Bear Xxxxxxx Asset Backed Securities, Inc.
Asset-Backed Securities, Series 2001-3
INDEMNIFICATION
AND
CONTRIBUTION AGREEMENT
AGREEMENT, dated November 27, 2001 (this "Agreement"), among Bear Xxxxxxx
Asset Backed Securities, Inc., a Delaware corporation ("BSABS"), EMC Mortgage
Corporation, a Delaware corporation (the "Seller"), Bear, Xxxxxxx & Co. Inc., as
an underwriter ("Bear Xxxxxxx"), and Countrywide Securities Corporation, as an
underwriter ("Countrywide," and together with Bear Xxxxxxx, the "Underwriters").
WITNESSETH:
WHEREAS, BSABS and the Underwriters are parties to the Underwriting
Agreement (defined below), providing for the sale by BSABS and the purchase,
severally and not jointly, by the Underwriters of the Public Certificates
(defined below); and
WHEREAS, as an inducement to the Underwriters to enter into the
Underwriting Agreement, BSABS and the Underwriters wish to provide for
indemnification and contribution on the terms and conditions hereinafter set
forth; and
WHEREAS, substantially all of the purchase price to be paid by BSABS to the
Seller for the Mortgage Loans will consist of the proceeds of the sale by BSABS
to the Underwriters of the Public Certificates and as an inducement to the
Underwriters to enter into the Underwriting Agreement, the Seller agrees to
perform certain obligations set forth herein;
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
1.1 CERTAIN DEFINED TERMS.
The following terms shall have the meanings set forth below, unless
the context clearly indicates otherwise:
ACT: The Securities Act of 1933, as amended.
AGREEMENT: This Indemnification and Contribution Agreement, as the
same may be amended in accordance with the terms hereof.
BASE PROSPECTUS: The prospectus dated November 27, 2001, as the same
may be amended or supplemented, of BSABS relating to the offering from time to
time of one or more series of mortgage pass-through certificates.
BEAR XXXXXXX: Bear, Xxxxxxx & Co. Inc., as an underwriter.
BSABS: Bear Xxxxxxx Asset Backed Securities, Inc., a Delaware
corporation and its successors in interest.
BSABS PROSPECTUS INFORMATION: All information contained or
incorporated in the Prospectus other than the Underwriter Information.
BSABS REGISTRATION INFORMATION: All information contained or
incorporated in the Registration Statement.
CERTIFICATES: The Asset-Backed Certificates, Series 2001-3, issued by
BSABS.
CLOSING DATE: On or about November 30, 2001.
COMPUTATIONAL MATERIALS: Computer generated tables and/or charts
displaying, with respect to any Class or Classes of Certificates, any of the
following: yield; average life; duration; expected maturity; interest rate
sensitivity; loss sensitivity; cash flow characteristics; background information
regarding the Mortgage Loans; the proposed structure; decrement tables; or
similar information (tabular or otherwise) of a statistical, mathematical,
tabular or computational nature.
COUNTRYWIDE: Countrywide Securities Corporation, as an underwriter.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
FORM 8-K: The Current Report on Form 8-K, if any, filed by or on
behalf of BSABS with respect to the Mortgage Loans and including any
Computational Materials furnished by one or more of the Underwriters.
PROSPECTUS: The Base Prospectus together with the Prospectus
Supplement.
PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated the date
hereof, as the same may be amended or supplemented, of BSABS relating to the
offering of the Public Certificates.
PUBLIC CERTIFICATES: The Class A-1, Class A-2, Class A-3, Class A-IO,
Class M-1, Class M-2, Class B, Class R-1, Class R-2 and Class R-3 Certificates
offered by the Prospectus.
REGISTRATION STATEMENT: As defined in the Underwriting Agreement.
SELLER: EMC Mortgage Corporation and its successors in interest.
SELLER MORTGAGE LOAN INFORMATION: Information relating to the Mortgage
Loans furnished by the Seller to the Underwriters, upon which the mathematical
calculations reflected in the Computational Materials of the Underwriter are
based.
SELLER INFORMATION: The written information furnished by or on behalf
of the Seller to BSABS specifically for use in connection with the preparation
of the Registration Statement or the Prospectus, such information being the
Seller Mortgage Loan Information and the information relating to the Seller, in
its capacity as Master Servicer set forth in the Prospectus Supplement under the
caption "Servicing of the Mortgage Loans--The Master Servicer" therein.
SPREAD: The excess, if any, of (i) the purchase prices paid by
investors to the Underwriters for the Public Certificates, over (ii) the
purchase price paid by the Underwriters to BSABS for the Public Certificates
pursuant to the Underwriting Agreement.
UNDERWRITERS: Collective reference to Bear Xxxxxxx and Countrywide,
which are, severally and not jointly, purchasing the Public Certificates
pursuant to the Underwriting Agreement.
UNDERWRITER INFORMATION: The only written information furnished by or
on behalf of the Underwriters to BSABS specifically for use in connection with
the preparation of the Registration Statement or the Prospectus, such
information being (i) the information relating to the Underwriters set forth in
the Prospectus Supplement in the last two paragraphs of the cover page thereof
and under the caption "Method of Distribution" therein and (ii) any
Computational Materials prepared by the Underwriters, furnished to BSABS and
included in the Form 8-K; PROVIDED, HOWEVER, that such Computational Materials
shall not include any Seller Mortgage Loan Information or any errors in the
mathematical calculations reflected in such Computational Materials to the
extent such errors result from such Seller Mortgage Loan Information.
UNDERWRITING AGREEMENT: The Underwriting Agreement, dated the date
hereof, between BSABS and the Underwriters providing for the purchase and sale
of the Public Certificates, including for this purpose the Pricing Letter of
even date related thereto.
1.2 OTHER TERMS.
Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Underwriting Agreement.
1.3 INTERPRETIVE PRINCIPLE.
An Underwriter may be acting in more than one capacity. References
herein to an Underwriter acting in a particular capacity shall refer to such
Underwriter in such capacity only and shall not refer to other capacities, if
any, being served by such Underwriter.
ARTICLE II
Representations and Warranties
2.1 MUTUAL REPRESENTATION.
Each party hereto represents to the other parties hereto that:
(a) the execution, performance and delivery of this Agreement has been duly
authorized by such party;
(b) this Agreement has been duly executed and delivered by such party; and
(c) this Agreement constitutes the legal and valid obligation of such
party.
2.2 OTHER REPRESENTATIONS.
(a) BSABS has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement; and
(b) The Seller has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement.
2.3 COMPUTATIONAL MATERIALS.
Each Underwriter which desires to furnish Computational Materials to
BSABS shall furnish copies thereof, in both printed and electronic format, to
Stroock & Stroock & Xxxxx LLP no later than 10:00 a.m. New York City time on the
business day prior to the day on which the Prospectus Supplement is being
cleared for printing. In addition, each Underwriter which has so furnished
Computational Materials to BSABS hereby represents as to the materials it has
furnished as follows:
(a) The Computational Materials so furnished by such Underwriter include
all Computational Materials prepared by such Underwriter that:
(i) are generated based on assumptions regarding the payment
priorities and characteristics of a Class of Certificates that is
actually issued and purchased by an Underwriter; and
(ii) are provided to prospective investors under the following
conditions prior to the time of filing of the Prospectus pursuant to
Rule 424(b):
(A) in the case of each prospective investor that has orally
indicated to such Underwriter that it will purchase all or a
portion of the Class of Certificates to which such Computational
Materials relate, the Computational Materials relating to such
Class that are sent to such prospective investor; and
(B) for any other prospective investor, all Computational
Materials that are sent to such prospective investor after the
structure for the Certificates is finalized;
PROVIDED, HOWEVER, that the Computational Materials so furnished need
not include any Computational Materials that relate to abandoned
structures or that are furnished to prospective investors prior to the
time that the structure of the Certificates is finalized where such
investors have not indicated to such Underwriter their intention to
purchase the Class or Classes of Certificates described in such
Computational Materials.
(b) The Computational Materials included in the Underwriters Information,
pursuant to the definition thereof do not contain an untrue statement of a
material fact or, when read in conjunction with the Prospectus as an integral
document, omit to state a material fact necessary to make such statements, in
light of the circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that no representation is made that the Prospectus (exclusive of such
Computational Materials and the Underwriters Information) does not include any
untrue statements of a material fact and does not omit to state any material
facts necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(c) The Computational Materials contain customary legends regarding the
assumptions on which they are based and the absence of assurances or
representations as to the actual rate or timing of principal payments or
prepayments on any of the Mortgage Loans or the performance characteristics of
the Certificates, and a statement to the effect that the Computational Materials
were prepared by the applicable Underwriter in reliance on information regarding
the Mortgage Loans furnished by BSABS or the Seller on its behalf.
(d) Neither BSABS nor any of its affiliates participated in the preparation
of the Computational Materials other than by supplying the Seller Mortgage Loan
Information to the Underwriter.
(e) At or prior to the time any Computational Materials are furnished to
BSABS for filing on the Form 8-K, the Underwriter furnishing such Computational
Materials will provide to BSABS and such Underwriter a letter, in form and
substance reasonably satisfactory to BSABS and such Underwriter, of a firm of
independent public accountants of national reputation to the effect that such
accountants have performed certain specified procedures with respect to such
Computational Materials and have found no exceptions, other than such exceptions
as are acceptable to BSABS and the Underwriter.
ARTICLE III
Indemnification
3.1 INDEMNIFICATION.
(a) BSABS agrees to indemnify and hold harmless each Underwriter and
each person who controls an Underwriter within the meaning of either the Act or
the Exchange Act against any and all losses, costs, claims, damages or
liabilities, joint or several, to which they may become subject under the Act,
the Exchange Act, or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, costs, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
BSABS Prospectus Information or the BSABS Registration Information or in any
revision or amendment thereof or supplement thereto or arise out of or are based
upon the omission or alleged omission to state in the BSABS Registration
Information, the BSABS Prospectus Information or in any revision or amendment
thereof or supplement thereto a material fact required to be stated therein
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each such
indemnified party for any legal or other expenses reasonably incurred by it or
him in connection with investigating or defending any such loss, cost, claim,
damage, liability or action; PROVIDED, HOWEVER, that BSABS shall not be liable
to a particular Underwriter or any person who controls such Underwriter to the
extent that any misstatement or alleged misstatement or omission or alleged
omission was (i) made in reliance upon and in conformity with the Underwriters
Information provided by such Underwriter, and (ii) in the case of the BSABS
Prospectus Information, to the extent that such misstatement or omission was
corrected and such Underwriter did not deliver, at or prior to the written
confirmation of such sale, a copy of the Prospectus as then revised, amended or
supplemented in any case where such delivery is required by the Act or the
Exchange Act, if BSABS has previously furnished copies thereof to the
Underwriters in accordance with the terms of the Underwriting Agreement. This
indemnity agreement will be in addition to any liability which BSABS may
otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless
BSABS, its officers who signed the Registration Statement or any amendment
thereof, its directors, and each person who controls BSABS within the meaning of
either the Act or the Exchange Act, to the same extent as the foregoing
indemnities from BSABS to each Underwriter; PROVIDED, HOWEVER, that an
Underwriter will be liable in any such case only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with the Underwriters Information provided by
such Underwriter; PROVIDED, FURTHER, that each Underwriter shall not be liable
to BSABS or any person who controls BSABS to the extent that any misstatement or
alleged misstatement or omission or alleged omission was made in reliance upon
and in conformity with the Seller Information; and PROVIDED, FURTHER, that any
such omission or alleged omission relating to the Computational Materials
included in the Underwriters Information, pursuant to the definition thereof
shall be determined by reading such Computational Materials in conjunction with
the Prospectus as an integral document and in light of the circumstances under
which such statements in the Computational Materials and Prospectus were made.
This indemnity agreement will be in addition to any liability which any
Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
3.1 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 under
this Section 3.1, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
the indemnifying party from any liability which it may have to any indemnified
party otherwise than under this Section 3.1. In case any such action is brought
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein, and to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, 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 and/or other indemnified parties that are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to elect 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
counsel, the indemnifying party will not be liable 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 in connection with the assertion of legal defenses in accordance with
the proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel for each of, and approved by, the Underwriters, in the case of
paragraph (a) of this Section 3.1, representing the related indemnified parties
under such paragraph (a) who are parties to such action), (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; and except that, if clause (i) or (iii) is applicable, such
liability shall only be in respect of the counsel referred to in such clause (i)
or (iii). No indemnifying party shall, without the consent of the indemnified
party, effect any settlement of any pending or threatened proceeding 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
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
3.2 CONTRIBUTION.
(a) If the indemnification provided for in Section 3.1 is unavailable
or insufficient to hold harmless an indemnified party under Section 3.1(a) or
(b), then each indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of the losses, costs, claims, damages or
liabilities referred to in Section 3.1 above in such proportion as is
appropriate to reflect the following: (A) in the case of any Underwriter which
did not furnish Computational Materials as provided in Section 2.3 hereof (i) in
such proportion as is appropriate to reflect the relative benefits received by
BSABS on the one hand and the Underwriters on the other from the offering of the
Public 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 BSABS on the one hand and the Underwriters on the other in
connection with the statements or omissions or alleged statements or alleged
omissions which resulted in such losses, claims, damages or liabilities as well
as any other relevant equitable considerations; or (B) in the case of any
Underwriter which did so furnish Computational Materials, (i) the relative
benefits received by BSABS on the one hand and the Underwriters on the other
from the offering of the Public Certificates and (ii) the relative fault of
BSABS on the one hand and the Underwriters on the other in connection with the
statements or omissions or alleged statements or alleged omissions which
resulted in such losses, costs, claims, damages or liabilities as well as any
other relevant equitable considerations. The relative benefits received by BSABS
on the one hand and the Underwriters on the other shall be in such proportion so
that the Underwriters are responsible for an amount equal to their respective
Spread and BSABS is responsible for the balance. The relative benefits received
by the Underwriters shall be the aggregate Spread. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omissions or alleged omission to
state a material fact relates to information supplied by BSABS or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, costs, claims,
damages or liabilities referred to in the first sentence of this Section 3.2(a)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any action
or claim which is the subject of this Section 3.2(a). An Underwriter shall not
be required to contribute any amount in excess of (x) its Spread, over (y) the
amount of any damages which the applicable Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission; PROVIDED, HOWEVER, that if the statements or omissions or
alleged statements or alleged omissions which resulted in contribution were
contained in or omitted from Computational Materials filed on the Form 8-K, the
preceding limitation on contribution shall be inapplicable to the Underwriter
which furnished such Computational Materials. The obligation of any Underwriter
to contribute under this Section 3.2 is several in proportion to the Spread. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(b) Each Underwriter, severally and not jointly, agrees to contribute
to the losses, costs, claims, damages or liabilities paid or incurred by any
other Underwriter to the extent such other Underwriter has paid or incurred
losses, costs, claims, damages or liabilities in excess of its Spread; PROVIDED,
HOWEVER, that if any Underwriter defaults in its obligation to any other
Underwriter hereunder, each non-defaulting Underwriter shall contribute to the
applicable payment of the defaulted obligations as set forth above; and
PROVIDED, FURTHER that if an Underwriter is required to contribute an amount in
excess of its Spread because such Underwriter's Computational Materials resulted
in the contribution, the other Underwriter shall not be required to contribute
in excess of its Spread.
3.3 BENEFITS.
The obligations of BSABS under this Article III shall be in addition
to any liability which BSABS may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls an Underwriter within
the meaning of the Act; and the obligations of each Underwriter under this
Article III shall be in addition to any liability which such Underwriter may
otherwise have and shall have extended upon the same terms and conditions, to
the officers of BSABS who signed the Registration Statement or any amendment
thereof, to its directors, and to each person who controls BSABS within the
meaning of either the Act or the Exchange Act.
3.4 SELLER OBLIGATION.
The Seller agrees with each Underwriter, for the sole and exclusive
benefit of such Underwriter and each person who controls such Underwriter within
the meaning of either the Act or the Exchange Act and not for the benefit of any
assignee thereof or any other person or persons dealing with such Underwriter,
to indemnify and hold harmless each Underwriter and each person who controls
such Underwriter within the meaning of either the Act or the Exchange Act
against any failure by BSABS to perform any of its obligations under this
Agreement. The Seller agrees that there are no conditions precedent to the
obligations of the Seller hereunder other than written demand to BSABS to
perform its obligations under this Agreement.
ARTICLE IV
Expenses
4.1 OTHER EXPENSES.
Any costs and expenses incurred in connection with the qualification
of any of the Public Certificates under the "blue sky" or securities laws of any
state shall be paid by the Underwriter requesting such action. Unless otherwise
agreed to among the Underwriters, any advertising or "tombstone" expenses shall
be paid by the Underwriter incurring the same. Each Underwriter shall be
responsible for all other costs and expenses incurred by it in connection with
the purchase and sale of the Public Certificates.
4.2 OID CALCULATIONS.
If an Underwriter fails to provide BSABS with original issue discount
("OID") calculations within five business days after the Closing Date for any
Certificates purchased by such Underwriter, such Underwriter agrees to reimburse
the Trust Fund for any penalties actually incurred by the Trust Fund resulting
from the failure of the Trust Fund to legend the Certificates with OID
information or for any delay in legending, as well as for any other penalties
actually imposed on the Trust Fund resulting from not having the OID information
or for having such information late.
ARTICLE V
General
5.1 SURVIVAL.
This Agreement and the obligations of the parties hereunder shall
survive the purchase and sale of the Public Certificates and any termination of
the Underwriting Agreement.
5.2 SUCCESSORS.
This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and the officers, directors and
controlling persons referred to in Article III hereof and their respective
successors and assigns, and no other person will have any right or obligation
hereunder.
5.3 APPLICABLE LAW.
THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK DISREGARDING PRINCIPLES OF CONFLICT OF LAWS.
5.4 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, which taken together shall constitute one and the same
instrument.
5.5 NOTICES.
All communications hereunder shall be in writing and effective only on
receipt and, if sent to an Underwriter, shall be delivered to the address
specified on the signature page hereof; or if sent to BSABS, shall be delivered
to Bear Xxxxxxx Asset Backed Securities, Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, attention of Chief Counsel, or if sent to the Seller, shall be
delivered to EMC Mortgage Corporation, 000 Xxxxxx Xxxxx Xxxxx, Xxxxxx, Xxxxx
00000, Attention: Xxxxxx Xxxxx, or such other address as may be hereafter
furnished to the other parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized officers on the date first above written.
BEAR XXXXXXX ASSET BACKED SECURITIES, INC.
By: /S/ XXXXXX X. XXXXXXXXX, XX.
---------------------------------------
Name: Xxxxxx X. Xxxxxxxxx, Xx.
Title: Vice President
EMC MORTGAGE CORPORATION
By: /S/ XXXX XXXXXX
---------------------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
COUNTRYWIDE SECURITIES CORPORATION
By: /S/ XXXXXXX XXXXXXXXXXXX
---------------------------------------
Name: Xxxxxxx Xxxxxxxxxxxx
Title: Executive Vice President
Address: 0000 Xxxx Xxxxxxx,
Xxxxxxxxx, Xxxxxxxxxx 00000
BEAR, XXXXXXX & CO. INC.
By: /S/ XXXXXXX XXXXXXXXXXXX
---------------------------------------
Name: Xxxxxxx Xxxxxxxxxxxx
Title: Senior Managing Director
Address: 000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
