SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report: September 25, 1998
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(Date of earliest event reported)
CAPCO America Securitization Corporation
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(Exact name of registrant as specified in its charter)
Delaware 333-22133 13-3672336
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(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
Two World Financial Center, Building B, New York, New York 10281
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Address of Principal Executive Office
Registrant's telephone number, including area code: (212) 667-9300
<PAGE>
Item 5. Other Events.
Attached as an exhibit to this Current Report is the Underwriting Agreement
(as defined below) for the CAPCO America Securitization Corporation, Commercial
Mortgage Pass-Through Certificates, Series 1998-D7 (the "Certificates"). On
September 25, 1998, Morgan Stanley & Co. Incorporated, Nomura Securities
International, Inc. and Merrill Lynch Pierce, Fenner & Smith Incorporated
(collectively, the "Underwriters") entered into an underwriting agreement dated
September 25, 1998 with CAPCO America Securitization Corporation (the
"Underwriting Agreement") in connection with the sale of the Class A-1A, Class
A-1B, Class A-2, Class A-3, Class A-4 and Class A-5 Certificates (the "Public
Certificates"). The Public Certificates were offered pursuant to a prospectus
dated September 25, 1998 (the "Prospectus") and a prospectus supplement dated
September 25, 1998, as supplemented by a supplement dated September 28, 1998
(together, the "Prospectus Supplement"). The section entitled "Method of
Distribution" in the Prospectus Supplement is revised insofar as it states that
all Public Certificates will be sold to the Underwriters pursuant to the
Underwriting Agreement. Only $65,000,000 of the $68,508,970 Initial Certificate
Balance of the Class A-3 Certificates and $25,000,000 of the Class $59,166,838
Initial Certificate Balance of the A-4 Certificates were sold to the
Underwriters pursuant to the Underwriting Agreement.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
Item 601(a) of
Regulation S-K
Exhibit No. Exhibit No. Description
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1 1 Underwriting Agreement dated
September 25, 1998.
<PAGE>
Pursuant to the requirements of the Securities Act of 1934, the Registrant
has duly caused this report to be signed on behalf of the Registrant by the
undersigned thereunto duly authorized.
CAPCO AMERICA SECURITIZATION CORPORATION
By: /s/ Marlyn A. Marincas
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Name: Marlyn A. Marincas
Title: Director
Date: October 13, 1998
<PAGE>
Exhibit Index
Item 601(a) of
Regulation S-K
Exhibit No. Exhibit No. Description
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1 1 Underwriting Agreement dated
September 25, 1998.
CAPCO AMERICA SECURITIZATION CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-D7,
Class A-1A, Class A-1B, Class A-2, Class A-3, Class A-4 and Class A-5
UNDERWRITING AGREEMENT
September 25, 1998
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Nomura Securities International, Inc.
2 World Financial Center - Building B
New York, New York 10281-1198
Merrill Lynch, Pierce, Fenner & Smith Incorporated
World Financial Center, North Tower
New York, New York 10281
Ladies and Gentlemen:
CAPCO America Securitization Corporation, a Delaware corporation (the
"Company"), proposes to sell, pursuant to the terms of this Underwriting
Agreement (this "Agreement"), to Nomura Securities International, Inc. ("NSI"),
Morgan Stanley & Co. Incorporated ("Morgan Stanley") and Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch", and together with NSI and Morgan
Stanley, the "Underwriters"), CAPCO America Securitization Corporation,
Commercial Mortgage Pass-Through Certificates, Series 1998-D7, Class A-1A, Class
A-1B, Class A-2, Class A-3, Class A-4 and Class A-5 Certificates, in the
original Certificate Balances set forth in Schedule I hereto (collectively, the
"Offered Certificates"). The CAPCO America Securitization Corporation,
Commercial Mortgage Pass-Through Certificates, Series 1998-D7 will also consist
of the Class PS-1, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class
B-6 Certificates (collectively, the "Private Certificates"), and $3,508,970
original Certificate Balance of Class A-3 Certificates, $34,166,838 original
Certificate Balance of Class A-4 Certificates and the Class B-6H, Class R, Class
LR, Class V-1 and Class V-2 Certificates (collectively, the "Retained
Certificates"; the Offered Certificates, the Private Certificates and the
Retained Certificates together constitute the "Certificates"). The Certificates
will be issued pursuant to a Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement") to be dated as of September 11, 1998 (the "Cut-off Date"),
by and between the Company, The Capital Company of America Client Services LLC
as servicer (the "Servicer"), AMRESCO Services, L.P. as co-servicer and
operating advisor (the "Co-Servicer"), AMRESCO Management, Inc. as special
servicer (the " Special Servicer"), LaSalle National Bank as trustee (the
"Trustee"), and ABN AMRO Bank N.V. as fiscal agent (the "Fiscal Agent"). Each
Certificate will evidence the holder's beneficial ownership interest in a trust
fund (the "Trust Fund") consisting primarily of a mortgage pool (the "Mortgage
Pool") consisting of 193 fixed-rate mortgage loans, with original terms to
maturity of generally not more than 30 years (the "Mortgage Loans"), secured by
first liens on 365 commercial and multifamily residential properties (the
"Mortgaged Properties"). The Offered Certificates are described more fully in
Schedule I hereto and in a Prospectus Supplement dated September 25, 1998 (the
"Prospectus Supplement") and Prospectus dated September 25, 1998 (the
"Prospectus," and together with the Prospectus Supplement, the "Final
Prospectus") furnished to the Underwriters by the Company.
Elections will be made to treat designated portions of the Trust Fund (such
portions of the Trust Fund, the "Trust REMIC"), and the Trust REMIC will
qualify, as two separate real estate mortgage investment conduits (the
"Upper-Tier REMIC" and the "Lower-Tier REMIC," respectively) within the meaning
of Code Section 860D. The Lower-Tier REMIC will hold the Mortgage Loans
(exclusive of the Excess Interest and the Default Interest) and any REO
Property, and will issue (i) certain uncertificated classes of regular interests
(the "Lower-Tier Regular Interests") to the Upper-Tier REMIC and (ii) the Class
LR Certificates, which will represent the sole class of residual interests in
the Lower-Tier REMIC. The Upper-Tier REMIC will hold the Lower-Tier Regular
Interests in the Upper-Tier REMIC Distribution Account in which distributions
thereon will be deposited, and will issue (i) the classes of regular interests
represented by the Regular Certificates and (ii) the Class R Certificates, which
will represent the sole class of residual interests in the Upper-Tier REMIC. The
Class V-1 and Class V-2 Certificates will represent pro rata undivided
beneficial interests in the portion of the Trust Fund consisting of Default
Interest and Excess Interest in respect of the Mortgage Loans, respectively, and
such portions will be treated as a grantor trust for federal income tax
purposes.
All but eighteen of the Mortgage Loans will be purchased by the Company
from The Capital Company of America LLC, a Delaware limited liability company
("CCA"), pursuant to a Mortgage Loan Purchase and Sale Agreement (the "CCA
Mortgage Loan Purchase Agreement"), to be dated as of the Cut-off Date, between
the Company and CCA. Eighteen of the Mortgage Loans will be purchased by the
Company from Nomura Holding Trust ST I, a Delaware business trust ("Holding
Trust"), pursuant to a Mortgage Loan Purchase and Sale Agreement (the "STI
Mortgage Loan Purchase Agreement" and, together with the CCA Mortgage Loan
Purchase Agreement, the "Mortgage Loan Purchase Agreements"), to be dated as of
the Cut-off Date, between the Company and Holding Trust.
Capitalized terms used but not otherwise defined herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.
1. Representations and Warranties. The Company represents and warrants to,
and agrees with, each Underwriter that:
(a) The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, with exhibits thereto, on Form S-3 (File
No. 333-22133) (the "Registration Statement") for the registration of Commercial
Mortgage Pass-Through Certificates, issuable in series, including the Offered
Certificates, under the Securities Act of 1933, as amended (the "1933 Act"). The
Registration Statement has become effective and copies of it have heretofore
been delivered to the Underwriters. The Company meets the requirements for use
of Form S-3 under the 1933 Act, and the Registration Statement meets the
requirements set forth in Rule 415(a)(1)(x) under the 1933 Act and complies in
all other material respects with the 1933 Act and the rules and regulations
thereunder. With the consent of the Underwriters, on September 2, 1998, the
Company filed with the Commission a preliminary prospectus supplement and
prospectus, each dated September 2, 1998, pursuant to Rule 424(b)(3) under the
1933 Act. With the consent of the Underwriters, the Company will file with the
Commission, on or before September 29, 1998, the Final Prospectus pursuant to
Rule 424(b)(5) under the 1933 Act. The Company has previously advised the
Underwriters of all further information (financial and other) with respect to
the Offered Certificates and the Mortgage Pool to be set forth therein. The
Company will file with the Commission on Form 8-K on or before September 29,
1998, additional Marketing Materials provided to it by the Underwriters pursuant
to Section 4(b) hereof. Subject to an Underwriter's compliance with its
obligations under Section 4(b) hereof, the Company shall file the Marketing
Materials (if any) provided to it by such Underwriter under Section 4(b) hereof
with the Commission on Form 8-K, concurrently (to the extent practicable) with
the filing of the Final Prospectus in accordance with Rule 424(b)(5) under the
1933 Act. The Company shall also file with the Commission, within fifteen days
of the issuance of the Offered Certificates, a Current Report on Form 8-K
setting forth specific information concerning the Mortgage Pool.
(b) As of (i) the date hereof, (ii) the date on which the Final Prospectus
Supplement is first filed pursuant to Rule 424(b)(5) under the 1933 Act, (iii)
the date on which, prior to the Closing Date (as hereinafter defined), any
amendment to the Registration Statement becomes effective, (iv) the date on
which any amendment or supplement to the Final Prospectus is filed with the
Commission and (v) the Closing Date, the Registration Statement, as amended as
of any such time, and the Final Prospectus, as amended or supplemented as of any
such time (in each case, whether in physical form, delivered through electronic
internet or other electronic media and any computer disc filed or delivered
therewith), (x) each complies and will comply in all material respects with the
applicable requirements of the 1933 Act and the rules and regulations
thereunder, and (y) do not contain and will not contain any untrue statement of
a material fact, and do not omit and will not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representation or
warranty to any Underwriter (1) as to statements contained in or omitted from
the Marketing Materials required to be provided by any Underwriter to the
Company pursuant to Section 4(b) hereof (except to the extent that any such
statement or omission is based on statements or information (or omissions
therefrom) provided by the Company to such Underwriter and provided that a Final
Prospectus was timely delivered to the persons who received such Marketing
Materials and purchased Offered Certificates) or (2) as to statements contained
in or omitted from the Final Prospectus and any amendment or supplement thereto
made in reliance upon and in conformity with the Underwriters' Information
(defined herein).
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, has full
power and authority (corporate and other) and all requisite approvals, orders,
licenses, certificates and permits of and from all governmental or regulatory
officials and bodies necessary to own its properties and to conduct its business
as described in the Registration Statement and Final Prospectus and to enter
into and perform its obligations under this Agreement, the Pooling and Servicing
Agreement and the Mortgage Loan Purchase Agreements. All such authorizations,
approvals, orders, licenses, certificates and permits are in full force and
effect and contain no unduly burdensome provisions. Except as may be otherwise
set forth in or contemplated by the Registration Statement or the Final
Prospectus, there are no legal or governmental proceedings pending or, to the
best knowledge of the Company, threatened that would result in a material
modification, suspension or revocation of any such authorization, approval,
order, license, certificate, and permit.
(d) As of (i) the date hereof, (ii) the date on which the Final Prospectus
is first filed pursuant to Rule 424(b)(5) under the 1933 Act, (iii) the date on
which, prior to the Closing Date, any post-effective amendment to the
Registration Statement becomes effective, (iv) the date on which any amendment
or supplement to the Final Prospectus is filed with the Commission and (v) the
Closing Date, there has not and will not have been (x) any request by the
Commission for any further amendment to the Registration Statement or any
amendment or supplement to the Final Prospectus or for any additional
information, (y) any issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or the institution or threat of any proceeding for that purpose or (z)
any notification with respect to the suspension of the qualification of the
Offered Certificates for sale in any jurisdiction or any initiation or threat of
any proceeding for such purpose.
(e) This Agreement has been duly authorized, executed and delivered by the
Company. The Pooling and Servicing Agreement and each Mortgage Loan Purchase
Agreement, when executed and delivered as contemplated hereby, will have been
duly authorized, executed and delivered by the Company. This Agreement
constitutes, and the Pooling and Servicing Agreement and each Mortgage Loan
Purchase Agreement when so executed and delivered will constitute, a legal,
valid, binding and enforceable agreement of the Company, 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.
(f) As of the Closing Date, the Offered Certificates, the Pooling and
Servicing Agreement and each Mortgage Loan Purchase Agreement will each conform
in all material respects to the respective descriptions thereof contained in the
Final Prospectus. As of the Closing Date, the Offered Certificates will be duly
and validly authorized and, when duly and validly executed, countersigned and
delivered in accordance with the Pooling and Servicing Agreement and delivered
to the Underwriters against payment therefor as provided herein, will be duly
and validly issued and outstanding and entitled to the benefits of the Pooling
and Servicing Agreement.
(g) As of the Closing Date, each of the Mortgage Loans will meet, in all
material respects, the descriptions thereof in the Final Prospectus, and on the
Closing Date, the Company (pursuant to the Pooling and Servicing Agreement) will
assign to the Trustee for the benefit of the Certificateholders certain
representations and warranties with respect to the Mortgage Loans made by CCA to
the Company in the CCA Mortgage Loan Purchase Agreement, and certain
representations and warranties made (or assigned) by the Holding Trust in the
Holding Trust Mortgage Loan Purchase Agreement, and such representations and
warranties will be true and correct in all material respects. The written
information (including information on electromagnetic tape or that was otherwise
provided in electronic form) regarding the Mortgage Loans that was provided to
the Rating Agencies and the Underwriters (including any supplement or amendment
thereto, the "Mortgage Pool Information"), taken together with the Prospectus
Supplement, will not, as of the Closing Date, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(h) Immediately prior to the assignment of the Mortgage Loans to the
Trustee, the Company will have good title to, and will be the sole owner of,
each Mortgage Loan free and clear of any pledge, mortgage, lien, security
interest or other encumbrance of any other person (collectively, "Liens").
(i) The Company is not in violation of its certificate of incorporation or
its by-laws or in default under any agreement, indenture or instrument, the
effect of which violation or default would be material to the Company or would
have a material adverse effect on its ability to perform its obligations under
this Agreement. Neither the issuance and sale of the Offered Certificates, nor
the execution and delivery by the Company of this Agreement, the Pooling and
Servicing Agreement or the Mortgage Loan Purchase Agreements, nor the
consummation by the Company of any of the transactions herein or therein
contemplated, nor compliance by the Company with the provisions hereof or
thereof, does or will conflict with or result in a breach of any term or
provision of the certificate of incorporation or by-laws of the Company or
conflict with, result in a breach, violation or acceleration of, or constitute a
default under, the terms of any indenture or other agreement or instrument to
which the Company is a party or by which it is bound, or any statute, order or
regulation applicable to the Company of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the Company.
The Company is not bound by or in breach or violation of any indenture or other
agreement or instrument, or subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or governmental
body having jurisdiction over it, that materially and adversely affects, or may
in the future materially and adversely affect, (i) the ability of the Company to
perform its obligations under this Agreement, the Pooling and Servicing
Agreement or the Mortgage Loan Purchase Agreements or (ii) the business,
operations, financial conditions, properties or assets of the Company.
(j) There are no actions or proceedings against, or investigations of, the
Company pending, or, to the knowledge of the Company, threatened, before any
court, arbitrator, administrative agency or other tribunal (i) asserting the
invalidity of this Agreement, the Pooling and Servicing Agreement, the Mortgage
Loan Purchase Agreements or the Offered Certificates, (ii) seeking to prevent
the issuance of the Offered Certificates or the consummation of any of the
transactions contemplated by this Agreement, the Pooling and Servicing Agreement
or the Mortgage Loan Purchase Agreements, (iii) that might materially and
adversely affect the performance by the Company of its obligations under, or the
validity or enforceability of, this Agreement, the Pooling and Servicing
Agreement, the Mortgage Loan Purchase Agreements or the Offered Certificates or
(iv) seeking to affect adversely the federal income tax attributes of the
Offered Certificates as described in the Final Prospectus.
(k) Any taxes, fees and other governmental charges in connection with the
execution and delivery of this Agreement, the Pooling and Servicing Agreement
and the Mortgage Loan Purchase Agreements or the execution, delivery and sale of
the Offered Certificates have been or will be paid at or prior to the Closing
Date.
(l) Neither the Company nor the Trust Fund is, and neither the issuance and
sale of the Offered Certificates in the manner contemplated by the Final
Prospectus nor the activities of the Trust Fund pursuant to the Pooling and
Servicing Agreement will cause the Company or the Trust Fund to be, an
"investment company" or under the control of an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended.
(m) Upon execution and delivery to the Trustee of the Pooling and Servicing
Agreement, payment by the Underwriters for the Offered Certificates, and
delivery to the Underwriters of the Offered Certificates, the Trust Fund will
own the Mortgage Loans and the Underwriters will acquire title to the Offered
Certificates, in each case free of Liens except to the extent permitted by the
Pooling and Servicing Agreement.
(n) No authorization, approval or consent of any court or governmental
authority or agency is necessary in connection with the offering, issuance or
sale of the Offered Certificates pursuant to this Agreement and the Pooling and
Servicing Agreement, except such as have been, or as of the Closing Date will
have been, obtained or such as may otherwise by required under applicable state
securities laws in connection with the purchase and offer and sale of the
Offered Certificates by the Underwriters.
(o) Under generally accepted accounting principles ("GAAP") and for federal
income tax purposes, the Company will report the transfer of the Mortgage Loans
to the Trustee in exchange for the Certificates and the sale of the Offered
Certificates to the Underwriters pursuant to this Agreement as a sale of the
interest in the Mortgage Loans evidenced by the Certificates (other than the
Retained Certificates).
2. Purchase and Sale. Subject to the terms and conditions set forth herein
and in reliance upon the representations and warranties contained herein, the
Company shall sell to the Underwriters, and each Underwriter (severally, and not
jointly with the other Underwriters) shall purchase from the Company, on the
Closing Date, at the related purchase price set forth on Schedule I hereto,
Offered Certificates of each Class thereof having the actual principal or
notional amount set forth in Schedule I, plus accrued interest at the related
Pass-Through Rate from the Cut-off Date to, but not including, the Closing Date.
In connection with the transactions contemplated hereby, each Underwriter shall
be entitled to be paid the fees described in Schedule II hereto.
3. Delivery and Payment. Delivery of the Offered Certificates shall be made
in book-entry form through the facilities of The Depository Trust Company
("DTC") in the United States and Cedel Bank, societe anonyme ("Cedel") and The
Euroclear System ("Euroclear") in Europe, on or about September 30, 1998 (the
"Closing Date"), which date may be postponed by agreement among the Underwriters
and the Company. Payment shall be made to the Company in immediately available
Federal Funds, wired to such bank as may be designated by the Company, against
delivery of the Offered Certificates. Each Class of Offered Certificates shall
be represented by one or more definitive global certificates registered in the
name of Cede & Co., as nominee of DTC.
The Company shall make the Offered Certificates available for inspection
and checking by the Underwriters in New York, New York, not later than 10:00
a.m. on the business day prior to the Closing Date.
4. Offering by the Underwriters.
(a) Any Underwriter may prepare and provide to prospective investors (x)
items similar to computational materials ("Computational Materials") as defined
in the no-action letter of May 20, 1994 issued by the Commission to Kidder,
Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated and Kidder
Structured Asset Corporation, as made applicable to other issuers and
underwriters by the Commission in response to the request of the Public
Securities Association dated May 24, 1994 (together, the "Kidder/PSA Letter")
and (y) items similar to ABS term sheets, structural term sheets and collateral
term sheets (collectively, "ABS Term Sheets," and together with Computational
Materials, "Marketing Materials") as defined in the no-action letter of February
17, 1995 issued by the Commission to the Public Securities Association (the "PSA
Letter" and, together with the Kidder/PSA Letter, the "No-Action Letters"),
subject to the following conditions:
(i) Such Underwriter shall comply with all applicable laws and
regulations, including the No-Action Letters, in connection with the use of
Marketing Materials. All Marketing Materials provided to prospective
investors that are required to be filed pursuant to the No-Action Letters
shall bear a legend substantially in a form approved by the Company. The
Company shall have the right to require additional specific legends or
notations to appear on any Marketing Materials, the right to require
changes regarding the use of terminology and the right to determine the
types of information appearing therein.
(ii) Such Underwriter shall provide to the Company, for filing on Form
8-K as provided in Section 1(a) hereof, copies (in such format as required
by the Company) of all Marketing Materials that are required to be filed
with the Commission pursuant to the No-Action Letters. Such Underwriter
may, or if requested by the Company shall, provide copies of the foregoing
in a consolidated or aggregated form including all information required to
be filed if filing in such format is permitted by the No-Action Letters.
All Marketing Materials described in this subsection (ii) must be provided
to the Company not later than 12:00 noon New York City time at least two
business days before filing thereof is required in accordance with the
No-Action Letters.
(iii) All information included in the Computational Materials shall be
generated based on substantially the same methodology and assumptions that
are used to generate the information in the Prospectus Supplement as set
forth therein; provided that the Computational Materials may include
information based on alternative methodologies or assumptions if specified
therein. All information included in the ABS Term Sheets shall be of the
type that is included in the Prospectus Supplement.
(iv) The Company shall not be obligated to file any Marketing
Materials that have been determined to contain any material error or, when
read together with the Final Prospectus, any material omission. If, within
the period during which the Final Prospectus is required to be delivered
under the 1933 Act, any Marketing Materials are determined, in the
reasonable judgment of the Company or such Underwriter, to contain a
material error or omission, then (unless the material error or omission was
corrected in the Final Prospectus) such Underwriter (if it has identified,
or been notified in writing by the Company of, such error or omission)
shall prepare a corrected version of such Marketing Materials, shall
circulate such corrected Marketing Materials to all recipients of the prior
versions thereof that either indicated orally to such Underwriter that they
would purchase all or any portion of the Offered Certificates, or actually
purchased all or any portion thereof, and shall deliver copies of such
corrected Marketing Materials (marked, "AS CORRECTED") to the Company for
filing with the Commission in a subsequent Form 8-K submission. No
Underwriter shall disseminate any Marketing Materials if, as of the date
that such Underwriter disseminates such Marketing Materials, such
Underwriter has any knowledge or reason to believe that such Marketing
Materials contained any material error or omission.
(v) Such Underwriter shall be deemed to have represented, as of the
Closing Date, that, except for Marketing Materials provided to the Company
pursuant to subsection (ii) above, such Underwriter did not provide any
prospective investors with any information in written or electronic form in
connection with the offering of the Offered Certificates that were not
permitted to be disseminated by applicable laws and regulations or that is
required to be filed with the Commission in accordance with the No-Action
Letters.
(vi) In the event any delay in the delivery by any Underwriter to the
Company of all Marketing Materials required to be delivered in accordance
with subsection (ii) above, the Company shall have the right to delay the
release of the Final Prospectus to investors or to any Underwriter, to
delay the Closing Date and to take other appropriate actions as necessary
to permit the Company to comply with the No-Action Letters and other
applicable laws and regulations.
(vii) Such Underwriter shall be deemed to have represented that it has
in place, and covenants that it shall maintain, internal controls and
procedures sufficient to ensure full compliance with all applicable legal
requirements (including the No-Action Letters), and all provisions of this
Agreement, with respect to the generation and use of Marketing Materials in
connection with the offering of the Offered Certificates.
(b) Each Underwriter represents and warrants that, if and to the extent it
has provided any prospective investors with any Marketing Materials prior to the
date hereof, all of the applicable conditions set forth in paragraph (a) above
have been satisfied with respect thereto.
(c) It is understood that the Underwriters propose to offer the Offered
Certificates for sale to the public as set forth in the Final Prospectus.
(d) Each Underwriter represents that as of the date hereof and as of the
Closing Date, such Underwriter has complied with all of its obligations
hereunder including this Section 4 and, with respect to all Marketing Materials
provided by such Underwriter to the Company pursuant to this Section 4(d), if
any, such Marketing Materials do not and will not contain any untrue statement
of a material fact and do not omit and will not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that such Underwriter makes no such
representation to the extent that any such untrue statement or alleged untrue
statement or omission or alleged omission was made therein in reliance upon and
in conformity with information furnished by the Company to such Underwriter.
(e) Each Underwriter shall take reasonable steps to offer or sell the Class
A-2, Class A-3, Class A-4 or Class A-5 Certificates in a manner that would not
cause the assets of the Trust Fund to be regarded as plan assets and subject to
the fiduciary responsibility provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or the prohibited transaction
provisions of the Internal Revenue Code of 1986, as amended (the "Code") or give
rise to a fiduciary duty under ERISA or Section 4975 of the Code on the part of
the Company, the Servicer or the Trustee or constitute a prohibited transaction
under ERISA or Section 4975 of the Code.
(f) Notwithstanding anything to the contrary set forth in Section 5(g) and
Section 7, NSI shall be obligated to pay the reasonable expenses of the Company
incurred in connection with the Company's performance of the Evergreen
Covenants.
5. Covenants of the Company. The Company covenants and agrees with the
Underwriters that:
(a) The Company shall promptly advise each Underwriter (i) when the Final
Prospectus shall have been filed or transmitted to the Commission for filing
pursuant to Rule 424(b)(5), (ii) when any amendment to the Registration
Statement shall have become effective (unless such amendment does not relate to
the Offered Certificates) or any further amendment to the Registration Statement
(unless such amendment does not relate to or affect the Offered Certificates) or
any amendment or supplement to the Final Prospectus shall have been filed with
the Commission, (iii) of any proposal or request to amend the Registration
Statement (unless such amendment does not relate to or affect the Offered
Certificates) or to amend or supplement the Final Prospectus or any request by
the Commission for any additional information (unless such request does not
relate to or affect the Offered Certificates), (iv) when notice is received from
the Commission that any post-effective amendment to the Registration Statement
has become or will become effective (unless such amendment does not relate to or
affect the Offered Certificates), (v) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or the institution or threatening of any
proceeding for that purpose (unless such stop order does not relate to the
Offered Certificates), (vi) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Offered Certificates
for sale in any jurisdiction or the institution or threatening of any proceeding
for that purpose and (vii) of the occurrence of any event that would cause the
Registration Statement, as then in effect, to contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, or that would cause
the Final Prospectus, as then in effect, to contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company shall use
its best efforts to prevent the issuance of any such stop order or suspension
and, if issued, to obtain as soon as possible the withdrawal thereof. The
Company shall not file any amendment to the Registration Statement (unless such
amendment does not relate to or affect the Offered Certificates) or any
amendment or supplement to the Final Prospectus unless the Company has furnished
a copy to each Underwriter for its review prior to filing and shall not file any
such proposed amendment or supplement to which any Underwriter reasonably
objects. Subject to the foregoing sentence, the Company shall cause the Final
Prospectus to be transmitted to the Commission for filing pursuant to Rule
424(b)(5) under the 1933 Act or will cause the Final Prospectus to be filed with
the Commission pursuant to said Rule 424(b)(5).
(b) If, at any time when a prospectus (other than a Market-Making
Prospectus as contemplated by paragraph (c) below) relating to the Offered
Certificates is required to be delivered under the 1933 Act, any event or
circumstance occurs as a result of which the Final Prospectus, as then amended
or supplemented, would include any untrue statement of a material fact or omit
to state any material fact 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, or if it shall be necessary to amend or supplement the
Final Prospectus to comply with the 1933 Act or the rules and regulations
thereunder, the Company promptly shall prepare and file with the Commission, at
the expense of the Company, subject to paragraph (a) of this Section 5, an
amendment or supplement that will correct such statement or omission or an
amendment or supplement that will effect such compliance and, if such amendment
or supplement is required to be contained in a post-effective amendment to the
Registration Statement, the Company shall use its best efforts to cause such
post-effective amendment to the Registration Statement to be made effective as
soon as possible.
(c) In addition to the obligations of the Company set forth in paragraph
(b) above, until the earliest of the date upon which (i) NSI and any servicer or
subservicer of any Mortgage Loan are, directly or indirectly, under common
control, (ii) the staff of the Commission has acknowledged to the Company in
writing that NSI may engage in secondary market trading in the Offered
Certificates without the necessity of delivering a Market-Making Prospectus and
(iii) NSI delivers written notice to the Company to the effect that NSI will no
longer make a market in the Offered Certificates (the "Market-Making Prospectus
Cessation Date"), if any event occurs as a result of which the Final Prospectus,
as then amended or supplemented, would include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, the Company promptly shall prepare and
file with the Commission a Current Report on Form 8-K or other appropriate
report under the 1934 Act ("Exchange Act Report") that will correct such
statement or omission; provided that the Company shall not file any such
Exchange Act Report (other than a routine Exchange Act Report prepared by the
Servicer on a monthly basis or otherwise as contemplated by the Pooling and
Servicing Agreement) unless the Company has furnished a copy to NSI for its
review prior to filing, and shall not file any such proposed Exchange Act Report
to which NSI reasonably and timely objects.
(d) The Company shall (i) furnish to the Underwriters and to counsel for
the Underwriters, without charge, signed copies of the Registration Statement
(including all exhibits thereto and documents incorporated by reference therein)
and each post-effective amendment thereto which shall become effective on or
prior to Closing Date and, so long as delivery of a prospectus by the
Underwriters or dealer may be required by the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), as many copies of the Final
Prospectus and any amendments and supplements thereto as may be reasonably
requested, and (ii) promptly file, or cause to be promptly filed, all reports
and any information statements required to be filed by the Company or the Trust
Fund with the Commission pursuant to the 1934 Act.
In addition, until the Market-Making Prospectus Cessation Date, the Company
(i) shall not file with the Commission, or request the Servicer pursuant to
Section 3.22(a) of the Pooling and Servicing Agreement to file with the
Commission, a Form 15 under the 1934 Act relating to the Trust Fund, and shall
cause all Exchange Act Reports to be filed as contemplated by the Pooling and
Servicing Agreement and paragraph (c) above from and after the date upon which
such filings could terminate as a result of a permitted filing of a Form 15 and
(ii) shall prepare and deliver to NSI, within a reasonable time following NSI's
request therefor made in contemplation of a secondary market sale of any Offered
Certificate, a prospectus (a "Market-Making Prospectus"), substantially in the
form of the Final Prospectus but updated to reflect events or circumstances that
occurred or came into existence following the Closing Date that, if not
disclosed in such prospectus, would result in the prospectus including any
untrue statement of a material fact or omitting to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
covenants ("Evergreen Covenants") of the Company set forth in this paragraph and
in Section 5(c) hereof shall not inure to the benefit of Morgan Stanley or
Merrill Lynch. Promptly following the date hereof, the Company and NSI shall
negotiate in good faith to reach agreement with respect to procedures reasonably
necessary to achieve such compliance. If the Company reasonably believes that
the Final Prospectus, as updated as contemplated by this paragraph, contains a
material misstatement or omission, it shall notify NSI of that belief and the
basis therefor and, upon request of the Company in writing, NSI shall cease
market-making activities in the affected Class or Classes of Offered
Certificates for such period as shall be necessary for the Company to correct
such misstatement or omission in the Final Prospectus. (e) For so long as the
Offered Certificates shall remain outstanding, the Company shall deliver to each
Underwriter, as soon as available (i) each annual statement as to compliance
delivered by the Servicer or the Special Servicer to the Trustee pursuant to
Section 3.14 of the Pooling and Servicing Agreement (ii) each annual statement
of a firm of independent public accountants delivered to the Trustee pursuant to
Section 3.15 of the Pooling and Servicing Agreement, and (iii) from time to
time, such other information concerning the Certificates which may be furnished
by the Company, the Trustee, the Servicer or the Special Servicer, to the extent
such information has not been delivered to the Underwriters and the Company
possesses the same or can acquire it without unreasonable effort or expense,
including without limitation the reports described in the Prospectus Supplement
under "The Pooling and Servicing Agreement--Reports to Certificateholders;
Available Information."
(f) The Company shall furnish such information, execute such instruments
and take such action, if any, as may be required to qualify the Offered
Certificates for sale under the laws of such jurisdiction as the Underwriters
may designate and will maintain such qualifications in effect so long as
required for the distribution of the Offered Certificates; provided, however,
that the Company shall not be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that would
subject it to general or unlimited service of process in any jurisdiction where
it is not so subject.
(g) The Company shall pay all costs and expenses in connection with the
transactions herein contemplated, including, but not limited to, the fees and
disbursements of its counsel and of counsel to the Underwriters (as such counsel
fees were previously agreed upon); the costs and expenses of printing (or
otherwise reproducing) and delivering the Pooling and Servicing Agreement and
the Offered Certificates; the fees, costs and expenses of the Trustee (to the
extent permitted under the Pooling and Servicing Agreement, and except to the
extent that another party is obligated to pay such amounts thereunder); the fees
and disbursements of accountants for the Company; the costs and expenses in
connection with the qualification, or exemption from qualification, of the
Offered Certificates under state securities or "blue sky" laws (including filing
fees and reasonable fees and disbursements of counsel in connection therewith),
the preparation of any blue sky survey, any determination of the eligibility of
the Offered Certificates for investment by institutional investors and the
preparation of any legal investment survey; the expenses of listing the Class
A-1A, Class A-1B and Class A-2 Certificates on the Luxembourg Stock Exchange;
the expenses of printing any such blue sky survey and legal investment survey;
the cost and expenses in connection with the preparation, printing and filing of
any post-effective amendment to the Registration Statement (including exhibits
thereto), the Preliminary Prospectus, the Final Prospectus and any supplement or
amendment to the Final Prospectus, the preparation and printing of this
Agreement and the delivery to the Underwriters of copies of the Preliminary
Prospectus and of such copies of the Final Prospectus as each may reasonably
request; the fees of the Rating Agencies; and the out-of-pocket expenses of each
Underwriter (including its cost of funds incurred in connection with the failure
of any prospective investor that has agreed to purchase any Offered Certificate
to deliver to such Underwriter immediately available funds on the Closing Date
in payment thereof) incurred in connection with the purchase and sale of the
Offered Certificates.
(h) To the extent, if any, that the ratings provided with respect to the
Offered Certificates by any Rating Agency are conditional upon the furnishing of
documents or the taking of any other actions by the Company, the Company shall
use its best efforts to furnish such documents and take any such other actions.
(i) The Company shall enter into the Mortgage Loan Purchase Agreements and
the Pooling and Servicing Agreement on or prior to the Closing Date.
(j) The Company shall use the net proceeds received by it from the sale of
the Offered Certificates in the manner specified in the Final Prospectus under
"Use of Proceeds".
(k) The Company shall not, without the consent of each Underwriter,
exercise any right it may have under the Pooling and Servicing Agreement or
otherwise to terminate the book-entry system through the Depository with respect
to all or a portion of any Class of Offered Certificates.
(l) The Company shall use its best efforts to cause the Class A-1A, Class
A-1B and Class A-2 Certificates to be listed on the Luxembourg Stock Exchange.
(m) The Company shall cooperate with NSI as reasonably requested by NSI in
order to permit NSI to perform "due diligence" from time to time in connection
with secondary market trading in the Offered Certificates during the period
prior to the Market-Making Prospectus Cessation Date.
6. Conditions to the Obligation of the Underwriters. The obligation of each
Underwriter to purchase the Offered Certificates allocated to it shall be
subject to the accuracy of the representations and warranties on the part of the
Company contained herein as of the date hereof, as of the date of the
effectiveness of any post-effective amendment to the Registration Statement, as
of the date the Final Prospectus or any amendment or supplement to the Final
Prospectus is filed with the Commission and as of the Closing Date, to the
accuracy of the statements of the Company made in any certificates delivered
pursuant to the provisions hereof, to the performance by the Company in all
material respects of its obligations hereunder, and to the following additional
conditions:
(a) The Registration Statement shall remain effective and no stop order
suspending the effectiveness of the Registration Statement, as amended from time
to time, shall have been issued and not withdrawn and no proceedings for that
purpose shall have been instituted or threatened; and the Final Prospectus shall
have been filed or transmitted for filing with the Commission in accordance with
Rule 424(b)(5) under the 1933 Act.
(b) Each of the Underwriters shall have received a certificate, dated the
Closing Date, of a responsible officer of the Company, to the effect that the
signer of such certificate has carefully examined the Registration Statement,
the Final Prospectus and this Agreement and that to the best of his or her
knowledge, after reasonable investigation, (i) the representations and
warranties of the Company in this Agreement are true and correct in all material
respects at and as of the Closing Date with the same effect as if made on the
Closing Date; (ii) the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to the Closing Date; and (iii) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the knowledge of the signer, threatened.
(c) On the Closing Date, each Underwriter shall have received one or more
opinions, dated the Closing Date, of Cadwalader, Wickersham & Taft and in-house
counsel to the Company, in substantially the form set forth in Exhibits B-1, B-2
and B-3 hereto.
(d) The Underwriters shall have received from their counsel opinions, dated
the Closing Date, as to such matters as the Underwriters may reasonably require,
and the Company shall have furnished to such counsel such documents as it may
reasonably request for the purpose of enabling it to pass upon such matters.
(e) Each Underwriter shall have received from Price Waterhouse, certified
public accountants, a letter dated the date of the Prospectus Supplement and
satisfactory in form and substance to each Underwriter and counsel for the
Underwriters, to the effect that such accountants have performed certain
specified procedures as a result of which they confirmed certain information of
an accounting, financial or statistical nature set forth in the Final
Prospectus.
(f) Each Underwriter shall have received written confirmation that the
Offered Certificates shall have been rated not lower than the required ratings
set forth in Schedule I hereto, by each of Moody's Investor Services, Inc.
("Moody's") and Fitch IBCA, Inc. ("Fitch" and together with Moody's, the "Rating
Agencies") and as of the Closing Date, no such rating or ratings shall have been
qualified, withdrawn or downgraded.
(g) Each Underwriter shall have received from counsel for the Trustee and
the Fiscal Agent a favorable opinion, dated the Closing Date, in form and
substance satisfactory to each Underwriter and its counsel to the effect that
the Pooling and Servicing Agreement has been duly authorized, executed and
delivered by each of the Trustee and the Fiscal Agent and constitutes the legal,
valid, binding and enforceable agreement of each of the Trustee and the Fiscal
Agent, subject, as to enforceability, to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights in general and by
general principles of equity regardless of whether enforcement is considered in
a proceeding in equity or at law, and as to such other matters as may be agreed
upon by the Underwriters and the Trustee or the Fiscal Agent, as applicable. (h)
Each Underwriter shall have received from counsel for the Servicer a favorable
opinion, dated the Closing Date, in form and substance satisfactory to each
Underwriter and its counsel to the effect that the Pooling and Servicing
Agreement has been duly authorized, executed and delivered by the Servicer and
constitutes the legal, valid, binding and enforceable agreement of the Servicer,
subject, as to enforceability, to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights in general and by
general principles of equity regardless of whether enforcement is considered in
a proceeding in equity or at law, and as to such other matters as may be agreed
upon by the Underwriters and the Servicer.
(i) Each Underwriter shall have received from counsel for the Special
Servicer a favorable opinion, dated the Closing Date, in form and substance
satisfactory to each Underwriter and its counsel to the effect that the Pooling
and Servicing Agreement has been duly authorized, executed and delivered by the
Special Servicer and constitutes the legal, valid, binding and enforceable
agreement of the Special Servicer, subject, as to enforceability, to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights in general and by general principles of equity regardless of
whether enforcement is considered in a proceeding in equity or at law, and as to
such other matters as may be agreed upon by the Underwriters and the Special
Servicer.
(j) As of the Closing Date, the Underwriters shall have received any
opinions of counsel to the Company supplied to the Rating Agencies in connection
with the transactions contemplated herein, addressed to the Underwriters and
dated the Closing Date. Drafts of such opinions shall be furnished to the
Underwriters and its counsel when delivered to the Rating Agencies.
(k) Each Underwriter shall have received from each Mortgage Loan Seller and
its officers all such certificates as may be required to be delivered thereby
under the related Mortgage Loan Purchase Agreement.
(l) Each Underwriter shall have received from counsel for the Mortgage Loan
Sellers a favorable opinion, dated the Closing Date, in form and substance
satisfactory to each Underwriter and its counsel to the effect that each
Mortgage Loan Purchase Agreement has been duly authorized, executed and
delivered by the respective Mortgage Loan Seller and constitutes the legal,
valid, binding and enforceable agreement of such Mortgage Loan Seller, subject,
as to enforceability, to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights in general and by general
principles of equity regardless of whether enforcement is considered in a
proceeding in equity or at law, and as to such other matters as may be agreed
upon by the Underwriters and the Mortgage Loan Sellers.
(m) On or before the Closing Date, each Underwriter and counsel to the
Underwriters shall have been furnished with such other 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 of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with the issuance and
sale of the Offered Certificates as herein contemplated shall be satisfactory in
form and substance to each Underwriter and counsel to the Underwriters.
(n) [Reserved.]
(o) (A) Each Underwriter shall have received evidence, in form and
substance reasonably satisfactory to such Underwriter, to the effect that (i)
the aggregate level and nature of the capitalization of NHA and subsidiaries as
of 10:00 a.m., New York City time, on the date hereof is not less favorable than
the aggregate level and nature of the capitalization of NHA and subsidiaries as
of April 1, 1998, (ii) the aggregate level and nature of the capitalization of
CCA and subsidiaries as of 10:00 a.m., New York City time, on the date hereof is
not less favorable than the aggregate level and nature of the capitalization of
CCA and subsidiaries as of the consummation of the reorganization of NACC,
capitalization of CCA and related transactions that occurred on June 29, 1998
and (iii) NHA is obligated to restore to CCA, on or before November 30, 1998,
(A) capital in the amount of any reductions in the level of capitalization of
CCA that may occur during the period from (and including) the date hereof to
(and including) September 30, 1998 and (B) to the extent that internal or
independent financial data, reports, reviews or examinations indicate hereafter
that the amount of losses experienced by CCA and its subsidiaries in the conduct
of their business activities (including, without limitation, dealing in
securities and the origination, purchase and sale of mortgage loans) during the
period from (and including) June 29, 1998 to (and including) September 30, 1998
exceeds the amount of such losses as set forth in the statement attached hereto
as Exhibit C, capital in the amount of such excess; and (B) there shall not have
occurred after 10:00 a.m., New York City time, on the date hereof, or on any
date hereafter, any event that, in the good faith judgment of any Underwriter,
constitutes a material adverse change in the general affairs, business, key
personnel, capitalization, financial position or net worth of the Company and
its subsidiaries, whether or not arising in the ordinary course of business.
(p) The Final Prospectus (as amended or supplemented to and including the
Closing Date) shall contain the statements set forth on Exhibit D hereto
verbatim except for such alteration as may be approved by each Underwriter (and,
without limiting any of the other rights of any Underwriter under this
Agreement, the Company and CCA hereby confirm that such statements are true and
correct).
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, if
the Company is in breach of any covenants or agreements contained herein or if
any of the opinions and certificates referred to above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Underwriters and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Underwriters. Notice of such
cancellation shall be given to the Company in writing, or by telephone or
telegraph confirmed in writing.
7. Reimbursement of Underwriters' Expenses. If the sale of the Offered
Certificates provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 is not satisfied or
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof, other than by
reason of a default by any of the Underwriters, the Company shall reimburse the
Underwriters, upon demand, for all out-of-pocket expenses (including reasonable
fees and disbursements of such Underwriter's counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the
Offered Certificates.
8. Indemnification and Contribution. (a) Each of the Company, CCA, Nomura
Asset Capital Corporation ("NACC") and Nomura Holding America Inc. ("NHA"),
jointly and severally, shall indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of or based upon (I) any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Prospectus, the Final Prospectus (or any amendment or
supplement thereto), any Computational Materials (to the extent the
information set forth in such items is based upon the Mortgage Pool
Information), any ABS Term Sheet approved by the Company, or any
Market-Making Prospectus (including any Exchange Act Reports incorporated
therein) or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein
not misleading or (II) the occurrence of any Prohibited Capital Event (as
defined in Exhibit E hereto) provided, that (A) the foregoing indemnity
with respect to the Preliminary Prospectus, any Marketing Materials shall
not inure to the benefit of any Underwriter (or to the benefit of any
person controlling such Underwriter) from whom the person asserting claims
giving rise to any such losses, claims, damages, expenses or liabilities
purchased Certificates if such untrue statement or omission or alleged
untrue statement or omission was corrected in the Final Prospectus and the
corrected Final Prospectus shall have been furnished to such person at or
prior to the written confirmation of the sale of Offered Certificates to
such person and (B) the foregoing indemnity with respect to any
Market-Making Prospectus shall not inure to the benefit of any person other
than NSI (and each person who controls NSI within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act);
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever arising out of or based upon (I) any such untrue statement or
omission, or any such alleged untrue statement or omission, if such
settlement is effected with the written consent of the Company, or (II) any
such Prohibited Capital Event; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by such Underwriter),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon (I)
any such untrue statement or omission, or any such alleged untrue statement
or omission or (II) any such Prohibited Capital Event, in each case to the
extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this Section 8 shall not apply to any loss, liability,
claim, damage or expense to the extent arising out of any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with the Underwriters' Information.
(b) Each Underwriter, severally and not jointly, shall indemnify and hold
harmless the Company and each person, if any, who controls the Company within
the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act,
against any and all losses, liabilities, claims and damages as incurred, arising
out of any untrue statements or omissions, or alleged untrue statements or
omissions, made in the Preliminary Prospectus or the Final Prospectus (or any
amendment thereto) in reliance upon and in conformity with written information
furnished to the Company by the Underwriters expressly for use in the
Preliminary Prospectus or the Final Prospectus (or any amendment or supplement
thereto). It is hereby acknowledged that the statements set forth (i) in the
second sentence of the fourth paragraph, and the Allocation Table, under the
caption "Method of Distribution" and (ii) the first sentence of the third to the
last paragraph on the front cover of the Final Prospectus (collectively, the
"Underwriters' Information"), will constitute the only written information
furnished to the Company by the Underwriters expressly for use in the
Preliminary Prospectus or the Final Prospectus (or any amendment or supplement
thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this Section 8. An indemnifying
party may participate at its own expense in the defense of any such action and,
to the extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from the indemnified party,
to assume the defense thereof, with counsel satisfactory to such indemnified
party. In any such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have agreed to the retention of such counsel or (ii) the
indemnifying party shall not have assumed the defense of such action, with
counsel satisfactory to the indemnified party, within a reasonable period
following the indemnifying party's receiving notice of such action, or (iii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (or, if the Company is the
indemnifying party, one counsel for each Underwriter, provided that the Company
shall not be liable for the fees and expenses of more than one counsel for
Morgan Stanley and Merrill Lynch (and NSI, if neither Nomura Holding America
Inc. nor any of its affiliates owns any interest in CCA) unless representation
of both (or all) of such Underwriters by the same counsel would be inappropriate
due to actual or potential differing interests between (or among) them) (in
addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. Unless it shall assume the defense of any
proceeding, an indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but, if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party shall indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. If an indemnifying party
assumes the defense of any proceeding, it shall be entitled to settle such
proceeding with the consent of the indemnified party or, if such settlement
provides for release of the indemnified party in connection with all matters
relating to the proceeding that have been asserted against the indemnified party
in such proceeding by the other parties to such settlement, without the consent
of the indemnified party.
(d) If the indemnification provided for in this Section 8 (other than such
indemnification that is related to the occurrence of any Prohibited Capital
Event) is unavailable to an indemnified party under subsection (a) or (b) or
insufficient in respect of any losses, liabilities, claims or damages referred
to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company, CCA, NACC and NHA (collectively, the "CCA Entities") on the one
hand and each of the Underwriters on the other from the offering of the Offered
Certificates or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, 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 CCA Entities on the one hand and of each of the Underwriters on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the CCA Entities on the one
hand, and an Underwriter on the other, in connection with the offering of the
Offered Certificates shall be deemed to be in the same respective proportions
that the total net proceeds from the offering of the Certificates (before
deducting expenses) received by the CCA Entities and the total underwriting
discounts and commissions received by the Underwriter in respect thereof, bear
to the aggregate offering price of the Offered Certificates. The relative fault
of the CCA Entities on the one hand and of a Underwriter on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the CCA Entities or by the
Underwriter, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. In no event
shall any Underwriter be obligated to contribute more than the difference
between the aggregate price at which it acquired the Offered Certificates
purchased by it hereunder and the aggregate price at which it sold such
Certificates. It is hereby acknowledged that the respective Underwriters'
obligations under this paragraph (d) shall be several and not joint.
(e) The parties hereto agree that it would not be just and equitable if
contribution were determined by pro rata allocation or by any other method of
allocation that does not take account of the considerations referred to in
paragraph (d) above. The amount paid or payable by an indemnified party as a
result of the losses, liabilities, claims or damages referred to in this Section
8 shall be deemed to include, subject to the limitations set forth above, any
legal fees and disbursements or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such claim.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The remedies provided for in
this Section 8 are not exclusive and shall not limit any rights or remedies that
may otherwise be available to any indemnified party at law or in equity.
(f) The indemnity and contribution agreements contained in this Section 8
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by any CCA Entity,
any Underwriter, any of their respective directors or officers, or any person
controlling any CCA Entity or any Underwriter, and (iii) acceptance of and
payment for any of the Certificates.
9. Default by Any of the Underwriters. If any of the Underwriters shall
fail or refuse to purchase the Offered Certificates that it has agreed to
purchase hereunder and arrangements satisfactory to the non-defaulting
Underwriters and the Company for the purchase of such Offered Certificates are
not made within 36 hours after such default, this Agreement will terminate
without liability on the part of the non-defaulting Underwriters or the Company.
In any such case which does not result in termination of this Agreement, each of
the non-defaulting Underwriters and the Company shall have the right to postpone
the Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Final Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve the defaulting Underwriter from liability in respect of any such default
of such Underwriter under this Agreement. The term "Underwriter" as used in this
Agreement shall also include, for all purposes of this Agreement, any party not
initially party to this Agreement who, with the approval of the non-defaulting
Underwriters and the Company, purchases the Offered Certificates that the
defaulting Underwriter agreed, but failed or refused, to purchase.
10. Termination of Agreement.
(a) This Agreement shall be subject to termination in the absolute
discretion of any Underwriter, by notice given to the Company, if (A) after the
execution and delivery of this Agreement and prior to the Closing Date (i)
trading generally shall have been suspended or materially limited on or by, as
the case may be, either the New York Stock Exchange or the American Stock
Exchange, (ii) a general moratorium on commercial banking activities in New York
shall have been declared by either Federal or State of New York authorities, or
(iii) there shall have occurred any outbreak or escalation of hostilities or any
calamity or crisis that, in the judgment of such Underwriter, is material and
adverse and (B) in the case of any of the events specified in clauses (A)(i)
through (iii) above, such event singly or together with any other such event,
makes it, in the judgment of such Underwriter, impracticable to market the
Offered Certificates on the terms and in the manner contemplated in the Final
Prospectus.
(b) If any Underwriter terminates its obligations under this Agreement in
accordance with Section 10(a), the Company shall reimburse such Underwriter for
all reasonable out-of-pocket expenses (including reasonable fees and
disbursements of such Underwriter's counsel) that shall have been reasonably
incurred by such Underwriter in connection with the proposed purchase and sale
of the Offered Certificates.
(c) If the obligations of an Underwriter are terminated hereunder, the
Company shall have the option to terminate this Agreement in its entirety. If
the obligations of an Underwriter under this Agreement are terminated pursuant
to this Section, the Company does not exercise its option pursuant to the
preceding sentence and arrangements satisfactory to the non-terminating
Underwriters and the Company for the purchase of the Offered Certificates
originally allocated to the non-terminating Underwriters as set forth on
Schedule I hereto are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any of the parties
hereto except for the obligation, if any, of the Company to reimburse each
Underwriter for its respective expenses as set forth in subsection (b).
11. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given if mailed or transmitted by any standard
form of communication. Notices to Morgan Stanley shall be directed to 1585
Broadway, New York, New York 10036, Attention: General Counsel; notices to NSI
shall be directed to 2 World Financial Center, Building B, New York, New York
10281, Attention: General Counsel; notices to Merrill Lynch shall be directed to
World Financial Center, North Tower, 250 Vesey Street, New York, New York 10281,
Attention: MBS Operations; and notices to the Company shall be directed to 2
World Financial Center, Building B, New York, New York 10281, Attention: Legal
Department; or, as to any party, such other address as may hereafter be
furnished by such party to the others in writing.
12. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 8, and their successors
and assigns, and no other person will have any right or obligation hereunder.
13. Applicable Law; Counterparts. This Agreement will be governed by and
construed in accordance with the laws of the State of New York. This Agreement
may be executed in any number of counterparts, each of which shall for all
purposes be deemed to be an original and all of which shall together constitute
but one and the same instrument.
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this letter and
your acceptance shall represent a binding agreement between the Company, CCA,
NACC, NHA and the Underwriters.
Very truly yours,
CAPCO AMERICA SECURITIZATION CORPORATION
By:_________________________________
Name:
Title:
THE CAPITAL COMPANY OF AMERICA LLC
By:_________________________________
Name:
Title:
NOMURA ASSET CAPITAL CORPORATION
By:_________________________________
Name:
Title:
NOMURA HOLDING AMERICA INC.
By:_________________________________
Name:
Title:
<PAGE>
The foregoing Underwriting Agreement is hereby confirmed and accepted as of
the date first above written.
NOMURA SECURITIES INTERNATIONAL, INC.
By:_________________________________
Name:
Title:
<PAGE>
The foregoing Underwriting Agreement is hereby confirmed and accepted as of
the date first above written.
MORGAN STANLEY & CO. INCORPORATED
By:_________________________________
Name:
Title:
<PAGE>
The foregoing Underwriting Agreement is hereby confirmed and accepted as of
the date first above written.
MERRILL LYNCH, PIERCE FENNER & SMITH INCORPORATED
By:_________________________________
Name:
Title:
<PAGE>
EXHIBIT A
[RESERVED]
<PAGE>
EXHIBIT B-1
<PAGE>
EXHIBIT B-2
<PAGE>
EXHIBIT B-3
<PAGE>
EXHIBIT C
(Statement of Losses)
Revenues $(363,452,000)
Expenses $ 124,144,000
------------
Losses before taxes $(487,596,000)
Income tax benefit $ 212,104,000
------------
Net Loss $(275,492,000)
=============
<PAGE>
EXHIBIT D
(Required Statements in Final Prospectus)
Recent Developments
Following losses experienced by CCA, NACC (CCA's parent) and NHA (NACC's
parent), the Board of Directors (the "NSC Board") of the ultimate parent of all
of these companies, Nomura Securities Co., Ltd. ("NSC"), authorized NSC to
provide additional capital to NHA (which, in turn, authorized a capital
contribution to CCA) the effect of which was to substantially restore the total
capitalization (shareholder's equity plus subordinated debt) of NHA and CCA to
the levels that existed on April 1, 1998 (that is, approximately $843 million of
subordinated debt and common shareholder's equity) in the case of NHA, and to
the level that existed on June 29, 1998 (that is, approximately $500 million of
common shareholder's equity) in the case of CCA.
As of this date, and as authorized by the NSC Board as described above, NSC
has made an equity investment in NHA of approximately $380 million, and acquired
(through Nomura Global Funding plc) subordinate debt of NHA in the amount of
approximately $250 million. Accordingly, NHA has received a total of
approximately $628 million in cash from or at the direction of NSC and has wired
approximately $214 million of that amount to CCA as equity capital. In exchange
for the additional capital investment, NSC redeemed $300 million of subordinated
debt and $100 million of senior debt held by various Nomura entities on
September 24, 1998. Consequently, there is an incremental increase of $150
million in subordinated debt of NHA over the March 31, 1998 level. These
investments achieve the restoration of capital referred to above based on
current loss estimates. NHA and CCA have agreed that the equity contributed by
NHA to CCA is subject to increase or reduction based on the amount of CCA losses
finally determined as of September 30, 19989. NSC has not committed to make
additional capital contributions to NHA.
In another development, Ethan Penner, who was appointed Chief Executive
Officer and President of CCA at its formation on June 29, 1998, resigned that
office and was appointed Vice Chairman of the Board of Directors of CCA on
August 14, 1998. Mr. Penner resigned as Vice Chairman of the Board of Directors
on September 16, 1998. Also, William Wraith, IV, the co-chief executive officer
and co-president of NHA and chairman of the Board of Directors of NSI, and Mark
McGauley, the chief operating officer of NHA, have informed CCA of their
intention to resign from those positions. Both of Messrs. Wraith and McGauley
currently serve on the CCA Board of Directors.
<PAGE>
EXHIBIT E
For purposes of this Agreement, "Prohibited Capital Event" shall mean the
occurrence of any of the following events to the extent that, giving effect to
such event, the level and nature of the capitalization of CCA would be less
favorable that the level and nature of the capitalization of CCA that would be
in effect on that date of such event based on the assumption that NHA fully
performs its obligations referenced in Section 6(o) as and when such obligations
are required to be performed as contemplated by such Section:
(i) any dividend or other distribution, direct or indirect, on account
of any shares of any class of Capital Stock of CCA or any of its
subsidiaries now or hereafter outstanding, except a dividend payable solely
in shares of that class of stock or in any junior class of stock to the
holders of that class;
(ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares
of any class of Capital Stock of CCA or any of its subsidiaries now or
hereafter outstanding;
(iii) any payment made to redeem, repurchase or retire, or to obtain
the surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of Capital Stock of CCA or any of its
subsidiaries now or hereafter outstanding; and
(iv) any payment or prepayment of principal of, premium, if any, or
interest, fees or other charges on or with respect to, any redemption,
purchase, retirement, defeasance, sinking fund or similar payment and any
claim to rescission with respect to, any Indebtedness, other than
Indebtedness that (a) is in favor of any third party that is not an
Affiliate of the Company, NACC, CCA, NHA or Nomura Securities Co., Ltd.,
and (b) was incurred in the ordinary course of such Person's business and
in an arm's-length transaction.
For purposes of this Exhibit E:
"Capital Stock" means, with respect to any Person, any capital stock of
such Person, regardless of a class or designation, and all warrants, options,
purchase rights, conversion or exchange rights, voting rights, calls or claims
of any character with respect thereto.
"Indebtedness", as applied to any Person, means, at any time (without
duplication), (a) all indebtedness, obligations or other liabilities of such
Person (i) for borrowed money or evidenced by debt securities, debentures,
acceptances, notes or other similar instruments, and any accrued interest, fees
and charges relating thereto, (ii) under profit payment agreements or in respect
of obligations to redeem, repurchase or exchange any securities of such Person
or to pay dividends in respect of any capital stock, (iii) with respect to
letters of credit issued for such Person's account, (iv) to pay the deferred
purchase price of assets, property or services, except accounts payable and
accrued expenses arising in the ordinary course of business, (v) in respect of
capital leases or (vi) for payment of obligations owing to governmental
authorities or other Persons; (b) all indebtedness, obligations or other
liabilities of such Person or others secured by any lien or encumbrances on any
property or assets of such Person, whether or not such indebtedness, obligations
or liabilities are assumed by such Person, all as of such time; (c) all
indebtedness, obligations or other liabilities of such Person in respect of
interest rates exchange agreement, currency exchange agreements, caps, floors,
collars and other similar instruments and contracts, net of liabilities owed to
such Person by the counterparties thereon; and (d) the guarantee (other than by
endorsement of negotiable instruments for collection in the ordinary course of
business), direct or indirect, of all or any part of the indebtedness,
obligations or liabilities referred to in clauses (a) through (c) above.
<PAGE>
SCHEDULE I
Underwriting Agreement dated September 25, 1998
Offered Certificates:
- ---------------------
<TABLE>
<CAPTION>
Class Initial Aggregate Aggregate Principal Aggregate Principal Aggregate Principal
Designation Principal Amount Amount Amount of Class to Amount of Class to be
----------- of Class to be Purchased by of Class to be Purchased be Purchased by NSI Purchased by Merrill Lynch
Underwriters by Morgan Stanley ------------------- --------------------------
--------------------------- ------------------------
<S> <C> <C> <C> <C>
A-1A $264,500,000 $119,025,000 $119,025,000 $26,450,000
A-1B $632,344,698 $284,555,114 $284,555,114 $63,234,470
A-2 $62,280,882 $28,026,397 $28,026,397 $6,228,088
A-3 $65,000,000 $29,250,000 $29,250,000 $6,500,000
A-4 $25,000,000 $11,250,000 $11,250,000 $2,500,000
A-5 $21,798,308 $9,809,239 $9,809,239 $2,179,831
</TABLE>
Initial
Pass-Through Purchase
Rate Ratings(1) Price(2)
---- ---------- --------
5.8600% AAA/Aaa 100.4913
6.2600% AAA/Aaa 101.5222
6.4600% AA/Aa2 101.5148
6.7400% A/A2 99.9739
7.2300% BBB/Baa2 99.9938
6.6932% BBB/Baa3 95.8280
- -----------------
(1) By each of Fitch IBCA and Moody's Investors Service, Inc., respectively.
(2) Expressed as a percentage of the aggregate stated amount of the relevant
Class of Certificates to be purchased. The purchase price for each Class of
the Certificates will include accrued interest at the initial Pass-Through
Rate therefor on the aggregate stated amount thereof to be purchased from
the Cut-off Date to but not including the Closing Date. The purchase price
for each Class of Offered Certificates does not include any deduction for
and does not otherwise take into account the fees to which each Underwriter
is entitled as described in Section 2 of the Underwriting Agreement.
<PAGE>
SCHEDULE II
(Underwriters' Fees)
Each Underwriter shall be entitled to (a) a selling concession equal to
0.15% of the aggregate principal amount of the Offered Certificates purchased by
such Underwriter, (b) a management fee equal to 0.05% of the aggregate principal
amount of the Offered Certificates purchased by such Underwriter and (c) an
underwriting fee equal to 0.05% of the aggregate principal amount of the Offered
Certificate purchased by such Underwriter. Each Underwriter shall be entitled to
deduct the amount of such fees from the purchase price otherwise payable by such
Underwriter for the related Offered Certificates.
