EXECUTION COPY
INDEMNIFICATION AND CONTRIBUTION AGREEMENT
THIS INDEMNIFICATION AND CONTRIBUTION AGREEMENT dated August 25, 1997
(the "Agreement") among Bear Xxxxxxx Asset Backed Securities, Inc., a Delaware
corporation ("BSABS"), Bear, Xxxxxxx & Co. Inc., a Delaware corporation
("Bear") and Life Savings Bank, Federal Savings Bank ("Life").
W I T N E S E T H:
- - - - - - - - -
WHEREAS, Life and BSABS are parties to the Sale and Servicing
Agreement;
WHEREAS, Life stands to receive substantial financial benefits in its
capacity as servicer and parent of Life Investments Holdings, Inc., the
transferor, under the Sale and Servicing Agreement;
WHEREAS, Bear and BSABS have entered into an Underwriting Agreement
pursuant to which Bear has agreed to purchase the Life Financial Loan Owner
Trust 1997-2, Loan Asset Backed Notes (the "Notes");
WHEREAS, Bear intends to offer the Notes to the public
pursuant to the Prospectus Supplement; and
WHEREAS, as an inducement to BSABS to enter into the Sale and
Servicing Agreement and the Purchase Agreement and the Home Loan Purchase
Agreement and to Bear to enter into the Underwriting Agreement, Life wishes to
provide for 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
1.1 Certain Defined Terms.
The following terms shall have the meanings set forth below, unless
the context clearly indicates otherwise:
1933 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.
Bear: Bear Xxxxxxx & Co. Inc., a Delaware corporation.
BSABS: Bear, Xxxxxxx Asset Backed Securities, Inc., a
Delaware corporation.
Life: Life Savings Bank, Federal Savings Bank.
Life Information: All information contained in the Prospectus
Supplement other than (i) the statements on page i of the Prospectus Supplement
relating to Bear (ii) the statements under the following captions: "SUMMARY -
Depositor" "- the Notes", "Priority of Distributions", "- Final Maturity
Dates", "- Tax Status", "- ERISA", "- Legal Investment", "DESCRIPTION OF THE
NOTES", "CERTAIN FEDERAL INCOME TAX CONSEQUENCES", "STATE TAX CONSEQUENCES",
"ERISA CONSIDERATIONS", "LEGAL INVESTMENT MATTERS" and "METHOD OF
DISTRIBUTION".
Notes: The Life Financial Loan Owner Trust 1997-2, Loan Asset Backed
Notes, Class A-1, Class A-2, Class A-3, Class A-4, Class M-1, Class M-2 and
Class B.
Prospectus: The prospectus dated June 24, 1997 of BSABS.
Prospectus Supplement: The prospectus supplement dated August
25, 1997 relating to the public offering by Bear of the Notes.
Sale and Servicing Agreement: The Sale and Servicing Agreement dated
as of September 1, 1997, by and among Life Financial Loan Owner Trust 1997-2,
as issuer, BSABS, as depositor, Life, as servicer, Life Investments Holdings,
Inc., as transferor, and First Bank National Association, as indenture trustee
and co-owner trustee, relating to the Notes and the Certificates.
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1.2 Other Terms.
Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Sale and Servicing Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Each party hereto represents that:
(a) it has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement;
(b) the execution, performance and delivery of this Agreement has been
duly authorized by such party;
(c) this Agreement has been duly executed and delivered by such party;
and
(d) this Agreement constitutes the legal, valid and binding obligation
of such party.
ARTICLE III
INDEMNIFICATION
3.1 Indemnification by Life, BSABS and Bear.
(a) Life shall indemnify and hold harmless each of BSABS and
Bear, each of their respective directors, each of their respective officers and
each person, if any, that controls BSABS or Bear, as the case may be, within
the meaning of the 1933 Act, against any and all losses, claims, damages or
liabilities to which BSABS or Bear or any such director, officer or controlling
person may become subject, under the 1933 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 in
which they were made, not misleading to the extent that such untrue statement
or alleged untrue statement or omission or alleged omission relates to the Life
Information in the Prospectus Supplement, and Life shall in each case reimburse
BSABS, Bear, and each such director, officer or
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controlling person for any legal or other expenses reasonably incurred by BSABS
or Bear and each such director, officer or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action. Life's liability under this Section 3.1 shall be in addition to any
other liability Life may otherwise have.
(b) BSABS shall indemnify and hold harmless Life, each of its
directors, each of its officers and each person, if any, that controls Life
within the meaning of the 1933 Act, against any losses, claims, damages or
liabilities to which Life or any such director, officer or controlling person
may become subject, under the 1933 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 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 does not relate to the information
covered by subsection (a) above or subsection (c) below, and BSABS shall
reimburse Life and each such director, officer or controlling person for any
legal or other expenses reasonably incurred by Life and any such director,
officer or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action. BSABS's liability under this
Section 3.1 shall be in addition to any liability that BSABS may otherwise
have.
(c) Bear shall indemnify and hold harmless Life, each of its
directors, each of its officers and each person, if any, that controls Life
within the meaning of the 1933 Act, against any losses, claims, damages or
liabilities to which Life or any such director, officer or controlling person
may become subject, under the 1933 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 specifically for
use in connection with the preparation of the Prospectus Supplement or the
Prospectus and Bear shall reimburse Life and each such director, officer or
controlling person for any legal or other expenses reasonably incurred by Life
and any such director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action.
Bear's liability under this Section 3.1 shall be in addition to any liability
that Bear may otherwise have. Life and Bear acknowledge that (i) the statements
set forth in the fourth paragraph on page i of the Prospectus Supplement and
(ii) the statements under the caption: "METHOD OF DISTRIBUTION" in the
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Prospectus Supplement constitute the only information furnished in writing by
Bear for inclusion in the Prospectus Supplement, and Bear confirms that such
information is correct.
(d) If the indemnification provided for in this Section 3.1
shall for any reason be unavailable to an indemnified party under this Section
3.1, then Life, on the one hand, and BSABS and Bear, on the other, shall
contribute to the aggregate losses, liabilities, claims, damages and expenses
of the nature contemplated herein and incurred by Life and BSABS and Bear in
such proportions that BSABS and Bear, in the aggregate, are responsible for the
lesser of (i) 0.5% thereof and (ii) 0.5% of the aggregate proceeds to BSABS
from the sale of the Loans and Life is responsible for the balance; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 3.1, (i) each director of BSABS and of Bear, each
officer of BSABS and of Bear and each person, if any, that controls BSABS or
Bear within the meaning of Section 15 of the 1933 Act shall have the same
rights to contribution as BSABS and Bear and (ii) each director of Life, each
officer of Life, and each person, if any, that controls Life within the meaning
of Section 15 of the 1933 Act shall have the same rights to contribution as
Life.
3.2 Notification; Procedural Matters.
(a) Promptly after receipt by an indemnified party under 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 (or if a
claim for contribution is to be made against another party) under Section 3.1,
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 3.1. 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, 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 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 and/or other
indemnified parties that are different from or addi-
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tional 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 (plus 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
4.1 Survival.
This Agreement and the obligations of the parties hereunder shall
survive the purchase and sale of the Notes.
4.2 Successors.
This Agreement shall 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 shall have any right or obligation
hereunder.
4.3 Applicable Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without giving effect to principles of
conflict of laws.
4.4 Miscellaneous.
Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated except by a writing signed by the
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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.
4.5 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, Bear
Xxxxxxx Asset Backed Securities, Inc., 000 Xxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Chief Counsel, (b) in the case of Life, Life Bank,
00000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Chief Financial
Officer and (c) in the case of Bear, Bear Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxxx Xxxxxxxxx, Vice President.
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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
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Name: Xxxxxxxx Xxxxxxxxx
Title: Vice President
LIFE SAVINGS BANK, FEDERAL SAVINGS BANK
By: /s/ L. Xxxxx Xxxxx, Jr.
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Name: L. Xxxxx Xxxxx, Jr.
Title: Executive Vice President,
Treasurer and Secretary
BEAR, XXXXXXX & CO. INC.
By: /s/ Xxxxxxxx Xxxxxxxxx
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Name: Xxxxxxxx Xxxxxxxxx
Title: Vice President
