execute,
authenticate, issue and deliver the Certificates has been duly authorized by the
Depositor, and assuming the Trustee has been duly authorized to do so, when
executed, authenticated, issued and delivered by the Trustee in accordance with
the Pooling and Servicing Agreement, the Certificates will be validly issued and
outstanding and will be entitled to the benefits provided by the Pooling and
Servicing Agreement.
(k) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance of the Certificates and the sale of the
Certificates to the Underwriters, or the consummation by the Depositor of the
other transactions contemplated by this Agreement, the Pooling and Servicing
Agreement and the Purchase Agreement, except such consents, approvals,
authorizations, registrations or qualifications as may be required under the
Securities Act or state securities or Blue Sky laws in connection with the
purchase and distribution of the Certificates by the Underwriters or as have
been completed or obtained.
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(l) The Depositor 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 conducted by
it and as described in the Prospectus, and the Depositor has not received notice
of any proceedings relating to the revocation or modification of any such
license, certificate, authority or permit which if decided adversely to the
Depositor would, singly or in the aggregate, materially and adversely affect the
conduct of its business, operations or financial condition.
(m) At the time of execution and delivery of the Pooling and Servicing
Agreement, the Depositor will: (i) have good title to the interest in the
Mortgage Loans conveyed by the Seller, free and clear of any lien, mortgage,
pledge, charge, encumbrance, adverse claim or other security interest
(collectively, "LIENS"); (ii) not have assigned to any person (other than the
Trustee) any of its right, title or interest in the Mortgage Loans, the Purchase
Agreement or the Pooling and Servicing Agreement; and (iii) have the power and
authority to sell its interest in the Mortgage Loans to the Trustee and to sell
the Offered Certificates to the Underwriters. Upon execution and delivery of the
Pooling and Servicing Agreement by the Trustee and any related instruments of
transfer or assignment by the Depositor (except as permitted in the Pooling and
Servicing Agreement), the Trustee will have acquired beneficial ownership of all
of the Depositor's right, title and interest in and to the Mortgage Loans. Upon
delivery to the Underwriters of the Offered Certificates, the Underwriters will
have good title to the Offered Certificates free of any Liens.
(n) As of the Cut-Off Date, the Mortgage Loans will meet the
eligibility criteria described in the Prospectus and will conform to the
descriptions thereof contained in the Prospectus.
(o) Neither the Depositor nor the Trust Fund created by the Pooling and
Servicing Agreement is an "INVESTMENT COMPANY" within the meaning of such term
under the Investment Company Act of 1940, as amended (the "1940 ACT"), and the
rules and regulations of the Commission thereunder.
(p) At the Closing Date, the Certificates and the Pooling and Servicing
Agreement will conform in all material respects to the descriptions thereof
contained in the Prospectus.
(q) At the Closing Date, the Offered Certificates so designated in the
Prospectus will be "MORTGAGE RELATED SECURITIES", as defined in Section 3(a)(41)
of the Exchange Act.
(r) Any taxes, fees and other governmental charges in connection with
the execution, delivery and issuance of this Agreement, the Pooling and
Servicing Agreement, the Purchase Agreement and the Certificates have been paid
or will be paid at or prior to the Closing Date.
(s) At the Closing Date, each of the representations and warranties of
the Depositor set forth in the Pooling and Servicing Agreement will be true and
correct in all material respects.
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(t) All Seller-Provided Information (defined below) was true and
correct in all material respects as of the date it was provided to the
Underwriters.
Any certificate signed by an officer of the Depositor and delivered to
the Underwriters or counsel for the Underwriters in connection with an offering
of the Certificates shall be deemed, and shall state that it is, a
representation and warranty as to the matters covered thereby to each person to
whom the representations and warranties in this Section 1 are made.
SECTION 2. PURCHASE AND SALE
The commitment of the Underwriters to purchase the Offered Certificates
pursuant to this Agreement shall be deemed to have been made on the basis of the
representations and warranties herein contained and shall be subject to the
satisfaction of the terms and conditions set forth herein. The Depositor agrees
to instruct the Trustee to issue and agrees to sell to the Underwriters, and the
Underwriters agree (except as provided in Sections 10 and 11 hereof) to purchase
from the Depositor the Offered Certificates at the purchase price set forth in
Schedule A.
SECTION 3. DELIVERY AND PAYMENT
Delivery of and payment for the Offered Certificates to be purchased by
the Underwriters shall be made at the offices of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, 3500
One First Union Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, or at such other place as shall be agreed upon by the Underwriters
and the Depositor, at 10:00 a.m. Charlotte, North Carolina time on February 25,
1999, or at such other time or date as shall be agreed upon in writing by the
Underwriters and the Depositor (such date being referred to as the "CLOSING
Date"). Payment shall be made to the Depositor by wire transfer of same day
funds payable to the account of the Depositor. Delivery of the Certificates
shall be made to the Underwriters for the account of the Underwriters against
payment of the purchase price thereof. The Offered Certificates (other than the
Class A-R and Class A-LR Certificates) shall be delivered in book-entry form
through The Depository Trust Company in such denominations and registered in
such names as the Underwriters may request in writing at least two business days
prior to the Closing Date. The Class A-R and A-LR Certificates shall be
registered in such names and delivered to such persons as the Underwriters may
request in writing at least two Business Days prior to the Closing Date. The
Offered Certificates will be made available for examination by the Underwriters
no later than 2:00 p.m. Charlotte, North Carolina time on the first business day
prior to the Closing Date.
SECTION 4. OFFERING BY THE UNDERWRITERS
It is understood that, subject to the terms and conditions hereof, the
Underwriters propose to offer the Offered Certificates for sale to the public as
set forth in the Prospectus.
SECTION 5. COVENANTS OF THE DEPOSITOR
The Depositor agrees as follows:
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(a) To prepare the Prospectus in a form approved by the Underwriters
and to file such Prospectus pursuant to Rule 424(b) under the Securities Act not
later than the Commission's close of business on the second business day
following the execution and delivery of this Agreement; to make no further
amendment or any supplement to the Registration Statement or to the Prospectus
prior to the Closing Date except as permitted herein; to advise the
Underwriters, promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes effective or
any supplement to the Prospectus or any amended Prospectus has been filed and to
furnish the Underwriters with copies thereof, to file promptly all reports and
any definitive proxy or information statements required to be filed by the
Depositor with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of the Prospectus and, for so long as
the delivery of a prospectus is required in connection with the offering or sale
of the Offered Certificates, to promptly advise the Underwriters of its receipt
of notice of the issuance by the Commission of any stop order or of: (i) any
order preventing or suspending the use of the Prospectus; (ii) the suspension of
the qualification of the Offered Certificates for the offering or sale in any
jurisdiction; (iii) the initiation of or threat of any proceeding for any such
purpose; or (iv) any request by the Commission for the amending or supplementing
of the Registration Statement or the Prospectus or for additional information.
