ADVANTA MORTGAGE CONDUIT SERVICES, INC.
ADVANTA NATIONAL BANK USA
Advanta Revolving Home Equity Loan Asset-Backed
Certificates, Series 1996-A, Class A Certificates
UNDERWRITING AGREEMENT
November 15, 1996
▇▇▇▇▇▇ Brothers Inc.
Three World Financial Center
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Advanta National Bank USA as Originator (the "Originator") has
authorized the issuance and sale of Revolving Home Equity Loan Asset-Backed
Certificates, Series 1996-A Class A (the "Certificates"), consisting of variable
rate pass-through Class A Certificates. The Certificates will be issued by the
Advanta Revolving Home Equity Loan Trust 1996-A (the "Trust"), whose assets will
include a pool of adjustable rate home equity revolving credit line loans, made
or to be made in the future (the "Mortgage Loans") under certain home equity
revolving credit line loan agreements, and certain related property. The
Certificates represent undivided interests issued by the Trust. The Originator
will retain, initially, the remaining undivided interest in the trust assets
(the "Originator Interest") which may be sold or pledged at anytime, subject to
certain conditions specified in the Pooling and Servicing Agreement. The Class A
Principal Balance of the Certificates as of the opening of business on November
22, 1996 (the "Closing Date"), shall be $50,000,000. The Certificates are to be
issued under a pooling and servicing agreement, to be dated as of November 1,
1996 (the "Pooling and Servicing Agreement"), among Advanta Mortgage Conduit
Services, Inc., as sponsor (the "Sponsor"), Advanta Mortgage Corp. USA, as
master servicer (the "Master Servicer"), the Originator and Bankers Trust
Company of California, N.A., as trustee (the "Trustee").
On or prior to the date of issuance of the Certificates, the
Company will obtain a guaranty insurance policy (the "Policy") issued by MBIA
Insurance Corporation (the "Certificate Insurer") which will unconditionally and
irrevocably guarantee to the Trustee for the benefit of the Owners of the
Certificates on any Payment Date, the amount by
which the (i) Class A Principal Balance exceeds the (ii) Trust Collateral Value
minus the Non-Subordinated Originator's Interest, and (iii) any accrued and
unpaid interest due on the Certificates.
The Certificates and the Originator's Interest are more fully
described in a Registration Statement which the Company has furnished to ▇▇▇▇▇▇
Brothers (the "Underwriter"). Capitalized terms used but not defined herein
shall have the meanings given to them in the Pooling and Servicing Agreement.
The Company will also enter into an Insurance Agreement dated
as of November 22, 1996 (the "Insurance Agreement"), with the Originator, the
Master Servicer, the Trustee and the Certificate Insurer, governing the
liability of the several parties with respect to the losses resulting from
material misstatements or omissions contained in the Prospectus Supplement. The
Originator will also enter into an Indemnification Agreement dated as of
November 22, 1996 (the "Indemnification Agreement"), with the Underwriter, and
the Certificate Insurer, governing the liability of the several parties with
respect to the losses resulting from material misstatements or omissions
contained in the Prospectus Supplement.
SECTION I. Representations and Warranties of the
Company and the Originator. The Company and the Originator
each represent and warrant to, and agree with the Underwriter
that:
A. Registration Statements on Form S-3, as amended
by Post-Effective Amendments thereto, have (i) been prepared
by the Company and the Originator in conformity with the
requirements of the Securities Act of 1933 (the "Securities
Act") and the rules and regulations (the "Rules and
Regulations") of the United States Securities and Exchange
Commission (the "Commission") thereunder, (ii) been filed with
the Commission under the Securities Act and (iii) become
effective under the Securities Act. Copies of such
Registration Statements have been delivered by the Company to
the Underwriter. As used in this Agreement, "Effective Time"
means the date and the time as of which such Registration
Statements, or the most recent post-effective amendment
thereto, if any, was declared effective by the Commission;
"Effective Date" means the date of the Effective Time;
"Preliminary Prospectus" means each prospectus included in
such Registration Statements, or amendments thereof, including
a preliminary prospectus supplement which, as completed, is
proposed to be used in connection
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with the sale of the Certificates and any prospectus filed
with the Commission by the Company with the consent of the
Underwriter pursuant to Rule 424(a) of the Rules and
Regulations; "Registration Statement" means such registration
statements, as amended by all Post-Effective Amendments
thereto heretofore filed with the Commission, at the Effective
Time, including any documents incorporated by reference
therein at such time; and "Prospectus" means such final
prospectus, as first supplemented by a prospectus supplement
(the "Prospectus Supplement") relating to the Certificates, as
first filed with the Commission pursuant to paragraph (1) or
(4) of Rule 424(b) of the Rules and Regulations. Reference
made herein to any Preliminary Prospectus or to the Prospectus
shall be deemed to refer to and include any documents
incorporated by reference therein pursuant to Item 12 of Form
S-3 under the Securities Act, as of the date of such
Preliminary Prospectus or the Prospectus, as the case may be,
and any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include any document filed under the Securities
Exchange Act of 1934 (the "Exchange Act") after the date of
such Preliminary Prospectus or the Prospectus, as the case may
be, and incorporated by reference in such Preliminary
Prospectus or the Prospectus, as the case may be; and any
reference to any amendment to the Registration Statement shall
be deemed to include any report of the Company filed with the
Commission pursuant to Section 13(a) or 15(d) of the Exchange
Act after the Effective Time that is incorporated by reference
in the Registration Statement. The Commission has not issued
any order preventing or suspending the use of any Preliminary
Prospectus. There are no contracts or documents of the Company
which are required to be filed as exhibits to the Registration
Statement pursuant to the Securities Act or the Rules and
Regulations which have not been so filed or incorporated by
reference therein on or prior to the Effective Date of the
Registration Statements. The conditions for use of Form S-3,
as set forth in the General Instructions thereto, have been
satisfied.
