AMBAC ASSURANCE CORPORATION, as Certificate Insurer
AND
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
CREDIT SUISSE FIRST BOSTON CORPORATION as Underwriters
INDEMNIFICATION AGREEMENT
ABFS MORTGAGE LOAN TRUST 2002-1 MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2002-1
Dated as of February 15, 2002
TABLE OF CONTENTS
This Table of Contents is for convenience of reference only and shall
not be deemed to be part of this Indemnification Agreement. All capitalized
terms used in this Indemnification Agreement and not otherwise defined sha ll
have the meanings set forth in Section 1 of this Indemnification Agreement.
Section 1. Defined Terms.............................................. 1
Section 2. Other Definitional Provisions.............................. 2
Section 3. Representations and Warranties of the Underwriters......... 2
Section 4. Representations and Warranties of the Certificate Insurer.. 2
Section 5. Indemnification............................................ 4
Section 6. Amendments, Etc............................................ 6
Section 7. Notices.................................................... 6
Section 8. Severability............................................... 7
Section 9. Governing Law.............................................. 7
Section 10. Counterparts............................................... 7
Section 11. Headings................................................... 7
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INDEMNIFICATION AGREEMENT dated as of February 15, 2002 (the
"Indemnification Agreement"), by and among AMBAC ASSURANCE CORPORATION, as
Certificate Insurer and BEAR, ▇▇▇▇▇▇▇ & CO. INC. and CREDIT SUISSE FIRST BOSTON
CORPORATION, as Underwriters.
Section 1. Defined Terms. Unless the context clearly requires
otherwise, all capitalized terms used but not defined herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement, the
Insurance Agreement or the Policy. For purposes of this Indemnification
Agreement, the following terms shall have the following meanings:
"Certificate Insurer" means Ambac Assurance Corporation, a
Wisconsin-domiciled stock insurance corporation, or any successor thereto, as
issuer of the Policy.
"Certificate Insurer Information" has the meaning given such term in
Section 4.
"Certificates" means the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5 or Class A-IO Certificates, each substantially in the form of Exhibit
A to the Pooling and Servicing Agreement.
"Insurance Agreement" means the Insurance and Indemnity Agreement (as
may be amended, modified or supplemented from time to time) dated as of March
21, 2002 by and among the Certificate Insurer, Bear ▇▇▇▇▇▇▇ Asset Backed
Securities, Inc. as Depositor, American Business Credit, Inc., as Servicer and
Originator, HomeAmerican Credit, Inc. d/b/a Upland Mortgage, as Originator,
American Business Mortgage Services, Inc., as Originator, ABFS 2002-1, Inc. as
Seller and JPMorgan Chase Bank, as Trustee.
"Offering Document " means the Prospectus Supplement, dated February
15, 2002, in respect of the Certificates, and any amendment or supplement
thereto, and any other offering document in respect of the Certificates that
makes reference to the Policy excluding any structural term sheet, collateral
term sheet or computational materials.
"Pooling and Servicing Agreement " means the Pooling and Servicing
Agreement, dated as of March 1, 2002, by and among the Depositor, the Servicer
and the Trustee (as may be amended, modified or supplemented from time to time
as set forth therein).
"Securities Act" means the Securities Act of 1933, including, unless
the context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Underwriters" means Bear, ▇▇▇▇▇▇▇ & Co. Inc. and Credit Suisse First
Boston Corporation.
"Underwriters Information" has the meaning given such term in Section
3.
Section 2. Other Definitional Provisions. The words "hereof," "herein"
and "hereunder" and words of similar import when used in this Indemnification
Agreement shall refer to this Indemnification Agreement as a whole and not to
any particular provision of this Indemnification Agreement, and Section,
subsection, Schedule and Exhibit references are to this Indemnification
Agreement unless otherwise specified. The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such terms.
The words "include" and "including" shall be deemed to be followed by the phrase
"without limitation."
Section 3. Representations and Warranties of the Underwriters. The
Underwriters represent and warrant as of the Closing Date as follows:
(a) Compliance With Laws. The Underwriters will comply in all
material respects with all legal requirements in connection with offers
and sales of the Certificates and will make such offers and sales in
the manner to be provided in the Offering Document.
(b) Offering Document. The Underwriters will not use, or
distribute to other broker-dealers for use, any Offering Document in
connection with the offer and sale of the Certificates unless such
Offering Document includes such information relating to the Certificate
Insurer as has been furnished by the Certificate Insurer for inclusion
therein and has been approved by the Certificate Insurer.
(c) Underwriters Information. All material provided by the
Underwriters for inclusion in the Offering Document (as revised from
time to time), shall be true and correct in all material respects, it
being understood and agreed that the only such information furnished by
the Underwriters consists of the following information (collectively,
the "Underwriters Information"): the information contained under the
heading "Plan of Distribution" relating to the Underwriters in the
Offering Document.
Section 4. Representations and Warranties of the Certificate Insurer.
The Certificate Insurer represents and warrants to the Underwriters as follows:
(a) Organization and Licensing. The Certificate Insurer is a
duly organized and licensed and validly existing Wisconsin stock
insurance corporation duly qualified to conduct an insurance business
in the State of New York.
(b) Corporate Power. The Certificate Insurer has the corporate
power and authority to issue the Policy and execute this
Indemnification Agreement and to perform all of its obligations
hereunder and thereunder.
(c) Authorization; Approvals. Proceedings legally required for
the issuance of the Policy and the execution, delivery and performance
of this Indemnification Agreement have been taken and all material
licenses, orders, consents or other authorizations or approvals of any
governmental boards or bodies legally required for the enforceability
of the Policy have been obtained; any proceedings not taken and any
licenses, authorizations or approvals not obtained are not material to
the enforceability of the Policy.
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(d) Enforceability. The Policy, when issued, and this
Indemnification Agreement will each constitute a legal, valid and
binding obligation of the Certificate Insurer, enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium, receivership and other similar laws
affecting creditors' rights generally and by general principles of
equity and subject to principles of public policy limiting the right to
enforce the indemnification provisions contained therein and herein,
insofar as such provisions relate to indemnification for liabilities
arising under federal securities laws.
(e) Financial Information. The consolidated financial
statements of the Certificate Insurer and subsidiaries as of December
31, 2000 and December 31, 1999, and for each of the years in the
three-year period ended December 31, 2000, prepared in accordance with
generally accepted accounting principles, included in the Annual Report
on Form 10-K of Ambac Financial Group, Inc. (which was filed with the
Securities and Exchange Commission on March 28, 2001; Securities and
Exchange Commission File No. 1-10777) and the unaudited consolidated
financial statements of the Certificate Insurer and subsidiaries as of
March 31, 2001 and for the periods ending March 31, 2001 and March 31,
2000, included in the Quarterly Report on Form 10-Q of Ambac Financial
Group, Inc. (which was filed with the Securities and Exchange
Commission on May 15, 2001); June 30, 2001 and for the periods ending
June 30, 2001 and June 30, 2000 included in the Quarterly Report on
Form 10-Q of Ambac Financial Group, Inc (filed with the SEC on August
10, 2001) and September 30, 2001 for the periods ending September 30,
2001 and September 30, 2000 included in the Quarterly Report on Form
10-Q of Ambac Financial Group, Inc. (which was filed with the SEC on
November 14, 2001) and Current Reports on Form 8-K filed with the SEC
on January 24, 2001, March 19, 2001, July 23, 2001, September 17, 2001,
September 19, 2001, October 22, 2001, December 4, 2001 and January 25,
2002, as they relate to Ambac Assurance Corporation, are incorporated
by reference in the Offering Document and fairly present in all
material respects the financial condition of the Certificate Insurer as
of such dates and for the periods covered by such statements in
accordance with generally accepted accounting principles consistently
applied. Since September 30, 2001, there has been no material change in
such financial condition of the Certificate Insurer that would
materially and adversely affect its ability to perform its obligations
under the Policy.
(f) Certificate Insurer Information. The information in the
Offering Document as of the date hereof under the captions "The
Certificate Insurer" and "The Policy" (together, the "Certificate
Insurer Information") is true and correct in all material respects and
does not contain any untrue statement of a material fact.
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(g) Rating. The Certificate Insurer is not aware of any facts
that if disclosed to ▇▇▇▇▇'▇ or S&P would be reasonably expected to
result in a downgrade of the rating of the financial strength of the
Certificate Insurer by either of such Rating Agencies.
(h) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Certificate Insurer 's
knowledge, threatened against it at law or in equity or before or by
any court, governmental agency, board or commission or any arbitrator
which, if decided adversely, would result in a Material Adverse Change
or would materially and adversely affect its ability to perform its
obligations under the Policy or this Indemnification Agreement.
(i) Securities Act Registration. The Policy is exempt from
registration under the Securities Act.
Section 5. Indemnification.
(a) The Underwriters hereby agree severally, and not jointly,
to pay, and to protect, indemnify and save harmless, the Certificate
Insurer and its officers, directors, shareholders, employees, agents
and each Person, if any, who controls the Certificate Insurer within
the meaning of either Section 15 of the Securities Act or Section 20 of
the Securities Exchange Act from and against, any and all claims,
losses, liabilities (including penalties), actio ns, suits, judgments,
demands, damages, costs or expenses (including reasonable fees and
expenses of attorneys, consultants and auditors and reasonable costs of
investigations) of (i) any nature arising out of or by reason of any
untrue statement of a material fact or an omission to state a material
fact necessary in order to make the statements therein in light of the
circumstances in which they were made not misleading, contained in the
Underwriters Information provided by the Underwriters or (ii) a breach
of any of the representations and warranties by the Underwriters
contained in Section 3.
(b) The Certificate Insurer agrees to pay, and to protect,
indemnify and save harmless, the Underwriters and their respective
officers, directors, shareholders, employees, agents and each Person,
if any, who controls the Underwriters within the meaning of either
Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act from and against, any and all claims, losses, liabilities
(including penalties), actions, suits, judgments, demands, damages,
costs or expenses (including reasonable fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations) of any
nature arising out of or by reason of (i) any untrue statement of a ma
terial fact or an omission to state a material fact necessary in order
to make the statements therein in light of the circumstances in which
they were made not misleading, contained in the Certificate Insurer
Information or (ii) a breach of any of the representations and
warranties of the Certificate Insurer contained in Section 4.
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(c) If any action or proceeding (including any governmental
investigation) shall be brought or asserted against any Person
(individually, an "Indemnified Party" and, collectively, the
"Indemnified Parties") in respect of which the indemnification provided
in Section 5(a) or (b) may be sought from the Underwriters, on the one
hand, or the Certificate Insurer, on the other (each, an "Indemnifying
Party") hereunder, each such Indemnified Party shall promptly notify
the Indemnifying Party in writing, and the Indemnifying Party shall
assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all
expenses. The Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof at
the expense of the Indemnified Party; provided, however that the fees
and expenses of such separate counsel shall be at the expense of the
Indemnifying Party if (i) the Indemnifying Party has agreed to pay such
fees and expenses, (ii) the Indemnifying Party shall have failed to
assume the defense of such action or proceeding and employ counsel
reasonably satisfactory to the Indemnified Party in any such action or
proceeding or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both the Indemnified Party
and the Indemnify Party, and the Indemnified Party shall have been
advised by 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 (in which case, if the 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 or proceeding on behalf of such Indemnified Party, it being
understood, however, that the Indemnifying Party shall not, in
connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings 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 at any time for the Indemnified
Parties, which firm shall be designated in writing by the Indemnified
Party). The Indemnifying Party shall not be liable for any settlement
of any such action or proceeding effected without its written consent
to the extent that any such settlement shall be prejudicial to the
Indemnifying Party, but, if settled with its written consent, or if
there is a final judgment for the plaintiff in any such action or
proceeding with respect to which the Indemnifying Party shall have
received notice in accordance with this subsection (c), the
Indemnifying Party agrees to indemnify and hold the Indemnified Parties
harmless from and against any loss or liability by reason of such
settlement or judgment.
(d) To provide for just and equitable contribution if the
indemnification provided by the Indemnifying Party is determined to be
unavailable or insufficient to hold harmless any Indemnified Party
(other than due to application of this Section), each Indemnifying
Party shall contribute to the losses incurred by the Indemnified Party
on the basis of the relative fault of the Indemnifying Party, on the
one hand, and the Indemnified Party, on the other hand; provided, that
the Underwriters shall not be liable for any amount in excess of, the
sales prices of the Certificates to the public less the prices paid
therefor by the Underwriters.
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No Indemnifying Party shall, without the prior written consent
of the Indemnified Party, effect any settlement of any pending or
threatened action in respect of which any Indemnified Party is or could
have been a party and indemnity could have been sought hereunder by
such Indemnified Party unless such settlement (i) includes an
unconditional release of such Indemnified Party from all liability on
any claims that are the subject matter of such action and (ii) does not
include a statement as to, or an admission of, fault, culpability or a
failure to act by or on behalf of an Indemnified Party.
The relative fault of each I ndemnifying Party, on the one hand, and
each Indemnified Party, on the other, shall be determined by reference to, among
other things, whether the breach of, or alleged breach of, any of its
representations and warranties set forth herein was within the control of the
Indemnifying Party or the Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
breach.
No person guilty of fraudulent 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.
Section 6. Amendments, Etc. This Indemnification Agreement may be
amended, modified, supplemented or terminated only by written instrument or
written instruments signed by the parties hereto.
Section 7. Notices. All demands, notices and other communications to be
given hereunder shall be in writing (except as otherwise specifically provided
herein) and shall be mailed by registered mail or personally delivered and
telecopied to the recipient as follows:
(a) To the Certificate Insurer:
Ambac Assurance Corporation ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Structured Finance Department - MBS
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation: 212-668-0340
(b) To the Underwriters:
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
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A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 8. Severability. In the event that any provision of this
Indemnification Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.
Section 9. Governing Law. This Indemnification Agreement shall be governed
by and construed in accordance with the laws of the State of New York.
Section 10. Counterparts. The Indemnification Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
Section 11. Headings. The headings of Sections and the Table of Contents
contained in this Indemnification Agreement are provided for convenience only.
They form no part of this Indemnification Agreement and shall not affect its
construction or interpretation.
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IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement, all as of the day and year first above mentioned.
AMBAC ASSURANCE CORPORATION,
as Certificate Insurer
By:
---------------------------------
Name:
Title:
BEAR ▇▇▇▇▇▇▇ & CO. INC.
as Underwriter
By:
---------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON
CORPORATION
as Underwriter
By:
---------------------------------
Name:
Title: