INDEMNIFICATION AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
AMERICAN RESIDENTIAL INVESTMENT TRUST, INC.,
AMERICAN RESIDENTIAL EAGLE, INC.,
AMERICAN RESIDENTIAL EAGLE BOND TRUST 1999-1,
BEAR XXXXXXX ASSET BACKED SECURITIES, INC.,
and
BEAR, XXXXXXX & CO. INC.
Dated as of April 9, 1999
American Residential Eagle Bond Trust 1999-1
Mortgage-Backed LIBOR Notes, Class A, Series 1999-1
$229,000,000
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.........................................7
Section 6. Contribution.......................................................8
Section 7. Miscellaneous......................................................9
EXHIBIT
Exhibit A Opinion of General Counsel
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT dated as of April 9, 1999, among FINANCIAL
SECURITY ASSURANCE INC. ("Financial Security"), AMERICAN RESIDENTIAL EAGLE
BOND TRUST 1999-1 (the "Issuer"), AMERICAN RESIDENTIAL INVESTMENT TRUST, INC.
(the "Company"), AMERICAN RESIDENTIAL EAGLE, INC. (the "Seller"), BEAR XXXXXXX
ASSET BACKED SECURITIES, INC. (the "Depositor") and BEAR, XXXXXXX & CO. INC.
(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.
"Insurance Agreement" means the Insurance and Indemnity Agreement, dated
as of April 1, 1999, by and among Financial Security, the Issuer, the
Depositor, the Seller, and the Company.
"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.
"Master Servicing Agreement" means the Master Servicing Agreement, dated
as of April 1, 1999, among Advanta Mortgage Corp. USA, as Master Servicer, the
Issuer, and the Indenture Trustee.
"Prospectus" means the Prospectus dated June 4, 1998 and the Prospectus
Supplement dated April 9, 1999 relating to the Securities.
"Offering Document" means the Prospectus 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
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.
"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.
"Securities" means the American Residential Eagle Bond Trust 1999-1,
$229,000,000 Mortgage-Backed LIBOR Notes, Class A, Series 1999-1, issued
pursuant to the Indenture, dated as of April 1, 1999, between the Issuer and
Norwest Bank Minnesota, National Association as Indenture Trustee (the
"Indenture Trustee")
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Underwriting Agreement" means the Underwriting Agreement, dated as of
April 9, 1999, between the Depositor and the Underwriter in respect of the
Securities.
"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 monoline 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 incorporation in the
Prospectus, 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
Supplement set forth under the caption "The Note Insurer" (as revised from
time to time in accordance with the provisions hereof (except with respect to
undertakings by the Depositor or the Seller), 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 Supplement 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 Depositor, the Company or the Issuer, upon request of the
Underwriter, the Depositor, the Company or the Issuer, 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 Depositor, the Company or the Issuer 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 Depositor, the Company or the Issuer, as the case may be.
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
issue of the Prospectus in connection with the offering or sale of the
Securities, the Company, the Depositor or the Underwriter will notify
Financial Security of such requirement to deliver a Prospectus and Financial
Security will promptly provide the Underwriter, the Depositor and the Company
with any revisions to the Financial Security Information that are in the
judgment of Financial Security necessary to prepare an amended Prospectus or a
supplement to the Prospectus which will correct such statement or omission.
(i) Opinion of Counsel. Financial Security will furnish to the Issuer,
the Depositor, the Seller, the Underwriter, the Company and the Rating
Agencies on the closing date for the sale of the Securities 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 Issuer, the Depositor,
the Seller, the Underwriter, the Company and the Rating Agencies.
(j) Consents and Reports of Independent Accountants. Financial Security
will furnish to the Underwriter, the Company, the Depositor and the Issuer,
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 Standard & Poor's Ratings Service, a Division of The McGraw Hill
Companies, Inc., or 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
Prospectus 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, with respect to itself, 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 Securities and make such offers and sales in the manner provided in the
Prospectus.
(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 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 principals in making such determinations."
(c) Underwriter Information. The following information constitutes the
only information furnished by the Underwriter (the "Underwriter Information"):
(i) the statements set forth in the second to the last paragraph on the front
cover page of the Prospectus Supplement; (ii) the statements set forth under
the heading "Underwriting"; and (iii) the statements (other than those based
on the "Seller Provided Information" (as such term is defined in the
Underwriting Agreement)) 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, Peabody Acceptance Corporation I,
Xxxxxx, Xxxxxxx & 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"). Within such limited scope of disclosure, however, as of the
date of the Prospectus and as of the date hereof, the Underwriter 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.
Section 4. Indemnification. (a) Financial Security agrees, upon the terms
and subject to the conditions provided herein, to indemnify, defend and hold
harmless each Issuer Party, each Depositor Party, each Seller Party, 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 Issuer Party, Depositor Party, Seller Party, 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 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
Issuer Parties, Depositor Parties, Seller Parties and 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, Seller Parties,
Depositor Parties and Issuer Parties, by the Underwriter in respect of the
Underwriter 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 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 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 Seller, the Depositor and the
Issuer.
(d) Notwithstanding anything in this Section 6 to the contrary, the
Underwriter shall not be required to contribute an amount greater than the
total discount received by it from the Depositor in respect of the Securities
underwritten by the Underwriter.
(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: Transaction Oversight
Re: American Residential Eagle Bond Trust 1999-1
If to the Issuer: American Residential Eagle Bond Trust 1999-1
c/o Wilmington Trust Company, as Owner Trustee
Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Administration
If to the Company: American Residential Investment Trust, Inc.
000 Xxxxxx Xxxx Xxxxxx, Xxxxx 000
Xxx Xxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx and/or Xxxxxx Xxxx
If to the Seller: American Residential Eagle, Inc.
000 Xxxxxx Xxxx Xxxxxx, Xxxxx 000
Xxx Xxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx and/or Xxxxxx Xxxx
If to the Depositor: Bear Xxxxxxx Asset Backed Securities, Inc.
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset Backed Securities Group/American
Residential Eagle Bond Trust 1999-1
If to the Underwriter: Bear Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Counsel/American
Residential Eagle Bond Trust 1999-1
(b) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflicts of law principles thereof.
(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 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 Company, the Seller, the Depositor, 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.
(g) Limitation of Liability of Wilmington Trust Company. It is expressly
understood and agreed by the parties hereto that (i) this Agreement is
executed and delivered by Wilmington Trust Company, not individually or
personally but solely as Owner Trustee of the Issuer in the exercise of the
powers and authority conferred and vested in it, (ii) each of the
representations, undertakings and agreements herein made on the part of the
Issuer is made and is intended not as personal representations, undertakings
and agreements by Wilmington Trust Company but is made and intended for the
purpose for binding only the Issuer, (iii) nothing herein contained shall be
construed as creating any liability on the part of Wilmington Trust company,
individually or personally, to perform any covenant either express or implied
herein and all such liability, if any, being expressly waived by the parties
hereto and by any Person claiming by, through or under the parties hereto and
(iv) under no circumstances shall Wilmington Trust Company be personally
liable for the payment of any indebtedness or expenses of the Issuer or be
liable for the breach or failure of any obligation, representation, warranty
or covenant made or undertaken by the Issuer under this Agreement or any other
related document.
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:
AMERICAN RESIDENTIAL EAGLE BOND TRUST 1999-1
By: Wilmington Trust Company, solely in its capacity
as Owner Trustee
By /s/ Xxxxxx Xxxxxx
---------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
AMERICAN RESIDENTIAL INVESTMENT TRUST, INC.
By /s/ Xxx X. Xxxxxx
-------------------------------------------------
Name: Xxx X. Xxxxxx
Title:
AMERICAN RESIDENTIAL EAGLE, INC.
By: Xxx X. Xxxxxx
-------------------------------------------------
Name: Xxx X. Xxxxxx
Title:
BEAR XXXXXXX ASSET BACKED SECURITIES, INC.
By /s/ Xxxxxxxx Xxxxxxxxx
--------------------------------------------------
Name: Xxxxxxxx Xxxxxxxxx
Title: Managing Director
BEAR, XXXXXXX & CO. INC.
By: /s/ Xxxxxxxx Xxxxxxxxx
--------------------------------------------------
Name: Xxxxxxxx Xxxxxxxxx
Title: Managing Director
EXHIBIT A
OPINION OF GENERAL COUNSEL
Based upon the foregoing, I am of the opinion that:
1. Financial Security is a monoline 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 April 9, 1999 to the Prospectus dated June 4, 1998 (the
"Offering Document") of the Issuer 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 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
Prospectus Supplement 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).