In the event of the issuance of any stop order or of any order preventing or
suspending the use of the Prospectus or suspending any such qualification, the
Depositor promptly shall use its best efforts to obtain the withdrawal of such
order by the Commission.
(b) To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, including all consents and exhibits filed therewith.
(c) To deliver promptly to the Underwriters such number of the
following documents as the Underwriters shall reasonably request: (i) conformed
copies of the Registration Statement as originally filed with the Commission and
each amendment thereto (in each case including exhibits); (ii) the Prospectus
and any amended or supplemented Prospectus; and (iii) any document incorporated
by reference in the Prospectus (including exhibits thereto). If the delivery of
a prospectus is required at any time prior to the expiration of nine months
after the Effective Time in connection with the offering or sale of the Offered
Certificates, and if at such time any events shall have occurred 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 in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Securities Act or the Exchange Act, the Depositor shall notify the Underwriters
and, upon the Underwriters' request, shall file such document and prepare and
furnish without charge to the Underwriters and to any dealer in securities as
many copies as the Underwriters may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which corrects such
statement or omission or effects such
9
compliance, and in case the Underwriters are required to deliver a Prospectus in
connection with sales of any of the Offered Certificates at any time nine months
or more after the Effective Time, upon the request of the Underwriters but at
its expense, the Depositor shall prepare and deliver to the Underwriters as many
copies as the Underwriters may reasonably request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Securities Act.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Depositor or the Underwriters, be required by
the Securities Act or requested by the Commission.
(e) Prior to filing with the Commission any (i) supplement to the
Prospectus, or document incorporated by reference in the Prospectus, or (ii)
Prospectus pursuant to Rule 424 of the Rules and Regulations, to furnish a copy
thereof to the Underwriters and counsel for the Underwriters and obtain the
consent of the Underwriters to the filing.
(f) [RESERVED]
(g) So long as the Offered Certificates shall be outstanding, to
deliver to the Underwriters as soon as such statements are furnished to the
Trustee: (i) the annual statement as to compliance delivered to the Trustee
pursuant to Section 3.10 of the Pooling and Servicing Agreement;(ii) the annual
statement of a firm of independent public accountants furnished to the Trustee
pursuant to Section 3.11 of the Pooling and Servicing Agreement; and (iii) the
Monthly Statement furnished to the Certificateholders pursuant to Section 5.2 of
the Pooling and Servicing Agreement.
(h) To apply the net proceeds from the sale of the Offered Certificates
in the manner set forth in the Prospectus.
SECTION 6. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS
The obligations of the Underwriters to purchase the Offered
Certificates pursuant to this Agreement are subject to: (1) the accuracy on and
as of the Closing Date of the representations and warranties on the part of the
Depositor herein contained; (2) the performance by the Depositor of all of its
obligations hereunder; and (3) the following conditions as of the Closing Date:
(a) The Underwriter shall have received confirmation of the
effectiveness of the Registration Statement. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission. Any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus shall
have been complied with.
10
(b) Neither Underwriter shall have discovered and disclosed to the
Depositor on or prior to the Closing Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of a fact or omits to state a fact which, in the opinion of either ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP or Brown & Wood LLP, as counsel for the Underwriters, is material
and is required to be stated therein or is necessary to make the statements
therein not misleading.
(c) All corporate proceedings and other legal matters relating to the
authorization, form and validity of this Agreement, the Pooling and Servicing
Agreement, the Purchase Agreement, the Offered Certificates, the Registration
Statement and the Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be satisfactory in all
respects to counsel for the Underwriters, and the Depositor shall have furnished
to such counsel all documents and information that they may reasonably request
to enable them to pass upon such matters.
(d) ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP shall have furnished to the Underwriters
their written opinion, as counsel to the Depositor and FUNB, addressed to the
Underwriters and dated the Closing Date, in form and substance satisfactory to
Fitch IBCA, Inc. ("Fitch"), Standard & Poor's Ratings Services, a division of
The McGraw Hill Companies, Inc. ("S&P") and the Underwriters (all of whom shall
be entitled to rely on such opinion as if an addressee), to the effect that:
(i) This Agreement, the Pooling and Servicing Agreement and
the Purchase Agreement, assuming the due authorization, execution and
delivery of such agreements by the other parties thereto, constitute
the legal, valid and binding agreements of the Depositor and FUNB, as
applicable, enforceable against the Depositor and FUNB, as applicable,
in accordance with their terms, subject as to enforceability to (A)
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights
generally, (B) the qualification that the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion, with respect to
such remedies, of the court before which any proceedings with respect
thereto may be brought, and (C) with respect to rights of indemnity
under this Agreement, the Pooling and Servicing Agreement and the
Purchase Agreement, limitations of public policy under applicable
securities laws.
(ii) The conditions to the use by the Depositor of a
registration statement on Form S-3 under the Securities Act, as set
forth in the General Instructions to Form S-3, have been satisfied with
respect to the Registration Statement and the Prospectus.
(iii) The Registration Statement and any amendments thereto
have become effective under the Securities Act; to the best of such
counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and not withdrawn and no
proceedings for that purpose have been instituted or threatened and not
terminated; and the Registration Statement, the Prospectus and each
amendment or supplement thereto, as of their respective effective or
issue dates (other than the financial
11
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 Securities Act and the Rules
and Regulations.
(iv) To the best of such counsel's knowledge, there are no
material contracts, indentures or other documents of a character
required to be described or referred to in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration
Statement other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto.
(v) The statements in the base Prospectus under the headings
"Summary of Terms--Certain Federal Income Tax Consequences" and
"--ERISA Considerations" and "Certain Legal Aspects of the Mortgage
Loans," "ERISA Considerations" and "Certain Federal Income Tax
Consequences," and the statements in the Prospectus Supplement under
the headings "Summary of Terms--Certain Federal Income Tax
Consequences" and "--ERISA Considerations," "Certain Federal Income Tax
Consequences" and "ERISA Considerations," to the extent that they
constitute matters of federal law or legal conclusions with respect
thereto, have been reviewed by such counsel and are correct in all
material respects with respects to those consequences or aspects that
are discussed.
