EXHIBIT 10.1 - -------------------------------------------------------------------------------- INDEMNIFICATION AGREEMENT among FINANCIAL SECURITY ASSURANCE INC., ACCESS FINANCIAL LENDING CORP., ACCESS FINANCIAL RECEIVABLES CORP., PRUDENTIAL SECURITIES INCORPORATED and MORGAN STANLEY & CO. INCORPORATED Dated as of October 23, 1997 $199,870,000 Access Financial Mortgage Loan Trust 1997-3, Mortgage Loan Pass-Through Certificates, Series 1997-3 - -------------------------------------------------------------------------------- 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 A Opinion of General Counsel INDEMNIFICATION AGREEMENT INDEMNIFICATION AGREEMENT dated as of October 23, 1997, among FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), ACCESS FINANCIAL RECEIVABLES CORP. (the "Transferor"), ACCESS FINANCIAL LENDING CORP. (the "Company"), PRUDENTIAL SECURITIES INCORPORATED ("Prudential") and MORGAN STANLEY & CO. INCORPORATED (each of Prudential and Morgan Stanley & Co. Incorporated, an "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 and subsidiaries 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 regulations in effect from time to time under such Acts. "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. -2- "Insurance Agreement" means the Insurance and Indemnity Agreement, dated as of October 1, 1997, among Financial Security, the Transferor and the Company. "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 Circular" means the Prospectus Supplement relating to the Securities dated October 23, 1997. "Offering Document" means the Offering Circular and any other material or documents delivered by an 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. "Securities" means the Class A Group I Certificates, Class A-6 Group II Certificates and Class A-7 Group III Certificates issued pursuant to the Pooling and Servicing Agreement, dated as of October 1, 1997, among the Company, the Transferor and Chase Manhattan Bank, as trustee. "Securities Act" means the Securities Act of 1933, as amended from time to time. "Transferor Party" means any of the Transferor, its parent and subsidiaries and any shareholder, director, officer, employee, agent or "controlling person" (as such term is used in the Securities Act) of any of the foregoing. -3- "Underwriter Information" has the meaning provided in Section 3(c) hereof. "Underwriter Party" means either Underwriter, or, with respect to either Underwriter, the parent, subsidiaries and affiliates thereof and any shareholder, director, officer, employee, agent or "controlling person" (as such item is used in the Securities Act) of any of the foregoing. "Underwriting Agreement" means the Underwriting Agreement between the Company and the Underwriters in respect of the Securities. Section 2. Representations, Warranties and Agreements of Financial Security. Financial Security represents, warrants and agrees to and with the other 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 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 -4- 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, 1995 and December 31, 1996 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 June 30, 1997, 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 Underwriters, fairly present in all material respects the financial condition of Financial Security as of such dates and for such periods in accordance with generally accepted accounting principles consistently applied (subject as to interim statements to normal year-end adjustments), and since the date of the most current interim consolidated balance sheet referred to above there has been no change in the financial condition of Financial Security which would materially and adversely affect its ability to perform its obligations under the Policy. (g) Financial Security Information. The information in the Offering Circular set forth under the caption "The Certificate Insurance Policy and the Certificate Insurer--Certificate Insurer" (as revised from time to time in accordance with the provisions hereof, the "Financial Security Information") is limited and does not purport to provide the scope of disclosure required to be included in a prospectus with respect to a registrant in connection with the offer and sale of securities of such registrant registered under the Securities Act. Within such limited scope of disclosure, however, as of the date of the Offering Circular and as of the date hereof, the Financial Security Information does not contain any untrue statement of a material fact, or omit to state a material fact necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading. (h) Additional Information. Financial Security will furnish to the Underwriters or the Company, upon request of an 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); provided, however, that, if an Underwriter or the Company 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 relevant Underwriter or the Company, as the case may be. In -5- addition, if the delivery of an Offering Circular relating to the Securities is required at any time prior to the expiration of nine months after the time of issue of the Offering Circular in connection with the offering or sale of the Securities, the Company or an Underwriter will notify Financial Security of such requirement to deliver an Offering Circular and Financial Security will promptly provide the Underwriters and the Company with any revisions to the Financial Security Information that are in the judgment of Financial Security necessary to prepare an amended Offering Circular or a supplement to the Offering Circular which will correct such statement or omission. (i) Opinion of Counsel. Financial Security will furnish to the Underwriters, the Company and the Transferor on the closing date for the sale of the Securities an opinion of its General Counsel, to the effect set forth in Exhibit A attached hereto, dated such closing date and addressed to the Transferor, the Company and the Underwriters. (j) Consents and Reports of Independent Accountants. Financial Security will furnish to the Underwriters 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 Offering Circular, including either a manually signed consent or a manually signed report of Financial Security's independent accountants and (ii) the quarterly review letter by Financial Security's independent accountants in respect of the most recent interim financial statements of Financial Security. Nothing in this Agreement shall be construed as a representation or warranty by Financial Security concerning the rating of its claims-paying ability by Moody's Investors Service, Inc. or Standard & Poor's, a division of the McGraw-Hill 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 Offering Circular and the facts and assumptions which are considered by the Rating Agencies, and the ratings issued thereby, are subject to change over time. Section 3. Representations, Warranties and Agreements of the Underwriters. Each Underwriter represents, warrants and agrees with respect to itself as follows: (a) Compliance With Laws. Such 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 Circular. (b) Offering Document. Such 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 -6- has been furnished by Financial Security for inclusion therein and the informa tion therein concerning Financial Security has been approved by Financial Security in writing. Financial Security hereby consents to the information in respect of Financial Security included in the Offering Circular. Each Offering Document will include the following statement: "The Policy is not covered by the property/casualty insurance security fund specified in Article 76 of the New York Insurance Law". (c) Underwriter Information. All material provided by such Underwriter for inclusion in the Offering Circular (as revised from time to time, the "Underwriter Information"), insofar as such information relates to such Underwriter, is true and correct in all material respects. In respect of the Offering Circular, the Underwriter Information is limited to the information set forth under the caption "Underwriting" and any information relating to any potential market-making, over-allotment or price stabilization activities of the related Underwriter in the Offering Circular. Section 4. Indemnification. (a) Financial Security agrees, upon the terms and subject to the conditions provided herein, to indemnify, defend and hold harmless each Transferor 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 Transferor 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) Each Underwriter agrees, severally and not jointly, 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 such 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 -7- 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 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 Transferor Parties, one such firm for all Underwriter Parties relating to Prudential, one such firm for all Underwriter Parties relating to Morgan Stanley & Co. Incorporated, one such firm for all Company Parties, and one such firm for all Financial Security Parties, as the case may be, which firm shall be designated in writing by the Transferor in respect of the Transferor Parties, by the relevant Underwriter in respect of the Underwriter Parties, by the Company in respect of the Company 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 -8- 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 and the Underwriters shall be solely responsible for the Underwriter Information and that the balance of each Offering Document shall be the responsibility of the Transferor and the Company as described in the Insurance Agreement. (d) Notwithstanding anything in this Section 6 to the contrary, an Underwriter shall not be required to contribute an amount in excess of the amount by which the total re-offering price at which the Securities underwritten by such Underwriter and distributed and offered to the public exceeds the amount paid under the Underwriting Agreement by such Underwriter for such Securities. (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. -9- 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. 350 Park Avenue New York, NY 10022 Attention: Senior Vice President-- Surveillance (with a copy to the attention of the General Counsel) If to Transferor: Access Financial Receivables Corp. 400 Highway 169 South, Suite 410 St. Louis Park, Minnesota 55426-0365 Attention: General Counsel If to Company: Access Financial Lending Corp. 400 Highway 169 South, Suite 400 St. Louis Park, Minnesota 55426-0365 Attention: General Counsel If to Prudential: Prudential Securities Incorporated Asset-Backed Finance Group One New York Plaza, 15th Floor New York, New York 10292-2015 If to Morgan Stanley & Co. Incorporated: Morgan Stanley & Co. Incorporated Asset Backed Finance Group 1585 Broadway, 3rd Floor New York, New York 10036 -10- (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 Transferor or the Company 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. -11- 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 ____________________________ Authorized Officer ACCESS FINANCIAL LENDING CORP. By Name Dan J. Cheever Title Chief Financial Officer ACCESS FINANCIAL RECEIVABLES CORP. By_______________________________ Name ____________________________ Title ___________________________ PRUDENTIAL SECURITIES INCORPORATED By_______________________________ Name ____________________________ Title ___________________________ MORGAN STANLEY & CO. INCORPORATED By_______________________________ Name ____________________________ Title ___________________________ EXHIBIT A OPINION OF GENERAL COUNSEL Based upon the foregoing, I am of the opinion that: 1. Financial Security is a stock insurance company duly organized, validly existing and authorized to transact financial guaranty insurance business under the laws of the State of New York. 2. The Policy and the Agreements have been duly authorized, executed and delivered by Financial Security. 3. The Policy and the Agreements constitute valid and binding obligations of Financial Security, enforceable against Financial Security in accordance with their terms, subject, as to the enforcement of remedies, to bankruptcy, insolvency, reorganization, rehabilitation, moratorium and other similar laws affecting the enforceability of creditors' rights generally applicable in the event of the bankruptcy or insolvency of Financial Security and to the application of general principles of equity and subject, in the case of the Indemnification Agreement, to principles of public policy limiting the right to enforce the indemnification provisions contained therein insofar as they relate to indemnification for liabilities arising under applicable securities laws. 4. The Policy is exempt from registration under the Securities Act of 1933, as amended (the "Act"). 5. Neither the execution or delivery by Financial Security of the Policy or the Agreements, nor the performance by Financial Security of its obligations thereunder, will conflict with any provision of the certificate of incorporation or the by-laws of Financial Security or, to the best of my knowledge, result in a breach of, or constitute a default under, any agreement or other instrument to which Financial Security is a party or by which it or any of its property is bound or, to the best of my knowledge, violate any judgment, order or decree applicable to Financial Security of any governmental or regulatory body, administrative agency, court or arbitrator having jurisdiction over Financial Security (except that in the published opinion of the Securities and Exchange Commission the indemnification provisions of the Indemnification Agreement, insofar as they relate to indemnification for liabilities arising under the Act, are against public policy as expressed in the Act and are therefore unenforceable). In addition, please be advised that I have reviewed the description of Financial Security under the caption "The Certificate Insurance Policy and the Certificate Insurer--Certificate Insurer" in the Prospectus Supplement dated October 23, 1997 (the "Offering Document") of the Transferor with respect to the Securities. The information -2- 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 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).