AMBAC ASSURANCE CORPORATION,
as Note Insurer
AND
BEAR, XXXXXXX & CO. INC.
XXXXXX XXXXXXX & CO. INCORPORATED
as Underwriters
INDEMNIFICATION AGREEMENT
ABFS MORTGAGE LOAN TRUST 2000-4
MORTGAGE-BACKED NOTES
SERIES 2000-4
Dated as of December 6, 2000
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and shall not
be deemed to be part of this Indemnification Agreement. All capitalized terms
used in this Indemnification Agreement and not otherwise defined shall have the
meanings set forth in Article I of this Indemnification Agreement.)
Page
Section 1. Defined Terms ............................................... 1
Section 2. Other Definitional Provisions ............................... 2
Section 3. Representations and Warranties of the Underwriters .......... 2
Section 4. Representations and Warranties of the Note Insurer .......... 2
Section 5. Indemnification ............................................. 4
Section 6. Amendments, Etc ............................................. 6
Section 7. Notices ..................................................... 6
Section 8. Severability ................................................ 6
Section 9. Governing Law ............................................... 6
Section 10. Counterparts ................................................ 7
Section 11. Headings .................................................... 7
(i)
INDEMNIFICATION AGREEMENT dated as of December 6, 2000 (the
"Indemnification Agreement"), by and among AMBAC ASSURANCE CORPORATION, as Note
Insurer and BEAR, XXXXXXX & CO. INC. and XXXXXX XXXXXXX & CO. INCORPORATED, as
Underwriters.
Section 1. Defined Terms. Unless the context clearly requires otherwise,
all capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Indenture, the Servicing Agreement, the
Insurance Agreement or the Policy. For purposes of this Indemnification
Agreement, the following terms shall have the following meanings:
"Indenture" means the Indenture, dated as of December 1, 2000, relating to
the ABFS Mortgage Loan Trust 2000-4, Mortgage-Backed Notes, Series 2000-4,
between ABFS Mortgage Loan Trust 2000-4, as the Issuer and The Chase Manhattan
Bank, as the Indenture Trustee (as may be amended, modified or supplemented from
time to time).
"Insurance Agreement" means the Insurance and Indemnity Agreement (as may
be amended, modified or supplemented from time to time) dated as of December 21,
2000 by and among the Note Insurer, the Depositor, ABFS Mortgage Loan Trust
2000-4, as Issuer, American Business Credit, Inc., as Servicer and Originator,
HomeAmerican Credit, Inc. d/b/a Upland Mortgage, as Originator, New Jersey
Mortgage and Investment Corp., as Originator, ABFS 2000-4, Inc., as Seller and
The Chase Manhattan Bank, as Indenture Trustee.
"Note Insurer" means Ambac Assurance Corporation, a Wisconsin-domiciled
stock insurance corporation, or any successor thereto, as issuer of the Policy.
"Note Insurer Information" has the meaning given such term in Section 4.
"Notes" means the Class A Notes, each substantially in the form of Exhibit
A to the Indenture.
"Offering Document" means the Prospectus Supplement, dated December 6,
2000, in respect of the Notes, and any amendment or supplement thereto, and any
other offering document in respect of the Notes that makes reference to the
Policy excluding any structural term sheet, collateral term sheet or
computational materials.
"Servicing Agreement" means the Sale and Servicing Agreement, dated as of
December 1, 2000, by and among American Business Credit, Inc., as Servicer, The
Chase Manhattan Bank, as Indenture Trustee and as Collateral Agent and ABFS
Mortgage Loan Trust 2000-4, as Issuer (as may be amended, modified or
supplemented from time to time as set forth therein).
"Securities Act" means the Securities Act of 1933, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Underwriters" means Bear, Xxxxxxx & Co. Inc. and Xxxxxx Xxxxxxx & Co.
Incorporated.
"Underwriters Information" has the meaning given such term in Section 3.
Section 2. Other Definitional Provisions. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Indemnification
Agreement shall refer to this Indemnification Agreement as a whole and not to
any particular provision of this Indemnification Agreement, and Section,
subsection, Schedule and Exhibit references are to this Indemnification
Agreement unless otherwise specified. The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such terms.
The words "include" and "including" shall be deemed to be followed by the phrase
"without limitation."
Section 3. Representations and Warranties of the Underwriters. The
Underwriters represent and warrant as of the Closing Date as follows:
(a) Compliance With Laws. The Underwriters will comply in all material
respects with all legal requirements in connection with offers and sales of
the Notes and will make such offers and sales in the manner to be provided
in the Offering Document.
(b) Offering Document. The Underwriters 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 relating to the Note Insurer as has been furnished by the Note
Insurer for inclusion therein and has been approved by the Note Insurer.
(c) Underwriters Information. All material provided by the Underwriters
for inclusion in the Offering Document (as revised from time to time),
shall be true and correct in all material respects, it being understood and
agreed that the only such information furnished by the Underwriters
consists of the following information (collectively, the "Underwriters
Information"): the information contained under the heading "Plan of
Distribution" relating to the Underwriters in the Offering Document.
Section 4. Representations and Warranties of the Note Insurer. The Note
Insurer represents and warrants to the Underwriters as follows:
(a) Organization and Licensing. The Note Insurer is a duly organized
and licensed and validly existing Wisconsin stock insurance corporation
duly qualified to conduct an insurance business in the State of New York.
(b) Corporate Power. The Note Insurer has the corporate power and
authority to issue the Policy and execute this Indemnification Agreement
and to perform all of its obligations hereunder and thereunder.
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(c) Authorization; Approvals. Proceedings legally required for the
issuance of the Policy and the execution, delivery and performance of this
Indemnification Agreement have been taken and all material licenses,
orders, consents or other authorizations or approvals of any governmental
boards or bodies legally required for the enforceability of the Policy have
been obtained; any proceedings not taken and any licenses, authorizations
or approvals not obtained are not material to the enforceability of the
Policy.
(d) Enforceability. The Policy, when issued, and this Indemnification
Agreement will each constitute a legal, valid and binding obligation of the
Note Insurer, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium, receivership and other
similar laws affecting creditors' rights generally and by general
principles of equity and subject to principles of public policy limiting
the right to enforce the indemnification provisions contained therein and
herein, insofar as such provisions relate to indemnification for
liabilities arising under federal securities laws.
(e) Financial Information. The consolidated financial statements of the
Note Insurer and subsidiaries as of December 31, 1999 and December 31,
1998, and for each of the years in the three-year period ended December 31,
1999, prepared in accordance with generally accepted accounting principles,
included in the Annual Report on Form 10-K of Ambac Financial Group, Inc.
(which was filed with the Securities and Exchange Commission on March 30,
2000; Securities and Exchange Commission File No. 1-10777) and the
unaudited consolidated financial statements of the Note Insurer and
subsidiaries as of September 30, 2000 and for the periods ending September
30, 2000 and September 30, 1999, included in the Quarterly Report on Form
10-Q of Ambac Financial Group, Inc. for the period ended September 30, 2000
(which was filed with the Securities and Exchange Commission on November
13, 2000) are incorporated by reference in the Offering Document and fairly
present in all material respects the financial condition of the Note
Insurer as of such dates and for the periods covered by such statements in
accordance with generally accepted accounting principles consistently
applied. Since September 30, 2000, there has been no material change in
such financial condition of the Note Insurer that would materially and
adversely affect its ability to perform its obligations under the Policy.
(f) Note Insurer Information. The information in the Offering Document
as of the date hereof under the captions "The Note Insurer" and "The
Policy" (together, the "Note Insurer Information") is true and correct in
all material respects and does not contain any untrue statement of a
material fact.
(g) Rating. The Note Insurer is not aware of any facts that if
disclosed to Xxxxx'x or S&P would be reasonably expected to result in a
downgrade of the rating of the financial strength of the Note Insurer by
either of such Rating Agencies.
(h) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Note Insurer's knowledge,
threatened against it at law or in
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equity or before or by any court, governmental agency, board or commission
or any arbitrator which, if decided adversely, would result in a Material
Adverse Change or would materially and adversely affect its ability to
perform its obligations under the Policy or this Indemnification Agreement.
(i) Securities Act Registration. The Policy is exempt from registration
under the Securities Act.
Section 5. Indemnification.
(a) The Underwriters hereby agree severally, and not jointly, to pay,
and to protect, indemnify and save harmless, the Note Insurer and its
officers, directors, shareholders, employees, agents and each Person, if
any, who controls the Note Insurer within the meaning of either Section 15
of the Securities Act or Section 20 of the Securities Exchange Act from and
against, any and all claims, losses, liabilities (including penalties),
actions, suits, judgments, demands, damages, costs or expenses (including
reasonable fees and expenses of attorneys, consultants and auditors and
reasonable costs of investigations) of (i) any nature arising out of or by
reason of any untrue statement of a material fact or an omission to state a
material fact necessary in order to make the statements therein in light of
the circumstances in which they were made not misleading, contained in the
Underwriters Information provided by the Underwriters or (ii) a breach of
any of the representations and warranties by the Underwriters contained in
Section 3.
(b) The Note Insurer agrees to pay, and to protect, indemnify and save
harmless, the Underwriters and their respective officers, directors,
shareholders, employees, agents and each Person, if any, who controls the
Underwriters within the meaning of either Section 15 of the Securities Act
or Section 20 of the Securities Exchange Act from and against, any and all
claims, losses, liabilities (including penalties), actions, suits,
judgments, demands, damages, costs or expenses (including reasonable fees
and expenses of attorneys, consultants and auditors and reasonable costs of
investigations) of any nature arising out of or by reason of (i) any untrue
statement of a material fact or an omission to state a material fact
necessary in order to make the statements therein in light of the
circumstances in which they were made not misleading, contained in the Note
Insurer Information or (ii) a breach of any of the representations and
warranties of the Note Insurer contained in Section 4.
(c) If any action or proceeding (including any governmental
investigation) shall be brought or asserted against any Person
(individually, an "Indemnified Party" and, collectively, the "Indemnified
Parties") in respect of which the indemnification provided in this Section
5(a) or (b) may be sought from the Underwriters, on the one hand, or the
Note Insurer, on the other (each, an "Indemnifying Party") hereunder, each
such Indemnified Party shall promptly notify the Indemnifying Party in
writing, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all expenses. The Indemnified Party
shall have the
4
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 reasonably 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 there may be one or more legal defenses available to it
which are different from or additional to those available to the
Indemnifying Party (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 the
Indemnified Parties, which firm shall be designated in writing by the
Indemnified Party). The Indemnifying Party shall not be liable for any
settlement of any such action or proceeding effected without its written
consent to the extent that any such settlement shall be prejudicial to the
Indemnifying Party, but, if settled with its written consent, or if there
is a final judgment for the plaintiff in any such action or proceeding with
respect to which the Indemnifying Party shall have received notice in
accordance with this subsection (c), the Indemnifying Party agrees to
indemnify and hold the Indemnified Parties harmless from and against any
loss or liability by reason of such settlement or judgment.
(d) To provide for just and equitable contribution if the
indemnification provided by the Indemnifying Party is determined to be
unavailable or insufficient to hold harmless any Indemnified Party (other
than due to application of this Section), each Indemnifying Party shall
contribute to the losses incurred by the Indemnified Party on the basis of
the relative fault of the Indemnifying Party, on the one hand, and the
Indemnified Party, on the other hand; provided, that the Underwriters shall
not be liable for any amount in excess of (i) the excess of the sales
prices of the Notes to the public over the prices paid therefor by the
Underwriters over (ii) the aggregate amount of any damages which the
Underwriters have otherwise been required to pay in respect of the same or
substantially similar claim.
The relative fault of each Indemnifying Party, on the one hand, and
each Indemnified Party, on the other, shall be determined by reference to,
among other things, whether the breach of, or alleged breach of, any of its
representations and warranties set forth herein was 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.
5
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.
Section 6. Amendments, Etc. This Indemnification Agreement may be amended,
modified, supplemented or terminated only by written instrument or written
instruments signed by the parties hereto.
Section 7. Notices. All demands, notices and other communications to be
given hereunder shall be in writing (except as otherwise specifically provided
herein) and shall be mailed by registered mail or personally delivered and
telecopied to the recipient as follows:
(a) To the Note Insurer:
Ambac Assurance Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance Department - MBS
Facsimile No.: 000-000-0000
Confirmation: 212-668-0340
(b) To the Underwriters:
Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxxxxx
Facsimile No.: (000) 000-0000
Confirmation: (000) 000-0000
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 8. Severability. In the event that any provision of this
Indemnification Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.
Section 9. Governing Law. This Indemnification Agreement shall be governed
by and construed in accordance with the laws of the State of New York.
6
Section 10. Counterparts. The Indemnification Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
Section 11. Headings. The headings of Sections and the Table of Contents
contained in this Indemnification Agreement are provided for convenience only.
They form no part of this Indemnification Agreement and shall not affect its
construction or interpretation.
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IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement, all as of the day and year first above mentioned.
AMBAC ASSURANCE CORPORATION,
as Note Insurer
By:
----------------------------------
Name:
Title:
BEAR, XXXXXXX & CO. INC.
as Underwriter
By:
----------------------------------
Name:
Title:
XXXXXX XXXXXXX & CO. INCORPORATED
as Underwriter
By:
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Name:
Title:
