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EXHIBIT 10.2
AMBAC ASSURANCE CORPORATION,
and
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
INDEMNIFICATION AGREEMENT
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1997-A
Dated as of November 20, 1997
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TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and shall
not be deemed to be part of this Indemnity Agreement. All capitalized terms used
in this Indemnity Agreement and not otherwise defined shall have the meanings
set forth in Article I of this Indemnity Agreement.)
Page
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Section 1. Defined Terms............................................1
Section 2. Other Definitional Provisions............................1
Section 3. Representations and Warranties of the Underwriter........2
Section 4. Representations and Warranties of the Insurer............2
Section 5. Indemnification..........................................3
Section 6. Amendments, Etc..........................................5
Section 7. Notices..................................................5
Section 8. Severability.............................................6
Section 9. Governing Law............................................6
Section 10. Counterparts............................................6
Section 11. Headings................................................6
(i)
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INDEMNIFICATION AGREEMENT dated as of November 20, 1997 (the "Indemnity
Agreement"), by and among AMBAC ASSURANCE CORPORATION, as Insurer, and ▇.▇.
▇▇▇▇▇▇ SECURITIES INC. (the"Underwriter").
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 Sale and Servicing Agreement, the
Insurance Agreement or the Policy. For purposes of this Indemnity Agreement, the
following terms shall have the following meanings:
"Insurance Agreement" means the Insurance and Indemnity Agreement (as
may be amended, modified or supplemented from time to time) dated as of November
20, 1997 by and among the Advanta Mortgage Conduit Services, Inc., as Sponsor,
Advanta Mortgage Corp. USA, as Master Servicer, the Insurer and the Trust, as
Issuer.
"Insurer" means Ambac Assurance Corporation, or any successor thereto,
as issuer of the Policy.
"Insurer Information" has the meaning given such term in Section 4.
"Offering Document" means the Prospectus Supplement, dated November __,
1997, in respect of the Certificates, and any amendment or supplement thereto,
and any other offering document in respect of the Certificates that makes
reference to the Policy.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of November 1, 1997, relating to the Advanta Home Equity Loan
Asset-Backed Notes, Series 1997-A, by and among the Sponsor, the Master Servicer
and the Trustee (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.
"Underwriter" means ▇.▇. ▇▇▇▇▇▇ Securities Inc.
"Underwriter's 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 Indemnity
Agreement shall refer to this Indemnity Agreement as a whole and not to any
particular provision of this Indemnity Agreement, and Section, subsection,
Schedule and Exhibit references are to this Indemnity 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."
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Section 3. Representations and Warranties of the Underwriter. The
Underwriter represent and warrant 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 Notes and will make such offers and sales in the
manner to be provided in the Offering Document.
(b) Offering Document. The Underwriter will not use, or
distribute to other broker-dealers for use, any Offering Document in
connection with the offer and sale of the Notes unless such Offering
Document includes such information relating to the Insurer as has been
furnished by the Insurer for inclusion therein and has been approved by
the Insurer.
(c) Underwriter' Information. All material provided by the
Underwriter 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
any Underwriter consists of the following information (collectively,
the "Underwriter's Information"): the information contained under the
heading "Underwriting" in the Offering Document.
Section 4. Representations and Warranties of the Insurer. The Insurer
represents and warrants to the Underwriter as follows:
(a) Organization and Licensing. The Insurer is a duly
organized and licensed and validly existing Wisconsin stock insurance
company duly qualified to conduct an insurance business in the State of
New York.
(b) Corporate Power. The Insurer has the corporate power and
authority to issue the Policy and execute this Indemnity Agreement and
to perform all of its obligations hereunder and thereunder.
(c) Authorization; Approvals. Proceedings legally required for
the issuance of the Policy and the execution, delivery and performance
of this Indemnity 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
Indemnity Agreement will each constitute a legal, valid and binding
obligation of the Insurer, enforceable in accordance with its terms,
subject to 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.
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(e) Financial Information. The balance sheet of the Insurer as
of December 31, 1996 and the related statements of income,
stockholder's equity and cash flows for the two fiscal years ended
December 31, 1996, and the accompanying footnotes, together with an
opinion thereon dated January 30, 1997, 1997 of KPMG Peat Marwick,
independent certified public accountants, a copy of which is
incorporated by reference in the Offering Document, fairly present in
all material respects the financial condition of the Insurer as of such
dates and for the periods covered by such statements in accordance with
generally accepted accounting principles consistently applied. The
balance sheets of the Insurer as of June 30, 1996 and June 30, 1997
fairly present in all material respects the financial condition of the
Insurer as of such date in accordance with generally accepted
accounting principles consistently applied. Since March 31, 1997, there
has been no material change in such financial condition of the Insurer
that would materially and adversely affect its ability to perform its
obligations under the Policy.
(f) Insurer Information. The information in the Offering
Document as of the date hereof under the caption "THE INSURER AND THE
POLICY" (the "Insurer Information") is true and correct in all material
respects and does not contain any untrue statement of a material fact.
(g) Rating. The Insurer is not aware of any facts that if
disclosed to Moody's or Standard & Poor's would be reasonably expected
to result in a downgrade of the rating of the claims paying ability of
the 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 Insurer's knowledge,
threatened against it at law or in 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 Insurance Agreement.
(i) 1933 Act Registration. The Policy is exempt from
registration under the Act.
Section 5. Indemnification.
(a) The Underwriter hereby agrees to pay, and to protect,
indemnify and save harmless, the Insurer and its officers, directors,
shareholders, employees, agents and each Person, if any, who controls
the 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 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 Underwriter's Information or a
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breach of any of the representations and warranties of the Underwriter
contained in Section 3.
(b) The Insurer agrees to pay, and to protect, indemnify and
save harmless, the Underwriter and its respective officers, directors,
shareholders, employees, agents and each Person, if any, who controls
such Underwriter 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 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 Insurer Information or a breach
of any of the representations and warranties of the 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 indemnity provided in
this Section 5(a) or (b) may be sought from any Underwriter, on the one
hand, or the 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 satisfactory
to the Indemnified Party and the payment of all expenses. The
Indemnified Party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof at the
expense of the Indemnified Party; provided, however, that the fees and
expenses of such separate counsel shall be at the expense of the
Indemnifying Party if (i) the Indemnifying Party has agreed to pay such
fees and expenses, (ii) the Indemnifying Party shall have failed to
assume the defense of such action or proceeding and employ counsel
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
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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
no Underwriter shall be liable for any amount in excess of (i) the
excess of the sales prices of the Offered Certificates to the public
over the prices paid therefor by the Underwriter over (ii) the
aggregate amount of any damages which the Underwriter have otherwise
been required to pay in respect of the same or any 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 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.
No person guilty of fraudulent misrepresentation
(within the meaning of Section (11)f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Section 6. Amendments, Etc. This Indemnity 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 Insurer:
Ambac Indemnity Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Structured Finance Department - MBS
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation: ▇▇▇-▇▇▇-▇▇▇▇
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(b) To any Underwriter:
▇.▇. ▇▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation: ▇▇▇-▇▇▇-▇▇▇▇
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
Indemnity 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 Indemnity Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
Section 10. Counterparts. The Indemnity 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 Indemnity Agreement are provided for convenience
only. They form no part of this Indemnity 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 Insurer
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: VICE PRESIDENT
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▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Title: VICE PRESIDENT
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