(vi) The Pooling and Servicing Agreement and the Offered
Certificates conform in all material respects to the description
thereof contained in the Prospectus and are not required to be
qualified under the Trust Indenture Act of 1939, as amended, and the
Trust Fund is not required to be registered under the 1940 Act.
(vii) Neither the Depositor nor the Trust Fund is an
"investment company" or under the control of an "investment company" as
such terms are defined in the 1940 Act.
(viii) The Trust Fund as described in the Prospectus
Supplement and the Pooling and Servicing Agreement will qualify as one
or more "real estate mortgage investment conduits" within the meaning
of Section 860D of the Code, assuming: (A) elections are made to treat
the Trust Fund as one or more REMICs, (B) compliance with the Pooling
and Servicing Agreement and (C) compliance with changes in the law,
including any amendments to the Code or applicable Treasury regulations
thereunder.
(ix) The Offered Certificates will, when issued, conform to
the description thereof contained in the Prospectus, and the Classes so
designated in the Prospectus will be "mortgage related securities", as
defined in Section 3(a)(41) of the Exchange Act.
(x) FUNB is existing as a national banking association
organized under the laws of the United States of America.
(xi) FUNB has full corporate power and authority to enter into
and fulfill its obligations under the Purchase Agreement and the
Pooling and Servicing Agreement and
12
to transfer the Mortgage Loans to the Depositor as contemplated in the
Purchase Agreement.
(xii) The Pooling and Servicing Agreement and the Purchase
Agreement have been duly authorized, executed and delivered by FUNB.
(xiii) No consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body having jurisdiction over FUNB is required for the
consummation by FUNB of the transactions contemplated by the Pooling
and Servicing Agreement and the Purchase Agreement, except such
consents, approvals, authorizations, registrations and qualifications
as have been obtained.
(xiv) The Depositor has been incorporated and is existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, is qualified to do business and is in good standing in
North Carolina, and has all power and authority necessary to own or
hold its properties and to conduct the business in which it is engaged
and to enter into and perform its obligations under this Agreement, the
Pooling and Servicing Agreement and the Purchase Agreement, and to
cause the Certificates to be issued.
(xv) This Agreement, the Pooling and Servicing Agreement, and
the Purchase Agreement have been duly authorized, executed and
delivered by the Depositor.
(xvi) No consent, approval, authorization, order, registration
or qualification of or with any court or governmental agency or body of
the United States is required for the issuance of the Certificates, and
the sale of the Certificates to the Underwriters, or the consummation
by the Depositor of the other transactions contemplated by this
Agreement, the Pooling and Servicing Agreement and the Purchase
Agreement, except such consents, approvals, authorizations,
registrations or qualifications as may be required under the Securities
Act or state securities or Blue Sky laws in connection with the
purchase and distribution of the Certificates by the Underwriters or as
have been previously obtained.
(xvii) The direction by the Depositor to the Trustee to
execute, issue, authenticate and deliver the Certificates has been duly
authorized by the Depositor and, assuming that the Trustee has been
duly authorized to do so, when executed, authenticated and delivered by
the Trustee against payment of the agreed upon consideration therefor
in accordance with the Pooling and Servicing Agreement, the
Certificates will be validly issued and outstanding and will be
entitled to the benefits of the Pooling and Servicing Agreement.
Such counsel shall also have furnished to the Underwriters a written
statement addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Underwriters to the effect that no facts have come
to the attention of such counsel which lead them to believe that: (A) the
Registration Statement (other than (1) the documents incorporated
13
therein by reference (including, without limitation, any Structural Term Sheets,
Collateral Term Sheets and Computational Materials) and (2) the financial and
statistical information contained therein, as to which no opinion shall be given
at the time it became effective, or at the date of such opinion) contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (B) the Prospectus (other than (1) the information
incorporated therein by reference (including, without, limitation, any
Structural Term Sheets, Collateral Term Sheets and Computational Materials) and
(2) the financial, statistical and numerical information contained therein, as
to which no opinion shall be expressed) contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(e) The Underwriters shall have received the favorable opinion, dated
the Closing Date, of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel to the Depositor,
addressed to the Depositor and satisfactory to Fitch, S&P and the Underwriters,
with respect to certain matters relating to the transfer of the Mortgage Loans
to the Trust Fund, and such counsel shall have consented to reliance on such
opinion by Fitch and S&P as though such opinion had been addressed to each such
party.
(f) The Underwriters shall have received the favorable opinion, dated
the Closing Date, of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel to FUNB, addressed to the
Depositor and satisfactory to Fitch, S&P and the Underwriters, with respect to
certain matters relating to the transfer of the Mortgage Loans to the Depositor,
and such counsel shall have consented to reliance on such, opinion by Fitch and
S&P as though such opinion had been addressed to each such party.
(g) FUNB shall have furnished to the Underwriters a written opinion of
counsel to FUNB (who may be an employee of FUNB or of an affiliate of FUNB),
addressed to the Underwriters and dated the Closing Date, in form and substance
satisfactory to the Underwriters, to the effect that:
(i) The execution, delivery and performance of the Pooling and
Servicing Agreement and the Purchase Agreement by FUNB and the
consummation of the transactions contemplated thereby do not and will
not conflict with or result in a material breach or violation of any of
the terms or provisions of, or constitute a default under, any material
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument known to such counsel and to which FUNB is a party or by
which FUNB is bound or to which any of the property or assets of FUNB
or any of its subsidiaries is subject. Nor will such actions result in
any violation of the provisions of the articles of incorporation or
bylaws of FUNB or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over FUNB or
any of its properties or assets.
(ii) There are no actions, proceedings or investigations
pending before or, to the best knowledge of such counsel, threatened by
any court, administrative agency or other tribunal to which FUNB is a
party or of which any of its properties is the subject:
14
(A) which if determined adversely to FUNB would have a material adverse
effect on the business, results of operations or financial condition of
FUNB; (B) asserting the invalidity of the Pooling and Servicing
Agreement, the Purchase Agreement or the Certificates; (C) seeking to
prevent the issuance of the Certificates or the consummation by FUNB of
any of the transactions contemplated by the Pooling and Servicing
Agreement or the Purchase Agreement; or (D) which might materially and
adversely affect the performance by FUNB of its obligations under, or
the validity or enforceability of, the Pooling and Servicing Agreement,
the Purchase Agreement or the Certificates.
