EXECUTION
INDEMNIFICATION AND CONTRIBUTION AGREEMENT
This Indemnification and Contribution Agreement, dated as of April 9,
1999 (the "Agreement") is by and among Bear Xxxxxxx Asset Backed Securities,
Inc., a Delaware corporation ("BSABS"), Bear, Xxxxxxx & Co. Inc., a Delaware
corporation ("BEAR XXXXXXX"), American Residential Eagle, Inc., a Delaware
corporation ("EAGLE") and American Residential Investment Trust, Inc., a real
estate investment trust organized under the laws of the State of Maryland
("AmREIT").
WITNESSETH:
WHEREAS, AmREIT, EAGLE and BSABS will be parties to certain mortgage loan
purchase and sale agreements (each, a "Sale Agreement") pursuant to which
AmREIT will sell and transfer a pool of mortgage loans (the "Mortgage Pool")
to EAGLE and EAGLE, in turn, will sell and transfer the Mortgage Pool to
BSABS, with the understanding that BSABS will transfer such Mortgage Pool to
American Residential Eagle Bond Trust 1999-1, a Delaware statutory business
trust (the "Trust"), for the purpose of providing security for the Trust's
issuance of its Mortgage-Backed LIBOR Notes, Class A, Series 1999-1
(hereinafter, the "Securitization Transaction");
WHEREAS, AmREIT and EAGLE stand to derive substantial financial and other
benefits in connection with the Securitization Transaction;
WHEREAS, BEAR XXXXXXX and BSABS will enter into an underwriting agreement
of even date herewith pursuant to which BEAR XXXXXXX has agreed to purchase
the Notes;
WHEREAS, BEAR XXXXXXX intends to offer the Notes to the public pursuant
to the Prospectus Supplement (as defined herein); and
WHEREAS, as an inducement to BSABS to enter into the Sale Agreement and
to BEAR XXXXXXX to enter into the Underwriting Agreement with BSABS, the
parties hereto have agreed to provide for cross-indemnification and
contribution on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions. The following terms shall have the meanings
set forth below, unless the context clearly indicates otherwise:
"Agreement" means this Indemnification and Contribution Agreement, as the
same may be amended in accordance with the terms hereof.
"AmREIT" means American Residential Investment Trust, Inc., a Maryland
corporation.
"AmREIT Information" means all information contained in the Prospectus
Supplement OTHER THAN (i) the BEAR XXXXXXX Information; (ii) the statements
under the following subheadings under the caption "Summary": "-- The
Depositor; "-- Description of the Notes"; "-- Payment of the Notes"; "--
Credit Enhancement"; "-- ERISA Considerations"; "-- Legal Investment
Considerations" "-- Rating of the Notes"; and (iii) the statements under the
following captions: "The Trust"; "The Depositor"; "Description of the Notes";
"The Insurance Policy"; "The Note Insurer"; "Certain Prepayment and Yield
Considerations"; "Certain Federal Income Tax Considerations"; "State Tax
Considerations"; "ERISA Considerations"; "Legal Investment Considerations";
"Underwriting"; "Experts"; "Legal Matters"; and "Ratings"; and "Annex A --
Global Clearance Settlement and Tax Documentation Procedures."
"BEAR XXXXXXX" means Bear, Xxxxxxx & Co. Inc., a Delaware corporation.
"BEAR XXXXXXX'x INFORMATION" means, with respect to the Prospectus
Supplement, (i) the information set forth in the penultimate paragraph of the
front cover page, and (ii) the information under the caption "UNDERWRITING".
"BSABS" means Bear Xxxxxxx Asset Backed Securities, Inc., a Delaware
corporation.
"Prospectus" means the prospectus dated June 4, 1998 of BSABS.
"Prospectus Supplement" means the prospectus supplement dated April 9,
1999, relating to the public offering of the Notes, in the form attached
hereto as Exhibit A.
