EXHIBIT 1.2
INDEMNIFICATION AGREEMENT
by and between
MBIA INSURANCE CORPORATION,
as Insurer
and
BEAR, XXXXXXX & CO. INC.,
as an Underwriter
and
XXXXXX XXXXXXX & CO. INCORPORATED
as an Underwriter
Dated as of June 28, 2001
INDEMNIFICATION AGREEMENT (the "AGREEMENT"), dated June 28, 2001, by
and between MBIA INSURANCE CORPORATION ("MBIA"), XXXXXX XXXXXXX & CO.
INCORPORATED ("XXXXXX XXXXXXX") and BEAR, XXXXXXX & CO. INC. ("BEAR XXXXXXX"
and, together with Xxxxxx Xxxxxxx, collectively, the "UNDERWRITERS"). Except as
otherwise indicated, capitalized terms used but not otherwise defined herein
shall have the respective meanings ascribed thereto in the P&S Agreement
referred to below.
WHEREAS, as described in the Pooling and Servicing Agreement, dated as
of June 28, 2001 (the "P&S AGREEMENT"), among Bear Xxxxxxx Asset Backed
Securities, Inc., as Depositor, American Business Credit, Inc., as Servicer, and
The Chase Manhattan Bank, as Trustee, (the "TRUSTEE"), the ABFS Mortgage Loan
Trust 2001-2 Mortgage Pass-Through Certificates Series 2001-2, Class A-1, Class
A-2, Class A-3, Class A-4 and Class A-IO (collectively, the "CLASS A
CERTIFICATES") will be issued by ABFS Mortgage Loan Trust 2001-2.
WHEREAS, in connection with the public offering and sale of the Class A
Certificates, the Depositor has filed with the Securities and Exchange
Commission (the "COMMISSION") registration statements on Form S-3, for the
registration under the Securities Act of 1933, as amended (the "ACT"), of the
Class A Certificates and has filed the prospectus dated June 8, 2001 (the "CORE
PROSPECTUS"), and a prospectus supplement dated June 8, 2001 (the "PROSPECTUS
SUPPLEMENT" and collectively with the Core Prospectus, the "PROSPECTUS"), with
the Commission pursuant to Rule 424(b) of the Act. The registration statements
including all exhibits and amendments thereto in the form in which it became
effective under the Act (the "EFFECTIVE DATE"), including any documents
incorporated by reference therein at such time and all post-effective amendments
thereto on the dates they became effective is referred to herein as the
"REGISTRATION STATEMENT".
WHEREAS, MBIA is authorized to transact a financial guaranty insurance
business in the State of New York and has agreed to issue to the Trustee, for
the benefit of the holders of the Class A Certificates, the Certificate
Insurance Policy (the "POLICY"), providing limited indemnity for, among other
things, certain shortfalls in required distributions on the Class A
Certificates.
WHEREAS, MBIA provided certain information to the Depositor for
inclusion in the Prospectus Supplement. The information presented in or
incorporated by reference into the Prospectus Supplement under the captions "THE
CERTIFICATE INSURER", "MBIA FINANCIAL INFORMATION" and "THE POLICY" constitutes
the only information furnished by MBIA for inclusion in the Prospectus. Such
information is collectively referred to herein as the "MBIA INFORMATION". MBIA
has reviewed the Prospectus Supplement and approved the presentation of the MBIA
Information therein.
WHEREAS, the Underwriters provided certain information to the Depositor
for inclusion in the Prospectus. The information presented in or incorporated by
reference into the Prospectus Supplement under the caption "PLAN OF
DISTRIBUTION" constitutes the only information furnished by the Underwriters for
inclusion in the Prospectus. Such information is collectively referred to herein
as the "UNDERWRITERS' INFORMATION". The Underwriters reviewed the Prospectus and
approved the presentation of the Underwriters' Information therein.
NOW, THEREFORE, in consideration of the premises contained herein and
other good and valuable consideration, receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. MBIA Agreements and Representations. MBIA agrees and represents as
follows:
(a) MBIA is a New York domiciled insurance company which is licensed, under
the laws of the State of New York, to write financial guaranty insurance and is
qualified or licensed to do business in all other jurisdictions in which such
qualification or licensing is necessary.
(b) MBIA has the corporate power and authority to execute and deliver this
Agreement and to perform all its obligations hereunder.
(c) The execution, delivery and performance of this Agreement has been duly
authorized by all necessary action (corporate and other).
(d) The MBIA Information in the Prospectus Supplement on the date of the
Prospectus Supplement and on June 28, 2001 (the "Closing Date"), did not and
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(e) The Policy and any amendments thereto will be filed with the
Superintendent of the New York State Insurance Department within 30 days of
their issuance, if not previously so filed.
(f) The Policy is exempt from registration under the Act.
(g) Neither the execution or delivery by MBIA of the Policy or the
Insurance Agreement, nor the performance by MBIA of its obligations thereunder,
will conflict with any provision of the certificate of incorporation or the
bylaws of MBIA nor result in a breach of, or constitute default under, any
material agreement or other instrument to which MBIA is a party or by which any
of its property is bound nor violate any judgment, order or decree or any law
regulation or rule applicable to MBIA of any governmental or regulatory body,
administrative agency, court or arbitrator having jurisdiction over MBIA.
(h) The consolidated balance sheets of MBIA as of December 31, 2000 and
December 31, 1999 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 MBIA as of March 31, 2001, and the related
statements of income, changes in shareholder's equity and cash flows for the
periods then ended, and furnished by MBIA to the Depositor, fairly present in
all material respects the financial condition of MBIA 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
MBIA which would materially and adversely affect its ability to perform its
obligations under the Policy.
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(i) MBIA will furnish to the Underwriters or the Depositor, upon request of
the Underwriters or the Depositor, as the case may be, copies of MBIA's most
recent financial statements (annual or interim, as the case may be) which fairly
present in all material respects the financial condition of MBIA 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 Class A Certificates 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 Class A Certificates, the Depositor
or the Underwriters will notify MBIA of such requirement to deliver a Prospectus
and MBIA will promptly provide the Depositor with any revisions to the MBIA
Information that are in the judgment of MBIA necessary to prepare a supplement
to the Prospectus.
2. Underwriters' Agreements and Representations. Each Underwriter agrees
and represents as follows:
(a) The execution, delivery and performance of this Agreement by such
Underwriter has been duly authorized by all necessary action (corporate and
other).
(b) The Underwriters' Information in the Prospectus on the date of the
Prospectus and on the Closing Date (as defined above), did not and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(c) With respect to the offering of the Class A Certificates, such
Underwriter has not and will not use any prospectus containing information
relating to MBIA unless such information relating to MBIA has been furnished by
MBIA for inclusion therein and has been approved by MBIA in writing, such
approval not to be unreasonably withheld.
3. Indemnification and Contribution.
(a) MBIA agrees to indemnify and hold harmless the Underwriters and each
Person, if any, who controls an Underwriter within the meaning of Section 15 of
the Act against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), any other
Federal or state statutory law or regulation, at common law or otherwise, as
incurred, 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 MBIA Information included
in the Prospectus Supplement, or, to the extent approved by MBIA in writing, in
any amendment or supplement to the Prospectus Supplement or arise out of or are
based upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each such
indemnified party, for any legal or other expenses reasonably incurred by it, as
incurred, in connection with investigating or defending any such loss, claim,
damage, liability or action. This indemnification agreement will be in addition
to any liability which MBIA may otherwise have.
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(b) The Underwriters agree, severally and not jointly, to indemnify and
hold harmless MBIA against any and all losses, claims, damages or liabilities,
joint or several, to which it may become subject under the Act, the Exchange
Act, any other Federal or state statutory law or regulation, at common law or
otherwise, as incurred, 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
Underwriters' Information included in the Prospectus or arise out of or are
based upon the omission or alleged omission to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, and agrees to reimburse MBIA, for any legal or other
expenses reasonably incurred by it, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnification agreement will be in addition to any liability which the
Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 3 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 3, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party except to the extent the
indemnifying party is materially prejudiced thereby. 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, at its own
expense, to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party) and after notice from the indemnifying party to such indemnified party to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section 3 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
of any such action other than reasonable costs of investigation. The
indemnifying person shall not be responsible for the settlement of any
proceeding made without its prior consent.
(d) If the indemnification provided for in this Section 3 is unavailable or
insufficient to hold harmless an indemnified party under subsections (a), (b) or
(c) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a), (b) or (c) above (i) in such
proportion as is appropriate to reflect the relative benefits received by MBIA
and the Underwriters from the offering and sale of the Class A Certificates or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
MBIA and the Underwriters in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities, or actions in respect
thereof as well as any other relevant equitable considerations. The relative
benefits received by MBIA and the Underwriters shall be deemed to be in the same
proportion as (i) the total net proceeds from the offering (before deducting
expenses) received by the Depositor to (ii) (x) in the case of MBIA, the
structuring fees paid by to MBIA by American Business Financial Services, Inc.
on the Closing Date and the total premiums received by MBIA and (ii) in the case
of the Underwriters, the total underwriting discounts and commissions received
by the Underwriters. The relative
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fault shall be determined by reference to among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by MBIA or by
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this Section
3(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
action or claim which is the subject of this Section 3(d). 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 is not
guilty of such fraudulent misrepresentation. The obligations of the Underwriters
under this Section 3(d) shall be several and not joint.
4. Representations and Indemnities to Survive. The agreements,
representations, warranties, indemnities, and other statements of the parties
hereto 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 3 hereof, and will
survive delivery of and payment for the Class A Certificates. The provisions of
Section 3 hereof shall survive the termination or cancellation of this
Agreement.
5. Notices. All communications hereunder shall be in writing and,
If to Bear Xxxxxxx:
Bear Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Counsel
If to Xxxxxx Xxxxxxx:
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel, with a copy to Xxxxxxx Xxxxxx, Esq.
If to MBIA:
MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Insured Portfolio Management, Structured Finance
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6. Miscellaneous. This Agreement is to be governed by, and construed in
accordance with, the laws of the State of New York; it may be executed in two or
more counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns and the officers and
directors and controlling persons referred to in Section 3 hereof, and no other
person shall have any right or obligation hereunder. This Agreement supersedes
all prior agreements and understandings relating to the subject matter hereof.
Neither this Agreement nor any term hereof may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of the change, waiver, discharge or termination is
sought. The headings in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, all as of the day and year first above mentioned.
MBIA INSURANCE CORPORATION
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Assistant Secretary
BEAR, XXXXXXX & CO. INC.
By: /s/ Xxxxxxxx Xxxxxxxxx
-------------------------------
Name: Xxxxxxxx Xxxxxxxxx
Title: Senior Managing Director
XXXXXX XXXXXXX & CO. INCORPORATED
By: /s/ Xxxxxx X. Friend
-------------------------------
Name: Xxxxxx X. Friend
Title: Managing Director
