EXHIBIT 1.2
AMBAC ASSURANCE CORPORATION,
and
PRUDENTIAL SECURITIES INCORPORATED
INDEMNIFICATION AGREEMENT
ABFS MORTGAGE LOAN TRUST 2000-3
MORTGAGE-BACKED NOTES
SERIES 2000-3
Dated as of September 8, 2000
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 shall have the meanings set forth in Article I of this Indemnification
Agreement.)
Page
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Section 1. Defined Terms.................................................1
Section 2. Other Definitional Provisions.................................2
Section 3. Representations and Warranties of the Underwriter.............2
Section 4. Representations and Warranties of the Note Insurer............2
Section 5. Indemnification...............................................4
Section 6. Amendments, Etc...............................................6
Section 7. Notices.......................................................6
Section 8. Severability..................................................6
Section 9. Governing Law.................................................6
Section 10. Counterparts..................................................7
Section 11. Headings......................................................7
(i)
INDEMNIFICATION AGREEMENT dated as of September 8, 2000 (the
"Indemnification Agreement"), by and among AMBAC ASSURANCE CORPORATION, as Note
Insurer and PRUDENTIAL SECURITIES INCORPORATED, as Underwriter.
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 Indenture, the Servicing Agreement,
the Insurance Agreement or the Policy. For purposes of this Indemnification
Agreement, the following terms shall have the following meanings:
"Indenture" means the Indenture, dated as of September 1, 2000,
relating to the ABFS Mortgage Loan Trust 2000-3 Mortgage-Backed Notes, Series
2000-3, between ABFS Mortgage Loan Trust 2000-3, as the Issuer and The Chase
Manhattan Bank, as the Indenture Trustee (as may be amended, modified or
supplemented from time to time).
"Insurance Agreement" means the Insurance and Indemnity Agreement (as
may be amended, modified or supplemented from time to time) dated as of
September 28, 2000 by and among the Note Insurer, the Depositor, ABFS Mortgage
Loan Trust 2000-3, as Issuer, American Business Credit, Inc., as Servicer and
Originator, Home American Credit, Inc. d/b/a Upland Mortgage, as Originator, New
Jersey Mortgage and Investment Corp., as Originator, ABFS 2000-3, Inc., as
Seller and The Chase Manhattan Bank, as Indenture Trustee.
"Note Insurer" means Ambac Assurance Corporation, a
Wisconsin-domiciled stock insurance corporation, or any successor thereto, as
issuer of the Policy.
"Note Insurer Information" has the meaning given such term in Section
4.
"Notes" means the Class A Notes, each substantially in the form of
Exhibit A to the Indenture.
"Offering Document" means the Prospectus Supplement, dated September
8, 2000, in respect of the Notes, and any amendment or supplement thereto, and
any other offering document in respect of the Notes that makes reference to the
Policy excluding any structural term sheet, collateral term sheet or
computational materials.
"Servicing Agreement" means the Sale and Servicing Agreement, dated
as of September 1, 2000, by and among American Business Credit, Inc., as
Servicer, The Chase Manhattan Bank, as Indenture Trustee and ABFS Mortgage Loan
Trust 2000-3, as Issuer (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.
"Underwriter" means Prudential Securities Incorporated.
"Underwriter 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 Underwriter. The
Underwriter represents and warrants as of the Closing Date as follows:
(a) Compliance With Laws. The Underwriter will comply in
all material respects with all legal requirements in connection with
offers and sales of the Notes and will make such offers and sales in
the manner to be provided in the Offering Document.
(b) Offering Document. The Underwriter will not use, or
distribute to other broker-dealers for use, any Offering Document in
connection with the offer and sale of the Notes unless such Offering
Document includes such information relating to the Note Insurer as
has been furnished by the Note Insurer for inclusion therein and has
been approved by the Note Insurer.
(c) Underwriter Information. All material provided by the
Underwriter 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 Underwriter consists of the following information
(collectively, the "Underwriter Information"): the information
contained under the heading "Plan of Distribution" relating to the
Underwriter in the Offering Document.
Section 4. Representations and Warranties of the Note Insurer. The
Note Insurer represents and warrants to the Underwriter as follows:
(a) Organization and Licensing. The Note 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 Note 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.
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(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.
(d) Enforceability. The Policy, when issued, and this
Indemnification Agreement will each constitute a legal, valid and
binding obligation of the Note 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 Note Insurer and subsidiaries as of December 31,
1999 and December 31, 1998, and for each of the years in the
three-year period ended December 31, 1999, 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 30, 2000;
Securities and Exchange Commission File No. 1-10777) and the
unaudited consolidated financial statements of the Note Insurer and
subsidiaries as of June 30, 2000 and for the periods ending June 30,
2000 and June 30, 1999, included in the Quarterly Report on Form 10-Q
of Ambac Financial Group, Inc. for the period ended June 30, 2000
(which was filed with the Securities and Exchange Commission on
August 11, 2000) are incorporated by reference in the Offering
Document and fairly present in all material respects the financial
condition of the Note Insurer as of such dates and for the periods
covered by such statements in accordance with generally accepted
accounting principles consistently applied. Since June 30, 2000,
there has been no material change in such financial condition of the
Note Insurer that would materially and adversely affect its ability
to perform its obligations under the Policy.
(f) Note Insurer Information. The information in the
Offering Document as of the date hereof under the captions "The Note
Insurer" and "The Policy" (together, the "Note Insurer Information")
is true and correct in all material respects and does not contain any
untrue statement of a material fact.
(g) Rating. The Note 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 Note
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 Note 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
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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 Underwriter hereby agrees to pay, and to protect,
indemnify and save harmless, the Note Insurer and its officers,
directors, shareholders, employees, agents and each Person, if any,
who controls the Note 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), actions, 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 Underwriter
Information provided by the Underwriter or (ii) a breach of any of
the representations and warranties by the Underwriter contained in
Section 3.
(b) The Note Insurer agrees to pay, and to protect,
indemnify and save harmless, the Underwriter and its respective
officers, directors, shareholders, employees, agents and each Person,
if any, who controls the Underwriter 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 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 Note Insurer Information or (ii) a breach of any of
the representations and warranties of the Note Insurer contained in
Section 4.
(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 this Section 5(a) or (b) may be sought from the
Underwriter, on the one hand, or the Note 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
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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 Indemnifying 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.
The relative fault of each Indemnifying 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.
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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 Note Insurer:
Ambac Assurance Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Structured Finance Department - MBS
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation: 212-668-0340
(b) To the Underwriter:
Prudential Securities Incorporated
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
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.
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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 Note Insurer
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: First Vice President
PRUDENTIAL SECURITIES INCORPORATED
as Underwriter
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President