For all purposes of this Agreement, except as otherwise expressly
provided herein or unless the context otherwise requires, capitalized terms
used herein that are not otherwise defined shall have the meanings ascribed
thereto in the Indenture dated as of April 1, 1999 (the "Indenture"), by and
between the Issuer and Norwest Bank Minnesota, National Association, as
Indenture Trustee. All other capitalized terms used herein shall have the
meanings specified herein.
Section 1.02. Interpretive Provisions.
(a) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein.
(b) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement; Section and Exhibit references
contained in this Agreement are references to Sections and Exhibits in or to
this Agreement unless otherwise specified; the term "including" shall mean
"including without limitation"; and "or" includes "and/or".
(c) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as the feminine and neuter genders of such terms.
(d) Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes in the case of agreements or instruments references
to all attachments thereto and instruments incorporated therein; references to
a Person are also to its permitted successors and assigns.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
Section 2.01. Representations and Warranties. Each party hereto
represents that:
(a) such party is validly existing and in good standing under the laws of
their respective jurisdiction of formation or incorporation, as applicable,
and has full power and authority to own its assets and to transact the
business in which it is currently engaged. Such party is duly qualified to do
business and is in good standing in each jurisdiction in which the character
of the business transacted by it or any properties owned or leased by it
requires such qualification and in which the failure so to qualify would have
a material adverse effect on the business, properties, assets or condition
(financial or otherwise) of such party;
(b) such party is not required to obtain the consent of any other Person
or any consent, license, approval or authorization from, or registration or
declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement;
(c) the execution, delivery and performance of this Agreement by such
party will not violate any provision of any existing law or regulation or any
order, judgment or decree of any court applicable to such party or any
provision of the charter or bylaws of such party, or constitute a material
breach of any mortgage, indenture, contract or other agreement to which such
party is a party or by which it or its property may be bound;
(d) no Proceeding of or before any court, tribunal or governmental body
is currently pending or, to the knowledge of such party, threatened against
such party or any of its properties or with respect to this Agreement or the
Notes;
(e) such party has full power and authority to make, execute, deliver and
perform this Agreement and all of the transactions contemplated hereunder, and
has taken all necessary corporate action to authorize the execution, delivery
and performance of this Agreement. When executed and delivered, this Agreement
will constitute the legal, valid and binding obligation of such party
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, or by the
availability of equitable remedies; and
(f) this Agreement has been duly executed and delivered by such party.
ARTICLE III.
INDEMNIFICATION
Section 3.01. Indemnification by AmREIT, EAGLE, BSABS and BEAR XXXXXXX.
(a) AmREIT and EAGLE, jointly and severally, shall indemnify and hold
harmless each of BSABS and BEAR XXXXXXX, each of their respective directors,
each of their respective officers and each Person, if any, that controls BSABS
or BEAR XXXXXXX, as the case may be, within the meaning of the Act, against
any and all losses, claims, damages or liabilities, as incurred, to which
BSABS or BEAR XXXXXXX or any such director, officer or controlling person may
become subject, under the Act or otherwise, to the extent that such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Prospectus Supplement or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a 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, to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission relates to the AmREIT Information in the Prospectus Supplement, and
AmREIT and EAGLE shall in each case be jointly and severally liable to
reimburse BSABS, BEAR XXXXXXX and each such director, officer or controlling
person of either such entity for any legal or other expenses reasonably
incurred by BSABS or BEAR XXXXXXX and each such director, officer or
controlling person, as incurred, in connection with investigating or defending
any such loss, claim, damage, liability or action. AmREIT's and EAGLE's
liability under this Section shall be in addition to any other liability
AmREIT or EAGLE may otherwise have.
