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Exhibit 10.2
AMBAC ASSURANCE CORPORATION,
MORGAN STANLEY & CO. INCORPORATED
and
BANC OF AMERICA SECURITIES LLC
INDEMNIFICATION AGREEMENT
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 1999-B
Dated as of September 28, 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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INDEMNIFICATION AGREEMENT dated as of September 28, 1999 (the
"Indemnification Agreement"), by and among AMBAC ASSURANCE CORPORATION, as
Insurer, MORGAN STANLEY & CO. INCORPORATED and BANC OF AMERICA SECURITIES LLC.
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 September 1, 1999 by and among the
Advanta Revolving Home Equity Loan Trust 1999-B and Bankers Trust Company of
California, N.A., as Indenture Trustee.
"Insurance Agreement" means the Insurance and Indemnity Agreement (as may
be amended, modified or supplemented from time to time) dated as of September
28, 1999 by and among the Advanta Conduit Receivables, Inc., as Sponsor, Advanta
Mortgage Corp. USA, as Master Servicer, the Insurer, Advanta Holding Trust
1999-B, 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 September 21,
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 September 1, 1999, relating to the Advanta Revolving Home Equity
Loan Asset Backed Notes, Series 1999-B, by and among Advanta Revolving Home
Equity Loan
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Trust 1999-B, Advanta Holding Trust 1999-B, 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 Morgan Stanley & Co. Incorporated and Banc of America
Securities LLC.
"Underwriters' Information" has the meaning given such term in Section 3.
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."
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
heading "Underwriting" in the Offering Document.
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. 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.
(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
June 30, 1999 and for the periods ending June 30, 1999 and June 30,
1998 included in the Quarterly Report on Form 10-Q of Ambac Financial
Group, Inc. for the period ended June 30, 1999 (which was filed with
the Commission on August 13, 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 June 30, 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.
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(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 S&P 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.
(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
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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 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
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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.
This Indemnification Agreement may be amended, modified, supplemented or
terminated only by written instrument or written instruments signed by the
parties hereto.
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
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 Morgan Stanley & Co. Incorporated:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Jessica Bellamy
Telecopy No.: 212-761-0782
Confirmation: 212-761-2229
(b) To Banc of America Securities LLC:
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Banc of America Securities LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Attention: Robert Baldwin
Telecopy No.: 704-388-0622
Confirmation: 704-388-7508
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.
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.
This Indemnification Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
The Indemnification Agreement may be executed in counterparts by the
parties hereto, and all such counterparts shall constitute one and the same
instrument.
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:
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Name:
Title:
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MORGAN STANLEY & CO. INCORPORATED
By:
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Name:
Title:
BANC OF AMERICA SECURITIES LLC
By:
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Name:
Title: