INDEMNIFICATION AGREEMENT
Agreement dated as of November 21, 2001 among Financial Security
Assurance Inc., a New York corporation ("FSA"), Xxxxxx Xxxxxxx ABS Capital I
Inc., a Delaware corporation (the "Depositor") and Xxxxxx Xxxxxxx & Co.
Incorporated, a Delaware corporation (the "Representative") as representative of
the underwriters (collectively, the "Underwriters").
W I T N E S S E T H
WHEREAS, the Depositor intends to issue approximately $201,925,000
initial principal balance of Mortgage Pass-Through Certificates, Series 2001-HE1
Class A, Class M-1, Class M-2, Class B, Class X, Class P and Class R
Certificates (the Series 2001-HE1 Certificates") pursuant to a Pooling and
Servicing Agreement dated as of November 1, 2001 (the "Pooling and Servicing
Agreement") (the Class A, Class M-1, Class M-2 and Class B Certificates are
collectively referred to herein as the "Offered Certificates");
WHEREAS, the Depositor has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (file number
333-65702) (the "Registration Statement") for the registration under the
Securities Act of 1933, as amended (the "Act") of Mortgage Pass-Through
Certificates of which the Series 2001-HE1 Certificates are a separate series;
WHEREAS, in connection with the public offering and sale of the Offered
Certificates, the Depositor will file a prospectus supplement (the "Prospectus
Supplement") dated November 26, 2001 together with a prospectus dated November
8, 2001 (the "Prospectus") with the Commission pursuant to Rule 424(b)(5) under
the Act;
WHEREAS, the Depositor has agreed to sell to Underwriters the Offered
Certificates pursuant to an underwriting agreement dated as of November 26,
2001;
WHEREAS, FSA has agreed to guaranty the Class A Certificates (the
"Guaranteed Certificates") pursuant to a Financial Guaranty Insurance Policy
(the "Policy") to be issued by FSA to the extent specified in the Policy;
WHEREAS, FSA has provided certain information to the Depositor for
inclusion in the Prospectus Supplement under the caption "The Class A
Certificate Insurer" in the Prospectus Supplement (such information, together
with the documents incorporated by reference thereunder, the "FSA Information");
WHEREAS, the Underwriters have provided certain information to the
Depositor for inclusion in the Prospectus Supplement in the first sentence of
the last paragraph on the cover page, the first sentence of the third paragraph
and the fifth paragraph under the caption "Plan of Distribution" in the
Prospecuts Supplement (such information, the "Underwriter Information").
NOW, THEREFORE, in consideration of the foregoing and for good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto do hereby agree as follows:
1. INDEMNIFICATION AND CONTRIBUTION.
(a) FSA agrees to indemnify and hold harmless the Depositor and the
Underwriters, each of their respective directors, each officer of the Depositor
who signed the Registration Statement and each person, if any, who controls the
Depositor or the Underwriters within the meaning of the Act against any and all
losses, claims, damages and liabilities, joint or several, to which they or any
of them may become subject under the Act, the Securities and Exchange Act of
1934 (the "Exchange Act"), any other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement of a material fact contained in the FSA Information
included in the Prospectus Supplement, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and agrees to reimburse each such indemnified party for
any legal or other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, damage, liability or action.
The indemnity in this paragraph (a) with respect to any amendment of or
supplement to the Prospectus Supplement affecting the FSA Information shall only
apply if such amendment of or supplement to the FSA Information has been
approved in writing by FSA. This indemnity agreement will be in addition to any
liability which FSA may otherwise have. For the avoidance of doubt, the
indemnity of FSA shall apply to the information provided in the Prospectus
Supplement under the caption "The Class A Certificate Insurer" including the
financial information concerning FSA's financial condition included in the FSA
Information and to any financial statements of FSA furnished by it as
contemplated by the Prospectus Supplement upon request of any investor or
prospective investor but will not include any statements made under the third
and fourth paragraphs under the subheading "-Incorporation of Certain Documents
by Reference".
(b) The Depositor agrees to indemnify and hold harmless FSA, each of
its directors and officers, and each person, if any, who controls FSA within the
meaning of the Act against any and all losses, claims, damages and liabilities,
joint or several, to which they or any of them may become subject under the Act,
the Exchange Act, any other Federal or state statutory law or regulation, at
common law or otherwise, insofar as 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 a material fact contained in the
Registration Statement or in any amendment thereof, or in the Prospectus or the
Prospectus Supplement, or in any amendment thereof 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 not misleading, and agree to reimburse each indemnified party
for any legal or other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, damage, liability or action;
PROVIDED, HOWEVER, that the Depositor will not be liable in any such case to the
extent that any such loss, claim, damage or liability arise out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made in any
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of such documents in the information covered by the indemnity agreement in
paragraph (a) above or in paragraph (c) below. This indemnity agreement will be
in addition to any liability which the Depositor may otherwise have.
(c) The Underwriters agree to indemnify and hold harmless FSA, each of
its directors and officers, and each person, if any, who controls FSA within the
meaning of the Act against any and all losses, claims, damages and liabilities,
joint or several, to which they or any of them may become subject under the Act,
the Exchange Act, any other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement of a material fact contained in the Underwriter Information included
in the Prospectus Supplement, or in any amendment thereof or supplement thereto,
or arise out of or are based upon the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party for any legal or
other expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, damage, liability or action. The indemnity in
this paragraph (c) with respect to any amendment of or supplement to the
Prospectus Supplement affecting the Underwriter Information shall only apply if
such amendment of or supplement to the Underwriter Information has been approved
in writing by the Representative. This indemnity agreement will be in addition
to any liability which the Underwriters may otherwise have.
(d) Promptly after receipt by an indemnified party under this Section
1 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 1, notify the indemnifying party in writing of the commencement thereof
and that the party intends to seek indemnification, and if indemnification is
not available as a remedy, contribution; 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 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 will be entitled to appoint counsel satisfactory to such indemnified party
to represent the indemnified party in such action; PROVIDED, HOWEVER, that if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which 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 defend 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 appoint counsel to defend such action
and approval by the indemnified party of such counsel, the indemnifying party
will not be liable to such indemnified party under this Section 1 for the fees
and expenses of any other legal counsel subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel 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 indemnified party, approved by FSA in the case of
paragraph (a) the Depositor in the case of paragraph (b) or the Representative
in the case of paragraph (c) of this Section 1, representing the indemnified
parties under, respectively, such paragraph (a), (b) or
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(c) who are parties to such action), (ii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice or 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 be only
in respect of the counsel referred to in such clause (i) or (iii). The
indemnifying party shall not be liable for any settlement of any claim or action
unless the indemnifying party shall (i) have consented thereto, or, if the
indemnifying party shall not have consented thereto, the indemnifying party
shall only be liable to the extent that any such settlement effected without its
consent shall not be prejudicial to the indemnifying party, or (ii) be in
default of its obligations hereunder.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) or (b)
of this Section 1 is due in accordance with its terms but is for any reason held
by a court to be unavailable from, respectively, FSA or the Depositor on grounds
of policy or otherwise, the Depositor or FSA, as appropriate, shall contribute
to the aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating or defending
same) to which the Depositor or FSA, as appropriate, may be subject in such
proportion as is appropriate to reflect the relative fault of FSA on the one
hand and the Depositor on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities. The
relative fault of FSA on the one hand and of the Depositor on the other shall be
determined by reference to, among other things, whether the untrue statement of
a material fact or the omission or to state a material fact relates to
information supplied by FSA or by the Depositor, and the parties relative
intent, knowledge, access to information and opportunity to correct or prevent
such information and opportunity to correct or prevent such statement or
omission. The Depositor's obligations to contribute pursuant to this Section 1
shall be joint and several.
(f) FSA and the Depositor agree that it would not be just and
equitable if contribution pursuant to this Section 1 were determined by PRO RATA
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
(g) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (c) of this
Section 1 is due in accordance with its terms but is for any reason held by a
court to be unavailable from, respectively, FSA or the Underwriters on grounds
of policy or otherwise, the Underwriters or FSA, as appropriate, shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) to which the Underwriters or FSA, as appropriate, may be subject
in such proportion as is appropriate to reflect the relative fault of FSA on the
one hand and the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities. The
relative fault of FSA on the one hand and of the Underwriters on the other shall
be determined by reference to, among other things, whether the untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by FSA or by the Underwriters, and the
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parties relative intent, knowledge, access to information and opportunity to
correct or prevent such information, statement or omission. The Underwriters
obligation to contribute pursuant to this Section 1 shall be joint and several.
(h) FSA and Underwriters agree that it would not be just and equitable
if contribution pursuant to this Section 1 were determined by PRO RATA
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
(i) Notwithstanding anything in this Section 1 to the contrary, no
Underwriter shall be required to contribute an amount greater than the total
discount received by it from the Depositor in respect of the Offered
Certificates underwritten by such Underwriter.
(j) No person guilty of fraudulent misrepresentation (within the
meaning of Section 11 (f) of the Act) shall be entitled to contribution from any
person which was not guilty of such fraudulent misrepresentation. For purposes
of this Section 1, each director and officer of FSA, each person which controls
FSA within the meaning of the Act shall have the same rights to contribution as
FSA, each person who controls the Depositor within the meaning of the Act, each
officer of the Depositor who shall have signed the Registration Statement and
each director of the Depositor shall have the same rights to contribution as the
Depositor, each director and officer of each Underwriter and each person which
controls such Underwriter within the meaning of the Act shall have the same
rights to contribution as such Underwriter as the case may be, subject in each
case to the first sentence of this paragraph (f).
(k) FSA acknowledges that, as among the parties hereto, it is solely
responsible for the FSA Information. The Underwriters acknowledge that, as among
the parties hereto, they are solely responsible for the Underwriter Information.
The Depositor and the Underwriters acknowledge that, as among the parties
hereto, FSA is not responsible for any information other than the FSA
Information included in the Prospectus Supplement, or an amendment thereof or
supplement thereto if such amendment thereof or supplement thereto has been
approved in writing by FSA. FSA acknowledges that, as among the parties hereto,
the Underwriters are not responsible for any information other than the
Underwriter Information included in the Prospectus Supplement, or an amendment
thereof or supplement thereto if such amendment thereof or supplement thereto
has been approved in writing by the Underwriters.
2. INDEMNITIES TO SURVIVE. The respective indemnities of the parties
hereto set forth in or made pursuant to this Agreement will remain in full force
and effect, regardless of any investigation or statement as to the results
thereof, made by or on behalf of any other parties hereto or any of the
officers, directors or controlling persons referred to in Section 1 hereof, and
will survive delivery of and payment for the Offered Certificates and the
Policy. The provisions of Section 1 hereof shall survive the termination or
cancellation of this Agreement.
3. NOTICES. All communication hereunder shall be in writing and, if
sent to FSA, will be mailed, delivered or telegraphed and confirmed to it at 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Surveillance Department; if
sent to the Depositor, will be mailed, delivered or telegraphed and confirmed to
it at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000; if
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sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to it at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Securitized
Products Group, with a copy to 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxxx Xxxxxx or in the case of any party, at such other
address as such party may hereafter specify for the purpose by notice given
pursuant to this Section 3.
4. GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York.
5. COUNTERPARTS. The Agreement may be executed in counterparts. Each
counterpart shall be deemed an original instrument, and all counterparts
together shall constitute one and the same instrument.
6. AMENDMENT. No supplement, modification, or amendment shall be
valid or binding unless contained in a written instrument executed by all of the
parties hereto.
7. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by any
party hereto without the prior written consent of all of the other parties
hereto. This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by and against the parties hereto and their respective successors
and permitted assigns.
8. EFFECTIVENESS OF AGREEMENT. This Agreement shall take effect only
upon the issuance of the Policy.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first written above.
FINANCIAL SECURITY ASSURANCE INC.
By:
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Name:
Title:
XXXXXX XXXXXXX & CO. INCORPORATED,
as Representative on behalf of the Underwriters
By:
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Name:
Title:
XXXXXX XXXXXXX ABS CAPITAL I INC.,
By:
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Name:
Title:
