EXHIBIT 1.2
AMBAC ASSURANCE CORPORATION,
and
PRUDENTIAL SECURITIES INCORPORATED
INDEMNIFICATION AGREEMENT
ABFS MORTGAGE LOAN TRUST 2000-1
MORTGAGE-BACKED NOTES
SERIES 2000-1
Dated as of March 15, 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.............................................3
Section 2. Other Definitional Provisions.............................4
Section 3. Representations and Warranties of the Underwriter.........4
Section 4. Representations and Warranties of the Note Insurer........4
Section 5. Indemnification...........................................6
Section 6. Amendments, Etc...........................................7
Section 7. Notices...................................................7
Section 8. Severability..............................................8
Section 9. Governing Law.............................................8
Section 10. Counterparts..............................................8
Section 11. Headings..................................................8
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INDEMNIFICATION AGREEMENT dated as of March 15, 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 March 1, 2000, relating to
the ABFS Mortgage Loan Trust 2000-1 Mortgage-Backed Notes, Series 2000-1,
between ABFS Mortgage Loan Trust 2000-1, 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 March 30,
2000 by and among the Note Insurer, the Depositor, ABFS Mortgage Loan Trust
2000-1, 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 2000-1, 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-1 and Class A-2 Notes, each substantially in the
form of Exhibit A to the Indenture.
"Offering Document" means the Prospectus Supplement, dated March 15, 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
March 1, 2000, by and among American Business Credit, Inc., as Servicer, The
Chase Manhattan Bank, as Indenture Trustee and ABFS Mortgage Loan Trust 2000-1,
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.
(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 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 are incorporated by reference in the Offering Document
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 December 31, 1999, 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 Xxxxx'x, S&P or Xxxxx'x 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 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.
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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 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
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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.
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
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance Department - MBS
Telecopy No.: 000-000-0000
Confirmation: 212-668-0340
(b) To the Underwriter:
Prudential Securities Incorporated
Xxx Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx Xxxxxxx
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
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 Note Insurer
By:
----------------------------------------
Name:
Title:
PRUDENTIAL SECURITIES INCORPORATED
as Underwriter
By:
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Name:
Title:
