EXHIBIT 10.2
EXECUTION COPY
INDEMNIFICATION AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
ADVANTA AUTO RECEIVABLES CORP. I
and
SALOMON BROTHERS INC
Dated as of March 1, 1997
Advanta Automobile Receivables Trust 1997-1
$55,575,000 Class A-1 Floating Rate Backed Notes
$29,925,000 6.75% Class A-2 Asset Backed 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..................................... 6
Section 4. Indemnification..................................... 7
Section 5. Indemnification Procedures.......................... 7
Section 6. Contribution........................................ 8
Section 7. Miscellaneous....................................... 9
EXHIBIT A - Opinion of Assistant General Counsel
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT dated as of March 1, 1997, among FINANCIAL
SECURITY ASSURANCE INC. ("Financial Security"), ADVANTA AUTO RECEIVABLES CORP. I
(the "Company") and SALOMON BROTHERS INC (the "Underwriter").
Section 1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings provided below:
"Advanta" means Advanta Auto Finance Corporation, a Nevada corporation.
"Agreement" means this Indemnification Agreement, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof.
"Commission" means the Securities and Exchange Commission.
"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.
"Federal Securities Laws" means the Securities Act, the Securities
Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company
Act of 1940, the Investment Advisers Act of 1940 and the Public Utility Holding
Company Act of 1935, each as amended from time to time, and the rules and
regulations in effect from time to time under such Acts.
"Financial Security Agreements" means this Agreement, the Stock Pledge
Agreement, the Spread Account 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 March 1, 1997 between
Advanta Automobile Receivables Trust 1997-1 and Bankers Trust Company, as
trustee and trust collateral agent.
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"Insurance Agreement" means the Insurance and Indemnity Agreement,
dated as of March 1, 1997, among Financial Security, Advanta Automobile
Receivables Trust 1997-1, the Company and Advanta, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"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 expenses 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.
"Offering Document" means the Prospectus and any other material or
documents delivered by the Underwriter or any Underwriter Party to any Person in
connection with the offer or sale of the Securities.
"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 Securities.
"Prospectus" means any prospectus or preliminary prospectus relating to
the Securities included in the Registration Statement or filed with the
Commission (including all documents, if any, incorporated by reference therein
and the information, if any, deemed to be part thereof pursuant to the Rules and
Regulations), as the same may be amended or supplemented from time to time;
provided, however, that if any revised prospectus shall be provided by the
Company for use in connection with the offering of the Securities which differs
from the Prospectus filed with the Commission pursuant to Rule 424 of the
Securities Act (whether or not such revised prospectus is required to be filed
by the Seller pursuant to Rule 424 of the Securities Act), the term "Prospectus"
shall refer to such revised Prospectus from and after the time it is first
provided to the Underwriter or any Underwriter Party for such use.
"Rating Agencies" has the meaning provided in the last paragraph of
Section 2 hereof.
"Registration Statement" means the registration statement on Form S-3
(No. 333-19733) including a prospectus and any amendments thereto relating to
the Securities, and any registration statement required to be filed under the
Securities Act or the Rules and Regulations (including all documents, if any,
incorporated by reference therein and the information, if any,
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deemed to be part thereof pursuant to the Rules and Regulations), as the same
may be amended or supplemented from time to time.
"Securities" means the Advanta Automobile Receivables Trust 1997-1
$55,575,000 Class A-1 Floating Rate Asset Backed Notes and $29,925,000 6.75%
Class A-2 Asset Backed Notes, described in the Offering Document and issued
pursuant to the Indenture.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and any rule or regulation in effect from time to time under such Act.
"Spread Account Agreement" means the Master Spread Account Agreement
dated as of March , 1997 among the Company, the Collateral Agent specified
therein, Financial Security and the Trustee specified therein, as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof.
"Underwriter Information" has the meaning provided in Section 3(c)
hereof.
"Underwriting Agreement" means the Underwriting Agreement dated as of
March 1, 1997 between the Company and the Underwriter with respect to the offer
and sale of the Securities, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"Underwriting Party" means any of the Underwriter, its parent,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent of "controlling person" (as such item 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 with the parties
hereto 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
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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 nor 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, 1994 and December 31, 1995 and
the related consolidated statements of income, changes in shareholder's
equity and cash flows for the fiscal years then ended and the interim
consolidated balance sheet of Financial Security as of December 31,
1996, and the related statements of income, changes in shareholder's
equity and cash flows for the interim period then ended, furnished by
Financial Security to the Underwriter, 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
Prospectus set forth under the caption "THE INSURER", or such
additional information as may be deemed to be included in the
Prospectus pursuant to the first paragraph under the heading
"Incorporation of Certain Documents By Reference" on page S-3 of the
Prospectus (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 Prospectus and as of the date hereof,
the Financial Security Information does not contain any untrue
statement of a
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material fact, or omit to state a material fact necessary to make the
statements contained therein, in the light of the circumstances under
which they were made, not misleading.
(h) Additional Information. Financial Security will furnish
to the Underwriter or the Company, upon request of the Underwriter or
the Company, 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). In addition, if the delivery of a
Prospectus relating to the Securities is required at any time prior to
the expiration of nine months after the time of issuance of the
Prospectus in connection with the offering or sale of the Securities,
the Company or the Underwriter will notify Financial Security of such
requirement to deliver a Prospectus and Financial Security will
promptly provide the Underwriter with any revisions to the Financial
Security Information that are in the judgment of Financial Security
necessary to prepare a supplement to the Prospectus.
(i) Opinion of Counsel. Financial Security will furnish to
the Underwriter and the Company, on the closing date for the sale of
the Securities an opinion of its Assistant General Counsel, to the
effect set forth in Exhibit A attached hereto, dated such closing date
and addressed to the Company and the Underwriter.
(j) Consents and Reports of Independent Accountants.
Financial Security will furnish to the Underwriter and the Company,
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 Prospectus, 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 claims-paying ability by Xxxxx'x
Investors Service, Inc. or Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, 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 Prospectus and the facts and
assumptions 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 with the parties
hereto as follows:
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(a) Compliance With Laws. The Underwriter will comply in all
material respects with all legal requirements in connection with offers
and sales of the Securities and make such offers and sales in the
manner provided in the Offering Document.
(b) Offering Document. The Underwriter will not use, or
distribute to other broker-dealers for use, any Offering Document in
connection with the offer and sale of the Securities 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 Prospectus. 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".
Each Offering Document including financial information with respect to
Financial Security prepared in accordance with generally accepted
accounting principles will include the following statement immediately
preceding such financial information:
"The New York State Insurance Department recognizes only
statutory accounting practices for determining and reporting
the financial condition and results of operations of an
insurance company, for determining its solvency under the New
York Insurance Law, and for determining whether its financial
condition warrants the payment of a dividend to its
stockholders. No consideration is given by the New York State
Insurance Department to financial statements prepared in
accordance with generally accepted accounting principles in
making such determinations."
(c) Underwriter Information. All material provided by the
Underwriter for inclusion in the Offering Document (as revised from
time to time, the "Underwriter Information"), insofar as such
information relates to the Underwriter and the manner of offer and sale
of the Securities, is true and correct in all material respects. In
respect of the Prospectus, the Underwriter Information is limited to
the following: (i) the last two paragraphs on the front cover page of
the Offering Document concerning the terms of the Offering; (ii) the
first paragraph on page S-2 of the Offering Document concerning
stabilization activities; (iii) the third paragraph on page S-2
concerning market making activities and (iv) the information set under
the caption "UNDERWRITING" in the Offering Document.
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Section 4. Indemnification.
(a) Financial Security agrees, upon the terms and subject to
the conditions provided herein, to indemnify, defend and hold harmless
each Company Party and each Underwriter Party against (i) any and all
Losses incurred by them with respect to the offer and sale of the
Securities 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 Company 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 Securities 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, 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
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reasonable cooperation of, the Indemnified Party. The Indemnified Party shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof at the expense of the Indemnified Party; provided,
however, that the fees and expenses of such separate counsel shall be at the
expense of the Indemnifying Party if (i) the Indemnifying Party has agreed to
pay such fees and expenses, (ii) the Indemnifying Party shall have failed to
assume the defense of such action or proceeding and employ counsel satisfactory
to the Indemnified Party in any such action or proceeding or (iii) the named
parties to any such action or proceeding (including any impleaded parties)
include both the Indemnified Party and the Indemnifying Party, and the
Indemnified Party shall have been advised by counsel that (A) there may be one
or more legal defenses available to it which are different from or additional to
those available to the Indemnifying Party and (B) the representation of the
Indemnifying Party and the Indemnified Party by the same counsel would be
inappropriate or contrary to prudent practice, in which case, if the Indemnified
Party notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense of such action or
proceeding on behalf of such Indemnified Party, it being understood, however,
that the Indemnifying Party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys at any time for all the Company Parties, one such
firm for all Underwriter Parties and one such firm for all Financial Security
Parties, as the case may be, which firm shall be designated in writing by the
Company in respect of the Company Parties, by the Underwriter in respect of the
Underwriter Parties and by Financial Security in respect of the Financial
Security Parties. 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 on the basis of the relative fault of each of the parties as set
forth in Section 6(b) below; 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
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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 and the Underwriter shall be
solely responsible for the Underwriter Information and that the balance of each
Offering Document shall be the responsibility of the Company.
(d) Notwithstanding anything in this Section 6 to the contrary, the
Underwriter shall not be required to contribute an amount in excess of the
amount by which the total underwriting discounts and commissions received by the
Underwriter exceeds the amount of any damages that such Underwriter has
otherwise been required to pay in respect of any breach by the Underwriter of
its representations or warranties contained in Section 3 hereof.
(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.
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: Senior Vice President --
Surveillance
Department (with a copy to the attention of
the General Counsel)
Re: Advanta Automobile Receivables Trust,
1997-1, Class A-1 Floating Rate Asset Backed
Notes, and 6.75% Class A-2 Asset Backed
Notes.
Confirmation: (000) 000-0000
Facsimile Nos.: (000) 000-0000,
(000) 000-0000
(in each case in which notice or other
communication to Financial Security refers
to an Event of Default, a claim on the
Policy or with respect to which failure on
the part of
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Financial Security to respond shall be
deemed to constitute consent or acceptance,
then a copy of such notice or other
communication should also be sent to the
attention of each of the General Counsel and
the Head-Financial Guaranty Group and
shall be marked to indicate "URGENT
MATERIAL ENCLOSED.")
If to the Company: Advanta Auto Receivables Corp. I
0000 Xxxxxxxxx Xxx, Xxxxx 000
Xxxx, Xxxxxx 00000
If to the Underwriter: Salomon Brothers Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
Facsimile No: (000) 000-0000
Confirm No: (000) 000-0000
(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 of 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 Securities 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 parties to the Underwriting Agreement or the
Insurance Agreement.
(f) Counterparts. This Agreement may be executed in counterparts by
the parties hereto, and all such counterparts shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indemnification
Agreement to be duly executed and delivered as of the date first above written.
FINANCIAL SECURITY ASSURANCE INC.
By: ____________________________
Name:
Title:
ADVANTA AUTO RECEIVABLES CORP. I
By: ____________________________
Name:
Title:
SALOMON BROTHERS INC
By: _____________________________
Name:
Title:
EXHIBIT A
OPINION OF ASSISTANT 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 Financial Security Agreements have been duly
authorized, executed and delivered by Financial Security.
3. 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 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 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, 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 INSURER" in the Prospectus Supplement
dated March 26, 1997, which supplements the Prospectus dated March 24, 1997 (the
"Offering Document") of the Company
with respect to the Securities. 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 the public offer 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, contained any untrue statement of a material
fact or omitted 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 no opinion is rendered with respect to any financial
statements or other financial information contained or referred to therein).
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