(h) Counsel for the Depositor (who may be an employee of FUNB or an
affiliate of FUNB) shall have furnished to the Underwriters its written opinion,
addressed to the Underwriters and dated the Closing Date, in form and substance
satisfactory to the Underwriters, to the effect that:
(i) The execution, delivery and performance of this Agreement,
the Pooling and Servicing Agreement and the Purchase Agreement by the
Depositor, the consummation of the transactions contemplated hereby and
thereby, and the issuance and delivery of the Certificates do not and
will not conflict with or result in a material breach or violation of
any of the terms or provisions of, or constitute a default under, any
material indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Depositor is a party or by which
the Depositor is bound or to which any of the property or assets of the
Depositor or any of its subsidiaries is subject, nor will such actions
result in any violation of the provisions of the articles of
incorporation or bylaws of the Depositor or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Depositor or any of its properties or assets.
(ii) There are no actions, proceedings or investigations
pending before or, to the best knowledge of such counsel, threatened by
any court, administrative agency or other tribunal to which the
Depositor is a party or of which any of its properties is the subject:
(A) which if determined adversely to the Depositor would have a
material adverse effect on the business, results of operations or
financial condition of the Depositor; (B) asserting the invalidity of
the Pooling and Servicing Agreement, the Purchase Agreement or the
Certificates; (C) seeking to prevent the issuance of the Certificates
or the consummation by the Depositor of any of the transactions
contemplated by the Pooling and Servicing Agreement, the Purchase
Agreement, or this Agreement, as the case may be; or (D) which might
materially and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, the Pooling
and Servicing Agreement, the Purchase Agreement, this Agreement or the
Certificates.
(i) The Underwriters shall have received the favorable opinion of
counsel to the Trustee, dated the Closing Date, addressed to the Underwriters
and in form and scope satisfactory to counsel to the Underwriters, which may
include, among other items, opinions to the effect that:
15
(i) The Trustee has been duly incorporated and is validly
existing as a national banking association in good standing under the
laws of the United States of America.
(ii) The Trustee has duly authorized, executed and delivered
the Pooling and Servicing Agreement, which constitutes the legal, valid
and binding agreement of the Trustee, enforceable against the Trustee
in accordance with its terms, subject, as to enforcement of remedies,
to (A) applicable bankruptcy, insolvency, reorganization, and other
similar laws affecting the rights of creditors generally, and (B) to
general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(iii) Upon the execution, authentication and delivery of the
Certificates by the Trustee on the Closing Date, the Certificates will
have been duly issued on behalf of the Trust Fund.
(iv) The execution and delivery by the Trustee of the Pooling
and Servicing Agreement and the performance by the Trustee of its
obligations thereunder, including the execution and authentication of
the Certificates, do not conflict with or result in a violation of the
certificate of incorporation or bylaws of the Trustee or any statute or
any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Trustee or any of its properties or
assets.
(v) The Trustee has full power and authority to execute and
deliver the Pooling and Servicing Agreement and to perform its
obligations thereunder.
(vi) There are no actions, proceedings or investigations
pending or threatened against or affecting the Trustee before or by any
court, arbitrator, administrative agency or other governmental
authority which, if decided adversely to the Trustee, would materially
and adversely affect the ability of the Trustee to carry out the
transactions contemplated in the Pooling and Servicing Agreement.
(vii) No consent, approval or authorization of, or
registration, declaration or filing with, any court or governmental
agency or body of the United States of America or any state thereof is
required for the execution, delivery or performance by the Trustee of
the Pooling and Servicing Agreement.
(j) The Underwriters shall have received the favorable opinion or
opinions, dated the date of the Closing Date, of, in the case of FCMC,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and, in the case of PaineWebber, Brown & Wood LLP, as
counsel for the respective Underwriters, with respect to the issue and sale of
the Certificates, the Registration Statement, this Agreement, the Prospectus and
such other related matters as the Underwriters may reasonably require.
16
(k) The Depositor shall have furnished to the Underwriters a
certificate, dated the Closing Date, of its Chairman of the Board, its President
or a Vice President stating that:
(i) The representations and warranties of the Depositor in
Section 1 of this Agreement are true and correct as of the Closing
Date; and the Depositor has complied with all its agreements contained
herein; and
(ii) Such person has carefully examined the Registration
Statement and the Prospectus and, in his or her opinion (A) as of the
Effective Date, the Registration Statement and Prospectus did not
include an untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (B) since the Effective
Date no event has occurred which should have been set forth in a
supplement or amendment to the Registration Statement or the
Prospectus.
(l) The Trustee shall have furnished to the Underwriters a certificate
of the Trustee, signed by one or more duly authorized officers of the Trustee,
dated the Closing Date, as to the due authorization, execution and delivery of
the Pooling and Servicing Agreement by the Trustee and the acceptance by the
Trustee of the trusts created thereby and the due execution, authentication and
delivery of the Certificates by the Trustee thereunder and such other matters as
the Underwriters shall reasonably request.
(m) The Offered Certificates shall have received the ratings described
in the Prospectus.
(n) The Underwriters shall have received at or before the Closing Date,
from Deloitte & Touche LLP, one or more letters, dated as of the date of this
Agreement, in form reasonably acceptable to the Underwriters (the "Initial
Letters"), and corresponding bring-down letters dated as of the Closing Date,
(A) confirming that they are independent public accountants within the meaning
of the Securities Act, and are in compliance with, the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (B) stating the conclusions and findings of such firm with
respect to the financial information and other matters covered by its letter,
and (C) in the case of the bring-down letters, confirming in all material
respects the conclusions and finding set forth in the Initial Letters.
(o) Prior to the Closing Date, counsel for the Underwriters shall have
been furnished with such documents and opinions as they may reasonably require
for the purpose of enabling them to pass upon the issuance and sale of the
Certificates as herein contemplated and related proceedings or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained, and
all proceedings taken by the Depositor in connection with the issuance and sale
of the Certificates as herein contemplated shall be satisfactory in form and
substance to the Underwriters and counsel for the Underwriters.
17
(p) Subsequent to the execution and delivery of this Agreement none of
the following shall have occurred: (i) trading in securities generally on the
New York Stock Exchange, the American Stock Exchange or the Nasdaq Stock Market
shall have been suspended or minimum prices shall have been established on
either of such exchanges or such market by the Commission, by such exchange or
by any other regulatory body or governmental authority having jurisdiction; (ii)
a banking moratorium shall have been declared by federal or state authorities;
(iii) the United States shall have become engaged in hostilities, there shall
have been an escalation of hostilities involving the United States or there
shall have been a declaration of a national emergency or war by the United
States; or (iv) there shall have occurred such a material adverse change in
general economic, political or financial conditions (or the effect of
international conditions on the financial markets of the United States shall be
such) as to make it, in the judgment of the Underwriters, impractical or
inadvisable to proceed with the public offering or delivery of the Certificates
on the terms and in the manner contemplated in the Prospectus.
If any condition specified in this Section 6 shall not have been
fulfilled when and as required to be fulfilled this Agreement may be terminated
by the Underwriters by notice to the Depositor at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party except as provided in Section 7.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
SECTION 7. PAYMENT OF EXPENSES
All expenses incurred by the Depositor or the Underwriters in
performance of their respective obligations hereunder, including the fees and
expenses of their respective counsel, shall be borne by the party incurring such
expense; provided that FCMC agrees to pay the fees and expenses of ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, as Underwriter's counsel and PaineWebber agrees to pay the fees
and expenses of ▇▇▇▇▇ & Wood LLP, as Underwriter's counsel.
If this Agreement is terminated by the Underwriters in accordance with
the provisions of Section 6, Section 10 or Section 11, the Depositor shall
reimburse the Underwriters for all reasonable out-of-pocket expenses, including
fees and disbursements of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and Brown & Wood LLP, as
applicable.
SECTION 8. INDEMNIFICATION AND CONTRIBUTION
(a) (i) The Depositor and FUNB agree to, jointly and severally,
indemnify and hold harmless the Underwriters, their directors and each
person, if any, who controls the Underwriters within the meaning of
Section 15 of the Securities Act from and against any and all loss,
claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim damage,
liability or action relating to purchases and sales of the Offered
Certificates), to which the Underwriters, their directors
18
or any such controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (A) any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, (B) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, (C) any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus
or (D) the omission or alleged omission to state, in the Prospectus, a
material fact required to be stated therein or necessary to make the
statements in the Prospectus, in the light of the circumstances under
which they were made, not misleading and shall reimburse each
Underwriter, each such director and each such controlling person
promptly upon demand for any legal or other expenses reasonably
incurred by such Underwriter, such director or such controlling person
in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action, as such
expenses are incurred; provided, however, that the Depositor and FUNB
shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement or omission or alleged
omission made in the Prospectus or the Registration Statement in
reliance upon and in conformity with written information furnished to
the Depositor by or on behalf of any of the Underwriters specifically
for inclusion therein (as specified in Section 8(h) below). The
foregoing indemnity agreement is in addition to any liability which the
Depositor and FUNB may otherwise have to the Underwriters, their
directors or any controlling person of the Underwriters.
(ii) The Depositor and FUNB agree to, jointly and severally,
indemnify and hold harmless PaineWebber, its directors and each person,
if any, who controls PaineWebber within the meaning of Section 15 of
the Securities Act from and against any and all loss, claim, damage or
liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of the Offered Certificates), to
which PaineWebber, its directors or any such controlling person may
become subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based
upon, (A) any untrue statement or alleged untrue statement of a
material fact contained in any prospectus used after May 24, 1999 (a
"MARKET MAKING PROSPECTUS"), or (B) the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and shall
reimburse PaineWebber, each such director and each such controlling
person promptly upon demand for any legal or other expenses reasonably
incurred by PaineWebber, such director or such controlling person in
connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action, as such
expenses are incurred; provided, however, the Depositor and FUNB shall
not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission
made in a Market Making Prospectus in reliance upon and in conformity
with written information furnished to the
19
Depositor by PaineWebber specifically for inclusion therein (as
specified in Section 8(h) below). The foregoing indemnity agreement is
in addition to any liability which the Depositor and FUNB may otherwise
have to PaineWebber, its directors or any controlling person of
PaineWebber under this Agreement.
(b) (i) Each Underwriter severally agrees to indemnify and hold
harmless the Depositor, each of its directors, each of its officers who
signed the Registration Statement, and each person, if any, who
controls the Depositor within the meaning of Section 15 of the
Securities Act against any and all loss, claim, damage or liability, or
any action in respect thereof, to which the Depositor or any such
director, officer or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) an untrue,
statement or alleged untrue statement of a material fact contained in
the Registration Statement, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (iii) any
untrue statement or alleged untrue statement of a material fact
contained in the Prospectus or (iv) the omission or alleged omission to
state therein a material fact required to be stated in the Prospectus
or necessary to make the statements in the Prospectus, in the light of
the circumstances under which they were made, not misleading, but in
each case only to the extent that the untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the
Depositor by or on behalf of the Underwriters specifically for
inclusion therein (as specified in Section 8(h) below), and shall
reimburse the Depositor and any such director, officer or controlling
person for any legal or other expenses reasonably incurred by the
Depositor or any director, officer or controlling person in connection
with investigating or defending or preparing to defend against any such
loss, claim, damage, liability or action as such expenses are incurred.
The foregoing indemnity agreement is in addition to any liability which
the Underwriters may otherwise have to the Depositor or any such
director, officer or controlling person. Notwithstanding anything to
the contrary contained in this Section 8, PaineWebber shall have no
obligation to indemnify any party for any loss, claim, damage or
liability or contribute to any such loss, claim, damage or liability in
respect of untrue statements or alleged untrue statements of material
fact or omissions or alleged omissions to state a material fact
contained in any Market Making Prospectus.
(ii) PaineWebber shall indemnify and hold harmless FCMC and
each person, if any, who controls FCMC within the meaning of Section 15
of the Securities Act from and against any loss, claim, damage or
liability, joint or several, and any action in respect thereof, to
which FCMC or any such controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement of a material fact contained in
any Computational Materials (defined below) furnished or made available
by PaineWebber to offerees of the Offered Certificates.
20
FCMC shall indemnify and hold harmless PaineWebber and each
person, if any, who controls PaineWebber within the meaning of Section
15 of the Securities Act from and against any loss, claim, damage or
liability, joint or several, and any action in respect thereof, to
which PaineWebber or any such controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement of a material fact contained in
any Computational Materials furnished or made available by FCMC to
offerees of the Offered Certificates.
(c) Promptly after receipt by any indemnified party under this Section
8 of notice of any claim or the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure; and, provided further, that the
failure to notify any indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to local counsel) at any time for all such indemnified parties, which
firm
21
shall be designated in writing by the Underwriters, if the indemnified parties
under this Section 8 consist of the Underwriters or any of their directors and
controlling persons, or by the Depositor, if the indemnified parties under this
Section 8 consist of the Depositor or any of the Depositor's directors, officers
or controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section 8(a) and (b), shall use its best efforts to cooperate
with the indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees
to indemnify and hold harmless any indemnified party from and against any loss
or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected, without its
written consent if (A) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (B) such
indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement.
(d) (i) Each Underwriter agrees to provide the Depositor no later than
two Business Days prior to the day on which the Prospectus Supplement
is required to be filed pursuant to Rule 424 with a copy of its
Structural Term Sheets and Computational Materials (each as defined
below), if any, for filing with the Commission an Form 8-K.
(ii) Each Underwriter agrees to provide the Depositor with its
Collateral Term Sheets no later than one Business Day prior to the day
on which such Collateral Term Sheets are distributed to potential
investors.
(e) Each Underwriter agrees, severally and not jointly, assuming all
Seller-Provided Information is accurate and complete in all material respects,
to indemnify and hold harmless the Depositor, each of the Depositor's officers
who sign the Registration Statement and directors and each person who controls
the Depositor within the meaning of Section 15 of the Securities Act against any
and all losses, claims, damages or liabilities, joint or several, to which they
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement of a material fact contained in the
Derived Information (defined below) provided by such Underwriter, or arise out
of or are based upon the omission or alleged omission, when read in conjunction
with the Prospectus, to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party for any legal or other expenses reasonably
incurred by him, her or it in connection with investigating or defending or
preparing to defend any such loss, claim, damage, liability or action as such
expenses are
22
incurred. The obligations of an Underwriter under this Section 8(e) shall be in
addition to any liability which such Underwriter may otherwise have.
The procedures set forth in Section 8(c) shall be equally applicable to
this Section 8(e).
(f) If the indemnification provided for in this Section 8 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 8(a), (b) or (e) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Depositor on the one hand and the Underwriters on the other from
the offering of the Certificates or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law or if the indemnified party failed
to give the notice required under Section 8(c), in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Depositor on the one hand and the
Underwriters on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations.
The relative benefits of the Underwriters and the Depositor shall be
deemed to be in such proportions that the Underwriters are responsible for their
pro rata portion of such losses, liabilities, claims, damages and expenses
determined in accordance with the ratio that the difference between the purchase
price paid to the Depositor by the Underwriters and the aggregate resale price
received by the Underwriters bears to the purchase price paid to the Depositor
by the Underwriters, and the Depositor shall be responsible for the balance.
The relative fault of the Underwriters and the Depositor shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Depositor or by the Underwriters, the intent of
the parties and their relative knowledge, access to information and opportunity
to correct or prevent such statement or omission and other equitable
considerations.
The Depositor and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(f) were to be determined
by pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 8(f),
shall be deemed to include, for purposes of this Section 8(f), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
In no case shall the Underwriters be responsible for any amount in
excess of the difference between the purchase price paid to the Depositor by the
Underwriters and the aggregate resale price received by the Underwriters. No
person guilty of fraudulent
23
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(g) For purposes of this Section 8, the term "DERIVED INFORMATION"
means such portion, if any, of the information delivered to the Depositor
pursuant to Section 8(d) for filing with the Commission on Form 8-K as:
(i) is not contained in the Prospectus without taking into
account information incorporated therein by reference;
(ii) does not constitute Seller-Provided Information; and
(iii) is of the type of information defined as Collateral Term
Sheets, Structural Term Sheets or Computational Materials (as such term
are interpreted in the No-Action Letters (defined below)).
The term "SELLER-PROVIDED INFORMATION" means the information contained
on any computer tape furnished to the Underwriters or provided by other written
means by FUNB concerning the assets comprising the Trust Fund.
The terms "COLLATERAL TERM SHEET" and "STRUCTURAL TERM SHEET" shall
have the respective meanings assigned to them in the February 13, 1995, letter
(the "PSA LETTER") of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ on behalf of the Public
Securities Association (which letter, and the Commission staff s response
thereto, were publicly available February 17, 1995). The term "COLLATERAL TERM
SHEET," as used herein, includes any subsequent Collateral Term Sheet that
reflects a substantive change in the information presented. The term
"COMPUTATIONAL MATERIALS" has the meaning assigned to it in the May 17, 1994,
letter (the "▇▇▇▇▇▇ LETTER" and, together with the PSA Letter, the "NO-ACTION
LETTERS") of Brown & Wood an behalf of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Co., Inc. (which
letter, and the SEC staffs response thereto, were publicly available May 20,
1994).
Each Underwriter shall cooperate with the Depositor and with Deloitte &
Touche LLP in obtaining a letter, in form and substance satisfactory to the
Depositor and such Underwriter, of Deloitte & Touche LLP regarding the
information in any Form 8-K consisting of Computational Materials and/or
Structural Term Sheets furnished by such Underwriter, in each case in ▇▇▇▇▇
format as formatted by the Depositor. Any such letter shall be obtained prior to
the filing of any such Form 8-K with the Commission at the applicable
Underwriter's sole expense.
Each Underwriter represents, warrants to, and covenants with, the
Depositor that the Derived Information prepared by such Underwriter is not
misleading and not inaccurate in any material respect and that any
Seller-Provided Information contained in any Form 8-K prepared by such
Underwriter which is not otherwise inaccurate in any material respect is not
presented in the Form 8-K in a way that is either misleading or inaccurate in
any material respect. Each Underwriter further covenants with the Depositor that
if any Computational Materials or Collateral Term Sheets contained in any Form
8-K prepared by such Underwriter are found to
24
include any information that is misleading or inaccurate in any material
respect, such Underwriter promptly shall inform the Depositor of such finding,
provide the Depositor with revised and/or corrected Computational Materials or
Collateral Term Sheets, as the case may be, and promptly prepare and deliver to
the Depositor (in hard copy and ▇▇▇▇▇ format) for filing with the Commission in
accordance herewith, revised and/or corrected Computational Materials or
Collateral Term Sheets, as the case may be.
Each Underwriter covenants that all Computational Materials and
Collateral Term Sheets used by it shall contain a legend substantially similar
to or including language substantially similar to the following:
THIS INFORMATION IS FURNISHED TO YOU SOLELY BY [NAME OF UNDERWRITER]
AND NOT BY THE ISSUER OR ANY OF ITS AFFILIATES. NEITHER THE ISSUER NOR
ANY OF ITS AFFILIATES MAKES ANY REPRESENTATION AS TO THE ACCURACY OR
COMPLETENESS OF THE INFORMATION HEREIN. THE INFORMATION HEREIN IS
PRELIMINARY, AND WILL BE SUPERSEDED BY THE APPLICABLE PROSPECTUS
SUPPLEMENT AND BY ANY OTHER INFORMATION SUBSEQUENTLY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Each Underwriter covenants that all Collateral Term Sheets used by it
shall contain an additional legend substantially similar to or including
language substantially similar to the following:
THIS INFORMATION CONTAINED HEREIN SUPERSEDED BY THE DESCRIPTION OF THE
MORTGAGE LOANS CONTAINED IN THE PROSPECTUS SUPPLEMENT.
Each Underwriter covenants that all Collateral Term Sheets (other than
the initial Collateral Term Sheet) shall contain an additional legend
substantially similar to or including language substantially similar to the
following:
THIS INFORMATION CONTAINED HEREIN SUPERSEDES THE INFORMATION IN ALL
PRIOR COLLATERAL TERM SHEETS, IF ANY.
If an Underwriter does not provide any Computation Materials or
Collateral Term Sheets to the Depositor pursuant to the preceding paragraphs,
such Underwriter shall be deemed to have represented, as of the Closing Date,
that it did not provide any prospective investors with any information in
written or electronic form in connection with the offering of the Certificates
that is required to be filed with the Commission in accordance with the
No-Action Letters, and such Underwriter shall provide the Depositor with a
certification to that effect on the Closing Date.
(h) The Underwriters confirm that the information set forth in the
third paragraph under the caption "Underwriting" in the Prospectus Supplement is
correct and, except for the
25
additional information noted in the following sentence, constitutes the only
information furnished in writing to the Depositor by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus. In addition, FCMC confirms that the information set forth in the
first and second paragraphs under the caption "Underwriting" in the Prospectus
Supplement is correct and has been furnished in writing to the Depositor by FCMC
specifically for inclusion in the Registration Statement and the Prospectus.
SECTION 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY
All representations, warranties and agreements contained in this
Agreement or contained in certificates of officers of the Depositor submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the Underwriters or controlling
persons thereof, or by or an behalf of the Depositor and shall survive delivery
of any Certificates to the Underwriters.
SECTION 10. DEFAULT BY ONE OF THE UNDERWRITERS
If one of the Underwriters participating in the public offering of the
Offered Certificates shall fail at the Closing Date to purchase the Offered
Certificates which it is obligated to purchase hereunder (the "DEFAULTED
CERTIFICATES"), then the non-defaulting Underwriter shall have the right, within
24 hours thereafter, to purchase all, but not less than all, of the Defaulted
Certificates in such amounts as may be agreed upon and upon the terms herein set
forth. If, however, the non-defaulting Underwriter has not completed such
arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted
Certificates does not exceed 10% of the aggregate principal amount of
the Offered Certificates to be purchased pursuant to this Agreement,
the non-defaulting Underwriter shall be obligated to purchase the full
amount thereof, or
(b) if the aggregate principal amount of Defaulted
Certificates exceeds 10% of the aggregate principal amount of the
Offered Certificates to be purchased pursuant to this Agreement, this
Agreement shall terminate, without any liability on the part of the
non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve a defaulting
Underwriter from the liability with respect to any default of such Underwriter
under this Agreement.
In the event of a default by any Underwriter as set forth in this
Section 10, the nondefaulting Underwriter and the Depositor shall have the right
to postpone the Closing Date for a period not exceeding five Business Days in
order that any required changes in the Registration Statement or Prospectus or
in any other documents or arrangements may be effected.
SECTION 11. TERMINATION OF AGREEMENT
26
The Underwriters may terminate this Agreement immediately upon notice
to the Depositor, at any time at or prior to the Closing Date if any of the
events or conditions described in Section 6(p) of this Agreement shall occur and
be continuing. In the event of any such termination, the covenant set forth in
Section 5(g), the provisions of Section 7, the indemnity agreement set forth in
Section 8, and the provisions of Sections 9 and 13 shall remain in effect.
SECTION 12. NOTICES
All statements, requests, notices and agreements hereunder shall be in
writing, and:
(a) if to First Union Capital Markets Corp., shall be delivered or sent
by mail, telex or facsimile transmission to One First Union ▇▇-▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (Fax: (▇▇▇) ▇▇▇-▇▇▇▇), and if
to PaineWebber Incorporated, to ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (Fax: (▇▇▇) ▇▇▇-▇▇▇▇), with a
copy to the General Counsel's office; or (b) if to the Depositor, shall be
delivered or sent by mail, telex or facsimile transmission to First Union
Residential Securitization Transactions, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (Fax (704)
▇▇▇-▇▇▇▇).
SECTION 13. PERSONS ENTITLED TO THE BENEFIT OF THIS AGREEMENT
This Agreement shall inure to the benefit of and be binding upon the
Underwriters and the Depositor, and their respective successors. This Agreement
and the terms and provisions hereof are for the sole benefit of only those
persons, except that the representations, warranties, indemnities and agreements
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control any of the Underwriters within the
meaning of Section 15 of the Securities Act, and for the benefit of directors of
the Depositor, officers of Depositor who have signed the Registration Statement
and any person controlling the Depositor within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section 13, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
SECTION 14. SURVIVAL
The respective indemnities, representations, warranties and agreements
of the Depositor and the Underwriters contained in this Agreement, or made by or
on behalf of them, respectively, pursuant to this Agreement, shall survive the
delivery of and payment for the Certificates and shall remain in full force and
effect, regardless of any investigation made by or on behalf of any of them or
any person controlling any of them.
27
SECTION 15. DEFINITION OF THE TERM "BUSINESS DAY"
For purposes of this Agreement, "BUSINESS DAY" means any day other than
(a) a Saturday or Sunday, or (b) a legal holiday in the States of New York or
North Carolina or (c) a day on which banking or savings and loan institutions in
the States of New York or North Carolina or the state in which the Corporate
Trust Office is located are authorized or obligated by law or executive order to
be closed or (d) a day on which the New York Stock Exchange, Inc. is closed for
trading.
SECTION 16. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of North Carolina, without giving effect to the conflicts
of laws provisions thereof.
SECTION 17. COUNTERPARTS
This Agreement may be executed in counterparts and, if executed in more
than one counterpart, the executed counterparts shall each be deemed to be an
original but all such counterparts shall together constitute one and the same
instrument.
SECTION 18. HEADINGS
The headings herein are inserted for convenience of reference only and
are not intended to be part of, or to affect the meaning or interpretation of,
this Agreement.
28
If the foregoing Underwriting Agreement correctly sets forth the
agreement between the Depositor and the Underwriters, please indicate your
acceptance in the space provided for that Purpose below.
Very truly yours,
FIRST UNION RESIDENTIAL
SECURITIZATION TRANSACTIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
FIRST UNION NATIONAL BANK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director
CONFIRMED AND ACCEPTED,
as of the date first above written:
FIRST UNION CAPITAL MARKETS CORP.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: V.P. Mortgage Trading
PAINEWEBBER INCORPORATED
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Senior Vice President
29
SCHEDULE A
TITLE AND DESCRIPTION OF THE OFFERED CERTIFICATES
Mortgage Pass-Through Certificates, Series 1999-A, Class 1A, Class 1A-PO,Class
1A-WIO, Class A-R, Class A-LR, Class 2A, Class M, Class B-1, Class B-2
Underwriting Agreement, dated as of February 22, 1999
Cut-Off Date: February 1, 1999
Portion of Certificate Portion of Certificate
Certificate Principal Balance Principal Balance
Principal Balance or Notional Amount or Notional Amount
Class or Class to be Purchased to be Purchased Initial Pass Purchase Rating
Designation Notional Amount(1) by PaineWebber by FCMC Through Rate Price (8) (Fitch/S&P)(2)
----------- ------------------ ---------------------- ---------------------- ------------ --------- --------------
Class 1A $150,744,000.00 50% 50% 6.250% 99.9375% AAA/AAA
Class 1A-PO 1,438,164.00 100% 0% (3) 70.0000 AAA/AAAr
Class 1A-WIO (4) 100% 0% (5) 1.0000 AAA/AAAr
Class 2A 55,130,000.00 100% 0% (6) 99.2500 AAA/AAA
Class A-R 50.00 0% 100% 6.250% 99.9375 AAA/AAA
Class A-LR 50.00 0% 100% 6.250% 99.9375 AAA/AAA
Class M 1,914,000.00 100% 0% (7) 96.7500 AA/AA
Class B-1 1,064,000.00 100% 0% (7) 95.3125 A/A
Class B-2 744,000.00 100% 0% (7) 90.0000 BBB/BBB
----------------
(1) Subject to a variance of plus or minus 5.0%
(2) A description of the ratings of the Offered Certificates is set forth
under the heading "Rating of Certificates" on Page S-1 of the Summary of
Terms and under "Certificate Rating" in the main text of this Prospectus
Supplement.
(3) The Class 1A-PO Certificates are principal-only certificates and will not
be entitled to distributions in respect of interest.
(4) The Class 1A-WIO Certificates are interest-only certificates, have no
principal balance and will bear interest on the Class 1A-WIO Notional
Amount (initially, approximately $113,352,150), as described herein under
"Description of the Certificates--Distributions."
(5) The Class 1A-WIO Certificates will bear interest at approximately 0.4071%
per annum for purposes of the Distribution Date occurring in March 1999
and thereafter interest will accrue on the Class 1A-WIO Notional Amount
with respect to each Distribution Date at a per annum rate equal tot he
weighted average of the Net Mortgage Interest Rates of the Premium Pool 1
Mortgage Loans (based on the Scheduled Principal Balances of the Premium
Pool 1 Mortgage Loans as of such Distribution Date) minus 6.250%.
(6) The Class 2A Certificates will bear interest at approximately 6.2743% per
annum for purposes of the Distribution Date occurring in March 1999 and
thereafter interest will accrue on the Class 2A Certificates will respect
to each Distribution Date at a per annum rate equal to the weighted
average of the Net Mortgage Interest Rates of the Pool 2 Mortgage Loans
(based on the Scheduled Principal Balances of the Pool 2 Mortgage Loans as
of such Distribution Date).
(7) The Class M, Class B-1, Class B-3, Class B-4 and Class B-5 Certificates
will bear interest at approximately 6.2565% per annum for purposes of the
Distribution Date occurring in March 1999 and thereafter interest will
accrue on such Certificates with respect to each Distribution Date at a
per annum rate equal to (A) the sum of (i) the Subordinate Loan Pool
Component Balance of the Pool 1 Mortgage Loans, as of such Distribution
Date, multiplied by 6.250% and (ii) the Subordinate Loan Pool Component
Balance of the Pool 2 Mortgage Loans, as of such Distribution Date,
multiplied by the weighted average Net Mortgage Interest Rate of such Pool
2 Mortgage Loans (based on Scheduled Principal Balances of the Mortgage
Loans as of such Distribution Date) divided by (B) the aggregate
Subordinate Loan Pool Component Balance for both Pools. The "Subordinate
Loan Pool Component Balance" at any time for either Pool shall equal the
then outstanding aggregate Scheduled Principal Balance oft the Mortgage
Loans in such Pool minus the then outstanding Certificate Principal
Balance of the Group 1A Certificates, with respect to Pool 1, or the Class
2A Certificates, with respect to Pool 2.
(8) Expressed as a percentage of the Certificate Principal Balance or Class
Notional Amount of the relevant Class of Offered Certificates to be
purchased. In addition, as to each Class of the Offered Certificates, the
Underwriters will pay the Depositor accrued interest at the initial
Pass-Through Rate therefor from the Cut-Off Date to but not including the
Closing Date.