(b) BSABS shall indemnify and hold harmless AmREIT and EAGLE, each of
their respective directors, each of their respective officers and each Person,
if any, that controls AmREIT or EAGLE, as the case may be, within the meaning
of the Act, against any and all losses, claims, damages or liabilities, as
incurred, to which AmREIT or EAGLE or any such director, officer or
controlling person may become subject, under the Act or otherwise, to the
extent that such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Prospectus Supplement or the
Prospectus or any amendment or supplement thereto, or arise out of or are
based upon the omission or the alleged omission to state therein a 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; in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission,
in the case of the Prospectus Supplement, does not relate to the AmREIT
Information, the BEAR XXXXXXX'x Information or the information in the
Prospectus Supplement under the caption "THE NOTE INSURER"; and BSABS shall
reimburse AmREIT, EAGLE and each such director, officer and controlling person
of either such entity for any legal or other expenses reasonably incurred by
AmREIT, EAGLE or any such director, officer or controlling person, as
incurred, in connection with investigating or defending any such loss, claim,
damage, liability or action. BSABS's liability under this Section shall be in
addition to any liability that BSABS may otherwise have.
(c) BEAR XXXXXXX shall indemnify and hold harmless AmREIT and EAGLE, each
of their respective directors, each of their respective officers and each
Person, if any, that controls AmREIT or EAGLE, as the case may be, within the
meaning of the Act, against any and all losses, claims, damages or
liabilities, as incurred, to which AmREIT or EAGLE or any such director,
officer or controlling person may become subject, under the Act or otherwise,
to the extent that such losses, claims, damage or liabilities (or actions in
respect thereof) arise out of or are based upon any written information
provided by BEAR XXXXXXX specifically for use in connection with the
preparation of the Prospectus Supplement or the Prospectus, and BEAR XXXXXXX
shall reimburse AmREIT, EAGLE and each such director, officer and controlling
person for any legal or other expenses reasonably incurred by AmREIT, EAGLE or
any such director, officer or controlling person, as incurred, in connection
with investigating or defending any such loss, claim, damage, liability or
action. BEAR XXXXXXX'x liability under this Section shall be in addition to
any liability that BEAR XXXXXXX may otherwise have. Each party hereto
acknowledges that the BEAR XXXXXXX'x Information constitutes the only
information furnished in writing by BEAR XXXXXXX for inclusion in the
Prospectus Supplement, and BEAR XXXXXXX confirms that such information is true
and correct.
(d) If the indemnification provided for in this Section shall for any
reason be unavailable to an party seeking indemnification under this Section,
then AmREIT and EAGLE, on the one hand, and BSABS and BEAR XXXXXXX, on the
other, shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated herein and incurred by AmREIT, EAGLE,
BSABS or BEAR XXXXXXX, as the case may be (collectively, "Losses"), in such
proportion as is appropriate to reflect the relative benefits received by
BSABS, BEAR XXXXXXX, AmREIT and, EAGLE, respectively, from the public offering
of the Notes; provided, however, that in no case shall BEAR XXXXXXX be
responsible for any amount in excess of the underwriting discount applicable
to the public offering of the Notes. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, BSABS, BEAR
XXXXXXX, AmREIT and EAGLE shall contribute in such proportion as is
appropriate to reflect not only the relative benefits received by BSABS, BEAR
XXXXXXX, AmREIT, or EAGLE, respectively, but also the relative fault of BSABS,
BEAR XXXXXXX, AmREIT or EAGLE, in connection with the statements or omissions
that resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by BSABS, AmREIT and EAGLE shall be deemed
equal to the total net proceeds of the public offering (before deducting
expenses) received by BSABS, EAGLE or AmREIT, respectively, and benefits
received by BEAR XXXXXXX shall be deemed to be equal to the total underwriting
discounts received by BEAR XXXXXXX from BSABS in connection with the public
offering of the Notes. Relative fault shall be determined by reference to
whether any alleged untrue statement or omission relates to the AmREIT
Information, the information provided by BSABS, or the information provided by
BEAR XXXXXXX. BSABS, AmREIT and BEAR XXXXXXX agree that it would not be just
and equitable if contribution were determined by pro rata allocation or any
other method of allocation that does not take into account the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph, no Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any Person that was not guilty of such fraudulent misrepresentation. For
purposes of this Section, (i) each director of BSABS, BEAR XXXXXXX, each
officer of BSABS or BEAR XXXXXXX and each Person, if any, that controls BSABS
or BEAR XXXXXXX within the meaning of Section 15 of the Act shall have the
same rights to contribution as BSABS and BEAR XXXXXXX and (ii) each director
of AmREIT or EAGLE, each officer of AmREIT or EAGLE and each Person, if any,
that controls AmREIT or EAGLE within the meaning of Section 15 of the Act
shall have the same rights to contribution as AmREIT or EAGLE.
Section 3.02. Notification; Procedural Matters.
(a) Promptly after receipt by an indemnified party under Section 3.01 of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party (or if a
claim for contribution is to be made against another party) under Section
3.01, notify the indemnifying party (or other contributing party) in writing
of the commencement thereof; but the omission so to notify the indemnifying
party (or other contributing party) shall not relieve it from any liability it
may have to any indemnified party (or to the party requesting contribution)
otherwise than under Section 3.01. In case any such action shall be brought
against any indemnified party, and such indemnified party notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that, by written notice
delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, the indemnifying party elects to assume
the defense thereof, it may participate (jointly with any other indemnifying
party hereunder similarly notified) with counsel satisfactory to such
indemnified party; provided, however, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party or parties shall have reasonably concluded that there may be
legal defenses available to it or them or other indemnified parties hereunder
that are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select
separate counsel to assert such legal defenses and to otherwise participate in
the defense of such action on behalf of such indemnified party or parties.
Upon receipt of notice from the indemnifying party to such indemnified party
of its election so to assume the defense of such action and approval by the
indemnified party of such counsel, the indemnifying party shall not be liable
to such indemnified party under this paragraph for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
(including any local counsel) in connection with the assertion of legal
defenses in accordance with the proviso to the immediately preceding sentence,
(ii) the indemnifying party shall not have employed counsel satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified party at
the expense of the indemnifying party. No party shall be liable for
contribution with respect to any action or claim settled without its consent,
which shall not be unreasonably withheld.
ARTICLE IV.
GENERAL
Section 4.01. Survival. This Agreement and the obligations hereunder of
the parties hereto shall survive the purchase and sale of the Notes.
Section 4.02. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
permitted successors and assigns, and the officers, directors and controlling
persons referred to in Article III hereof and their respective permitted
successors and assigns, and no other Person shall have any right or obligation
hereunder.
Section 4.03. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
Section 4.04. Miscellaneous. Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated except by a writing signed by
the party against whom enforcement of such change, waiver, discharge or
termination is sought. This Agreement may be signed in any number of
counterparts, each of which shall be deemed an original, and which taken
together shall constitute but one and the same instrument.
Section 4.05. Notices. All communications hereunder shall be in writing
and shall be deemed to have been duly given when delivered to (a) in the case
of BSABS, 000 Xxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Chief Counsel, (b) in the case of Bear, Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset Backed Securities Group, (c) in the
case of AmREIT, 000 Xxxxxx Xxxx Xxxxxx, Xxxxx 000, Xxx Xxx, Xxxxxxxxxx 00000,
Attention: Xxxx Xxxxxx, Chief Financial Officer, and (d) in the case of EAGLE,
000 Xxxxxx Xxxx Xxxxxx, Xxxxx 000, Xxx Xxx, Xxxxxxxxxx 00000, Attention:
Xxxxxx Xxxx, Senior Vice President, Portfolio Manager.
IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized officers as of the date first above written.
BEAR XXXXXXX ASSET BACKED
SECURITIES, INC.
By:/s/ Xxxxxxxx Xxxxxxxxx
--------------------------
Name: Xxxxxxxx Xxxxxxxxx
Title: Managing Director
BEAR, XXXXXXX & CO. INC.
By:/s/ Xxxxxxxx Xxxxxxxxx
---------------------------
Name: Xxxxxxxx Xxxxxxxxx
Title: Managing Director
AMERICAN RESIDENTIAL INVESTMENT
TRUST, INC.
By: /s/ Xxx X. Xxxxxx
---------------------------
Name: Xxx X. Xxxxxx
Title:
AMERICAN RESIDENTIAL EAGLE, INC.
By: /s/ Xxx X. Xxxxxx
---------------------------
Name: Xxx X. Xxxxxx
Title:
