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Exhibit 10.2
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AMBAC ASSURANCE CORPORATION,
and
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
INDEMNIFICATION AGREEMENT
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1998-A
Dated as of June 24, 1998
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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 June 24, 1998 (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 June 24,
1998 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 June 19, 1998,
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 June 1, 1998, relating to the Advanta Home Equity Loan Asset-Backed
Notes, Series 1998-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, 1997 and the related statements of income, stockholders'
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, 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 December 31,
1996 and December 31, 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, 1998, 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 Assurance 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: ▇▇▇▇▇▇ ▇▇▇▇
Title:
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President