1
EXHIBIT 4.5
2
[Ambac Letterhead]
Ambac
Certificate Guaranty Insurance Policy
Insured Obligations: Policy Number:
$247,500,000 Advanta Revolving AB0264BE
Home Equity Loan Trust 1999-A,
Advanta Revolving Home Equity Premium:
Loan Asset Backed Notes, Series Calculated as set forth in the
1999-A, Variable Pass-Through Rate Certificate Guaranty Insurance Policy
Endorsement attached hereto and made
a part hereof
AMBAC ASSURANCE CORPORATION (AMBAC) A Wisconsin Stock Insurance Company in
consideration of the payment of the premium and subject to the terms of this
Policy, hereby agrees unconditionally and irrevocably to pay to the Trustee for
the benefit of the Holders of the Insured Obligations, that portion of the
Insured Amounts which shall become Due for Payment but shall be unpaid by reason
of Nonpayment.
Ambac will make such payments to the Trustee from its own funds on the later of
(a) one (1) Business Day following notification to Ambac of Nonpayment or (b)
the Business Day on which the Insured Amounts are Due for Payment. Such payments
of principal or interest shall be made only upon presentation of an instrument
of assignment in form and substance satisfactory to Ambac, transferring to Ambac
all rights under such Insured Obligations to receive the principal of and
interest on the Insured Obligation. Ambac shall be subrogated to all the
Holders' rights to payment on the Insured Obligations to the extent of the
insurance disbursements so made. Once payments of the Insured Amounts have been
made to the Trustee, Ambac shall have no further obligation hereunder in respect
of such Insured Amounts.
In the event the Trustee for the Insured Obligations has notice that any payment
of principal or interest on an Insured Obligation which has become Due for
Payment and which is made to a Holder by or on behalf of the Trustee has been
deemed a preferential transfer and theretofore recovered from its Holder
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court of competent jurisdiction, such Holder will be
entitled to payment from Ambac to the extent of such recovery if sufficient
funds are not otherwise available.
This Policy is noncancelable by Ambac for any reason, including failure to
receive payment of any premium due hereunder. The premium on this Policy is not
refundable for any reason. This Policy does not insure against loss of any
prepayment or other acceleration payment which at any time may become due in
respect of any Insured Obligation, other than at the sole option of Ambac, nor
against any risk other than Nonpayment, including failure of the Trustee to make
any payment due Holders of Insured Amounts.
To the fullest extent permitted by applicable law, Ambac hereby waives and
agrees not to assert any and all rights and defenses, to the extent such rights
and defenses may be available to Ambac, to avoid payment of its obligations
under this Policy in accordance with the express provisions hereof.
Any capitalized terms not defined herein shall have the meaning given such terms
in the endorsement attached hereto or in the Agreement.
In witness whereof, Ambac has caused this Policy to be affixed with its
corporate seal and to be signed by its duly authorized officers in facsimile to
become effective as their original signatures and binding upon Ambac by virtue
of the countersignature of its duly authorized representative.
/s/ P. Lassiter /s/ Stephen D. Cooke
President Secretary
[Seal]
/s/ Warren K. Tong
Effective Date: May 27,1999 Authorized Representative
3
CERTIFICATE GUARANTY INSURANCE ENDORSEMENT
Attached to and forming Effective Date of Endorsement:
part of Policy #ABO264BE May 27, 1999
issued to:
Bankers Trust Company
of California, N.A.,
as Indenture Trustee for the Holders of
Advanta Revolving Home Equity Loan Asset Backed
Notes, Series 1999-A
For all purposes of this Policy, the following terms shall have the
following meanings:
"Agreement" shall mean the Sale and Servicing Agreement dated as of May
1, 1999 among Advanta Mortgage Conduit Services, Inc., as Sponsor, Advanta
Mortgage Corp. USA, as Master Servicer, Bankers Trust Company of California,
N.A., as Indenture Trustee, Advanta Holding Trust 1999-A, as Holding Trust and
Advanta Revolving Home Equity Loan Trust 1999-A, as the Trust, as such Agreement
may be amended, modified or supplemented from time to time as set forth in the
Agreement.
"Deficiency Amount" means the excess, if any, of Required Payments over
the Net Available Distribution Amount for such Payment Date.
"Due for Payment" shall mean the Business Day immediately preceding the
Payment Date on which Insured Amounts are due.
"First Payment Date" shall mean June 25, 1999.
"Holder" shall mean any person who is the registered owner or
beneficial owner of any Notes.
"Indenture" shall mean the Indenture between Advanta Revolving Home
Equity Loan Trust 1999-A, as Issuer and Bankers Trust Company of California,
N.A. as Indenture Trustee, dated May 1, 1998.
4
-2-
"Indenture Trustee" shall mean Bankers Trust Company of California,
N.A. or its successor-in-interest, in its capacity as Indenture Trustee under
the Indenture, or if any successor indenture trustee or any co-trustee shall be
appointed as provided therein, then "Indenture Trustee" shall also mean such
successor trustee or such co-trustee, as the case may be, subject to the
provisions thereof.
"Insurance Agreement" shall mean the Insurance and Indemnity Agreement,
dated as of May 27, 1999, among Advanta Mortgage Conduit Services, Inc., as
Sponsor, Advanta Mortgage Corp. USA, as Master Servicer, Bankers Trust Company
of California, N.A., as Indenture Trustee, Ambac Assurance Corporation, as
Insurer, Advanta Holding Trust 1999-A, as Depositor and the Advanta Revolving
Home Equity Loan Trust 1999-A, as Issuer as such Agreement may be amended,
modified or supplemented from time to time.
"Insured Amounts" shall mean, with respect to any Payment Date, the
Deficiency Amount for such Payment Date.
"Insured Payments" shall mean, with respect to any Payment Date, the
aggregate amount actually paid by the Insurer to the Indenture Trustee in
respect of (i) Insured Amounts for such Payment Date and (ii) Preference Amounts
for any given Business Day.
"Insurer" shall mean Ambac Assurance Corporation, or any successor
thereto, as issuer of the Policy.
"Late Payment Rate" shall mean for any Payment Date, the greater of (i)
the rate of interest, as it is publicly announced by Citibank, N.A. at its
principal office in New York, New York as its prime rate (any change in such
prime rate of interest to be effective on the date such change is announced by
Citibank, N.A.) plus 2% and (ii) the then applicable highest rate of interest on
the Notes. The Late Payment Rate shall be computed on the basis of a year of 360
days and the actual number of days elapsed. In no event shall the Late Payment
Rate exceed the maximum rate permissible under any applicable law limiting
interest rates.
"Net Available Distribution Amount" means, with respect to any Payment
Date, the amount of Available Funds on such Payment Date minus the Owner
Trustee's Fee, the Indenture Trustee's Fee and the Premium Amount.
"Nonpayment" shall mean, with respect to any Payment Date, a Deficiency
Amount owing in respect of such Payment Date.
"Note Account" shall mean the account created and maintained with the
Indenture Trustee for the benefit of the Holders and the Insurer pursuant to
Section 8.3 of the Indenture.
"Note Balance" shall mean 96.75% of the Pool Principal Balance as of
the Cut-off Date minus the aggregate amounts actually distributed as principal
to the Holders.
"Policy" shall mean this Certificate Guaranty Insurance Policy together
with each and every endorsement hereto.
5
-3-
"Notes" shall mean any one of the Notes substantially in the form set
forth in Exhibit A to the Indenture.
"Notice" shall mean the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A to the
Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Amount which shall be
due and owing on the applicable Payment Date.
"Overcollateralization Deficit" for any Payment Date shall be the
amount by which the Note Balance (after giving effect to all other amounts
distributable and allocable to principal on the Notes on such Payment Date)
exceeds the aggregate of the Principal Balances of all of the Mortgage Loans as
of such Payment Date.
"Payment Date" shall mean the 25th day of any month (or if such 25th
day is not a Business Day, the first Business Day immediately following)
beginning with the First Payment Date.
"Preference Amount" means any payment on a Note which has become Due
for Payment and which is made to a Holder by or on behalf of the Indenture
Trustee which has been deemed a preferential transfer and theretofore recovered
from its Holder pursuant to the United States Bankruptcy Code in accordance with
a final, nonappealable order of a court of competent jurisdiction.
"Premium Percentage" shall have the meaning set forth in the Insurance
Agreement.
"Reimbursement Amount" shall mean, as to any Payment Date, the sum of
(x) (i) all Insured Payments paid by the Insurer, but for which the Insurer has
not been reimbursed prior to such Payment Date pursuant to Section 8.6(c)(vii)
of the Indenture, plus (ii) interest accrued thereon, calculated at the Late
Payment Rate from the date the Indenture Trustee received the related Insured
Payments, and (y) without duplication (i) any amounts then due and owing to the
Insurer under the Insurance Agreement plus (ii) interest on such amounts at the
Late Payment Rate.
"Required Payments" shall mean, as of any Payment Date, the sum of (a)
the Interest Distribution Amount plus any Interest Shortfall Amount, (b) for any
Payment Date, any shortfalls in Available Funds to pay the Overcollateralization
Deficit and (c) on the Final Scheduled Payment Date, any shortfall of Available
Funds to pay the outstanding Note Balance.
"Trust Agreement" shall mean the Trust Agreement between Advanta
Mortgage Conduit Services, Inc., as Sponsor, Advanta Holding Trust 1999-A, as
Depositor and Wilmington Trust Company, as Owner Trustee, dated as of May 1,
1999 relating to the creation of the Advanta Revolving Home Equity Loan Trust
1999-A.
Capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Agreement or the Indenture.
6
-4-
As provided by the Policy, the Insurer will pay any amount payable
hereunder no later than 12:00 noon, New York City time, on the later of the
Payment Date on which the related Insured Amount is due or the Business Day
following receipt in New York, New York on a Business Day by the Insurer of a
Notice; provided that, if such Notice is received after 12:00 noon, New York
City time, on such Business Day, it will be deemed to be received on the
following Business Day. If any such Notice is not in proper form or is otherwise
insufficient for the purpose of making a claim under the Policy, it shall be
deemed not to have been received for purposes of this paragraph, and the Insurer
shall promptly so advise the Indenture Trustee and the Indenture Trustee may
submit an amended Notice.
The Insurer shall pay any Preference Amount when due to be paid
pursuant to the Order referred to below, but in any event no earlier than the
third Business Day following receipt by the Insurer of (i) a certified copy of a
final, non-appealable order of a court or other body exercising jurisdiction in
such insolvency proceeding to the effect that the Holder is required to return
such Preference Amount paid during the term of this Policy because such payments
were avoided as a preferential transfer or otherwise rescinded or required to be
restored by the Holder (the "Order"), (ii) a certificate by or on behalf of the
Holder that the Order has been entered and is not subject to any stay, (iii) an
assignment, in form and substance satisfactory to the Insurer, duly executed and
delivered by the Holder, irrevocably assigning to the Insurer all rights and
claims of the Holder relating to or arising under the Indenture against the
estate of the Indenture Trustee or otherwise with respect to such Preference
Amount and (iv) a Notice of Nonpayment (attached hereto as Exhibit A)
appropriately completed and executed by the Holder. Such payment shall be
disbursed to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the Order, and not to the Holder directly, unless the Holder
has made a payment of the Preference Amount to the court or such receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Order,
in which case the Insurer will pay the Holder, subject to the delivery of (a)
the items referred to in clauses (i), (ii), (iii) and (iv) above to the Insurer
and (b) evidence satisfactory to the Insurer that payment has been made to such
court or receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the Order.
The Insurer hereby agrees that if it shall be subrogated to the rights
of Holders by virtue of any previous payment under this Policy, no recovery of
such payment will occur unless the full amount of the Holders' allocable
distributions for such Payment Date can be made. In so doing, the Insurer does
not waive its rights to seek full payment of all Reimbursement Amounts owed to
it under the Agreement.
The terms and provisions of the Agreement constitute the instrument of
assignment referred to in the second paragraph of the face of this Policy.
A premium will be payable on this Policy on each Payment Date as
provided in Section 8.6(c)(ii) of the Indenture, beginning with the First
Payment Date, in an amount equal to the Premium Amount.
7
-5-
In the event the Insurer were to become insolvent, any claims arising
under the Policy would be excluded from coverage by the California Insurance
Guaranty Association established pursuant to the laws of the State of California
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy to which this Endorsement is attached and of which it forms
a part is hereby amended to provide that there shall be no acceleration payment
due under the Policy unless such acceleration is at the sole option of the
Insurer.
Nothing herein contained shall be held to vary, alter, waive or extend
any of the terms, conditions, provisions, agreements or limitations of the above
mentioned Policy other than as above stated.
This Policy is issued under and pursuant to, and shall be construed
under, the laws of the State of New York.
8
IN WITNESS WHEREOF, the Ambac Assurance Corporation has caused this
Endorsement to the Policy to be signed by its duly authorized officers.
/s/ Warren K. Tong /s/ Stephan D. Cooke
First Vice President Assistant Secretary
9
A-1
EXHIBIT A
TO THE CERTIFICATE GUARANTY INSURANCE POLICY
Policy No. _____________
NOTICE OF NONPAYMENT AND DEMAND
FOR PAYMENT OF INSURED AMOUNTS
Date: [ ]
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: General Counsel
Reference is made to Certificate Guaranty Insurance Policy No.
ABO264BE (the "Policy") issued by Ambac Assurance Corporation ("Ambac"). Terms
capitalized herein and not otherwise defined shall have the meanings specified
in the Policy and the Indenture, as the case may be, unless the context
otherwise requires.
The Indenture Trustee hereby certifies as follows:
1. The Indenture Trustee is the Indenture Trustee under the
Indenture for the Holders.
2. The relevant Payment Date is [date].
3. Payment on the Notes in respect of the Payment Date is due to
be received on __________________________________ under the
Indenture, in an amount equal to $______________________.
4. There is an Insured Amount of $______________________________
in respect of the Notes, which amount is an Insured Amount
pursuant to the terms of the Indenture.
5. The sum of $____________________ is the Insured Amount that is
Due For Payment.
6. The Indenture Trustee has not heretofore made a demand for the
Insured Amount in respect of the Payment Date.
7. The Indenture Trustee hereby requests the payment of the
Insured Amount that is Due For Payment be made by Ambac under
the Policy and directs that
10
A-2
payment under the Policy be made to the following account by
bank wire transfer of federal or other immediately available
funds in accordance with the terms of the Policy to:
__________________________________ Indenture Trustee's account
number.
8. The Indenture Trustee hereby agrees that, following receipt of
the Insured Payment from Ambac, it shall (a) hold such amounts
in trust and apply the same directly to the distribution of
payment on the Notes when due; (b) not apply such funds for
any other purpose; (c) deposit such funds to the Note Account
and not commingle such funds with other funds held by Trustee
and (d) maintain an accurate record of such payments with
respect to each Note and the corresponding claim on the Policy
and proceeds thereof.
ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY INSURANCE
COMPANY OR OTHER PERSON FILES AN APPLICATION FOR INSURANCE OR STATEMENT OF CLAIM
CONTAINING ANY MATERIALLY FALSE INFORMATION, OR CONCEALS FOR THE PURPOSE OF
MISLEADING, INFORMATION CONCERNING ANY FACT MATERIAL THERETO, COMMITS A
FRAUDULENT INSURANCE ACT, WHICH IS A CRIME AND SHALL ALSO BE SUBJECT TO A CIVIL
PENALTY NOT TO EXCEED FIVE THOUSAND DOLLARS AND THE STATED VALUE OF THE CLAIM
FOR EACH SUCH VIOLATION.
By:______________________________
Indenture Trustee
Title:__________________________
(Officer)