To the extent that the Underwriter (i) has provided
to the Company Collateral term sheets (as hereinafter defined)
that the Underwriter has provided to a prospective investor,
the Company has filed such Collateral term sheets as an
exhibit to a report on Form 8-K within two business days of
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its receipt thereof, or (ii) has provided to the Company
Structural term sheets or Computational Materials (each as
defined below) that the Underwriter has provided to a
prospective investor, the Company will file or cause to be
filed with the Commission a report on Form 8-K containing such
Structural term sheet and Computational Materials, as soon as
reasonably practicable after the date of this Agreement, but
in any event, not later than the date on which the Prospectus
is filed with the Commission pursuant to Rule 424 of the Rules
and Regulations.
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
Securities Act and the Rules and Regulations. 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 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 Company 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 Securities Act or 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
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become effective or are filed with the Commission, as the case
may be, will conform in all material respects to the
requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and 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 Company
or the Originator, otherwise than as set forth or contemplated
in the Prospectus as supplemented or amended as of the Closing
Date.
E. Each of the Company and the Originator 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 this
Agreement, the Pooling and Servicing Agreement, the Insurance
Agreement and, in the case of the Originator, the
Indemnification Agreement, and to cause the Certificates 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 Company
or the Originator is a party or of which any of its properties
is the subject (a) which if determined adversely to the
Company or the Originator would have a material adverse effect
on the business or financial condition of the Company or the
Originator, (b) which asserts the invalidity of this
Agreement, the Pooling and Servicing Agreement, the
Indemnification Agreement, the Insurance Agreement, or the
Certificates, (c) which seeks to prevent the issuance of the
Certificates or the consummation by the Company or the
Originator of any of the transactions contemplated by the
Pooling and Servicing
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Agreement, the Insurance Agreement, the Indemnification
Agreement or this Agreement, as the case may be, or (d) which
might materially and adversely affect the performance by the
Company or the Originator of its obligations under, or the
validity or enforceability of, the Pooling and Servicing
Agreement, the Insurance Agreement, this Agreement, the
Indemnification Agreement, or the Certificates.
G. This Agreement has been, and the Pooling and
Servicing Agreement, the Indemnification Agreement and the
Insurance Agreement when executed and delivered as
contemplated hereby and thereby will have been, duly
authorized, executed and delivered by the Company and the
Originator, and this Agreement constitutes, and the Pooling
and Servicing Agreement, the Indemnification Agreement and the
Insurance Agreement, when executed and delivered as
contemplated herein, will constitute, legal, valid and binding
instruments enforceable against the Company and the 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
and the Insurance Agreement, limitations of public policy
under applicable securities laws.
H. The execution, delivery and performance of this
Agreement, the Pooling and Servicing Agreement, the
Indemnification Agreement and the Insurance Agreement by the
Company and the Originator and the consummation of the
transactions contemplated hereby and thereby, and the issuance
and delivery of the Certificates 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 Company or the Originator is a party,
by which the Company or the Originator is bound or to which
any of the property or assets of the Company, the Originator
or any of their subsidiaries are subject, nor will such
actions result in any violation of the provisions of the
articles of incorporation or by-laws of the Company or of the
Originator or any statute or any
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order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or the Originator
or any of their properties or assets.
I. Arthur ▇▇▇▇▇▇▇▇ LLP are independent public
accountants with respect to the Company and Originator as
required by the Securities Act and the Rules and Regulations.
J. The direction by the Originator to the Trustee to
execute, authenticate, issue and deliver the Certificates has
been duly authorized by the Originator, and assuming the
Trustee has been duly authorized to do so, when executed,
authenticated, issued and delivered by the Trustee in
accordance with the Pooling and Servicing Agreement, the
Certificates will be validly issued and outstanding and will
be entitled to the benefits provided by the Pooling and
Servicing Agreement.
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 Certificates and the sale of the
Certificates to the Underwriter, or the consummation by the
Company or the Originator of the other transactions
contemplated by this Agreement, the Pooling and Servicing
Agreement, the Indemnification Agreement and the Insurance
Agreement, 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 Certificates by the Underwriter or as
have been obtained.
L. The 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 the 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 the 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
Pooling and Servicing Agreement, the Originator
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will: (i) have good title to the interest in the Mortgage
Loans conveyed by the Originator, free and clear of any lien,
mortgage, pledge, charge, encumbrance, adverse claim or other
security interest (collectively, "Liens"); (ii) not have
assigned to any person any of its right, title or interest in
the Mortgage Loans, in the Pooling and Servicing Agreement or
in the Certificates being issued pursuant thereto; and (iii)
have the power and authority to sell its interest in the
Mortgage Loans to the Trustee and to sell the Certificates to
the Underwriter. Upon execution and delivery of the Pooling
and Servicing Agreement by the Trustee, the Trustee will have
acquired beneficial ownership of all of the Originator's
right, title and interest in and to the Mortgage Loans. Upon
delivery to the Underwriter of the Certificates, the
Underwriter will have good title to the Certificates, free of
any Liens.
N. As of the Cut-0ff Date, each of the Mortgage
Loans will meet the eligibility criteria described in the
Prospectus and will conform to the descriptions thereof
contained in the Prospectus.
O. None of the Sponsor, the Originator or the Trust
created by the Pooling and Servicing Agreement 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 Certificates and the
Pooling and Servicing Agreement will conform in all material
respects to the descriptions thereof contained in the
Prospectus.
Q. At the Closing Date, the Certificates shall have
been rated in the highest rating category by at least two
nationally recognized rating agencies.
R. Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of this
Agreement, the Pooling and Servicing Agreement, the Insurance
Agreement, the Indemnification Agreement and the Certificates
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 Company and the Originator set forth in
the Pooling and
8
Servicing Agreement, the Insurance Agreement and, in the case
of the Originator, the Indemnification Agreement will be true
and correct in all material respects.
Any certificate signed by an officer of the Company or the
Originator and delivered to the Underwriter or counsel for the Underwriter in
connection with an offering of the Certificates 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 I are
made.
SECTION II. Purchase and Sale. The commitment of the
Underwriter to purchase the Certificates 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 Originator agrees to instruct the Trustee to issue and agrees to sell
to the Underwriter, and the Underwriter agrees (except as provided in Sections X
and XI hereof) to purchase from the Originator the aggregate initial principal
amount of the Certificates set forth on Schedule A, at the purchase price or
prices set forth in Schedule A.
SECTION III. Delivery and Payment. Delivery of and payment for
the Certificates to be purchased by the Underwriter shall be made at the offices
of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such
other place as shall be agreed upon by the Underwriter, the Company and the
Originator 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 Company
and the Originator. Payment shall be made to the Originator by wire transfer of
same day funds payable to the account of the Originator. Delivery of the
Certificates shall be made to the Underwriter against payment of the purchase
price thereof. The Certificates 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 Certificates will be made available for
examination by the Underwriter no later than 2:00 p.m. New York City time on the
first business day prior to the Closing Date.
SECTION IV. Offering by the Underwriter. It is understood
that, subject to the terms and conditions hereof, the Underwriter proposes to
offer the Certificates for sale to the public as set forth in the Prospectus.
SECTION V. Covenants of the Company. The Company and the
Originator agree as follows:
9
A. To prepare the Prospectus in a form approved by
the Underwriter and to file such Prospectus pursuant to Rule
424(b) under the Securities 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 Company 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 Certificates, 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 Certificates 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 Company
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
10
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 Certificates, 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
Securities Act or the Exchange Act, the Company 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
Certificates 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 Company 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 Securities
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 Company or the Underwriter, be required by the Securities
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
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copy thereof to the Underwriter and counsel for the
Underwriter and obtain the consent of the Underwriter to the
filing.
F. To make generally available to holders of the
Certificates 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 Securities Act
and the Rules and Regulations (including, at the option of the
Company, 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 Certificates 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 Certificates. The Company and the
Originator will file or cause the filing of such statements
and reports as may be required by the laws of each
jurisdiction in which the Certificates 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 Company for a period of 5 business days following
the commencement of the offering of the Certificates to the
public.
I. So long as the Certificates shall be outstanding,
to deliver to the Underwriter as soon as such statements are
furnished to the Trustee: (i) the annual statement as to
compliance delivered to the Trustee pursuant to Section 8.16
of the Pooling and Servicing Agreement; (ii) the annual
statement of a firm of independent public accountants
furnished to the Trustee pursuant to Section 8.17 of the
Pooling and Servicing Agreement; and (iii) the Monthly
Statement furnished to the Certificateholders pursuant to
Section 7.8 of the Pooling and Servicing Agreement.
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J. To apply the net proceeds from the sale of the
Certificates in the manner set forth in the Prospectus.
SECTION VI. Conditions to the Underwriter's Obligation. The
obligation of the Underwriter to purchase the Certificates pursuant to this
Agreement are subject to: (i) the accuracy on and as of the Closing Date of the
representations and warranties on the part of the Company and the Originator
herein contained; (ii) the performance by the Company and the Originator 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.
B. The Underwriter shall not have discovered and
disclosed to the Company 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 ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, 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 this
Agreement, the Pooling and Servicing Agreement, the
Certificates, the Indemnification Agreement, 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 Company 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 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, special
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counsel to the Company and the Originator with respect to the
following items, dated the Closing Date, to the effect that:
1. The Company and the Originator has each 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 the State of Delaware, 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 Pooling and Servicing Agreement. Each of the Company
and the Originator has the requisite power and authority to
execute and deliver, engage in the transactions contemplated
by, and perform and observe the conditions of, this Agreement,
the Pooling and Servicing Agreement, the Insurance Agreement
and, in the case of the Originator, the Indemnification
Agreement.
2. This Agreement, the Certificates, the Pooling and
Servicing Agreement and the Insurance Agreement have been duly
and validly authorized, executed and delivered by the Company
and the Originator, and the Originator has duly and validly
authorized the Indemnification Agreement, all requisite
corporate action having been taken with respect thereto, each
(other than the Certificates and the Indemnification
Agreement) constitutes the valid, legal and binding agreement
of the Company, and each constitutes the valid, legal and
binding agreement of the Originator.
3. Neither the transfer of the Mortgage Loans to the
Trust, the issuance or sale of the Certificates nor the
execution, delivery or performance by the Company or the
Originator of the Pooling and Servicing Agreement, this
Agreement, the Insurance Agreement or, in the case of the
Originator, the Indemnification Agreement (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
bylaws of the Company or the Originator; (ii) any term or
provision of any material agreement, contract, instrument or
indenture, to which the Company or the 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 Company or the Originator and known to
such counsel; or
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(B) results in, or will result in the creation or imposition
of any lien, charge or encumbrance upon any of the Trust's
assets or upon the Certificates, except as otherwise
contemplated by the Pooling and Servicing Agreement.
4. The endorsement and delivery of each Credit Line
Agreement, and the preparation, delivery and recording of an
Assignment with respect to each Mortgage is sufficient to
fully transfer to the Trustee for the benefit of the Owners
all right, title and interest of the Originator in the Credit
Line 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 Trustee to avail
itself of all protection available under applicable law
against the claims of any present or future creditors of the
Originator and to prevent any other sale, transfer,
assignment, pledge or other encumbrance of the Mortgage Loans
by the Originator from being enforceable.
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 Pooling and Servicing
Agreement, the Insurance Agreement, the Indemnification
Agreement, this Agreement or the offer, issuance, sale or
delivery of the Certificates or the consummation of any other
transaction contemplated thereby by the Company and the
Originator, except such which have been obtained.
6. There are no actions, proceedings or
investigations, to such counsel's knowledge, pending or
threatened against the Company or the Originator before any
court, governmental agency or body or other tribunal (i)
asserting the invalidity of the Pooling and Servicing
Agreement, the Insurance Agreement, the Indemnification
Agreement, this Agreement, or the Certificates, (ii) seeking
to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by the
Pooling and Servicing Agreement, the Insurance Agreement, the
Indemnification Agreement or this Agreement or (iii) which
would materially and adversely affect the performance by the
Company or the Originator of obligations under, or the
validity or enforceability of, the Pooling and Servicing
15
Agreement, the Indemnification Agreement, the Certificates,
the Insurance Agreement, or this Agreement.
7. To the best of the 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 Certificates
(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 1933 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
Registration Statement or required to be described in the
Registration Statement which has not been filed or described
as required.
9. Neither the qualification of the Pooling and
Servicing Agreement under the Trust Indenture Act of 1939 nor
the registration of the Trust created by such Agreement under
the Investment Company Act of 1940 is presently required.
10. The statements in the Prospectus set forth under
the captions "DESCRIPTION OF THE SECURITIES," "THE POOLING AND
SERVICING AGREEMENT" and the statements in the Prospectus
Supplement set forth under the caption "DESCRIPTION OF THE
CLASS A CERTIFICATES," to the extent such statements purport
to summarize certain provisions of the Certificates or of the
Pooling and Servicing Agreement, are fair and accurate in all
material respects.
11. 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
16
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.
12. Such opinion shall also relate to comparable
matters with respect to the Advanta Mortgage Holding Company.
13. 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.
14. 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
Company and the Originator, the 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 Company and
the Originator.
E. The Underwriter shall have received letters,
including bring-down letters, from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 Originator.
F. The Certificates shall have been rated in the
highest rating category by Standard & Poor's Ratings Group and
by ▇▇▇▇▇'▇ 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 Certificates. Any such
opinions shall be dated the Closing Date and addressed to the
Underwriter or accompanied by reliance letters
17
to the Underwriter or shall state that the Underwriter may
rely upon them.
G. The Underwriter shall have received from the
Company a certificate, signed by the president, a senior vice
president or a vice president of the Company, dated the
Closing Date, to the effect that the signer of such
certificate has carefully examined the Registration Statement,
the Pooling 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
Company, in this Agreement and as of the Closing Date, and in
the Pooling 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 Company, 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 Company which if adversely
determined, individually or in the aggregate, would be
reasonably likely to adversely affect the Company's
obligations under the Pooling and Servicing Agreement, the
Insurance Agreement or this Agreement in any material way; and
no merger, liquidation, dissolution or bankruptcy of the
Company is pending or contemplated;
3. the information contained in the Registration
Statement and the Prospectus relating to the Originator, 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
Pooling and Servicing Agreement is true and correct in all
material respects;
18
5. there has been no amendment or other document
filed affecting the certificate of incorporation or bylaws of
the Company since September 30, 1996, and no such amendment
has been authorized. No event has occurred since September 30,
1996, which has affected the good standing of the Company
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 Company and its
subsidiaries, taken as a whole, from September 30, 1996;
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
indicated, in the rating, if any, accorded the Company or in
any rating accorded any securities of the Company, if any, by
any "nationally recognized statistical rating organization,"
as such term is defined for purposes of the 1933 Act; and
8. each person who, as an officer or representative
of the Company or the Originator, signed or signs the
Registration Statement, the Pooling and Servicing Agreement,
this Agreement, the Insurance Agreement, 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 Pooling and Servicing
Agreement, the Insurance Agreement, and 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.
The Company shall attach to such certificate a true and
correct copy of its certificate and bylaws 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 Trustee, dated
19
the Closing Date and in form and substance satisfactory to the
Underwriter, to the effect that:
1. the 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
Pooling and Servicing Agreement;
2. the Pooling and Servicing Agreement has been duly
authorized, executed and delivered by the Trustee and the
Pooling and Servicing Agreement constitutes the legal, valid
and binding obligation of the Trustee, enforceable against the
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 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 Trustee in connection with its
execution and delivery of the Pooling and Servicing Agreement
or the performance of its obligations thereunder;
4. the Certificates have been duly executed,
authenticated and delivered by the Trustee; and
5. the execution and delivery of, and performance by
the Trustee of its obligations under, the Pooling and
Servicing Agreement do not conflict with or result in a
violation of any statute or regulation applicable to the
Trustee, or the charter or bylaws of the Trustee, or to the
best knowledge of such counsel, any governmental authority
having jurisdiction over the Trustee or the terms of any
indenture or other agreement or instrument to which the
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 Company, the
Trustee and public officials. Such opinion may also assume the due
authorization, execution and delivery
20
of the instruments and documents referred to therein by the parties thereto
other than the Trustee.
I. The Underwriter shall have received from the
Trustee a certificate, signed by the President, a senior vice
president or a vice president of the Trustee, dated the
Closing Date, to the effect that each person who, as an
officer or representative of the Trustee, signed or signs the
Certificates, the Pooling and Servicing Agreement or any other
document delivered pursuant hereto, on the date hereof or on
the Closing Date, in connection with the transactions
described in the Pooling and Servicing 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.
J. The Policy relating to the Certificates 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 in-house 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 Certificate Insurer is a stock insurance
corporation, duly incorporated and validly existing under the
laws of the State of New York. The Certificate Insurer is
validly licensed and authorized to issue the Policy and
perform its obligations under the Policy in accordance with
the terms thereof, under the laws of the State of New York.
2. The execution and delivery by the Certificate
Insurer of the Policy, the Insurance Agreement are within the
corporate power of the Certificate Insurer and have been
authorized by all necessary corporate action on the part of
the Certificate Insurer; the Policy has been duly executed and
is the valid and binding obligation of the Certificate Insurer
enforceable in accordance with its terms except that the
enforcement of the Policy may be limited by laws relating to
bankruptcy, insolvency, reorganization, moratorium,
receivership and other similar laws affecting
21
creditors' rights generally and by general principles of
equity.
3. The Certificate 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
Certificate 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 Certificate Insurer, the lack of
which would adversely affect the validity or enforceability of
the Policy; to the extent required by applicable legal
requirements that would adversely affect validity or
enforceability of the Policy, the form of the Policy has been
filed with, and approved by, all governmental authorities
having jurisdiction over the Certificate Insurer in connection
with the Policy.
5. The Policy is not required to be registered under
the Securities Act.
6. The information set forth under the caption "THE
CERTIFICATE INSURANCE POLICY" and "THE CERTIFICATE INSURER" in
the Prospectus forming a part of the Registration Statement,
insofar as such statements constitute a description of the
Policy, accurately summarizes the Policy.
In rendering this opinion, such counsel may rely, as to
matters of fact, on certificates of responsible officers of the Company, the
Originator, the Trustee, the Certificate 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 Certificate Insurer.
L. 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
22
or (B) any review or possible changes in rating the direction
of which has not been indicated, in the rating, if any,
accorded the Company or the Originator or in any rating
accorded any securities of the Company, if any, by any
"nationally recognized statistical rating organization," as
such term is defined for purposes of the 1933 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 Certificate
Insurer's claims paying ability by any "nationally recognized
statistical rating organization," as such term is defined for
purposes of the 1933 Act.
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 September 30, 1996, of (A) the Company, the
Originator and any subsidiaries or (B) the Certificate
Insurer, that is in the Underwriter's judgment material and
adverse and that makes it in the Underwriter's judgment
impracticable to market the Certificates on the terms and in
the manner contemplated in the Prospectus.
O. The Underwriter shall have received from the
Certificate 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 Policy, 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 Certificate
Insurer which, if adversely determined, individually or in the
aggregate, would adversely affect the Certificate Insurer's
performance under the Policy, the Indemnification Agreement or
the Insurance Agreement;
2. each person who as an officer or representative
of the Certificate Insurer, signed or signs the Policy, the
Insurance Agreement, the
23
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 under
the captions "THE CERTIFICATE INSURANCE POLICY" and "THE
CERTIFICATE INSURER" is true and correct in all material
respects and does not omit to state a material fact with
respect to the description of the Policy or the ability of the
Insurer to meet its payment obligations under the Policy;
4. the tables regarding the Certificate Insurer's
capitalization set forth under the heading "THE CERTIFICATE
INSURANCE POLICY" and "THE CERTIFICATE INSURER" presents
fairly the capitalization of the Insurer as of September 30,
1996;
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 Certificate Insurer by any "nationally recognized
statistical rating organization," as such term is defined for
purposes of the 1933 Act;
6. the audited balance sheet of the Certificate
Insurer as of December 31, 1995 and the related statement of
income and retained earnings for the fiscal year then ended,
and the accompanying footnotes, together with opinion dated
January 20, 1995 of Coopers and ▇▇▇▇▇▇▇, an independent
certificated public accountant, which are incorporated by
reference in the Prospectus, fairly present in all material
respects the financial condition of the Certificate 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
Certificate Insurer as of September 30, 1996 and the related
statement of income and retained earnings for the three-month
period then ended, copies of which are included in
24
the Prospectus, fairly present in all material respects the
financial condition of the Certificate 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, 1995 audited statements.
7. to the best knowledge of such officer, since
September 30, 1996, no material adverse change has occurred in
the financial position of the Certificate Insurer other than
as set forth in the Prospectus.
The officer of the Certificate Insurer certifying to items 5-7
shall be an officer in charge of a principal financial function.
The Certificate Insurer shall attach to such certificate a
true and correct copy of its certificate or articles of incorporation, as
appropriate, and its bylaws, all of which are in full force and effect on the
date of such certificate.
P. The Underwriter shall have received from ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, special counsel to the Company and the Originator,
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 Pooling and
Servicing Agreement and the Originator shall have complied
with all such requirements.
Q. The Underwriter shall have received from ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, special counsel to the Underwriters, such opinion
or opinions, dated the Closing Date, with respect to the
issuance and sale of the Certificates, 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
Company, the Originator or the Certificate Insurer supplied to
the Trustee relating to matters with respect to the
Certificates or the Policy. 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.
25
S. The Underwriter shall have received such further
information, certificates 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
Company ("AMHC"), a letter agreement with the Trustee and the
Certificate Insurer, pursuant to which AMHC agrees to become
jointly and severally liable with the Company, the Originator
and Advanta Mortgage Corp. USA 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 Company, a letter agreement
with the Underwriter and the Certificate 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
Certificates 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 Originator in connection with the issuance and sale of
the Certificates 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; (ii) 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
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇; or (iv) 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 Certificates on the terms and in the manner
contemplated in the Prospectus.
If any condition specified in this Section VI shall not have
been fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Underwriter by notice to the Company and the Originator 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 VII.
All opinions, letters, evidence and certificates 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 VII. Payment of Expenses. The Company and the
Originator agree to pay: (a) the costs incident to the authorization, issuance,
sale and delivery of the Certificates and any taxes payable in connection
therewith; (b) the costs incident to the preparation, printing and filing under
the Securities 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 Certificates under the securities laws of the several
jurisdictions as provided in Section V(G) hereof and of preparing, printing and
distributing a Blue Sky Memorandum and a Legal Investment Survey (including
related fees and expenses of counsel to the Underwriter); (f) any fees charged
by securities rating services for rating the Certificates; and (g) all other
costs and expenses incident to the performance of the obligations of the Company
and the Originator; provided that, except as provided in this Section VII, the
Underwriter shall pay its own costs and expenses, including the costs and
expenses of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, any transfer taxes on the Certificates which they
may sell and the expenses of advertising any offering of the Certificates made
by the Underwriter.
27
If this Agreement is terminated by the Underwriter, in
accordance with the provisions of Section VI or Section X, the Company and the
Originator shall reimburse the Underwriter for its respective reasonable
out-of-pocket expenses, including fees and disbursements of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
counsel for the Underwriters.
SECTION VIII. Indemnification and Contribution. A. The Company
and the Originator 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 Securities 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 Certificates), to which the Underwriter or any such
controlling person may become subject, under the Securities 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 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 Company nor the
Originator 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
any Preliminary Prospectus, the Prospectus or the Registration Statement in
reliance upon and in conformity with written information (including any Derived
Information) furnished to the Company by the Underwriter specifically for
inclusion therein; and provided, further, that as to any Preliminary Prospectus
this indemnity shall not inure to the benefit of the Underwriter or any
controlling person on account of any loss, claim, damage, liability or action
arising from the sale of the Certificates to any person by the Underwriter if
the Underwriter failed to send or give a copy of the Prospectus, as amended or
supplemented, to that person within the time required by the Securities Act, and
the untrue statement or alleged untrue statement of a material fact or the
omission or alleged
28
omission to state a material fact in the Preliminary Prospectus was corrected in
the Prospectus, unless such failure resulted from non-compliance by the Company
or the Originator with Section V(C). 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 Company or the Originator may otherwise have
to the Underwriter or any controlling person of the Underwriter.
B. The Underwriter agrees to indemnify and hold harmless the
Company, the Originator, each of their respective directors, each of their
respective officers who signed the Registration Statement, and each person, if
any, who controls the Company or the Originator within the meaning of Section 15
of the Securities Act against any and all loss, claim, damage or liability, or
any action in respect thereof, to which the Company or the Originator or any
such director, officer or controlling person may become subject, under the
Securities 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 furnished to the
Company by or on behalf of the Underwriter specifically for inclusion therein,
and shall reimburse the Company, the Originator and any such director, officer
or controlling person for any legal or other expenses reasonably incurred by the
Company or the Originator or any director, officer or 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. The
foregoing indemnity agreement is in addition to any liability which the
Underwriter may otherwise have to the Company, the Originator or any such
director, officer or controlling person.
29
C. Promptly after receipt by any indemnified party under this
Section VIII 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 VIII, 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 VIII except to the extent it has
been materially prejudiced by such failure; and provided, further, 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
VIII.
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 VIII for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
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
30
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 VIII consist of the Underwriter or any of
its controlling persons, or by the Company or the Originator, as the case may
be, if the indemnified parties under this Section VIII consist of the Company or
the Originator, as the case may be, or any of the Company's directors, officers
or controlling persons.
Each indemnified party, as a condition of the indemnity
agreements contained in Section VIII(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 Company
no later than the date on which the Prospectus Supplement is
required to be filed pursuant to Rule 424 with a copy of its
Derived Information (defined below) for filing with the
Commission on Form 8-K.
E. The Underwriter agrees, assuming all
Company-Provided Information (defined below) is accurate and
complete in all material respects, to severally and not
jointly indemnify and hold harmless the Company, the
Originator, each of the Company's and the Originator's
respective officers and directors and each person who controls
the Company or the Originator within the meaning of Section 15
of the Securities Act against any and all losses, claims,
damages or liabilities to which they may become subject under
the Securities Act or otherwise, insofar as such losses,
claims, damages
31
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,
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 VIII(E) shall be in
addition to any liability which the Underwriter may otherwise
have.
The procedures set forth in Section VIII(C) shall be
equally applicable to this Section VIII(E).
F. For purposes of this Section VIII, the term
"Derived Information" means such portion, if any, of the
information delivered to the Company pursuant to Section
VIII(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 Company-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).
"Company-Provided Information" means any computer tape
furnished to the Underwriter by the Company and the Originator
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,
32
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ 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
"▇▇▇▇▇▇ letter" and together with the PSA Letter, the
"No-Action Letters") of ▇▇▇▇▇ & ▇▇▇▇ on behalf of ▇▇▇▇▇▇,
Peabody & 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 VIII shall for any reason be unavailable to or
insufficient to hold harmless an indemnified party under
Section VIII(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, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and the
Originator on the one hand and the Underwriter on the other
from the offering of the Certificates or (ii) 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 VIII(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 Company and the Originator 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.
The relative benefits of the Underwriter and the Company and
the Originator 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 appearing on the cover page of the Prospectus bears to the
public offering price appearing on the cover page of the Prospectus.
33
The relative fault of the Underwriter and the Company and the
Originator 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 Company and the Originator
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 Company, the Originator and the Underwriter agree that it
would not be just and equitable if contributions pursuant to this Section
VIII(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 VIII(G) shall be deemed to include, for
purposes of this Section VIII(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 Certificates purchased
by the Underwriter hereunder. 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.
H. The Underwriter confirms that the information set
forth (i) in the Prospectus Supplement relating to market
making and (ii) in the third paragraph 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 Company and the
Originator by or on behalf of the Underwriter specifically for
inclusion in the Registration Statement and the Prospectus.
SECTION IX. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements contained in
this Agreement or contained in certificates of officers of the Company or the
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 Company or
the Originator and shall survive delivery of any Certificates to the
Underwriter.
34
SECTION X. Termination of Agreement. The Underwriter may
terminate this Agreement immediately upon notice to the Company and the
Originator, at any time at or prior to the Closing Date if any of the events or
conditions described in Section VI(Y) of this Agreement shall occur and be
continuing. In the event of any such termination, the covenant set forth in
Section V(G), the provisions of Section VII, the indemnity agreement set forth
in Section VIII, and the provisions of Sections IX and XIII shall remain in
effect.
SECTION XI. 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 ▇▇▇▇▇▇ Brothers, 3
World Financial Center, New York, New York, 10285-1100,
Attention: Syndicate Registration Department (Fax:
212-528-8822);
B. if to the Company, shall be delivered or sent by
mail, telex or facsimile transmission to Advanta Mortgage
Conduit Services, Inc. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: General Counsel (Fax:
619-674-3592).
C. if to the Originator, shall be delivered or sent
by mail to Advanta National Bank USA Brandywine Corporate
Center, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Telephone:
302-791-4400).
SECTION XII. Persons Entitled to the Benefit of this
Agreement. This Agreement shall inure to the benefit of and be binding upon the
Underwriter, the Company, the Originator 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 Securities Act, and for the benefit of directors of
the Company or of the Originator, officers of the Company who have signed the
Registration Statement and any person controlling the Company or the Originator
within the meaning of Section 15 of the Securities Act. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section XII, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
SECTION XIII. Survival. The respective indemnities,
representations, warranties and agreements of the
35
Company, the Originator 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 Certificates 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.
SECTION XIV. 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 XV. 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 XVI. 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 XVII. 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.
36
If the foregoing correctly sets forth the agreement between
the Company 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: Vice President
CONFIRMED AND ACCEPTED, as of the date first above written:
▇▇▇▇▇▇ BROTHERS INC.
By:
------------------------
Name:
Title:
[Underwriting Agreement]
CONFIRMED AND ACCEPTED, as of
the date first above written:
ADVANTA NATIONAL BANK USA
By:
------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
[Underwriting Agreement]
38
================================================================================
SCHEDULE A
--------------------------------------------------------------------------------
Purchase Price
Initial Principal Amount to Underwriter
of Certificates Purchased disregarding
Class by the Underwriter accrued interest
--------------------------------------------------------------------------------
Class A $50,000,000_ %
================================================================================
39
EXHIBIT A
As of _______, 1996
▇▇▇▇▇▇ Brothers Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
MBIA Insurance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Underwriting Agreement dated November 15, 1996
(the "Underwriting Agreement") between Advanta
Mortgage Conduit Services, Inc. (the "Sponsor"),
Advanta National Bank USA (the "Originator") and
▇▇▇▇▇▇ Brothers Inc. (the "Underwriter"); Indem-
nification Agreement dated November 22, 1996
(the "Indemnification Agreement") among the Ori-
ginator, the Underwriter and the MBIA Insurance
Corporation (the "Certificate Insurer") Insur-
ance Agreement dated as of November 22, 1996
(the "Insurance Agreement") among the Certifi-
cate Insurer, the Sponsor, the Trustee and the
Underwriter
Ladies and Gentlemen:
Pursuant to the Underwriting Agreement, the Indemnification
Agreement and the Insurance Agreement (together, the "Designated Agreements"),
the Sponsor and the Originator have undertaken certain financial obligations
with respect to the indemnification of the Underwriter and of the Certificate
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 Originator 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 Originator under the Designated Agreements (including the
payment of money damages for a breach of any of the Sponsor's and the
Originator's obligations under the 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 Certificate Insurer have required
the undersigned, Advanta Mortgage Holding Company ("AMHC"), the parent
corporation of the Sponsor and the Originator, to acknowledge its
joint-and-several liability with the Sponsor and the Originator for the payment
of the Joint and Several Obligations under the Designated Agreements.
Now, therefore, the Underwriter, the Certificate 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 Originator to the Underwriter
for the payment of the Joint and Several Obligations
under the Underwriting Agreement.
(ii) AMHC hereby agrees to be absolutely and
unconditionally jointly and severally liable with
the Sponsor to the Certificate Insurer for the
payment of the Joint and Several Obligations and
this Insurance Agreement.
(iii) AMHC hereby agrees to be absolutely and
unconditionally jointly and severally liable with
the Originator to the Certificate Insurer for the
payment of the Joint and Several Obligations under
the Indemnification Agreement.
(iv) 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 Certificate
Insurer, as applicable, by the Sponsor or another
affiliate of AMHC.
2
Capitalized terms used herein and not defined herein shall
have their respective meanings as set forth in the 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
▇▇▇▇▇▇ BROTHERS
By:
--------------------------------
Authorized Signatory
3
