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EXHIBIT 10.2
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AMBAC ASSURANCE CORPORATION,
and
BEAR, STEARNS & CO. INC.
and
LEHMAN BROTHERS INC.
INDEMNIFICATION AGREEMENT
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-A
Dated as of May 27, 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 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
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Section 1. Defined Terms.................................................. 1
Section 2. Other Definitional Provisions.................................. 1
Section 3. Representations, Warranties and Covenants of the Underwriters.. 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
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INDEMNIFICATION AGREEMENT dated as of May 27, 1999 (the "Indemnification
Agreement"), by and among AMBAC ASSURANCE CORPORATION, as Insurer, BEAR, STEARNS
& CO. INC. and LEHMAN BROTHERS INC.
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 Indemnification Agreement, the
following terms shall have the following meanings:
"Indenture" means the Indenture (as may be amended, modified or
supplemented from time to time) dated as of May 1, 1999 by and among the Advanta
Revolving Home Equity Loan Trust 1999-A and Bankers Trust Company of California,
N.A., as Indenture Trustee.
"Insurance Agreement" means the Insurance and Indemnification Agreement (as
may be amended, modified or supplemented from time to time) dated as of May 27,
1999 by and among the Advanta Mortgage Conduit Services, Inc., as Sponsor,
Advanta Mortgage Corp. USA, as Master Servicer, the Insurer, Advanta Holding
Trust 1999-A, the Trust, as Issuer and Bankers Trust Company of California,
N.A., as Indenture Trustee.
"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.
"Notes" means any one of the Notes substantially in the form set forth in
Exhibit A to the Indenture.
"Offering Document" means the Prospectus Supplement, dated May 18, 1999, 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.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of May 1, 1999, relating to the Advanta Home Equity Loan Asset Backed
Notes, Series 1999-A, by and among Advanta Revolving Home Equity Loan Trust
1999-A, Advanta Holding Trust 1999-A, the Sponsor, the Master Servicer and the
Indenture 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 Bear, Stearns & Co. Inc. and Lehman Brothers Inc.
"Underwriters' Information" has the meaning given such term in Section 3.
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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, Warranties and Covenants of the Underwriters.
The Underwriters represent, warrant and covenant 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 Insurer as has been furnished by the Insurer
for inclusion therein and has been approved by the 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 third,
fourth, fifth, sixth, seventh and ninth paragraphs under the heading
"UNDERWRITING" in the Offering Document.
Section 4. Representations and Warranties of the Insurer. The Insurer
represents and warrants to the Underwriters 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 Indemnification 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
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.
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(d) Enforceability. The Policy, when issued, and this Indemnification
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.
(e) Financial Information. The consolidated financial statements of
the 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
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 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
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 financial strength 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 Indemnification Agreement.
(i) 1933 Act Registration. The Policy is exempt from registration
under the Securities Act.
Section 5. Indemnification.
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(a) The Underwriters hereby agree 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 Underwriters' Information or a
breach of any of the representations, warranties and covenants of the
Underwriters contained in Section 3.
(b) The 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
either of 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 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 indemnification provided in this Section
5(a) or (b) may be sought from either of the Underwriters, 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 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
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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 neither of the
Underwriters shall 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
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, warranties or covenants 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.
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:
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(a) To the 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
(b) To Bear, Stearns & Co. Inc.:
Bear, Stearns & Co. Inc.
245 Park Avenue, 4th Floor
New York, New York 10167
Attention: Bear Stearns Asset-Backed Securities Group
Telecopy No.: 212-272-7294
Confirmation: 212-272-2000
(b) To Lehman Brothers Inc.:
Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285-1200
Attention: Aadit Seshasayee
Telecopy No.: 212-526-7209
Confirmation: 212-526-7000
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.
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.
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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 as of the day and year first above mentioned.
AMBAC ASSURANCE CORPORATION,
as Insurer
By: /s/ Warren K. Tong
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Name: Warren K. Tong
Title: First Vice President
BEAR, STEARNS & CO. INC.
By: /s/ Thomas S. Dunstan
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Name: Thomas S. Dunstan
Title: Managing Director
LEHMAN BROTHERS INC.
By: /s/ Samir Tabet
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Name: Samir Tabet
Title: Senior Vice President