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EXHIBIT 1.1
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EXHIBIT 1.1
EXECUTION COPY
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
ADVANTA NATIONAL BANK
ADVANTA FINANCE CORP.
ADVANTA HOME EQUITY LOAN ASSET-BACKED NOTES,
SERIES 1998-B
VARIABLE RATE CLASS A-1 NOTES
6.55% CLASS A-2 NOTES
UNDERWRITING AGREEMENT
September 25, 1998
Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Advanta Mortgage Conduit Services, Inc., as Sponsor (the "Sponsor"),
has authorized the issuance and sale of Advanta Home Equity Loan Asset-Backed
Notes, Series 1998-B, consisting of variable rate Class A-1 Notes (the "Class
A-1 Notes") and fixed rate Class A-2 Notes (the "Class A-2 Notes" and, together
with the Class A-1 Notes, the "Notes"). The Notes will be issued pursuant to an
indenture (the "Indenture"), dated as of September 1, 1998, between Advanta Home
Equity Loan Trust 1998-B (the "Trust") and Bankers Trust Company of California,
N.A., as Indenture Trustee (the "Indenture Trustee"). The Trust will be formed
pursuant to a trust agreement (the "Trust Agreement"), dated as of September 1,
1998, among the Sponsor, Advanta Holding Trust ("Holding") and Wilmington Trust
Company, as Owner Trustee. The Class A-1 Notes will be secured by certain
adjustable rate home equity revolving credit line loans (the "Credit Line
Loans") made pursuant to certain home equity revolving credit line loan
agreements (the "Credit Line Agreements") and the Class A-2 Notes will be
secured by certain fixed-rate closed-end high loan-to-value mortgage loans (the
"HLTV Loans" and, together with the Credit Line Loans, the "Mortgage Loans")
made pursuant to certain mortgage loan agreements or notes (the "HLTV
Agreements" and, together with the Credit Line Agreements, the "Mortgage Loan
Agreements") to be transferred by the Sponsor to Holding and by Holding to the
Trust pursuant to a sale and servicing agreement (the "Sale and Servicing
Agreement"), dated as of September 1, 1998, among the Sponsor, Holding, the
Trust, Advanta Mortgage Corp. USA, as Master Servicer (the "Master Servicer"),
and the Indenture Trustee. Holding, whose beneficial ownership
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interests will initially be held by Advanta National Bank (the "Bank"), Advanta
Finance Corp. ("AFC" and, together with the Bank, the "Originators") and the
Sponsor or their respective designees, will retain, initially, the remaining
undivided interest in the assets of the Trust (the "Residual Interest"), which
may be sold or pledged at any time, subject to certain conditions specified in
the Trust Agreement. The Class A-1 Notes and the Class A-2 Notes will be issued
on September 30, 1998 (the "Closing Date") in the aggregate original principal
amounts (approximately) of $67,500,000 and $40,000,000, respectively. The Notes
and the Residual Interest are more fully described in a registration statement
which the Sponsor has furnished or will furnish to Bear, Xxxxxxx & Co. Inc. (the
"Underwriter").
On or prior to the date of issuance of the Notes, the Sponsor will
obtain two guaranty insurance policies (the "Policies") issued by MBIA Insurance
Corporation (the "Insurer"), one of which will unconditionally and irrevocably
guarantee to the Indenture Trustee for the benefit of the Class A-1 Noteholders
the timely payment of interest on and ultimate payment of principal of the Class
A-1 Notes and the other of which will unconditionally and irrevocably guarantee
to the Indenture Trustee for the benefit of the Class A-2 Noteholders the timely
payment of interest on and ultimate payment of principal of the Class A-2 Notes.
Concurrently therewith, the Sponsor will enter into an Insurance Agreement (the
"Insurance Agreement"), dated as of September 1, 1998, with the Insurer, the
Master Servicer, the Originators, Holding, the Trust, the Indenture Trustee and
the Owner Trustee, governing certain matters relating to the issuance of the
Policies. The Sponsor will also enter into an Indemnification Agreement, dated
as of September 25, 1998 (the "Indemnification Agreement"), with the
Underwriter, the Insurer and the Originators, governing the liability of the
several parties with respect to the losses resulting from material misstatements
or omissions contained in the Prospectus Supplement.
As used herein, the "Documents" shall mean the Indenture, the Trust
Agreement, the Holding Trust Agreement, the Sale and Servicing Agreement, the
Underwriting Agreement, the Insurance Agreement and the Indemnification
Agreement. Capitalized terms used but not defined herein shall have the meanings
given to them in the Sale and Servicing Agreement.
SECTION 1. Representations and Warranties of the Sponsor and the
Originator. The Sponsor and the Originators each represent and warrant to, and
agree with the Underwriter that:
A. The Sponsor has filed with the Securities and Exchange
Commission (the "Commission"), a registration statement (No. 333-52351)
on Form S-3 for the registration under the Securities Act of 1933, as
amended (the "Act"), of Mortgage Loan Asset Backed Certificates and
Notes (issuable in series), which registration statement, as amended at
the date hereof, has become effective. Such registration statement, as
amended to the date of this Agreement, meets the requirements set forth
in Rule 415(a)(1)(vii) under the Act and complies in all other material
respects with such Rule. The Sponsor proposes to file with the
Commission pursuant to Rule 424(b)(5) under the act a supplement dated
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September 25, 1998 to the prospectus dated September 15, 1998 relating
to the Notes and the method of distribution thereof and has previously
advised or will advise the Underwriter of all further information
(financial and other) with respect to the Notes to be set forth
therein. Such registration statement, including the exhibits thereto,
as amended at the date hereof, is hereinafter called the "Registration
Statement"; such prospectus dated September 15, 1998, in the form in
which it will be filed with the Commission pursuant to Rule 424(b)(5)
under the Act is hereinafter called the "Basic Prospectus"; such
supplement dated September 25, 1998 to the Basic Prospectus, in the
form in which it will be filed with the Commission pursuant to Rule
424(b)(5) of the Act, is hereinafter called the "Prospectus
Supplement"; and the Basic Prospectus and the Prospectus Supplement
together are hereinafter called the "Prospectus." The Sponsor will file
with the Commission (i) promptly after receipt from the Underwriter of
any Computational Materials (as defined herein) (and in any event no
later than the Business Day on which the Prospectus Supplement is made
available to the Underwriter), a Form 8-K incorporating such
Computational Materials and (ii) within fifteen days of the issuance of
the Notes a report on Form 8-K setting forth specific information
concerning the related Mortgage Loans (the "8-K").
B. The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder. The Registration Statement, as of the Effective Date
thereof and of any amendment thereto, did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading. The Prospectus, as of its date and as amended or
supplemented as of the Closing Date (as hereinafter defined), does not
and will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that no representation or warranty
is made as to information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with
written information furnished to the Sponsor in writing by the
Underwriter expressly for use therein.
C. The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case
may be, conformed in all material respects to the requirements of the
Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of
a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus, when such documents become effective or
are filed with the Commission, as the case may be, will conform in all
material respects to the requirements of the Act or the Exchange Act,
as applicable, and the rules and
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regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading.
D. Since the respective dates as of which information is given in
the Prospectus, there has not been any material adverse change in the
general affairs, management, financial condition, or results of
operations of the Sponsor or any of the Originators, otherwise than as
set forth or contemplated in the Prospectus as supplemented or amended
as of the Closing Date.
E. Each of the Sponsor and the Originators has been duly
incorporated and is validly existing as a corporation or national
banking association, as the case may be, in good standing under the
laws of its jurisdiction of incorporation, is duly qualified to do
business and is in good standing as a foreign corporation or national
banking association in each jurisdiction in which its ownership or
lease of property or the conduct of its business requires such
qualification, and has all power and authority necessary to own or hold
its properties, to conduct the business in which it is engaged and to
enter into and perform its obligations under the Documents to which it
is a party, and to cause the Notes to be issued.
F. There are no actions, proceedings or investigations pending
before or threatened by any court, administrative agency or other
tribunal to which the Sponsor or any Originator is a party or of which
any of its properties is the subject (a) which if determined adversely
to the Sponsor or such Originator would have a material adverse effect
on the business or financial condition of the Sponsor or such
Originator (as applicable), (b) which asserts the invalidity of the
Documents or the Notes, (c) which seeks to prevent the issuance of the
Notes or the consummation by the Sponsor or such Originator of any of
the transactions contemplated by the Documents to which it is a party
or (d) which might materially and adversely affect the performance by
the Sponsor or such Originator of its obligations under, or the
validity or enforceability of, the Documents to which it is a party or
the Notes.
G. The Documents, when executed and delivered as contemplated
hereby and thereby, will have been duly authorized, executed and
delivered by the Sponsor or any Originator, as the case may be, and
will constitute legal, valid and binding instruments enforceable
against the Sponsor or such Originator in accordance with their
respective terms, subject as to enforceability to (x) applicable
bankruptcy, reorganization, insolvency, moratorium or other similar
laws affecting creditors' rights generally, (y) general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law) and (z) with respect to rights of indemnity under
this Agreement, the Indemnification Agreement, the Insurance Agreement
and the limitations of public policy under applicable securities laws.
H. The execution, delivery and performance of the Documents by the
Sponsor and the Originators, as the case may be, and the consummation
of the
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transactions contemplated hereby and thereby, and the issuance and
delivery of the Notes do not and will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Sponsor or any of the
Originators is a party, by which the Sponsor or any of the Originators
is bound or to which any of the property or assets of the Sponsor, any
of the Originators or any of their respective subsidiaries are subject,
nor will such actions result in any violation of the provisions of the
articles of incorporation or by-laws of the Sponsor or any of the
Originators or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Sponsor or any of the Originators or any of their respective properties
or assets.
I. Arthur Xxxxxxxx LLP are independent public accountants with
respect to the Sponsor and the Originators as required by the Act and
the Rules and Regulations.
J. The direction by the Sponsor to the Indenture Trustee to
execute, authenticate, issue and deliver the Notes has been or will be
duly authorized by the Sponsor, and assuming the Indenture Trustee has
been duly authorized to do so, when executed, authenticated, issued and
delivered by the Indenture Trustee in accordance with the Indenture,
the Notes will be validly issued and outstanding and will be entitled
to the benefits provided by the Indenture.
K. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of
the United States is required for the issuance of the Notes and the
sale of the Notes to the Underwriter, or the consummation by the
Sponsor or the Originators of the other transactions contemplated by
the Documents, except such consents, approvals, authorizations,
registrations or qualifications as may be required under State
securities or "blue sky" laws in connection with the purchase and
distribution of the Notes by the Underwriter or as have been obtained.
L. Each Originator possesses all material licenses, certificates,
authorities or permits issued by the appropriate State, Federal or
foreign regulatory agencies or bodies necessary to conduct the business
now conducted by it and as described in the Prospectus, and such
Originator has not received notice of any proceedings relating to the
revocation or modification of any such license, certificate, authority
or permit which if decided adversely to such Originator would, singly
or in the aggregate, materially and adversely affect the conduct of its
business, operations or financial condition.
M. At the time of execution and delivery of the Sale and Servicing
Agreement, the Sponsor will: (i) have good title to the interest in the
Mortgage Loans and the other rights and properties to be conveyed by
the Sponsor thereunder, free and clear of any lien, mortgage, pledge,
charge, encumbrance, adverse claim or other security interest
(collectively, "Liens"); (ii) except as
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provided in the Documents, not have assigned to any person any of its
right, title or interest in the Mortgage Loans, in the Sale and
Servicing Agreement or in the Notes being issued pursuant thereto; and
(iii) have the power and authority to sell its interest in the Mortgage
Loans to Holding and to sell the Notes to the Underwriter. Upon
execution and delivery of the Sale and Servicing Agreement and the
Indenture by the respective parties thereto, the Indenture Trustee will
have acquired all of the Sponsor's right, title and interest in and to
the Mortgage Loans (excluding accrued interest due prior to the Cut-Off
Date). Upon delivery to the Underwriter of the Notes, the Underwriter
will have good title to the Notes, free of any Liens.
N. As of opening of business on September 1, 1998 (the "Cut-Off
Date"), each of the Mortgage Loans identified on the Closing Date will
meet the eligibility criteria described in the Prospectus Supplement
and will conform to the descriptions thereof contained in the
Prospectus Supplement.
O. None of the Sponsor, the Originators, Holding or the Trust is
an "investment company" within the meaning of such term under the
Investment Company Act of 1940 (the "1940 Act") and the rules and
regulations of the Commission thereunder.
P. At the Closing Date, the Notes and the Indenture will conform
in all material respects to the descriptions thereof contained in the
Prospectus.
Q. At the Closing Date, the Notes shall have been rated in the
highest rating category by at least two nationally recognized rating
agencies.
R. Any applicable taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of the Documents
and the Notes have been paid or will be paid at or prior to the Closing
Date.
S. At the Closing Date, each of the representations and warranties
of the Sponsor set forth in the Sale and Servicing Agreement, the
Insurance Agreement and the Indemnification Agreement will be true and
correct in all material respects.
Any certificate signed by an officer of the Sponsor or any of the
Originators and delivered to the Underwriter or counsel for the Underwriter in
connection with an offering of the Notes shall be deemed, and shall state that
it is, a representation and warranty as to the matters covered thereby to each
person to whom the representations and warranties in this Section 1 are made.
SECTION 2. Purchase and Sale. The commitment of the Underwriter to
purchase the Notes pursuant to this Agreement shall be deemed to have been made
on the basis of the representations and warranties herein contained and shall be
subject to the terms and conditions herein set forth. The Sponsor agrees to
instruct the Trust to issue and agrees to sell to the Underwriter, and the
Underwriter agrees (except as provided in Sections 6 and 10 hereof) to purchase
from the Sponsor, the Notes in the aggregate
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initial principal amount or amounts set forth on Schedule A at the purchase
price or prices set forth in Schedule A.
SECTION 3. Delivery and Payment. Delivery of and payment for the Notes
to be purchased by the Underwriter shall be made at the offices of Xxxxx
Xxxxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00
A.M. New York City time on the Closing Date or at such other time or date as
shall be agreed upon in writing by the Underwriter, the Sponsor and the
Originators. Payment shall be made to the Sponsor and the Originators (in such
proportions as they shall jointly advise the Underwriter in writing) by wire
transfer of same day funds payable to such accounts as they shall designate in
writing. Delivery of the Notes shall be made to the Underwriter against payment
of the purchase price thereof. The Notes shall be in such denominations and
registered in such names as the Underwriter may request in writing at least two
business days prior to the Closing Date. The Notes will be made available for
examination by the Underwriter no later than 4:00 P.M. New York City time on the
first business day prior to the Closing Date.
SECTION 4. Offering by the Underwriter. It is understood that, subject
to the terms and conditions hereof, the Underwriter proposes to offer the Notes
for sale to the public as set forth in the Prospectus.
SECTION 5. Covenants of the Sponsor and the Originators. The Sponsor
and the Originators agree as follows:
A. To prepare the Prospectus in a form approved by the Underwriter
and to file such Prospectus pursuant to Rule 424(b) under the Act not
later than the Commission's close of business on the second business
day following the execution and delivery of this Agreement; to make no
further amendment or any supplement to the Registration Statement or to
the Prospectus prior to the Closing Date except as permitted herein; to
advise the Underwriter, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish the Underwriter with
copies thereof; to file promptly all reports and any definitive proxy
or information statements required to be filed by the Sponsor with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and, for so long
as the delivery of a prospectus is required in connection with the
offering or sale of the Notes, to promptly advise the Underwriter of
its receipt of notice of the issuance by the Commission of any stop
order or of: (i) any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus; (ii) the suspension of the
qualification of the Notes for offering or sale in any jurisdiction;
(iii) the initiation of or threat of any proceeding for any such
purpose; (iv) any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information. In the event of the issuance of any stop order
or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending any such qualification, the
Sponsor
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promptly shall use its best efforts to obtain the withdrawal of such
order or suspension.
B. To furnish promptly to the Underwriter and to counsel for the
Underwriter a signed copy of the Registration Statement as originally
filed with the Commission, and of each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith.
C. To deliver promptly to the Underwriter such number of the
following documents as the Underwriter shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with
the Commission and each amendment thereto (in each case including
exhibits); (ii) each Preliminary Prospectus, the Prospectus and any
amended or supplemented Prospectus; and (iii) any document incorporated
by reference in the Prospectus (including exhibits thereto). If the
delivery of a prospectus is required at any time prior to the
expiration of nine months after the Effective Time in connection with
the offering or sale of the Notes, and if at such time any events shall
have occurred as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary during such same period to amend
or supplement the Prospectus or to file under the Exchange Act any
document incorporated by reference in the Prospectus in order to comply
with the Act or the Exchange Act, the Sponsor shall notify the
Underwriter and, upon the Underwriter's request, shall file such
document and prepare and furnish without charge to the Underwriter and
to any dealer in securities as many copies as the Underwriter may from
time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which corrects such statement or omission
or effects such compliance, and in case the Underwriter is required to
deliver a Prospectus in connection with sales of any of the Notes at
any time nine months or more after the Effective Time, upon the request
of the Underwriter but at the expense of the Underwriter, the Sponsor
shall prepare and deliver to the Underwriter as many copies as the
Underwriter may reasonably request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act.
D. To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Sponsor or the Underwriter,
be required by the Act or requested by the Commission.
E. Prior to filing with the Commission any (i) Preliminary
Prospectus, (ii) amendment to the Registration Statement or supplement
to the Prospectus, or document incorporated by reference in the
Prospectus or (iii) Prospectus pursuant to Rule 424 of the Rules and
Regulations, to furnish a copy thereof to the Underwriter and counsel
for the Underwriter and obtain the consent of the Underwriter to the
filing.
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F. To make generally available to holders of the Notes as soon as
practicable, but in any event not later than 90 days after the close of
the period covered thereby, a statement of earnings of the Trust (which
need not be audited) complying with Section 11(a) of the Act and the
Rules and Regulations (including, at the option of the Sponsor, Rule
158) and covering a period of at least twelve consecutive months
beginning not later than the first day of the first fiscal quarter
following the Closing Date.
G. To use their best efforts, in cooperation with the Underwriter,
to qualify the Notes for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United
States as the Underwriter may designate, and maintain or cause to be
maintained such qualifications in effect for as long as may be required
for the distribution of the Notes. The Sponsor will file or cause the
filing of such statements and reports as may be required by the laws of
each jurisdiction in which the Notes have been so qualified.
H. Not, without the Underwriter's prior written consent, to
publicly offer or sell or contract to sell any mortgage pass-through
securities, collateralized mortgage obligations or other similar
securities representing interests in or secured by other
mortgage-related assets originated or owned by the Sponsor for a period
of 5 business days following the commencement of the offering of the
Notes to the public.
I. So long as the Notes shall be outstanding, to deliver to the
Underwriter as soon as such statements are furnished to the Indenture
Trustee the annual statement as to compliance delivered to the
Indenture Trustee pursuant to Section 3.9 of the Indenture.
J. To apply the net proceeds from the sale of the Notes in the
manner set forth in the Prospectus.
SECTION 6. Conditions to the Underwriter's Obligation. The obligation
of the Underwriter to purchase the Notes pursuant to this Agreement is subject
to: (i) the accuracy on and as of the Closing Date of the representations and
warranties on the part of the Sponsor and the Originators herein contained; (ii)
the performance by the Sponsor and the Originators of all of their respective
obligations hereunder; and (iii) the following conditions as of the Closing
Date:
A. The Underwriter shall have received confirmation of the
effectiveness of the Registration Statement. No stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission. Any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus shall have been complied with.
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B. The Underwriter shall not have discovered and disclosed to the
Sponsor on or prior to the Closing Date that the Registration Statement
or the Prospectus or any amendment or supplement thereto contains an
untrue statement of a fact or omits to state a fact which, in the
opinion of Xxxxx Xxxxxxxxxx LLP, counsel for the Underwriter, is
material and is required to be stated therein or is necessary to make
the statements therein not misleading.
C. All corporate proceedings and other legal matters relating to
the authorization, form and validity of the Documents, the Notes, the
Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby
shall be satisfactory in all respects to counsel for the Underwriter,
and the Sponsor shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass
upon such matters.
D. The Underwriter shall have received the favorable opinion of
Xxxxx Xxxxxxxxxx LLP, special counsel to the Sponsor and the
Originators with respect to the following items, dated the Closing
Date, to the effect that:
1. Each of the Sponsor and the Originators has been duly organized
and is validly existing as a corporation or national banking
association, as the case may be, in good standing under the laws of its
jurisdiction of incorporation, and is qualified to do business in each
state necessary to enable it to perform its obligations as Sponsor or
Originator, as the case may be, under the Documents to which it is a
party. Each of the Sponsor and the Originators has the requisite power
and authority to execute and deliver, engage in the transactions
contemplated by, and perform and observe the conditions of the
Documents to which it is a party.
2. The Documents to which the Sponsor or any Originator is a party
have been duly and validly authorized, executed and delivered by the
Sponsor or such Originator, as the case may be, and all requisite
corporate action by the Sponsor or such Originator has been taken with
respect thereto, and the Notes constitute the valid, legal and binding
agreement of the Trust.
3. Neither the transfer of the Mortgage Loans to the Trust, the
issuance or sale of the Notes nor the execution, delivery or
performance by the Sponsor or such Originator of the Documents to which
it is a party (A) conflicts or will conflict with or results or will
result in a breach of, or constitutes or will constitute a default
under, (i) any term or provision of the certificate of incorporation or
by-laws of the Sponsor or such Originator; (ii) any term or provision
of any material agreement, contract, instrument or indenture, to which
the Sponsor or such Originator is a party or is bound and known to such
counsel; or (iii) any order, judgment, writ, injunction or decree of
any court or governmental agency or body or other tribunal having
jurisdiction over the Sponsor or such Originator and known to such
counsel; or (B) results in, or will result in the creation or
imposition of any lien, charge or encumbrance upon any
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of the Trust's assets or upon the Notes, except as otherwise
contemplated by the Sale and Servicing Agreement.
4. The endorsement and delivery of each Mortgage Loan
Agreement, and the preparation, delivery and recording of an Assignment
with respect to each Mortgage is sufficient to fully transfer to the
Indenture Trustee for the benefit of the Noteholders all right, title
and interest of the Sponsor in the Mortgage Loan Agreement and
Mortgage, as noteholder and mortgagee or assignee thereof, subject to
any exceptions set forth in such opinion, and will be sufficient to
permit the Indenture Trustee to avail itself of all protection
available under applicable law against the claims of any present or
future creditors of the Sponsor and to prevent any other sale,
transfer, assignment, pledge or other encumbrance of the Mortgage Loans
by the Sponsor from being enforceable, subject to any exceptions set
forth in such opinion.
5. No consent, approval, authorization or order of,
registration or filing with, or notice to, courts, governmental agency
or body or other tribunal is required under the laws of the State of
New York, for the execution, delivery and performance of the Documents
or the offer, issuance, sale or delivery of the Notes or the
consummation of any other transaction contemplated thereby by the
Sponsor and the Originators, except such which have been obtained.
6. There are no actions, proceedings or investigations, to
such counsel's knowledge, pending or threatened against the Sponsor or
any Originator before any court, governmental agency or body or other
tribunal (i) asserting the invalidity of the Documents to which the
Sponsor or such Originator (as applicable) is a party or the Notes,
(ii) seeking to prevent the issuance of the Notes or the consummation
of any of the transactions contemplated by the Documents or (iii) which
would materially and adversely affect the performance by the Sponsor or
such Originator of obligations under, or the validity or enforceability
of, the Notes or the Documents to which the Sponsor or such Originator
(as applicable) is a party.
7. To the best knowledge of such counsel, the Commission has
not issued any stop order suspending the effectiveness of the
Registration Statement or any order directed to any prospectus relating
to the Notes (including the Prospectus), and has not initiated or
threatened any proceeding for that purpose.
8. The Registration Statement and the Prospectus (other than
the financial and statistical data included therein, as to which such
counsel need express no opinion), including the incorporated documents,
as of the date on which the Registration Statement was declared
effective and as of the date hereof, comply as to form in all material
respects with the requirements of the Act and the rules and regulations
thereunder and the Exchange Act and the rules and regulations
thereunder, and such counsel does not know of any amendment to the
Registration Statement required to be filed, or of any contracts,
indentures or other documents of a character required to be filed as an
exhibit to the
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Registration Statement or required to be described in the Registration
Statement which has not been filed or described as required.
9. The Indenture, when executed and delivered, will have been
duly qualified under the Trust Indenture Act.
10. The statements in the Prospectus and Prospectus Supplement
set forth under the captions "ERISA CONSIDERATIONS," "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES," and the statements in the Prospectus set
forth under the caption "CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS
AND RELATED MATTERS," to the extent that they constitute matters of
federal, New York or California law, or federal, New York or California
legal conclusions provide a fair and accurate summary of such law or
conclusions.
11. No information has come to such counsel's attention which
causes them to believe that the Prospectus (other than the financial
statement and other financial and statistical data contained therein,
as to which such counsel need express no opinion), as of the date
thereof, contained any untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
12. Such other matters as the Underwriter may reasonably
request.
In rendering its opinions, the counsel described above may
rely, as to matters of fact, on certificates of responsible officers of
the Sponsor and the Originators, the Indenture Trustee and public
officials. Such opinions may also assume the due authorization,
execution and delivery of the instruments and documents referred to
therein by the parties thereto other than the Sponsor and the
Originators.
E. The Underwriter shall have received letters, including
bring-down letters, from Xxxxxx Xxxxxxxx LLP, dated on or before the
Closing Date, in form and substance satisfactory to the Underwriter and
counsel for the Underwriter, to the effect that they have performed
certain specified procedures requested by the Underwriter with respect
to the information set forth in the Prospectus and certain matters
relating to the Originators.
F. The Notes shall have been rated in the highest rating category
by Standard & Poor's Ratings Group and by Xxxxx'x Investors Service,
Inc., and such ratings shall not have been rescinded or downgraded. The
Underwriter and counsel for the Underwriter shall have received copies
of any opinions of counsel supplied to the rating organizations
relating to any matters with respect to the Notes. Any such opinions
shall be dated the Closing Date and addressed to the Underwriter or
accompanied by reliance letters to the Underwriter or shall state that
the Underwriter may rely upon them.
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G. The Underwriter shall have received from the Sponsor a
certificate, signed by the president, a senior vice president or a vice
president of the Sponsor, dated the Closing Date, to the effect that
the signer of such certificate has carefully examined the Registration
Statement, the Sale and Servicing Agreement, and this Agreement and
that, to the best of his or her knowledge based upon reasonable
investigation:
1. the representations and warranties of the Sponsor in this
Agreement, as of the Closing Date, and in the Sale and Servicing
Agreement, the Insurance Agreement, and in all related agreements, as
of the date specified in such agreements, are true and correct, and the
Sponsor has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Closing Date;
2. there are no actions, suits or proceedings pending, or to
the best of such officer's knowledge, threatened against or affecting
the Sponsor which if adversely determined, individually or in the
aggregate, would be reasonably likely to adversely affect the Sponsor's
obligations under the Documents to which it is a party in any material
way; and no merger, liquidation, dissolution or bankruptcy of the
Sponsor is pending or contemplated;
3. the information contained in the Registration Statement and
the Prospectus relating to the Sponsor, the Mortgage Loans or the
servicing procedures of it or its affiliates or subservicer is true and
accurate in all material respects and nothing has come to his or her
attention that would lead such officer to believe that the Registration
Statement or Prospectus includes any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
therein not misleading;
4. the information set forth in the Schedule of Mortgage Loans
required to be furnished pursuant to the Sale and Servicing Agreement
is true and correct in all material respects;
5. there has been no amendment or other document filed
affecting the articles of incorporation or by-laws of the Sponsor since
June 30, 1998, and no such amendment has been authorized. No event has
occurred since June 30, 1998, which has affected the good standing of
the Sponsor under the laws of the State of Delaware;
6. there has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Sponsor and its subsidiaries, taken as a whole, from
June 30, 1998;
7. on or prior to the Closing Date, there has been no
downgrading, nor has any notice been given of (A) any intended or
potential downgrading or (B) any review or possible changes in rating
the direction of which has not been
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indicated, in the rating, if any, accorded the Sponsor or in any rating
accorded any securities of the Sponsor, if any, by any "nationally
recognized statistical rating organization," as such term is defined
for purposes of the Act; and
8. each person who, as an officer or representative of the
Sponsor, signed or signs the Registration Statement, the Documents or
any other document delivered pursuant hereto, on the date of such
execution, or on the Closing Date, as the case may be, in connection
with the transactions described in the Documents was, at the respective
times of such signing and delivery, and is now, duly elected or
appointed, qualified and acting as such officer or representative, and
the signatures of such persons appearing on such documents are their
genuine signatures.
The Sponsor shall attach to such certificate a true and
correct copy of its certificate or articles of incorporation, as
appropriate, and by-laws which are in full force and effect on the date
of such certificate and a certified true copy of the resolutions of its
Board of Directors with respect to the transactions contemplated
herein.
H. The Underwriter shall have received a favorable opinion of
counsel to the Indenture Trustee, dated the Closing Date and in form
and substance satisfactory to the Underwriter, to the effect that:
1. the Indenture Trustee is a national banking association
duly organized, validly existing and in good standing under the laws of
the United States and has the power and authority to enter into and to
take all actions required of it under the Documents to which it is a
party to;
2. the Documents to which the Indenture Trustee is a party
have been duly authorized, executed and delivered by the Indenture
Trustee and such Documents constitute the legal, valid and binding
obligation of the Indenture Trustee, enforceable against the Indenture
Trustee in accordance with its terms, except as enforceability thereof
may be limited by (A) bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally,
as such laws would apply in the event of a bankruptcy, insolvency or
reorganization or similar occurrence affecting the Indenture Trustee,
and (B) general principles of equity regardless of whether such
enforcement is sought in a proceeding at law or in equity;
3. no consent, approval, authorization or other action by any
governmental agency or body or other tribunal is required on the part
of the Indenture Trustee in connection with its execution and delivery
of the Documents to which it is a party or the performance of its
obligations thereunder;
4. the Notes have been duly executed, authenticated and
delivered by the Indenture Trustee; and
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5. the execution and delivery of, and performance by the
Indenture Trustee of its obligations under, the Documents to which it
is a party do not conflict with or result in a violation of any statute
or regulation applicable to the Indenture Trustee, or the charter or
by-laws of the Indenture Trustee, or to the best knowledge of such
counsel, any governmental authority having jurisdiction over the
Indenture Trustee or the terms of any indenture or other agreement or
instrument to which the Indenture Trustee is a party or by which it is
bound.
In rendering such opinion, such counsel may rely, as to
matters of fact, on certificates of responsible officers of the
Sponsor, the Indenture Trustee and public officials. Such opinion may
also assume the due authorization, execution and delivery of the
instruments and documents referred to therein by the parties thereto
other than the Indenture Trustee.
I. The Underwriter shall have received from the Indenture
Trustee a certificate, signed by the President, a senior vice president
or a vice president of the Indenture Trustee, dated the Closing Date,
to the effect that each person who, as an officer or representative of
the Indenture Trustee, signed or signs the Notes, the Sale and
Servicing Agreement, the Indenture or any other document delivered
pursuant hereto, on the date hereof or on the Closing Date, in
connection with the transactions described in the Sale and Servicing
Agreement and the Indenture was, at the respective times of such
signing and delivery, and is now, duly elected or appointed, qualified
and acting as such officer or representative, and the signatures of
such persons appearing on such documents are their genuine signatures.
J. The Policies relating to the Notes shall have been duly
executed and issued at or prior to the Closing Date and shall conform
in all material respects to the description thereof in the Prospectus.
K. The Underwriter shall have received a favorable opinion of
counsel to the Insurer, dated the Closing Date and in form and
substance satisfactory to counsel for the Underwriter, to the effect
that:
1. The Insurer is an insurance corporation, duly incorporated
and validly existing under the laws of its state of incorporation. The
Insurer is validly licensed to do business in New York and is
authorized to issue the Policies and perform its obligations under the
Policies in accordance with the terms thereof.
2. The execution and delivery by the Insurer of the Policies,
the Insurance Agreement and the Indemnification Agreement are within
the corporate power of the Insurer and have been authorized by all
necessary corporate action on the part of the Insurer; the Policies has
been duly executed and is the valid and binding obligation of the
Insurer enforceable in accordance with its terms except that the
enforcement of the Policies may be limited by laws relating to
bankruptcy, insolvency, reorganization, moratorium, receivership and
other
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similar laws affecting creditors' rights generally and by general
principles of equity.
3. The Insurer is authorized to deliver the Insurance
Agreement and the Indemnification Agreement, and such agreements have
been duly executed and delivered and constitute the legal, valid and
binding obligations of the Insurer enforceable in accordance with its
terms except that the enforcement of the Insurance Agreement and the
Indemnification Agreement may be limited by laws relating to
bankruptcy, insolvency, reorganization, moratorium, receivership and
other similar laws affecting creditors' rights generally and by general
principles of equity and by public policy considerations relating to
indemnification for securities law violations.
4. No consent, approval, authorization or order of any state
or federal court or governmental agency or body is required on the part
of the Insurer, the lack of which would adversely affect the validity
or enforceability of the Policies; to the extent required by applicable
legal requirements that would adversely affect validity or
enforceability of the Policies, the form of the Policies has been filed
with, and approved by, all governmental authorities having jurisdiction
over the Insurer in connection with the Policies.
5. The Policies are not required to be registered under the
Act.
6. The information set forth under the caption "THE INSURER
AND THE POLICIES" in the Prospectus Supplement, insofar as such
statements constitute a description of the Policies, accurately
summarizes the Policies.
In rendering this opinion, such counsel may rely, as to
matters of fact, on certificates of responsible officers of the
Sponsor, the Originators, the Indenture Trustee, the Insurer and public
officials. Such opinion may assume the due authorization, execution and
delivery of the instruments and documents referred to therein by the
parties thereto other than the Insurer.
L. Except for the downgrading of Advanta National Bank on
March 17, 1997, on or prior to the Closing Date, there has been no
downgrading, nor has any notice been given of (A) any intended or
potential downgrading or (B) any review or possible changes in rating
the direction of which has not been indicated, in the rating, if any,
accorded the Sponsor or any Originator or in any rating accorded any
securities of the Sponsor, if any, by any "nationally recognized
statistical rating organization," as such term is defined for purposes
of the Act.
M. On or prior to the Closing Date, there shall not have
occurred any downgrading, nor shall any notice have been given of (A)
any intended or potential downgrading or (B) any review or possible
change in rating the direction of which has not been indicated, in the
rating accorded the Insurer's claims paying ability by any "nationally
recognized statistical rating organization," as such term is defined
for purposes of the Act.
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N. There has not occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations, since June 30,
1998, of (A) the Sponsor, the Originators and any subsidiaries or (B)
the Insurer, that is in the Underwriter's judgment material and adverse
and that makes it in the Underwriter's judgment impracticable to market
the Notes on the terms and in the manner contemplated in the
Prospectus.
O. The Underwriter shall have received from the Insurer a
certificate, signed by the president, a senior vice president or a vice
president of the Insurer, dated the Closing Date, to the effect that
the signer of such certificate has carefully examined the Policies, the
Insurance Agreement, the Indemnification Agreement and the related
documents and that, to the best of his or her knowledge based on
reasonable investigation:
1. There are no actions, suits or proceedings pending or
threatened against or affecting the Insurer which, if adversely
determined, individually or in the aggregate, would adversely affect
the Insurer's performance under the Policies, the Indemnification
Agreement or the Insurance Agreement;
2. Each person who as an officer or representative of the
Insurer, signed or signs the Policies, the Insurance Agreement, the
Indemnification Agreement or any other document delivered pursuant
hereto, on the date thereof, or on the Closing Date, in connection with
the transactions described in this Agreement was, at the respective
times of such signing and delivery, and is now, duly elected or
appointed, qualified and acting as such officer or representative, and
the signatures of such persons appearing on such documents are their
genuine signatures;
3. The information contained in the Prospectus Supplement
under the caption "THE INSURER AND THE POLICIES" is true and correct in
all material respects and does not omit to state a material fact with
respect to the description of the Policies or the ability of the
Insurer to meet its payment obligations under the Policies;
4. The tables regarding the Insurer's capitalization set forth
under the heading "THE INSURER AND THE POLICIES" in the Prospectus
Supplement presents accurately and fairly the capitalization of the
Insurer as of June 30, 1998;
5. On or prior to the Closing Date, there has been no
downgrading, nor has any notice been given of (A) any intended or
potential downgrading or (B) any review or possible changes in rating
the direction of which has not been indicated, in the rating accorded
the claims paying ability of the Insurer by any "nationally recognized
statistical rating organization," as such term is defined for purposes
of the Act;
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6. The audited balance sheet of the Insurer as of December 31,
1997 and the related statement of income and retained earnings for the
fiscal year then ended, and the accompanying footnotes, together with
the related opinion of an independent certificated public accountant,
copies of which are incorporated by reference in the Prospectus
Supplement, fairly present in all material respects the financial
condition of the Insurer as of such date and for the period covered by
such statements in accordance with generally accepted accounting
principles consistently applied; the unaudited balance sheet of the
Insurer as of June 30, 1998 and the related statement of income and
retained earnings for the three-month period then ended, copies of
which are included in the Prospectus Supplement, fairly present in all
material respects the financial condition of the Insurer as of such
date and for the period covered by such statements in accordance with
generally accepted accounting principles applied consistently with
those principles applied in preparing the December 31, 1997 audited
statements;
7. To the best knowledge of such officer, since June 30, 1998,
no material adverse change has occurred in the financial position of
the Insurer other than as set forth in the Prospectus Supplement.
The officer of the Insurer certifying to items 5-7 shall be an
officer in charge of a principal financial function.
The Insurer shall attach to such certificate a true and
correct copy of its certificate or articles of incorporation, as
appropriate, and its by-laws, all of which are in full force and effect
on the date of such certificate.
P. The Underwriter shall have received from Xxxxx Xxxxxxxxxx
LLP, special counsel to the Sponsor and the Originators, a survey in
form and substance satisfactory to the Underwriter, indicating the
requirements of applicable local law which must be complied with in
order to transfer and service the Mortgage Loans pursuant to the Sale
and Servicing Agreement and the Originators shall have complied with
all such requirements.
Q. The Underwriter shall have received from Xxxxx Xxxxxxxxxx
LLP, special counsel to the Underwriter, such opinion or opinions,
dated the Closing Date, with respect to the issuance and sale of the
Notes, the Prospectus and such other related matters as the Underwriter
shall reasonably require.
R. The Underwriter and counsel for the Underwriter shall have
received copies of any opinions of counsel to the Sponsor, the
Originators or the Insurer supplied to the Indenture Trustee relating
to matters with respect to the Notes or the Policies. Any such opinions
shall be dated the Closing Date and addressed to the Underwriter or
accompanied by reliance letters to the Underwriter or shall state the
Underwriter may rely thereon.
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S. The Underwriter shall have received such further information,
Notes and documents as the Underwriter may reasonably have requested
not fewer than three (3) full business days prior to the Closing Date.
T. There shall have been executed and delivered by Advanta
Mortgage Holding Company, the corporate parent of the Sponsor ("AMHC"),
a letter agreement with the Indenture Trustee and the Insurer, pursuant
to which AMHC agrees to become jointly and severally liable with the
Sponsor, the Originators and the Master Servicer for the payment of the
Joint and Several Obligations (as defined in such letter agreement).
U. There shall have been executed and delivered by AMHC, the
corporate parent of the Sponsor, a letter agreement with the
Underwriter and the Insurer substantially in the form of Exhibit A
hereto.
V. Prior to the Closing Date, counsel for the Underwriter shall
have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Notes as herein contemplated and related
proceedings or in order to evidence the accuracy and completeness of
any of the representations and warranties, or the fulfillment of any of
the conditions, herein contained, and all proceedings taken by the
Originators in connection with the issuance and sale of the Notes as
herein contemplated shall be satisfactory in form and substance to the
Underwriter and counsel for the Underwriter.
W. Subsequent to the execution and delivery of this Agreement none
of the following shall have occurred: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange
or the over-the-counter market shall have been suspended or minimum
prices shall have been established on either of such exchanges or such
market by the Commission, by such exchange or by any other regulatory
body or governmental authority having jurisdiction; (i) a banking
moratorium shall have been declared by Federal or state authorities;
(iii) the United States shall have become engaged in hostilities, there
shall have been an escalation of hostilities involving the United
States or there shall have been a declaration of a national emergency
or war by the United States; or (iii) there shall have occurred such a
material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets of the United States shall be such) as to make it, in the
judgment of the Underwriter, impractical or inadvisable to proceed with
the public offering or delivery of the Notes on the terms and in the
manner contemplated in the Prospectus.
If any condition specified in this Section 6 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriter by notice to the Sponsor and each of the Originators at any
time at or prior to the Closing Date, and such termination shall be without
liability of any party to any other party except as provided in Section 7.
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All opinions, letters, evidence and Notes mentioned above or elsewhere
in this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Underwriter.
SECTION 7. Payment of Expenses. The Sponsor and the Originators agree
to pay: (a) the costs incident to the authorization, issuance, sale and delivery
of the Notes and any taxes payable in connection therewith; (b) the costs
incident to the preparation, printing and filing under the Act of the
Registration Statement and any amendments and exhibits thereto; (c) the costs of
distributing the Registration Statement as originally filed and each amendment
thereto and any post-effective amendments thereof (including, in each case,
exhibits), the Preliminary Prospectus, the Prospectus and any amendment or
supplement to the Prospectus or any document incorporated by reference therein,
all as provided in this Agreement; (d) the costs of reproducing and distributing
this Agreement; (e) the fees and expenses of qualifying the Notes under the
securities laws of the several jurisdictions as provided in Section 5(G) hereof
and of preparing, printing and distributing any Blue Sky Memorandum or Legal
Investment Survey (including related fees and expenses of counsel to the
Underwriter); (f) any fees charged by securities rating services for rating the
Notes; (g) one-half of the costs and expenses of Xxxxx Xxxxxxxxxx LLP; and (h)
all other costs and expenses incident to the performance of the obligations of
the Sponsor and the Originators; provided, however, that, except as provided in
this Section 7, the Underwriter shall pay its own costs and expenses, including
one-half of the costs and expenses of Xxxxx Xxxxxxxxxx LLP, any transfer taxes
on the Notes which they may sell and the expenses of marketing any offering of
the Notes made by the Underwriter (including expenses incident to the
preparation, printing and distribution of Computational Materials and other
Derived Information).
If this Agreement is terminated by the Underwriter, in accordance with
the provisions of Section 6 or Section 10, the Sponsor and the Originators shall
reimburse the Underwriter for its respective reasonable out-of-pocket expenses,
including fees and disbursements of Xxxxx Xxxxxxxxxx LLP.
SECTION 8. Indemnification and Contribution.
A. The Sponsor and the Originators each agree to indemnify and
hold harmless the Underwriter and each person, if any, who controls the
Underwriter within the meaning of Section 15 of the Act from and
against any and all loss, claim, damage or liability, joint or several,
or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and
sales of the Notes), to which the Underwriter or any such controlling
person may become subject, under the Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based
upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, (ii) the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, (iii) any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus or (iv) the omission or
alleged omission
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to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and shall
reimburse the Underwriter and each such controlling person promptly
upon demand for any legal or other expenses reasonably incurred by the
Underwriter or such controlling person in connection with investigating
or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided,
however, that neither the Sponsor nor any of the Originators shall be
liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission
made in the Prospectus or the Registration Statement in reliance upon
and in conformity with written information (including any Derived
Information) furnished to the Sponsor by the Underwriter specifically
for inclusion therein. For purposes of the last proviso to the
immediately preceding sentence, the term "Prospectus" shall not be
deemed to include the documents incorporated therein by reference, and
the Underwriter shall not be obligated to send or give any supplement
or amendment to any document incorporated therein by reference to any
person other than a person to whom the Underwriter had delivered such
incorporated document or documents in response to a written request
therefor. The foregoing indemnity agreement is in addition to any
liability which the Sponsor or any of the Originators may otherwise
have to the Underwriter or any controlling person of the Underwriter.
B. The Underwriter agrees to indemnify and hold harmless the
Sponsor, the Originators, each of their respective directors, each of
their respective officers who signed the Registration Statement, and
each person, if any, who controls the Sponsor or any of the Originators
within the meaning of Section 15 of the Act against any and all loss,
claim, damage or liability, or any action in respect thereof, to which
the Sponsor or such Originator or any such director, officer or
controlling person may become subject, under the Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of,
or is based upon, (i) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, (ii) the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, (iii) any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus or (iv) the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, but in
each case only to the extent that the untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information (excluding any Derived
Information which is covered in paragraph (E) below) furnished to the
Sponsor by or on behalf of the Underwriter specifically for inclusion
therein, and shall reimburse the Sponsor, such Originator and any such
director, officer or controlling person for any legal or other expenses
reasonably incurred by the Sponsor or such Originator or any director,
officer or controlling person in connection with investigating or
defending or preparing to defend against any
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such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any
liability which the Underwriter may otherwise have to the Sponsor, the
Originators or any such director, officer or controlling person.
C. Promptly after receipt by any indemnified party under this
Section 8 of notice of any claim or the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be
made against any indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify an indemnifying
party shall not relieve it from any liability which it may have under
this Section 8 except to the extent it has been materially prejudiced
by such failure; and provided further, however, that the failure to
notify any indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under this
Section 8.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof.
Any indemnified party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such 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 and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
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
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions 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 (in
addition to local counsel) at any time for all such indemnified parties, which
firm shall be designated in writing by the Underwriter, if the indemnified
parties under this Section 8 consist of the Underwriter or any of its
controlling persons, or by the Sponsor or the Originators, as the case may be,
if the
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indemnified parties under this Section 8 consist of the Sponsor or the
Originators, as the case may be, or any of the Sponsor's directors, officers or
controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section 8(A) and (B), shall use its best efforts to cooperate with
the indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement.
D. The Underwriter agrees to deliver to the Sponsor a copy of
its Derived Information no later than one (1) business day prior to the
date such information is required to be filed, pursuant to the
No-Action Letters (as defined herein), with the Commission on Form 8-K.
E. The Underwriter agrees, assuming all Sponsor-Provided
Information (defined below) is accurate and complete in all material
respects, to indemnify and hold harmless the Sponsor, the Originators,
each of the Sponsor's and the Originators' respective officers and
directors and each person who controls the Sponsor or the Originators
within the meaning of Section 15 of the Act against any and all losses,
claims, damages or liabilities, joint or several, to which they may
become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement of a material fact
contained in the Derived Information provided by the Underwriter, or
arise out of or are based upon the omission or alleged omission to
state therein, a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made and when read in conjunction
with the Prospectus, not misleading, and agrees to reimburse each such
indemnified party for any legal or other expenses reasonably incurred
by him, her or it in connection with investigating or defending or
preparing to defend any such loss, claim, damage, liability or action
as such expenses are incurred. The obligations of the Underwriter under
this Section 8(E) shall be in addition to any liability which the
Underwriter may otherwise have.
The procedures set forth in Section 8(C) shall be equally
applicable to this Section 8(E).
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F. For purposes of this Section 8, the term "Derived
Information" means such portion, if any, of the information delivered
to the Sponsor pursuant to Section 8(D) for filing with the Commission
on Form 8-K as:
(i) is not contained in the Prospectus without taking
into account information incorporated therein by reference;
(ii) does not constitute Sponsor-Provided
Information; and
(iii) is of the type of information defined as
Collateral term sheets, Structural term sheets or
Computational Materials (as such terms are interpreted in the
No-Action Letters).
"Sponsor-Provided Information" means any computer tape furnished to the
Underwriter by the Sponsor and the Originators concerning the Mortgage
Loans comprising the Trust.
The terms "Collateral term sheet" and "Structural term sheet"
shall have the respective meanings assigned to them in the February 13,
1995 letter (the "PSA Letter") of Cleary, Gottlieb, Xxxxx & Xxxxxxxx on
behalf of the Public Securities Association (which letter, and the SEC
staff's response thereto, were publicly available February 17, 1995).
The term "Collateral term sheet" as used herein includes any subsequent
Collateral term sheet that reflects a substantive change in the
information presented. The term "Computational Materials" has the
meaning assigned to it in the May 17, 1994 letter (the "Xxxxxx letter"
and together with the PSA Letter, the "No-Action Letters") of Xxxxx &
Wood on behalf of Xxxxxx, Xxxxxxx & Co., Inc. (which letter, and the
SEC staff's response thereto, were publicly available May 20, 1994).
G. If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(A) or (B) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred
to therein, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or
liability, or action in respect thereof, in such proportion as shall be
appropriate to reflect the relative benefits received by the Sponsor
and the Originators on the one hand and the Underwriter on the other
from the offering of the Notes or if the allocation provided by clause
(i) above is not permitted by applicable law or if the indemnified
party failed to give the notice required under Section 8(C), in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the
Sponsor and the Originators on the one hand and the Underwriter on the
other with respect to the statements or omissions which resulted in
such loss, claim, damage or liability, or action in respect thereof, as
well as any other relevant equitable considerations.
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The relative benefits of the Underwriter and the Sponsor and the
Originators shall be deemed to be in such proportion so that the Underwriter is
responsible for that portion represented by the percentage that the underwriting
discount (whether appearing on the cover page of the Prospectus or otherwise)
bears to the public offering price (whether appearing on the cover page of the
Prospectus or otherwise) and the Sponsor and the Originators are responsible for
the remainder.
The relative fault of the Underwriter and the Sponsor and the
Originators shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Sponsor and the Originators
or by the Underwriter, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement or
omission and other equitable considerations.
The Sponsor, the Originators and the Underwriter agree that it would
not be just and equitable if contributions pursuant to this Section 8(G) were to
be determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section 8(G) shall be deemed to include, for purposes of this Section 8(G), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
In no case shall the Underwriter be responsible for any amount in
excess of the underwriting discount applicable to the Notes purchased by the
Underwriter hereunder. 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.
H. The Underwriter confirms that the information set forth (i)
in the Prospectus Supplement (on page S-2 thereof) relating to market
making and (ii) in the fourth and fifth paragraphs under the caption
"UNDERWRITING" in the Prospectus Supplement, together with the Derived
Information, is correct and constitutes the only information furnished
in writing to the Sponsor and the Originators by or on behalf of the
Underwriter specifically for inclusion in the Registration Statement
and the Prospectus.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or contained in certificates of officers of the Sponsor or any
Originator submitted pursuant hereto shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of the
Underwriter or controlling persons thereof, or by or on behalf of the Sponsor or
the Originator and shall survive delivery of any Notes to the Underwriter.
SECTION 10. Termination of Agreement. The Underwriter may terminate
this Agreement immediately upon notice to the Sponsor and the Originators, at
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any time at or prior to the Closing Date if any of the events or conditions
described in Section 6(W) of this Agreement shall occur and be continuing. In
the event of any such termination, the covenant set forth in Section 5(G), the
provisions of Section 7, the indemnity agreement set forth in Section 8, and the
provisions of Sections 9 and 13 shall remain in effect.
SECTION 11. Notices. All statements, requests, notices and agreements
hereunder shall be in writing, and:
A. if to the Underwriter, shall be delivered or sent by mail,
telex or facsimile transmission to Bear, Xxxxxxx & Co. Inc., 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset Backed Securities
(Fax: 000-000-0000);
B. if to the Sponsor, shall be delivered or sent by mail,
telex or facsimile transmission to Advanta Mortgage Conduit Services,
Inc. 00000 Xxxx Xxxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 Attention:
General Counsel (Fax: 000-000-0000); and
C. if to Advanta National Bank, shall be delivered or sent by
mail to Advanta National Bank, Xxx Xxxxxxx Xxxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000 (Telephone: 000-000-0000); and
D. if to Advanta Finance Corp., 00000 Xxxx Xxxxxxxx Xxxxx, Xxx
Xxxxx, XX 00000, Attention: Secretary.
SECTION 12. Persons Entitled to the Benefit of this Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriter, the
Sponsor, the Originators and their respective successors. This Agreement and the
terms and provisions hereof are for the sole benefit of only those persons,
except that the representations, warranties, indemnities and agreements
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control the Underwriter within the meaning of
Section 15 of the Act, and for the benefit of directors of the Sponsor or any of
the Originators, officers of the Sponsor who have signed the Registration
Statement and any person controlling the Sponsor or any of the Originators
within the meaning of Section 15 of the Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 12, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
SECTION 13. Survival. The respective indemnities, representations,
warranties and agreements of the Sponsor, the Originators and the Underwriter
contained in this Agreement, or made by or on behalf of them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Notes and shall remain in full force and effect, regardless of any investigation
made by or on behalf of any of them or any person controlling any of them.
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SECTION 14. Definition of the Term "Business Day". For purposes of this
Agreement, "Business Day" means any day on which the New York Stock Exchange,
Inc. is open for trading.
SECTION 15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND SHALL BE
CONSTRUED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 16. Counterparts. This Agreement may be executed in
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
SECTION 17. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
[Signature Page Follows]
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If the foregoing correctly sets forth the agreement among the Sponsor,
the Originators and the Underwriter, please indicate your acceptance in the
space provided for that purpose below.
Very truly yours,
ADVANTA MORTGAGE CONDUIT
SERVICES INC.
By:________________________
Name:
Title:
ADVANTA NATIONAL BANK
By:________________________
Name:
Title:
ADVANTA FINANCE CORP.
By:________________________
Name:
Title:
CONFIRMED AND ACCEPTED
as of the date first above written:
BEAR, XXXXXXX & CO. INC.
By:__________________________
Name:
Title:
[Signature Page to the Underwriting Agreement]
30
==================================================================================================================================
SCHEDULE A
----------------------------------------------------------------------------------------------------------------------------------
Class Initial Principal Amount of Notes Purchase Price
Purchased by the Underwriter to Underwriter
disregarding
accrued interest
----------------------------------------------------------------------------------------------------------------------------------
Class A-1 $67,500,000 99.750000%
==================================================================================================================================
Class A-2 $40,000,000 99.664574%
==================================================================================================================================
S-1
31
EXHIBIT A
As of September 25, 1998
Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Re: Underwriting Agreement dated September 25, 1998 (the
"Underwriting Agreement") among Advanta National Bank and
Advanta Finance Corp. (together, the "Originators"), Advanta
Mortgage Conduit Services, Inc. (the "Sponsor") and Bear,
Xxxxxxx & Co. (the "Underwriter"); Indemnification Agreement
dated September 25, 1998 (the "Indemnification Agreement")
among the Sponsor, the Originators, the Underwriter and MBIA
Insurance Corporation (the "Insurer"); and the Insurance
Agreement dated as of September 1, 1998 (the "Insurance
Agreement") among the Insurer, Advanta Mortgage Corp. USA, the
Sponsor, the Originators, Advanta Holding Trust, Advanta Home
Equity Loan Trust 1998-B, Bankers Trust Company of California,
N.A., as Indenture Trustee, and Wilmington Trust Company, as
Owner Trustee
Ladies and Gentlemen:
Pursuant to the Underwriting Agreement, the Indemnification Agreement
and the Insurance Agreement (collectively, the "Designated Agreements"), the
Sponsor and the Originators have undertaken certain financial obligations with
respect to the indemnification of the Underwriter and of the Insurer with
respect to the Registration Statement, the Prospectus and the Prospectus
Supplement described in the Designated Agreements. Any financial obligations of
the Sponsor and the Originators under the Designated Agreements, whether or not
specifically enumerated in this paragraph, are hereinafter referred to as the
"Joint and Several Obligations"; provided, however, that "Joint and Several
Obligations" shall mean only the financial obligations of the Sponsor and the
Originators under the Designated Agreements (including the payment of money
damages for a breach of any of the Sponsor's and the Originators' obligations
under the
A-1
32
Designated Agreements, whether financial or otherwise) but shall not
include any obligations not relating to the payment of money.
As a condition of their respective executions of the Designated
Agreements, the Underwriter and the Insurer have required the undersigned,
Advanta Mortgage Holding Company ("AMHC"), the parent corporation of the Sponsor
and the Originators, to acknowledge its joint-and-several liability with the
Sponsor and the Originators for the payment of the Joint and Several Obligations
under the Designated Agreements.
Now, therefore, the Underwriter, the Insurer and AMHC do hereby agree
that:
(i) AMHC hereby agrees to be absolutely and
unconditionally jointly and severally liable with the Sponsor
and the Originators to the Underwriter for the payment of the
Joint and Several Obligations under the Underwriting
Agreement.
(ii) AMHC may honor its obligations hereunder either
by direct payment of any Joint and Several Obligations or by
causing any Joint and Several Obligations to be paid to the
Underwriter or to the Insurer, as applicable, by the Sponsor
or another affiliate of AMHC.
This letter and the respective obligations and rights hereunder and
thereunder shall not be delegated or assigned by you without the prior written
consent of the Insurer. This letter may not be amended or otherwise modified
except pursuant to a writing signed by each of the parties hereto. This letter
may be executed by the signatories hereto in several counterparts, each of which
shall be deemed to be an original and all of which shall constitute one and the
same letter. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK. EACH OF THE UNDERSIGNED PARTIES HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF OR IN
CONNECTION WITH, THIS LETTER, AND ANY OTHER COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THE
UNDERSIGNED PARTIES IN CONNECTION HEREWITH OR THEREWITH.
A-2
33
Capitalized terms used herein and not defined herein shall have their
respective meanings as set forth in the Underwriting Agreement.
Very truly yours,
ADVANTA MORTGAGE HOLDING
COMPANY
By: _______________________
Authorized Signatory
CONFIRMED AND ACCEPTED,
as of the date first above written:
MBIA INSURANCE CORPORATION
By:_________________________________
Authorized Signatory
BEAR, XXXXXXX & CO. INC.
By:_________________________________
Authorized Signatory
A-3
