EXHIBIT 1.2
INDEMNIFICATION AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
ABFS 1999-2, INC.
AMERICAN BUSINESS CREDIT, INC.
HOME AMERICAN CREDIT, INC. D/B/A UPLAND MORTGAGE
NEW JERSEY MORTGAGE AND INVESTMENT CORP.
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
ABFS MORTGAGE LOAN TRUST 1999-2
and
PRUDENTIAL SECURITIES INCORPORATED
Dated as of June 25, 1999
ABFS Mortgage Loan Trust 1999-2
Mortgage Backed Notes Series 1999-2
$218,900,000 Class A-1 and Class A-2 Notes
TABLE OF CONTENTS
Page
Section 1. Definitions 1
Section 2. Representations, Warranties and Agreements of Financial Security 3
Section 3. Representations, Warranties and Agreements of the Underwriter 5
Section 4. Indemnification 6
Section 5. Indemnification Procedures 6
Section 6. Contribution 7
Section 7. Miscellaneous. 8
EXHIBIT
Exhibit A Opinion of General Counsel
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT dated as of June 25, 1999, among
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), PRUDENTIAL SECURITIES
SECURED FINANCING CORPORATION (the "Depositor"), AMERICAN BUSINESS CREDIT, INC.
(the "Company"), ABFS 1999-2, INC. (the "Seller"), HOME AMERICAN CREDIT, INC.,
D/B/A UPLAND MORTGAGE ("Upland"), NEW JERSEY MORTGAGE AND INVESTMENT CORP.
("NJMIC" and together with Upland, the "Originators"), ABFS MORTGAGE LOAN TRUST
1999-2 (the "Issuer") and PRUDENTIAL SECURITIES INCORPORATED (the
"Underwriter"):
Section 1. Definitions. For purposes of this Agreement, the
following terms shall have the meanings provided
below:
"Agreement" means this Indemnification Agreement, as amended
from time to time.
"Company Party" means any of the Company, its parent,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Securities Act) of
any of the foregoing.
"Depositor Party" means any of the Depositor, its parent,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Securities Act) of
any of the foregoing.
"Financial Security Agreements" means this Agreement and the
Insurance Agreement.
"Financial Security Information" has the meaning provided in
Section 2(g) hereof.
"Financial Security Party" means any of Financial Security,
its parent, subsidiaries and affiliates, and any shareholder, director, officer,
employee, agent or "controlling person" (as such term is used in the Securities
Act) of any of the foregoing.
"Indemnified Party" means any party entitled to any
indemnification pursuant to Section 4 hereof.
"Indemnifying Party" means any party required to provide
indemnification pursuant to Section 4 hereof.
"Indenture" means the Indenture, dated as of June 1, 1999,
between the Issuer and the Indenture Trustee.
"Indenture Trustee" means The Chase Manhattan Bank.
"Insurance Agreement" means the Insurance and Indemnity
Agreement, dated as of June 1, 1999, by and among Financial Security, the
Depositor, the Company, the Originators, the Issuer and the Seller.
"Issuer Party" means any of the Issuer, its parent,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Securities Act) of
any of the foregoing.
"Losses" means (a) any actual out-of-pocket damages incurred
by the party entitled to indemnification or contribution hereunder, (b) any
actual out-of-pocket costs or actual expenses reasonably incurred by such party,
including reasonable fees or expenses of its counsel and other expenses incurred
in connection with investigating or defending any claim, action or other
proceeding which entitle such party to be indemnified hereunder (subject to the
limitations set forth in Section 5 hereof), to the extent not paid, satisfied or
reimbursed from funds provided by any other Person other than an affiliate of
such party (provided that the foregoing shall not create or imply any obligation
to pursue recourse against any such other Person), plus (c) interest on the
amount paid by the party entitled to indemnification or contribution from the
date of such payment to the date of payment by the party who is obligated to
indemnify or contribute hereunder at the statutory rate applicable to judgments
for breach of contract.
"Notes" means the $218,900,000 of the ABFS Mortgage Backed
Notes, Series 1999-2, Class A-1 Notes and Class A-2 Notes, issued by the Issuer
pursuant to the Indenture.
"Offering Circular" means the Prospectus dated June 23, 1999,
including the Prospectus Supplement thereto dated June 25, 1999, relating to the
Notes.
"Offering Document" means the Offering Circular and any
amendments or supplements thereto and any other material or documents delivered
by the Underwriter to any Person in connection with the offer or sale of the
Notes.
"Originator Party" means any of the Originators, their
parents, subsidiaries and affiliates and any shareholder, director, officer,
employee, agent or "controlling person" (as such term is used in the Securities
Act) of any of the foregoing.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization or other organization or entity
(whether governmental or private).
"Policy" means the financial guaranty insurance policy
delivered by Financial Security with respect to the Notes.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Seller Party" means any of the Seller, its parent,
subsidiaries and affiliates, and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Securities Act) of
any of the foregoing.
"Underwriting Agreement" means the Underwriting Agreement
dated as of June 25, 1999, between the Depositor and the Underwriter in respect
of the Notes.
"Underwriter Information" has the meaning provided in Section
3(c) hereof.
"Underwriter Party" means any of the Underwriter, its parent,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Securities Act) of
any of the foregoing.
Section 2. Representations, Warranties and Agreements of
Financial Security. Financial Security represents, warrants and agrees, as of
the date hereof and as of the Closing Date, as follows:
(a) Organization, Etc. Financial Security is a stock insurance
company duly organized, validly existing and authorized to transact financial
guaranty insurance business under the laws of the State of New York.
(b) Authorization, Etc. The Policy and the Financial Security
Agreements have been duly authorized, executed and delivered by Financial
Security.
(c) Validity, Etc. The Policy and the Financial Security
Agreements constitute valid and binding obligations of Financial Security,
enforceable against Financial Security in accordance with their terms, subject,
as to the enforcement of remedies, to bankruptcy, insolvency, reorganization,
rehabilitation, moratorium and other similar laws affecting the enforceability
of creditors' rights generally applicable in the event of the bankruptcy or
insolvency of Financial Security and to the application of general principles of
equity and subject, in the case of this Agreement, to principles of public
policy limiting the right to enforce the indemnification provisions contained
herein.
(d) Exemption From Registration. The Policy is exempt from
registration under the Securities Act.
(e) No Conflicts. Neither the execution or delivery by
Financial Security of the Policy or the Financial Security Agreements, nor the
performance by Financial Security of its obligations thereunder, will conflict
with any provision of the certificate of incorporation or the bylaws of
Financial Security or result in a breach of, or constitute a default under, any
material agreement or other instrument to which Financial Security is a party or
by which any of its property is bound nor violate any judgment, order or decree
applicable to Financial Security of any governmental or regulatory body,
administrative agency, court or arbitrator having jurisdiction over Financial
Security (except that, in the published opinion of the Securities and Exchange
Commission, the indemnification provisions of this Agreement, insofar as they
relate to indemnification for liabilities arising under the Securities Act, are
against public policy as expressed in the Securities Act and are therefore
unenforceable).
(f) Financial Information. The consolidated balance sheets of
Financial Security as of December 31, 1998 and the related consolidated
statements of income, changes in shareholder's equity and cash flows for the
fiscal year then ended, furnished by Financial Security for use in the Offering
Circular, fairly present in all material respects the financial condition of
Financial Security as of such dates and for such periods in accordance with
generally accepted accounting principles consistently applied (subject as to
interim statements to normal year-end adjustments) and since the date of the
most current interim consolidated balance sheet referred to above there has been
no change in the financial condition of Financial Security which would
materially and adversely affect its ability to perform its obligations under the
Policy.
(g) Financial Security Information. The information in the
Offering Circular set forth under the caption "The Note Insurer" (as revised
from time to time in accordance with the provisions hereof, the "Financial
Security Information") is limited and does not purport to provide the scope of
disclosure required to be included in a prospectus with respect to a registrant
in connection with the offer and sale of securities of such registrant
registered under the Securities Act. Within such limited scope of disclosure,
however, as of the date of the Offering Circular and as of the date hereof, the
Financial Security Information does not contain any untrue statement of a
material fact, or omit to state a material fact necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
(h) Additional Information. Financial Security will furnish to
the Underwriter, the Company, the Seller, the Issuer or the Depositor, upon
request of the Underwriter, the Company, the Seller, the Issuer or the
Depositor, as the case may be, copies of Financial Security's most recent
financial statements (annual or interim, as the case may be) which fairly
present in all material respects the financial condition of Financial Security
as of the dates and for the periods indicated, in accordance with generally
accepted accounting principles consistently applied except as noted therein
(subject, as to interim statements, to normal year-end adjustments); provided,
however, that, if the Underwriter, the Company, the Seller, the Issuer or the
Depositor shall require a manually signed report or consent of Financial
Security's auditors in connection with such financial statements, such report or
consent shall be at the expense of the Underwriter, the Company, the Seller, the
Issuer or the Depositor, as the case may be. In addition, if the delivery of an
Offering Circular relating to the Notes is required at any time prior to the
expiration of nine months after the time of issue of the Offering Circular in
connection with the offering or sale of the Notes, the Depositor or the
Underwriter will notify Financial Security of such requirement to deliver an
Offering Circular and Financial Security will promptly provide the Underwriter
and the Depositor with any revisions to the Financial Security Information that
are in the judgment of Financial Security necessary to prepare an amended
Offering Circular or a supplement to the Offering Circular which will correct
such statement or omission.
(i) Opinion of Counsel. Financial Security will furnish to the
Seller, the Originators, the Depositor, the Underwriter, the Issuer and the
Company on the closing date for the sale of the Notes an opinion of its
Associate General Counsel, to the effect set forth in Exhibit A attached hereto,
dated such closing date and addressed to the Seller, the Originators, the
Depositor, the Underwriter, the Issuer and the Company.
(j) Consents and Reports of Independent Accountants. Financial
Security will furnish to the Underwriter, the Company, the Issuer and the
Depositor, upon request, as comfort from its independent accountants in respect
of its financial condition, (i) at the expense of the Person specified in the
Insurance Agreement, a copy of the Offering Circular, including either a
manually signed consent or a manually signed report of Financial Security's
independent accountants and (ii) the quarterly review letter by Financial
Security's independent accountants in respect of the most recent interim
financial statements of Financial Security.
Nothing in this Agreement shall be construed as a
representation or warranty by Financial Security concerning the rating of its
insurance financial strength by Standard & Poor's Ratings Services, a division
of the XxXxxx-Xxxx Companies Inc., or of its insurer financial strength by
Xxxxx'x Investors Service, Inc. or any other rating agency (collectively, the
"Rating Agencies"). The Rating Agencies, in assigning such ratings, take into
account facts and assumptions not described in the Offering Circular and the
facts and assumptions which are considered by the Rating Agencies, and the
ratings issued thereby, are subject to change over time.
Section 3. Representations, Warranties and Agreements of the
Underwriter. The Underwriter represents, warrants and agrees, as of the date
hereof and 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 make such offers and sales in the manner provided in the
Offering Circular.
(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 as has been furnished by Financial Security for inclusion therein
and the information therein concerning Financial Security has been approved by
Financial Security in writing. Financial Security hereby consents to the
information in respect of Financial Security included in the Offering Circular.
Each Offering Document will include the following statement: "The Policy is not
covered by the property/casualty insurance security fund specified in Article 76
of the New York Insurance Law".
(c) Underwriting Information. The following information
constitutes the only information furnished by the Underwriter (the "Underwriter
Information"): (i) the statements set forth in the last two paragraphs on the
front cover page of the Offering Circular regarding market making; (ii) the
statements set forth under the heading "Underwriting"; and (iii) the statements
set forth in materials delivered by the Underwriter to the Depositor within the
meaning of the no-action letter dated May 20, 1994 issued by the Division of
Corporation Finance of the Securities Exchange Commission (the "Commission") to
Xxxxxx, Xxxxxxx Acceptance Corporation I, Xxxxxx, Peabody & Co. Incorporated and
Xxxxxx Structured Asset Corporation and the no-action letter dated May 27, 1994
issued by the Division of Corporation Finance of the Commission to the Public
Securities Association and filed by the Sponsor with the Commission in the
Current Report or Reports on Form 8-K (the "Form 8-K"). The Underwriter confirms
that such statements (to such extent) are correct.
Section 4. Indemnification. (a) Financial Security agrees,
upon the terms and subject to the conditions provided herein, to indemnify,
defend and hold harmless each Depositor Party, each Company Party, each Seller
Party, each Originator Party, each Issuer Party and each Underwriter Party
against (i) any and all Losses incurred by them with respect to the offer and
sale of the Notes and resulting from Financial Security's breach of any of its
representations, warranties or agreements set forth in Section 2 hereof and (ii)
any and all Losses to which any Depositor Party, Company Party, Seller Party,
Originator Party, Issuer Party or Underwriter Party may become subject, under
the Securities Act or otherwise, insofar as such Losses arise out of or result
from an untrue statement of a material fact contained in any Offering Document
or the omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or omission was made
in the Financial Security Information included therein in accordance with the
provisions hereof.
(b) The Underwriter agrees, upon the terms and subject to the
conditions provided herein, to indemnify, defend and hold harmless each
Financial Security Party against (i) any and all Losses incurred by them with
respect to the offer and sale of the Notes and resulting from the Underwriter's
breach of any of its representations, warranties or agreements set forth in
Section 3 hereof and (ii) any and all Losses to which any Financial Security
Party may become subject, under the Securities Act or otherwise, insofar as such
Losses arise out of or result from an untrue statement of a material fact
contained in any Offering Document or the omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or omission was made in the Underwriter Information included
therein.
(c) Upon the incurrence of any Losses for which a party is
entitled to indemnification hereunder, the Indemnifying Party shall reimburse
the Indemnified Party promptly upon establishment by the Indemnified Party to
the Indemnifying Party of the Losses incurred.
Section 5. Indemnification Procedures. Except as provided
below in Section 6 with respect to contribution or in Section 7(e), the
indemnification provided herein by an Indemnifying Party shall be the exclusive
remedy of any and all Indemnified Parties for the breach of a representation,
warranty or agreement hereunder by an Indemnifying Party; provided, however,
that each Indemnified Party shall be entitled to pursue any other remedy at law
or in equity for any such breach so long as the damages sought to be recovered
shall not exceed the Losses incurred thereby resulting from such breach. In the
event that any action or regulatory proceeding shall be commenced or claim
asserted which may entitle an Indemnified Party to be indemnified under this
Agreement, such party shall give the Indemnifying Party written or telegraphic
notice of such action or claim reasonably promptly after receipt of written
notice thereof. The Indemnifying Party shall be entitled to participate in and,
upon notice to the Indemnified Party, assume the defense of any such action or
claim in reasonable cooperation with, and with the reasonable cooperation of,
the Indemnified Party. The Indemnified Party will have the right to employ its
own counsel in any such action in addition to the counsel of the Indemnifying
Party, but the fees and expenses of such counsel will be at the expense of such
Indemnified Party, unless (a) the employment of counsel by the Indemnified Party
at its expense has been authorized in writing by the Indemnifying Party, (b) the
Indemnifying Party has not in fact employed counsel to assume the defense of
such action within a reasonable time after receiving notice of the commencement
of the action, or (c) the named parties to any such action or proceeding
(including any impleaded parties) include both the Indemnifying Party and one or
more Indemnified Parties, and the Indemnified Parties shall have been advised by
counsel that there may be one or more legal defenses available to them which are
different from or additional to those available to the Indemnifying 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 all
Depositor Parties, one such firm for all Underwriter Parties, one such firm for
Company Parties, one such firm for all Seller Parties, one such firm for all
Originator Parties, one such firm for all Issuer Parties and one such firm for
all Financial Security Parties, as the case may be, which firm shall be
designated in writing by the Depositor in respect of the Depositor Parties, by
the Underwriter in respect of the Underwriter Parties, by the Company in respect
of the Company Parties, by the Seller in respect of the Seller Parties, by the
Originators in respect of the Originator Parties, by the Issuer in respect of
the Issuer Parties and by Financial Security in respect of the Financial
Security Parties), in each of which cases the fees and expenses of counsel will
be at the expense of the Indemnifying Party and all such fees and expenses will
be reimbursed promptly as they are incurred. The Indemnifying Party shall not be
liable for any settlement of any such claim or action unless the Indemnifying
Party shall have consented thereto or be in default in its obligations
hereunder. Any failure by an Indemnified Party to comply with the provisions of
this Section shall relieve the Indemnifying Party of liability only if such
failure is prejudicial to the position of the Indemnifying Party and then only
to the extent of such prejudice.
Section 6. Contribution. (a) To provide for just and equitable
contribution if the indemnification provided by any Indemnifying Party is
determined to be unavailable for any Indemnified Party (other than due to
application of this Section), each Indemnifying Party shall contribute to the
Losses arising from any breach of any of its representations, warranties or
agreements contained in this Agreement in such proportion as is appropriate to
reflect (i) the benefits received by such Indemnifying Party relative to the
benefits received by the Indemnified Party 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 the Indemnifying Party on the one hand and
the Indemnified Party on the other in connection with such Loss; provided,
however, that an Indemnifying Party shall in no event be required to contribute
to all Indemnified Parties an aggregate amount in excess of the Losses incurred
by such Indemnified Parties resulting from the breach of representations,
warranties or agreements contained in this Agreement.
(b) The relative fault of each Indemnifying Party, on the one
hand, and of each Indemnified Party, on the other, shall be determined by
reference to, among other things, whether the breach of, or alleged breach of,
any representations, warranties or agreements contained in this Agreement
relates to information supplied by, or action 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.
(c) The parties agree that Financial Security shall be solely
responsible for the Financial Security Information, the Underwriter shall be
solely responsible for the Underwriter Information and that, as and to the
extent provided in the Insurance Agreement, the balance of the Offering Document
shall be the responsibility of the Company, the Originators, the Seller, the
Issuer and the Depositor.
(d) Notwithstanding anything in this Section 6 to the
contrary, the Underwriter shall not be required to contribute an amount greater
than the excess, if any, of (x) the purchase prices paid by investors to the
Underwriter for the Notes over (y) the purchase price paid by the Underwriter
for the Notes.
(e) 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.
(f) Upon the incurrence of any Losses entitled to contribution
hereunder, the contributor shall reimburse the party entitled to contribution
promptly upon establishment by the party entitled to contribution to the
contributor of the Losses incurred.
(g) The provisions relating to contribution set forth in this
Section 6 do not limit the rights of any party to indemnification under Section
4.
Section 7. Miscellaneous.
(a) Notices. All notices and other communications provided for
under this Agreement shall be delivered to the address set forth below or to
such other address as shall be designated by the recipient in a written notice
to the other party or parties hereto.
If to Financial Security:
Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Surveillance Department
Re: ABFS Mortgage Loan Trust 1999-2
Mortgage Backed Notes, Series 1999-2
If to the Depositor: Prudential Securities Secured Financing Corporation
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Managing Director, Asset-Backed Finance Group
If to the Company: American Business Credit, Inc.
BalaPointe Office Centre
000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Esq.
If to the Underwriter: Prudential Securities Incorporated
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Managing Director, Asset-Backed Finance Group
If to the Seller: ABFS 1999-2, Inc.
BalaPointe Office Centre
000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Esq.
If to the Issuer: ABFS Mortgage Loan Trust 1999-2
c/o First Union Trust Company, National Association
One Xxxxxx Square
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Att: Corporate Trust Administration
If to the Originators: Home American Credit, Inc. D/B/A Upland Mortgage
BalaPointe Office Centre
000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Esq.
New Jersey Mortgage and Investment Corp.
BalaPointe Office Centre
000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Esq.
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
(c) Assignments. This Agreement may not be assigned by any
party without the express written consent of each other party. Any assignment
made in violation of this Agreement shall be null and void.
(d) Amendments. Amendments to this Agreement shall be in
writing signed by each party hereto.
(e) Survival, Etc. The indemnity and contribution agreements
contained in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Indemnifying
Party, (ii) the issuance of the Notes or (iii) any termination of this Agreement
or the Policy. The indemnification provided in this Agreement will be in
addition to any liability which the parties may otherwise have and shall in no
way limit any obligations of the Company, the Depositor, the Seller, the
Originators, the Issuer or the Underwriter under the Underwriting Agreement or
the Insurance Agreement, as applicable.
(f) Counterparts. This Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
FINANCIAL SECURITY ASSURANCE INC.
By
Name:
Title:
ABFS 1999-2, INC.
By
Name:
Title:
AMERICAN BUSINESS CREDIT, INC.
By
Name:
Title:
HOME AMERICAN CREDIT, INC. D/B/A UPLAND MORTGAGE
By
Name:
Title:
NEW JERSEY MORTGAGE AND INVESTMENT CORP.
By
---------------------------------------
Name:
Title:
PRUDENTIAL SECURITIES
SECURED FINANCING CORPORATION
By
---------------------------------------
Name:
Title:
PRUDENTIAL SECURITIES INCORPORATED
By
---------------------------------------
Name:
Title:
ABFS MORTGAGE LOAN TRUST 1999-2
By
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
not in its individual capacity but solely as Owner
Trustee under the Trust Agreement
By
---------------------------------------
Name:
Title:
EXHIBIT A
OPINION OF GENERAL COUNSEL
Based upon the foregoing, I am of the opinion that:
1. Financial Security is a stock insurance company duly
organized, validly existing and authorized to transact financial guaranty
insurance business under the laws of the State of New York.
2. The Policy and the Agreements have been duly authorized,
executed and delivered by Financial Security.
3. The Policy and the Agreements constitute valid and binding
obligations of Financial Security, enforceable against Financial Security in
accordance with their terms, subject, as to the enforcement of remedies, to
bankruptcy, insolvency, reorganization, rehabilitation, moratorium and other
similar laws affecting the enforceability of creditors' rights generally
applicable in the event of the bankruptcy or insolvency of Financial Security
and to the application of general principles of equity and subject, in the case
of the Indemnification Agreement, to principles of public policy limiting the
right to enforce the indemnification provisions contained therein insofar as
they relate to indemnification for liabilities arising under applicable
securities laws.
4. The Policy is exempt from registration under the Securities
Act of 1933, as amended (the "Act").
5. Neither the execution or delivery by Financial Security of the
Policy or the Agreements, nor the performance by Financial Security of its
obligations thereunder, will conflict with any provision of the certificate of
incorporation or the by-laws of Financial Security or, to the best of my
knowledge, result in a breach of, or constitute a default under, any agreement
or other instrument to which Financial Security is a party or by which it or any
of its property is bound or, to the best of my knowledge, violate any judgment,
order or decree applicable to Financial Security of any governmental or
regulatory body, administrative agency, court or arbitrator having jurisdiction
over Financial Security (except that in the published opinion of the Securities
and Exchange Commission the indemnification provisions of the Indemnification
Agreement, insofar as they relate to indemnification for liabilities arising
under the Act, are against public policy as expressed in the Act and are
therefore unenforceable).
In addition, please be advised that I have reviewed the
description of Financial Security under the caption "The Note Insurer" in the
Prospectus Supplement dated June 25, 1999 (the "Offering Document") of the
Depositor with respect to the Notes. The information provided in the Offering
Document with respect to Financial Security is limited and does not purport to
provide the scope of disclosure required to be included in a prospectus with
respect to a registrant under the Act in connection with a public offering and
sale of securities of such registrant. Within such limited scope of disclosure,
however, there has not come to my attention any information which would cause me
to believe that the description of Financial Security referred to above, as of
the date of the Offering Document or as of the date of this opinion, contained
or contains any untrue statement of a material fact or omitted or omits to state
a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except that I express
no opinion with respect to any financial statements or other financial
information contained or referred to therein).
