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Exhibit 10.1
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AMBAC ASSURANCE CORPORATION,
MORGAN STANLEY & CO. INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
and
SALOMON SMITH BARNEY, INC.
INDEMNIFICATION AGREEMENT
ADVANTA MORTGAGE LOAN TRUST 1999-2
Dated as of May 26, 1999
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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 Underwriters.................................................2
Section 4. Representations and Warranties of the Certificate 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
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INDEMNIFICATION AGREEMENT dated as of May 26, 1999 (the "Indemnity
Agreement"), by and among AMBAC ASSURANCE CORPORATION, as Certificate Insurer,
and MORGAN STANLEY & CO. INCORPORATED, PRUDENTIAL SECURITIES INCORPORATED and
SALOMON SMITH BARNEY, INC. (the"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 Pooling and Servicing Agreement, the
Insurance Agreement or the Policy. For purposes of this Indemnity Agreement, the
following terms shall have the following meanings:
"Certificate Insurer" means Ambac Assurance Corporation, or any
successor thereto, as issuer of the Policy.
"Certificate Insurer Information" has the meaning given such term in
Section 4.
"Insurance Agreement" means the Insurance and Indemnity Agreement (as
may be amended, modified or supplemented from time to time) dated as of June 3,
1999 by and among the Advanta Mortgage Conduit Services, Inc., as Sponsor,
Advanta Mortgage Corp. USA, as Master Servicer and the Certificate Insurer.
"Offering Document" means, together, the Preliminary Prospectus
Supplement, dated May 21, 1999, and the Prospectus Supplement, dated May 26,
1999, 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.
"Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement, dated as of May 1, 1999, relating to the Advanta Mortgage Loan
Asset-Backed Certificates, Series 1999-2, 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.
"Underwriters" means Morgan Stanley & Co. Incorporated, Prudential
Securities Incorporated and Salomon Smith Barney, Inc., severally.
"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 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
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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. Each
Underwriter severally represent and warrant as of the Closing Date 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 Certificates and will make such offers and sales in
the manner to be provided in the Offering Document.
(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 Certificates unless such
Offering Document includes such information relating to the Certificate
Insurer as has been furnished by the Certificate Insurer for inclusion
therein and has been approved by the Certificate 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 regarding the
Underwriters contained under the heading "Underwriting" in the Offering
Document.
Section 4. Representations and Warranties of the Certificate Insurer.
The Certificate Insurer represents and warrants to each Underwriter as follows:
(a) Organization and Licensing. The Certificate 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.
(a) Corporate Power. The Certificate 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.
(a) 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.
(a) Enforceability. The Policy, when issued, and this Indemnity Agreement will
each constitute a legal, valid and binding obligation of the Certificate
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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(a) Financial Information. The consolidated financial statements of
the Certificate Insurer and subsidiaries as of December 31, 1998 and December
31, 1997, and for each of the years in the three-year period ended December 31,
1998, 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 Commission on March 30, 1999; Commission File Number 1-10777)
and the unaudited consolidated financial statements of the Certificate Insurer
and subsidiaries as of March 31, 1999 and for the periods ending March 31, 1999
and March 31, 1998 included in the Quarterly Report on Form 10-Q of Ambac
Financial Group, Inc. for the period ended March 31, 1999 (which was filed with
the Commission on May 12, 1999), which are incorporated by reference in the
Offering Document, fairly present in all material respects the financial
condition of the Certificate Insurer as of such dates and for the periods
covered by such statements in accordance with generally accepted accounting
principles consistently applied. Since March 31, 1999, there has been no
material change in such financial condition of the Certificate Insurer that
would materially and adversely affect its ability to perform its obligations
under the Policy.
(a) Certificate Insurer Information. The information in the Offering Document as
of the date hereof under the captions "THE CERTIFICATE INSURER" and "THE
CERTIFICATE INSURANCE POLICY" (together, the "Certificate Insurer Information")
is true and correct in all material respects and does not contain any untrue
statement of a material fact.
(a) Rating. The Certificate Insurer is not aware of any facts that if disclosed
to Moody's or S&P would be reasonably expected to result in a downgrade of the
rating of the financial strength of the Certificate Insurer by either of such
Rating Agencies.
(a) No Litigation. There are no actions, suits, proceedings or investigations
pending or, to the best of the Certificate 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 Indemnification
Agreement.
(a) 1933 Act Registration. The Policy is exempt from registration under the
Securities Act.
Section 5. Indemnification.
(a) The Underwriters hereby severally agree to pay, and to
protect, indemnify and save harmless, the Certificate Insurer and its
officers, directors, shareholders, employees, agents and each Person,
if any, who controls the Certificate 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
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Underwriters' Information or a breach of any of the representations and
warranties of the Underwriters contained in Section 3.
(b) The Certificate Insurer agrees to pay, and to protect,
indemnify and save harmless, each Underwriters and their respective
officers, directors, shareholders, employees, agents and each Person,
if any, who controls such 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 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 Certificate
Insurer Information or a breach of any of the representations and
warranties of the Certificate 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 of the Underwriters, on
the one hand, or the Certificate 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 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
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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 Certificates 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 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 Securities 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 Certificate Insurer:
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: Structured Finance Department - MBS
Telecopy No.: 212-363-1459
Confirmation: 212-668-0340
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(b) To the Representative of the Underwriters:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: ___________________
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 Certificate Insurer
By: /s/ Thomas J. Adams
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Name: Thomas J. Adams
Title:
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Valerie Kay
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Name: Valerie Kay
Title: Vice President
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Chris Riccardi
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Name: Chris Riccardi
Title: Vice President
SALOMON SMITH BARNEY, INC.
By: /s/ Paul Humphrey
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Name: Paul Humphrey
Title: Vice President