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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
March 31, 1997
Advanta Automobile Receivables Trust 1997-1
(Exact name of registrant as specified in its charter)
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United States 333-19733 52-6850827
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(State or Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer Identification No.)
c/o Advanta Auto 19044
Finance Corporation ------------------------------------
Attention: Kevin Shipe (Zip Code)
300 Welsh Road, Building Four
Horsham, Pennsylvania
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(Address of Principal Executive Offices)
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Registrant's telephone number, including area code (215) 444-4663
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Securities and the Auto Loans
Advanta Auto Finance Corporation, as Sponsor, has registered
an issuance of $300,000,000 in principal amount of Securities (the "Securities")
on Form S-3. Pursuant to the Registration Statement, Advanta Automobile
Receivables Trust 1997-1 (the "Trust") issued $55,575,000 Class A-1 Floating
Rate Asset Backed Notes and $29,925,000 6.75% Class A-2 Asset Backed Notes
(together, the "Notes") on March 31, 1997. The Trust also issued, in a private
7placement, $14,500,000 6.75% Asset Backed Certificates (the "Certificates").
This Current Report on Form 8-K is being filed to satisfy an undertaking to file
copies of certain agreements executed in connection with the issuance of the
Notes, the forms of which were filed as Exhibits to the Registration Statement.
The Notes were issued pursuant to an Indenture attached hereto
as Exhibit 4.1, dated as of March 1, 1997, between the Trust and Bankers Trust
Company, as Trustee and Trust Collateral Agent (the "Trustee" and the "Trust
Collateral Agent", respectively).
The Notes evidence fractional undivided ownership interests in
the Trust, the assets of which consist primarily of retail installment sales
contracts and installment loans (the "Receivables") secured by new and used
automobiles and light duty trucks financed thereby.
As of the Closing Date, the Receivables had the
characteristics described in the Prospectus dated March 26, 1997 filed pursuant
to Rule 424(b)(2) of the Act with the Commission.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement, dated as of March 26, 1997, among
Advanta Auto Finance Corporation and Salomon Brothers Inc.
4.1 Indenture, dated as of March 1, 1997, between Advanta
Automobile Receivables Trust 1997-1 and Bankers Trust Company, as Trustee and
Trust Collateral Agent.
4.2 Trust Agreement, dated as of March 1, 1997, between
Advanta Auto Receivables Corp. I, as Depositor, and Wilmington Trust Company, as
Owner Trustee.
4.3 Sale and Servicing Agreement, dated as of March 1, 1997,
among Advanta Automobile Receivables Trust 1997-1, as Issuer, Advanta Auto
Finance Corporation, as Master Servicer, Advanta Auto Receivables Corp. I, as
Seller, and Bankers Trust Company, as Trust Collateral Agent.
4.4 Note Guaranty Surety Bond, dated as of March 31, 1997 and
delivered by Financial Security Assurance Inc.
10.1 Purchase Agreement, dated as of March 1, 1997, among
Advanta Auto Finance Corporation, as Seller, and Advanta Auto Receivables Corp.
I, as Purchaser.
10.2 Indemnification Agreement, dated March 1, 1997, among
Financial Security Assurance Inc., Advanta Auto Receivables Corp. I and Salomon
Brothers Inc.
23.1 Consent of Coopers & Lybrand L.L.P. regarding financial
statements of Financial Security Assurance Inc. and their report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-1
By: Advanta Auto Finance Corporation, as Master Servicer
By:/s/ Mark T. Dunsheath
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Name: Mark T. Dunsheath
Title: Vice President
Dated: April 18, 1997
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EXHIBIT INDEX
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Exhibit No. Description
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1.1 Underwriting Agreement, dated as of March 26, 1997, among Advanta Auto Finance
Corporation and Salomon Brothers Inc.
4.1 Indenture, dated as of March 1, 1997, between Advanta
Automobile Receivables Trust 1997-1 and Bankers Trust
Company, as Trustee and Trust Collateral Agent.
4.2 Trust Agreement, dated as of March 1, 1997, between Advanta Auto Receivables Corp. I,
as Depositor, and Wilmington Trust Company, as Owner Trustee.
4.3 Sale and Servicing Agreement, dated as of March 1, 1997, among Advanta Automobile
Receivables Trust 1997-1, as Issuer, Advanta Auto Finance Corporation, as Master
Servicer, Advanta Auto Receivables Corp. I, as Seller, and Bankers Trust Company, as
Trust Collateral Agent.
4.4 Note Guaranty Surety Bond, dated as of March 31, 1997 and delivered by Financial
Security Assurance Inc.
10.1 Purchase Agreement, dated as of March 1, 1997, among Advanta Auto Finance Corporation,
as Seller, and Advanta Auto Receivables Corp. I, as Purchaser.
10.2 Indemnification Agreement, dated March 1, 1997, among Financial Security Assurance
Inc., Advanta Auto Receivables Corp. I and Salomon Brothers Inc.
23.1 Consent of Coopers & Lybrand L.L.P. regarding financial statements of Financial
Security Assurance Inc. and their report.
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EXHIBIT 1.1
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EXECUTION COPY
ADVANTA AUTO FINANCE CORPORATION
Automobile Receivables Asset Backed Notes
Series 1997-1
Class A-1 Floating Rate Asset Backed Notes
6.75% Class A-2 Asset Backed Notes
UNDERWRITING AGREEMENT
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Advanta Auto Finance Corporation, a Nevada corporation (the
"Company"), proposes to sell to you (the "Underwriter") the principal amount of
certain securities (the "Securities"), to be issued pursuant to an indenture
(the "Indenture") dated as of March 1, 1997, between Advanta Automobile
Receivables Trust 1997-A (the "Trust") and Bankers Trust Company, as indenture
trustee (the "Indenture Trustee"). The Trust will be formed pursuant to a Trust
Agreement to be dated as of March 1, 1997 and entered into by and among Advanta
Auto Receivables Corp. I ("Receivables I") and Wilmington Trust Company as Owner
Trustee. The Securities will be secured by certain auto loan receivables to be
transferred by Receivables I to the Trust pursuant to a sale and servicing
agreement (the "Sale and Servicing Agreement") dated March 1, 1997 among
Receivables I, the Company, the Trust and Bankers Trust Company as collateral
agent and back-up servicer.
1. Representations and Warranties. The Company
represents and warrants to, and agrees with, the Underwriter, as set forth
below in this Section 1. Certain terms used in this Section are defined in
paragraph (c) hereof.
(a) The Company meets the requirements for the use of Form S-3
under the Securities Act of 1933 (the "Act") and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement (file number 333-19733) on such Form, including a basic
prospectus, for registration under the Act of the offering and sale of
the Securities. The Company may
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have filed one or more amendments thereto, and may have used a
Preliminary Final Prospectus, each of which has previously been
furnished to you. Such registration statement, as so amended, has
become effective. The offering of the Securities is a Delayed
Offering and, although the Basic Prospectus may not include all the
information with respect to the Securities and the offering thereof
required by the Act and the rules thereunder to be included in the
Final Prospectus, the Basic Prospectus includes all such information
required by the Act and the rules thereunder to be included therein
as of the Effective Date. The Company will next file with the
Commission pursuant to Rules 415 and 424(b)(2) or (5) a final
supplement to the form of the prospectus included in such registration
statement relating to the Securities and the offering thereof. As
filed, such final prospectus supplement shall include all required
information with respect to the Securities and the offering thereof
and, except to the extent the Underwriter shall agree in writing to a
modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
Basic Prospectus and any Preliminary Final Prospectus) as the Company
has advised you, prior to the Execution Time, will be included or made
therein.
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 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 sheets
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 Final Prospectus is filed with the Commission pursuant to
Rule 424 of the Rules and Regulations.
(b) On the Effective Date, the Registration Statement did or
will, and when the Final Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date, the Final
Prospectus (and any supplement thereto) will, comply in all material
respects with the applicable requirements of
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the Act, the Securities Exchange Act of 1934 (the "Exchange Act") and
the Trust Indenture Act of 1939, to the extent applicable (the "Trust
Indenture Act") and the respective rules thereunder; on the Effective
Date, the Registration Statement did not or will not contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading; on the Effective Date and on the
Closing Date the Indenture did or will comply in all material
respects with the requirements of the Trust Indenture Act and the
rules thereunder; and, on the Effective Date, the Final Prospectus,
if not filed pursuant to Rule 424(b), did not or will not, and on the
date of any filing pursuant to Rule 424(b) and on the Closing Date,
the Final Prospectus (together with any supplement thereto) will not,
include 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 circumstance under which they were made, not
misleading; provided, however, that the Company makes no
representations or warranties as to (i) that part of the Registration
statement which shall constitute the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the Trustee
or (ii) the information contained in or omitted from the Registration
Statement or the Final Prospectus (or any supplement thereto) in
reliance upon and in conformity with information furnished in writing
to the Company by or on behalf of the Underwriter specifically for
inclusion in the Registration Statement or the Final Prospectus (or
any supplement thereto).
(c) The terms which follow, when used in this Agreement, shall
have the meanings indicated. The term "the Effective Date" shall mean
each date that the Registration Statement and any post-effective
amendment or amendments thereto became or become effective and each
date after the date hereof on which a document incorporated by
reference in the Registration Statement is filed. "Execution Time"
shall mean the date and time that this Agreement is executed and
delivered by the parties hereto. "Basic Prospectus" shall mean the
prospectus referred to in paragraph (a) above contained in the
Registration Statement at the Effective Date. "Preliminary Final
Prospectus" shall mean any preliminary prospectus supplement to the
Basic Prospectus which describes the Securities and the offering
thereof and is used prior to filing of the Final Prospectus. "Final
Prospectus" shall mean the prospectus supplement relating to the
Securities that is first filed pursuant to Rule 424(b) after the
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Execution Time, together with the Basic Prospectus. "Registration
Statement" shall mean the registration statement referred to in
paragraph (a) above, including incorporated documents, exhibits and
financial statements, as amended at the Execution Time (or, if not
effective at the Execution Time, in the form in which it shall become
effective) and, in the event any post-effective amendment thereto
becomes effective prior to the Closing Date (as hereinafter defined),
shall also mean such registration statement as so amended. "Rule 415",
"Rule 424" and "Regulation S-K" refer to such rules or regulation under
the Act. Any reference herein to the Registration Statement, the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus
shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to item 12 of Form S-3 which were filed
under the Exchange Act on or before the Effective Date of the
Registration Statement or the issue date of the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, as the case may
be; and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement, the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus
shall be deemed to refer to and include the filing of any document
under the Exchange Act after the Effective Date of the Registration
Statement or the issue date of the Basic Prospectus, any Preliminary
Final Prospectus or the Final Prospectus, as the case may be, deemed to
be incorporated therein by reference. A "Delayed Offering" shall mean
an offering of securities pursuant to Rule 415 which does not commence
promptly after the effective date of a registration statement, with the
result that only information required pursuant to Rule 415 need be
included in such registration statement at the effective date thereof
with respect to the securities so offered.
2. Purchase and Sale. Subject to the terms and
conditions and in reliance upon the representations and warranties set forth
herein, the Company agrees to sell to the Underwriter, and the Underwriter
agrees to purchase from the Company the Securities, at the purchase price and in
the principal amount set forth in Schedule I attached hereto.
3. Delivery and Payment. Delivery of and payment for the
Securities to be purchased by the Underwriter shall be made at the offices of
Dewey Ballantine, 1301 Sixth Avenue, New York, New York 10019, or at such other
place as shall be agreed upon by the Underwriter and the Company at 10:00 A.M.
New York City time on March 31, 1997 or at such other time or date as shall be
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agreed upon in writing by the Underwriter and the Company (such date being
referred to as the "Closing Date"). Payment shall be made to the Company by wire
transfer of same day funds payable to the account of the Company. Delivery of
the Securities shall be made to the Underwriter against payment of the purchase
price thereof. The Securities 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 Securities 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.
4. Agreements. The Company agrees with the Underwriter that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereto, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of
the Registration Statement or supplement (including the Final
Prospectus or any Preliminary Final Prospectus) to the Basic Prospectus
unless the Company has furnished you a copy for your review prior to
filing and will not file any such proposed amendment or supplement to
which you reasonably object. Subject to the foregoing sentence, the
Company will cause the Final Prospectus, properly completed, and any
supplement thereto to be filed with the commission pursuant to the
applicable paragraph of Rule 424(b) within the time period prescribed
and will provide evidence satisfactory to the Underwriter of such
timely filing. The Company will promptly advise the Underwriter (i)
when the Registration Statement, if not effective at the Execution
Time, and any amendment thereto, shall have become effective, (ii) when
the Final Prospectus, and any supplement thereto, shall have been filed
with the Commission pursuant to Rule 424(b), (iii) when, prior to
termination of the offering of the Securities, any amendment to the
Registration Statement shall have been filed or become effective, (iv)
of any request by the Commission for any amendment of the Registration
Statement or supplement to the Final Prospectus or for any additional
information, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (vi)
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose. The
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Company will use its best efforts to prevent the issuance of any such
stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Final Prospectus as then supplemented would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, or if it
shall be necessary to amend the Registration Statement or supplement
the Final Prospectus to comply with the Act or the Exchange Act or the
respective rules thereunder, the Company will (i) prepare and file with
the Commission, subject to the second sentence of paragraph (a) of this
Section 4, an amendment or supplement which will correct such statement
or omission or effect such compliance and (ii) supply any supplemented
Prospectus to the Underwriter in such quantities as the Underwriter may
reasonably request.
(c) As soon as practicable but in any event not later than 90
days after the close of the period covered thereby, the Company will
make generally available to its security holders and to the Underwriter
an earnings statement or statements of the Trust which will satisfy the
provisions of Section 11(a) of the Act and, including, at the option of
the Company, Rule 158 under the Act.
(d) The Company will furnish to the Underwriter and counsel
for the Underwriter, without charge, copies of the Registration
Statement (including exhibits thereto) and, so long as delivery of a
prospectus by the Underwriter or dealer may be required by the Act, as
many copies of any Preliminary Final Prospectus and the Final
Prospectus and any supplement thereto as the Underwriter may reasonably
request.
(e) The Company will use its best efforts to arrange for the
qualification of the Securities for sale under the laws of such
jurisdictions as the Underwriter may designate, will use its best
efforts to maintain such qualifications in effect so long as required
for the distribution of the Securities.
(f) Not, without the Underwriter's prior written consent, to
publicly offer or sell or contract to sell debt securities issued or
guaranteed by the Company (other than the Securities) representing
interests in or secured by other auto loan-related assets originated
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or owned by the Company for a period of 5 business days following the
commencement of the offering of the Securities to the public.
5. Conditions to the Obligations of the Underwriter.
The obligations of the Underwriter to purchase the Securities shall be
subject to the accuracy of the representations and warranties on the
part of the Company contained herein as of the Execution Time and the
Closing Date, to the accuracy of the statements of the Company made in
any certificates pursuant to the provisions hereof, to the performance
by the Company of its obligations hereunder and to the following
additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Underwriter agrees in writing
to a later time, the Registration Statement will become effective not
later than (i) 6:00 PM New York City time, on the date of determination
of the public offering price, if such determination occurred at or
prior to 3:00 PM New York City time on such date or (ii) 12:00 Noon on
the business day following the day on which the public offering price
was determined, if such determination occurred after 3:00 PM New York
City time on such date; if filing of the Final Prospectus, or any
supplement thereto, is required pursuant to Rule 424(b), the Final
Prospectus, and any such supplement, shall have been filed in the
manner and within the time period required by Rule 424(b); and no stop
order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Company shall have furnished to the Underwriter the
opinion of Dewey Ballantine, special counsel for the Company, dated the
Closing Date, to the effect that:
(i) each of the Company and Receivables I (the
"Subsidiary") has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the jurisdiction in which it is chartered or organized, with
full corporate power and authority to own its properties and
conduct its business as described in the Final Prospectus, and
is duly qualified to do business as a foreign corporation in
each state necessary to enable it to perform its obligations
under the sale and servicing agreement;
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(ii) all the outstanding shares of capital stock of
the Subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable, and, except as
otherwise set forth in the Final Prospectus, all outstanding
shares of capital stock of the Subsidiary are owned by the
Company either directly or through wholly owned subsidiaries
free and clear of any perfected security interest and, to the
knowledge of such counsel, after due inquiry, any other
security interests, claims, liens or encumbrances;
(iii) the Indenture has been duly authorized,
executed and delivered, has been duly qualified under the
Trust Indenture Act, and constitutes a legal, valid and
binding instrument enforceable against the Company in
accordance with its terms (subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other law affecting creditors'
rights generally from time to time in effect); and the
Securities have been duly authorized and, when executed and
authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Underwriter
pursuant to this Agreement will constitute legal, valid and
binding obligations of the Company entitled to the benefits of
the Indenture;
(iv) to the best knowledge of such counsel, there is
no pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator involving the Company or the Subsidiary, of
character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Final
Prospectus, and there is no franchise, contract or other
document of character required to be described in the
Registration Statement or Final Prospectus, or to be filed as
an exhibit, which is not described or filed as required; and
the statements included or incorporated in the Final
Prospectus describing any legal proceedings or material
contracts or agreements relating to the Company fairly
summarize such matters;
(v) the Registration Statement has become effective
under the Act; any required filing of the Basic Prospectus,
any Preliminary Final Prospectus and the Final Prospectus, and
any supplements thereto, pursuant to Rule 424(b) has been made
in the manner and within the time period
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required by Rule 424(b); to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for
that purpose have been instituted or threatened, and the
Registration Statement and the Final Prospectus (other than
the financial statements and other financial and statistical
information contained therein as to which such counsel need
express no opinion) comply as to form in all material
respects with the applicable requirements of the Act, the
Exchange Act and the Trust Indenture Act and the respective
rules thereunder; and such counsel has no reason to believe
that at the Effective Date the Registration Statement
contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or
that the Final Prospectus includes any untrue statement of a
material fact or omits to state a material fact necessary to
make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(vi) this Agreement has been duly authorized,
executed and delivered by the Company;
(vii) no consent, approval, authorization or order of
any court or governmental agency or body is required for the
consummation of the transactions contemplated herein except
such as have been obtained under the Act and such as may be
required under the blue sky law of any jurisdiction in
connection with the purchase and distribution of the
Securities by the Underwriter and such other approvals
(specified in such opinion) as have been obtained;
(viii) neither the execution and delivery of the
Indenture, the issue and sale of the Securities, nor the
consummation of any other of the transactions herein
contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation of, or
constitute a default under any law or the charter or by-laws
of the Company or the terms of any indenture or other
agreement or instrument known to such counsel and to which the
Company or any of its subsidiaries of a party or bound or any
judgment, order or decree known to such counsel to be
applicable to the Company or any of its subsidiaries of any
court, regulatory body,
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administrative agency, governmental body or arbitrator
having jurisdiction over the Company or any of its
subsidiaries; and
(ix) no holders of securities of the Company
have rights to the registration of such securities under the
Registration Statement.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the State of New York or the
United States, to the extent deemed proper and specified in such opinion, upon
the opinion of other counsel of good standing believed to be reliable and who
are satisfactory to counsel for the Underwriter and (B) as to matters of fact,
to the extent deemed proper, on certificates of responsible officers of the
Company and public officials. References to the Final Prospectus in this
paragraph (b) include any supplements thereto at the Closing Date.
(c) The Underwriter shall have received from Dewey Ballantine,
special counsel for the Underwriter, such opinion or opinions, dated
the Closing Date, with respect to the issuance and sale of the
Securities, the Indenture, the Registration Statement, the Final
Prospectus (together with any supplement thereto) and other related
matters as the Underwriter may reasonably require, and the Company
shall have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters.
(d) The Company shall have furnished to the Underwriter a
certificate of the Company, signed by the president, a senior vice
president, vice president or principal financial or accounting officer
of the Company, dated the Closing Date, to the effect that the signer
of such certificate has carefully examined the Registration Statement,
the Final Prospectus, any supplement to the Final Prospectus and this
Agreement and that, to the best of his or her knowledge and based upon
reasonable investigation:
(i) the representations and warranties of the Company
in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date 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;
(ii) no stop order suspending the effectiveness of
the Registration Statement has
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been issued and no proceedings for that purpose have been
instituted or, to the Company's knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Final Prospectus (exclusive of any
supplement thereto), there has been no material adverse change
in the condition (financial or other), earnings, business or
properties of the company and its subsidiaries, whether or not
arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Final Prospectus
(exclusive of any supplement thereto).
(e) At the Closing Date, Arthur Andersen LLP shall have
furnished to the Underwriter a letter or letters (which may refer to
letters previously delivered to the Underwriter), dated as of the
Closing Date, in form and substance satisfactory to the Underwriter,
confirming that they are independent accountants within the meaning of
the Act and the Exchange Act and the respective applicable published
rules and regulations thereunder and stating in 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 Company.
(f) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Final Prospectus
(exclusive of any supplement thereto), there shall not have been any
change, or any development involving a prospective change, in or
affecting the business or properties of the Company and its
subsidiaries the effect of which is, in the judgment of the
Underwriter, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities
as contemplated by the Registration Statement (exclusive of any
amendment thereof) and the Final Prospectus (exclusive of any
supplement thereto).
(g) Subsequent to the Execution Time, there shall not have
been any decrease in the rating of any of the Company's debt securities
by any "nationally recognized statistical rating organization" (as
defined for purpose of Rule 436(g) under the Act) or any notice given
of any intended or potential decrease in any such rating or of a
possible change in any such rating that does not indicate the direction
of the possible change.
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(h) Prior to the Closing Date, the Company shall have
furnished to the Underwriter such further information, certificates and
documents as the Underwriter may reasonably request.
If any of the conditions specified in this Section 5 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Underwriter and counsel for the
Underwriter, this Agreement and all obligations of the Underwriter hereunder may
be canceled at, or at any time prior to, the Closing Date by the Underwriter.
Notice of such cancellation shall be given to the Company in writing or by
telephone or telegraph confirmed in writing.
The documents required to be delivered by this Section 5 shall
be delivered at the office of Dewey Ballantine, special counsel for the
Underwriter, at 1301 Avenue of the Americas, New York, New York, on the Closing
Date.
6. Payment of Expenses. The Company agrees to pay: the costs
incident to the authorization, issuance, sale and delivery of the Securities and
any taxes payable in connection therewith; the costs incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement and any amendments and exhibits thereto; 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 Final Prospectus, the Prospectus and any amendment or supplement to
the Prospectus or any document incorporated by reference therein, all as
provided in this Agreement; the costs of reproducing and distributing this
Agreement; the fees and expenses of qualifying the Securities under the
securities laws of the several jurisdictions and of preparing, printing and
distributing a Blue Sky Memorandum and a Legal Investment Survey (including
related fees and expenses of counsel to the Underwriters); any fees charged by
securities rating services for rating the Securities; and all other costs and
expenses incident to the performance of the obligations of the Company; provided
that, except as provided in this Section 6, the Underwriter shall pay its own
costs and expenses, including any transfer taxes on the Securities which they
may sell, the expenses of advertising any offering of the Securities made by the
Underwriter and one-half the costs and expenses of Dewey Ballantine.
12
<PAGE>
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless the Underwriter, the directors, officers,
employees and agents of the Underwriter and each person who controls
the Underwriter within the meaning of either the Act or the Exchange
Act against any and all losses, claims, damages or liabilities to which
such indemnified parties may become subject under the Act, the Exchange
Act or other Federal or state statutory law or regulation, at common
law 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 or alleged untrue statement of a material
fact contained in the registration statement for the registration of
the Securities as originally filed or in any amendment thereof, or in
the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, or in any amendment thereof or supplement thereto, 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 not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out
of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon
and in conformity with written information (including any Derived
Information (as defined in Section 7(e) herein)) furnished to the
Company by or on behalf of any Underwriter through the Underwriter
specifically for inclusion therein; and provided further that as to any
Preliminary Final 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
Securities 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 omission to state a material fact in the
Preliminary Final Prospectus was corrected in the Prospectus, unless
such failure resulted from non-compliance by the Company with Section
4(d). For purposes of the last proviso to the immediately preceding
sentence, the term "Prospectus" shall not be deemed to include the
13
<PAGE>
documents incorporated therein by reference, and the Underwriters 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. This indemnity
agreement will be in addition to any liability which the Company may
otherwise have.
(b) The Underwriter agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within
the meaning of either the Act or the Exchange Act, to the same extent
as the foregoing indemnity from the Company to the Underwriter, but
only with reference to losses, claims, damages or liability arising out
of or based upon any untrue statement of a material fact contained in
any written information (including any Derived Information (as defined
in Section 7(e) herein)) provided by the Underwriter, or arising out of
or based upon the omission or alleged omission to state therein a
material fact required to be stated therein, in the light of the
circumstances under which they were made, not misleading. This
indemnity agreement will be in addition to any liability which the
Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party
in writing of the commencement thereof; but the failure so to notify
the indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. The indemnifying
party shall be entitled to appoint counsel of the indemnifying party's
choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case
the indemnifying party shall not thereafter be responsible for the fees
and expenses of any separate counsel retained by the indemnified party
or parties except as set forth below); provided, however, that such
counsel shall be satisfactory to the
14
<PAGE>
indemnified party. Notwithstanding the indemnifying party's election
to appoint counsel to represent the indemnified party in an action,
the indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i)
the use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of,
any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to
those available to the indemnifying party, (iii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified
party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party.
(d) The Underwriter agrees to deliver to the Company no later
than the date on which the Final Prospectus 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) For purposes of this Section 7, the term "Derived
Information" means such portion, if any, of the information delivered
to the Company pursuant to Section 4(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 (as defined below)).
"Company-Provided Information" means any computer tape
furnished to the Underwriter by the Company concerning the Mortgage
Loans which comprise part of the assets of the Trust.
15
<PAGE>
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, Steen & Hamilton 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 "Kidder letter"
and together with the PSA Letter, the "No-Action Letters") of Brown &
Wood on behalf of Kidder, Peabody & Co., Inc. (which letter, and the
SEC staff's response thereto, were publicly available May 20, 1994).
(f) The Underwriter confirms that the information set forth in
the Final Prospectus relating to market making and under the caption
"Underwriting", together with the Derived Information, is correct and
constitutes the only information furnished in writing to the Company by
or on behalf of the Underwriter specifically for inclusion in the
Registration Statement and the Final Prospectus.
(g) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 7 is unavailable to or insufficient to hold
harmless an indemnified party for any reason, the Company and the
Underwriter shall, in lieu of indemnifying the indemnified party,
contribute to the amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect not only the relative
benefits but also the relative fault of the Company and of the
Underwriter in connection with the statements or omissions which
resulted in such loss, claim, damage, liability or action in respect
thereof, as well as any other relevant equitable considerations;
provided, however, that in no case shall the Underwriter be responsible
for any amount in excess of the underwriting discount or commission
applicable to the Securities purchased by the Underwriter hereunder.
Benefits received by the Company shall be deemed to be equal to the
total net proceeds from the offering, and benefits received by the
Underwriter shall be deemed to be equal to the underwriting discount or
commission set forth on the cover page of the Final Prospectus.
Relative fault shall be determined by reference to whether any alleged
untrue statement or omission relates to information provided by the
Company or the Underwriter, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or
prevent such
16
<PAGE>
statement or omission and other equitable considerations.
The Company and the Underwriter agree that it would not be just and
equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of
this paragraph (d), 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. For purposes of this Section 7, each person who
controls the Underwriter within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of the
Underwriter shall have the same rights to contribution as the
Underwriter, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each
director of the company shall have the came rights to contribution as
the Company, subject in each case to the applicable terms and condition
of this paragraph (d).
8. Termination. This Agreement shall be subject to termination
in the discretion of the Underwriter, by notice given to the Company prior to
delivery of and payment for the Securities, if prior to such time (i) trading in
securities generally on the New York Stock Exchange, the American Stock
Exchange, or the National Association of Securities Dealers Automated Quotation
National Market System shall have been suspended or limited or minimum prices
shall have been established on either of such Exchanges or Market System, (ii) a
banking moratorium shall have been declared either by Federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the reasonable judgment of the Underwriter, impracticable or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Final Prospectus (exclusive of any supplement thereto).
9. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriter set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers,
17
<PAGE>
directors or controlling persons referred to in Section 7 hereof, and will
survive delivery of and payment for the Securities. The provision 5 of
Sections 6 and 7 hereof shall survive the termination or cancellation of this
Agreement.
10. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Underwriter, will be mailed,
delivered or telegraphed and confirmed to the Underwriter, at Seven World Trade
Center, New York, New York 10048; or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at 300 Welsh Road, Suite 400,
Horsham, Pennsylvania 19044, attention of the legal department.
11. Successors. This Agreement will inure to
the benefit of and be binding upon the parties hereto and
their respective successors and the officers and directors and
controlling persons referred to in Section 7 hereof, and no
other person will have any right or obligation hereunder.
12. Applicable Law. This Agreement will be
governed by and construed in accordance with the laws of
the State of New York.
18
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Company and the Underwriter.
Very truly yours,
Advanta Auto Finance
Corporation
By:________________________
Name:
Title:
The foregoing Agreement
is hereby confirmed and
accepted as of March 1, 1997.
Salomon Brothers Inc
By: Salomon Brothers Inc
By:______________________
Name:
Title:
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
- ------------------------------------------------------------------------------------------------------------------
Class Initial Principal Purchase Price to
Amount of Securities Underwriter
Purchased by disregarding accrued
Underwriter interest
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Class A-1 $55,575,000.00 99.75000%
- ------------------------------------------------------------------------------------------------------------------
Class A-2 $29,925,000.00 99.70348%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 4.1
EXECUTION COPY
- ------------------------------------------------------------------------------
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-1
CLASS A-1 Floating Rate Asset Backed Notes
CLASS A-2 6.75% Asset Backed Notes
-----------------------
INDENTURE
Dated as of March 1, 1997
-----------------------
BANKERS TRUST COMPANY
Trustee and Trust Collateral Agent
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
<S> <C> <C>
Definitions and Incorporation by Reference............................. 3
SECTION 1.1 Definitions............................................................... 3
SECTION 1.2 Incorporation by Reference of the
Trust Indenture Act....................................................... 10
SECTION 1.3 Rules of Construction..................................................... 11
SECTION 1.4 Action by or Consent of Noteholders
and Certificateholders.................................................... 11
SECTION 1.5 Material Adverse Effect................................................... 11
SECTION 1.6 Conflict with TIA......................................................... 12
ARTICLE II
The Notes............................................. 12
SECTION 2.1 Form...................................................................... 12
SECTION 2.2 Execution, Authentication and Delivery.................................... 12
SECTION 2.3 Temporary Notes........................................................... 13
SECTION 2.4 Registration; Registration of
Transfer and Exchange..................................................... 13
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen
Notes..................................................................... 14
SECTION 2.6 Persons Deemed Owner...................................................... 15
SECTION 2.7 Payment of Principal and Interest;
Defaulted Interest........................................................ 15
SECTION 2.8 Cancellation.............................................................. 16
SECTION 2.9 Release of Collateral..................................................... 16
SECTION 2.10 Book-Entry Notes.......................................................... 17
SECTION 2.11 Notices to Clearing Agency................................................ 17
SECTION 2.12 Definitive Notes.......................................................... 17
ARTICLE III
Covenants............................................. 18
SECTION 3.1 Payment of Principal and Interest......................................... 18
SECTION 3.2 Maintenance of Office or Agency........................................... 18
SECTION 3.3 Money for Payments to be Held in Trust.................................... 18
SECTION 3.4 Existence................................................................. 20
SECTION 3.5 Protection of Trust Property.............................................. 20
SECTION 3.6 Opinions as to Trust Property............................................. 21
SECTION 3.7 Performance of Obligations; Servicing
of Receivables............................................................ 21
SECTION 3.8 Negative Covenants........................................................ 22
SECTION 3.9 Annual Statement as to Compliance......................................... 23
SECTION 3.10 Issuer May Consolidate, Etc.
Only on Certain Terms..................................................... 23
SECTION 3.11 Successor or Transferee................................................... 25
SECTION 3.12 No Other Business......................................................... 25
i
<PAGE>
SECTION 3.13 No Borrowing.............................................................. 25
SECTION 3.14 Master Servicer's Obligations............................................. 25
SECTION 3.15 Guarantees, Loans, Advances and
Other Liabilities......................................................... 25
SECTION 3.16 Capital Expenditures...................................................... 26
SECTION 3.17 Compliance with Laws...................................................... 26
SECTION 3.18 Restricted Payments....................................................... 26
SECTION 3.19 Notice of Events of Default............................................... 26
SECTION 3.20 Further Instruments and Acts.............................................. 26
SECTION 3.21 Amendments of Sale and
Servicing Agreement and Trust
Agreement................................................................. 26
SECTION 3.22 Income Tax Characterization............................................... 26
ARTICLE IV
Satisfaction and Discharge..................................... 27
SECTION 4.1 Satisfaction and Discharge of
Indenture................................................................. 27
SECTION 4.2 Application of Trust Money................................................ 28
SECTION 4.3 Repayment of Monies Held by Note
Paying Agent.............................................................. 28
ARTICLE V
Remedies.............................................. 28
SECTION 5.1 Events of Default......................................................... 28
SECTION 5.2 Rights Upon Event of Default.............................................. 30
SECTION 5.3 Collection of Indebtedness and Suits
for Enforcement by Trustee................................................ 31
SECTION 5.4 Remedies.................................................................. 33
SECTION 5.5 Optional Preservation of the
Receivables............................................................... 34
SECTION 5.6 Priorities................................................................ 35
SECTION 5.7 Limitation of Suits....................................................... 36
SECTION 5.8 Unconditional Rights of Noteholders
To Receive Principal and Interest......................................... 36
SECTION 5.9 Restoration of Rights and Remedies........................................ 36
SECTION 5.10 Rights and Remedies Cumulative............................................ 37
SECTION 5.11 Delay or Omission Not a Waiver............................................ 37
SECTION 5.12 Control by Noteholders.................................................... 37
SECTION 5.13 Waiver of Past Defaults................................................... 37
SECTION 5.14 Undertaking for Costs..................................................... 38
SECTION 5.15 Waiver of Stay or Extension Laws.......................................... 38
SECTION 5.16 Action on Notes........................................................... 38
SECTION 5.17 Performance and Enforcement of
Certain Obligations....................................................... 38
SECTION 5.18 Subrogation............................................................... 39
SECTION 5.19 Preference Claims......................................................... 39
ii
<PAGE>
ARTICLE VI
The Trustee and the Trust Collateral Agent............................. 40
SECTION 6.1 Duties of Trustee......................................................... 40
SECTION 6.2 Rights of Trustee and the Trust
Collateral Agent.......................................................... 42
SECTION 6.3 Individual Rights of Trustee.............................................. 43
SECTION 6.4 Trustee's Disclaimer...................................................... 43
SECTION 6.5 Notice of Defaults........................................................ 43
SECTION 6.6 Reports by Trustee to Holders............................................. 43
SECTION 6.7 Compensation and Indemnity................................................ 44
SECTION 6.8 Replacement of Trustee.................................................... 44
SECTION 6.9 Successor Trustee by Merger............................................... 46
SECTION 6.10 Appointment of Co-Trustee or
Separate Trustee.......................................................... 46
SECTION 6.11 Eligibility: Disqualification............................................. 47
SECTION 6.12 Preferential Collection of
Claims Against Issuer..................................................... 47
SECTION 6.13 Appointment and Powers.................................................... 47
SECTION 6.14 Performance of Duties..................................................... 48
SECTION 6.15 Limitation on Liability................................................... 48
SECTION 6.16 Reliance Upon Documents................................................... 48
SECTION 6.17 Successor Trust Collateral Agent.......................................... 49
SECTION 6.18 Compensation.............................................................. 50
SECTION 6.19 Representations and Warranties of the Trustee and the Trust
Collateral Agent.......................................................... 50
SECTION 6.20 Waiver of Setoffs......................................................... 51
SECTION 6.21 Control by the Controlling Party.......................................... 51
SECTION 6.22 Compensation.............................................................. 51
ARTICLE VII
Noteholders' Lists and Reports................................... 51
SECTION 7.1 Issuer To Furnish To Trustee Names
and Addresses of Noteholders.............................................. 51
SECTION 7.2 Preservation of Information;
Communications to Noteholders............................................. 51
SECTION 7.3 Reports by Issuer......................................................... 52
SECTION 7.4 Reports by Trustee........................................................ 52
ARTICLE VIII
Accounts, Disbursements and Releases................................ 52
SECTION 8.1 Collection of Money....................................................... 52
SECTION 8.2 Release of Trust Property................................................. 53
SECTION 8.3 Opinion of Counsel........................................................ 53
iii
<PAGE>
ARTICLE IX
Supplemental Indentures...................................... 53
SECTION 9.1 Supplemental Indentures Without
Consent of Noteholders.................................................... 53
SECTION 9.2 Supplemental Indentures with Consent
of Noteholders............................................................ 54
SECTION 9.3 Execution of Supplemental Indentures...................................... 56
SECTION 9.4 Effect of Supplemental Indenture.......................................... 56
SECTION 9.5 Conformity With Trust Indenture Act....................................... 56
SECTION 9.6 Reference in Notes to Supplemental
Indentures................................................................ 56
ARTICLE X
Redemption of Notes........................................ 57
SECTION 10.1 Redemption................................................................ 57
SECTION 10.2 Form of Redemption Notice................................................. 57
SECTION 10.3 Notes Payable on Redemption Date.......................................... 58
ARTICLE XI
Miscellaneous.............................................. 58
SECTION 11.1 Compliance Certificates and
Opinions, etc............................................................. 58
SECTION 11.2 Form of Documents Delivered to
Trustee................................................................... 60
SECTION 11.3 Acts of Noteholders....................................................... 60
SECTION 11.4 Notices, etc. to Trustee,
Issuer and Rating Agencies................................................ 61
SECTION 11.5 Notices to Noteholders; Waiver............................................ 62
SECTION 11.6 Alternate Payment and Notice
Provisions................................................................ 62
SECTION 11.7 Conflict with Trust Indenture
Act....................................................................... 63
SECTION 11.8 Effect of Headings and Table of
Contents.................................................................. 63
SECTION 11.9 Successors and Assigns.................................................... 63
SECTION 11.10 Separability.............................................................. 63
SECTION 11.11 Benefits of Indenture..................................................... 63
SECTION 11.12 Legal Holidays............................................................ 63
SECTION 11.13 GOVERNING LAW............................................................. 63
SECTION 11.14 Counterparts.............................................................. 63
SECTION 11.15 Recording of Indenture.................................................... 64
SECTION 11.16 Trust Obligation.......................................................... 64
SECTION 11.17 No Petition............................................................... 64
SECTION 11.18 Inspection................................................................ 64
SECTION 11.19 Limitation of Liability................................................... 65
EXHIBITS
Exhibit A-1 -- Form of Class A-1 Note
Exhibit A-2 -- Form of Class A-2 Note
</TABLE>
iv
<PAGE>
INDENTURE dated as of March 1, 1997, between
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-1, a Delaware business trust
(the "Issuer"), and BANKERS TRUST COMPANY, a New York banking corporation, as
trustee (the "Trustee") and Trust Collateral Agent (as defined below)
Each party agrees as follows for the benefit of
the other party and for the equal and ratable benefit of the Holders
of the Issuer's Class A-1 Floating Rate Asset Backed Notes (the "Class A-1
Notes"), Class A-2 6.75% Asset Backed Notes (the "Class A-2 Notes"), (the "Class
A-2 Notes" and, together with the Class A-1 Notes, the "Notes"):
As security for the payment and performance by
the Issuer of its obligations under this Indenture and the Notes, the
Issuer has agreed to assign the Indenture Collateral (as defined below) to
the Trust Collateral Agent for the benefit of the Trustee on behalf of the
Noteholders.
Financial Security Assurance Inc. (the "Insurer")
has issued and delivered a financial guaranty insurance policy, dated
the Closing Date (with endorsements, the "Note Policy"), pursuant to which the
Insurer guarantees Scheduled Payments, as defined in the Note Policy.
As an inducement to the Insurer to issue and
deliver the Note Policy, the Issuer and the Insurer have executed and
delivered the Insurance and Indemnity Agreement, dated as of March 31, 1997 (as
amended from time to time, the "Insurance Agreement"), among the Insurer, the
Issuer, Advanta Auto Finance Corporation and Advanta Auto Receivables Corp. I.
As an additional inducement to the Insurer to
issue the Note Policy, and as security for the performance by the Issuer of
the Insurer Issuer Secured Obligations and as security for the performance by
the Issuer of the Trustee Issuer Secured Obligations, the Issuer has agreed to
assign the Collateral (as defined below) to the Trust Collateral Agent for the
benefit of the Issuer Secured Parties, as their respective interests may appear.
<PAGE>
GRANTING CLAUSE
The Issuer hereby Grants to the Trust Collateral
Agent at the Closing Date, for the benefit of the Issuer Secured Parties all
of the Issuer's right, title and interest in and to (a) the Initial
Receivables and all monies paid or payable thereon or in respect thereof after
the Initial Cutoff date (including amounts due on or before the Initial Cutoff
Date but received by Advanta, the Seller or the Issuer after the Initial Cutoff
Date); (b) the Subsequent Receivables and all monies paid or payable thereon or
in respect thereof after the Subsequent Cutoff Date (including amounts due on or
before the Subsequent Cutoff Date but received by Advanta, the Seller or the
Issuer after the Subsequent Cutoff Date); (c) an assignment of the security
interests in the Financed Vehicles granted by Obligors pursuant to the Initial
Receivables and any Subsequent Receivables and any other interest of the Issuer
in the Financed Vehicles; (d) all rights of the Seller against Dealers pursuant
to Dealer Agreements, Dealer Assignments or Unaffiliated Originator Receivables
Purchase Agreements; (e) any proceeds and the right to receive proceeds with
respect to the Initial Receivables and the Subsequent Receivables repurchased by
either (i) a Dealer, pursuant to a Dealer Agreement, or (ii) an Unaffiliated
Originator, pursuant to an Unaffiliated Originator Receivables Purchase
Agreement as a result of a breach of representation or warranty in the related
Dealer Agreement or Unaffiliated Originator Receivables Purchaser Agreement, as
applicable; (f) all rights under any Service Contracts on the related Financed
Vehicles; (g) any proceeds and the right to receive proceeds with respect to the
Initial Receivables and the Subsequent Receivables from claims on any physical
damage, credit life or disability insurance policies covering Financed Vehicles
or Obligors including rebates of insurance premiums relating to the Receivables;
(h) all funds on deposit from time to time in the Trust Accounts (less all
investments and proceeds thereof), and all rights of the Issuer therein; (i) the
Issuer's rights and benefits, but none of its obligations or burdens, under the
Purchase Agreement and each Subsequent Purchase Agreement, including the
delivery requirements, representations and warranties and the cure and
repurchase obligations of Advanta under the Purchase Agreement; (j) property
(including the right to receive future Net Liquidation Proceeds) that secures a
Receivable and that has been acquired by or on behalf of the Trust pursuant to
liquidation of such Receivable; (k) all items contained in the Receivable Files
and any and all other documents that Advanta keeps on file in accordance with
its customary procedures relating to the Receivables, the Obligors or the
Financed Vehicles, (l) the Issuer's rights and benefits, but none of its
obligations or burdens, under the Sale and Servicing Agreement (including all
rights of the Seller under the Purchase Agreement, any Subsequent Purchase
Agreement and any Subsequent Transfer Agreement assigned to the Issuer pursuant
to the Sale and Servicing Agreement); and (m) all present and future claims,
demands, causes and chooses in action in respect of any or all of the foregoing
and all payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all proceeds of
the conversion, voluntary or involuntary, into cash or other liquid property,
all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, insurance proceeds, condemnation
awards, rights to payment of any and every kind and other forms of obligations
and receivables, instruments and other property which at any time constitute all
or part of or are included in the proceeds of any of the foregoing
(collectively, the "Collateral").
The foregoing Grant is made in trust to the
Trust Collateral Agent, for the benefit first, of the Trustee on behalf of
the Holders of the Notes, and second, for the benefit of the Insurer. The Trust
Collateral Agent hereby acknowledges such Grant, accepts the trusts under this
Indenture in accordance with the provisions of this Indenture and agrees to
perform its duties
2
<PAGE>
required in this Indenture to the best of its ability to the
end that the interests of such parties, recognizing the priorities of their
respective interests may be adequately and effectively protected.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1 Definitions. Except as otherwise specified herein,
the following terms have the respective meanings set forth below for all
purposes of this Indenture.
"Act" has the meaning specified in Section 11.3(a).
"Affiliate" means, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. A Person shall not be
deemed to be an Affiliate of any person solely because such other Person has the
contractual right or obligation to manage such Person unless such other Person
controls such Person through equity ownership or otherwise.
"Authorized Officer" means, with respect to the Issuer and the
Master Servicer, any officer or agent acting pursuant to a power of attorney of
the Owner Trustee or the Master Servicer, as applicable, who is authorized to
act for the Owner Trustee or the Master Servicer, as applicable, in matters
relating to the Issuer and who is identified on the list of Authorized Officers
delivered by each of the Owner Trustee and the Master Servicer to the Trustee on
the Closing Date (as such list may be modified or supplemented from time to time
thereafter).
"Basic Documents" means this Agreement, the Certificate of
Trust, the Trust Agreement, the Sale and Servicing Agreement, the Spread Account
Agreement, the Insurance Agreement and other documents and certificates
delivered in connection therewith.
"Book Entry Notes" means a beneficial interest in the Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.10.
"Business Day" means any day other than a Saturday, Sunday,
legal holiday or other day on which commercial banking institutions located in
the state of New York are authorized or obligated by law, executive order or
governmental decree to be closed.
"Certificate of Trust" means the certificate of trust of the
Issuer substantially in the form of Exhibit B to the Trust Agreement.
"Class A-1 Prepayment Amount" means, as of the Distribution
Date on or immediately following the last day of the Pre-Funding Period, after
giving effect to any transfer of Subsequent Receivables on such date, an amount
equal to the remaining Pre-Funded Amount in the Pre-Funding Account on the
Mandatory Redemption Date.
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"Class A-1 Notes" means the Class A-1 Floating Rate Asset
Backed Notes, substantially in the form of Exhibit A-1.
"Class A-1 Interest Rate" means with respect to any Interest
Period, LIBOR plus 0.14%, subject to a maximum rate equal to 11% (computed on
the basis of the actual number of days elapsed in a 360-day year).
"Class A-2 Note Prepayment Amount" means, as of the
Distribution Date on or immediately following the last day of the Pre-Funding
Period, after giving effect to any transfer of Subsequent Receivables on such
date, an amount equal to any Pre-Funded Amounts remaining in the Pre-Funding
Account on the Mandatory Redemption Date after payments of the Class A-1
Pre-Payment Amounts.
"Class A-2 Notes" means the Class A-2 6.75% Asset Backed
Notes, substantially in the form of Exhibit A-2.
"Class A-2 Interest Rate" means, 6.75% per annum (computed on
the basis of a 360-day year consisting of twelve 30-day months.
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities deposited
with the Clearing Agency.
"Closing Date" means March 31, 1997.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the
Granting Clause of this Indenture.
"Controlling Party" means the Insurer, so long as no Insurer
Default shall have occurred and be continuing, and the Trustee, for so long as
an Insurer Default shall have occurred and be continuing.
"Corporate Trust Office" means the principal office of the
Trustee at which at any particular time its corporate trust business shall be
administered which office at date of the execution of this Agreement is located
at Four Albany Street, New York, New York 10006, Attention: Corporate Trust and
Agency Group, Structured Finance Team or at such other address as the Trustee
may designate from time to time by notice to the Noteholders, the Insurer, the
Master Servicer and the Issuer, or the principal corporate trust office of any
successor Trustee (the address of which the successor Trustee will notify the
Noteholders and the Issuer).
"Default" means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in
Section 2.10.
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"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Executive Officer" means, with respect to any corporation,
the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation.
"Grant" means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, grant a lien upon
and a security interest in and right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of the Collateral or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Collateral and all other
monies payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring proceedings in the name of the Granting party or otherwise and generally
to do and receive anything that the Granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note
is registered on the Note Register.
"Indebtedness" means, with respect to any Person at any time,
(a) indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
"Indenture" means this Indenture as amended and supplemented
from time to time.
"Independent" means, when used with respect to any specified
Person, that the person (a) is in fact independent of the Issuer, any other
obligor upon the Notes, the Seller and any Affiliate of any of the foregoing
persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the Seller or
any Affiliate of any of the foregoing Persons and (c) is not connected with the
Issuer, any such other obligor, the Seller or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions.
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"Independent Certificate" means a certificate or opinion to be
delivered to the Trust Collateral Agent and the Trustee under the circumstances
described in, and otherwise complying with, the applicable requirements of
Section 11.1, prepared by an Independent appraiser or other expert appointed
pursuant to an Issuer Order and approved by the Trust Collateral Agent in the
exercise of reasonable care, and such opinion or certificate shall state that
the signer has read the definition of "Independent" in this Indenture and that
the signer is Independent within the meaning thereof.
"Initial Cutoff Date" means March 1, 1997.
"Insurance Agreement Indenture Cross Default" has the meaning
specified therefor in the Insurance Agreement.
"Insurer Issuer Secured Obligations" means all amounts and
obligations which the Issuer may at any time owe to or on behalf of the Insurer
under this Indenture, the Insurance Agreement or any other Basic Document.
"Interest Rate" means, with respect to the (i) Class A-1
Notes, the Class A-1 Interest Rate and (ii) Class A-2 Notes, the Class A-2
Interest Rate.
"Issuer" means the party named as such in this Indenture until
a successor replaces it and, thereafter, means the successor and, for purposes
of any provision contained herein and required by the TIA, each other obligor on
the Notes.
"Issuer Order" and "Issuer Request" means a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Trustee.
"Issuer Secured Obligations" means the Insurer Issuer
Secured Obligations and the Trustee Issuer Secured Obligations.
"Issuer Secured Parties" means each of the Trustee in respect
of the Trustee Issuer Secured Obligations and the Insurer in respect of the
Insurer Issuer Secured Obligations.
"LIBOR" means, with respect to any Interest Period, the London
interbank offered rate for deposits in U.S. dollars having a maturity of one
month commencing on the related LIBOR Determination Date (the "Index Maturity")
which appears on Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR
Determination Date. If such rate does not appear on Telerate Page 3750, the rate
for that day will be determined on the basis of the rates at which deposits in
U.S. dollars, having the Index Maturity and in a principal amount of not less
than U.S. $1,000,000, are offered at approximately 11:00 a.m., London time, on
such LIBOR Determination Date to prime banks in the London interbank market by
the Reference Banks. The Trustee will request the principal London office of
each of such Reference Banks to provide a quotation of its rate. If at least two
such quotations are provided, the rate for that day will be the arithmetic mean,
rounded upward, if necessary to the nearest 1/100,000 of 1% (.0000001), with
five one-millionths of a percentage point rounded upward, of all such
quotations. If fewer than two such quotations are provided, the rate for that
day will be the arithmetic mean, rounded upward, if necessary to the nearest
1/100,000 of 1% (.0000001), with five one-millionths of a percentage point
rounded upward, of the offered per annum rates one or more leading banks in New
York City, selected by the Trustee, are quoting as of approximately 11:00 a.m.,
New York City time,
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on such LIBOR Determination Date to leading European banks for United States
dollar deposits for the Index Maturity; provided that if the banks selected
as aforesaid are not quoting as mentioned in this sentence, LIBOR in effect
for the applicable Interest Period will be LIBOR in effect for the previous
Interest Period.
"LIBOR Determination Date" means, with respect to any Interest
Period, the day that is the second London Business Day prior to the commencement
of such Interest Period.
"London Business Day" means a Business Day and a day on which
banking institutions in the City of London, England are not required or
authorized by law to be closed.
"Note" means a Class A-1 Note or a Class A-2 Note.
"Note Owner" means, with respect to a Book-Entry Note, the
person who is the owner of such Book-Entry Note, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of such Clearing
Agency).
"Note Paying Agent" means the Trustee or any other Person that
meets the eligibility standards for the Trustee specified in Section 6.11 and is
authorized by the Issuer to make payments to and distributions from the
Collection Account and the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
"Note Policy" means the insurance policy issued by the Insurer
with respect to the Notes, including any endorsements thereto.
"Note Policy Claim Amount" has the meaning
specified in the Sale and Serving Agreement.
"Note Register" and "Note Registrar" have the respective
meanings specified in Section 2.4.
"Officer's Certificate" means a certificate signed by any
Authorized Officer of the Issuer, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 and TIA
ss. 314, and delivered to the Trustee. Unless otherwise specified, any reference
in this Indenture to an Officer's Certificate shall be to an Officer's
Certificate of any Authorized Officer of the Issuer. Each certificate with
respect to compliance with a condition or covenant provided for in this
Agreement shall include (1) a statement that the Authorized Officer signing the
certificate has read such covenant or condition; (2) a brief statement as to the
nature and scope of the examination or investigation upon which the statements
contained in such certificate are based; (3) a statement that in the opinion of
such person, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (4) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.
"Opinion of Counsel" means one or more opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees of
or counsel to the Issuer and,
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if addressed to the Insurer, satisfactory to the Insurer, and which shall
comply with any applicable requirements of Section 11.1, and if addressed
to the Insurer, satisfactory to the Insurer.
"Outstanding" means, as of the date of determination, all
Notes theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Trustee or
any Note Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor, satisfactory to the Trustee); and
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Trustee is presented that any such Notes are
held by a bona fide purchaser;
provided, however, that Notes which have been paid with proceeds of the Note
Policy shall continue to remain Outstanding for purposes of this Indenture until
the Insurer has been paid as subrogee hereunder or reimbursed pursuant to the
Insurance Agreement as evidenced by a written notice from the Insurer delivered
to the Trustee, and the Insurer shall be deemed to be the Holder thereof to the
extent of any payments thereon made by the Insurer; provided, further, that in
determining whether the Holders of the requisite Outstanding Amount of the Notes
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder or under any Basic Document, Notes owned by the Issuer, any
other obligor upon the Notes, the Seller or any Affiliate of any of the
foregoing Persons shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Notes that a Responsible Officer of the Trustee either actually knows to be so
owned or has received written notice thereof shall be so disregarded. Notes so
owned that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgees right so to
act with respect to such Notes and that the pledgee is not the Issuer, any other
obligor upon the Notes, the Seller or any Affiliate of any of the foregoing
Persons.
"Outstanding Amount" means the aggregate principal amount
of all Notes, or class of Notes, as applicable, Outstanding at the date of
determination.
"Predecessor Note" means, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.5 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Preference Claim" has the meaning specified in the Sale
and Servicing Agreement.
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"Proceeding" means any suit in equity, action at
law or other judicial or administrative proceeding.
"Rating Agency" means each of Moody's and Standard & Poor's,
so long as such Persons maintain a rating on the Notes; and if either Moody's or
Standard & Poor's no longer maintains a rating on the Notes, such other
nationally recognized statistical rating organization selected by the Seller and
(so long as an Insurer Default shall not have occurred and be continuing)
acceptable to the Insurer.
"Rating Agency Condition" means, with respect to any action,
that each Rating Agency shall have been given 10 days' (or such shorter period
as shall be acceptable to each Rating Agency) prior notice thereof and that each
of the Rating Agencies shall have notified the Seller, the Master Servicer, the
Insurer, the Trustee, the Owner Trustee and the Issuer in writing that such
action will not result in a reduction or withdrawal of the then current rating
of the Notes.
"Record Date" means, with respect to a Distribution Date or
Redemption Date, the close of business on the Business Day immediately preceding
such Distribution Date or Redemption Date.
"Redemption Date" means (a) in the case of a redemption of the
Notes pursuant to Section 10.1(a) or a payment to Noteholders pursuant to
Section 10.1(b), the Distribution Date specified by the Master Servicer or the
Issuer pursuant to Section 10.1(a) or (b) as applicable.
"Redemption Price" means (a) in the case of a redemption of
the Notes pursuant to Section 10.1(a), an amount equal to the unpaid principal
amount of the then outstanding principal amount of each class of Notes being
redeemed plus accrued and unpaid interest thereon to but excluding the
Redemption Date, or (b) in the case of a payment made to Noteholders pursuant to
Section 10.1(b), the amount on deposit in the Note Distribution Account, but not
in excess of the amount specified in clause (a) above.
"Reference Banks" means the following banks: Union Bank of
Switzerland, Barclays Bank, Deutsche Bank, Canadian Imperial Bank of Commerce.
"Responsible Officer" means, with respect to the Indenture
Trustee or the Owner Trustee (as defined in the Trust Agreement), any officer
within the Corporate Trust Office of the Indenture Trustee or the Owner Trustee,
as the case may be, including any Vice President, Assistant Vice President,
Assistant Treasurer, Assistant Secretary, Financial Services Officer or any
other officer of the Indenture Trustee or the Owner Trustee, as the case may be,
customarily performing functions similar to those performed by any of the above
designated officers, and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing
Agreement dated as of March 1, 1997, among the Issuer, the Seller, the Master
Servicer and the Trust Collateral Agent, as the same may be amended or
supplemented from time to time.
"Scheduled Payments" has the meaning specified in the Note
Policy.
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"State" means any one of the 50 states of the
United States of America or the District of Columbia.
"Termination Date" means the latest of (i) the expiration of
the Note Policy and the return of the Note Policy to the Insurer for
cancellation, (ii) the date on which the Insurer shall have received payment and
performance of all Insurer Issuer Secured obligations and (iii) the date on
which the Trustee shall have received payment and performance of all Trustee
Issuer Secured Obligations.
"Trust Collateral Agent" means, initially, Bankers Trust
Company, in its capacity as collateral agent on behalf of the Issuer Secured
Parties, including its successors in interest, until and unless a successor
Person shall have become the Trust Collateral Agent pursuant to Section 6.17
hereof, and thereafter "Trust Collateral Agent" shall mean such successor
Person.
"Trust Property" means all money, instruments, rights and
other property that are subject or intended to be subject to the lien and
security interest of this Indenture for the benefit of the Noteholders
(including all property and interests Granted to the Trust Collateral Agent),
including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939, as amended and as in force on the date hereof, unless otherwise
specifically provided.
"Trustee" means Bankers Trust Company, a New York banking
corporation, not in its individual capacity but as trustee under this Indenture,
or any successor trustee under this Indenture.
"Trustee Issuer Secured Obligations" means all amounts and
obligations which the Issuer may at any time owe to or on behalf of the Trustee
for the benefit of the Noteholders under this Indenture or the Notes.
"UCC" means, unless the context otherwise requires, the
Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended
from time to time.
Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to them in the Sale and Servicing
Agreement or the Trust Agreement.
SECTION 1.2 Incorporation by Reference of the Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
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"indenture trustee" or "institutional trustee"
means the Trustee.
"obligor" on the indenture securities means the Issuer.
All other TIA terms used in this Indenture that are defined by
the TIA, or defined by Commission rule have the meaning assigned to them by such
definitions.
SECTION 1.3 Rules of Construction. Unless the
context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without
limitation; and
(v) words in the singular include the plural and
words in the plural include the singular.
SECTION 1.4 Action by or Consent of Noteholders and
Certificateholders. Whenever any provision of this Agreement refers to action to
be taken, or consented to, by Noteholders or Certificateholders, such provision
shall be deemed to refer to the Certificateholder or Noteholder, as the case may
be, of record as of the Record Date immediately preceding the date on which such
action is to be taken, or consent given, by Noteholders or Certificateholders.
Solely for the purposes of any action to be taken, or consented to, by
Noteholders or Certificateholders, any Note or Certificate registered in the
name of Advanta Auto Receivables Corp I or any Affiliate thereof shall be deemed
not to be outstanding; provided, however, that, solely for the purpose of
determining whether the Indenture Trustee or the Trust Collateral Agent is
entitled to rely upon any such action or consent, only Notes or Certificates
which the Owner Trustee, the Indenture Trustee or the Trust Collateral Agent,
respectively, knows to be so owned shall be so disregarded.
SECTION 1.5 Material Adverse Effect. Whenever a
determination is to be made under this Agreement as to whether a given event,
action, course of conduct or set of facts or circumstances could or would have a
material adverse effect on the Securityholders (or any similar or analogous
determination), such determination shall be made without taking into account the
funds available from claims under the Policy. Whenever a determination is to be
made under this Agreement whether a breach of a representation, warranty or
covenant has or could have a material adverse effect on a Receivable or the
interest therein of the Trust, the Noteholders, the Certificateholders or the
Insurer (or any similar or analogous determination), such determination shall be
made by the Insurer in its reasonable discretion and after notifying the Trustee
and the Seller of such potential breach or (x) if an Insurer Default shall have
occurred and be continuing, or (y) upon (i) the expiration of the Note Policy in
accordance with the terms thereof and (ii) the payment of all amounts owing to
the Insurer under this Agreement and the Insurance Agreement, by a Security
Majority.
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SECTION 1.6 Conflict with TIA. If any provision hereof limits,
qualifies or conflicts with a provision of the TIA that is required under the
TIA to be part of and govern this Indenture, the latter provision shall control.
If any provision of this Indenture modifies or excludes any provision of the TIA
that may be so modified or excluded, the latter provisions shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
ARTICLE II
The Notes
SECTION 2.1 Form. The Class A-1 Notes and the Class A-2 Notes,
in each case together with the Trustee's certificate of authentication, shall be
in substantially the form set forth in Exhibit A-1 and A-2, respectively, with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may, consistently herewith, be determined by the officers executing such
Notes, as evidenced by their execution of the Notes. Any portion of the text of
any Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed,
lithographed or engraved or produced by any combination of these methods (with
or without steel engraved borders), all as determined by the officers executing
such Notes, as evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The
terms of the Notes set forth in Exhibits A-1 and A-2 are part of the terms of
this Indenture.
SECTION 2.2 Execution, Authentication and Delivery. The Notes
shall be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be original or
facsimile.
Notes bearing the original or facsimile signature of
individuals who were at any time Authorized Officers of the Issuer shall bind
the Issuer, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Notes or did
not hold such offices at the date of such Notes.
The Trustee shall upon receipt of the Note Policy and Issuer
Order for authentication and delivery, authenticate and deliver Class A-1 Notes
for original issue in an aggregate principal amount of $55,575,000 and Class A-2
Notes for original issue in the aggregate principal amount of $29,925,000. The
Class A-1 Notes and the Class A-2 Notes outstanding at any time may not exceed
such amounts except as provided in Section 2.5.
Each Note shall be dated the date of its authentication. The
Notes shall be issuable as registered Notes in the minimum denomination of
$100,000 and in integral multiples of $1,000 in excess thereof (except for one
Note of each class which may be issued in a denomination other than an integral
multiple of $100,000).
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose, unless there appears attached to such
Note a certificate of
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authentication substantially in the form provided for herein executed by the
Trustee by the manual signature of one of its authorized signatories, and
such certificate attached to any Note shall be conclusive evidence, and the
only evidence, that such Note has been duly authenticated and delivered
hereunder.
SECTION 2.3 Temporary Notes. Pending the preparation of
Definitive Notes, the Issuer may execute, and upon receipt of an Issuer Order
the Trustee shall authenticate and deliver, temporary Notes which are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the Definitive Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause
Definitive Notes to be prepared without unreasonable delay. After the
preparation of Definitive Notes, the temporary Notes shall be exchangeable for
Definitive Notes upon surrender of the temporary Notes at the office or agency
of the Issuer to be maintained as provided in Section 3.2, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes, the
Issuer shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of Definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as Definitive Notes.
SECTION 2.4 Registration; Registration of Transfer and
Exchange. The Issuer shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Notes and the registration of transfers of
Notes. The Trustee shall be "Note Registrar" for the purpose of registering
Notes and transfers of Notes as herein provided. Upon any resignation of any
Note Registrar, the Issuer shall promptly appoint a successor or, if it elects
not to make such an appointment, assume the duties of Note Registrar.
If a Person other than the Trustee is appointed by the Issuer
as Note Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof. The
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an Authorized Officer thereof as to the names and
addresses of the Holders of the Notes and the principal amounts and number of
such Notes.
Upon surrender for registration or transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 3.2, and
if the requirements of Section 8-401(1) of the UCC are met, the Issuer shall
execute or cause the Trustee to authenticate one or more new Notes, in any
authorized denominations, of the same class and a like aggregate principal
amount. A Noteholder may also obtain from the Trustee, in the name of the
designated transferee or transferees one or more new Notes, in any authorized
denominations, of the same class and a like aggregate principal amount. Such
requirements shall not be deemed to create a duty in the Trustee to monitor the
compliance by the Issuer with Section 8-401 of the UCC.
At the option of the Holder, Notes may be exchanged for other
Notes in any authorized denominations, of the same class and a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered
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for exchange, and if the requirements of Section 8-401(1) of the UCC are met,
the Issuer shall execute and upon its request the Trustee shall authenticate
the Notes which the Noteholder making the exchange is entitled to receive.
Such requirements shall not be deemed to create a duty in the Trustee to
monitor the compliance by the Issuer with Section 8-401 of the UCC.
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of
transfer or exchange shall be (i) duly endorsed by, or be accompanied by a
written instrument of transfer in the form attached to Exhibits A-1 and A-2,
duly executed by the Holder thereof or such Holder's attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar which requirements include
membership or participation in Securities Transfer Agents Medallion Program
("Stamp") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, Stamp, all in
accordance with the Exchange Act, and (ii) accompanied by such other documents
as the Note Registrar may require.
No service charge shall be made to a Holder for any
registration of transfer or exchange of Notes, but the Note Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.3 or 9.6 not
involving any transfer.
Notwithstanding, the preceding provisions of this section, the
Issuer shall not be required to make, and the Note Registrar shall not register,
transfers or exchanges of Notes selected for redemption for a period of 15 days
preceding the Distribution Date.
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes.
If (i) any mutilated Note is surrendered to the Trustee, or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any Note, and
(ii) there is delivered to the Trustee and the Insurer (unless an Insurer
Default shall have occurred and be continuing) such security or indemnity as
may be required by it to hold the Issuer, the Trustee and the Insurer harmless,
then, in the absence of notice to the Issuer, the Note Registrar or the Trustee
that such Note has been acquired by a bona fide purchaser, and provided that
the requirements of Section 8-405 of the UCC are met, the Issuer shall execute
and upon its request the Trustee shall authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement
Note (such requirement shall not be deemed to create a duty in the Trustee to
monitor the compliance by the Issuer with Section 8-405); provided, however,
that if any such destroyed, lost or stolen Note, but not a mutilated Note, shall
have become or within seven days shall be due and payable, or shall have been
called for redemption, the Issuer may, instead of issuing a replacement Note,
direct the Trustee, in writing, to pay such destroyed, lost or stolen Note when
so due or payable or upon the Redemption Date without surrender thereof. If,
after the delivery of such replacement Note or payment of a destroyed, lost or
stolen Note pursuant to the proviso to the preceding sentence, a bona fide
purchaser of the original Note in lieu of which such replacement Note was issued
presents for payment such original Note, the Issuer, the Trustee and the Insurer
shall be entitled to recover such replacement Note (or such payment) from the
Person to whom it was delivered or any Person taking such replacement Note from
such Person to whom such replacement Note
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was delivered or any assignee of such Person, except a bona fide purchaser,
and shall be entitled to recover upon the security or indemnity provided
therefor to the extent of any loss, damage, cost or expense incurred by the
Issuer or the Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section,
the Issuer may require the payment by the Holder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 Persons Deemed Owner. Prior to due presentment
for registration of transfer of any Note, the Issuer, the Trustee and any
agent of Issuer, the Trustee, the Insurer may treat the Person in whose
name any Note is registered (as of the Record Date) as the owner of such
Note for the purpose of receiving payments of principal of and interest,
if any on such Note and for all other purposes whatsoever, whether or not
such Note be overdue, and none of the Issuer, the Insurer, the Trustee nor any
agent of the Issuer or the Trustee shall be affected by notice to the contrary.
SECTION 2.7 Payment of Principal and Interest; Defaulted
Interest. (a) The Notes shall accrue interest as provided in the forms of the
Class A-1 Note and the Class A-2 Note set forth in Exhibits A-1 and A-2,
respectively, and such interest shall be payable on each Distribution Date as
specified therein. Any installment of interest or principal, if any, payable on
any Note which is punctually paid or duly provided for by the Issuer on the
applicable Distribution Date shall be paid to the Person in whose name such Note
(or one or more Predecessor Notes) is registered on the Record Date, by check
mailed first-class, postage prepaid, to such Person's address as it appears on
the Note Register on such Record Date, except that, unless Definitive Notes have
been issued pursuant to Section 2.12, with respect to Notes registered on the
Record Date in the name of the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and except for the
final installment of principal payable with respect to such Note on a
Distribution Date or on the Final Scheduled Distribution Date (and except for
the Redemption Price for any Note called for redemption pursuant to Section
10.1(a)) which shall be payable as provided below. The funds represented by any
such checks returned undelivered shall be held in accordance with Section 3.3.
(b) The principal of each Note shall be payable in
installments on each Distribution Date as provided in the forms of the Class A-1
Note and the Class A-2 Note set forth in Exhibits A-1 and A-2, respectively.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable, if not previously paid, on the date on which an Event
of Default shall have occurred and be continuing, if the Trustee or the Holders
of the Notes
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representing not less than a majority of the Outstanding Amount of the Notes
have declared the Notes to be immediately due and payable in the manner
provided in Section 5.2. Upon written notice from the Issuer, the Trustee
shall notify the Person in whose name a Note is registered at the close of
business on the Record Date preceding the Distribution Date on which the Issuer
expects that the final installment of principal of and interest on such Note
will be paid. Such notice shall be mailed or transmitted by facsimile prior to
such final Distribution Date and shall specify that such final installment will
be payable only upon presentation and surrender of such Note and shall specify
the place where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Notes shall be mailed to
Noteholders as provided in Section 10.2.
(c) If the Issuer defaults in a payment of interest on the
Notes, the Issuer shall pay defaulted interest (plus interest on such defaulted
interest to the extent lawful) at the applicable Interest Rate to the extent
lawful. The Issuer may pay such defaulted interest to the Persons who are
Noteholders on a subsequent special record date, which date shall be at least
five Business Days prior to the payment date. The Issuer shall fix or cause to
be fixed any such special record date and payment date, and, at least 15 days
before any such special record date, the Issuer shall mail to each Noteholder
and the Trustee a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
(d) Promptly following the date on which all principal of and
interest on the Notes has been paid in full and the Notes have been surrendered
to the Trustee, the Trustee shall, upon written notice from the Master Servicer
of the amounts, if any, that the Insurer has paid in respect of the Notes under
the Note Policy or otherwise which has not been reimbursed to it, deliver such
surrendered Notes to the Insurer to the extent not previously cancelled or
destroyed.
SECTION 2.8 Cancellation. Subject to Section 2.7(d), all Notes
surrendered for payment, registration of transfer, exchange or redemption shall,
if surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by the Trustee. Subject to Section 2.7(d), the
Issuer may at any time deliver to the Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
canceled by the Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes canceled as provided in this Section, except as expressly
permitted by this Indenture. Subject to Section 2.7(d), all canceled Notes may
be held or disposed of by the Trustee in accordance with its standard retention
or disposal policy as in effect at the time unless the Issuer shall direct by an
Issuer Order that they be destroyed or returned to it; provided that such Issuer
Order is timely and the Notes have not been previously disposed of by the
Trustee.
SECTION 2.9 Release of Collateral. The Trust Collateral Agent
shall, on or after the Termination Date, release any remaining portion of the
Trust Property from the lien created by this Indenture and deposit in the
Collection Account any funds then on deposit in any other Trust Account. The
Trust Collateral Agent shall release property from the lien created by this
Indenture pursuant to this Section 2.9 only upon receipt of an Issuer Request by
it and the Trustee accompanied by an Officer's Certificate, an Opinion of
Counsel and (if required by the TIA) Independent Certificates in accordance with
TIA ss.ss. 314(c) and 314(d)(1) meeting the applicable requirements of Section
11.1.
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SECTION 2.10 Book-Entry Notes. The Notes, upon original
issuance, will be issued in the form of typewritten Notes representing the
Book-Entry Notes, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Issuer. Such Notes shall initially
be registered on the Note Register in the name of Cede & Co., the nominee of
the initial Clearing Agency, and no Note Owner will receive a Definitive Note
representing such Note Owner's interest in such Note, except as provided in
Section 2.12. Unless and until definitive, fully registered Notes (the
"Definitive Notes") have been issued to Note Owners pursuant to Section 2.12:
(i) the provisions of this Section shall be in
full force and effect;
(ii) the Note Registrar and the Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and
the giving of instructions or directions hereunder) as the sole Holder
of the Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Note Owners shall be exercised only
through the Clearing Agency and shall be limited to those established
by law and agreements between such Note Owners and the Clearing Agency
and/or the Clearing Agency Participants. Unless and until Definitive
Notes are issued pursuant to Section 2.12, the initial Clearing Agency
will make book-entry transfers among the Clearing Agency Participants
and receive and transmit payments of principal of and interest on the
Notes to such Clearing Agency Participants;
(v) whenever this Indenture requires or permits actions to
be taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount of the
Notes, the Clearing Agency shall be deemed to represent such percentage
only to the extent that it has received instructions to such effect
from Note Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial
interest in the Notes and has delivered such instructions to the
Trustee; and
(vi) Note Owners may receive copies of any reports sent to
Noteholders pursuant to this Indenture, upon written request, together
with a certification that they are Note Owners and payment of
reproduction and postage expenses associated with the distribution of
such reports, from the Trustee at the Corporate Trust Office.
SECTION 2.11 Notices to Clearing Agency. Whenever a notice or
other communication to the Noteholders is required under this Indenture, unless
and until Definitive Notes shall have been issued to Note Owners pursuant to
Section 2.12, the Trustee shall give all such notices and communications
specified herein to be given to Holders of the Notes to the Clearing Agency, and
shall have no obligation to the Note Owners.
SECTION 2.12 Definitive Notes. If (i) the Master Servicer
advises the Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to
the Notes, and the Master Servicer is unable to locate a qualified
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successor, (ii) the Master Servicer at its option advises the Trustee
in writing that it elects to terminate the book-entry system through the
Clearing Agency or (iii) after the occurrence of an Event of Default,
Note Owners representing beneficial interests aggregating at least a
majority of the Outstanding Amount of the Notes advise the Trustee through
the Clearing Agency in writing that the continuation of a book entry system
through the Clearing Agency is no longer in the best interests of the Note
Owners, then the Clearing Agency shall notify all Note Owners and the
Trustee of the occurrence of any such event and of the availability of
Definitive Notes to Note Owners requesting the same. Upon surrender to the
Trustee of the typewritten Note or Notes representing the Book-Entry Notes
by the Clearing Agency, accompanied by registration instructions, the Issuer
shall execute and the Trustee shall authenticate the Definitive Notes in
accordance with the instructions of the Clearing Agency. None of the
Issuer, the Note Registrar or the Trustee shall be liable for any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Notes, the Trustee shall recognize the Holders of the Definitive
Notes as Noteholders.
ARTICLE III
Covenants
SECTION 3.1 Payment of Principal and Interest. The Issuer will
duly and punctually pay the principal of and interest on the Notes in accordance
with the terms of the Notes and this Indenture. Without limiting the foregoing,
the Issuer will cause to be distributed all amounts on deposit in the Note
Distribution Account on a Distribution Date deposited therein pursuant to the
Sale and Servicing Agreement (i) for the benefit of the Class A-l Notes, to
Class A-1 Noteholders and (ii) for the benefit of the Class A-2 Notes, to Class
A-2 Noteholders. Amounts properly withheld under the Code by any Person from a
payment to any Noteholder of interest and/or principal shall be considered as
having been paid by the Issuer to such Noteholder for all purposes of this
Indenture.
SECTION 3.2 Maintenance of Office or Agency. The Issuer will
maintain in New York, an office or agency where Notes may be surrendered for
registration, transfer or exchange of the Notes, and where notices and demands
to or upon the Issuer in respect of the Notes and this Indenture may be served.
The Issuer hereby initially appoints the Trustee to serve as its agent for the
foregoing purposes. The Issuer will give prompt written notice to the Trustee of
the location, and of any change in the location, of any such office or agency.
If at any time the Issuer shall fail to maintain any such office or agency or
shall fail to furnish the Trustee with the address thereof, such surrenders,
notices and demands may be made or served at the Corporate Trust Office, and the
Issuer hereby appoints the Trustee as its agent to receive all such surrenders,
notices and demands.
SECTION 3.3 Money for Payments to be Held in Trust. On or
before each Distribution Date and Redemption Date, the Issuer shall deposit or
cause to be deposited in the Note Distribution Account from the Collection
Account an aggregate sum sufficient to pay the amounts then becoming due under
the Notes, such sum to be held in trust for the benefit of the Persons entitled
thereto and (unless the Note Paying Agent is the Trustee) shall promptly notify
the Trustee of its action or failure so to act.
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The Issuer will cause each Note Paying Agent other than the
Trustee to execute and deliver to the Trustee and the Insurer an instrument in
which such Note Paying Agent shall agree with the Trustee (and if the Trustee
acts as Note Paying Agent, it hereby so agrees), subject to the provisions of
this Section, that such Note Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Trustee written notice of any default by the
Issuer of which it has actual knowledge (or any other obligor upon the
Notes) in the making of any payment required to be made with respect to
the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Note Paying Agent;
(iv) immediately resign as a Note Paying Agent and forthwith
pay to the Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be met
by a Note Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Note Paying Agent to pay to the Trustee all sums held in trust
by such Note Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which the sums were held by such Note Paying Agent; and
upon such a payment by any Note Paying Agent to the Trustee, such Note Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to the escheat of
funds, any money held by the Trustee or any Note Paying Agent in trust for the
payment of any amount due with respect to any Note and remaining unclaimed for
two years after such amount has become due and payable shall be discharged from
such trust and be paid to the Issuer on Issuer Request, with the consent of the
Insurer (unless an Insurer Default shall have occurred and be continuing) and
shall be deposited by the Trustee in the Collection Account; and the Holder of
such Note shall thereafter, as an unsecured general creditor, look only to the
Issuer for payment thereof (but only to the extent of the amounts so paid to the
Issuer), and all liability of the Trustee or such Note Paying Agent with respect
to such trust money shall thereupon cease; provided, however, that if such money
or any portion thereof had been previously deposited by the Insurer or the Trust
Collateral Agent with the Trustee for the payment of principal or interest on
the Notes, to the extent any amounts are owing to the Insurer, such amounts
shall be paid promptly to the Insurer upon receipt of a written request by the
Insurer to such effect; and provided, further, that the Trustee or such Note
Paying Agent, before being required to make any such repayment, shall at the
expense of the Issuer cause to be published once, in a newspaper published in
the English
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language, customarily published on each Business Day and of general
circulation in The City of New York, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Issuer. The Trustee shall also adopt and employ,
at the expense of the Issuer, any other reasonable means of notification of such
repayment (including, but not limited to, mailing notice of such repayment to
Holders whose Notes have been called but have not been surrendered for
redemption or whose right to or interest in monies due and payable but not
claimed is determinable from the records of the Trustee or of any Note Paying
Agent, at the last address of record for each such Holder).
SECTION 3.4 Existence. Except as otherwise permitted by the
provisions of Section 3.10, the Issuer will keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Trust Property.
SECTION 3.5 Protection of Trust Property. The Issuer
intends the security interest Granted pursuant to this Indenture in favor
of the Issuer Secured Parties to be prior to all other liens in respect of
the Trust Property, and the Issuer shall take all actions necessary to obtain
and maintain, in favor of the Trust Collateral Agent, for the benefit of the
Issuer Secured Parties, a first lien on and a first priority, perfected
security interest in the Trust Property. The Issuer will from time to time
prepare (or shall cause to be prepared), execute and deliver all
such supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other
instruments, and will take such other action necessary or advisable to:
(i) Grant more effectively all or any portion of
the Trust Property;
(ii) maintain or preserve the lien and security interest (and
the priority thereof) in favor of the Trust Collateral Agent for the
benefit of the Issuer Secured Parties created by this Indenture or
carry out more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the
validity of any Grant made or to be made by this
Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Trust Property and the
rights of the Trust Collateral Agent in such Trust Property against the
claims of all persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon the
Trust Property when due.
The Issuer hereby designates the Trust Collateral Agent its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required by the Trust
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Collateral Agent pursuant to this Section; provided that, such designation
shall not be deemed to create a duty in the Trustee or the Trust Collateral
Agent to monitor the compliance of the Issuer with respect to its duties
under this Section 3.5 or the adequacy of any financing statement,
continuation statement or other instrument prepared by the Issuer.
SECTION 3.6 Opinions as to Trust Property. (a) On the Closing
Date, the Issuer shall furnish to the Trustee, the Trust Collateral Agent and
the Insurer an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording and filing of
this Indenture, any indentures supplemental hereto, and any other requisite
documents, and with respect to the execution and filing of any financing
statements and continuation statements, as are necessary to perfect and make
effective the first priority lien and security interest in favor of the Trust
Collateral Agent, for the benefit of the Issuer Secured Parties, created by this
Indenture and reciting the details of such action, or stating that, in the
opinion of such counsel, no such action is necessary to make such lien and
security interest effective.
(b) Within 90 days after the beginning of each calendar year,
beginning with the first calendar year beginning more than six months after the
Closing Date, the Issuer shall furnish to the Trustee, Trust Collateral Agent
and the Insurer, an Opinion of Counsel either stating that, in the opinion of
such counsel, such action has been taken with respect to the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and with respect to the execution and filing
of any financing statements and continuation statements as are necessary to
maintain the lien and security interest created by this Indenture and reciting
the details of such action or stating that in the opinion of such counsel no
such action is necessary to maintain such lien and security interest. Such
Opinion of Counsel shall also describe the recording, filing, re-recording and
refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest of this Indenture.
SECTION 3.7 Performance of Obligations; Servicing of
Receivables. (a) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under
any instrument or agreement included in the Trust Property or that would
result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any such instrument
or agreement, except as ordered by any bankruptcy or other court or as
expressly provided in this Indenture, the Basic Documents or such other
instrument or agreement.
(b) The Issuer may contract with other Persons acceptable to
the Insurer (so long as no Insurer Default shall have occurred and be
continuing) to assist it in performing its duties under this Indenture, and any
performance of such duties by a Person identified to the Trustee and the Insurer
in an Officer's Certificate of the Issuer shall be deemed to be action taken by
the Issuer. Initially, the Issuer has contracted with the Master Servicer to
assist the Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Property, including, but
not limited, to preparing (or causing to
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prepared) and filing (or causing to be filed) all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture and
the Sale and Servicing Agreement in accordance with and within the time periods
provided for herein and therein. Except as otherwise expressly provided therein,
the Issuer shall not waive, amend, modify, supplement or terminate any Basic
Document or any provision thereof without the consent of the Trustee, the
Insurer or the Holders of at least a majority of the Outstanding Amount of the
Notes.
(d) If a Responsible Officer of the Owner Trustee shall have
actual knowledge of the occurrence of a Master Servicer Termination Event under
the Sale and Servicing Agreement, the Issuer shall promptly notify the
Trustee,the Trust Collateral Agent, the Insurer and the Rating Agencies thereof
in accordance with Section 11.4, and shall specify in such notice the action, if
any, the Issuer is taking in respect of such default. If a Master Servicer
Termination Event shall arise from the failure of the Master Servicer to perform
any of its duties or obligations under the Sale and Servicing Agreement with
respect to the Receivables, the Issuer shall take all reasonable steps available
to it to remedy such failure.
(e) The Issuer agrees that it will not waive timely
performance or observance by the Master Servicer or the Seller of their
respective duties under the Basic Documents (x) without the prior consent of the
Insurer (unless an Insurer Default shall have occurred and be controlling) or
(y) if the effect thereof would adversely affect the Holders of the Notes.
SECTION 3.8 Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture or the
Basic Documents, sell, transfer, exchange or otherwise dispose of any
of the properties or assets of the Issuer, including those included in
the Trust Property, unless directed to do so by the Controlling Party;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Trust
Property; or
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien in favor of the Trust
Collateral Agent created by this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be
released from any covenants or obligations with respect to the Notes
under this Indenture except as may be expressly permitted hereby, (B)
permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien of this Indenture) to be created
on or extend to or otherwise arise upon or burden the Trust Property or
any part thereof or any interest therein or the proceeds thereof (other
than tax liens, mechanics' liens and other liens that arise by
operation of law, in each case on a Financed Vehicle and arising solely
as a result of an action or omission of the related Obligor), (C)
permit the lien of this Indenture not to constitute a valid first
priority (other than with respect to any such tax, mechanics' or other
lien) security interest in the Trust Property or (D) amend, modify or
fail to comply with the provisions of the Basic Documents without the
prior written consent of the Controlling Party.
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SECTION 3.9 Annual Statement as to Compliance. The Issuer will
deliver to the Trustee and the Insurer, within 90 days after the end of each
fiscal year of the Issuer (commencing with the fiscal year ended December 31,
1997), and otherwise in compliance with the requirements of TIA Section
314(a)(4) an Officer's Certificate stating, as to the Authorized Officer signing
such Officer's Certificate, that
(i) a review of the activities of the Issuer during such
year and of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge,
based on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain
Terms. (a) The Issuer shall not consolidate or merge with or into any other
Person, unless
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America or any state
and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the
Trustee and the Insurer (so long as no Insurer Default shall have
occurred and be continuing), the due and punctual payment of the
principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture on the
part of the Issuer to be performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Trustee, the Owner
Trustee and the Insurer (so long as no Insurer Default shall have
occurred and be continuing)) to the effect that such transaction will
not have any material adverse tax consequence to the Trust, the
Insurer, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the
lien and security interest created by this Indenture
shall have been taken;
(vi) the Issuer shall have delivered to the Trustee and the
Insurer an Officer's Certificate and an Opinion of Counsel each stating
that such consolidation or merger and such supplemental indenture
comply with this Article III and that all conditions precedent herein
provided for relating to such transaction have been complied with
(including any filing required by the Exchange Act); and
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(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Insurer written notice of
such consolidation or merger at least 20 Business Days prior to the
consummation of such action and shall have received the prior written
approval of the Insurer of such consolidation or merger and the Issuer
or the Person (if other than the Issuer) formed by or surviving such
consolidation or merger has a net worth, immediately after such
consolidation or merger, that is (a) greater than zero and (b) not less
than the net worth of the Issuer immediately prior to giving effect to
such consolidation or merger.
(b) The Issuer shall not convey or transfer all or
substantially all of its properties or assets, including those included in the
Trust Property, to any Person, unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which
is hereby restricted shall (A) be a United States citizen or a Person
organized and existing under the laws of the United States of America
or any state, (B) expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, and the Insurer (so long as no Insurer Default shall have
occurred and be continuing), the due and punctual payment of the
principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture and each
of the Basic Documents on the part of the Issuer to be performed or
observed, all as provided herein, (C) expressly agree by means of such
supplemental indenture that all right, title and interest so conveyed
or transferred shall be subject and subordinate to the rights of
Holders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agree to indemnify, defend and hold
harmless the Issuer against and from any loss, liability or expense
arising under or related to this Indenture and the Notes and (E)
expressly agree by means of such supplemental indenture that such
Person (or if a group of persons, then one specified Person) shall
prepare (or cause to be prepared) and make all filings with the
Commission (and any other appropriate Person) required by the Exchange
Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Trustee and the Insurer
(so long as no Insurer Default shall have occurred and be continuing))
to the effect that such transaction will not have any material adverse
tax consequence to the Trust, the Insurer, any Noteholder or any
Certificate-holder;
(v) any action as is necessary to maintain the
lien and security interest created by this Indenture
shall have been taken; and
(vi) the Issuer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture comply with this
Article III and that all conditions precedent
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herein provided for relating to such transaction have been complied
with (including any filing required by the Exchange Act); and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Insurer written notice of
such conveyance or transfer at least 20 Business Days prior to the
consummation of such action and shall have received the prior written
approval of the Insurer of such consolidation or merger and the Issuer
or the Person (if other than the Issuer) formed by or surviving such
consolidation or merger has a net worth, immediately after such
consolidation or merger, that is (a) greater than zero and (b) not less
than the net worth of the Issuer immediately prior to giving effect to
such consolidation or merger.
SECTION 3.11 Successor or Transferee. (a) Upon any
consolidation or merger of the Issuer in accordance with Section 3.10(a), the
Person formed by or surviving such consolidation or merger (if other than the
Issuer) shall succeed to, and be substituted for, and may exercise every right
and power of, the Issuer under this Indenture with the same effect as if such
Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and
properties of the Issuer pursuant to Section 3.10 (b), Advanta Automobile
Receivables Trust 1997-1 will be released from every covenant and agreement of
this Indenture to be observed or performed on the part of the Issuer with
respect to the Notes immediately upon the delivery of written notice to the
Trustee stating that Advanta Automobile Receivables Trust 1997-1 is to be so
released.
SECTION 3.12 No Other Business. The Issuer shall not engage in
any business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the Basic Documents
and activities incidental thereto. After the Pre-Funding Period, the Issuer
shall not fund the purchase of any additional Receivables.
SECTION 3.13 No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes, (ii) obligations owing from time to time
to the Insurer under the Insurance Agreement and (iii) any other Indebtedness
permitted by or arising under the Basic Documents. The proceeds of the Notes
and the Certificates shall be used exclusively to fund the Issuer's purchase of
the Receivables and the other assets specified in the Sale and Servicing
Agreement, to fund the Pre-Funding Account, the Capitalized Interest Account and
the Spread Account and to pay the Issuer's organizational, transactional and
start-up expenses.
SECTION 3.14 Master Servicer's Obligations. The Issuer shall
cause the Master Servicer to comply with Sections 4.9, 4.10, 4.11 and 5.11 of
the Sale and Servicing Agreement.
SECTION 3.15 Guarantees, Loans, Advances and Other
Liabilities. Except as contemplated by the Sale and Servicing Agreement or this
Indenture, the Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
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SECTION 3.16 Capital Expenditures. The Issuer shall not make
any expenditure (by long-term or operating lease or otherwise) for capital
assets (either realty or personally).
SECTION 3.17 Compliance with Laws. The Issuer shall comply
with the requirements of all applicable laws, the non-compliance with which
would, individually or in the aggregate, materially and adversely affect the
ability of the Issuer to perform its obligations under the Notes, this Indenture
or any Basic Document.
SECTION 3.18 Restricted Payments. The Issuer shall not,
directly or indirectly, (i) pay any dividend or make any distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, to the Owner Trustee or any owner of a beneficial interest
in the Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer or to the Master Servicer, (ii) redeem, purchase,
retire or otherwise acquire for value any such ownership or equity interest or
security or (iii) set aside or otherwise segregate any amounts for any such
purpose; provided, however, that the Issuer may make, or cause to be
made, distributions to the Master Servicer, the Owner Trustee, the Trustee and
the Certificateholders as permitted by, and to the extent funds are available
for such purpose under, the Sale and Servicing Agreement or Trust Agreement. The
Issuer will not, directly or indirectly, make payments to or distributions from
the Collection Account except in accordance with this Indenture and the Basic
Documents.
SECTION 3.19 Notice of Events of Default. Upon a
Responsible Officer of the Owner Trustee having actual knowledge thereof, the
Issuer agrees to give the Trustee, the Insurer and the Rating Agencies prompt
written notice of each Event of Default hereunder and each default on the
part of the Master Servicer or the Seller of its obligations under the Sale
and Servicing Agreement.
SECTION 3.20 Further Instruments and Acts. Upon request of the
Trustee or the Insurer, the Issuer will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purpose of this Indenture.
SECTION 3.21 Amendments of Sale and Servicing Agreement and
Trust Agreement. The Issuer shall not agree to any amendment to Section 13.1 of
the Sale and Servicing Agreement or Section 13.1 of the Trust Agreement to
eliminate the requirements thereunder that the Trustee or the Holders of the
Notes consent to amendments thereto as provided therein.
SECTION 3.22 Income Tax Characterization. For purposes of
federal income, state and local income and franchise and any other income taxes,
the Issuer will treat the Notes as indebtedness of the Issuer and hereby
instructs the Trustee to treat the Notes as indebtedness of the Issuer for
federal and state tax reporting purposes.
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ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect with respect to the Notes except
as to (i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal thereof and interest thereon, (iv) Sections 3.3,
3.4, 3.5, 3.8, 3.10, 3.12, 3.13, 3.20, 3.21 and 3.22, (v) the rights,
obligations and immunities of the Trustee hereunder (including the rights of the
Trustee under Section 6.7 and the obligations of the Trustee under Section 4.2)
and (vi) the rights of Noteholders as beneficiaries hereof with respect to the
property so deposited with the Trustee payable to all or any of them, and the
Trustee, on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered
(other than (i) Notes that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section 2.5
and (ii) Notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the
Issuer and thereafter repaid to the Issuer or discharged from
such trust, as provided in Section 3.3) have been delivered to
the Trustee for cancellation and the Note Policy has expired
and been returned to the Insurer for cancellation; or
(2) all Notes not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at their
respective Final Scheduled Distribution Dates
within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited
with the Trust Collateral Agent cash or direct obligations of
or obligations guaranteed by the United States of America
(which will mature prior to the date such amounts are
payable), in trust for such purpose, in an amount sufficient
to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation when due
on the Final Scheduled Distribution Date or Redemption Date
(if Notes shall have been called for redemption pursuant to
Section 10.1(a)), as the case may be;
(B) the Issuer has paid or caused to be paid all Insurer
Issuer Secured Obligations and all Trustee Issuer Secured Obligations;
and
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(C) the Issuer has delivered to the Trustee, the Trust
Collateral Agent and the Insurer an Officer's Certificate, an Opinion
of Counsel and if required by the TIA, the Trustee, the Trust
Collateral Agent or the Insurer (so long as an Insurer Default shall
not have occurred and be continuing) an Independent Certificate from a
firm of certified public accountants, each meeting the applicable
requirements of Section 11.1(a) and each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
SECTION 4.2 Application of Trust Money. All monies
deposited with the Trustee pursuant to Section 4.1 hereof shall be held in trust
and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Note Paying Agent, as
the Trustee may determine, to the Holders of the particular Notes for the
payment or redemption of which such monies have been deposited with the Trustee,
of all sums due and to become due thereon for principal and interest; but such
monies need not be segregated from other funds except to the extent required
herein or in the Sale and Servicing Agreement or required by law.
SECTION 4.3 Repayment of Monies Held by Note Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
the Notes, all monies then held by any Note Paying Agent other than the Trustee
under the provisions of this Indenture with respect to such Notes shall, upon
demand of the Issuer, be paid to the Trustee to be held and applied according to
Section 3.3 and thereupon such Note Paying Agent shall be released from all
further liability with respect to such monies.
ARTICLE V
Remedies
SECTION 5.1 Events of Default. "Event of Default", wherever
used herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest on any Note when
the same becomes due and payable, and such default shall continue for a
period of five days (solely for purposes of this clause, a payment on
the Notes funded by the Insurer or the Collateral Agent pursuant to the
Spread Account Agreement shall be deemed to be a payment made by the
Issuer); or
(ii) default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable and such default shall continue for a period of five days
(solely for purposes of this clause, a payment on the Notes funded by
the Insurer or the Collateral Agent pursuant to the Spread Account
Agreement, shall be deemed to be a payment made by the Issuer); or
(iii) so long as an Insurer Default shall not have occurred
and be continuing, an Insurance Agreement Indenture Cross Default shall
have occurred; provided, however, that
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the occurrence of an Insurance Agreement Indenture Cross Default may
not form the basis of an Event of Default unless the Insurer shall,
upon prior written notice to the Rating Agencies, have delivered to
the Issuer and the Trustee, and not rescinded, a written notice
specifying that such Insurance Agreement Indenture Cross Default
constitutes an Event of Default under the Indenture; or
(iv) so long as an Insurer Default shall have occurred and be
continuing, default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant
or agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with), or any
representation or warranty of the Issuer made in this Indenture or in
any certificate in connection herewith proving to have been incorrect
in any material respect as of the time when the same shall have been
made, and such default shall continue or not be cured, or the
circumstance or condition in respect of which such misrepresentation or
warranty was incorrect shall not have been eliminated or otherwise
cured, for a period of 30 days (or for such longer period, not in
excess of 90 days, as may be reasonably necessary to remedy such
default; provided that such default is capable of remedy within 90 days
or less and the Master Servicer, on behalf of the Owner Trustee,
delivers an Officer's Certificate to the Trustee to the effect that the
Issuer has commenced, or will promptly commence and diligently pursue,
all reasonable efforts to remedy such default) after there shall have
been given, by registered or certified mail, to the Issuer by the
Trustee or to the Issuer and the Trustee by the Holders of at least 25%
of the Outstanding Amount of the Notes, a written notice specifying
such default or incorrect representation or warranty and requiring it
to be remedied and stating that such notice is a "Notice of Default"
hereunder; or
(v) so long as an Insurer Default shall have occurred and be
continuing, the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Property in an involuntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Trust Property, or ordering
the winding-up or liquidation of the Issuer's affairs, and such decree
or order shall remain unstayed and in effect for a period of 60
consecutive days; or
(vi) so long as an Insurer Default shall have occurred and be
continuing, the commencement by the Issuer of a voluntary case under
any applicable Federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by the Issuer to the
entry of an order for relief in an involuntary case under any such law,
or the consent by the Issuer to the appointment or taking possession by
a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the Trust
Property, or the making by the Issuer of any general assignment for the
benefit of creditors, or the failure by the Issuer generally to pay its
debts as such debts become due, or the taking of action by the Issuer
in furtherance of any of the foregoing.
The Issuer shall deliver to the Trustee, the Owner Trustee and
the Insurer, within five days after the occurrence thereof, written notice in
the form of an Officer's Certificate of any event which with the giving of
notice and the lapse of time would become an Event of Default
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under clause (iii), its status and what action the Issuer is taking or
proposes to take with respect thereto.
SECTION 5.2 Rights Upon Event of Default. (a) If an
Insurer Default shall not have occurred and be continuing and an Event
of Default shall have occurred and be continuing, the Notes shall become
immediately due and payable at par, together with accrued interest thereon. If
an Event of Default shall have occurred and be continuing, the Controlling Party
may exercise any of the remedies specified in Section 5.4(a). In the event of
any acceleration of any Notes by operation of this Section 5.2, the Trustee
shall continue to be entitled to make claims under the Note Policy pursuant to
the Sale and Servicing Agreement for Scheduled Payments on the Notes. Payments
under the Note Policy following acceleration of any Notes shall be applied by
the Trustee:
FIRST: to Noteholders for amounts due and unpaid
on the Notes for interest, ratably, without preference
or priority of any kind, according to the amounts due
and payable on the Notes for interest; and
SECOND: to Noteholders for amounts due and unpaid
on the Notes for principal, ratably, without
preference or priority of any kind, according to the
amounts due and payable on the Notes for principal.
(b) In the event any Notes are accelerated due to an Event of
Default, the Insurer shall have the right (in addition to its obligation to pay
Scheduled Payments on the Notes in accordance with the Note Policy), but not the
obligation, to make payments under the Note Policy or otherwise of interest and
principal due on such Notes, in whole or in part, on any date or dates following
such acceleration as the Insurer, in its sole discretion, shall elect.
(c) If an Insurer Default shall have occurred and be
continuing and an Event of Default shall have occurred and be continuing, the
Trustee in its discretion may, or if so requested in writing by Holders holding
Notes representing not less than a majority of the Outstanding Amount of the
Notes, subject to Section 6.2(f), declare by written notice to the Issuer that
the Notes shall become immediately due and payable at par, together with accrued
interest thereon.
(d) If an Insurer Default shall have occurred and be
continuing, then at any time after such declaration of acceleration of maturity
has been made and before a
judgment or decree for payment of the money due has been obtained by the Trustee
as hereinafter in this Article V provided, the Holders of Notes representing a
majority of the Outstanding Amount of the Notes, by written notice to the Issuer
and the Trustee, may rescind and annul such declaration and its consequences if:
(i) the Issuer has paid or deposited with the
Trustee a sum sufficient to pay
(A) all payments of principal of and interest on all
Notes and all other amounts that would then be due hereunder
or upon such Notes if the Event of Default giving rise to such
acceleration had not occurred; and
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(B) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements and
advances of the Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or
impair any right consequent thereto.
SECTION 5.3 Collection of Indebtedness and Suits for
Enforcement by Trustee. (a) The Issuer covenants that if (i) default is made in
the payment of any interest on any Note when the same becomes due and payable,
and such default continues for a period of five days, or (ii) default is made in
the payment of the principal of or any installment of the principal of any Note
when the same becomes due and payable, and such default continues for a period
of five days, the Issuer will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of the Notes, the whole amount then due and payable on
such Notes for principal and interest, with interest upon the overdue principal,
and, to the extent payment at such rate of interest shall be legally
enforceable, upon overdue installments of interest, at the applicable Interest
Rate and in addition thereto such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee and its agents and counsel.
(b) Each Issuer Secured Party hereby irrevocably and
unconditionally appoints the Controlling Party as the true and lawful
attorney-in-fact of such Issuer Secured Party for so long as such Issuer Secured
Party is not the Controlling Party, with full power of substitution, to execute,
acknowledge and deliver any notice, document, certificate, paper, pleading or
instrument and to do in the name of the Controlling Party as well as in the
name, place and stead of such Issuer Secured Party such acts, things and deeds
for or on behalf of and in the name of such Issuer Secured Party under this
Indenture (including specifically under Section 5.4) and under the Basic
Documents which such Issuer Secured Party could or might do or which may be
necessary, desirable or convenient in such Controlling Party's sole discretion
to effect the purposes contemplated hereunder and under the Basic Documents and,
without limitation, following the occurrence of an Event of Default, exercise
full right, power and authority to take, or defer from taking, any and all acts
with respect to the administration, maintenance or disposition of the Trust
Property.
(c) If an Event of Default occurs and is continuing, the
Trustee may in its discretion but with the consent of the Controlling Party and
shall, at the direction of the Controlling Party (except as provided in Section
5.3(d) below), proceed to protect and enforce its rights and the rights of the
Noteholders by such appropriate Proceedings as the Trustee or the Controlling
Party shall deem most effective to protect and enforce any such rights, whether
for the specific enforcement of any covenant or agreement in this Indenture or
in aid of the exercise of any power granted herein, or to enforce any other
proper remedy or legal or equitable right vested in the Trustee by this
Indenture or by law.
(d) Notwithstanding anything to the contrary contained in this
Indenture (including, without limitation, Sections 5.4(a), 5.12, 5.13 and 5.17)
and regardless of whether an
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Insurer Default shall have occurred and be continuing, if the Issuer fails to
perform its obligations under Section 10.1(b) hereof when and as due, the
Trustee may in its discretion (and without the consent of the Controlling Party)
proceed to protect and enforce its rights and the rights of the Noteholders by
such appropriate proceedings as the Trustee shall deem most effective to protect
and enforce any such rights, whether for specific performance of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy or legal or equitable right vested
in the Trustee by this Indenture or by law; provided that the Trustee shall only
be entitled to take any such actions without the consent of the Controlling
Party to the extent such actions (x) are taken only to enforce the Issuer's
obligations to redeem the principal amount of Notes and (y) are taken only
against the portion of the Collateral, if any, consisting of the Pre-Funding
Account, the Capitalized Interest Account, any investments therein and any
proceeds thereof.
(e) In case there shall be pending, relative to the Issuer or
any other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Property, proceedings under Title 11 of the United States
Code or any other applicable Federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Trustee, irrespective of
whether the principal of any Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and interest owing and unpaid in respect of the Notes and
to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee,
and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee, except as a
result of negligence, bad faith or willful misconduct) and of the
Noteholders allowed in such proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or person performing similar functions in any such
proceedings;
(iii) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Trustee or the Holders of Notes allowed in any judicial
proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of such Noteholders to make
payments to the Trustee, and, in the event
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that the Trustee shall consent to the making of payments directly to such
Noteholders, to pay to the Trustee such amounts as shall be sufficient to cover
reasonable compensation to the Trustee, each predecessor Trustee and their
respective agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor Trustee
except as a result of negligence or bad faith.
(f) Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Noteholder in any
such proceeding except, as aforesaid, to vote for the election of a trustee in
bankruptcy or similar person.
(g) All rights of action and of asserting claims under this
Indenture, the Spread Account Agreement or under any of the Notes, may be
enforced by the Trustee without the possession of any of the Notes or the
production thereof in any trial or other proceedings relative thereto, and any
such action or proceedings instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment, subject to
the payment of the expenses, disbursements and compensation of the Trustee, each
predecessor Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes.
(h) In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture or
the Spread Account Agreement), the Trustee shall be held to represent all the
Holders of the Notes, and it shall not be necessary to make any Noteholder a
party to any such proceedings.
SECTION 5.4 Remedies. (a) If an Event of Default shall have
occurred and be continuing, the Controlling Party may do one or more of the
following (subject to Section 5.5):
(i) institute Proceedings in its own name and as trustee of
an express trust for the collection of all amounts then payable on the
Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer and any other obligor upon such Notes monies adjudged
due;
(ii) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust
Property;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the rights
and remedies of the Issuer Secured Parties; and
(iv) direct the Trust Collateral Agent in writing to sell the
Trust Property or any portion thereof or rights or interest therein, at
one or more public or private sales called and conducted in any manner
permitted by law; provided, however, that
(A) if the Insurer is the Controlling Party, the Insurer
may not sell or otherwise liquidate the Trust Property
following an Insurance Agreement Indenture Cross Default
unless
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(I) such Insurance Agreement Indenture Cross Default
arises from a claim being made on the Note Policy or from
the insolvency of the Trust or the Seller, or
(II) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to
discharge in full all amounts then due and unpaid upon
such Notes for principal and interest; or
(B) if the Trustee is the Controlling Party, the Trustee
may not sell or otherwise liquidate the Trust Property
following an Event of Default unless
(I) such Event of Default is of the type
described in Section 5.01(i) or (ii), or
(II) either
(x) the Holders of 100% of the
Outstanding Amount of the Notes consent
thereto,
(y) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to
discharge in full all amounts then due and unpaid upon
such Notes for principal and interest, or
(z) the Trustee determines that the Trust Property
will not continue to provide sufficient funds for the
payment of principal of and interest on the Notes as
they would have become due if the Notes had not been
declared due and payable, and the Trustee provides
prior written notice to the Rating Agencies and obtains
the consent of Holders of 66-2/3% of the Outstanding
Amount of the Notes.
In determining such sufficiency or insufficiency with respect
to clause (y) and (z), the Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Property for such purpose.
SECTION 5.5 Optional Preservation of the Receivables. If the
Trustee is the Controlling Party and if the Notes have been declared to be due
and payable under Section 5.2 following an Event of Default and such declaration
and its consequences have not been rescinded and annulled, the Trustee may, but
need not, elect to direct the Trust Collateral Agent to maintain possession of
the Trust Property. It is the desire of the parties hereto and the Noteholders
that there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Trustee shall take such desire into account when
determining whether or not to direct the Trust Collateral Agent to maintain
possession of the Trust Property. In determining whether to direct the Trust
Collateral Agent to maintain possession of the Trust Property, the Trustee may,
but need not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Property for such purpose
which opinion shall be at the expense of the Issuer.
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SECTION 5.6 Priorities.
(a) Following (1) the acceleration of the Notes pursuant to
Section 5.2 or (2) if an Insurer Default shall have occurred and be continuing,
the occurrence of an Event of Default pursuant to Section 5.1(i), 5.1(ii),
5.1(iii), 5.1(v) or 5.1(vi) of the Indenture or (3) the receipt of Insolvency
Proceeds pursuant to Section 11.1(b) of the Sale and Servicing Agreement, the
Distribution Amount, including any money or property collected pursuant to
Section 5.4 of the Indenture and any such Insolvency Proceeds, shall be applied
by the Trust Collateral Agent on the related Distribution Date in the following
order of priority:
FIRST: amounts due and owing and required to be distributed to
the Master Servicer, the Owner Trustee, the Trustee, the Collateral
Agent and the Trust Collateral Agent, respectively, pursuant to
priorities (i) and (ii) of Section 5.7(b) of the Sale and Servicing
Agreement and not previously distributed, in the order of such
priorities and without preference or priority of any kind within such
priorities;
SECOND: to Noteholders for amounts due and unpaid
on the Notes for interest, ratably, without preference
or priority of any kind, according to the amounts due
and payable on the Notes for interest;
THIRD: to Noteholders for amounts due and unpaid
on the Notes for principal, ratably, without
preference or priority of any kind, according to the
amounts due and payable on the Notes for principal;
FOURTH: to the Insurer, to the extent of any
amounts owing to the Insurer under the Insurance
Agreement and not paid;
FIFTH: to the Collateral Agent to be applied as
provided in the Master Spread Account Agreement.
SIXTH: amounts due and unpaid on the Certificates
for interest, principal and premium, to the
Certificateholders in accordance with Sections 5.7 and
5.9 of the Sale and Servicing Agreement;
SEVENTH: to the Seller, any remaining Available
Funds;
provided that any amounts collected from the Pre-Funding Account or the
Capitalized Interest Account shall be paid, first, for amounts due and unpaid on
the Notes for principal and interest, if any, for distribution to Noteholders in
accordance with Section 10.1(b) and, second, for amounts due to the
Certificateholders for principal and interest, if any, and third, in accordance
with priorities FIRST through SEVENTH above.
(b) The Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section. At least 15 days before such
record date the Issuer shall mail to each Noteholder and the Trustee a notice
that states the record date, the payment date and the amount to be paid.
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SECTION 5.7 Limitation of Suits. No Holder of any Note shall
have any right to institute any proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder has previously given written
notice to the Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding
Amount of the Notes have made written request to the Trustee to
institute such proceeding in respect of such Event of Default in its
own name as Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities to be incurred in complying with such request;
(iv) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
proceedings;
(v) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount of the Notes; and
(vi) an Insurer Default shall have occurred and be
continuing;
it being understood and intended that no Holders of Notes shall have any right
in any manner whatsoever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other Holders of
Notes or to obtain or to seek to obtain priority or preference over any other
Holders or to enforce any right under this Indenture, except in the manner
herein provided.
In the event the Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Notes,
the Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
SECTION 5.8 Unconditional Rights of Noteholders To Receive
Principal and Interest. Notwithstanding any other provisions in this Indenture,
the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any, on
such Note on or after the respective due dates thereof expressed in such Note or
in this Indenture (or, in the case of redemption, on or after the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
right shall not be impaired without the consent of such Holder.
SECTION 5.9 Restoration of Rights and Remedies. If the
Controlling Party or any Noteholder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, then and in every such case the Issuer, the Trustee
and the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
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thereafter all rights and remedies of the Trustee and the Noteholders shall
continue as though no such proceeding had been instituted.
SECTION 5.10 Rights and Remedies Cumulative. No right or
remedy herein conferred upon or reserved to the Controlling Party or to the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.11 Delay or Omission Not a Waiver. No delay or
omission of the Controlling Party or any Holder of any Note to exercise any
right or remedy accruing upon any Default or Event of Default shall impair any
such right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by this Article
V or by law to the Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the
Noteholders, as the case may be.
SECTION 5.12 Control by Noteholders. If the Trustee is the
Controlling Party, the Holders of a majority of the Outstanding Amount of the
Notes shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee with respect to the Notes
or exercising any trust or power conferred on the Trustee; provided that
(i) such direction shall not be in conflict with
any rule of law or with this Indenture;
(ii) subject to the express terms of Section 5.4, any
direction to the Trustee to sell or liquidate the Trust Property shall
be by the Holders of Notes representing not less than 100% of the
Outstanding Amount of the Notes;
(iii) if the conditions set forth in Section 5.5 have been
satisfied and the Trustee elects to retain the Trust Property pursuant
to such Section, then any direction to the Trustee by Holders of Notes
representing less than 100% of the Outstanding Amount of the Notes to
sell or liquidate the Trust Property shall be of no force and effect;
and
(iv) the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with
such direction;
provided, however, that, subject to Section 6.1, the Trustee need not take any
action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
SECTION 5.13 Waiver of Past Defaults. If an Insurer
Default shall have occurred and be continuing, prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.4, the
Holders of Notes of not less than a majority of the Outstanding Amount of the
Notes may waive any past Default or Event of Default and its consequences except
a Default (a) in payment of principal of or interest on any of the Notes or (b)
in respect of a covenant or provision hereof which cannot be modified or amended
without
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the consent of the Holder of each Note. In the case of any such waiver, the
Issuer, the Trustee and the Holders of the Notes shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto.
Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured and not to have occurred,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
SECTION 5.14 Undertaking for Costs. All parties to this
Indenture agree, and each Holder of any Note by such Holder's acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Trustee for any action taken, suffered or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to (a) any suit instituted by the Trustee, (b) any suit
instituted by any Noteholder, or group of Noteholders, in each case holding in
the aggregate more than 10% of the Outstanding Amount of the Notes or (c) any
suit instituted by any Noteholder for the enforcement of the payment of
principal of or interest on any Note on or after the respective due dates
expressed in such Note and in this Indenture (or, in the case of redemption, on
or after the Redemption Date).
SECTION 5.15 Waiver of Stay or Extension Laws. The Issuer
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead or in any manner whatsoever, claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 5.16 Action on Notes. The Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Trustee against the Issuer or by the levy of any execution
under such judgment upon any portion of the Trust Property or upon any of the
assets of the Issuer.
SECTION 5.17 Performance and Enforcement of Certain
Obligations. (a) Promptly following a request from the Trustee to do so and
at the Master Servicer's expense, the Issuer agrees to take all such lawful
action as the Trustee may request to compel or secure the performance and
observance by the Seller and the Master Servicer, as applicable, of each of
their obligations to the Issuer under or in connection with the Sale and
Servicing Agreement in accordance with the terms thereof, and to exercise any
and all rights, remedies, powers and privileges lawfully available to the Issuer
under or in connection with the Sale and Servicing Agreement to the extent and
in the manner directed by the Trustee, including the transmission of
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notices of default on the part of the Seller or the Master Servicer thereunder
and the institution of legal or administrative actions or proceedings to compel
or secure performance by the Seller or the Master Servicer of each of their
obligations under the Sale and Servicing Agreement.
(b) If the Trustee is a Controlling Party and if an Event of
Default has occurred and is continuing, the Trustee may, and, at the written
direction of the Holders of 66-2/3% of the Outstanding Amount of the Notes
shall, exercise all rights, remedies, powers, privileges and claims of the
Issuer against the Seller or the Master Servicer under or in connection with the
Sale and Servicing Agreement, including the right or power to take any action to
compel or secure performance or observance by the Seller or the Master Servicer
of each of their obligations to the Issuer thereunder and to give any consent,
request, notice, direction, approval, extension or waiver under the Sale and
Servicing Agreement, and any right of the Issuer to take such action shall be
suspended.
SECTION 5.18 Subrogation. The Trust Collateral Agent
shall receive as attorney-in-fact of each Noteholder any Note Policy Claim
Amount from the Insurer. Any and all Note Policy Claim Amounts disbursed by the
Trustee from claims made under the Note Policy shall not be considered payment
by the Trust or from the Spread Account with respect to such Notes, and shall
not discharge the obligations of the Trust with respect thereto. The Insurer
shall, to the extent it makes any payment with respect to the Notes, become
subrogated to the rights of the recipient of such payments to the extent of such
payments. Subject to and conditioned upon any payment with respect to the Notes
by or on behalf of the Insurer, the Trustee shall assign to the Insurer all
rights to the payment of interest or principal with respect to the Notes which
are then due for payment to the extent of all payments made by the Insurer, and
the Insurer may exercise any option, vote right, power or the like with respect
to the Notes to the extent that it has made payment pursuant to the Note
Policy. To evidence such subrogation, the Note Registrar shall note the
Insurer's rights as subrogee upon the register of Noteholders upon receipt from
the Insurer of proof of payment by the Insurer of any Noteholders' Interest
Distributable Amount or Noteholders' Principal Distributable Amount. The
foregoing subrogation shall in all cases be subject to the rights of the
Noteholders to receive all Scheduled Payments in respect of the Notes.
SECTION 5.19 Preference Claims.
(a) In the event that the Trustee has received a certified
copy of an order of the appropriate court that any Noteholders' Interest
Distributable Amount or Noteholders' Principal Distributable Amount paid on a
Note has been avoided in whole or in part as a preference payment under
applicable bankruptcy law, the Trustee shall so notify the Insurer, shall comply
with the provisions of the Note Policy to obtain payment by the Insurer of such
avoided payment, and shall, at the time it provides notice to the Insurer,
notify Holders of the Notes by mail that, in the event that any Noteholder's
payment is so recoverable, such Noteholder will be entitled to payment pursuant
to the terms of the Note Policy. The Trustee shall furnish to the Insurer at its
written request, the requested records it holds in its possession evidencing the
payments of principal of and interest on Notes, if any, which have been made by
the Trustee and subsequently recovered from Noteholders, and the dates on which
such payments were made. Pursuant to the terms of the Note Policy, the Insurer
will make such payment on behalf of the Noteholder to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order (as defined in
the Note Policy) and not to the Trustee or any Noteholder directly (unless a
Noteholder has previously paid such payment to the receiver, conservator,
debtor-in-possession or trustee in
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bankruptcy, in which case the Insurer will make such payment to the Trustee for
distribution to such Noteholder upon proof of such payment reasonably
satisfactory to the Insurer).
(b) The Trustee shall promptly notify the Insurer of any
proceeding or the institution of any action (of which the Trustee has actual
knowledge) seeking the avoidance as a preferential transfer under applicable
bankruptcy, insolvency, receivership, rehabilitation or similar law (a
"Preference Claim") of any distribution made with respect to the Notes. Each
Holder, by its purchase of Notes, and the Trustee hereby agree that so long as
an Insurer Default shall not have occurred and be continuing, the Insurer may at
any time during the continuation of any proceeding relating to a Preference
Claim direct all matters relating to such Preference Claim including,without
limitation, (i) the direction of any appeal of any order relating to any
Preference Claim and (ii) the posting of any surety, supersedeas or performance
bond pending any such appeal at the expense of the Insurer, but subject to
reimbursement as provided in the Insurance Agreement. In addition, and without
limitation of the foregoing, as set forth in Section 5.18(c), the Insurer shall
be subrogated to, and each Noteholder and the Trustee hereby delegate and
assign, to the fullest extent permitted by law, the rights of the Trustee and
each Noteholder in the conduct of any proceeding with respect to a Preference
Claim, including, without limitation, all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with any
such Preference Claim.
ARTICLE VI
The Trustee and the Trust Collateral Agent
SECTION 6.1 Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee and the Trust Collateral Agent
shall exercise the rights and powers vested in it by this Indenture and the
Basic Documents and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) each of the Trustee and the Trust Collateral Agent
undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee and
the Trust Collateral Agent, respectively; and
(ii) in the absence of bad faith on its part, each of the
Trustee and the Trust Collateral Agent may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee or the
Trust Collateral Agent, as the case may be and conforming to the
requirements of this Indenture; however, the Trustee and the Trust
Collateral Agent shall examine the certificates and opinions to
determine whether or not they conform on their face to the requirements
of this Indenture.
(c) Each of the Trustee and the Trust Collateral Agent may not
be relieved from liability for its own negligent action, its own negligent
failure to act or its own wilful misconduct, except that:
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(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) each of the Trustee and the Trust Collateral Agent shall
not be liable for any error of judgment made in good faith by a
Responsible Officer unless it is proved that the Trustee or the Trust
Collateral Agent was negligent in ascertaining the pertinent facts; and
(iii) each of the Trustee and the Trust Collateral Agent shall
not be liable with respect to any action it takes or omits to take in
good faith in accordance with a direction received by it pursuant to
Section 5.12.
(d) The Trustee and the Trust Collateral Agent shall not be
liable for interest on any money received by it except as the Trustee may agree
in writing with the Issuer.
(e) Money held in trust by the Trustee or the Trust Collateral
Agent need not be segregated from other funds except to the extent required by
law or the terms of this Indenture or the Sale and Servicing Agreement.
(f) No provision of this Indenture shall require the Trustee
or the Trust Collateral Agent to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if it shall have reasonable grounds to
believe that repayment of such funds or indemnity reasonably satisfactory to it
against such risk or liability is not reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee or the
Trust Collateral Agent shall be subject to the provisions of this Section and to
the provisions of the TIA.
(h) The Trustee or the Trust Collateral Agent shall, upon one
Business Day's prior written notice to the Trustee or the Trust Collateral
Agent, as the case may be, permit any representative of the Insurer, during the
Trustee's or the Trust Collateral Agent, as the case may be, normal business
hours, to examine all books of account, records, reports and other papers of the
Trustee or the Trust Collateral Agent, as the case may be, relating to the
Notes, to make copies and extracts therefrom and to discuss the Trustee's or the
Trust Collateral Agent's affairs and actions, as such affairs and actions relate
to the Trustee's or the Trust Collateral Agent's duties with respect to the
Notes, with the Trustee's or the Trust Collateral Agent's officers and employees
responsible for carrying out the Trustee's or the Trust Collateral Agent's
duties with respect to the Notes.
(i) Each of the Trustee and the Trust Collateral Agent shall,
and hereby agrees that it will, perform all of the obligations and duties
required of it under the Sale and Servicing Agreement.
(j) The Trustee shall, and hereby agrees that it will, hold
the Note Policy in trust, and will hold any proceeds of any claim on the Note
Policy in trust solely for the use and benefit of the Noteholders.
(k) Without limiting the generality of this Section 6.1, the
Trustee shall have no duty (i) to see to any recording, filing or depositing of
this Indenture or any agreement referred to herein or any financing statement
evidencing a security interest in the Financed Vehicles, or
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to see to the maintenance of any such recording or filing or depositing or to
any recording, refiling or redepositing of any thereof, (ii) to see to any
insurance of the Financed Vehicles or Obligors or to effect or maintain any such
insurance, (iii) to see to the payment or discharge of any tax, assessment or
other governmental charge or any Lien or encumbrance of any kind owing with
respect to, assessed or levied against any part of the Trust, (iv) to confirm or
verify the contents of any reports or certificates delivered to the Trustee
pursuant to this Indenture or the Sale and Servicing Agreement believed by the
Trustee to be genuine and to have been signed or presented by the proper party
or parties, or (v) to inspect the Financed Vehicles at any time or ascertain or
inquire as to the performance of observance of any of the Issuer's, the Seller's
or the Master Servicer's representations, warranties or covenants or the Master
Servicer's duties and obligations as Master Servicer and as custodian of the
Receivable Files under the Sale and Servicing Agreement.
(l) In no event shall Bankers Trust Company, in any of its
capacities hereunder, be deemed to have assumed any duties of the Owner Trustee
under the Delaware Business Trust Statute, common law, or the Trust Agreement.
SECTION 6.2 Rights of Trustee and the Trust Collateral Agent.
(a) The Trustee and the Trust Collateral Agent may rely on any document believed
by it to be genuine and to have been signed or presented by the proper person.
The Trustee and the Trust Collateral Agent need not investigate any fact or
matter stated in the document.
(b) Before the Trustee or the Trust Collateral Agent acts or
refrains from acting, it may require an Officer's Certificate or an Opinion of
Counsel. The Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on the Officer's Certificate or Opinion of
Counsel.
(c) The Trustee or the Trust Collateral Agent may execute any
of the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys or a custodian or nominee, and the
Trustee or the Trust Collateral Agent shall not be responsible for any
misconduct or negligence on the part of, or for the supervision of, Advanta Auto
Finance Corporation, or any other such agent, attorney, custodian or nominee
appointed with due care by it hereunder.
(d) The Trustee or the Trust Collateral Agent shall not be
liable for any action it takes or omits to take in good faith which it believes
to be authorized or within its rights or powers; provided, however, that the
Trustee's or the Trust Collateral Agent's conduct does not constitute wilful
misconduct, negligence or bad faith.
(e) The Trustee and the Trust Collateral Agent may consult
with counsel, and the advice or opinion of counsel with respect to legal matters
relating to this Indenture and the Notes shall be full and complete
authorization and protection from liability in respect to any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
(f) The Trustee and the Trust Collateral Agent shall be under
no obligation to institute, conduct or defend any litigation under this
Indenture or in relation to this Indenture, at the request, order or direction
of any of the Holders of Notes or the Controlling Party, pursuant to the
provisions of this Indenture, unless such Holders of Notes or the Controlling
Party shall
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have offered to the Trustee and the Trust Collateral Agent reasonable security
or indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby; provided, however, that the Trustee and the Trust Collateral
Agent shall, upon the occurrence of an Event of Default (that has not been
cured), exercise the rights and powers vested in it by this Indenture with
reasonable care and skill.
(g) The Trustee and the Trust Collateral Agent shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing to do so by the Insurer (so long as no Insurer Default
shall have occurred and be continuing) or (if an Insurer Default shall have
occurred and be continuing) by the Holders of Notes evidencing not less than 25%
of the Outstanding Amount thereof; provided, however, that if the payment within
a reasonable time to the Trustee and the Trust Collateral Agent of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee or the Trust Collateral Agent,
not reasonably assured to the Trustee or the Trust Collateral Agent by the
security afforded to it by the terms of this Indenture or the Sale and Servicing
Agreement, the Trustee or the Trust Collateral Agent may require indemnity
reasonably satisfactory to it against such cost, expense or liability as a
condition to so proceeding; the reasonable expense of every such examination
shall be paid by the Person making such request, or, if paid by the Trustee or
the Trust Collateral Agent, shall be reimbursed by the Person making such
request upon demand.
SECTION 6.3 Individual Rights of Trustee. The Trustee in
its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Trustee. Any Note Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4 Trustee's Disclaimer. Each of the Trustee and the
Trust Collateral Agent shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture, the Trust Property or the
Notes, it shall not be accountable for the Issuer's use of the proceeds from the
Notes, and it shall not be responsible for any statement of the Issuer in the
Indenture or in any document issued in connection with the sale of the Notes or
in the Notes other than the Trustee's certificate of authentication.
SECTION 6.5 Notice of Defaults. If an Event of Default occurs
and is continuing and if it is either known by, or written notice of the
existence thereof has been delivered to, a Responsible Officer of the Trustee,
the Trustee shall mail to each Noteholder notice of the Default within 90 days
after such knowledge or notice occurs. Except in the case of a Default in
payment of principal of or interest on any Note (including payments pursuant to
the mandatory redemption provisions of such Note), the Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Noteholders.
SECTION 6.6 Reports by Trustee to Holders. Upon written
request, the Note Paying Agent or the Master Servicer shall on behalf of the
Issuer deliver to each Noteholder such information as may be reasonably required
to enable such Holder to prepare its Federal and state income tax returns
required by law.
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SECTION 6.7 Compensation and Indemnity. (a) Pursuant to
Section 5.7(b) of the Sale and Servicing Agreement and subject to Section 6.18
herein, the Issuer shall, or shall cause the Master Servicer to, pay to the
Trustee and the Trust Collateral Agent from time to time compensation for its
services. The Trustee's and the Trust Collateral Agent's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Issuer shall or shall cause the Master Servicer to reimburse the Trustee and the
Trust Collateral Agent for all reasonable out-of-pocket expenses incurred or
made by it, including costs of collection, in addition to the compensation for
its services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Trustee's and the Trust Collateral
Agent's agents, counsel, accountants and experts. The Issuer shall or shall
cause the Master Servicer to indemnify the Trustee, the Trust Collateral Agent
and their respective officers, directors, employees and agents against any and
all loss, liability or expense (including attorneys' fees and expenses) incurred
by each of them in connection with the acceptance or the administration of this
trust and the performance of its duties hereunder. The Trustee or the Trust
Collateral Agent shall notify the Issuer and the Master Servicer promptly of any
claim for which it may seek indemnity. Failure by the Trustee or the Trust
Collateral Agent to so notify the Issuer and the Master Servicer shall not
relieve the Issuer of its obligations hereunder or the Master Servicer of its
obligations under Article XII of the Sale and Servicing Agreement. The Issuer
shall or shall cause the Master Servicer to defend the claim, the Trustee or the
Trust Collateral Agent may have separate counsel and the Issuer shall or shall
cause the Master Servicer to pay the fees and expenses of such counsel. Neither
the Issuer nor the Master Servicer need reimburse any expense or indemnify
against any loss, liability or expense incurred by the Trustee or the Trust
Collateral Agent through the Trustee's or the Trust Collateral Agent's own
wilful misconduct, negligence or bad faith.
(b) The Issuer's payment obligations to the Trustee pursuant
to this Section shall survive the discharge of this Indenture. When the Trustee
incurs expenses after the occurrence of a Default specified in Section 5.1(iv)
or (v) with respect to the Issuer, the expenses are intended to constitute
expenses of administration under Title 11 of the United States Code or any other
applicable Federal or state bankruptcy, insolvency or similar law.
Notwithstanding anything else set forth in this Indenture or the Basic
Documents, the Trustee agrees that the obligations of the Issuer (but not the
Master Servicer) to the Trustee hereunder and under the Basic Documents shall be
recourse to the Trust Property only and specifically shall not be recourse to
the assets of the Issuer or any Securityholder. In addition, the Trustee agrees
that its recourse to the Issuer, the Trust Property, the Seller and amounts held
pursuant of the Spread Account Agreement shall be limited to the right to
receive the distributions referred to in Section 5.7(b) of the Sale and
Servicing Agreement.
SECTION 6.8 Replacement of Trustee. The Trustee may resign at
any time by so notifying the Issuer and the Insurer. The Issuer may and, at the
request of the Insurer (unless an Insurer Default shall have occurred and be
continuing) shall, remove the Trustee, if:
(i) the Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect
of the Trustee in an involuntary case or proceeding under federal or
state banking or bankruptcy laws, as now or hereafter constituted, or
any other applicable federal or state bankruptcy, insolvency or other
similar law, shall have entered a decree or order granting relief or
appointing a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or similar
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official) for the Trustee or for any substantial part of the
Trustee's property, or ordering the winding-up or liquidation
of the Trustee's affairs;
(iii) an involuntary case under the federal bankruptcy laws,
as now or hereafter in effect, or another present or future federal or
state bankruptcy, insolvency or similar law is commenced with respect
to the Trustee and such case is not dismissed within 60 days;
(iv) the Trustee commences a voluntary case under any federal
or state banking or bankruptcy laws, as now or hereafter constituted,
or any other applicable federal or state bankruptcy, insolvency or
other similar law, or consents to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or other similar official) for the Trustee
or for any substantial part of the Trustee's property, or makes any
assignment for the benefit of creditors or fails generally to pay its
debts as such debts become due or takes any corporate action in
furtherance of any of the foregoing;
(v) the Trustee otherwise becomes incapable of
acting; or
(vi) the rating assigned to the long-term unsecured debt
obligations of the Trustee by the Rating Agencies shall be lowered
below the rating of "BBB", "Baa3" or equivalent rating or be withdrawn
by either of the Rating Agencies.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Issuer shall promptly appoint a
successor Trustee acceptable to the Insurer (so long as an Insurer Default shall
not have occurred and be continuing). If the Issuer fails to appoint such a
successor Trustee, the Insurer may appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the resignation
or removal of the retiring Trustee the Insurer (provided that no Insurer Default
shall have occurred and be continuing) shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the retiring Trustee
under this Indenture subject to satisfaction of the Rating Agency Condition. The
successor Trustee shall mail a notice of its succession to Noteholders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Issuer or the Holders of a majority in Outstanding Amount of the Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of
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appointment by the successor Trustee pursuant to Section 6.8 and payment of all
fees and expenses owed to the outgoing Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section, the
Issuer's and the Master Servicer's obligations under Section 6.7 shall continue
for the benefit of the retiring Trustee.
SECTION 6.9 Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Notes either
in the name of any predecessor hereunder or in the name of the successor to the
Trustee; and in all such cases such certificates shall have the full force which
it is anywhere in the Notes or in this Indenture provided that the certificate
of the Trustee shall have.
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Trust may at the time be located, the Trustee with the consent
of the Insurer (so long as an Insurer Default shall not have occurred and be
continuing) shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person or Persons, in such capacity and for the benefit of the Noteholders,
such title to the Trust, or any part hereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and trusts
as the Trustee may consider necessary or desirable. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 6.11 and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Trustee;
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(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder, including
acts or omissions of predecessor or successor trustees; and
(iii) the Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Indenture, specifically including every provision of this Indenture
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time
constitute the Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, dissolve, become insolvent, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall invest in and be exercised by the Trustee, to the extent permitted
by law, without the appointment of a new or successor trustee.
SECTION 6.11 Eligibility: Disqualification. The Trustee shall
at all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have
a combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition and it shall have a long term debt
rating of BBB- or better by the Rating Agencies. The Trustee shall provide
copies of such reports to the Insurer upon request. The Trustee shall comply
with TIA ss. 310(b), including the optional provision permitted by the second
sentence of TIA ss. 310(b)(9); provided, however, that there shall be excluded
from the operation of TIA ss. 310(b)(1) any indenture or indentures under which
other securities of the Issuer are outstanding if the requirements for such
exclusion set forth in TIA ss. 310(b)(1) are met.
SECTION 6.12 Preferential Collection of Claims Against Issuer.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
SECTION 6.13 Appointment and Powers. Subject to the terms and
conditions hereof, each of the Issuer Secured Parties hereby appoints Bankers
Trust Company as the Trust Collateral Agent with respect to the Collateral, and
Bankers Trust Company hereby accepts such appointment and agrees to act as Trust
Collateral Agent with respect to the Indenture Collateral for the Issuer Secured
Parties, to maintain custody and possession of such Indenture Collateral (except
as otherwise provided hereunder) and to perform the other duties of the Trust
Collateral Agent in accordance with the provisions of this Indenture and the
other Basic Documents. Each Issuer Secured Party hereby authorizes the Trust
Collateral Agent to take such action on its behalf, and to exercise such rights,
remedies, powers and privileges hereunder, as the Controlling Party
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may direct and as are specifically authorized to be exercised by the Trust
Collateral Agent by the terms hereof, together with such actions, rights,
remedies, powers and privileges as are reasonably incidental thereto. The Trust
Collateral Agent shall act upon and in compliance with the written instructions
of the Controlling Party delivered pursuant to this Indenture promptly following
receipt of such written instructions; provided that the Trust Collateral Agent
shall not act in accordance with any instructions (i) which are not authorized
by, or in violation of the provisions of, this Indenture or (ii) for which the
Trust Collateral Agent has not received reasonable indemnity. Receipt of such
instructions shall not be a condition to the exercise by the Trust Collateral
Agent of its express duties hereunder, except where this Indenture provides that
the Trust Collateral Agent is permitted to act only following and in accordance
with such instructions.
SECTION 6.14 Performance of Duties. The Trust Collateral
Agent shall have no duties or responsibilities except those expressly set forth
in this Indenture and the other Basic Documents to which the Trust Collateral
Agent is a party or as directed by the Controlling Party in accordance with this
Indenture. The Trust Collateral Agent shall not be required to take any
discretionary actions hereunder except at the written direction and with the
indemnification of the Controlling Party. The Trust Collateral Agent shall, and
hereby agrees that it will, perform all of the duties and obligations required
of it under the Sale and Servicing Agreement.
SECTION 6.15 Limitation on Liability. Neither the Trust
Collateral Agent nor any of its directors, officers, employees and agents shall
be liable for any action taken or omitted to be taken by it or them hereunder,
or in connection herewith, except that the Trust Collateral Agent shall be
liable for its negligence, bad faith or willful misconduct; nor shall the Trust
Collateral Agent be responsible for the validity, effectiveness, value,
sufficiency or enforceability against the Issuer of this Indenture or any of the
Indenture Collateral (or any part thereof). Notwithstanding any term or
provision of this Indenture, the Trust Collateral Agent shall incur no liability
to the Issuer or the Issuer Secured Parties for any action taken or omitted by
the Trust Collateral Agent in connection with the Indenture Collateral, except
for the negligence, bad faith or willful misconduct on the part of the Trust
Collateral Agent, and, further, shall incur no liability to the Issuer Secured
Parties except for negligence, bad faith or willful misconduct in carrying out
its duties to the Issuer Secured Parties. Subject to Section 6.16, the Trust
Collateral Agent shall be protected and shall incur no liability to any such
party in conclusively relying upon the accuracy, acting in reliance upon the
contents, and assuming the genuineness of any notice, demand, certificate,
signature, instrument or other document reasonably believed by the Trust
Collateral Agent to be genuine and to have been duly executed by the appropriate
signatory, and (absent actual knowledge to the contrary) the Trust Collateral
Agent shall not be required to make any independent investigation with respect
thereto. The Trust Collateral Agent shall at all times be free independently to
establish to its reasonable satisfaction, but shall have no duty to
independently verify, the existence or nonexistence of facts that are a
condition to the exercise or enforcement of any right or remedy hereunder or
under any of the Basic Documents. The Trust Collateral Agent may consult with
counsel, and shall not be liable for any action taken or omitted to be taken by
it hereunder in good faith and in accordance with the advice of such counsel.
The Trust Collateral Agent shall not be under any obligation to exercise any of
the remedial rights or powers vested in it by this Indenture or to follow any
direction from the Controlling Party unless it shall have received security or
indemnity satisfactory to the Trust Collateral Agent against the costs, expenses
and liabilities which might be incurred by it.
SECTION 6.16 Reliance Upon Documents. In the absence of
negligence, bad faith or willful misconduct on its part, the Trust Collateral
Agent shall be entitled to rely on any
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communication, instrument, paper or other document reasonably believed by it to
be genuine and correct and to have been signed or sent by the proper Person or
Persons and shall have no liability in acting, or omitting to act, where such
action or omission to act is in reasonable reliance upon any statement or
opinion contained in any such document or instrument.
SECTION 6.17 Successor Trust Collateral Agent.
(a) Merger. Any Person into which the Trust Collateral Agent
may be converted or merged, or with which it may be consolidated, or to which it
may sell or transfer its trust business and assets as a whole or substantially
as a whole, or any Person resulting from any such conversion, merger,
consolidation, sale or transfer to which the Trust Collateral Agent is a party,
shall (provided it is otherwise qualified to serve as the Trust Collateral Agent
hereunder) be and become a successor Trust Collateral Agent hereunder and be
vested with all of the title to and interest in the Indenture Collateral and all
of the trusts, powers, discretions, immunities, privileges and other matters as
was its predecessor without the execution or filing of any instrument or any
further act, deed or conveyance on the part of any of the parties hereto,
anything herein to the contrary notwithstanding, except to the extent, if any,
that any such action is necessary to perfect, or continue the perfection of, the
security interest of the Issuer Secured Parties in the Indenture Collateral;
provided that any such successor shall also be the successor Trustee under
Section 6.9.
(b) Resignation. The Trust Collateral Agent and any successor
Trust Collateral Agent may resign at any time by so notifying the Issuer and the
Insurer; provided that the Trust Collateral Agent shall not so resign unless it
shall also resign as Trustee hereunder.
(c) Removal. Absent a Financial Security Default (as defined
in the Master Spread Account Agreement), the Trust Collateral Agent may be
removed by the Controlling Party at any time (and should be removed at any time
that the Trustee has been removed), with or without cause, by an instrument or
concurrent instruments in writing delivered to the Trust Collateral Agent, the
other Issuer Secured Party and the Issuer. A temporary successor may be removed
at any time to allow a successor Trust Collateral Agent to be appointed pursuant
to subsection (d) below. Any removal pursuant to the provisions of this
subsection (c) shall take effect only upon the date which is the latest of (i)
the effective date of the appointment of a successor Trust Collateral Agent and
the acceptance in writing by such successor Trust Collateral Agent of such
appointment and of its obligation to perform its duties hereunder in accordance
with the provisions hereof, and (ii) receipt by the Controlling Party of an
Opinion of Counsel to the effect described in Section 3.6.
(d) Acceptance by Successor. The Controlling Party shall have
the sole right to appoint each successor Trust Collateral Agent. Every temporary
or permanent successor Trust Collateral Agent appointed hereunder shall execute,
acknowledge and deliver to its predecessor and to the Trustee, each Issuer
Secured Party and the Issuer an instrument in writing accepting such appointment
hereunder and the relevant predecessor shall execute, acknowledge and deliver
such other documents and instruments as will effectuate the delivery of all
Indenture Collateral to the successor Trust Collateral Agent, whereupon such
successor, without any further act, deed or conveyance, shall become fully
vested with all the estates, properties, rights, powers, duties and obligations
of its predecessor. Such predecessor shall, nevertheless, on the written request
of either Issuer Secured Party or the Issuer, execute and deliver an instrument
transferring to such successor all the estates, properties, rights and powers of
such predecessor hereunder. In the event that any instrument in writing from the
Issuer or an Issuer Secured Party is reasonably required
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by a successor Trust Collateral Agent to more fully and certainly vest in such
successor the estates, properties, rights, powers, duties and obligations vested
or intended to be vested hereunder in the Trust Collateral Agent, any and all
such written instruments shall, at the request of the temporary or permanent
successor Trust Collateral Agent, be forthwith executed, acknowledged and
delivered by the Trustee or the Issuer, as the case may be. The designation of
any successor Trust Collateral Agent and the instrument or instruments removing
any Trust Collateral Agent and appointing a successor hereunder, together with
all other instruments provided for herein, shall be maintained with the records
relating to the Indenture Collateral and, to the extent required by applicable
law, filed or recorded by the successor Trust Collateral Agent in each place
where such filing or recording is necessary to effect the transfer of the
Indenture Collateral to the successor Trust Collateral Agent or to protect or
continue the perfection of the security interests granted hereunder.
SECTION 6.18 Compensation. The Trust Collateral Agent shall
not be entitled to any compensation for the performance of its duties hereunder
other than the compensation it is entitled to receive in its capacity as
Trustee. Upon termination of the Trustee, the Trust Collateral Agent's duties
hereunder shall also terminate.
SECTION 6.19 Representations and Warranties of the Trustee and
the Trust Collateral Agent. Each of the Trust Collateral Agent and the Trustee
represents and warrants to the Issuer and to each Issuer Secured Party
as follows:
(a) Due Organization. The Trustee and the Trust Collateral
Agent is a New York banking corporation, duly organized, validly existing and in
good standing under the laws of New York and is duly authorized and licensed
under applicable law to conduct its business as presently conducted.
(b) Corporate Power. The Trustee and the Trust Collateral
Agent has all requisite right, power and authority to execute and deliver this
Indenture and to perform all of its duties as the Trustee or Trust Collateral
Agent, as the case may be, hereunder.
(c) Due Authorization. The execution and delivery by the Trust
Collateral Agent and the Trustee of this Indenture and the other Transaction
Documents to which it is a party, and the performance by the Trust Collateral
Agent and the Trustee of its duties hereunder and thereunder, have been duly
authorized by all necessary corporate proceedings, are required for the valid
execution and delivery by the Trust Collateral Agent or the Trustee, or the
performance by the Trust Collateral Agent or the Trustee, of this Indenture and
such other Basic Documents.
(d) Valid and Binding Indenture. Each of the Trustee and the
Trust Collateral Agent has duly executed and delivered this Indenture and each
other Basic Document to which it is a party, and each of this Indenture and each
such other Basic Document constitutes the legal, valid and binding obligation of
the Trustee and the Trust Collateral Agent, enforceable against the Trustee and
the Trust Collateral Agent in accordance with its terms, except as (i) such
enforceability may be limited by bankruptcy, insolvency, reorganization and
similar laws relating to or affecting the enforcement of creditors' rights
generally and (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability.
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SECTION 6.20 Waiver of Setoffs. The Trustee and the
Trust Collateral Agent hereby expressly waives any and all rights of setoff that
the Trustee or the Trust Collateral Agent may otherwise at any time have under
applicable law with respect to any Trust Account and agrees that amounts in the
Trust Accounts shall at all times be held and applied solely in accordance with
the provisions hereof.
SECTION 6.21 Control by the Controlling Party. The Trustee and
the Trust Collateral Agent shall comply with notices and instructions given by
the Issuer only if accompanied by the written consent of the Controlling Party,
except that if any Event of Default shall have occurred and be continuing, the
Trustee and the Trust Collateral Agent shall act upon and comply with notices
and instructions given by the Controlling Party alone in the place and stead of
the Issuer.
SECTION 6.22 Compensation. The Trust Collateral Agent shall
not be entitled to any compensation for the performance of its duties hereunder
other than the compensation it is entitled to receive in its capacity as
Trustee. Upon termination of the Trustee, the Trust Collateral Agent's duties
hereunder shall also terminate.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 Issuer To Furnish To Trustee Names and Addresses
of Noteholders. The Issuer will furnish or cause to be furnished to the Trustee
(a) not more than five days after the earlier of (i) each Record Date and (ii)
three months after the last Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders as of such Record
Date, (b) at such other times as the Trustee may request in writing, within 30
days after receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that so long as the Trustee is the Note Registrar,
no such list shall be required to be furnished. The Trustee or, if the Trustee
is not the Note Registrar, the Issuer shall furnish to the Insurer in writing
[upon their written request] and at such other times as the Insurer may request
a copy of the list.
SECTION 7.2 Preservation of Information; Communications to
Noteholders. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders contained in the
most recent list furnished to the Trustee as provided in Section 7.1 and the
names and addresses of Holders received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided in such
Section 7.1 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Notes.
(c) The Issuer, the Trustee and the Note Registrar shall have
the protection of TIA ss. 312(c).
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SECTION 7.3 Reports by Issuer. (a) The Issuer shall:
(i) file with the Trustee, within 15 days after the Issuer
is required to file the same with the Commission, copies of the annual
reports and copies of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) which the Issuer
may be required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act;
(ii) file with the Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Trustee (and the Trustee shall transmit by
mail to all Noteholders described in TIA ss. 313(c)) such summaries of
any information, documents and reports required to be filed by the
Issuer pursuant to clauses (i) and (ii) of this Section 7.3(a) as may
be required by rules and regulations prescribed from time to time by
the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of
the Issuer shall end on December 31 of each year.
SECTION 7.4 Reports by Trustee. If required by TIA ss. 313(a),
within 60 days after each August 31, beginning with August 31, 1997, the Trustee
shall mail to each Noteholder as required by TIA ss. 313(c) a brief report dated
as of such date that complies with TIA ss. 313(a). The Trustee also shall comply
with TIA ss. 313(b).
A copy of each report at the time of its mailing to
Noteholders shall be filed by the Trustee with the Commission and each stock
exchange, if any, on which the Notes are listed. The Issuer shall notify the
Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1 Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Trust Collateral Agent pursuant to this Indenture and the Sale
and Servicing Agreement. The Trustee shall apply all such money received by it,
or cause the Trust Collateral Agent to apply all money received by it as
provided in this Indenture and the Sale and Servicing Agreement. Except as
otherwise expressly provided in this Indenture or in the Sale and Servicing
Agreement, if any default occurs in the making of any payment or performance
under any agreement or instrument that is part of the Trust Property, the
Trustee may take such action as may be appropriate to enforce such payment or
performance, including the institution and prosecution of appropriate
proceedings. Any such action shall be without prejudice
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to any right to claim a Default or Event of Default under this Indenture and any
right to proceed thereafter as provided in Article V.
SECTION 8.2 Release of Trust Property. (a) Subject to the
payment of its fees and expenses pursuant to Section 6.7, the Trust Collateral
Agent may, and when required by the Issuer and the provisions of this Indenture
shall, execute instruments to release property from the lien of this Indenture,
in a manner and under circumstances that are not inconsistent with the
provisions of this Indenture. No party relying upon an instrument executed by
the Trust Collateral Agent as provided in this Article VIII shall be bound to
ascertain the Trust Collateral Agent's authority, inquire into the satisfaction
of any conditions precedent or see to the application of any monies.
(b) The Trust Collateral Agent shall, at such time as there
are no Notes outstanding and all sums due the Trustee pursuant to Section 6.7
have been paid, release any remaining portion of the Trust Property that secured
the Notes from the lien of this Indenture and release to the Issuer or any other
Person entitled thereto any funds then on deposit in the Trust Accounts. The
Trustee shall release property from the lien of this Indenture pursuant to this
Section 8.2(b) only upon receipt of an Issuer Request accompanied by an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA)
Independent Certificates in accordance with TIA ss.ss. 314(c) and 314(d)(1)
meeting the applicable requirements of Section 11.1.
SECTION 8.3 Opinion of Counsel. The Trust Collateral Agent
shall receive at least seven days' notice when requested by the Issuer to take
any action pursuant to Section 8.2(a), accompanied by copies of any instruments
involved, and the Trustee shall also require as a condition to such action, an
Opinion of Counsel, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with and such action
will not materially and adversely impair the security for the Notes or the
rights of the Noteholders in contravention of the provisions of this Indenture;
provided, however, that such Opinion of Counsel shall not be required to express
an opinion as to the fair value of the Trust Property. Counsel rendering any
such opinion may rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the Trustee in
connection with any such action.
[co]
ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures Without Consent of
Noteholders. (a) Without the consent of the Holders of any Notes but with the
consent of the Insurer (unless an Insurer Default shall have occurred and be
continuing), as evidenced to the Trustee, the Issuer and the Trustee, when
authorized by an Issuer Order, at any time and from time to time, may enter into
one or more indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of the execution
thereof), in form satisfactory to the Trustee, for any of the following
purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Trust Collateral
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Agent any property subject or required to be subjected to the lien of
this Indenture, or to subject to the lien of this Indenture additional
property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the
benefit of the Holders of the Notes, or to surrender any right or
power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or
pledge any property to or with the Trust Collateral
Agent;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; provided that such action shall not adversely affect the
interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
The Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the Notes but with
prior notice to the Rating Agencies by the Issuer, as evidenced to the Trustee,
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Noteholder.
SECTION 9.2 Supplemental Indentures with Consent of
Noteholders. The Issuer and the Trustee, when authorized by an Issuer Order,
also may, with prior notice to the Rating Agencies, with the consent of the
Insurer (unless an Insurer Default shall have occurred and be continuing) and
with the consent of the Holders of not less than a majority of the outstanding
Amount of the Notes, by Act of such Holders delivered to the Issuer and the
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of
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modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that, subject to the express rights of the Insurer
under the Basic Documents, no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of
principal of or interest on any Note, or reduce
the principal amount thereof, the interest rate
thereon or the Redemption Price with respect
thereto, change the provision of this Indenture
relating to the application of collections on, or
the proceeds of the sale of, the Trust Property
to payment of principal of or interest on the
Notes, or change any place of payment where, or
the coin or currency in which, any Note or the
interest thereon is payable;
(ii) impair the right to institute suit for the
enforcement of the provisions of this Indenture
requiring the application of funds available
therefor, as provided in Article V, to the
payment of any such amount due on the Notes on or
after the respective due dates thereof (or, in
the case of redemption, on or after the
Redemption Date);
(iii) reduce the percentage of the Outstanding Amount
of the Notes, the consent of the Holders of which
is required for any such supplemental indenture,
or the consent of the Holders of which is
required for any waiver of compliance with
certain provisions of this Indenture or certain
defaults hereunder and their consequences
provided for in this Indenture;
(iv) modify or alter the provisions of the proviso to
the definition of the term "Outstanding";
(v) reduce the percentage of the Outstanding Amount of
the Notes required to direct the Trustee to direct
the Issuer to sell or liquidate the Trust Property
pursuant to Section 5.4;
(vi) modify any provision of this Section except to
increase any percentage specified herein or to
provide that certain additional provisions of this
Indenture or the Basic Documents cannot be
modified or waived without the consent of the
Holder of each Outstanding Note affected thereby;
(vii) modify any of the provisions of this Indenture in
such manner as to affect the calculation of the
amount of any payment of interest or principal
due on any Note on any Distribution Date
(including the calculation of any of the
individual components of such calculation) or to
affect the rights of the Holders of Notes to the
benefit of any provisions for the mandatory
redemption of the Notes contained herein; or
(viii) permit the creation of any lien ranking prior to
or on a parity with the lien of this Indenture
with respect to any part of the Trust Property
or, except as otherwise permitted or contemplated
herein or in any of the Basic Documents,
terminate the lien of this Indenture on any
property at any time subject hereto or deprive
the Holder of any Note of the security provided by
the lien of this Indenture.
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The Trustee may determine whether or not any Notes would be
adversely affected by any supplemental indenture upon receipt of an Opinion of
Counsel to that effect and any such determination shall be conclusive upon the
Holders of all Notes, whether theretofore or thereafter authenticated and
delivered hereunder. The Trustee shall not be liable for any such determination
made in good faith.
It shall not be necessary for any Act of Noteholders under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Issuer and the Trustee of
any supplemental indenture pursuant to this Section, the Trustee shall mail to
the Holders of the Notes to which such amendment or supplemental indenture
relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
SECTION 9.3 Execution of Supplemental Indentures. In
executing, or permitting the additional trusts created by, any supplemental
indenture permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, the Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2, shall be fully protected in relying upon, an
Opinion of Counsel (and, if requested, an Officer's Certificate) stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.
SECTION 9.4 Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Trustee, the Issuer and the Holders of the Notes shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 9.5 Conformity With Trust Indenture Act. Every
amendment of this Indenture and every supplemental indenture executed pursuant
to this Article IX shall conform to the requirements of the Trust Indenture Act
as then in effect so long as this Indenture shall then be qualified under the
Trust Indenture Act.
SECTION 9.6 Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and if required by the Trustee shall,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Issuer or the Trustee shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and the
Issuer, to any such supplemental indenture may be prepared and executed by the
Issuer and authenticated and delivered by the Trustee in exchange for
Outstanding Notes.
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ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption. (a) The Notes are subject to
redemption in whole, but not in part, at the direction of the Seller pursuant to
Section 11.1(a) of the Sale and Servicing Agreement, on any Distribution Date on
which the Master Servicer or Seller exercises its option to purchase the Trust
Property pursuant to said Section 11.1(a), for a purchase price equal to the
Redemption Price. The Master Servicer or the Issuer shall furnish the Insurer
notice of such redemption. If the Notes are to be redeemed pursuant to this
Section 10.1(a), the Master Servicer or the Issuer shall furnish notice of such
election to the Trustee not later than 35 days prior to the Redemption Date and
the Issuer shall deposit with the Trustee in the Note Distribution Account the
Redemption Price of the Notes within Five Business Days Prior to the Redemption
Date whereupon all such Notes shall be due and payable on the Redemption Date
upon the furnishing of a notice complying with Section 10.2.
(b) In the event that on the Distribution Date on which the
Pre-Funding Period ends (or on the Distribution Date on or immediately following
the last day of the Pre-Funding Period, if the Pre-Funding Period does not end
on a Distribution Date), the Pre-Funded Amount after giving effect to the
purchase of all Subsequent Receivables, including any such purchase on such
Redemption Date, the Notes will be redeemed in part and paid sequentially to the
Class A-1 Notes and the Class A-2 Notes in an aggregate principal amount equal
to the Class A-1 Prepayment Amount and the Class A-2 Prepayment Amount.
(c) In the event that the assets of the Trust are sold
pursuant to Section 9.2 of the Trust Agreement, all amounts on deposit in the
Note Distribution Account shall be paid to the Noteholders up to the Outstanding
Amount of the Notes and all accrued and unpaid interest thereon. If amounts are
to be paid to Noteholders pursuant to this Section 10.1(c), the Master Servicer
or the Issuer shall, to the extent practicable, furnish written notice of such
event to the Trustee not later than 45 days prior to the Redemption Date
whereupon all such amounts shall be payable on the Redemption Date.
SECTION 10.2 Form of Redemption Notice. (a) Notice of
redemption supplied to the Trustee by the Master Servicer under Section 10.1(a)
shall be given by the Trustee by facsimile or by first-class mail, postage
prepaid, transmitted or mailed prior to the applicable Redemption Date to each
Holder of Notes or record, as of the close of business on the date which is 5
days prior to the applicable Redemption Date, at such Holder's address appearing
in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such
Redemption Date is not applicable and that payments shall be made only
upon presentation and surrender of such Notes and the place where such
Notes are to be surrendered for payment of the
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Redemption Price (which shall be the office or agency of the Issuer to be
maintained as provided in Section 3.2); and
(iv) that interest on the Notes shall cease to
accrue on the Redemption Date.
Notice of redemption of the Notes shall be given by the
Trustee in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair or
affect the validity of the redemption of any other Note.
(b) Prior notice of redemption under Section
10.1(b) is not required to be given to Noteholders.
SECTION 10.3 Notes Payable on Redemption Date. The Notes to
be redeemed shall, following notice of
redemption as required by Section 10.2 (in the case of redemption pursuant to
Section 10.1(a) or (c)), on the Redemption Date become due and payable at the
Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemption Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Redemption Price.
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and Opinions, etc. (a)
Upon any application or request by the Issuer to the Trustee or the Trust
Collateral Agent to take any action under any provision of this Indenture, the
Issuer shall furnish to the Trustee or the Trust Collateral Agent, as the case
may be, and to the Insurer if the application or request is made to the Trust
Collateral Agent (i) an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with, (ii) an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express
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an informed opinion as to whether or not such covenant or condition has been
complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other
property or securities with the Trust Collateral Agent that is to be made the
basis for the release of any property or securities subject to the lien of this
Indenture, the Issuer shall, in addition to any obligation imposed in Section
11.1(a) or elsewhere in this Indenture, furnish to the Trust Collateral Agent
and the Insurer an Officer's Certificate certifying or stating the opinion of
each person signing such certificate as to the fair value (within 90 days of
such deposit) to the Issuer of the Collateral or other property or securities to
be so deposited. Such certificate or opinion of fair value shall satisfy the
requirements of Section 314 of the TIA, as amended.
(ii) Whenever the Issuer is required to furnish to the Trust
Collateral Agent and the Insurer an Officer's Certificate certifying or
stating the opinion of any signer thereof as to the matters described
in clause (i) above, the Issuer shall also deliver to the Trust
Collateral Agent and the Insurer an Independent Certificate as to the
same matters, if the fair value to the Issuer of the securities to be
so deposited and of all other such securities made the basis of any
such withdrawal or release since the commencement of the then-current
fiscal year of the Issuer, as set forth in the certificates delivered
pursuant to clause (i) above and this clause (ii), is 10% or more of
the Outstanding Amount of the Notes; provided, that such a certificate
need not be furnished with respect to any securities so deposited, if
the fair value thereof to the Issuer as set forth in the related
Officer's Certificate is less than $25,000 or less than 1% percent of
the Outstanding Amount of the Notes.
(iii) Other than with respect to the release of any Purchased
Receivables or Liquidated Receivables, whenever any property or
securities are to be released from the lien of this Indenture, the
Issuer shall also furnish to the Trust Collateral Agent and the Insurer
an Officer's Certificate certifying or stating the opinion of each
person signing such certificate as to the fair value (within 90 days of
such release) of the property or securities proposed to be released and
stating that in the opinion of such person the proposed release will
not impair the security under this Indenture in contravention of the
provisions hereof.
(iv) Whenever the Issuer is required to furnish to the
Trustee and the Insurer an Officer's Certificate certifying or
stating the opinion of any signer thereof as to the matters described
in clause (iii) above, the Issuer shall also furnish to the Trust
Collateral Agent and the Insurer an Independent Certificate as to the
same matters if the fair value of the property or securities and of all
other property other than Purchased Receivables and Defaulted
Receivables, or securities released from the lien of this Indenture
since the commencement of the then current calendar year, as set forth
in the certificates required by clause (iii) above and this clause
(iv), equals 10% or more of the Outstanding Amount of the Notes;
provided, that such certificate need not be furnished in the case of
any release of property or securities if the fair value thereof as set
forth in the related Officer's Certificate is less than $25,000 or less
than 1 percent of the then Outstanding Amount of the Notes.
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(v) Notwithstanding Section 2.9 or any other provision of
this Section, the Issuer may (A) collect, liquidate, sell or otherwise
dispose of Receivables as and to the extent permitted or required by
the Basic Documents and (B) make cash payments out of the Trust
Accounts as and to the extent permitted or required by the Basic
Documents.
SECTION 11.2 Form of Documents Delivered to Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the
Issuer may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Master Servicer, the Seller or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Master Servicer, the
Seller or the Issuer, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Whenever in this Indenture, in connection with any application
or certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Trustee's right to conclusively rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
SECTION 11.3 Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Trustee, and, where it is hereby
expressly required, to the Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Noteholders signing such instrument or instruments. Proof of
execution of any such
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instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.1) conclusive in favor of
the Trustee and the Issuer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any
such instrument or writing may be proved in any customary manner of the Trustee.
(c) The ownership of Notes shall be proved by the
Note Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Notes shall bind the Holder
of every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 11.4 Notices, etc. to Trustee, Issuer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
to be made upon, given or furnished to or filed with:
(a) The Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if personally delivered, delivered by
overnight courier or mailed first-class and shall be deemed to have been duly
given upon receipt to the Trustee at its Corporate Trust Office, or
(b) The Issuer by the Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if personally delivered, delivered by
facsimile or overnight courier or mailed first class, and shall deemed to have
been duly given upon receipt to the Issuer addressed to: Advanta Automobile
Receivables Trust 1997-1, in care of Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, DE 19890-0001 Attention: Corporate
Trust Administration, or at any other address previously furnished in writing to
the Trustee by Issuer. The Issuer shall promptly transmit any notice received by
it from the Noteholders to the Trustee.
(c) The Insurer by the Issuer or the Trustee shall be
sufficient for any purpose hereunder if in writing and mailed by first-class
mail personally delivered or telexed or telecopied to the recipient as follows:
To the Insurer: Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Surveillance Department
Telex No.: (212) 688-3101
Confirmation: (212)826-0100
Telecopy Nos.: (212)339-3518 or
(212) 339-3529
(In each case in which notice or other communication to the Insurer refers to an
Event of Default, a claim on the Note Policy or with respect to which failure on
the part of the Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other
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communication should also be sent to the attention of the General Counsel and
the Head--Financial Guaranty Group "URGENT MATERIAL ENCLOSED.")
Notices required to be given to the Rating Agencies by the
Issuer, the Trustee or the Owner Trustee shall be in writing, personally
delivered, delivered by overnight courier or first class or via facsimile to (i)
in the case of Moody's, at the following address: Moody's Investors Service,
Inc., 99 Church Street, New York, New York 10004, Fax No: (212) 533-0355 and
(ii) in the case of S&P, at the following address: Standard & Poor's Ratings
Group, 26 Broadway (15th Floor), New York, New York 10004, Attention: Asset
Backed Surveillance Department, Fax No: (212) 412-0224; or as to each of the
foregoing, at such other address as shall be designated by written notice to the
other parties.
SECTION 11.5 Notices to Noteholders; Waiver. Where this
Indenture provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Trustee
but such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Trustee shall be
deemed to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating
Agencies, failure to give such notice shall not affect any other rights or
obligations created hereunder, and shall not under any circumstance constitute a
Default or Event of Default.
SECTION 11.6 Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Trustee or any Note Paying
Agent to such Holder, that is different from the methods provided for in this
Indenture for such payments or notices, provided that such methods are
reasonable and consented to by the Trustee (which consent shall not be
unreasonably withheld). The Issuer will furnish to the Trustee a copy of each
such agreement and the Trustee will cause payments to be made and notices to be
given in accordance with such agreements.
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SECTION 11.7 Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another provision hereof
that is required to be included in this indenture by any of the provisions of
the Trust Indenture Act, such required provision shall control.
The provisions of TIA ss.ss. 310 through 317 that impose
duties on any person (including the provisions automatically deemed included
herein unless expressly excluded by this Indenture) are a part of and govern
this Indenture, whether or not physically contained herein.
SECTION 11.8 Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 11.9 Successors and Assigns. All covenants and
agreements in this Indenture and the Notes by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of the
Trustee in this Indenture shall bind its successors. All agreements of the Trust
Collateral Agent in this Indenture shall bind its successors.
SECTION 11.10 Separability. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 11.11 Benefits of Indenture. The Insurer and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Indenture, and shall be entitled to rely upon and directly to enforce such
provisions of this Indenture so long as no Insurer Default shall have occurred
and be continuing. Nothing in this Indenture or in the Notes, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, and the Noteholders, and any other party secured
hereunder, and any other person with an Ownership interest in any part of the
Trust Property, any benefit or any legal or equitable right, remedy or claim
under this Indenture. The Insurer may disclaim any of its rights and powers
under this Indenture (in which case the Indenture Trustee may exercise such
right or power hereunder), but not its duties and obligations under the Note
Policy, upon delivery of a written notice to the Trustee.
SECTION 11.12 Legal Holidays. In any case where the date on
which any payment is due shall not be a Business Day, then (notwithstanding any
other provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date an which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14 Counterparts. This Indenture may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
63
<PAGE>
SECTION 11.15 Recording of Indenture. If this Indenture is
subject to recording in any appropriate public recording offices, such recording
is to be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Trust or any other counsel reasonably
acceptable to the Trustee and the Insurer) to the effect that such recording is
necessary either for the protection of the Noteholders or any other person
secured hereunder or for the enforcement of any right or remedy granted to the
Trustee or the Trust Collateral Agent under this Indenture or the Collateral
Agent under the Spread Account Agreement.
SECTION 11.16 Trust Obligation. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the
Seller, the Master Servicer, the Owner Trustee, the Trust Collateral Agent or
the Trustee on the Notes or under this Indenture or any certificate or other
writing delivered in connection herewith or therewith, against (i) the Seller,
the Master Servicer, the Trust Collateral Agent, the Trustee or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director,
employee or agent of the Seller, the Master Servicer, the Trust Collateral
Agent, the Trustee or the Owner Trustee in its individual capacity, any holder
of a beneficial interest in the Issuer, the Seller, the Trust Collateral Agent,
the Master Servicer, the Owner Trustee or the Trustee or of any successor or
assign of the Seller, the Master Servicer, the Trust Collateral Agent, the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed (it being understood that the Trustee, the
Trust Collateral Agent and the Owner Trustee have no such obligations in their
individual capacity) and except that any such owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity. For all purposes of this Indenture, in
the performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Articles VI, VII and VIII of the Trust Agreement.
SECTION 11.17 No Petition. The Trustee and the Trust
Collateral Agent, by entering into this Indenture, and each Noteholder, by
accepting a Note, hereby covenant and agree that they will not at any time
institute against the Seller, or the Issuer, or join in any institution against
the Seller, or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, this Indenture or any of the Basic Documents.
SECTION 11.18 Inspection. The Issuer agrees that, on
reasonable prior notice, it will permit any representative of the Trustee or of
the Insurer, during the Issuer's normal business hours, to examine all the books
of account, records, reports, and other papers of the Issuer, to make copies and
extracts therefrom, to cause such books to be audited by independent certified
public accountants, and to discuss the Issuer's affairs, finances and accounts
with the Issuer's officers, employees, and independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Trustee shall and shall cause its representatives to hold in
confidence all such information except to the extent disclosure may be required
by law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Trustee may reasonably determine
that such disclosure is consistent with its Obligations hereunder.
64
<PAGE>
SECTION 11.19 Limitation of Liability. It is expressly
understood and agreed by the parties hereto that (a) this Agreement is executed
and delivered by Wilmington Trust Company, not individually or personally but
solely as Owner Trustee of the Issuer under the Trust Agreement, in the exercise
of the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Issuer is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Issuer, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties to this Agreement and
by any person claiming by, through or under them and (d) under no circumstances
shall Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaking by the
Issuer under this Agreement or any related documents.
65
<PAGE>
IN WITNESS WHEREOF, the Issuer, the Trustee and the Trust
Collateral Agent have caused this Indenture to be duly executed by their
respective officers, hereunto duly authorized, all as of the day and year first
above written.
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-1,
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee,
By: _______________________________
Name:
Title:
BANKERS TRUST COMPANY, not in its individual
capacity but solely as Trustee and Trust
Collateral Agent,
By: _______________________________
Name:
Title:
<PAGE>
[Form of Note] EXHIBIT A-1
REGISTERED $ 55,575,000
No. A-1-1
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. ________
Unless this Note is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
or its agent for registration of transfer, exchange or payment, and any Note
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-1
CLASS A-1 FLOATING RATE ASSET BACKED NOTES
Advanta Automobile Receivables Trust 1997-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO.,
or registered assigns, the principal sum of FIFTY-FIVE MILLION FIVE HUNDRED AND
SEVENTY-FIVE THOUSAND DOLLARS ($ 55,575,000), such amount payable on each
Distribution Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $ 55,575,000 and the denominator of which is
$ 85,500,000 by (ii) the aggregate amount, if any, payable from the Note
Distribution Account in respect of principal on the Class A-1 Notes pursuant to
Section 3.1 of the Indenture; provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the December, 2001,
Distribution Date (the "Final Scheduled Distribution Date"). The Issuer will pay
interest on this Note at the rate per annum shown above on each Distribution
Date until the principal of this Note is paid or made available for payment, on
the principal amount of this Note outstanding on the preceding Distribution Date
(after giving effect to all payments of principal made on the preceding
Distribution Date). Interest on this Note will accrue for each Distribution Date
from the most recent Distribution Date on which interest has been paid to but
excluding such Distribution Date or, if no interest has yet been paid, from
March 31, 1997. Interest will be computed on the basis of the actual number of
days elapsed in a 360-day year. Such principal of and interest on this Note
shall be paid in the manner specified on the reverse hereof.
A-1-1
<PAGE>
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
The Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Note Policy") issued by Financial Security Assurance Inc.
(the "Insurer"), pursuant to which the Insurer has unconditionally guaranteed
payments of the Noteholders' Interest Distributable Amount and the Noteholders'
Principal Distributable Amount on each Distribution Date, all as more fully set
forth in the Indenture.
For purposes of federal income, state and local income and
franchise and any other income taxes, the Issuer will treat the Notes as
indebtedness of the Issuer and hereby instructs the Trustee to treat the Notes
as indebtedness of the Issuer for federal state tax reporting purposes.
Each Noteholder or Note Owner, by acceptance of this Note or,
in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Trustee on the Notes or
under the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Seller, the Master Servicer, the Trustee, the Trust
Collateral Agent or the Owner Trustee in its individual capacity, (ii) any owner
of a beneficial interest in the Issuer or (iii) any owner, beneficiary, agent,
officer, director or employee of the Seller, the Master Servicer, the Trustee,
the Trust Collateral Agent or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Seller, the Master Servicer,
the Owner Trustee or the Trustee or of any successor or assign of the Seller,
the Master Servicer, the Trustee, the Trust Collateral Agent or the Owner
Trustee in its individual capacity, except as any such Person may have expressly
agreed (it being understood that the Trustee, the Trust Collateral Agent and the
Owner Trustee have no such obligations in their individual capacity) and except
that any such owner or beneficiary shall be fully liable, to the extent provided
by applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
Unless the certificate of authentication hereon has been
executed by the Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
A-1-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be signed, manually or in facsimile, by its Authorized Officer.
Date: March 31, 1997 ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-1
By WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee under the Trust Agreement
By ______________________________
Name:
Title:
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: March 31, 1997 BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Trustee,
by ___________________________
Authorized Signatory
<PAGE>
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Class A-1 Floating Rate Asset Backed Notes (herein
called the "Class A-1 Notes"), all issued under an Indenture dated as of March
1, 1997 (such indenture, as supplemented or amended, is herein called the
"Indenture"), between the Issuer and Bankers Trust Company, as trustee (the
"Trustee", which term includes any successor Trustee under the Indenture, and
the "Trust Collateral Agent", which term includes any successor Trust Collateral
Agent under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a state- ment of the respective rights and
obligations thereunder of the Issuer, the Trustee, the Trust Collateral Agent
and the Holders of the Notes. The Notes are subject to all terms of the
Indenture. All terms used in this Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Class A-1 Notes and the Class A-2 Notes (together, the
"Notes") are and will be equally and ratably secured by the collateral pledged
as security therefor as provided in the Indenture.
Principal of the Class A-1 Notes will be payable on each
Distribution Date in an amount described on the face hereof. "Distribution Date"
means the fifteenth day of each month, or, if any such date is not a Business
Day, the next succeeding Business Day, commencing April 15, 1997. The term
"Distribution Date," shall be deemed to include the Final Scheduled Distribution
Date.
As described above, the entire unpaid principal amount of this
Note shall be due and payable on the earlier of the Final Scheduled Distribution
Date and the Redemption Date, if any, pursuant to Section 10.1(a) or 10.1(c) of
the Indenture. As described above, a portion of the unpaid principal balance of
this Note shall be due and payable on the Redemption Date, if any, pursuant to
Section 10.1(b) of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable (i) on the date on
which an Event of Default shall have occurred and be continuing so long as an
Insurer Default shall not have occurred and be continuing or (ii) if an Insurer
Default shall have occurred and be continuing, on the date on which an Event of
Default shall have occurred and be continuing and the Trustee or the Holders of
the Notes representing at least 66-2/3% of the Outstanding Amount of the Notes
have declared the Notes to be immediately due and payable in the manner provided
in Section 5.2 of the Indenture. All principal payments on the Class A-1 Notes
shall be made pro rata to the Class A-1 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each
Distribution Date, together with the installment of principal, if any, to the
extent not in full payment of this Note, shall be made by check mailed to the
Person whose name appears as the Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any
A-1-5
<PAGE>
one or more Predecessor Notes) effected by any payments made on any
Distribution Date shall be binding upon all future Holders of this Note and of
any Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Note on a Distribution Date, then the
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Holder hereof as of the Record Date preceding such Distribution Date by
notice mailed prior to such Distribution Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Trustee's principal Corporate Trust Office or at the office of the Trustee's
agent appointed for such purposes located in The City of New York.
The Issuer shall pay interest on overdue installments of
interest at the Class A-1 Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed (a)
pursuant to Section 10.1(a) of the Indenture, in whole, but not in part, at the
option of the Seller or the Master Servicer (with the consent of the Insurer
under certain circumstances), on any Distribution Date on or after the date on
which the Pool Balance is less than or equal to 10% of the Original Pool
Balance, and (b) pursuant to Section 10.1(b) of the Indenture, in part, on the
Distribution Date on or immediately following the last day of the Pre-Funding
Period in the event that any Pre-Funded Amount remains on deposit in the
Pre-Funding Account after giving effect to the purchase of all Subsequent
Receivables, including any such purchase on such Redemption Date.
As provided in the Indenture and subject to certain
limitations set forth therein, the transfer of this Note may be registered on
the Note Register upon surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to the Indenture, (i)
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by, the Holder hereof or his attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar which
requirements include membership or participation in Securities Transfer Agents
Medallion Program ("Stamp") or such other "signature guarantee program" as may
be determined by the Note Registrar in addition to, or in substitution for,
Stamp, all in accordance with the Exchange Act, and (ii) accompanied by such
other documents as the Trustee may require, and thereupon one or more new Notes
of authorized denominations and in the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note covenants and agrees
that no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee, the Trust Collateral Agent or the
Trustee on the Notes or under the Indenture or any certificate or other writing
delivered in connection therewith, against (i) the Seller, the Master Servicer,
the Trustee, the Trust Collateral Agent or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
owner, beneficiary, agent, officer, director or employee of the Seller, the
Master Servicer, the Trust Collateral Agent, the Trustee or the Owner Trustee in
its individual capacity, any holder of a beneficial interest in the Issuer, the
Seller, the Master Servicer, the Owner Trustee, the Trust Collateral Agent or
the Trustee or of any successor or
A-1-6
<PAGE>
assign of the Seller, the Master Servicer, the Trustee, the Trust Collateral
Agent or the Owner Trustee in its individual capacity, except as any such Person
may have expressly agreed (it being understood that the Trustee, the Trust
Collateral Agent and the Owner Trustee have no such obligations in their
individual capacity) and except that any such owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note covenants and agrees
that by accepting the benefits of the Indenture that such Noteholder will not at
any time institute against the Depositor, or the Issuer or join in any
institution against the Depositor, or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings, under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, the Indenture or the
Basic Documents.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Trustee and the Insurer and any agent of the Issuer,
the Trustee or the Insurer may treat the Person in whose name this Note (as of
the day of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Note be overdue, and neither the Issuer, the Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Holders of the Notes under the
Indenture at any time by the Issuer with the consent of the Insurer and of the
Holders of Notes representing a majority of the Outstanding Amount of all Notes
at the time Outstanding. The Indenture also contains provisions permitting the
Holders of Notes representing specified percentages of the Outstanding Amount of
the Notes, on behalf of the Holders of all the Notes, to waive compliance by the
Issuer with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the Holder
of this Note (or any one of more Predecessor Notes) shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor
to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Trustee and
the Holders of Notes under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Note and the Indenture shall be construed in accordance
with the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights
A-1-7
<PAGE>
and remedies of the parties hereunder and thereunder shall be determined in
accordance with such laws.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place, and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Indenture or the Basic Documents, neither Wilmington
Trust Company in its individual capacity, any owner of a beneficial interest in
the Issuer, nor any of their respective beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of or
interest on, or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Note or the Indenture, it
being expressly understood that said covenants, obligations and indemnifications
have been made by the Issuer for the sole purposes of binding the interests of
the Issuer in the assets of the Issuer. The Holder of this Note by the
acceptance hereof agrees that except as expressly provided in the Indenture or
the Basic Documents, in the case of an Event of Default under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Note.
A-1-8
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto _________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:______________ __________________________ (1)
Signature Guaranteed:
- -------------------------- ------------------------------
- -----------
(1) NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
A-1-9
<PAGE>
[Form of Note] EXHIBIT A-2
REGISTERED $ 29,925,000
No. A-1-2
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. ____________
Unless this Note is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
or its agent for registration of transfer, exchange or payment, and any Note
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-1
CLASS A-2 6.75% ASSET BACKED NOTES
Advanta Automobile Receivables Trust 1997-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO.,
or registered assigns, the principal sum of TWENTY-NINE MILLION NINE HUNDRED AND
TWENTY-FIVE THOUSAND DOLLARS ($ 29,925,000), such amount payable on each
Distribution Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $ 29,925,000 and the denominator of which is
$ 85,500,000 by (ii) the aggregate amount, if any, payable from the Note
Distribution Account in respect of principal on the Class A-2 Notes pursuant to
Section 3.1 of the Indenture; provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the December, 2003
Distribution Date (the "Final Scheduled Distribution Date"). The Issuer will pay
interest on this Note at the rate per annum shown above on each Distribution
Date until the principal of this Note is paid or made available for payment, on
the principal amount of this Note outstanding on the preceding Distribution Date
(after giving effect to all payments of principal made on the preceding
Distribution Date). Interest on this Note will accrue for each Distribution Date
from the most recent Distribution Date on which interest has been paid to but
excluding such Distribution Date or, if no interest has yet been paid, from
March 31, 1997. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Such principal of and interest on this Note
shall be paid in the manner specified on the reverse hereof.
A-2-1
<PAGE>
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
The Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Note Policy") issued by Financial Security Assurance Inc.
(the "Insurer"), pursuant to which the Insurer has unconditionally guaranteed
payments of the Noteholders' Interest Distributable Amount and the Noteholders'
Principal Distributable Amount on each Distribution Date, all as more fully set
forth in the Indenture.
For purposes of federal income, state and local income and
franchise and any other income taxes, the Issuer will treat the Notes as
indebtedness of the Issuer and hereby instructs the Trustee to treat the Notes
as indebtedness of the Issuer for federal state tax reporting purposes.
Each Noteholder or Note Owner, by acceptance of this Note or,
in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Trustee on the Notes or
under the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Seller, the Master Servicer, the Trustee, the Trust
Collateral Agent or the Owner Trustee in its individual capacity, (ii) any owner
of a beneficial interest in the Issuer or (iii) any owner, beneficiary, agent,
officer, director or employee of the Seller, the Master Servicer, the Trustee,
the Trust Collateral Agent or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Seller, the Master Servicer,
the Trust Collateral Agent, the Owner Trustee or the Trustee or of any successor
or assign of the Seller, the Master Servicer, the Trustee, the Trust Collateral
Agent or the Owner Trustee in its individual capacity, except as any such Person
may have expressly agreed (it being understood that the Trustee, the Trust
Collateral Agent and the Owner Trustee have no such obligations in their
individual capacity) and except that any such owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
Unless the certificate of authentication hereon has been
executed by the Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
A-2-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be signed, manually or in facsimile, by its Authorized Officer as of the date
set forth below.
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-1
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee under the Trust Agreement
By _________________________________
Name:
Title:
A-2-3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Trustee,
by ___________________________
Authorized Signatory
A-2-4
<PAGE>
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Class A-2 6.75% Asset Backed Notes (herein called the
"Class A-2 Notes"), all issued under an Indenture dated as of March 1, 1997
(such indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and Bankers Trust Company, as trustee (the "Trustee", which
term includes any successor Trustee under the Indenture, and the "Trust
Collateral Agent", which term includes any successor Trust Collateral Agent
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Trustee, the Trust Collateral Agent
and the Holders of the Notes. The Notes are subject to all terms of the
Indenture. All terms used in this Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Class A-1 Notes and the Class A-2 Notes (together, the
"Notes") are and will be equally and ratably secured by the collateral pledged
as security therefor as provided in the Indenture.
Principal of the Class A-2 Notes will be payable on each
Distribution Date in an amount described on the face hereof. "Distribution Date"
means the fifteenth day of each month, or, if any such date is not a Business
Day, the next succeeding Business Day, commencing April 15, 1997.
As described above, the entire unpaid principal amount of this
Note shall be due and payable on the earlier of the Final Scheduled Distribution
Date and the Redemption Date, if any, pursuant to Section 10.1(a) or 10.1(c) of
the Indenture. As described above, a portion of the unpaid principal balance of
this Note shall be due and payable on the Redemption Date, if any, pursuant to
Section 10.1(b) of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable (i) on the date on
which an Event of Default shall have occurred and be continuing so long as an
Insurer Default shall not have occurred and be continuing or (ii) if an Insurer
Default shall have occurred and be continuing, on the date on which an Event of
Default shall have occurred and be continuing and the Trustee or the Holders of
the Notes representing at least 66-2/3% of the Outstanding Amount of the Notes
have declared the Notes to be immediately due and payable in the manner provided
in Section 5.2 of the Indenture. All principal payments on the Class A-2 Notes
shall be made pro rata to the Class A-2 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each
Distribution Date, together with the installment of principal, if any, to the
extent not in full payment of this Note, shall be made by check mailed to the
Person whose name appears as the Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Distribution Date shall be binding upon all future Holders of this Note and of
any Note issued upon the registration of
A-2-5
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted
hereon. If funds are expected to be available, as provided in the Indenture, for
payment in full of the then remaining unpaid principal amount of this Note on a
Distribution Date, then the Trustee, in the name of and on behalf of the Issuer,
will notify the Person who was the Holder hereof as of the Record Date preceding
such Distribution Date by notice mailed prior to such Distribution Date and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Trustee's principal Corporate Trust Office or at
the office of the Trustee's agent appointed for such purposes located in The
City of New York.
The Issuer shall pay interest on overdue installments of
interest at the Class A-2 Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed (a)
pursuant to Section 10.1(a) of the Indenture, in whole, but not in part, at the
option of the Seller or the Master Servicer (with the consent of the Insurer
under certain circumstances), on any Distribution Date on or after the date on
which the Pool Balance is less than or equal to 10% of the Original Pool
Balance, and (b) pursuant to Section 10.1(b) of the Indenture, in part, on the
Distribution Date on or immediately following the last day of the Pre-Funding
Period in the event that any Pre-Funded Amount remains on deposit in the
Pre-Funding Account after giving effect to the purchase of all Subsequent
Receivables, including any such purchase on such Redemption Date.
As provided in the Indenture and subject to certain
limitations set forth therein, the transfer of this Note may be registered on
the Note Register upon surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to the Indenture, (i)
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by, the Holder hereof or his attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar which
requirements include membership or participation in Securities Transfer Agents
Medallion Program ("Stamp") or such other "signature guarantee program" as may
be determined by the Note Registrar in addition to, or in substitution for,
Stamp, all in accordance with the Exchange Act, and (ii) accompanied by such
other documents as the Trustee may require, and thereupon one or more new Notes
of authorized denominations and in the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note covenants and agrees
that no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Trustee on the Notes or
under the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Seller, the Master Servicer, the Trustee or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer or (iii) any owner, beneficiary, agent, officer, director or employee
of the Seller, the Master Servicer, the Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Seller, the Master Servicer, the Owner Trustee or the Trustee or of any
successor or assign of the Seller, the Master Servicer, the Trustee or the Owner
Trustee in its individual capacity, except as any such Person may have expressly
agreed (it being understood that the Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such owner or
A-2-6
<PAGE>
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note covenants and agrees
that by accepting the benefits of the Indenture that such Noteholder will not at
any time institute against the Depositor, or the Issuer or join in any
institution against the Depositor, or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings, under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, the Indenture or the
Basic Documents.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Trustee and the Insurer and any agent of the Issuer,
the Trustee or the Insurer may treat the Person in whose name this Note (as of
the day of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Note be overdue, and neither the Issuer, the Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Holders of the Notes under the
Indenture at any time by the Issuer with the consent of the Insurer and of the
Holders of Notes representing a majority of the Outstanding Amount of all Notes
at the time Outstanding. The Indenture also contains provisions permitting the
Holders of Notes representing specified percentages of the Outstanding Amount of
the Notes, on behalf of the Holders of all the Notes, to waive compliance by the
Issuer with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the Holder
of this Note (or any one of more Predecessor Notes) shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor
to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Trustee and
the Holders of Notes under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Note and the Indenture shall be construed in accordance
with the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
A-2-7
<PAGE>
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place, and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Indenture or the Basic Documents, neither Wilmington
Trust Company in its individual capacity, any owner of a beneficial interest in
the Issuer, nor any of their respective beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of or
interest on, or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Note or the Indenture, it
being expressly understood that said covenants, obligations and indemnifications
have been made by the Issuer for the sole purposes of binding the interests of
the Issuer in the assets of the Issuer. The Holder of this Note by the
acceptance hereof agrees that except as expressly provided in the Indenture or
the Basic Documents, in the case of an Event of Default under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Note.
A-2-8
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto ________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:______________ ____________________________ (2)
Signature Guaranteed:
- -------------------------- ------------------------------
- -------------
(2) NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
A-2-9
<PAGE>
EXHIBIT 4.2
<PAGE>
EXECUTION COPY
TRUST AGREEMENT
between
ADVANTA AUTO RECEIVABLES CORP. I
and
WILMINGTON TRUST COMPANY
Owner Trustee
Dated as of March 1, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.
Definitions.............................................. 1
SECTION 1.1. Capitalized Terms............................................ 1
SECTION 1.2. Other Definitional Provisions................................ 3
SECTION 1.3. Action by or Consent of Noteholders
and Certificateholders....................................... 4
SECTION 1.4. Material Adverse Effect...................................... 4
ARTICLE II.
Organization............................................ 4
SECTION 2.1. Name........................................................ 4
SECTION 2.2. Office...................................................... 4
SECTION 2.3. Purposes and Powers......................................... 4
SECTION 2.4. Appointment of Owner Trustee................................ 5
SECTION 2.5. Initial Capital Contribution of Trust
Estate...................................................... 5
SECTION 2.6. Declaration of Trust........................................ 5
SECTION 2.7. Liability................................................... 6
SECTION 2.8. Title to Trust Property..................................... 6
SECTION 2.9. Situs of Trust.............................................. 6
SECTION 2.10. Representations and Warranties of the Depositor............. 6
SECTION 2.11. Federal Income Tax Allocations.............................. 7
SECTION 2.12. Covenants of the Depositor.................................. 8
SECTION 2.13. Covenants of the Certificateholders......................... 9
ARTICLE III.
Certificates and Transfer of Interests.................. 9
SECTION 3.1. Initial Ownership........................................... 9
SECTION 3.2. The Certificates............................................ 9
SECTION 3.3. Authentication of Certificates.............................. 10
SECTION 3.4. Registration of Transfer and Exchange of Certificates....... 10
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates........... 12
SECTION 3.6. Persons Deemed Certificateholders........................... 13
SECTION 3.7. Access to List of Certificateholders' Names and Addresses... 13
SECTION 3.8. Maintenance of Office or Agency............................. 13
SECTION 3.9. ERISA Restrictions.......................................... 13
SECTION 3.10. Securities Matters.......................................... 13
ARTICLE IV.
Voting Rights and Other Actions......................... 14
SECTION 4.1. Prior Notice to Holders with Respect to Certain Matters..... 14
SECTION 4.2. Action by Certificateholders with
Respect to Certain Matters.................................. 14
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy..... 14
SECTION 4.4. Restrictions on Certificateholders' Power................... 15
<PAGE>
SECTION 4.5. Majority Control............................................ 15
SECTION 4.6. Rights of Insurer........................................... 16
ARTICLE V.
Certain Duties.......................................... 16
SECTION 5.1. Accounting and Records to theNoteholders, Certificateholders,
the Internal Revenue Service and Others..................... 16
SECTION 5.2. Signature on Returns; Tax Matters Partner................... 16
SECTION 5.3. Underwriting Agreement...................................... 17
ARTICLE VI.
Authority and Duties of Owner Trustee................... 17
SECTION 6.1. General Authority........................................... 17
SECTION 6.2. General Duties.............................................. 17
SECTION 6.3. Action upon Instruction..................................... 17
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions................................................ 18
SECTION 6.5. No Action Except under Specified Documents or Instructions.. 18
SECTION 6.6. Restrictions................................................ 18
ARTICLE VII.
Concerning the Owner Trustee............................ 19
SECTION 7.1. Acceptance of Trusts and Duties............................. 19
SECTION 7.2. Furnishing of Documents..................................... 20
SECTION 7.3. Representations and Warranties.............................. 20
SECTION 7.4. Reliance; Advice of Counsel................................. 20
SECTION 7.5. Not Acting in Individual Capacity........................... 21
SECTION 7.6. Owner Trustee Not Liable for Certificates or Receivables.... 21
SECTION 7.7. Owner Trustee May Own Certificates and Notes................ 21
SECTION 7.8. Payments from Owner Trust Estate............................ 21
SECTION 7.9. Doing Business in Other Jurisdictions....................... 22
ARTICLE VIII.
Compensation of Owner Trustee........................... 22
SECTION 8.1. Owner Trustee's Fees and Expenses........................... 22
SECTION 8.2. Indemnification............................................. 22
SECTION 8.3. Payments to the Owner Trustee............................... 23
SECTION 8.4. Non-recourse Obligations.................................... 23
ARTICLE IX.
Termination of Trust Agreement.......................... 23
SECTION 9.1. Termination of Trust Agreement.............................. 23
<PAGE>
ARTICLE X.
Successor Owner Trustees and Additional Owner Trustees.. 24
SECTION 10.1. Eligibility Requirements for Owner Trustee.................. 24
SECTION 10.2. Resignation or Removal of Owner Trustee..................... 24
SECTION 10.3. Successor Owner Trustee..................................... 25
SECTION 10.4. Merger or Consolidation of Owner Trustee.................... 25
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee............... 26
ARTICLE XI.
Miscellaneous........................................... 27
SECTION 11.1. Supplements and Amendments.................................. 27
SECTION 11.2. No Legal Title to Owner Trust Estate in Certificateholders.. 28
SECTION 11.3. Limitations on Rights of Others............................. 28
SECTION 11.4. Notices..................................................... 28
SECTION 11.5. Severability................................................ 29
SECTION 11.6. Separate Counterparts....................................... 29
SECTION 11.7. Assignments; Insurer........................................ 29
SECTION 11.8. No Petition................................................. 29
SECTION 11.9. No Recourse................................................. 29
SECTION 11.10. Headings.................................................... 29
SECTION 11.11. GOVERNING LAW............................................... 29
SECTION 11.12. Master Servicer............................................. 29
EXHIBITS
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
Exhibit C Form of Purchaser Representation Letter
Exhibit D Form of Transferee Representation Letter
<PAGE>
TRUST AGREEMENT dated as of March 1, 1997 between ADVANTA AUTO RECEIVABLES
CORP. I, a Nevada corporation (the "Depositor"), and WILMINGTON TRUST COMPANY, a
Delaware banking corporation as Owner Trustee.
ARTICLE I.
Definitions
SECTION 1.1. Capitalized Terms. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Advanta" shall mean Advanta Auto Finance Corporation.
"Affiliate" shall mean with respect to any specified Person, a Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with,or owns, directly or indirectly,
50% or more of, the Person specified.
"Agreement" shall mean this Trust Agreement, as the same may be amended and
supplemented from time to time.
"Basic Documents" shall mean this Agreement, the Certificate of Trust, the
Sale and Servicing Agreement, the Spread Account Agreement, the Spread Account
Agreement Supplement, the Insurance Agreement, the Indenture and the other
documents and certificates delivered in connection therewith.
"Benefit Plan" shall have the meaning assigned to such term in Section
3.09.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss. 3801 et. seq. as the same may be amended from time to
time.
"Certificate" means a trust certificate evidencing the beneficial ownership
interest of a Certificateholder in the Trust, substantially in the form of
Exhibit A attached hereto.
"Certificate Distribution Account" shall mean the account designated as
such as established and maintained pursuant to the Sale and Servicing Agreement.
"Certificate of Trust" shall mean the Certificate of Trust in the form of
Exhibit B to be filed for the Trust pursuant to Section 3810(a) of the Business
Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the register
mentioned and the registrar appointed pursuant to Section 3.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee, the
principal corporate trust office of the Owner Trustee located at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration, or at such other address
<PAGE>
as the Owner Trustee may designate by notice to the Certificateholders and the
Depositor, or the principal corporate trust office of any successor Owner
Trustee (the address of which the successor owner trustee will notify the
Certificateholders and the Depositor).
"Definitive Certificates" shall mean Certificates issued in certificated,
fully registered form.
"Depositor" shall mean Advanta Auto Receivables Corp. I in its capacity as
Depositor hereunder.
"ERISA" shall have the meaning assigned to such term in Section 3.9.
"Expenses" shall have the meaning assigned to such term in Section 8.2.
"Holder" or "Certificateholder" shall mean the Person in whose name a
Certificate is registered on the Certificate Register.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.2.
"Indenture" shall mean the Indenture dated as of March 1, 1997, among the
Issuer and Bankers Trust Company, as Trust Collateral Agent and Trustee, as the
same may be amended and supplemented from time to time.
"Indenture Trustee" shall mean, initially Bankers Trust Company, in its
capacity as indenture trustee, including its successors in interest, until and
unless a successor Person shall have become the Indenture Trustee pursuant to
the Sale and Servicing Agreement and thereafter "Indenture" shall mean such
successor Person.
"Insurer" shall mean Financial Security Assurance Inc., or its successor in
interest.
"Instructing Party" shall have the meaning assigned to such term in Section
6.3.
"Owner Trust Estate" shall mean all right, title and interest of the Trust
in and to the property and rights assigned to the Trust pursuant to Article II
of the Sale and Servicing Agreement, all funds on deposit from time to time in
the Trust Accounts and the Certificate Distribution Account and all other
property of the Trust from time to time, including any rights of the Owner
Trustee and the Trust pursuant to the Sale and Servicing Agreement and the
Spread Account Agreement.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor Owner Trustee hereunder.
"Record Date" shall mean with respect to any Distribution Date, the close
of business on the last Business Day immediately preceding such Distribution
Date.
"Sale and Servicing Agreement" shall mean the Sale and Servicing Agreement
among the Trust, Advanta Auto Receivables Corp. I, as Seller, Advanta Auto
Finance Corporation, as Master Servicer and the Trust Collateral Agent, dated as
of March 1, 1997, as the same may be amended and supplemented from time to time.
<PAGE>
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Security Majority" means a majority by principal amount of the Noteholders
so long as the Notes are outstanding and a majority by principal amount of the
Certificateholders thereafter.
"Spread Account" shall mean the Series Spread Account established and
maintained pursuant to the Spread Account Agreement.
"Spread Account Agreement" shall mean the Spread Account Agreement, dated
as of March 1, 1997, among Advanta Auto Receivables Corp. I, the Insurer, and
the Trust Collateral Agent, as the same may be amended, supplemented or
otherwise modified in accordance with the terms thereof.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trust Accounts" shall have the meaning ascribed thereto in the Sale and
Servicing Agreement.
"Trust Collateral Agent" shall mean, initially, Bankers Trust Company, in
its capacity as collateral agent, including its successors in interest, until
and unless a successor Person shall have become the Trust Collateral Agent
pursuant to the Sale and Servicing Agreement, and thereafter "Trust Collateral
Agent" shall mean such successor Person.
SECTION 1.2. Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined have the
meanings assigned to them in the Sale and Servicing Agreement or, if not defined
therein, in the Spread Account Agreement or in the Indenture.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles as in effect on the date of
this Agreement or any such certificate or other document, as applicable. To the
extent that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision
<PAGE>
of this Agreement; Section and Exhibit references contained in this Agreement
are references to Sections and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
SECTION 1.3. Action by or Consent of Noteholders and Certificateholders.
Whenever any provision of this Agreement refers to action to be taken, or
consented to, by Noteholders or Certificateholders, such provision shall be
deemed to refer to the Certificateholder or Noteholder, as the case may be, of
record as of the Record Date immediately preceding the date on which such action
is to be taken, or consent given, by Noteholders or Certificateholders. Solely
for the purposes of any action to be taken, or consented to, by Noteholders or
Certificateholders, any Note or Certificate registered in the name of the Seller
or any Affiliate thereof shall be deemed not to be outstanding; provided,
however, that, solely for the purpose of determining whether the Indenture
Trustee or the Trust Collateral Agent is entitled to rely upon any such action
or consent, only Notes or Certificates which the Owner Trustee, the Indenture
Trustee or the Trust Collateral Agent, respectively, knows to be so owned shall
be so disregarded.
SECTION 1.4. Material Adverse Effect. Whenever a determination is to be
made under this Agreement as to whether a given event, action, course of conduct
or set of facts or circumstances could or would have a material adverse effect
on the Noteholders or Certificateholders (or any similar or analogous
determination), such determination shall be made without taking into account the
funds available from claims under the Policy. Whenever a determination is to be
made under this Agreement whether a breach of representation, warranty or
covenant has or could have a material adverse effect on a Receivable or the
interest therein of the Trust, the Noteholders, the Certificateholders or the
Insurer (or any similar or analgous determination), such determination shall be
made by the Insurer in its reasonable discretion and after notifying the Trustee
and the Seller of such potentional breach or (x) if an Insurer Default shall
have occurred and be continuing, or (y) upon (i) the expiration of the Policy in
accordance with the terms thereof and (ii) the payment of all amounts owing to
the Insurer under the Sale and Servicing Agreement and the Insurance Agreement,
by a Security Majority.
ARTICLE II.
Organization
SECTION 2.1. Name. There is hereby formed a trust to be known as "Advanta
Auto Receivables Trust 1997-1", in which name the Owner Trustee may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION 2.2. Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address as the
Owner Trustee may designate by written notice to the Certificateholders and the
Depositor.
SECTION 2.3. Purposes and Powers. (a) The purpose of the Trust is, and
the Trust shall have the power and authority, to engage in the following
activities:
<PAGE>
(i) to issue the Notes pursuant to the Indenture and the Certificates
pursuant to this Agreement, and to sell the Notes;
(ii) with the proceeds of the sale of the Notes, to fund the Pre-Funding
Account, the Capitalized Interest Account and the Spread Account and to pay the
organizational, start-up and transactional expenses of the Trust and to pay the
balance to the Depositor pursuant to the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey the Owner Trust
Estate (other than the Certificate Distribution Account) to the Trust Collateral
Agent pursuant to the Indenture for the benefit of the Insurer and the Indenture
Trustee on behalf of the Noteholders and to hold, manage and distribute to the
Certificateholders and the Depositor pursuant to the terms of the Sale and
Servicing Agreement any portion of the Owner Trust Estate released from the Lien
of, and remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the Basic Documents to
which it is a party;
(v) to engage in those activities, including entering into agreements, that
are necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith; and
(vi) subject to compliance with the Basic Documents, to engage in such other
activities as may be required in connection with conservation of the Owner Trust
Estate and the making of distributions to the Certificateholders and the
Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the Basic
Documents.
SECTION 2.4. Appointment of Owner Trustee. The Depositor hereby appoints
the Owner Trustee as trustee of the Trust effective as of the date hereof, to
have all the rights, powers and duties set forth herein.
SECTION 2.5. Initial Capital Contribution of Trust Estate. The Depositor
hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as
of the date hereof, the sum of $1. The Owner Trustee hereby acknowledges receipt
in trust from the Depositor, as of the date hereof, of the foregoing
contribution, which shall constitute the initial Owner Trust Estate and shall be
deposited in the Certificate Distribution Account. The Depositor shall pay
organizational expenses of the Trust as they may arise.
SECTION 2.6. Declaration of Trust. The Owner Trustee hereby declares that
it will hold the Owner Trust Estate in trust upon and subject to the conditions
set forth herein for the use and benefit of the Certificateholders, subject to
the obligations of the Trust under the Basic Documents. It is the intention of
the parties hereto that the Trust constitute a business trust under the Business
Trust Statute and that this Agreement constitute the governing instrument of
such business trust. It is the intention of the parties hereto that, solely for
income tax purposes, the Trust shall
<PAGE>
be treated as a branch; provided, however, that in the event Certificates are
owned by more than one Certificateholder, it is the intention of the parties
hereto that, solely for income and franchise tax purposes, the Trust shall then
be treated as a partnership and that, unless otherwise required by appropriate
tax authorities, only after such time the Trust will file or cause to be filed
annual or other necessary returns, reports and other forms consistent with the
characterization of the Trust as a partnership for such tax purposes. Effective
as of the date hereof, the Owner Trustee shall have all rights, powers and
duties set forth herein and to the extent not inconsistent herewith, in the
Business Trust Statute with respect to accomplishing the purposes of the Trust.
The Owner Trustee shall file the Certificate of Trust with the Secretary of
State.
SECTION 2.7. Liability. (a) The Depositor shall pay organizational
expenses of the Trust as they may arise or shall, upon the request of the Owner
Trustee, promptly reimburse the Owner Trustee for any such expenses paid by the
Owner Trustee.
(b) No Holder, other than to the extent set forth in clause (a), shall
have any personal liability for any liability or obligation of the Trust.
SECTION 2.8. Title to Trust Property. (a) Legal title to all the Owner
Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Owner Trust Estate to be vested in a trustee or trustees, in which
case title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.
(b) The Holders shall not have legal title to any part of the Trust
Property. The Holders shall be entitled to receive distributions with respect to
their undivided ownership interest therein only in accordance with Articles V
and IX. No transfer, by operation of law or otherwise, of any right, title or
interest by any Certificateholder of its ownership interest in the Owner Trust
Estate shall operate to terminate this Agreement or the trusts hereunder or
entitle any transferee to an accounting or to the transfer to it of legal title
to any part of the Trust Property.
SECTION 2.9. Situs of Trust. The Trust will be located and administered
in the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware or the State of
New York. Payments will be received by the Trust only in Delaware or New York
and payments will be made by the Trust only from Delaware or New York. The Trust
shall not have any employees in any state other than Delaware; provided,
however, that nothing herein shall restrict or prohibit the Owner Trustee, the
Master Servicer or any agent of the Trust from having employees within or
without the State of Delaware. The only office of the Trust will be at the
Corporate Trust Office in Delaware.
SECTION 2.10. Representations and Warranties of the Depositor. The
Depositor makes the following representations and warranties on which the Owner
Trustee relies in accepting the Owner Trust Estate in trust and issuing the
Certificates and upon which the Insurer relies in issuing the Note Policy.
(a) Organization and Good Standing. The Depositor is duly organized and
validly existing as a Nevada corporation with power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted and is proposed to be conducted
pursuant to this Agreement and the Basic Documents.
(b) Due Qualification. It is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions
<PAGE>
in which the ownership or lease of its property, the conduct of its business and
the performance of its obligations under this Agreement and the Basic Documents
requires such qualification.
(c) Power and Authority. The Depositor has the corporate power and
authority to execute and deliver this Agreement and to carry out its terms; the
Depositor has full power and authority to sell and assign the property to be
sold and assigned to and deposited with the Trust and the Depositor has duly
authorized such sale and assignment and deposit to the Trust by all necessary
corporate action; and the execution, delivery and performance of this Agreement
has been duly authorized by the Depositor by all necessary corporate action.
(d) No Consent Required. To the best knowledge of the Depositor, no
consent, license, approval or authorization or registration or declaration with,
any Person or with any governmental authority, bureau or agency is required in
connection with the execution, delivery or performance of this Agreement and the
Basic Documents, except for such as have been obtained, effected or made.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time) a default under, the certificate of
incorporation or by-laws of the Depositor, or any material indenture, agreement
or other instrument to which the Depositor is a party or by which it is bound;
nor result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); nor violate any law or, to the
best of the Depositor's knowledge, any order, rule or regulation applicable to
the Depositor of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Depositor or its properties.
(f) No Proceedings. There are no proceedings or investigations pending
or, to its knowledge threatened against it before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having
jurisdiction over it or its properties (A) asserting the invalidity of this
Agreement or any of the Basic Documents, (B) seeking to prevent the issuance of
the Certificates or the Notes or the consummation of any of the transactions
contemplated by this Agreement or any of the Basic Documents, (C) seeking any
determination or ruling that might materially and adversely affect its
performance of its obligations under, or the validity or enforceability of, this
Agreement or any of the Basic Documents, or (D) seeking to adversely affect the
federal income tax or other federal, state or local tax attributes of the
Certificates.
SECTION 2.11. Federal Income Tax Allocations. In the event that the Trust
is treated as a partnership for Federal income tax purposes, net income of the
Trust for any month as determined for Federal income tax purposes (and each item
of income, gain, loss, credit and deduction entering into the computation
thereof) shall be allocated:
(a) to the extent of available net income, among the Certificateholders as
of the first Record Date following the end of such month, in proportion to their
ownership of principal amount of Certificates on such date, an amount of net
income up to the sum of (i) the Certificateholders' Monthly Interest
Distributable Amount for such month, (ii) interest on the excess, if any, of the
Certificateholders' Interest Distributable Amount for the preceding Distribution
Date over the amount in respect of interest at the Certificate Rate that is
actually deposited in the Certificate Distribution Account on such preceding
Distribution Date, to the extent permitted by law, at the Certificate Rate from
<PAGE>
such preceding Distribution Date through the current Distribution Date, and
(iii) the portion of the market discount on the Receivables accrued during such
month that is allocable to the excess of the initial aggregate principal amount
of the Certificates over their initial aggregate issue price; and
(b) to the Depositor, to the extent of any remaining net income.
If the net income of the Trust for any month is insufficient for the allocations
described in clause (a) above, subsequent net income shall first be allocated to
make up such shortfall before being allocated as provided in clause (b). Net
losses of the Trust, if any, for any month as determined for Federal income tax
purposes (and each item of income, gain, loss, credit and deduction entering
into the computation thereof) shall be allocated among the Certificateholders as
of the Record Date in proportion to their ownership of principal amount of
Certificates on such Record Date until the principal balance of the Certificates
is reduced to zero. The Depositor is authorized to modify the allocations in
this paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to the
Certificateholders, or as otherwise required by the Code.
SECTION 2.12. Covenants of the Depositor. The Depositor agrees and
covenants for the benefit of each Certificateholder, the Insurer and the Owner
Trustee, during the term of this Agreement, and to the fullest extent permitted
by applicable law, that:
(a) it shall not create, incur or suffer to exist any indebtedness or
engage in any business, except, in each case, as permitted by its certificate of
incorporation and the Basic Documents;
(b) it shall not, for any reason, institute proceedings for the Trust to
be adjudicated a bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against the Trust, or file a petition
seeking or consenting to reorganization or relief under any applicable federal
or state law relating to the bankruptcy of the Trust, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Trust or a substantial part of the property of the
Trust or cause or permit the Trust to make any assignment for the benefit of
creditors, or admit in writing the inability of the Trust to pay its debts
generally as they become due, or declare or effect a moratorium on the debt of
the Trust or take any action in furtherance of any such action;
(c) it shall obtain from each counterparty to each Basic Document to which
it or the Trust is a party and each other agreement entered into on or after the
date hereof to which it or the Trust is a party, an agreement by each such
counterparty that prior to the occurrence of the event specified in Section
9.1(e) such counterparty shall not institute against, or join any other Person
in instituting against, it or the Trust, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceedings
under the laws of the United States or any state of the United States; and
(d) it shall not, for any reason, withdraw or attempt to withdraw from
this Agreement, dissolve, institute proceedings for it to be adjudicated a
bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against it, or file a petition seeking or consenting to
reorganization or relief under any applicable federal or state law relating to
bankruptcy, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of it or a substantial part of
its property, or make any assignment for the benefit of creditors,
<PAGE>
or admit in writing its inability to pay its debts generally as they become due,
or declare or effect a moratorium on its debt or take any action in furtherance
of any such action.
SECTION 2.13. Covenants of the Certificateholders. Each Certificateholder
agrees:
(a) to be bound by the terms and conditions of the Certificates and of
this Agreement, including any supplements or amendments hereto and to perform
the obligations of a Certificateholder as set forth therein or herein, in all
respects as if it were a signatory hereto. This undertaking is made for the
benefit of the Trust, the Owner Trustee, the Insurer and all other
Certificateholders present and future;
(b) to hereby appoint the Depositor as such Certificateholder's agent and
attorney-in-fact to sign any federal income tax information return filed on
behalf of the Trust, if any, and agree that, if requested by the Trust, it will
sign such federal income tax information return in its capacity as holder of an
interest in the Trust. Each Certificateholder also hereby agrees that in its tax
returns it will not take any position inconsistent with those taken in any tax
returns that may be filed by the Trust;
(c) if such Certificateholder is other than an individual or other entity
holding its Certificate through a broker who reports securities sales on Form
1099-B, to notify the Owner Trustee of any transfer by it of a Certificate in a
taxable sale or exchange, within 30 days of the date of the transfer;
(d) until the completion of the events specified in Section 9.1(e), not
to, for any reason, institute proceedings for the Trust or the Depositor to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against the Trust, or file a petition seeking or
consenting to reorganization or relief under any applicable federal or state law
relating to bankruptcy, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the Trust or a
substantial part of its property, or cause or permit the Trust to make any
assignment for the benefit of its creditors, or admit in writing its inability
to pay its debts generally as they become due, or declare or effect a moratorium
on its debt or take any action in furtherance of any such action; and
(e) that there shall not be more than 98 other holders of Certificates.
ARTICLE III.
Certificates and Transfer of Interests
SECTION 3.1. Initial Ownership. Upon the formation of the Trust by the
contribution by the Depositor pursuant to Section 2.5 and until the sale of the
Certificates by the Depositor, the Depositor, as the sole Certificateholder,
shall be the sole beneficiary of the Trust.
SECTION 3.2. The Certificates. The Certificates shall be issued in
denominations of $100,000 and integral multiples of $1,000 in excess thereof.
The Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Owner Trustee. Certificates bearing
the manual or facsimile signatures of individuals who were, at the time
<PAGE>
when such signatures shall have been affixed, authorized to sign on behalf of
the Trust, shall be validly issued and entitled to the benefit of this
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of authentication and
delivery of such Certificates. A transferee of a Certificate shall become a
Certificateholder, and shall be entitled to the rights and subject to the
obligations of a Certificateholder hereunder, upon due registration of such
Certificate in such transferee's name pursuant to Section 3.4.
SECTION 3.3. Authentication of Certificates. Concurrently with the initial
sale of the Receivables to the Trust pursuant to the Sale and Servicing
Agreement, the Owner Trustee shall cause the Certificates, which Certificate
Balance may be increased, during the Funding Period, in an aggregate principal
amount equal to the initial Certificate Balance to be executed on behalf of the
Trust, authenticated and delivered to or upon the written order of the
Depositor, signed by its chairman of the board, its president or any vice
president, its treasurer or any assistant treasurer without further corporate
action by the Depositor, in authorized denominations. No Certificate shall
entitle its holder to any benefit under this Agreement, or shall be valid for
any purpose, unless there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in Exhibit A, executed by the
Owner Trustee, by manual signature; such authentication shall constitute
conclusive evidence that such Certificate shall have been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication.
SECTION 3.4. Registration of Transfer and Exchange of Certificates. The
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 3.8, a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, the Owner Trustee shall provide
for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Owner Trustee shall be the initial
Certificate Registrar.
The Certificates have not been registered under the Securities Act of 1933,
as amended (the "Securities Act") or any state securities law. The Certificate
Registrar shall not register the transfer of any Certificate unless such resale
or transfer is pursuant to an effective registration state- ment under the
Securities Act or is to the Seller or unless it shall have received (i) a
representation letter substantially in the form of Exhibit D hereto or (ii) such
other representations (or an Opinion of Counsel) satisfactory to the Owner
Trustee to the effect that such resale or transfer is made (A) in a transaction
exempt from the registration requirements of the Securities Act and applicable
state securities laws, or (B) to a person who the transferor of the Certificate
reasonably believes is a qualified insti- tutional buyer (within the meaning of
Rule 144A under the Securities Act) that is aware that such resale or other
transfer is being made in reliance upon Rule 144A. Until the earlier of (i) such
time as the Certificates shall be registered pursuant to a registration
statement filed under the Securities Act and (ii) the date three years from the
later of the date of the original authentication and delivery of the
Certificates and the date any Certificate was acquired from the Seller or any
affiliate of the Seller, the Certificates shall bear a legend as follows:
THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE IN RELIANCE UPON
EXEMPTIONS PROVIDED BY THE SECURITIES ACT
AND SUCH STATE SECURITIES LAWS. NO RESALE OR
OTHER TRANSFER OF THIS CERTIFICATE MAY BE
<PAGE>
MADE UNLESS SUCH RESALE OR TRANSFER (A) IS
MADE IN ACCORDANCE WITH SECTION 3.4 OF THE
OWNER TRUST AGREEMENT PERTAINING TO THE
ADVANTA AUTO RECEIVABLES TRUST 1997-1 (THE
"AGREEMENT") AND (B) IS MADE (i) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, (ii) IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, (iii) TO THE SELLER OR (iv)
TO A PERSON WHO THE TRANSFEROR REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT THAT IS AWARE THAT THE RESALE
OR OTHER TRANSFER IS BEING MADE IN RELIANCE
ON RULE 144A AND (C) UPON THE SATISFACTION
OF CERTAIN OTHER REQUIREMENTS SPECIFIED IN
THE AGREEMENT. NEITHER THE SELLER, THE
MASTER SERVICER, THE TRUST NOR THE OWNER
TRUSTEE IS OBLIGATED TO REGISTER THE
CERTIFICATES UNDER THE SECURITIES ACT OR ANY
APPLICABLE STATE SECURITIES LAWS.
The Certificate Registrar shall not register the
initial placement of the Certificates unless it shall have received a Purchaser
Representation Letter in the form of Exhibit C.
The Certificate Registrar shall provide the Trust Collateral Agent with a
list of the names and addresses of the Certificateholders on the Closing Date in
the form which such information is provided to the Certificate Registrar by the
Depositor. Upon any transfers of Certificates, the Certificate Registrar shall
notify the Trust Collateral Agent of the name and address of the transferee in
writing, by facsimile, on the day of such transfer.
Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 3.8, the Owner Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of a like
class and aggregate face amount dated the date of authentication by the Owner
Trustee or any authenticating agent. At the option of a Holder, Certificates may
be exchanged for other Certificates of the same class in authorized
denominations of a like aggregate amount upon surrender of the Certificates to
be exchanged at the office or agency maintained pursuant to Section 3.8.
Every Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certificate Registrar duly executed by
the Certificateholder or his attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Certificate Registrar, which requirements include membership
or participation in the Securities Transfer Agent's Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Certificate Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Exchange Act. Each Certificate surrendered for registration
of transfer or exchange shall be
<PAGE>
canceled and subsequently disposed of by the Owner Trustee in accordance with
its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
Notwithstanding the preceding provisions of this Section, the Owner Trustee
shall be required to make, and the Certificate Registrar shall not be required
to register, transfers and exchanges of Certificates for a period of 15 days
preceding the due date for any payment with respect to the Certificate.
The Seller shall not sell, transfer, assign, convey or pledge any
Certificate at any time subsequent to the Closing Date to any Person that is an
Affiliate of the Seller, unless, prior to such sale, transfer, assignment,
conveyance or pledge, the Seller delivers to Financial Security an Opinion of
Counsel substantially similar in form and substance to the Opinion of Counsel
delivered on the Closing Date as to non-consolidation of the assets and
liabilities of (x) the Seller and Advanta or (y) the Seller and any such Person
that is an Affiliate of the Seller (other than Advanta).
In furtherance of and not in limitation of the foregoing, each
Certificateholder, by acceptance of its Certificate, specifically acknowledges
that it has no right to or interest in any monies at any time held pursuant to
the Spread Account Agreement or prior to the release of such monies pursuant to
Section 5.7(b) of the Sale and Servicing Agreement, such monies being held in
trust for the benefit of the Noteholders and the Insurer. Notwithstanding the
foregoing, in the event that it is ever determined that the monies held in the
Spread Account constitute a pledge of collateral, then the provisions of the
Sale and Servicing Agreement and the Spread Account Agreement shall be
considered to constitute a security agreement and the Seller and the
Certificateholders hereby grant to the Trust Collateral Agent for the benefit of
the Trustee and the Insurer a first priority perfected security interest in such
amounts, to be applied as set forth in Section 3.03 of the Spread Account
Agreement. In addition, each Certificateholder, by acceptance of its
Certificate, hereby appoints the Seller as its agent to pledge a first priority
perfected security interest in the Spread Account, and any amounts held therein
from time to time to the Trust Collateral Agent for the benefit of the Trustee
and the Insurer pursuant to the Spread Account Agreement and agrees to execute
and deliver such instruments of conveyance, assignment, grant, confirmation,
etc., as well as any financing statements, in each case the Insurer shall
consider reasonably necessary in order to perfect the Trust Collateral Agent's
Security Interest in the Collateral (as such terms are defined in the Spread
Account Agreement).
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any
mutilated Certificate shall be surrendered to the Certificate Registrar, or if
the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar, the Owner Trustee and (unless an Insurer Default
shall have occurred and be continuing) the Insurer, such security or indemnity
as may be required by them to save each of them harmless, then in the absence of
notice that such Certificate shall have been acquired by a bona fide purchaser,
the Owner Trustee on behalf of the Trust shall execute and the Owner Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
class, tenor and denomination. In connection with the issuance of any new
Certificate under this Section, the Owner Trustee or the Certificate Registrar
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute
<PAGE>
conclusive evidence of an ownership interest in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
SECTION 3.6. Persons Deemed Certificateholders. Every Person by virtue of
becoming a Certificateholder in accordance with this Agreement and the rules and
regulations of the Certificate Registrar shall be deemed to be bound by the
terms of this Agreement. Prior to due presentation of a Certificate for
registration of transfer, the Owner Trustee, the Certificate Registrar and the
Insurer and any agent of the Owner Trustee, the Certificate Registrar and the
Insurer, may treat the Person in whose name any Certificate shall be registered
in the Certificate Register as the owner of such Certificate for the purpose of
receiving distributions pursuant to the Sale and Servicing Agreement and for all
other purposes whatsoever, and none of the Owner Trustee, the Certificate
Registrar or the Insurer nor any agent of the Owner Trustee, the Certificate
Registrar or the Insurer shall be bound by any notice to the contrary.
SECTION 3.7. Access to List of Certificateholders' Names and Addresses.
The Owner Trustee shall furnish or cause to be furnished to the Master Servicer,
the Depositor or (unless an Insurer Default shall have occurred and be
continuing) the Insurer, within 15 days after receipt by the Owner Trustee of a
request therefor from such Person in writing, a list, of the names and addresses
of the Certificateholders as of the most recent Record Date. If three or more
Holders of Certificates or one or more Holders of Certificates evidencing not
less than 25% of the Certificate Balance apply in writing to the Owner Trustee,
and such application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Owner Trustee
shall, within five Business Days after the receipt of such application, afford
such applicants access during normal business hours to the current list of
Certificateholders. Each Holder, by receiving and holding a Certificate, shall
be deemed to have agreed not to hold any of the Depositor, the Master Servicer,
the Owner Trustee or the Insurer or any agent thereof accountable by reason of
the disclosure of its name and address, regardless of the source from which such
information was derived.
SECTION 3.8. Maintenance of Office or Agency. The Owner Trustee shall
maintain in Wilmington, Delaware, an office or offices or agency or agencies
where Certificates may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Owner Trustee in respect of the
Certificates and the Basic Documents may be served. The Owner Trustee initially
designates its Corporate Trust Office for such purposes. The Owner Trustee shall
give prompt written notice to the Depositor, the Certificateholders and (unless
an Insurer Default shall have occurred and be continuing) the Insurer of any
change in the location of the Certificate Register or any such office or agency.
SECTION 3.9. ERISA Restrictions. The Certificates may not be acquired by
or for the account of (i) an employee benefit plan (as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
that is subject to the provisions of Title I of ERISA, (ii) a plan described in
Section 4975(e)(1) of the Internal Revenue Code of 1985, as amended, or (iii)
any entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By accepting and holding its
beneficial ownership interest in its Certificate, the Holder thereof shall be
deemed to have represented and warranted that it is not a Benefit Plan.
SECTION 3.10. Securities Matters. Notwithstanding anything contained
herein to the contrary, the Owner Trustee shall not be responsible for
ascertaining whether any transfer
<PAGE>
complies with the registration provisions or exemptions from the Securities Act
of 1933, as amended, the Securities Act of 1934, as amended, applicable state
securities law or the Investment Company Act; provided, however, that if a
certificate is specifically required to be delivered to the Owner Trustee by a
purchaser or transferee of a Certificate, the Owner Trustee shall be under a
duty to examine the same to determine whether it conforms to the requirements of
this Trust Agreement and shall promptly notify the party delivering the same if
such certificate does not so conform.
ARTICLE IV.
Voting Rights and Other Actions
SECTION 4.1. Prior Notice to Holders with Respect to Certain Matters. With
respect to the following matters, the Owner Trustee shall not take action unless
at least 30 days before the taking of such action, the Owner Trustee shall have
notified the Certificateholders in writing of the proposed action and the
Certificateholders shall not have notified the Owner Trustee in writing prior to
the 30th day after such notice is given that such Certificateholders have
withheld consent or provided alternative direction:
(a) the election by the Trust to file an amendment to the Certificate of
Trust (unless such amendment is required to be filed under the Business Trust
Statute or unless such amendment would not materially and adversely affect the
interests of the Holders);
(b) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Certificateholders;
or
(d) except pursuant to Section 13.1(b) of the Sale and Servicing
Agreement, the amendment, change or modification of the Sale and Servicing
Agreement, except to cure any ambiguity or defect or to amend or supplement any
provision in a manner that would not materially adversely affect the interests
of the Certificateholders.
The Owner Trustee shall notify the Certificateholders in writing of any
appointment of a successor Note Registrar, Trust Collateral Agent or Certificate
Registrar within five Business Days thereof.
SECTION 4.2. Action by Certificateholders with Respect to Certain Matters.
The Owner Trustee shall not have the power, except upon the direction of the
Insurer or, in the event that an Insurer Default shall have occurred and be
continuing, the Security Majority in accordance with the Basic Documents, to (a)
remove the Master Servicer under the Sale and Servicing Agreement or (b) except
as expressly provided in the Basic Documents, sell the Receivables after the
termination of the Indenture. The Owner Trustee shall take the actions referred
to in the preceding sentence only upon written instructions signed by the
Insurer or the Securityholders, as the case may be, and the furnishing of
indemnification satisfactory to the Owner Trustee by the Certificateholders.
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy.
Until the Notes have been paid in full, the Owner Trustee shall not have the
power to, and shall not,
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commence any proceeding or other actions contemplated by Section 2.12(d)
relating to the Trust without the prior written consent of the Insurer (unless
an Insurer Default shall have occurred and be continuing) or the Security
Majority upon an Insurer Default. After the Notes have been paid in full, all
amounts due to the Insurer under the Insurance Agreement have been paid in full,
the Term of the Policy has expired and the Trust Collateral Agent has
surrendered the Policy to the Insurer, the Owner Trustee shall not have the
power to, and shall not, commence any proceeding or other actions contemplated
by Section 212(d) relating to the Trust without the prior written consent of all
of the Certificateholders and the delivery to the Owner Trustee by each such
Certificateholder of a certificate certifying that such Certificateholder
reasonably believes that the Trust is insolvent.
SECTION 4.4. Restrictions on Certificateholders' Power. (a) The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the Basic
Documents or would be contrary to Section 2.3 or otherwise contrary to law nor
shall the Owner Trustee be obligated to follow any such direction, if given.
(b) No Certificateholder (other than the Depositor as sole
Certificateholder) shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement or any Basic
Document, unless the Certificateholders are the Instructing Party pursuant to
Section 6.3 and unless a Certificateholder previously shall have given to the
Owner Trustee a written notice of default and of the continuance thereof, as
provided in this Agreement, and also unless Certificateholders evidencing not
less than 25% of the Certificate Balance shall have made written request upon
the Owner Trustee to institute such action, suit or proceeding in its own name
as Owner Trustee under this Agreement and shall have offered to the Owner
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Owner Trustee, for 30
days after its receipt of such notice, request, and offer of indemnity, shall
have neglected or refused to institute any such action, suit, or proceeding, and
during such 30-day period no request or waiver inconsistent with such written
request has been given to the Owner Trustee pursuant to and in compliance with
this Section or Section 6.3; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Owner Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner provided in this Agreement and for the equal, ratable, and common benefit
of all Certificateholders. For the protection and enforcement of the provisions
of this Section 4.4, each and every Certificateholder and the Owner Trustee
shall be entitled to such relief as can be given either at law or in equity.
SECTION 4.5. Majority Control. No Certificateholder shall have any right
to vote or in any manner otherwise control the operation and management of the
Trust except as expressly provided in this Agreement. Except as expressly
provided herein, any action that may be taken by the Certificateholders under
this Agreement may be taken by the Holders of Certificates evidencing not less
than a majority of the Certificate Balance. Except as expressly provided herein,
any written notice of the Certificateholders delivered pursuant to this
Agreement shall be effective if signed by Certificateholders evidencing not less
than a majority of the Certificate Balance at the time of the delivery of such
notice.
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SECTION 4.6. Rights of Insurer. Notwithstanding anything to the contrary
in the Basic Documents, without the prior written consent of the Insurer or if
an Insurer Default shall have occurred and be continuing, the Security Majority,
the Owner Trustee shall not (i) remove the Master Servicer, (ii) initiate any
claim, suit or proceeding by the Trust or compromise any claim, suit or
proceeding brought by or against the Trust, other than with respect to the
enforcement of any Receivable or any rights of the Trust thereunder, (iii)
authorize the merger or consolidation of the Trust with or into any other
business trust or other entity (other than in accordance with Section 3.10 of
the Indenture), (iv) amend the Certificate of Trust or (v) amend this Agreement
in accordance with Section 11.1 of this Agreement.
ARTICLE V.
Certain Duties
SECTION 5.1. Accounting and Records to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. Subject to Sections
12.1(b)(iii) and 12.1(c) of the Sale and Servicing Agreement, the Depositor
shall (a) maintain (or cause to be maintained) the books of the Trust on a
calendar year basis on the accrual method of accounting, including, without
limitation, the allocations of net income under Section 2.11, (b) deliver (or
cause to be delivered) to each Certificateholder, as may be required by the Code
and applicable Treasury Regulations, such information as may be required
(including Schedule K-1, if applicable) to enable each Certificateholder to
prepare its Federal and state income tax returns, (c) file or cause to be filed,
if necessary, such tax returns relating to the Trust (including a partnership
information return, Form 1065), and direct the Owner Trustee or the Master
Servicer, as the case may be, to make such elections as may from time to time be
required or appropriate under any applicable state or Federal statute or rule or
regulation thereunder so as to maintain the Trust's characterization as a
branch, or if applicable, as a partnership, for Federal income tax purposes and
(d) collect or cause to be collected any withholding tax as described in and in
accordance with Section 5.9(c) of the Sale and Serving Agreement with respect to
income or distributions to Certificateholders and the appropriate forms relating
thereto. The Owner Trustee or the Master Servicer, as the case may be, shall
make all elections pursuant to this Section as directed in writing by the
Depositor. The Owner Trustee shall sign all tax information returns, if any,
filed pursuant to this Section 5.1 and any other returns as may be required by
law, and in doing so shall rely entirely upon, and shall have no liability for
information provided by, or calculations provided by, the Depositor or the
Master Servicer. The Owner Trustee shall elect under Section 1278 of the Code to
include in income currently any market discount that accrues with respect to the
Receivables. The Owner Trustee shall not make the election provided under
Section 754 of the Code.
SECTION 5.2. Signature on Returns; Tax Matters Partner. (a)
Notwithstanding the provisions of Section 5.1 and in the event that the Trust is
characterized as a partnership, the Owner Trustee shall sign on behalf of the
Trust the tax returns of the Trust, unless applicable law requires a
Certificateholder to sign such documents, in which case such documents shall be
signed by the Depositor.
(b) In the event that the Trust is characterized as a partnership, the
Depositor shall be the "tax matters partner" of the Trust pursuant to the Code.
<PAGE>
SECTION 5.3. Underwriting Agreement. The Master Servicer is hereby
authorized to execute and deliver the Underwriting Agreement with respect to the
Notes and the Certificates.
ARTICLE VI.
Authority and Duties of Owner Trustee
SECTION 6.1. General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is named
as a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is named as a party and
any amendment thereto, in each case, in such form as the Depositor shall approve
as evidenced conclusively by the Owner Trustee's execution thereof, and on
behalf of the Trust, to direct the Indenture Trustee to authenticate and deliver
Class A-1 Notes in the aggregate principal amount of $55,575,000 and Class A-2
Notes in the aggregate principal amount of $29,925,000. In addition to the
foregoing, the Owner Trustee is authorized, but shall not be obligated, to take
all actions required of the Trust pursuant to the Basic Documents. The Owner
Trustee is further authorized from time to time to take such action as the
Instructing Party recommends with respect to the Basic Documents so long as such
activities are consistent with the terms of the Basic Documents.
SECTION 6.2. General Duties. It shall be the duty of the Owner Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and to administer the Trust in the interest of the
Holders, subject to the Basic Documents and in accordance with the provisions of
this Agreement. Notwithstanding the foregoing, the Owner Trustee shall be deemed
to have discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Master Servicer has agreed in the Sale and Servicing
Agreement to perform any act or to discharge any duty of the Trust or the Owner
Trustee hereunder or under any Basic Document, and the Owner Trustee shall not
be liable for the default or failure of the Master Servicer to carry out its
obligations under the Sale and Servicing Agreement.
SECTION 6.3. Action upon Instruction. (a) Subject to Article IV and the
terms of the Spread Account Agreement, the Insurer (so long as an Insurer
Default shall not have occurred and be continuing) or the Certificateholders (if
an Insurer Default shall have occurred and be continuing) (the "Instructing
Party") shall have the exclusive right to direct the actions of the Owner
Trustee in the management of the Trust, so long as such instructions are not
inconsistent with the express terms set forth herein or in any Basic Document.
The Instructing Party shall not instruct the Owner Trustee in a manner
inconsistent with this Agreement or the Basic Documents.
(b) The Owner Trustee shall not be required to take any action hereunder
or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or any
Basic Document, the Owner Trustee shall promptly give notice (in such form as
shall be appropriate under the circumstances) to the Instructing Party
requesting instruction as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
instruction of the Instructing Party
<PAGE>
received, the Owner Trustee shall not be liable on account of such action to any
Person. If the Owner Trustee shall not have received appropriate instruction
within ten days of such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the Basic Documents,
as it shall deem to be in the best interests of the Certificateholders, and
shall have no liability to any Person for such action or
inaction.
(d) In the event that the Owner Trustee is unsure as to the application of
any provision of this Agreement or any Basic Document or any such provision is
ambiguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or in the event that this Agreement permits any
determination by the Owner Trustee or is silent or is incomplete as to the
course of action that the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances) to the Instructing Party
requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the Basic
Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Commission filing for the Trust or to
record this Agreement or any Basic Document. The Owner Trustee nevertheless
agrees that it will, at its own cost and expense, promptly take all action as
may be necessary to discharge any Liens on any part of the Owner Trust Estate
that result from actions by, or claims against, the Owner Trustee (solely in its
individual capacity) and that are not related to the ownership or the
administration of the Owner Trust Estate.
SECTION 6.5. No Action Except under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) in accordance with the Basic Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.
SECTION 6.6. Restrictions. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of the Trust set forth in Section 2.3
or (b) that, to the actual knowledge of the Owner Trustee, would result in the
Trust's becoming taxable as a corporation or a
publicly traded partnership for Federal income tax purposes. The
Certificateholders shall not direct the Owner Trustee to take action that would
violate the provisions of this Section.
ARTICLE VII.
Concerning the Owner Trustee
SECTION 7.1. Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all monies actually received by it constituting
part of the Owner Trust Estate upon the terms of the Basic Documents and this
Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any Basic Document under any circumstances, except (i) for its own willful
misconduct, bad faith or negligence, (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.3 expressly made by the Owner
Trustee in its individual capacity, (iii) for liabilities arising from the
failure of the Owner Trustee to perform obligations expressly undertaken by it
in the last sentence of Section 6.4 hereof, (iv) for any investments issued by
the Owner Trustee or any branch or affiliate thereof in its commercial capacity
or (v) for taxes, fees or other charges on, based on or measured by, any fees,
commissions or compensation received by the Owner Trustee. In particular, but
not by way of limitation (and subject to the exceptions set forth in the
preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment made
by a Responsible Officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in accordance with the instructions of the
Instructing Party, the Depositor, the Master Servicer or any Certificateholder;
(c) no provision of this Agreement or any Basic Document shall require the
Owner Trustee to expend or risk funds or otherwise incur any financial liability
in the performance of any of its rights or powers hereunder or under any Basic
Document if the Owner Trustee shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by the
Depositor or for the form, character, genuineness, sufficiency, value or
validity of any of the Owner Trust Estate or for or in respect of the validity
or sufficiency of the Basic Documents, other than the certificate of
authentication on the Certificates, and the Owner Trustee shall in no event
assume or incur any liability, duty or obligation to the Depositor, the Insurer,
Trustee, Trust Collateral Agent, the Collateral Agent, any Noteholder or to any
Certificateholder, other than as expressly provided for herein and in the Basic
Documents;
<PAGE>
(f) the Owner Trustee shall not be liable for the default or misconduct of
the Depositor, the Insurer, the Trustee, the Trust Collateral Agent or the
Master Servicer under any of the Basic Documents or otherwise and the Owner
Trustee shall have no obligation or liability to perform the obligations under
this Agreement or the Basic Documents that are required to be performed by the
Depositor under this Agreement, by the Trustee under the Indenture or the Trust
Collateral Agent or the Master Servicer under the Sale and Servicing Agreement;
and
(g) the Owner Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Basic Document, at the request, order or direction of the
Instructing Party or any of the Certificateholders, unless such Instructing
Party or Certificateholders have offered to the Owner Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities that
may be incurred by the Owner Trustee therein or thereby. The right of the Owner
Trustee to perform any discretionary act enumerated in this Agreement or in any
Basic Document shall not be construed as a duty, and the Owner Trustee shall not
be answerable for other than its negligence, bad faith or willful misconduct in
the performance of any such act.
SECTION 7.2. Furnishing of Documents. The Owner Trustee shall furnish to
the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents.
SECTION 7.3. Representations and Warranties. The Owner Trustee hereby
represents and warrants, in its individual capacity, to the Depositor, the
Holders and the Insurer (which shall have relied on such representations and
warranties in issuing the Policies), that:
(a) It is a Delaware banking corporation, duly organized and validly
existing in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the execution
and delivery by it of this Agreement, and this Agreement will be executed and
delivered by one of its officers who is duly authorized to execute and deliver
this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement, nor
the consummation by it of the transactions contemplated hereby nor compliance by
it with any of the terms or provisions hereof will contravene any federal or
Delaware state law, governmental rule or regulation governing the banking or
trust powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.
SECTION 7.4. Reliance; Advice of Counsel. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee may accept a certified copy of
a resolution of the board of directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter the
method of the determination of which is not specifically prescribed herein, the
Owner Trustee may for all purposes hereof rely on a certificate, signed by the
president or
<PAGE>
any vice president or by the treasurer, secretary or other authorized officers
of the relevant party, as to such fact or matter, and such certificate shall
constitute full protection to the Owner Trustee for any action taken or omitted
to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and according to such opinion not
contrary to this Agreement or any Basic Document.
SECTION 7.5. Not Acting in Individual Capacity. Except as provided in this
Article VII, in accepting the trusts hereby created Wilmington Trust Company
acts solely as Owner Trustee hereunder and not in its individual capacity and
all Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by this Agreement or any Basic Document shall look
only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6. Owner Trustee Not Liable for Certificates or Receivables. The
recitals contained herein and in the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates) shall be taken as the
statements of the Depositor and the Owner Trustee assumes no responsibility for
the correctness thereof. The Owner Trustee makes no representations as to the
validity or sufficiency of this Agreement, of any Basic Document or of the
Certificates (other than the signature and countersignature of the Owner Trustee
on the Certificates) or the Notes, or of any Receivable or related documents.
The Owner Trustee shall at no time have any responsibility or liability for or
with respect to the legality, validity and enforceability of any Receivable, or
the perfection and priority of any security interest created by any Receivable
in any Financed Vehicle or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Owner Trust Estate or its
ability to generate the payments to be distributed to Certificateholders under
this Agreement or the Noteholders under the Indenture, including, without
limitation: the existence, condition and ownership of any Financed Vehicle; the
existence and enforceability of any insurance thereon; the existence and
contents of any Receivable on any computer or other record thereof; the validity
of the assignment of any Receivable to the Trust or of any intervening
assignment; the completeness of any Receivable; the performance or enforcement
of any Receivable; the compliance by the Depositor, the Master Servicer or any
other Person with any warranty or representation made under any Basic Document
or in any related document or the accuracy of any such warranty or
representation or any action of the Trustee or the Master Servicer or any
subservicer taken in the name of the Owner Trustee.
SECTION 7.7. Owner Trustee May Own Certificates and Notes. The Owner
Trustee in its individual or any other capacity may become the owner or pledge
of Certificates or Notes and may deal with the Depositor, the Trustee and the
Master Servicer in banking transactions with the same rights as it would have if
it were not Owner Trustee.
SECTION 7.8. Payments from Owner Trust Estate. All payments to be made by
the Owner Trustee under this Agreement or any of the Basic Documents to which
the Trust or the
<PAGE>
Owner Trustee is a party shall be made only from the income and proceeds of the
Owner Trust Estate and only to the extent that the Owner Trust shall have
received income or proceeds from the Owner Trust Estate to make such payments in
accordance with the terms hereof. Wilmington Trust Company, or any successor
thereto, in its individual capacity, shall not be liable for any amounts payable
under this Agreement or any of the Basic Documents to which the Trust or the
Owner Trustee is a party.
SECTION 7.9. Doing Business in Other Jurisdictions. Notwithstanding
anything contained to the contrary, neither Wilmington Trust Company or any
successor thereto, nor the Owner Trustee shall be required to take any action in
any jurisdiction other than in the State of Delaware if the taking of such
action will, even after the appointment of a co-trustee or separate trustee in
accordance with Section 10.5 hereof, (i) require the consent or approval or
authorization or order of or the giving of notice to, or the registration with
or the taking of any other action in respect of, any state or other governmental
authority or agency of any jurisdiction other than the State of Delaware; (ii)
result in any fee, tax or other governmental charge under the laws of the State
of Delaware becoming payable by Wilmington Trust Company (or any successor
thereto); or (iii) subject Wilmington Trust Company (or any successor thereto)
to personal jurisdiction in any jurisdiction other than the State of Delaware
for causes of action arising from acts unrelated to the consummation of the
transactions by Wilmington Trust Company (or any successor thereto) or the Owner
Trustee, as the case may be, contemplated hereby.
ARTICLE VIII.
Compensation of Owner Trustee
SECTION 8.1. Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between Advanta and the Owner
Trustee, and the Owner Trustee shall be entitled to be reimbursed by the
Depositor for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder and under the
Basic Documents.
SECTION 8.2. Indemnification. The Depositor shall be liable as primary
obligor for, and shall indemnify the Owner Trustee (in its individual and trust
capacities) and its officers, directors, successors, assigns, agents and
servants (collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may (in its trust or individual capacities) at any time be
imposed on, incurred by, or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement, the
Basic Documents, the Owner Trust Estate, the administration of the Owner Trust
Estate or the action or inaction of the Owner Trustee hereunder, except only
that the Depositor shall not be liable for or required to indemnify the Owner
Trustee from and against Expenses arising or resulting from any of the matters
described in the third sentence of Section 7.1. The indemnities contained in
this Section and the rights under Section 8.1 shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement. In any
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Owner Trustee's choice of legal counsel shall be
subject to the approval of the Depositor which approval shall not be
unreasonably withheld.
<PAGE>
SECTION 8.3. Payments to the Owner Trustee. Any amounts paid to the Owner
Trustee pursuant to this Article VIII shall be deemed not to be a part of the
Owner Trust Estate immediately after such payment.
SECTION 8.4. Non-recourse Obligations. Notwithstanding anything in this
Agreement or any Basic Document, the Owner Trustee agrees in its individual
capacity and in its capacity as Owner Trustee for the Trust that all obligations
of the Trust to the Owner Trustee individually or as Owner Trustee for the Trust
shall be recourse to the Owner Trust Estate only and specifically shall not be
recourse to the assets of any Certificateholder.
ARTICLE IX.
Termination of Trust Agreement
SECTION 9.1. Termination of Trust Agreement. (a) This Agreement and the
Trust shall terminate and be of no further force or effect upon the latest of
(i) the maturity or other liquidation of the last Receivable (including the
purchase by the Master Servicer at its option of the corpus of the Trust as
described in Section 11.1 of the Sale and Servicing Agreement) and the
subsequent distribution of amounts in respect of such Receivables as provided in
the Basic Documents or (ii) the payment to Certificateholders of all amounts
required to be paid to them pursuant to this Agreement and the payment to the
Insurer of all amounts payable or reimbursable to it pursuant to the Sale and
Servicing Agreement; provided, however, that the rights to indemnification under
Section 8.2 and the rights under Section 8.1 shall survive the termination of
the Trust. The Master Servicer shall promptly notify the Owner Trustee and the
Insurer of any prospective termination pursuant to this Section 9.1. The
bankruptcy, liquidation, dissolution, death or incapacity of any
Certificateholder shall not (x) operate to terminate this Agreement or the
Trust, nor (y) entitle such Certificateholder's legal representatives or heirs
to claim an accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or Owner Trust Estate
nor (z) otherwise affect the rights, obligations and liabilities of the parties
hereto.
(b) Except as provided in clause (a), neither the Depositor nor any other
Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Distribution
Date upon which the Certificateholders shall surrender their Certificates to the
Trust Collateral Agent for payment of the final distribution and cancellation,
shall be given by the Owner Trustee by letter to Certificateholders mailed
within five Business Days of receipt of notice of such termination from the
Master Servicer given pursuant to Section 11.1(c) of the Sale and Servicing
Agreement, stating (i) the Distribution Date upon or with respect to which final
payment of the Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Trust Collateral Agent therein designated,
(ii) the amount of any such final payment, (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office of the Trust
Collateral Agent therein specified and (iv) interest will cease to accrue on the
Certificates. The Owner Trustee shall give such notice to the Certificate
Registrar (if other than the Owner Trustee) and the Trust Collateral Agent at
the time such notice is given to Certificateholders. Upon presentation and
surrender of the Certificates, the Trust Collateral Agent shall cause to be
distributed to Certificateholders amounts distributable on such Distribution
Date pursuant to Section 5.7 of the Sale and Servicing Agreement.
<PAGE>
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Owner Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Owner Trustee may take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Any funds remaining in the Trust after exhaustion of
such remedies shall be distributed, subject to applicable escheat laws, by the
Owner Trustee to the Depositor and Holders shall look solely to the Depositor
for payment.
(d) Any funds remaining in the Trust after funds for final distribution
have been distributed or set aside for distribution shall be distributed by the
Owner Trustee to the Depositor.
(e) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
ARTICLE X.
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation (i) satisfying the provisions of
Section 3807(a) of the Business Trust Statute; (ii) authorized to exercise
corporate trust powers; (iii) having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or State
authorities; (iv) having (or having a parent which has) a rating of at least
Baa3 by Moody's or A-1 by Standard & Poors; and (v) acceptable to the Insurer in
its sole discretion, so long as an Insurer Default shall not have occurred and
be continuing. If such corporation shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2.
SECTION 10.2. Resignation or Removal of Owner Trustee. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Depositor (or in the event that the
Depositor is not the sole Certificateholder, the Holders of Certificates
evidencing not less than a majority of the Certificate Balance), the Insurer and
the Master Servicer. Upon receiving such notice of resignation, the Depositor
shall promptly appoint a successor Owner Trustee, meeting the qualifications set
forth in Section 10.1 herein, by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Owner Trustee and one copy
to the successor Owner Trustee, provided that the Depositor shall have received
written confirmation from each of the Rating Agencies that the proposed
appointment will not result in an increased capital charge to the Insurer by
either of the Rating Agencies. If no successor Owner Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Owner Trustee or the Insurer may petition
any court of competent jurisdiction for the appointment of a successor Owner
Trustee.
<PAGE>
If at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 10.1 and shall fail to resign after written
request therefor by the Depositor, or if at any time the Owner Trustee shall be
legally unable to act, or shall be adjudged bankrupt or insolvent, or a receiver
of the Owner Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Owner Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor with the consent of the Insurer (so long as an Insurer Default shall
not have occurred and be continuing) may remove the Owner Trustee. If the
Depositor shall remove the Owner Trustee under the authority of the immediately
preceding sentence, the Depositor shall promptly appoint a successor Owner
Trustee, meeting the qualifications set forth in Section 10.1 herein, by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
outgoing Owner Trustee so removed, one copy to the Insurer and one copy to the
successor Owner Trustee and payment of all fees owed to the outgoing Owner
Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Depositor shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies.
SECTION 10.3. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Depositor, the Master Servicer, the Insurer and to its predecessor Owner Trustee
an instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become effective
and such successor Owner Trustee, without any further act, deed or conveyance,
shall become fully vested with all the rights, powers, duties and obligations of
its predecessor under this Agreement, with like effect as if originally named as
Owner Trustee. The predecessor Owner Trustee shall upon payment of its fees and
expenses deliver to the successor Owner Trustee all documents and statements and
monies held by it under this Agreement; and the Depositor and the predecessor
Owner Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Owner Trustee all such rights, powers, duties and
obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Master Servicer shall mail notice of the successor of such
Owner Trustee to all Certificateholders, the Trustee, the Noteholders and the
Rating Agencies. If the Master Servicer shall fail to mail such notice within 10
days after acceptance of appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Master Servicer.
SECTION 10.4. Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation shall be eligible pursuant to Section 10.1, without the
execution or filing of any instrument or any further act
<PAGE>
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided further that the Owner Trustee shall mail notice of
such merger or consolidation to the Rating Agencies.
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Financed Vehicle may at the time be located,
the Master Servicer and the Owner Trustee acting jointly shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Owner Trustee and the Insurer to act as co-trustee, jointly with
the Owner Trustee, or separate trustee or separate trustees, of all or any part
of the Owner Trust Estate, and to vest in such Person, in such capacity, such
title to the Trust, or any part thereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the Master
Servicer and the Owner Trustee may consider necessary or desirable. If the
Master Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request so to do, the Owner Trustee subject, unless an
Insurer Default shall have occurred and be continuing, to the approval of the
Insurer (which approval shall not be unreasonably withheld) shall have the power
to make such appointment. No co-trustee or separate trustee under this Agreement
shall be required to meet the terms of eligibility as a successor trustee
pursuant to Section 10.1 and no notice of the appointment of any co-trustee or
separate trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Owner Trustee joining
in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Owner Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Master Servicer and the Owner Trustee acting jointly may
at any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Owner Trustee. Each such instrument shall be filed with the Owner Trustee and a
copy thereof given to the Master Servicer and the Insurer.
<PAGE>
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE XI.
Miscellaneous
SECTION 11.1. Supplements and Amendments. (a) This Agreement may be
amended by the Depositor and the Owner Trustee, with the prior written consent
of the Insurer (so long as an Insurer Default shall not have occurred and be
continuing) and with prior written notice to the Rating Agencies, without the
consent of any of the Noteholders or, in the event that the Depositor is not the
sole Certificateholder, the Certificateholders, (i) to cure any ambiguity or
defect or (ii) to correct, supplement or modify any provisions in this
Agreement; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel which may be based upon a certificate of the Master Servicer,
adversely affect in any material respect the interests of any Noteholder or
Certificateholder.
(b) This Agreement may also be amended from time to time, with the prior
written consent of the Insurer (so long as an Insurer Default shall not have
occurred and be continuing) by the Depositor and the Owner Trustee, with prior
written notice to the Rating Agencies, to the extent such amendment materially
and adversely affects the interests of the Noteholders, with the consent of the
Noteholders evidencing not less than a majority of the Outstanding Amount of the
Notes and, the consent of the Certificateholders evidencing not less than a
majority of the Certificate Balance (which consent of any Holder of a
Certificate or Note given pursuant to this Section or pursuant to any other
provision of this Agreement shall be conclusive and binding on such Holder and
on all future Holders of such Certificate or Note and of any Certificate or Note
issued upon the transfer thereof or in exchange thereof or in lieu thereof
whether or not notation of such consent is made upon the Certificate or Note)
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided,
however, that, subject to the express rights of the Insurer under the Basic
Documents, no such amendment shall (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
Receivables or distributions that shall be required to be made for the benefit
of the Noteholders or the Certificateholders or (b) reduce the aforesaid
percentage of the Outstanding Amount of the Notes and the Certificate Balance,
the Holders of which are required to consent to any such amendment, without the
consent of the Holders of all the outstanding Notes and Holders of all
outstanding Certificates.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder, the Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders, the
Noteholders or the Trustee pursuant to this Section to approve the particular
form of any proposed amendment or consent, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents (and any other consents of Certificateholders provided for in this
Agreement or
<PAGE>
in any other Basic Document) and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe. Promptly after the execution of
any amendment to the Certificate of Trust, the Owner Trustee shall cause the
filing of such amendment with the Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 11.2. No Legal Title to Owner Trust Estate in Certificateholders.
The Certificateholders shall not have legal title to any part of the Owner Trust
Estate. The Certificateholders shall be entitled to receive distributions with
respect to their undivided ownership interest therein only in accordance with
Articles V and IX. No transfer, by operation of law or otherwise, of any right,
title or interest of the Certificateholders to and in their ownership interest
in the Owner Trust Estate shall operate to terminate this Agreement or the
trusts hereunder or entitle any transferee to an accounting or to the transfer
to it of legal title to any part of the Owner Trust Estate.
SECTION 11.3. Limitations on Rights of Others. Except for Section 2.7, the
provisions of this Agreement are solely for the benefit of the Owner Trustee,
the Depositor, the Certificateholders, the Master Servicer and, to the extent
expressly provided herein, the Insurer, the Trustee and the Noteholders, and
nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 11.4. Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt personally delivered, delivered by overnight courier
or mailed first class mail or certified mail, in each case return receipt
requested, and shall be deemed to have been duly given upon receipt, if to the
Owner Trustee, addressed to the Corporate Trust Office; if to the Depositor,
addressed to Advanta Auto Receivables Corp. I, 1325 Airmotive Way, Suite 130,
Reno, Nevada 89502; if to the holder of the Insurer, addressed to Insurer,
Financial Security Assurance Inc., 350 Park Avenue, New York, NY 10022,
Attention: Surveillance Department, Telex No.: (212) 688-3101, Confirmation:
(212) 826-0100, Telecopy Nos.: (212) 339-3518, (212) 339-3529 (in each case in
which notice or other communication to Financial Security refers to an Event of
Default, a claim on the Policies or with respect to which failure on the part of
Financial Security to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should also be
sent to the attention of the General Counsel and the Head-Financial Guaranty
Group "URGENT MATERIAL ENCLOSED"); or, as to each party, at such other address
as shall be designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.
<PAGE>
SECTION 11.5. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.6. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7. Assignments; Insurer. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. This Agreement shall also inure to the benefit
of the Insurer for so long as an Insurer Default shall not have occurred and be
continuing. Without limiting the generality of the foregoing, all covenants and
agreements in this Agreement which confer rights upon the Insurer shall be for
the benefit of and run directly to the Insurer, and the Insurer shall be
entitled to rely on and enforce such covenants, subject, however, to the
limitations on such rights provided in this Agreement and the Basic Documents.
The Insurer may disclaim any of its rights and powers under this Agreement (but
not its duties and obligations under the Policies) upon delivery of a written
notice to the Owner Trustee.
SECTION 11.8. No Petition. The Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Certificate, and the Trustee and each
Noteholder by accepting the benefits of this Agreement, hereby covenants and
agrees that they will not at any time institute against the Depositor, or join
in any institution against the Depositor of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Certificates, the Notes, this Agreement or any
of the Basic Documents.
SECTION 11.9. No Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in the Trust only and do not represent interests in or
obligations of the Master Servicer, the Depositor, the Owner Trustee, the
Trustee, the Insurer or any Affiliate thereof and no recourse may be had against
such parties or their assets, except as may be expressly set forth or
contemplated in this Agreement, the Certificates or the Basic Documents.
SECTION 11.10. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 11.11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.12. Master Servicer. The Master Servicer is authorized to
prepare, or cause to be prepared, execute and deliver on behalf of the Trust all
such documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of the Trust or Owner Trustee to prepare,
<PAGE>
file or deliver pursuant to the Basic Documents. Upon written request, the Owner
Trustee shall execute and deliver to the Master Servicer a limited power of
attorney appointing the Master Servicer the Trust's agent and attorney-in-fact
to prepare, or cause to be prepared, execute and deliver all such documents,
reports, filings, instruments, certificates and opinions.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed by their respective officers hereunto duly authorized as of the
day and year first above written.
WILMINGTON TRUST COMPANY
Owner Trustee
By:_________________________________
Name:
Title:
ADVANTA AUTO RECEIVABLES
CORP. I
Depositor
By:_________________________________
Name: Mark T. Dunsheath
Title: Vice President
Acknowledged and Agreed:
ADVANTA AUTO FINANCE CORPORATION
Master Servicer
By:____________________________
Name: Mark T. Dunsheath
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE
NUMBER $14,500,000
1
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE IN
RELIANCE UPON EXEMPTIONS PROVIDED BY THE SECURITIES ACT AND SUCH STATE
SECURITIES LAWS. NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE
UNLESS SUCH RESALE OR TRANSFER (A) IS MADE IN ACCORDANCE WITH SECTION 3.4 OF THE
OWNER TRUST AGREEMENT PERTAINING TO THE ADVANTA AUTO RECEIVABLES TRUST 1997-1
(THE "AGREEMENT") AND (B) IS MADE (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, (ii) IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS, (iii) TO THE SELLER OR (iv) TO A PERSON WHO THE TRANSFEROR REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT THAT IS AWARE THAT THE RESALE OR OTHER TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A AND (C) UPON THE SATISFACTION OF CERTAIN
OTHER REQUIREMENTS SPECIFIED IN THE AGREEMENT. NEITHER THE SELLER, THE MASTER
SERVICER, THE TRUST NOR THE OWNER TRUSTEE IS OBLIGATED TO REGISTER THE
CERTIFICATES UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
THE PRINCIPAL OF THIS CERTIFICATE IS DISTRIBUTABLE IN INSTALLMENTS AS
SET FORTH IN THE TRUST AGREEMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL OF THIS
CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
---------------------------------
6.75% ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in certain distributions of the
Trust, as defined below, the property of which includes a pool of retail
installment sale contracts secured by new or used automobiles, vans or light
duty trucks and sold to the Trust by Advanta Auto Receivables Corp. I.
(This Certificate does not represent an interest in or obligation of Advanta
Auto Receivables Corp. I or any of its Affiliates, except to the extent
described below.)
THIS CERTIFIES THAT Advanta Auto Receivables Corp. I is the registered
owner of $14,500,000 nonassessable, fully-paid, beneficial ownership interest in
certain distributions of Advanta Automobile Receivables Trust 1997-1 (the
"Trust") formed by Advanta Auto Receivables Corp. I, a Nevada corporation (the
"Depositor"). The Certificates have a Certificate Rate of 6.75% per annum.
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
A-1
<PAGE>
WILMINGTON TRUST COMPANY
not in its individual
capacity but solely as
Owner Trustee
by_______________________________________________________Authenticating Agent
by___________________________________________________________________________
The Trust was created pursuant to a Trust Agreement dated as of March 1,
1997 (the "Trust Agreement"), between the Depositor and Wilmington Trust
Company, as owner trustee (the "Owner Trustee"), a summary of certain of the
pertinent provisions of which is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings assigned to
them in the Trust Agreement.
This Certificate is one of the duly authorized Certificates designated as
"6.75% Asset Backed Certificates" (herein called the "Certificates"). Also
issued under the Indenture dated as of March 1, 1997, among the Trust, Bankers
Trust Company, as trustee and trust collateral agent, are three classes of Notes
designated as "Class A-1 Floating Rate Asset Backed Notes" (the "Class A-1
Notes") and "Class A-2 6.75% Asset Backed Notes" (the "Class A-2 Notes",
together with the Class A-1 Notes, (the "Notes"). This Certificate is issued
under and is subject to the terms, provisions and conditions of the Trust
Agreement, to which Trust Agreement the holder of this Certificate by virtue of
the acceptance hereof assents and by which such holder is bound. The property of
the Trust includes a pool of retail installment sale contracts secured by new
and used automobiles, vans or light duty trucks (the "Receivables"), all monies
due thereunder on or after Initial Cutoff Date, security interests in the
vehicles financed thereby, certain bank accounts and the proceeds thereof,
proceeds from claims on certain insurance policies and certain other rights
under the Trust Agreement and the Sale and Servicing Agreement, all right, to
and interest of the Depositor in and to the Purchase Agreement dated as of March
1, 1997 between Advanta Auto Finance Corporation and Advanta Auto Receivables
Corp. I and all proceeds of the foregoing.
Under the Trust Agreement, there will be distributed on the 15th day of
each month or, if such 15th day is not a Business Day, the next Business Day
(the "Distribution Date"), commencing on April 15, 1997, to the Person in whose
name this Certificate is registered at the close of business on the Business Day
preceding such Distribution Date (the "Record Date") such Certificateholder's
fractional undivided interest in the amount to be distributed to
Certificateholders on such Distribution Date. No principal will be paid on the
Certificate until the Class A-2 Notes have been paid in full.
The holder of this Certificate acknowledges and agrees that its rights to
receive distributions in respect of this Certificate are subordinated to the
rights of the Noteholders as described in the Sale and Servicing Agreement, the
Indenture and the Trust Agreement, as applicable.
The holder of this Certificate, by acceptance of this Certificate,
specifically acknowledges that it has no right to or interest in any monies at
any time held pursuant to the Spread Account Agreement or prior to the release
of such monies pursuant to Section 5.7(b) of the Sale and Servicing Agreement,
such monies being held in trust for the benefit of the Noteholders and the
Insurer. Notwithstanding the foregoing, in the event that it is ever determined
that the monies held in the Spread Account constitute a pledge of collateral,
then the provisions of the Sale and Servicing Agreement and the Spread Account
Agreement shall be considered to constitute a security agreement and the holder
of this Certificate hereby grants to the Trust Collateral Agent for the benefit
of the Trustee and the Insurer a first priority perfected security interest in
such amounts, to be applied as set forth in Section 3.03 of the Spread Account
Agreement. In addition, each Certificateholder, by acceptance of its
Certificate,
A-2
<PAGE>
hereby appoints the Seller as its agent to pledge a first priority perfected
security interest in the Spread Account, and any amounts held therein from time
to time to the Collateral Agent for the benefit of the Trustee and the Insurer
pursuant to the Spread Account Agreement and agrees to execute and deliver such
instruments of conveyance, assignment, grant, confirmation, etc., as well as any
financing statements, in each case as the Insurer shall consider reasonably
necessary in order to perfect the Trust Collateral Agent's security interest in
the Collateral.
It is the intent of the Depositor, the Master Servicer, and the
Certificateholders that, for purposes of Federal income taxes, the Trust will be
treated as a branch. In the event that the Certificates are held more than one
Holder, it is the intent of the Depositor, the Master Servicer, and the
Certificateholders that, for purposes of Federal income taxes, the Trust will be
treated as a partnership and the Certificateholders will be treated as partners
in that partnership. The Depositor and any other Certificateholders, by
acceptance of a Certificate, agree to treat, and to take no action inconsistent
with the treatment of, the Certificates for such tax purposes as partnership
interests in the Trust. Each Certificateholder, by its acceptance of a
Certificate, covenants and agrees that such Certificateholder will not at any
time institute against the Trust or the Depositor, or join in any institution
against the Trust or the Depositor of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Certificates, the Notes, the Trust Agreement or
any of the Basic Documents.
Distributions on this Certificate will be made as provided in the Sale and
Servicing Agreement by the Trust Collateral Agent by wire transfer or check
mailed to the Certificateholder of record in the Certificate Register without
the presentation or surrender of this Certificate or the making of any notation
hereon. Except as otherwise provided in the Trust Agreement and notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for the purpose by the Owner Trustee in the Corporate Trust Office.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed by
an authorized officer of the Owner Trustee, by manual signature, this
Certificate shall not entitle the holder hereof to any benefit under the Trust
Agreement or the Sale and Servicing Agreement or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
A-3
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Certificate to be duly executed.
ADVANTA AUTOMOBILE
RECEIVABLES TRUST 1997-1
By: WILMINGTON TRUST COMPANY not in its individual
capacity but solely as Owner Trustee
Dated: March 31, 1997 By:__________________________________
By: ____________________________
Name:
Title:
A-4
<PAGE>
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an interest in, the
Depositor, the Master Servicer, the Owner Trustee or any Affiliates of any of
them and no recourse may be had against such parties or their assets, except as
may be expressly set forth or contemplated herein or in the Trust Agreement, the
Indenture or the Basic Documents. In addition, this Certificate is not
guaranteed by any governmental agency or instrumentality and is limited in right
of payment to certain collections with respect to the Receivables, as more
specifically set forth herein and in the Sale and Servicing Agreement. A copy of
each of the Sale and Servicing Agreement and the Trust Agreement may be examined
during normal business hours at the principal office of the Depositor, and at
such other places, if any, designated by the Depositor, by any Certificateholder
upon written request.
The Trust Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Trust Agreement at
any time by the Depositor and the Owner Trustee with the prior written consent
of Financial Security Assurance, Inc. (the "Insurer") so long as no Insurer
Default has occurred and is continuing, and with the consent of the holders of
the Notes and the Certificates evidencing not less than a majority of the
outstanding Notes and the Certificate Balance. Any such consent by the holder of
this Certificate shall be conclusive and binding on such holder and on all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Trust Agreement also permits
the amendment thereof, in certain limited circumstances, without the consent of
the holders of any of the Certificates (other than the Depositor or the
Insurer).
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Owner Trustee in the Corporate Trust Office, accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations evidencing the same aggregate interest in the Trust
will be issued to the designated transferee. The initial Certificate Registrar
appointed under the Trust Agreement is Wilmington Trust Company.
Except for Certificates issued to the Depositor, the Certificates are
issuable only as registered Certificates without coupons in denominations of
$100,000 or integral multiples of $1,000 in excess thereof. As provided in the
Trust Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates in authorized denominations
evidencing the same aggregate denomination, as requested by the holder
surrendering the same. No service charge will be made for any such registration
of transfer or exchange, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
payable in connection therewith.
The Owner Trustee, the Certificate Registrar and any agent of the Owner
Trustee, the Certificate Registrar or the Insurer may treat the person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Owner Trustee, the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Trust Agreement and the
Sale and Servicing Agreement and the disposition of all property held as part of
the Trust. The Master Servicer of the Receivables may at its option purchase
A-5
<PAGE>
the corpus of the Trust at a price specified in the Sale and Servicing
Agreement, and such purchase of the Receivables and other property of the Trust
will effect a transfer of the Certificates; however, such right of purchase is
exercisable, subject to certain restrictions, only as of the last day of any
Monthly Period as of which the Pool Balance is 10% or less of the Original Pool
Balance.
The Certificates may not be acquired by (a) an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (b) a plan described in Section 4975(e) (1) of the Code or (c) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By accepting and holding this
Certificate, the Holder hereof shall be deemed to have represented and warranted
that it is not a Benefit Plan.
The recitals contained herein shall be taken as the statements of the
Depositor or the Master Servicer, as the case may be, and the Owner Trustee
assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representations as to the validity or sufficiency of this Certificate or of
any Receivable or related document.
Unless the certificate of authentication hereon shall have been executed by
an authorized officer of the Owner Trustee, by manual or facsimile signature,
this Certificate shall not entitle the holder hereof to any benefit under the
Trust Agreement or the Sale and Servicing Agreement or be valid for any purpose.
A-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
_______________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
_______________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
____________________Attorney to transfer said Certificate on the books of the
Certificate Registrar, with full power of substitution in the premises.
Dated:
__________________________ *
Signature Guaranteed:
__________________________ *
____________
* NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Certificate in
every particular, without alteration, enlargement or any change whatever.
Such signature must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Certificate Registrar, which requirements
include membership or participation in STAMP or such other "signature
guarantee program" as may be determined by the Certificate Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT B
CERTIFICATE OF TRUST OF
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-1
This Certificate of Trust of Advanta Automobile Receivables Trust 1997-1
(the "Trust"), dated as of March 26, 1997, is being duly executed and filed by
Wilmington Trust Company, a Delaware banking corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, ss. 3801 et
seq.).
1. Name. The name of the business trust formed
hereby is Advanta Automobile Receivables Trust 1997-1.
2. Delaware Trust. The name and business address
of the Trustee of the Trust in the State of Delaware is Wilmington Trust
Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001. Attn: Corporate Trust Administration.
3. This Certificate of Trust will be effective
March 31, 1997.
IN WITNESS WHEREOF, the undersigned, being the sole trustee
of the Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY
not in its individual capacity but
solely as owner trustee of the Trust.
By:_________________________________
Name:
Title:
B-1
<PAGE>
EXHIBIT 4.3
EXECUTION COPY
- ------------------------------------------------------------------------------
SALE AND SERVICING
AGREEMENT
among
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-1,
Issuer,
ADVANTA AUTO RECEIVABLES CORP. I,
Seller,
ADVANTA AUTO FINANCE CORPORATION,
Master Servicer
and
BANKERS TRUST COMPANY
Trust Collateral Agent
Dated as of March 1, 1997
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
Definitions
SECTION 1.1. Definitions.............................................................. 1
SECTION 1.2. Other Definitional Provisions............................................ 21
SECTION 1.3. Usage of Terms........................................................... 22
SECTION 1.4. Certain References....................................................... 22
SECTION 1.5. No Recourse.............................................................. 22
SECTION 1.6. Action by or Consent of Noteholders and Certificateholders............... 22
SECTION 1.7. Material Adverse Effect.................................................. 22
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Initial Receivables........................................ 23
SECTION 2.2. Conveyance of Subsequent Receivables..................................... 24
SECTION 2.3. Further Encumbrance of Trust Property.................................... 27
ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties of Seller................................. 27
SECTION 3.2. Repurchase upon Breach................................................... 28
SECTION 3.3. Custody of Receivables Files............................................. 28
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of the Master Servicer............................................ 30
SECTION 4.2. Collection of Receivable Payments; Modifications of Receivables;
Lockbox Agreements....................................................... 31
SECTION 4.3. Realization Upon Receivables............................................. 32
SECTION 4.4. Insurance................................................................ 33
SECTION 4.5. Maintenance of Security Interests in Vehicles............................ 34
SECTION 4.6. Covenants, Representations, and Warranties of Master Servicer............ 35
SECTION 4.7. Purchase of Receivables Upon Breach of Covenant.......................... 36
SECTION 4.8. Total Servicing Fee; Payment of Certain Expenses by Master Servicer...... 36
SECTION 4.9. Master Servicer's Certificate............................................ 37
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 4.10. Annual Statement as to Compliance, Notice of Master
Servicer Termination Event............................................... 37
SECTION 4.11. Annual Independent Accountants' Report................................... 38
SECTION 4.12. Access to Certain Documentation and Information Regarding
Receivables.............................................................. 39
SECTION 4.13. Monthly Tape............................................................. 39
SECTION 4.14. Retention and Termination of Master Servicer............................. 39
SECTION 4.15. Fidelity Bond and Errors and Omissions Policy............................ 40
ARTICLE V
Trust Accounts; Distributions;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts.......................................... 40
SECTION 5.2. Capitalized Interest Account............................................. 43
SECTION 5.3. Certain Reimbursements to the Master Servicer............................ 43
SECTION 5.4. Application of Collections............................................... 43
SECTION 5.5. Withdrawals from Series 1997-1 Spread Account............................ 44
SECTION 5.6. Additional Deposits...................................................... 44
SECTION 5.7. Distributions............................................................ 45
SECTION 5.8. Note Distribution Account................................................ 47
SECTION 5.10. Pre-Funding Account...................................................... 49
SECTION 5.11. Statements to Certificateholders and Noteholders......................... 50
SECTION 5.12. Optional Deposits by the Insurer......................................... 51
ARTICLE VI
The Note Policy
SECTION 6.1. Claims Under Note Policy................................................. 51
SECTION 6.2. Preference Claims........................................................ 52
SECTION 6.3. Surrender of Policy...................................................... 53
ARTICLE VII
RESERVED
ARTICLE VIII
The Seller
SECTION 8.1. Representations of Seller................................................ 53
SECTION 8.2. Corporate Existence...................................................... 54
SECTION 8.3. Liability of Seller; Indemnities......................................... 55
SECTION 8.4. Merger or Consolidation of, or Assumption of the Obligations of,
Seller................................................................... 56
SECTION 8.5. Limitation on Liability of Seller and Others............................. 57
SECTION 8.6. Seller May Own Certificates or Notes..................................... 57
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE IX
The Master Servicer
SECTION 9.1. Representations of Master Servicer....................................... 57
SECTION 9.2. Liability of Master Servicer; Indemnities................................ 59
SECTION 9.3. Merger or Consolidation of, or Assumption of the Obligations of the
Master Servicer or the Trust Collateral Agent............................ 60
SECTION 9.4. Limitation on Liability of Master Servicer, Trust Collateral Agent
and Others............................................................... 61
SECTION 9.5. Delegation of Duties..................................................... 62
SECTION 9.6. Master Servicer and Trust Collateral Agent Not to Resign................. 62
SECTION 9.7. Sub-Servicing Agreements Between Master Servicer and Sub- Servicers...... 64
SECTION 9.8. Successor Sub-Servicers.................................................. 64
SECTION 9.9. Liability of Master Servicer............................................. 64
SECTION 9.10. No Contractual Relationship.............................................. 64
SECTION 9.11. Assumption or Termination of Sub-Servicing Agreement..................... 65
ARTICLE X
Default
SECTION 10.1. Master Servicer Termination Event....................................... 65
SECTION 10.2. Consequences of a Master Servicer Termination Event..................... 66
SECTION 10.3. Appointment of Successor................................................ 67
SECTION 10.4. Notification to Noteholders and Certificateholders...................... 69
SECTION 10.5. Waiver of Past Defaults................................................. 69
SECTION 10.6. Termination of Trust Collateral Agent................................... 69
SECTION 10.7. Successor to Master Servicer............................................ 69
ARTICLE XI
Termination
SECTION 11.1. Optional Purchase of All Receivables.................................... 70
ARTICLE XII
Administrative Duties of the Master Servicer
SECTION 12.1. Administrative Duties................................................... 71
SECTION 12.2. Records................................................................. 73
SECTION 12.3. Additional Information to be Furnished to the Issuer.................... 73
ARTICLE XIII
Miscellaneous Provisions
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 13.1. Amendment............................................................... 73
SECTION 13.2. Protection of Title to Trust............................................ 74
SECTION 13.3. Notices................................................................. 76
SECTION 13.4. Assignment.............................................................. 77
SECTION 13.5. Limitations on Rights of Others......................................... 77
SECTION 13.6. Severability............................................................ 77
SECTION 13.7. Separate Counterparts................................................... 78
SECTION 13.8. Headings................................................................ 78
SECTION 13.9. Governing Law........................................................... 78
SECTION 13.10. Assignment to Trustee................................................... 78
SECTION 13.11. Nonpetition Covenants................................................... 78
SECTION 13.12. Limitation of Liability of Owner Trustee and Trustee.................... 78
SECTION 13.13. Independence of the Master Servicer..................................... 79
SECTION 13.14. No Joint Venture........................................................ 79
</TABLE>
SCHEDULES
Schedule A - Schedule of Receivables
Schedule B - Schedule of Representations and Warranties
EXHIBITS
Exhibit A - Form of Subsequent Transfer Agreement
Exhibit B - Form of Servicer's Certificate
Exhibit C - Form of Deficiency Claim Notice
iv
<PAGE>
SALE AND SERVICING AGREEMENT dated as of March 1, 1997, among
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-1, a Delaware business trust (the
"Issuer"), ADVANTA AUTO RECEIVABLES CORP. I, a Nevada corporation (the
"Seller"), and ADVANTA AUTO FINANCE CORPORATION, a Nevada corporation (the
"Master Servicer"), and BANKERS TRUST COMPANY, a New York banking corporation,
in its capacity as Trust Collateral Agent.
WHEREAS the Issuer desires to purchase a portfolio of
receivables arising in connection with motor vehicle retail installment sale
contracts acquired by Advanta Auto Finance Corporation directly or indirectly
through motor vehicle dealers;
WHEREAS the Seller has purchased such receivables from Advanta
Auto Finance Corporation and is willing to sell such receivables to the Issuer;
WHEREAS the Issuer desires to purchase additional receivables
arising in connection with motor vehicle retail installment sale contracts to be
acquired by Advanta Auto Finance Corporation directly or indirectly through
motor vehicle dealers;
WHEREAS the Seller has an agreement to purchase such
additional receivables from Advanta Auto Finance Corporation and is willing to
sell such receivables to the Issuer;
WHEREAS the Master Servicer is willing to service all such
receivables;
NOW, THEREFORE, in consideration of the promises and the
mutual covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions. Whenever used in this Agreement,
the following words and phrases shall have the following meanings:
"Accountants' Report" means the report of a firm of nationally
recognized independent accountants described in Section 4.11.
"Accounting Date" means, with respect to a Distribution Date,
the last day of the Collection Period immediately preceding such Distribution
Date.
"Actuarial Method" means the method of allocating a fixed
level payment on an obligation between principal and interest, pursuant to which
the portion of such payment that is allocated to interest is equal to the
product of (a) 1/12, (b) the fixed rate of interest on such obligation and (c)
the outstanding principal balance of such obligation.
"Actuarial Receivable" means a Receivable under which the
portion of the payment allocated to interest and the portion allocable to
principal is determined in accordance with the Actuarial Method.
<PAGE>
"Administrative Receivable" means, with respect to any
Collection Period, a Receivable which the Master Servicer is required to
purchase pursuant to Section 4.7 or which the Master Servicer has elected to
purchase pursuant to Section 4.4(c) on the Deposit Date with respect to such
Collection Period.
"Addition Notice" means, with respect to any transfer of
Subsequent Receivables to the Trust pursuant to Section 2.2 of this Agreement,
notice of the Seller's election to transfer Subsequent Receivables to the Trust,
such notice to designate the related Subsequent Transfer Date and the
approximate principal amount of Subsequent Receivables to be transferred on such
Subsequent Transfer Date.
"Advanta" means Advanta Auto Finance Corporation.
"Affiliate" means, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Principal Balance" means, with respect to any date
of determination, the sum of the Principal Balances for all Receivables (other
than (i) any Receivable that became a Liquidated Receivable during the related
Collection Period and (ii) any Receivable that became a Purchased Receivable
during the related Collection Period) as of the date of determination.
"Agreement" means this Sale and Servicing Agreement, as the
same may be amended and supplemented from time to time.
"Amount Financed" means, with respect to a Receivable, the
aggregate amount advanced under such Receivable toward the purchase price of the
Financed Vehicle and any related costs, including amounts advanced in respect of
accessories, insurance premiums, service and warranty contracts, other items
customarily financed as part of retail automobile installment sale contracts or
promissory notes, and related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the
annual percentage rate of finance charges or service charges, as stated in the
related Contract.
"Available Funds" means, with respect to any Determination
Date, the sum of (i) the Collected Funds for such Determination Date, (ii) all
Purchase Amounts deposited in the Collection Account during the related
Collection Period, plus Investment Earnings with respect to the Trust Accounts
for the related Distribution Date, (iii) the Monthly Capitalized Interest Amount
with respect to the related Distribution Date, (iv) following the acceleration
of the Notes pursuant to Section 5.2 of the Indenture, the amount of money or
property collected pursuant to Section 5.6 of the Indenture since the preceding
Determination Date by the Trust Collateral Agent or Controlling Party for
distribution pursuant to Section 5.7 hereof, (v) if such Determination Date
immediately precedes the Mandatory Redemption Date, any Pre-Funded Amount to be
deposited into the Collection Account on such Distribution Date pursuant to
Section 5.7(a), and (vi) the proceeds of any purchase or sale of the assets of
the Trust described in Section 11.1 hereof.
2
<PAGE>
"Base Servicing Fee" means, with respect to any Collection
Period, the fee payable to the Master Servicer for services rendered during such
Collection Period, which shall be equal to one-twelfth of the Servicing Fee Rate
multiplied by the Pool Balance as of the close of business on the last day of
the preceding Monthly Period.
"Basic Documents" means this Agreement, the Certificate of
Trust, the Trust Agreement, the Indenture, the Spread Account Agreement and
other documents and certificates delivered in connection therewith.
"Business Day" means a day other than a Saturday, a Sunday or
other day on which commercial banks located in the states of Delaware, Nevada,
Pennsylvania or New York are authorized or obligated to be closed.
"Capitalized Interest Account" means the account designated as
such, established and maintained pursuant to Section 5.2.
"Capitalized Interest Account Initial Deposit" means $0
deposited on the Closing Date.
"Certificate" means a Trust Certificate (as defined in the
Trust Agreement).
"Certificate Balance" equals, as of the Closing Date,
$14,500,000 and as of any date thereafter, the initial Certificate Balance (i)
increased by an amount equal to 14.5% of the Principal Balance (calculated as of
the related Subsequent Transfer Date) of the Subsequent Receivables transferred
to the Issuer prior to such date, (ii) minus all amounts allocable to principal
previously distributed to Certificateholders and (iii) minus the aggregate
cumulative amount of all Realized Losses since the Closing Date.
"Certificate Distribution Account" has the meaning assigned to
such term in Section 5.1(a)(iii) hereof.
"Certificate Pool Factor" as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the Certificate
Balance as of such Distribution Date divided by the Maximum Certificate Balance.
"Certificate Rate" means 6.75% per annum.
"Certificateholder" has the meaning assigned to such term in
the Trust Agreement.
"Certificateholders' Distributable Amount" means, with respect
to any Distribution Date, the sum of the Certificateholders' Interest
Distributable Amount and the Certificateholders' Principal Distributable Amount.
"Certificateholders' Interest Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Certificateholders' Monthly
Interest Distributable Amount for the preceding Distribution Date and any
outstanding Certificateholders' Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest at the Certificate
Rate that was actually deposited in the Certificate Distribution Account on such
preceding Distribution Date, plus interest on such excess, to the extent
permitted by law, at the
3
<PAGE>
Certificate Rate from and including such preceding Distribution Date to but
excluding the current Distribution Date.
"Certificateholders' Interest Distributable Amount" means,
with respect to any Distribution Date, the sum of the Certificateholders'
Monthly Interest Distributable Amount for such Distribution Date and the
Certificateholders' Interest Carryover Shortfall for such Distribution Date.
"Certificateholders' Monthly Interest Distributable Amount"
means, with respect to any Distribution Date, interest accrued during the
related Interest Period (including the initial Interest Period which will
consist of 15 days) at the Certificate Rate on the Certificate Balance
immediately preceding such Distribution Date. Interest shall be computed on the
basis of a 360- day year of twelve 30-day months for purposes of this
definition.
"Certificateholders' Monthly Principal Distributable Amount"
means, with respect to any Distribution Date, the Certificateholders'
Percentage of the Principal Distributable Amount.
"Certificateholders' Percentage" means (i) for each
Distribution Date prior to the Distribution Date on which the Class A-2 Notes
are paid in full, 10%, (ii) on the Distribution Date on which the Class A-2
Notes are paid in full, the excess of 100% over the percentage necessary to pay
the Class A-2 Notes in full, and (iii) for each Distribution Date thereafter to
and including the Distribution Date on which the Certificate Balance is reduced
to zero, the lesser of (x) 100% and (y) the percentage necessary to reduce the
Certificate Balance to zero.
"Certificateholders' Principal Carryover Shortfall" means, as
of the close of any Distribution Date, the excess of the Certificateholders'
Monthly Principal Distributable Amount and any outstanding Certificateholders'
Principal Carryover Shortfall from the preceding Distribution Date, over the
amount in respect of principal that is actually deposited in the Certificate
Distribution Account on such current Distribution Date.
"Certificateholders' Principal Distributable Amount" means,
with respect to any Distribution Date, the sum of the Certificateholders'
Monthly Principal Distributable Amount for such Distribution Date and the
Certificateholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date; provided, however, that the Certificateholders'
Principal Distributable Amount (i) shall not exceed the Certificate Balance and
(ii) shall equal the Certificate Balance on the Final Scheduled Distribution
Date for the Certificates.
"Class" means the Class A-1 Notes or the Class A-2 Notes, as
the context requires.
"Class A-1 Interest Period" means, with respect to any
Distribution Date, the period from and including the Closing Date (in the case
of the first Distribution Date) or from and including the most recent
Distribution Date on which interest has been paid to but excluding such
Distribution Date.
"Class A-1 Note Interest Rate" means the London interbank
offered rates for one- month U.S. dollar deposits ("LIBOR") plus 0.14%, subject
to a maximum rate equal to 11% per annum (computed on the basis of the actual
number of days elapsed in a 360-day year) .
"Class A-1 Notes" has the meaning assigned to
such term in the Indenture.
4
<PAGE>
"Class A-2 Interest Period" means, for the first Distribution
Date, the period from and including the Closing Date to but excluding the first
Distribution Date, and for any Distribution Date thereafter, a period of 30
days.
"Class A-2 Note Interest Rate" means 6.75% per annum (computed
on the basis of a 360-day year of twelve 30-day months).
"Class A-2 Notes" has the meaning assigned to such term in
the Indenture.
"Closing Date" means March 31, 1997.
"Collateral Agent" means Bankers Trust Company, in its
capacity as Collateral Agent under the Spread Account Agreement.
"Collateral Insurance" shall have the meaning set forth in
Section 4.4(a).
"Collected Funds" means, with respect to any Determination
Date, the amount of funds in the Collection Account representing collections on
the Receivables during the related Collection Period, including all Net
Liquidation Proceeds collected during the related Collection Period (but
excluding any Purchase Amounts).
"Collection Account" means the account designated as such,
established and maintained pursuant to Section 5.1.
"Collection Period" means, with respect to the first
Distribution Date, the period beginning on the close of business on March 1,
1997 and ending on the close of business on March 31, 1997. With respect to each
subsequent Distribution Date, the preceding calendar month. Any amount stated
"as of the close of business of the last day of a Collection Period" shall give
effect to the following calculations as determined as of the end of the day on
such last day: (i) all applications of collections, and (ii) all distributions.
"Collection Records" means all manually prepared or computer
generated records relating to collection efforts or payment histories with
respect to the Receivables.
"Computer Tape" means the computer tapes or other electronic
media furnished by the Seller to the Issuer and its assigns describing certain
characteristics of the Initial Receivables as of the Initial Cutoff Date and of
the Subsequent Receivables as of the related Subsequent Cutoff Date.
"Contract" means a motor vehicle retail installment sale
contract.
"Controlling Party" means the Insurer, so long as no Insurer
Default shall have occurred and be continuing, and, in the event the Insurer
Default shall have occurred and be continuing, the Trust Collateral Agent for
the benefit of the Securityholders.
"Corporate Trust Office" means (i) with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee, which at the
time of execution of this agreement is Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890- 0001, Attention: Corporate Trust
Administration, and (ii) with respect to the Trustee, the Trust
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Collateral Agent and the Collateral Agent, the principal corporate trust
office of the Trustee, which at the time of execution of this agreement is
Four Albany Street, New York, New York 10006, Attention: Corporate Trust and
Agency Group-Structured Finance Team (Asset Backed Securities Trust
Administration-Advanta Automobile Receivables Trust 1997-1).
"Cram Down Loss" means, with respect to a Receivable, if a
court of appropriate jurisdiction in an insolvency proceeding shall have issued
an order reducing the amount owed on a Receivable or otherwise modifying or
restructuring the scheduled payments to be made on a Receivable, an amount equal
to (i) the excess of the principal balance of such Receivable immediately prior
to such order over the principal balance of such Receivable as so reduced and/or
(ii) if such court shall have issued an order reducing the effective rate of
interest on such Receivable, the excess of the principal balance of such
Receivable immediately prior to such order over the net present value (using as
the discount rate the higher of the APR on such Receivable or the rate of
interest, if any, specified by the court in such order) of the scheduled
payments as so modified or restructured. A "Cram Down Loss" shall be deemed to
have occurred on the date of issuance of such order.
"Custodian" means Norwest Bank Minnesota, National Association
and any other Person named from time to time as custodian in any Custodian
Agreement acting as agent for the Trust Collateral Agent, which Person must be
acceptable to the Controlling Party (the Custodian as of the Closing Date is
acceptable to the Insurer as of the Closing Date).
"Custodian Agreement" means any Custodian Agreement from time
to time in effect between the Custodian named therein and the Trust Collateral
Agent, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof, which Custodian Agreement and any
amendments, supplements or modifications thereto shall be acceptable to the
Controlling Party (the Custodian Agreement which is effective on the Closing
Date is acceptable to the Controlling Party).
"Dealer" means a dealer who sold a Financed Vehicle and who
originated and assigned the respective Receivable, directly or indirectly, to
Advanta or an Unaffiliated Originator under a Dealer Agreement or pursuant to
a Dealer Assignment.
"Dealer Agreement" means any agreement between an Unaffiliated
Originator and a Dealer relating to the acquisition of Receivables from a Dealer
by an Unaffiliated Originator.
"Dealer Assignment" means, with respect to a Receivable, the
executed assignment executed by a Dealer conveying such Receivable to an
Unaffiliated Originator.
"Dealer Underwriting Guide" means either, (i) the underwriting
guidelines used by or on behalf of Advanta in the origination and purchase of
Receivables as amended from time to time or (ii) the underwriting guidelines
used in the origination of Receivables as reviewed by Advanta prior to the
purchase of Receivables by Advanta.
"Defaulted Receivable" means, with respect to any Distribution
Date, a Receivable with respect to which: (i) any portion of a Scheduled Payment
is 90 or more days delinquent, (ii) the Servicer has repossessed the related
Financed Vehicle (and any applicable redemption period has expired) or (iii)
such Receivable is in default and the Servicer has determined in good faith that
payments thereunder are not likely to be resumed.
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"Deficiency Claim Amount" shall have the meaning set forth
in Section 5.5.
"Deficiency Claim Date" means, with respect to any
Distribution Date, the fourth Business Day immediately preceding such
Distribution Date.
"Deficiency Notice" shall have the meaning set forth in
Section 5.5.
"Delivery" when used with respect to Trust Account Property
means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC and are
susceptible of physical delivery, transfer thereof to the Trust Collateral Agent
or its nominee or custodian by physical delivery to the Trust Collateral Agent
or its nominee or custodian endorsed to, or registered in the name of, the Trust
Collateral Agent or its nominee or custodian or endorsed in blank, and, with
respect to a certificated security (as defined in Section 8-102 of the UCC)
transfer thereof (i) by delivery of such certificated security endorsed to, or
registered in the name of, the Trust Collateral Agent or its nominee or
custodian or endorsed in blank to a financial intermediary (as defined in
Section 8-313 of the UCC) and the making by such financial intermediary of
entries on its books and records identifying such certificated securities as
belonging to the Trust Collateral Agent or its nominee or custodian and the
sending by such financial intermediary of a confirmation of the purchase of such
certificated security by the Trust Collateral Agent or its nominee or custodian,
or (ii) by delivery thereof to a "clearing corporation" (as defined in Section
8-102(3) of the UCC) and the making by such clearing corporation of appropriate
entries on its books reducing the appropriate securities account of the
transferor and increasing the appropriate securities account of a financial
intermediary by the amount of such certificated security, the identification by
the clearing corporation of the certificated securities for the sole and
exclusive account of the financial intermediary, the maintenance of such
certificated securities by such clearing corporation or a "custodian bank" (as
defined in Section 8-102(4) of the UCC) or the nominee of either subject to the
clearing corporation's exclusive control, the sending of a confirmation by the
financial intermediary of the purchase by the Trust Collateral Agent or its
nominee or custodian of such securities and the making by such financial
intermediary of entries on its books and records identifying such certificated
securities as belonging to the Trust Collateral Agent or its nominee or
custodian (all of the foregoing, "Physical Property"), and, in any event, any
such Physical Property in registered form shall be in the name of the Trust
Collateral Agent or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect the complete transfer
of ownership of any such Trust Account Property to the Trust Collateral Agent or
its nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury,
the Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations, the following procedures, all
in accordance with applicable law, including applicable Federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of such Trust Account
Property to an appropriate book-entry account maintained with a Federal Reserve
Bank by a financial intermediary which is also a "depository" pursuant to
applicable Federal regulations and issuance by such financial intermediary of a
deposit advice or other written confirmation of such book-entry registration to
the Trust Collateral Agent or its nominee or custodian of the purchase
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by the Trust Collateral Agent or its nominee or custodian of such book-entry
securities; the making by such financial intermediary of entries in its books
and records identifying such book-entry security held through the Federal
Reserve System pursuant to Federal book-entry regulations as belonging to the
Trust Collateral Agent or its nominee or custodian and indicating that such
custodian holds such Trust Account Property solely as agent for the Trust
Collateral Agent or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect complete transfer of
ownership of any such Trust Account Property to the Trust Collateral Agent or
its nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that is
an uncertificated security under Article 8 of the UCC and that is not governed
by clause (b) above, registration on the books and records of the issuer thereof
in the name of the financial intermediary, the sending of a confirmation by the
financial intermediary of the purchase by the Trust Collateral Agent or its
nominee or custodian of such uncertificated security, the making by such
financial intermediary of entries on its books and records identifying such
uncertificated certificates as belonging to the Trust Collateral Agent or its
nominee or custodian.
"Deposit Date" means, with respect to any Collection Period,
the Business Day immediately preceding the related Determination Date.
"Depositor" shall mean the Seller in its capacity as
Depositor under the Trust Agreement.
"Determination Date" means, with respect to any Distribution
Date, the earlier of (i) the eighth day of the calendar month in which such
Distribution Date occurs (or if such day is not a Business Day, the next
Business Day) or (ii) the fifth Business Day preceding such Distribution Date;
provided, however, that "Determination Date" for April 1997 may be no later than
April 10, 1997.
"Distribution Amount" means, with respect to a Distribution
Date, the sum of (i) the Available Funds for the immediately preceding
Determination Date, plus (ii) the Deficiency Claim Amount, if any, received by
the Trust Collateral Agent with respect to such Distribution Date plus (iii) the
Insurer Optional Deposit, if any, received by the Trust Collateral Agent with
respect to such Distribution Date.
"Distribution Date" means, with respect to each Collection
Period, the fifteenth day of the following calendar month, or if such day is not
a Business Day, the immediately following Business Day, commencing on April 15,
1997.
"Draw Date" means, with respect to any Distribution Date, the
third Business Day (as defined in the Note Policy) immediately preceding such
Distribution Date.
"Electronic Ledger" means the electronic master record of the
retail installment sales contracts or installment loans of the Master Servicer.
"Eligible Bank" means any depository institution (which shall
initially be the Trust Collateral Agent) acceptable to the Insurer (so long as
an Insurer Default shall not have occurred and be continuing), organized under
the laws of the United States of America or any one of the
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states thereof or the District of Columbia (or any United States branch or
agency of a foreign bank), which is subject to supervision and examination by
federal or state banking authorities and which at all times (a) has a net
worth in excess of $50,000,000 and (b) has either (i) a rating of P-1 from
Moody's and A-1 from S&P with respect to short-term deposit obligations, or
(ii) if such institution has issued long-term unsecured debt obligations, a
rating of A2 or higher from Moody's and AA from S&P with respect to long-term
unsecured debt obligations. Such depository institution (other than the Trust
Collateral Agent) shall have been approved in writing by the Controlling
Party, ating in its discretion, by written notice to the Trust Collateral Agent.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Bank or (b) a segregated trust account with the
corporate trust department of a depository institution with corporate trust
powers organized under the laws of the United States of America or any state
thereof or the District of Columbia (or any United States branch or agency of a
foreign bank) and whose deposits are insured by the FDIC, provided that such
institution also must have a rating of Baa3 or higher from Moody's and a rating
of BBB- or higher from S&P with respect to long-term deposit obligations and
must be acceptable to the Insurer. Such Eligible Bank or depository institution
(other than the Trust Collateral Agent) shall have been approved in writing by
the Controlling Party, acting in its discretion, by written notice to the Trust
Collateral Agent.
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct interest-bearing obligations of, and
interest-bearing obligations fully guaranteed as to timely payment of principal
and interest by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit
of any depository institution or trust company organized under the laws of the
United States of America or any state thereof or the District of Columbia (or
any domestic branch of a foreign bank) and subject to supervision and
examination by Federal or state banking or depository institution authorities
(including depository receipts issued by any such institution or trust company
as custodian with respect to any obligation referred to in clause (a) above or
portion of such obligation for the benefit of the holders of such depository
receipts); provided, however, that at the time of the investment or
contractual commitment to invest therein (which shall be deemed to be made
again each time funds are reinvested following each Distribution Date), the
commercial paper or other short-term senior unsecured debt obligations (other
than such obligations the rating of which is based on the credit of a Person
other than such depository institution or trust company) of such depository
institution or trust company shall have a credit rating from Standard & Poor's
of AAA and from Moody's of Aaa;
(c) commercial paper and demand notes investing solely in
commercial paper that (i) is payable in United States dollars and (ii) has, at
the time of the investment or contractual commitment to invest therein, a rating
from Standard & Poor's of A-1+ and from Moody's of P-1;
(d) investments in money market funds (including funds for
which the Trust Collateral Agent or the Owner Trustee in each of their
individual capacities or any of their
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respective Affiliates is investment manager or advisor) having a rating from
Standard & Poor's of AAA-m or AAAm-G and from Moody's of Aaa and (other than
funds for which the Trust Collateral Agent or the Owner Trustee in each of
their individual capacities or any of their respective Affiliates is
investment manager or advisor) having been approved in writing by the Insurer;
(e) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed by, the United States of America
or any agency or instrumentality thereof the obligations of which are backed by
the full faith and credit of the United States of America, in either case
entered into with a depository institution or trust company (acting as
principal) referred to in clause (b) above of which are rated A-1+ by Standard &
Poor's and P-1 by Moody's; and
(g) any other investment which is consistent with the ratings
of the Securities and which, so long as no Insurer Default shall have occurred
and be continuing, has been approved by the Insurer.
Any of the foregoing Eligible Investments may be purchased by
or through the Owner Trustee or the Trust Collateral Agent or any of their
respective Affiliates.
"Eligible Sub-Servicer" means (x) LSI Financial Group or (y)
any Person which at the time of its appointment as Sub-Servicer, (i) is
servicing a portfolio of motor vehicle retail installment sales contracts and/or
motor vehicle installment loans, (ii) is legally qualified and has the capacity
to service the Receivables, (iii) has demonstrated the ability professionally
and competently to service a portfolio of motor vehicle retail installment sales
contracts and/or motor vehicle installment loans similar to the Receivables with
reasonable skill and care, and (iv) is qualified and entitled to use, pursuant
to a license or other written agreement, and agrees to maintain the
confidentiality of, the software which the Master Servicer uses in connection
with performing its duties and responsibilities under this Agreement or
otherwise has available software which is adequate to perform its duties and
responsibilities under this Agreement.
"FDIC" means the Federal Deposit Insurance Corporation.
"Final Scheduled Distribution Date" means with respect to (i)
the Class A-1 Notes, the December 2001 Distribution Date, (ii) the Class A-2
Notes, the December 2003 Distribution Date and (iii) the Certificates, the
December 2003 Distribution Date.
"Financed Vehicle" means an automobile or light-duty truck,
van or minivan, together with all accessions thereto, securing an Obligor's
indebtedness under the respective Receivable.
"Indenture" means the Indenture dated as of March 1, 1997,
among the Issuer and Bankers Trust Company, as Trust Collateral Agent and
Trustee, as the same may be amended and supplemented from time to time.
"Initial Cutoff Date" means March 1, 1997.
"Initial Receivables" means any Receivable conveyed to the
Trust on the Closing Date.
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"Initial Spread Account Deposit" means an amount as set forth
in the Spread Account Agreement.
"Insolvency Event" means, with respect to a specified Person,
(a) the filing of a petition against such Person or the entry of a decree or
order for relief by a court having jurisdiction in the premises in respect of
such Person or any substantial part of its property in an involuntary case under
any applicable federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator, or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation or
such Person's affairs, and such petition, decree or order shall remain unstayed
and in effect for a period of 60 consecutive days; or (b) the commencement by
such Person of a voluntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or the
consent by such Person to the entry of an order for relief in an involuntary
case under any such law, or the consent by such Person to the appointment of or
taking possession by, a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official for such Person or for any substantial part of
its property, or the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to pay its debts
as such debts become due, or the taking of action by such Person in furtherance
of any of the foregoing.
"Insurance Agreement" means the Insurance and Indemnity
Agreement, dated as of March 1, 1997, among the Insurer, the Trust, the Seller
and Advanta.
"Insurance Agreement Event of Default" means an "Event of
Default" as defined in the Insurance Agreement.
"Insurance Policy" means, with respect to a Receivable, any
insurance policy (including the insurance policies described in Section 4.4
hereof) benefiting the holder of the Receivable providing loss or physical
damage, credit life, credit disability, theft, mechanical breakdown or similar
coverage with respect to the Financed Vehicle or the Obligor.
"Insurer" means Financial Security Assurance Inc., a monoline
insurance company incorporated under the laws of the State of New York, or any
successor thereto, as issuer of the Note Policy.
"Insurer Default" means the occurrence and
continuance of any of the following events:
(a) the Insurer shall have failed to make a
payment required under the Note Policy in accordance with
its terms;
(b) The Insurer shall have (i) filed a petition or commenced
any case or proceeding under any provision or chapter of the United States
Bankruptcy Code or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (ii) made
a general assignment for the benefit of its creditors, or (iii) had an order for
relief entered against it under the United States Bankruptcy Code or any other
similar federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization which is final and nonappealable; or
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(c) a court of competent jurisdiction, the New York Department
of Insurance or other competent regulatory authority shall have entered a final
and nonappealable order, judgment or decree (i) appointing a custodian, trustee,
agent or receiver for the Insurer or for all or any material portion of its
property or (ii) authorizing the taking of possession by a custodian, trustee,
agent or receiver of the Insurer (or the taking of possession of all or any
material portion of the property of the Insurer).
"Insurer Optional Deposit" means, with respect to any
Distribution Date, an amount delivered by the Insurer pursuant to Section 5.12,
at its sole option, other than amounts in respect of a Note Policy Claim Amount
to the Trust Collateral Agent for deposit into the Collection Account for any of
the following purposes: (i) to provide funds in respect of the payment of fees
or expenses of any provider of services to the Trust with respect to such
Distribution Date; or (ii) to include such amount as part of the Distribution
Amount for such Distribution Date to the extent that without such amount a draw
would be required to be made on the Note Policy.
"Interest Period" means, the Class A-1 Interest Period and
the Class A-2 Interest Period.
"Interest Rate" means, with respect to (i) the Class A-1
Notes, the Class A-1 Note Interest Rate, and (ii) the Class A-2 Notes, the Class
A-2 Note Interest Rate.
"Investment Earnings" means, with respect to any Distribution
Date and Trust Account, the investment earnings on amounts on deposit in such
Trust Account on such Distribution Date.
"Issuer" means Advanta Automobile Receivables Trust 1997-1.
"Lien" means a security interest, lien, charge, pledge,
equity, or encumbrance of any kind, other than tax liens, mechanics' liens and
any liens that attach to the respective Receivable by operation of law as a
result of any act or omission by the related Obligor.
"Lien Certificate" means, with respect to a Financed Vehicle,
an original certificate of title, certificate of lien or other notification
issued by the Registrar of Titles of the applicable state to a secured party
which indicates that the lien of the secured party on the Financed Vehicle is
recorded on the original certificate of title. In any jurisdiction in which the
original certificate of title is required to be given to the Obligor, the term
"Lien Certificate" shall mean only a certificate or notification issued to a
secured party.
"Liquidated Receivable" means, with respect to any Collection
Period, a Receivable as to which (i) 60 days have elapsed since the Master
Servicer repossessed the Financed Vehicle, (ii) the Master Servicer has
determined in good faith that all amounts it expects to recover have been
received, (iii) 5% or more of a Scheduled Payment shall have become 120 or more
days delinquent, except in the case of a repossessed Financed Vehicle or (iv)
the Financed Vehicle has been sold and the proceeds received. Any Receivable
that becomes a Purchased Receivable on or before the related Deposit Date shall
not be a Liquidated Receivable.
"Lockbox Account" means an account maintained on behalf of the
Trust Collateral Agent by the Lockbox Bank pursuant to Section 4.2(d).
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"Lockbox Agreement" means an agreement, in form and substance
acceptable to the Controlling Party, which shall initially be the Lockbox
Agreement dated as of December 1, 1995 between LSI Financial Group and First
Tennessee, National Association.
"Lockbox Bank" means a depository institution named by the
Master Servicer and acceptable to the Controlling Party, which initially shall
be First Tennessee, National Association.
"Mandatory Redemption Date" means the earlier of (i) the
Distribution Date in June 1997 and (ii) if the last day of the Pre-Funding
Period occurs on or prior to the Determination Date in April or May 1997, the
Distribution Date relating to such Determination Date.
"Master Servicer" means Advanta Auto Finance Corporation, as
the servicer of the Receivables, and each successor Master Servicer pursuant to
Section 10.3.
"Master Servicer Extension Notice" means the notice
specified in Section 4.14.
"Master Servicer Termination Event" means an event specified
in Section 10.1.
"Master Servicer's Certificate" means an Officers' Certificate
of the Master Servicer delivered pursuant to Section 4.9, substantially in the
form of Exhibit B.
"Maximum Certificate Balance" means the initial Certificate
Balance plus 14.5% of the Principal Balance of all Subsequent Receivables
transferred to the Issuer, calculated as of the final Subsequent Transfer Date.
"Monthly Capitalized Interest Amount" means in the case of the
April, May or June 1997 Distribution Dates, an amount equal to the excess of (i)
the product of (x) a fraction the numerator of which is the actual number of
days elapsed in the related Interest Period and the denominator of which is 360,
(y) the weighted average of each Interest Rate and the Certificate Rate and (z)
the difference between (i) the outstanding Pre-Funded Amount immediately prior
to the applicable Distribution Date and (ii) the Pool Balance as of the last day
of the second preceding Collection Period, or in the case of the April
Distribution Date, as of the Closing Date over (ii) the Pre-Funding Earnings for
such Distribution Date.
"Monthly Records" means all records and data maintained by the
Master Servicer with respect to the Receivables, including the following with
respect to each Receivable: the account number; the originating Dealer; Obligor
name; Obligor address; Obligor home phone number; Obligor business phone number;
original Principal Balance; original term; Annual Percentage Rate; current
Principal Balance; current remaining term; origination date; first payment date;
final scheduled payment date; next payment due date; date of most recent
payment; new/used classification; collateral description; days currently
delinquent; number of contract extensions (months) to date; amount of Scheduled
Payment; current Insurance Policy expiration date; and past due late charges.
"Moody's" means Moody's Investors Service, Inc., or its
successor.
"Net Liquidation Proceeds" means, with respect to a Liquidated
Receivable, all amounts realized with respect to such Receivable (other than
amounts withdrawn from the Series
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1997-1 Spread Account and drawings under the Note Policy) net of (i)
reasonable expenses, which expenses shall not include any deficiency balances
or post-disposition recoveries collected, incurred by the Master Servicer in
connection with the collection of such Receivable and the repossession and
disposition of the Financed Vehicle and (ii) amounts that are required to be
refunded to the Obligor on such Receivable; provided, however, that the
Liquidation Proceeds with respect to any Receivable shall in no event be less
than zero.
"Note Distribution Account" means the account designated as
such, established and maintained pursuant to Section 5.1.
"Noteholders' Distributable Amount" means, with respect to
any Distribution Date, the sum of the Noteholders' Principal Distributable
Amount and the Noteholders' Interest Distributable Amount.
"Noteholders' Interest Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Noteholders' Monthly
Interest Distributable Amount for the preceding Distribution Date and any
outstanding Noteholders' Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest that was actually
deposited in the Note Distribution Account on such preceding Distribution Date,
plus interest on the amount of interest due but not paid to Noteholders on the
preceding Distribution Date, to the extent permitted by law, at the respective
Interest Rate borne by each Class of Notes from such preceding Distribution Date
to but excluding the current Distribution Date.
"Noteholders' Interest Distributable Amount" means, with
respect to any Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders' Interest
Carryover Shortfall for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means,
with respect to any Distribution Date, the product of (i)(A) in the case of the
Class A-1 Notes, the product of the Class A-1 Note Interest Rate and a fraction,
the numerator of which is the number of days elapsed from and including the
prior Distribution Date (or, in the case of the first Distribution Date, from
and including the Closing Date) to but excluding such Distribution Date and the
denominator of which is 360 and (B) in the case of the Class A-2 Notes, the
product of (x) the Class A-2 Note Interest Rate and (y) a fraction, the
numerator of which is 30 (or, in the case of the first Distribution Date, the
number of days elapsed from and including the Closing Date to but excluding the
first Distribution Date) and the denominator of which is 360 and (ii) the
outstanding principal amount of the Notes of such Class immediately preceding
such Distribution Date.
"Noteholders' Monthly Principal Distributable Amount" means,
with respect to any Distribution Date, the Noteholders' Percentage of the
Principal Distributable Amount.
"Noteholders' Percentage" means (i) for each Distribution Date
prior to the Distribution Date on which the Class A-2 Notes have been paid in
full, 90%; (ii) on the Distribution Date on which the principal amount of the
Class A-2 Notes is reduced to zero, the percentage not greater than the
percentage necessary to pay the Class A-2 Notes in full; and (iii) for each
Distribution Date thereafter, zero.
"Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Noteholders' Monthly Principal
Distributable Amount and any
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outstanding Noteholders' Principal Carryover Shortfall from the preceding
Distribution Date over the amount in respect of principal that was actually
deposited in the Note Distribution Account on such Distribution Date.
"Noteholders' Principal Distributable Amount" means, with
respect to any Distribution Date, (other than the Final Scheduled Distribution
Date for any Class of Notes), the sum of the Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and the Noteholders' Principal
Carryover Shortfall as of the close of the preceding Distribution Date. The
Noteholders' Principal Distributable Amount on the Final Scheduled Distribution
Date for any Class of Notes will equal the sum of (i) the Noteholders' Monthly
Principal Distributable Amount for such Distribution Date, (ii) the Noteholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date, and (iii) the excess of the outstanding principal amount of such Class of
Notes, if any, over the amounts described in the foregoing clauses (i) and (ii).
"Note Policy" means the financial guaranty insurance policy
issued by the Insurer to the Trust Collateral Agent, as agent for the Trustee,
for the benefit of the Noteholders.
"Note Policy Claim Amount" means, for any Distribution Date,
shall equal the lesser of (i) the sum of the Noteholders' Interest Distributable
Amount and Noteholders' Principal Distributable Amount for such Distribution
Date and (ii) the excess, if any, of (x) the amount required to be distributed
pursuant to clauses (i) through (iv) of Section 5.7(b) hereof over (y) the
Distribution Amount with respect to such Distribution Date.
"Note Pool Factor" for each Class of Notes as of the close of
business on a Distribution Date means a seven-digit decimal figure equal to the
outstanding principal amount of such Class of Notes divided by the original
outstanding principal amount of such Class of Notes.
"Note Prepayment Amount" means, as of the Distribution Date on
or immediately following the last day of the Pre-Funding Period, after giving
effect to any transfer of Subsequent Receivables on such date, an amount equal
to the remaining Pre-Funded Amount on deposit in the Pre-Funding Account.
"Obligor" on a Receivable means the purchaser or
co-purchasers of the Financed Vehicle and any other Person who owes payments
under the Receivable.
"Officers' Certificate" means a certificate signed by the
chairman of the board, the president, any executive vice president or any vice
president, any treasurer, assistant treasurer, secretary or assistant secretary
of the Seller or the Master Servicer, as appropriate.
"Opinion of Counsel" means an opinion of counsel reasonably
acceptable to the Insurer, and, if such opinion or a copy thereof is required by
the provisions of this Agreement to be delivered to the Insurer, to the Insurer.
"Original Pool Balance" means the sum, as of any date, of the
Pool Balance as of the Initial Cutoff Date.
"Other Conveyed Property" means all property conveyed by the
Seller to the Trust pursuant to Section 2.1(b) through (h) of this Agreement.
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"Overfunded Capitalized Interest Amount" means:
With respect to the April 1997 Distribution Date, the excess
of (a) the amount on deposit in the Capitalized Interest Account on such
Distribution Date (after giving effect to the transfer of the Monthly
Capitalized Interest Amount to the Collection Account on such date) over (b) the
product of (i) 1/360, (ii) 2.50%, (iii) 60 and (iv) the amount on deposit in the
Pre-Funding Account (excluding Pre-Funding Earnings) at the close of business on
March 31, 1997.
With respect to the May 1997 Distribution Date, the excess of
(a) the amount on deposit in the Capitalized Interest Account on such
Distribution Date (after giving effect to the transfer of the Monthly
Capitalized Interest Amount to the Collection Account on such date) over (b) the
product of (i) 1/360, (ii) 2.50%, (iii) 30 and (iv) the amount on deposit in the
Pre-Funding Account (excluding Pre-Funding Earnings) at the close of business on
April 30, 1997.
With respect to the June 1997 Distribution Date, the amount on
deposit in the Capitalized Interest Account on such Distribution Date (after
given effect to the transfer of the Monthly Capitalized Interest Amount to the
Collection Account on such date).
"Owner Trust Estate" has the meaning assigned to such term
in the Trust Agreement.
"Owner Trustee" means Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, its
successors in interest or any successor Owner Trustee under the Trust Agreement.
"Person" means any individual, corporation, estate,
partnership, joint venture, association, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
"Physical Property" has the meaning assigned to such term in
the definition of "Delivery" above.
"Pool Balance" means, as of any date of determination, the
Original Pool Balance, plus the aggregate Principal Balance of the Subsequent
Receivables, if any, sold to the Trust, reduced by any principal amounts
previously paid (excluding Purchased Receivables and Liquidated Receivables).
"Pre-Funded Amount" means, with respect to any Distribution
Date, the amount on deposit in the Pre-Funding Account, (exclusive of
Pre-Funding Earnings) which initially shall be $0.00.
"Pre-Funding Account" has the meaning specified in
Section 5.1.
"Pre-Funding Earnings" means any Investment Earnings on
amounts on deposit in the Pre-Funding Account.
"Pre-Funding Period" means the period beginning on and
including the Closing Date and ending on the first to occur of (a) the first
date on which the amount on deposit in the Pre-Funding Account (after giving
effect to any transfers therefrom in connection with the transfer
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of Subsequent Receivables to the Issuer on such date) is less than $100,000,
(b) the date on which an Event of Default occurs under the Indenture or a
Master Servicer Termination Event occurs and (c) the Distribution Date in
June 1997.
"Principal Balance" means, with respect to any Receivable, as
of any date, the Amount Financed minus (i) that portion of all amounts received
on or prior to such date and allocable to principal in accordance with the
Actuarial Method and (ii) any Cram Down Loss in respect of such Receivable.
"Principal Carryover Shortfall" means, as of the close of
business on any Distribution Date, the excess of the Principal Distributable
Amount plus any outstanding Principal Carryover Shortfall from the preceding
Distribution Date over the amount of principal deposited in the Note
Distribution Account and/or the Certificate Distribution Account with respect to
such current Distribution Date.
"Principal Distributable Amount" means, with respect to any
Distribution Date, the amount equal to the sum of (i) the principal portion of
all Collected Funds, including the principal portion of all prepayments,
received during the immediately preceding Collection Period (other than
Liquidated Receivables and Purchased Receivables), (ii) the Principal Balance of
all Receivables that became Liquidated Receivables during the related Collection
Period (other than Purchased Receivables), (iii) the principal portion of the
Purchase Amounts received with respect to all Receivables that became Purchased
Receivables during the related Collection Period, (iv) in the sole discretion of
the Insurer, the Principal Balance of all the Receivables that were required to
be purchased pursuant to Sections 3.2 and 4.7, during such Collection Period but
were not purchased, and (v) the aggregate amount of Cram Down Losses that shall
have occurred during the related Collection Period.
"Purchase Agreement" means the Purchase Agreement between the
Seller and Advanta, dated as of March 1, 1997, pursuant to which the Seller
acquired the Initial Receivables, as such Agreement may be amended from time to
time.
"Purchase Amount" means, with respect to a Receivable, the
Principal Balance and all accrued and unpaid interest on the Receivable, after
giving effect to the receipt of any moneys collected (from whatever source) on
such Receivable, if any, as of the date of purchase.
"Purchased Receivable" means a Receivable purchased as of the
close of business on the last day of a Collection Period by the Master Servicer
pursuant to Section 4.7 or repurchased by the Seller or Advanta pursuant to
Section 3.2 or Section 11.1(a).
"Rating Agency" means Moody's and Standard & Poor's. If no
such organization or successor maintains a rating on the Securities, "Rating
Agency" shall be a nationally recognized statistical rating organization or
other comparable Person designated by the Seller and acceptable to the Insurer
(so long as an Insurer Default shall not have occurred and be continuing),
notice of which designation shall be given to the Trust Collateral Agent, the
Owner Trustee and the Master Servicer.
"Rating Agency Condition" means, with respect to any action,
that each Rating Agency shall have been given 10 days' (or such shorter period
as shall be acceptable to each Rating Agency) prior notice thereof and that each
of the Rating Agencies shall have notified the
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Seller, the Master Servicer, the Insurer, the Owner Trustee and the Trust
Collateral Agent in writing that such action will not result in a reduction or
withdrawal of the then current rating of any Class of Notes or the Certificates.
"Realized Losses" means, with respect to any Receivable that
becomes a Liquidated Receivable, the excess of the Principal Balance of such
Liquidated Receivable over Net Liquidation Proceeds to the extent allocable to
principal.
"Receivable" means any Contract listed on Schedule A, as such
Schedule shall be amended to reflect the transfer of Subsequent Receivables to
the Trust (which Schedule may be in the form of microfiche or a disk).
"Receivable Files" means the documents specified in
Section 3.3.
"Record Date" with respect to each Distribution Date means the
Business Day immediately preceding such Distribution Date, unless otherwise
specified in the Agreement.
"Registrar of Titles" means, with respect to any state, the
governmental agency or body responsible for the registration of, and the
issuance of certificates of title relating to, motor vehicles and liens thereon.
"Requisite Amount" has the meaning specified in the Spread
Account Agreement.
"Rule of 78s Method" means the method under which a portion of
a payment allocated to earned interest and the portion allocable to principal is
determined according to the sum of the month's digits or any equivalent method
commonly referred to as the "Rule of 78s."
"Rule of 78s Receivable" means a Receivable under which the
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Rule of 78s Method.
"Schedule of Receivables" means the schedule of all retail
installment sales contracts and promissory notes originally held as part of the
Trust which is attached as Schedule A.
"Schedule of Representations" the Schedule of Representations
and Warranties attached hereto as Schedule B.
"Scheduled Payment" means, with respect to any Collection
Period for any Receivable, the amount set forth in such Receivable as required
to be paid by the Obligor in such Collection Period. If after the Closing Date,
the Obligor's obligation under a Receivable with respect to a Collection
Period has been modified so as to differ from the amount specified in such
Receivable as a result of (i) the order of a court in an insolvency proceeding
involving the Obligor, (ii) pursuant to the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended, or (iii) modifications or extensions of the
Receivable permitted by Sections 4.2(b) and (c), the Scheduled Payment with
respect to such Collection Period shall refer to the Obligor's payment
obligation with respect to such Collection Period as so modified.
"Securityholder" means the Noteholders and the
Certificateholders.
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"Security Majority" means a majority by principal amount of
the Noteholders so long as the Notes are outstanding and a majority by principal
amount of the Certificateholders thereafter.
"Seller" means Advanta Auto Receivables Corp. I, a Nevada
corporation, and its successors in interest to the extent permitted hereunder.
"Series 1997-1 Spread Account" means the account designated as
such, established and maintained pursuant to the Spread Account Agreement.
"Service Contract" means, with respect to a Financed Vehicle,
the agreement, if any, financed under the related Receivable that provides for
the repair of such Financed Vehicle.
"Servicing Fee" has the meaning specified in Section 4.8.
"Servicing Fee Rate" means 2.50% per annum.
"Simple Interest Method" means the method of allocating a
fixed level payment on an obligation between principal and interest, pursuant to
which the portion of such payment that is allocated to interest is equal to the
product of the fixed rate of interest on such obligation multiplied by the
period of time (expressed as a fraction of a year, based on the actual number of
days in the calendar month and 365 days in the calendar year) elapsed since the
preceding payment under the obligation was made.
"Simple Interest Receivable" means a Receivable under which
the portion of the payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"Spread Account Agreement" means the Master Spread Account
Agreement dated as of March 1, 1997 among the Insurer, the Seller and the
Collateral Agent, as the same may be modified, supplemented or otherwise amended
in accordance with the terms thereof.
"Standard & Poor's" means Standard & Poor's Ratings Services,
or its successor.
"Subsequent Cutoff Date" means (i) the last day of the month
preceding the month in which particular Subsequent Receivables are conveyed to
the Trust pursuant to this Agreement or (ii) if any such Subsequent Receivable
is originated in the month of the related Subsequent Transfer Date, the date of
origination.
"Subsequent Purchase Agreement" means an agreement by and
between the Seller and Advanta pursuant to which the Seller will acquire
Subsequent Receivables.
"Subsequent Receivables" means the Receivables transferred to
the Issuer pursuant to Section 2.2, which shall be listed on Schedule A to the
related Subsequent Transfer Agreement.
"Subsequent Spread Account Deposit" means, with respect to
each Subsequent Transfer Date, an amount equal to 3.0% of the aggregate
principal balance of Subsequent Receivables as of the related Subsequent Cutoff
Date transferred to the Trust on such Subsequent Transfer Date from amounts
released from the Pre-Funding Account.
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"Subsequent Transfer Agreement" means the agreement among the
Issuer, the Seller and the Master Servicer, substantially in the form of Exhibit
A.
"Subsequent Transfer Date" means, with respect to Subsequent
Receivables, any date, occurring not more frequently than once a month, during
the Pre-Funding Period on which Subsequent Receivables are to be transferred to
the Trust pursuant to this Agreement, and a Subsequent Transfer Agreement is
executed and delivered to the Trust.
"Sub-Servicer" means any Eligible Sub-Servicer with whom
Advanta has entered into a Sub-Servicing Agreement. Initially, the Sub-Servicer
will be LSI Financial Group.
"Sub-Servicing Agreement" means the written contract between
Advanta and any Sub-Servicer relating to servicing and/or administration of the
Receivables as permitted by Section 9.7 hereof.
"Supplemental Servicing Fee" means, with respect to any
Collection Period, (i) all administrative fees, expenses and charges paid by or
on behalf of Obligors, including late fees, prepayment fees and liquidation fees
collected on the Receivables during such Collection Period, and (ii) the net
realized Investment Earnings of funds on deposit in the Collection Account.
"Trigger Event" has the meaning assigned thereto in the
Spread Account Agreement.
"Trust" means the Issuer.
"Trust Account Property" means the Trust Accounts, all amounts
and investments held from time to time in any Trust Account (whether in the form
of deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), and all proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in
Section 5.1.
"Trust Agreement" means the Trust Agreement dated as of March
1, 1997, between the Seller and the Owner Trustee, as the same may be amended
and supplemented from time to time.
"Trust Collateral Agent" means the Person acting as Trust
Collateral Agent hereunder, its successors in interest and any successor Trust
Collateral Agent hereunder.
"Trust Officer" means, (i) in the case of the Trust Collateral
Agent, the chairman or vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, any vice president, assistant vice-president or managing director,
the secretary, any assistant secretary or any other officer of the Trust
Collateral Agent customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject, and (ii) in the case of the Owner Trustee, any officer in
the corporate trust office of the Owner Trustee or any agent of the Owner
Trustee under a power of attorney with
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direct responsibility for the administration of this Agreement or any of the
Basic Documents on behalf of the Owner Trustee.
"Trust Property" means the property and proceeds conveyed
pursuant to Section 2.1, together with certain monies paid on or after the
Initial Cutoff Date, the Note Policy, the Collection Account (including all
Eligible Investments therein and all proceeds therefrom), the Lockbox Account
and certain other rights under this Agreement. Although the Seller has pledged
the Series 1997-1 Spread Account to the Trust Collateral Agent and the Insurer
pursuant to the Spread Account Agreement, the Series 1997-1 Spread Account shall
not under any circumstances be deemed to be a part of or otherwise includable in
the Trust or the Trust Property.
"Trustee" means the Person acting as Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"Unaffiliated Originator" means a third-party originator or
owner of Receivables not affiliated with the Seller or Advanta.
"Unaffiliated Originator Receivables Purchase Agreements"
means, collectively, the agreements pursuant to which Advanta acquired certain
of the Receivables, directly or indirectly, from Unaffiliated Originators, as
any of such agreements may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"UCC" means the Uniform Commercial Code as in effect in the
relevant jurisdiction on the date of the Agreement.
"Warranty Receivable" With respect to any Collection Period, a
Receivable which the Seller has become obligated to repurchase pursuant to
Section 3.3.
SECTION 1.2. Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined
herein have the meanings assigned to them in the Indenture, or, if not defined
therein, in the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein.
(c) As used in this Agreement, in any instrument governed
hereby and in any certificate or other document made or delivered pursuant
hereto or thereto, accounting terms not defined in this Agreement or in any such
instrument, certificate or other document, and accounting terms partly defined
in this Agreement or in any such instrument, certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such instrument, certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such instrument, certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained in this Agreement or in any such instrument, certificate
or other document shall control.
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(d) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
SECTION 1.3. Usage of Terms. With respect to all terms used
in this Agreement, the singular includes the plural and the plural includes
the singular; words importing any gender include the other gender; references
to "writing" include printing, typing, lithography, and other means of
reproducing words in a visible form; references to agreements and other
contractual instruments include all subsequent amendments thereto or changes
therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; the terms "include" or "including" mean "include
without limitation" or "including without limitation; "the words "herein",
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section or other
subdivision, and Article, Section, Schedule and Exhibit references, unless
otherwise specified, refer to Articles and Sections of Schedules and Exhibits to
this Agreement.
SECTION 1.4. Certain References. All references to the
Principal Balance of a Receivable as of any date of determination shall refer
to the close of business on such day, or as of the first day of an Interest
Period shall refer to the opening of business on such day. All references to
the last day of an Interest Period shall refer to the close of business on
such day.
SECTION 1.5. No Recourse. Without limiting the obligations of
Advanta hereunder, no recourse may be taken, directly or indirectly, under this
Agreement or any certificate or other writing delivered in connection herewith
or therewith, against any stockholder, officer or director, as such, of Advanta,
or of any predecessor or successor of Advanta.
SECTION 1.6. Action by or Consent of Noteholders and
Certificateholders. Whenever any provision of this Agreement refers to action to
be taken, or consented to, by Noteholders or Certificateholders, such provision
shall be deemed to refer to the Certificateholder or Noteholder, as the case may
be, of record as of the Record Date immediately preceding the date on which such
action is to be taken, or consent given, by Noteholders or Certificateholders.
Solely for the purposes of any action to be taken, or consented to, by
Noteholders or Certificateholders, any Note or Certificate registered in the
name of Advanta or any Affiliate thereof shall be deemed not to be outstanding;
provided, however, that, solely for the purpose of determining whether a Trust
Officer of the Trustee or the Trust Collateral Agent is entitled to rely upon
any such action or consent, only Notes or Certificates which the Owner Trustee,
the Trust Officer of the Trustee or the Trust Collateral Agent, respectively,
actually knows to be so owned shall be so disregarded.
SECTION 1.7. Material Adverse Effect. Whenever a determination
is to be made under this Agreement as to whether a given event, action, course
of conduct or set of facts or circumstances could or would have a material
adverse effect on the Securityholders (or any similar or analogous
determination), such determination shall be made without taking into account the
funds available from claims under the Note Policy. Whenever a determination is
to be made under this Agreement whether a breach of a representation, warranty
or covenant has or could have a material adverse effect on a Receivable or the
interest therein of the Trust, the Noteholders,
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the Certificateholders or the Insurer (or any similar or analogous
determination), such determination shall be made by the Insurer in its
reasonable discretion and after notifying the Trustee, each Rating Agency and
the Seller of such potential breach or (x) if an Insurer Default shall have
occurred and be continuing, or (y) upon (i) the expiration of the Note Policy in
accordance with the terms thereof and (ii) the payment of all amounts owing to
the Insurer under this Agreement and the Insurance Agreement, by a Security
Majority. The Trust Collateral Agent shall be entitled to rely on an Opinion of
Counsel for any determination whether a given event, action, course of conduct
or set of facts or circumstances could or would have a material adverse effect
on the Securityholders.
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Initial Receivables. In
consideration of the Issuer's delivery to or upon the order of the Seller on
the Closing Date of the net proceeds from the sale of the Notes and the
Certificates and the other amounts to be distributed from time to time to the
Seller in accordance with the terms of this Agreement, the Seller does hereby
sell, transfer, assign, set over and otherwise convey to the Issuer, without
recourse (subject to the obligations set forth herein), all right, title and
interest of the Seller in and to:
(a) the Initial Receivables and all monies received thereon on
or after the Initial Cutoff Date (including amounts due on or before the Initial
Cutoff Date but received by Advanta, the Seller or the Issuer on or after the
Initial Cutoff Date);
(b) The security interests in the Financed Vehicles granted by
Obligors pursuant to the Initial Receivables and any other interest of the
Seller in such Financed Vehicles;
(c) any proceeds and the right to receive proceeds with
respect to the Initial Receivables from claims on any physical damage, credit
life or disability insurance policies covering Financed Vehicles or Obligors,
including rebates of insurance premiums relating to the Receivables and any
proceeds from the liquidation of the Initial Receivables;
(d) all rights of the Seller against Dealers pursuant to
Dealer Agreements, Dealer Assignments or Unaffiliated Originator Receivables
Purchase Agreements;
(e) all rights under any Service Contracts on the related
Financed Vehicles;
(f) the related Receivables Files and any and all other
documents that Advanta keeps on file in accordance with its customary procedures
relating to the Receivables, the Obligors or the Financed Vehicles;
(g) property (including the right to receive future
Liquidation Proceeds) that secures a Receivable and that has been acquired by or
on behalf of the Trust pursuant to liquidation of such Receivable;
(h) all funds on deposit from time to time in the Trust
Accounts (less all investments and proceeds thereof), and all rights of the
Issuer therein;
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(i) all of the Seller's right, title and interest in its
rights and benefits, but none of its obligations or burdens, under the Purchase
Agreement, including the delivery requirements, representations and warranties
and the cure and repurchase obligations of Advanta under the Purchase Agreement;
and
(j) the proceeds of any and all of the foregoing.
It is the intention of the Seller that the transfer and
assignment contemplated by this Agreement shall constitute a sale of the
Receivables and other Trust Property from the Seller to the Issuer and the
beneficial interest in and title to the Receivables and the other Trust Property
shall not be part of the Seller's estate in the event of the filing of a
bankruptcy petition by or against the Seller under any bankruptcy law. In the
event that, notwithstanding the intent of the Seller, the transfer and
assignment contemplated hereby is held not to be a sale, this Agreement shall
constitute a grant of a security interest in the property referred to in this
Section 2.1 for the benefit of the Securityholders and the Insurer.
SECTION 2.2. Conveyance of Subsequent Receivables.
(a) Subject to the conditions set forth in paragraph (b)
below, in consideration of the Issuer's delivery on each related Subsequent
Transfer Date to or upon the order of the Seller of the amount described in
Section 5.10(a) to be delivered to the Seller, the Seller does hereby sell,
transfer, assign, set over and otherwise convey to the Issuer without recourse
(subject to the obligations set forth herein), all right, title and interest of
the Seller in and to:
(i) the Subsequent Receivables listed on Schedule A to
the related Subsequent Transfer Agreement and all monies received
thereon on or after the related Subsequent Transfer Date (including
amounts due on or before the Subsequent Cutoff Date but received by
Advanta, the Seller or the Issuer on or after the Subsequent Cutoff
Date);
(ii) the security interests in the Financed Vehicles
granted by Obligors pursuant to the Subsequent Receivables and any
other interest of the Seller in such Financed Vehicles;
(iii) any proceeds and the right to receive proceeds with
respect to such Subsequent Receivables from claims on any physical
damage, credit life or disability insurance policies covering the
related Financed Vehicles or Obligors, including rebating of insurance
premiums relating to the Receivables, and any proceeds from the
liquidation of the Subsequent Receivables;
(iv) all rights of the Seller against the
Dealers pursuant to Dealer Agreements; or Unaffiliated
Originator Receivables Purchase Agreements;
(v) all rights under any Service Contracts on
the related Financed Vehicles:
(vi) the related Receivables Files; and any and all other
documents that Advanta keeps on file in accordance with its customary
procedures relating to the Receivables, the Obligors or the Financed
Vehicles;
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(vii) property (including the right to receive future
Liquidation Proceeds) that secures a Receivable and that has been
acquired by or on behalf of the Trust pursuant to liquidation of such
Receivable;
(viii) all funds on deposit from time to time in the Trust
Accounts (less all investments and proceeds thereof), and all rights of
the Issuer therein;
(ix) all of the Seller's right, title and interest in its
rights and benefits, but none of its obligations or burdens, under each
of the Subsequent Purchase Agreements, including the delivery
requirements, representations and warranties and the cure and
repurchase obligations of Advanta under each of the Subsequent Purchase
Agreements, on or after the related Subsequent Cutoff Date; and
(x) the proceeds of any and all of the foregoing.
(b) The Seller shall transfer to the Issuer the Subsequent
Receivables and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Trust Collateral
Agent, the Owner Trustee and the Insurer with an Addition Notice not
later than five days prior to such Subsequent Transfer Date and shall
have provided any information reasonably requested by any of the
foregoing with respect to the Subsequent Receivables;
(ii) the Seller shall have delivered to the Owner Trustee
and the Trust Collateral Agent a duly executed Subsequent Transfer
Agreement which shall include supplements to Schedule A, listing the
Subsequent Receivables;
(iii) the Seller shall, to the extent required by Section
4.2, have deposited in the Collection Account all collections in
respect of the Subsequent Receivables;
(iv) as of each Subsequent Transfer Date, (A) the Seller
shall not be insolvent and shall not become insolvent as a result of
the transfer of Subsequent Receivables on such Subsequent Transfer
Date, (B) the Seller shall not intend to incur or believe that it shall
incur debts that would be beyond its ability to pay as such debts
mature, (C) such transfer shall not have been made with actual intent
to hinder, delay or defraud any Person and (D) the assets of the Seller
shall not constitute unreasonably small capital to carry out its
business as conducted;
(v) the Pre-Funding Period shall not have terminated;
(vi) after giving effect to any transfer of Subsequent
Receivables on a Subsequent Transfer Date, the Receivables transferred
to the Trust pursuant hereto shall meet the following criteria (based
on the characteristics of the Initial Receivables on the Initial Cutoff
Date and the Subsequent Receivables on the related Subsequent Cutoff
Dates): (i) the weighted average APR of the Receivables transferred to
the Trust shall not be less than 18.5%, unless, with the prior consent
of the Rating Agencies and the Insurer, the Seller increases the
Initial Spread Account Deposit with respect to such Subsequent
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Receivables by the amount required by the Insurer; (ii) the weighted
average remaining term of the Receivables transferred to the Trust
shall not be greater than 60 months; and (iii) not more than 35% of the
Aggregate Principal Balance shall have Obligors whose mailing addresses
are in Texas and New York;
(vii) each of the representations and warranties made by
the Seller pursuant to Section 3.1 with respect to the Subsequent
Receivables to be transferred on such Subsequent Transfer Date shall be
true and correct as of the related Subsequent Transfer Date, and the
Seller shall have performed all obligations to be performed by it
hereunder on or prior to such Subsequent Transfer Date;
(viii) the Seller shall, at its own expense, on or prior to
the Subsequent Transfer Date indicate in its computer files that the
Subsequent Receivables identified in the Subsequent Transfer Agreement
have been sold to the Trust pursuant to this Agreement;
(ix) the Seller shall have taken any action necessary or,
if required by the Insurer, advisable to maintain the first priority
perfected ownership interest of the Trust in the Owner Trust Estate and
the first perfected security interest of the Trust Collateral Agent in
the Collateral;
(x) no selection procedures adverse to the interests of
the Securityholders or the Insurer shall have been utilized in
selecting the Subsequent Receivables;
(xi) the addition of any such Subsequent Receivables
shall not result in a material adverse tax consequence to the Trust
or the Securityholders;
(xii) the Seller shall have delivered (A) to the Rating
Agencies and the Insurer an Opinion of Counsel with respect to the
transfer of such Subsequent Receivables substantially in the form of
the Opinion of Counsel delivered to the Rating Agencies and the Insurer
on the Closing Date and (B) to the Trust Collateral Agent and the
Insurer the Opinion of Counsel required by Section 13.2(h)(1);
(xiii) the Insurer (so long as no Insurer Default shall have
occurred and be continuing), in its absolute and sole discretion, shall
have approved the transfer of such Subsequent Receivables to the Trust
and the Insurer shall have been reimbursed for any fees and expenses
incurred by the Insurer in connection with the granting of such
approval;
(xiv) the Seller shall simultaneously transfer the
Subsequent Spread Account Deposit to the Trust Collateral Agent with
respect to the Subsequent Receivables transferred on such Subsequent
Transfer Date; and
(xv) the Seller shall have delivered to the Insurer and
the Trust Collateral Agent an Officers' Certificate confirming the
satisfaction of each condition precedent specified in this paragraph
(b).
The Seller covenants that in the event any of the foregoing
conditions precedent are not satisfied with respect to any Subsequent Receivable
on the date required as specified
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above, the Seller will immediately repurchase such Subsequent Receivable from
the Trust, at a price equal to the Purchase Amount thereof, in the manner
specified in Section 4.7.
SECTION 2.3. Further Encumbrance of Trust Property. (a)
Immediately upon the conveyance to the Trust by the Seller of any item of the
Trust Property pursuant to Section 2.1, all right, title and interest of the
Seller in and to such item of Trust Property shall terminate, and all such
right, title and interest shall vest in the Trust, in accordance with the
Trust Agreement and Sections 3802 and 3805 of the Business Trust Statute (as
defined in the Trust Agreement).
(b) Immediately upon the vesting of the Trust Property in the
Trust, the Trust shall have the sole right to pledge or otherwise encumber, such
Trust Property. Pursuant to the Indenture and contemporaneously with such
property vesting in the Trust pursuant to (a) above, the Trust shall grant a
security interest in the Trust Property to secure the repayment of the Notes.
The Certificates shall represent the beneficial ownership interest in the Trust
Property, and the Certificateholders shall be entitled to receive distributions
with respect thereto as set forth herein.
(c) Prior to the payment in full on the Notes, the payment of
all amounts due to the Insurer under the Insurance Agreement, the end of the
Term of the Note Policy (as defined therein) and the surrender of the Note
Policy by the Collateral Agent to the Insurer, the Trust Collateral Agent shall
hold the Trust Property for the exclusive benefit of the Trustee on behalf of
the Noteholders and the Insurer. Following the payment in full of the Notes and
the release and discharge of the Indenture, all covenants of the Issuer under
Article III of the Indenture shall, until payment in full of the Certificates,
remain as covenants of the Issuer for the benefit of the Certificateholders,
enforceable by the Certificateholders to the same extent as such covenants were
enforceable by the Noteholders prior to the discharge of the Indenture. Any
rights of the Trustee under Article III of the Indenture, following the
discharge of the Indenture, shall vest in Certificateholders.
(d) The Trust Collateral Agent shall, at such time as there
are no Securities outstanding and all sums due to (i) the Trustee or any agent
or counsel thereof pursuant to the Indenture and (ii) the Trust Collateral Agent
pursuant to this Agreement, have been paid, release any remaining portion of the
Trust Property to the Seller.
ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties of Seller. The
Seller makes the following representations and warranties as to the Receivables
and the Other Conveyed Property on which the Issuer is deemed to have relied in
acquiring the Receivables and upon which the Insurer shall be deemed to rely in
issuing the Note Policy. Such representations and warranties speak as of the
execution and delivery of this Agreement and as of the Closing Date in the case
of the Initial Receivables, and as of the related Subsequent Transfer Date in
case of the Subsequent Receivables, but shall survive the sale, transfer and
assignment of the Receivables to the Issuer and the pledge thereof to the
Trustee pursuant to the Indenture.
(a) Schedule of Representations. The representations and
warranties set forth on the Schedule of Representations attached hereto as
Schedule B are true and correct.
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SECTION 3.2. Repurchase upon Breach.
(a) The Seller, the Master Servicer, the Insurer, any Trust
Officer of the Trust Collateral Agent or the Owner Trustee, as the case may be,
shall inform each of the other parties to this Agreement promptly, in writing,
upon the discovery of any breach of the Seller's representations and warranties
made pursuant to Section 3.1; provided, however, that the failure to give any
such notice shall not derogate from any obligations of the Seller under this
Section 3.2. As of the last day of the second (or, if the Seller so elects, the
first) month following the discovery by the Seller or receipt by the Seller of
notice of such breach, unless such breach is cured by such date, the Seller
shall have an obligation to repurchase any Receivable in which the interests of
the Noteholders or the Certificateholders or the Insurer are materially and
adversely affected by any such breach as of such date. The "second month" shall
mean the month following the month in which discovery occurs or notice is given,
and the "first month" shall mean the month in which discovery occurs or notice
is given. In consideration of and simultaneously with the repurchase of the
Receivable, the Seller shall remit, or cause Advanta to remit, to the Collection
Account the Purchase Amount in the manner specified in Section 5.6 and the
Issuer shall execute such assignments and other documents reasonably requested
by such person in order to effect such repurchase. The sole remedy of the
Issuer, the Owner Trustee, the Trust Collateral Agent, the Trustee, the
Noteholders or the Certificateholders with respect to a breach of
representations and warranties pursuant to Section 3.1 and the agreement
contained in this Section shall be the repurchase of Receivables pursuant to
this Section, subject to the conditions contained herein or to enforce the
obligation of Advanta to the Seller to repurchase such Receivables pursuant to
the Purchase Agreement. Neither the Owner Trustee, the Trust Collateral Agent
nor the Trustee shall have a duty to conduct any affirmative investigation as to
the occurrence of any conditions requiring the repurchase of any Receivable
pursuant to this Section; provided, however, that the Trust Collateral Agent
shall notify the Insurer in writing promptly of any failure by the Seller to
repurchase any Receivables as provided herein.
In addition to the foregoing and notwithstanding whether the
related Receivable shall have been purchased by the Seller, the Seller shall
indemnify the Trust, the Trust Collateral Agent, the Insurer, and the
Securityholders and any of their respective officers, directors, employees or
agents against all costs, expenses, losses, damages, claims and liabilities,
including reasonable fees and expenses of counsel, which may be asserted against
or incurred by any of them as a result of third party claims arising out of the
events or facts giving rise to such breach. This indemnity shall survive the
termination of this Agreement or the earlier resignation and removal of the
Trust Collateral Agent.
(b) Pursuant to Section 2.1 of this Agreement, the Seller
conveyed to the Trust all of the Seller's right, title and interest in its
rights and benefits, but none of its obligations or burdens, under the Purchase
Agreement including the Seller's rights under the Purchase Agreement and the
delivery requirements, representations and warranties and the cure or repurchase
obligations of Advanta thereunder. The Seller hereby represents and warrants to
the Trust that such assignment is valid, enforceable and effective to permit the
Trust to enforce such obligations of Advanta under the Purchase Agreement.
SECTION 3.3. Custody of Receivables Files.
(a) In connection with the sale, transfer and assignment of
the Receivables and the Other Conveyed Property to the Trust pursuant to this
Agreement and simultaneously with the
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execution and delivery of this Agreement, the Trust Collateral Agent shall
enter into the Custodian Agreement with the Custodian, dated as of March 1,
1997, pursuant to which the Trust Collateral Agent shall appoint the
Custodian, and the Custodian shall accept such appointment, to act as the
agent of the Trust Collateral Agent as custodian of the following documents or
instruments in its possession which shall be delivered to the Custodian as
agent of the Trust Collateral Agent on or before the Closing Date (with
respect to each Receivable):
(i) The fully executed original of the Receivable (together
with any agreements modifying the Receivable, including without
limitation any extension agreements);
(ii) The original credit application, or a copy thereof, of
each Obligor, fully executed by each such Obligor on Advanta's or the
applicable Unaffiliated Originator's customary form, or on a form
approved by Advanta, for such application; and
(iii) The original certificate of title (when received) and
otherwise such documents, if any, that Advanta keeps on file in
accordance with its customary procedures indicating that the Financed
Vehicle is owned by the Obligor and subject to the interest of (x)
Advanta or the Trust Collateral Agent as first lienholder or secured
party (including any Lien Certificate received by Advanta), or, (y) an
Unaffiliated Originator as first lienholder or secured party or, if
such original certificate of title has not yet been received, a copy of
the application therefor, showing either Advanta, the Trust Collateral
Agent or an Unaffiliated Originator as secured party; and
(iv) Documents evidencing or relating to any Insurance Policy,
to the extent such documents are maintained by or on behalf of the
Seller or Advanta.
The Trust Collateral Agent may act as the Custodian, in which
case the Trust Collateral Agent shall be deemed to have assumed the obligations
of the Custodian specified in the Custodian Agreement.
(b) Upon payment in full of any Receivable, the Master
Servicer will notify the Custodian and the Trust Collateral Agent by an
Officer's Certificate of the Master Servicer (which certificate shall include a
statement to the effect that all amounts received in connection with such
payments which are required to be deposited in the Collection Account pursuant
to Section 4.1 have been so deposited) and shall request delivery of the
Receivable and Receivable File to the Master Servicer. From time to time as
appropriate for servicing and enforcing any Receivable, the Custodian shall,
upon written request of an officer of the Master Servicer and delivery to the
Custodian of a receipt signed by such officer, cause the original Receivable and
the related Receivable File to be released to the Master Servicer. The Trustee
may rely and shall be protected when acting or refraining from acting upon any
certificate, request or receipt under this Section. The Master Servicer's
receipt of a Receivable and/or Receivable File shall obligate the Master
Servicer to return the original Receivable and the related Receivable File to
the Custodian when its need by the Master Servicer has ceased unless the
Receivable is repurchased as described in Section 3.2 or 4.7.
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ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of the Master Servicer. The Master
Servicer is hereby authorized to act as agent for the Trust and in such capacity
shall manage, service, administer and make collections on the Receivables, and
perform the other actions required by the Master Servicer under this Agreement.
The Master Servicer agrees that its servicing of the Receivables shall be
carried out in accordance with customary and usual procedures of institutions
which service comparable motor vehicle retail installment sales contracts and,
to the extent more exacting, the degree of skill and attention that the Master
Servicer exercises from time to time with respect to all comparable motor
vehicle receivables that it services for itself or others. In performing such
duties, so long as Advanta is the Master Servicer, it shall comply with the
standard and customary procedures for servicing all of its comparable motor
vehicle receivables. The Master Servicer's duties shall include, without
limitation, collection and posting of all payments, responding to inquiries of
Obligors on the Receivables, investigating delinquencies, sending payment
coupons to Obligors, reporting any required tax information to Obligors,
monitoring the collateral, complying with the terms of the Lockbox Agreement,
accounting for collections and furnishing monthly and annual statements to the
Trust Collateral Agent, the Trustee and the Insurer with respect to
distributions, monitoring the status of Insurance Policies with respect to the
Financed Vehicles and performing the other duties specified herein. The Master
Servicer shall also administer and enforce all rights and responsibilities of
the holder of the Receivables provided for in the Dealer Agreements (and Advanta
shall make efforts to obtain possession of the Dealer Agreements, to the extent
it is necessary to do so), the Dealer Assignments, the Unaffiliated Originator
Receivables Purchase Agreements and the Insurance Policies, to the extent that
such Dealer Agreements, Dealer Assignments, Unaffiliated Originator Receivables
Purchase Agreements and Insurance Policies relate to the Receivables, the
Financed Vehicles or the Obligors. To the extent consistent with the standards,
policies and procedures otherwise required hereby, the Master Servicer shall
follow its customary standards, policies, and procedures and shall have full
power and authority, acting alone, to do any and all things in connection with
such managing, servicing, administration and collection that it may deem
necessary or desirable. Without limiting the generality of the foregoing, the
Master Servicer is hereby authorized and empowered by the Trust to execute and
deliver, on behalf of the Trust, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables and with respect to the
Financed Vehicles; provided, however, that notwithstanding the foregoing and
subject to Section 4.3 hereof, the Master Servicer shall not, except pursuant to
an order from a court of competent jurisdiction, release an Obligor from payment
of any unpaid amount under any Receivable or waive the right to collect the
unpaid balance of any Receivable from the Obligor. The Master Servicer is hereby
authorized to commence, in it's own name or in the name of the Trust, a legal
proceeding to enforce a Receivable pursuant to Section 4.3 or to commence or
participate in any other legal proceeding (including, without limitation, a
bankruptcy proceeding) relating to or involving a Receivable, an Obligor or a
Financed Vehicle. If the Master Servicer commences or participates in such a
legal proceeding in its own name, the Trust shall thereupon be deemed to have
automatically assigned such Receivable to the Master Servicer solely for
purposes of commencing or participating in any such proceeding as a party or
claimant, and the Master Servicer is authorized and empowered by the Trust to
execute and deliver in the Master Servicer's name any notices, demands, claims,
complaints, responses, affidavits or other documents or instruments in
connection with any such proceeding. The Trust Collateral Agent and the Owner
Trustee shall
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furnish the Master Servicer with any powers of attorney and other documents
which the Master Servicer may reasonably request and which the Master Servicer
deems necessary or appropriate and take any other steps which the Master
Servicer may deem necessary or appropriate to enable the Master Servicer to
carry out its servicing and administrative duties under this Agreement.
SECTION 4.2. Collection of Receivable Payments;
Modifications of Receivables; Lockbox Agreements.
(a) Consistent with the standards, policies and procedures
required by this Agreement, the Master Servicer shall make reasonable efforts to
collect all payments called for under the terms and provisions of the
Receivables as and when the same shall become due, and shall follow such
collection procedures as it follows with respect to all comparable automobile
receivables that it services for itself or others and otherwise act with respect
to the Receivables, the Dealer Agreements, the Dealer Assignments, the
Unaffiliated Originator Receivables Purchase Agreements, the Insurance Policies
and the Other Conveyed Property in such manner as will, in the reasonable
judgment of the Master Servicer, maximize the amount to be received by the Trust
with respect thereto. The Master Servicer is authorized in its discretion to
waive any prepayment charge, late payment charge or any other similar fees that
may be collected in the ordinary course of servicing any Receivable.
(b) The Master Servicer may at any time agree to a
modification or amendment of a Receivable in order to (i) change the Obligor's
regular due date to a date within 30 days in which such due date occurs or (ii)
re-amortize the scheduled payments on the Receivable following a partial
prepayment of principal; provided, however, that no such change shall extend the
maturity date of any Receivable.
(c) The Master Servicer may grant payment extensions on, or
other modifications or amendments to, a Receivable (in addition to those
modifications permitted by Section 4.2(b)) in accordance with the terms set
forth in the Insurance Agreement.
(d) The Master Servicer shall use its best efforts to direct
Obligors to make all payments on the Receivables, whether by check or by direct
debit of the Obligor's bank account, to be made directly to one or more Lockbox
Banks, acting as agent for the Trust pursuant to a Lockbox Agreement. Amounts
received by a Lockbox Bank in respect of the Receivables may initially be
deposited into a demand deposit account maintained by the Lockbox Bank as agent
for the Trust and for other owners of automobile receivables serviced by the
Master Servicer. The Master Servicer shall use its best efforts to cause any
Lockbox Bank to deposit all payments on the Receivables in the Lockbox Account
no later than the Business Day after receipt, and to cause all amounts credited
to the Lockbox Account on account of such payments to be transferred to the
Collection Account no later than the second Business Day after receipt of such
payments. The Lockbox Account shall be a demand deposit account held by the
Lockbox Bank, or at the request of the Controlling Party, an Eligible Account.
Any payments on the Receivables sent to and received by the Master Servicer
shall be deposited directly into the Lockbox Account within one Business Day of
receipt.
Prior to the Closing Date, the Master Servicer shall have
notified each Obligor that makes its payments on the Receivables by check to
make such payments thereafter directly to the Lockbox Bank (except in the case
of Obligors that have already been making such payments to the Lockbox Bank),
and shall have provided each such Obligor with remittance
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invoices in order to enable such Obligors to make such payments directly to
the Lockbox Bank for deposit into the Lockbox Account, and the Master Servicer
will continue, not less often than every three months, to so notify those
Obligors who have failed to make payments to the Lockbox Bank.
Notwithstanding any Lockbox Agreement, or any of the
provisions of this Agreement relating to the Lockbox Agreement, the Master
Servicer shall remain obligated and liable to the Trust, the Trust Collateral
Agent and Securityholders for servicing and administering the Receivables and
the Other Conveyed Property in accordance with the provisions of this Agreement
without diminution of such obligation or liability by virtue thereof, provided,
however, that the foregoing shall not apply to the any successor Master Servicer
for so long as a Lockbox Bank is performing its obligations pursuant to the
terms of a Lockbox Agreement.
In the event of a termination of the Master Servicer pursuant
to Article X hereof, the successor Master Servicer shall assume all of the
rights and obligations of the outgoing Master Servicer under the Lockbox
Agreement subject to the terms hereof. In such event, the successor Master
Servicer shall be deemed to have assumed all of the outgoing Master Servicer's
interest therein and to have replaced the outgoing Master Servicer as a party to
each such Lockbox Agreement to the same extent as if such Lockbox Agreement had
been assigned to the successor Master Servicer, except that the outgoing Master
Servicer shall not thereby be relieved of any liability or obligations on the
part of the outgoing Master Servicer to the Lockbox Bank under such Lockbox
Agreement. The outgoing Master Servicer shall, upon request of the Trust
Collateral Agent, but at the expense of the outgoing Master Servicer, deliver to
the successor Master Servicer all documents and records relating to each such
Lockbox Agreement and an accounting of amounts collected and held by the Lockbox
Bank and otherwise use its best efforts to effect the orderly and efficient
transfer of any Lockbox Agreement to the successor Master Servicer. In the event
that the Insurer (so long as an Insurer Default shall not have occurred and be
continuing) or a Security Majority (if an Insurer Default shall have occurred
and be continuing) elects to change the identity of the Lockbox Bank, the
outgoing Master Servicer, at its expense, shall cause the Lockbox Bank to
deliver, at the direction of the Insurer (so long as an Insurer Default shall
not have occurred and be continuing) or a Security Majority (if an Insurer
Default shall have occurred and be continuing) to the Trust Collateral Agent or
a successor Lockbox Bank, all documents and records relating to the Receivables
and all amounts held (or thereafter received) by the Lockbox Bank (together with
an accounting of such amounts) and shall otherwise use its best efforts to
effect the orderly and efficient transfer of the lockbox arrangements and the
Master Servicer shall notify the Obligors to make payments to the Lockbox
established by the successor.
(e) The Master Servicer shall remit all payments by or on
behalf of the Obligors received directly by the Master Servicer to the Lockbox
Bank for deposit into the Collection Account, in either case, without deposit
into any intervening account and as soon as practicable, but in no event later
than the Business Day after receipt thereof.
SECTION 4.3. Realization Upon Receivables.
(a) Consistent with the standards, policies and procedures
required by this Agreement, the Master Servicer shall use its best efforts to
repossess (or otherwise comparably convert the ownership of) and liquidate any
Financed Vehicle securing a Receivable with respect to which the Master Servicer
has determined that payments thereunder are not likely to be
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resumed, as soon as is practicable after default on such Receivable but in no
event later than the date on which all or any portion of a Scheduled Payment
has become 120 days delinquent (other than in the case of Financed Vehicles
where neither the Financed Vehicle nor the Obligor can be physically located
by the Master Servicer (using procedures consistent with the standards,
policies and procedures of the Master Servicer required by this Agreement) and
other than in the case of an Obligor who is subject to a bankruptcy
proceeding); provided, however, that the Master Servicer may elect not to
repossess a Financed Vehicle within such time period if in its good faith
judgment it determines that the proceeds ultimately recoverable with respect
to such Receivable would be increased by forbearance. The Master Servicer is
authorized to follow such customary practices and procedures as it shall deem
necessary or advisable, consistent with the standard of care required by
Section 4.1, which practices and procedures may include reasonable efforts to
realize upon any recourse to Dealers, the sale of the related Financed Vehicle
at public or private sale, the submission of claims under an Insurance Policy
and other actions, including, without limitation, entering into settlements
with Obligors, by the Master Servicer in order to realize upon such a
Receivable. The foregoing is subject to the provision that, in any case in
which the Financed Vehicle shall have suffered damage, the Master Servicer
shall not expend funds in connection with any repair or towards the
repossession of such Financed Vehicle unless it shall determine in its
discretion that such repair and/or repossession shall increase the proceeds of
liquidation of the related Receivable by an amount greater than the amount of
such expenses. All amounts received upon liquidation of a Financed Vehicle
shall be remitted directly by the Master Servicer to the Collection Account
without deposit into any intervening account as soon as practicable, but in no
event later than the Business Day after receipt thereof. The Master Servicer
shall be entitled to recover all reasonable expenses incurred by it in the
course of repossessing and liquidating a Financed Vehicle. The Master Servicer
shall recover such reasonable expenses based on the information contained in
the Master Servicer's Certificate delivered on the related Determination Date.
The Master Servicer shall pay on behalf of the Trust any personal property
taxes assessed on repossessed Financed Vehicles. The Master Servicer shall be
entitled to reimbursement of any such tax from Net Liquidation Proceeds with
respect to such Receivable.
(b) If the Master Servicer elects to commence a legal
proceeding to enforce a Dealer Agreement, Dealer Assignment or Unaffiliated
Originator Receivables Purchase Agreement, the act of commencement shall be
deemed to be an automatic assignment from the Trust to the Master Servicer of
the rights under such Dealer Agreement and Dealer Assignment for purposes of
collection only. If, however, in any enforcement suit or legal proceeding it is
held that the Master Servicer may not enforce a Dealer Agreement, Dealer
Assignment or Unaffiliated Originator Receivables Purchase Agreement on the
grounds that it is not a real party in interest or a Person entitled to enforce
the Dealer Agreement, Dealer Assignment or Unaffiliated Receivables Purchase
Agreement, the Owner Trustee and/or the Trust Collateral Agent, at the Master
Servicer's written direction and expense, or the Seller, at the Seller's
expense, shall take such steps as the Master Servicer deems necessary to enforce
the Dealer Agreement, Dealer Assignment or Unaffiliated Originator Receivables
Purchase Agreement, including bringing suit in its name or the name of the
Seller or of the Trust and the Owner Trustee and/or the Trust Collateral Agent
for the benefit of the Securityholders. All amounts recovered shall be remitted
directly by the Master Servicer as provided in Section 4.2(e).
SECTION 4.4. Insurance.
(a) The Master Servicer shall require, in accordance with its
customary servicing policies and procedures, that each Financed Vehicle be
insured by the related Obligor under the
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Insurance Policies referred to in Paragraph 24 of the Schedule of
Representations and Warranties and shall monitor the status of such physical
loss and damage insurance coverage thereafter, in accordance with its
customary servicing procedures. Each Receivable requires the Obligor to obtain
such physical loss and damage insurance, naming Advanta and its successors and
assigns as additional insureds, and permits the holder of such Receivable to
obtain physical loss and damage insurance at the expense of the Obligor if the
Obligor fails to maintain such insurance. If the Master Servicer shall
determine that an Obligor has failed to obtain or maintain a physical loss and
damage Insurance Policy covering the related Financed Vehicle which satisfies
the conditions set forth in clause (i)(a) of such Paragraph 24 (including,
without limitation, during the repossession of such Financed Vehicle) the
Master Servicer shall be diligent in carrying out its customary servicing
procedures to enforce the rights of the holder of the Receivable under the
Receivable to require the Obligor to obtain such physical loss and damage
insurance in accordance with its customary servicing policies and procedures.
(b) The Master Servicer may sue to enforce or collect upon the
Insurance Policies, in its own name, if possible, or as agent of the Trust. If
the Master Servicer elects to commence a legal proceeding to enforce an
Insurance Policy, the act of commencement shall be deemed to be an automatic
assignment of the rights of the Trust under such Insurance Policy to the Master
Servicer for purposes of collection only. If, however, in any enforcement suit
or legal proceeding it is held that the Master Servicer may not enforce an
Insurance Policy on the grounds that it is not a real party in interest or a
holder entitled to enforce the Insurance Policy, the Owner Trustee and/or the
Trust Collateral Agent, at the Master Servicer's written direction and expense,
or the Seller, at the Seller's expense, shall take such steps as the Master
Servicer deems necessary to enforce such Insurance Policy, including bringing
suit in its name or the name of the Trust and the Owner Trustee and/or the Trust
Collateral Agent for the benefit of the Securityholders.
SECTION 4.5. Maintenance of Security Interests in Vehicles.
(a) Consistent with the policies and procedures required by
this Agreement, the Master Servicer shall take such steps on behalf of the Trust
as are necessary to maintain perfection of the security interest created by each
Receivable in the related Financed Vehicle, including but not limited to
obtaining the execution by the Obligors and the recording, registering, filing,
re- recording, re-filing, and re-registering of all security agreements,
financing statements and continuation statements as are necessary to maintain
the security interest granted by the Obligors under the respective Receivables.
The Trust Collateral Agent hereby authorizes the Master Servicer, and the Master
Servicer agrees, to take any and all steps necessary to re-perfect such security
interest on behalf of the Trust as necessary because of the relocation of a
Financed Vehicle or for any other reason. In the event that the assignment of a
Receivable to the Trust is insufficient, without a notation on the related
Financed Vehicle's certificate of title, or without fulfilling any additional
administrative requirements under the laws of the state in which the Financed
Vehicle is located, to perfect a security interest in the related Financed
Vehicle in favor of the Trust, the Master Servicer hereby agrees that either
Advanta's or the Trust Collateral Agent's designation as the secured party on
the certificate of title is in its capacity as agent of the Trust.
(b) Upon the occurrence of an Insurance Agreement Event of
Default, the Insurer may (so long as an Insurer Default shall not have occurred
and be continuing) instruct the Trust Collateral Agent and the Master Servicer
to take or cause to be taken, or, if an Insurer Default shall have occurred,
upon the occurrence of a Master Servicer Termination Event, the
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Trust Collateral Agent and the Master Servicer shall take or cause to be taken
such action as may, in the opinion of counsel to the Controlling Party, be
necessary to perfect or re-perfect the security interests in the Financed
Vehicles securing the Receivables in the name of the Trust by amending the
title documents of such Financed Vehicles or by such other reasonable means as
may, in the opinion of counsel to the Controlling Party, be necessary or
prudent. Advanta hereby agrees to pay all expenses related to such perfection
or reperfection and to take all action necessary therefor. In addition, prior
to the occurrence of an Insurance Agreement Event of Default, the Controlling
Party may instruct the Trust Collateral Agent and the Master Servicer to take
or cause to be taken such action as may, in the opinion of counsel to the
Controlling Party, be necessary to perfect or re-perfect the security interest
in the Financed Vehicles underlying the Receivables in the name of the Trust,
including by amending the title documents of such Financed Vehicles or by such
other reasonable means as may, in the opinion of counsel to the Controlling
Party, be necessary or prudent; provided, however, that if the Controlling
Party requests that the title documents be amended prior to the occurrence of
an Insurance Agreement Event of Default, the out-of-pocket expenses of the
Master Servicer or the Trust Collateral Agent in connection with such action
shall be reimbursed to the Master Servicer or the Trust Collateral Agent, as
applicable, by the Controlling Party. Advanta hereby appoints the Trust
Collateral Agent as its attorney-in-fact to take any and all steps required to
be performed by Advanta pursuant to this Section 4.5(b), including execution
of certificates of title or any other documents in the name and stead of
Advanta, and the Trust Collateral Agent hereby accepts such appointment.
SECTION 4.6. Covenants, Representations, and Warranties of
Master Servicer. By its execution and delivery of this Agreement, the Master
Servicer makes the following representations, warranties and covenants on which
the Trust Collateral Agent relies in accepting the Receivables, on which the
Trustee relies in authenticating the Notes, on which the Owner Trustee relies in
executing the Certificates and on which the Insurer relies in issuing the Note
Policy.
(a) The Master Servicer covenants as follows:
(i) Liens in Force. The Financed Vehicle securing each
Receivable shall not be released in whole or in part from the security
interest granted by the Receivable, except upon payment in full of the
Receivable or as otherwise contemplated herein;
(ii) No Impairment. The Master Servicer shall do
nothing to impair the rights of the Trust or the Securityholders in
the Receivables, the Dealer Agreements, the Dealer Assignments, the
Unaffiliated Originator Receivables Purchase Agreements, the
Insurance Policies or the Other Conveyed Property;
(iii) No Amendments. The Master Servicer shall not
extend or otherwise amend the terms of any Receivable, except in
accordance with Section 4.2;
(iv) Restrictions on Liens. The Master Servicer shall not
(i) create, incur or suffer to exist, or agree to create, incur or
suffer to exist, or consent to cause or permit in the future (upon the
happening of a contingency or otherwise) the creation, incurrence or
existence of any Lien or restriction on transferability of the
Receivables except for the Lien in favor of the Trust Collateral Agent
for the benefit of the Securityholders and Insurer, the Lien imposed by
the Spread Account Agreement in favor of the Collateral Agent for the
benefit of the Trust Collateral Agent and Insurer, and the restrictions
on
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transferability imposed by this Agreement or (ii) sign or file under
the Uniform Commercial Code of any jurisdiction any financing statement
which names Advanta or the Master Servicer as a debtor, or sign any
security agreement authorizing any secured party thereunder to file
such financing statement, with respect to the Receivables, except in
each case any such instrument solely securing the rights and preserving
the Lien of the Trust Collateral Agent, for the benefit of the
Securityholders and the Insurer; and
(v) Servicing of Receivables. The Master Servicer shall
service the Receivables as required by the terms of this Agreement and
in material compliance with its standard and customary procedures for
servicing all its other comparable motor vehicle receivables.
(b) The Master Servicer represents, warrants and covenants as
of the Closing Date as to itself that the representations and warranties set
forth on the Schedule of Representations attached hereto as Schedule B are true
and correct, provided that such representations and warranties contained therein
and herein shall not apply to any entity other than Advanta.
SECTION 4.7. Purchase of Receivables Upon Breach of Covenant.
Upon discovery by any of the Master Servicer, the Seller, the Insurer, a Trust
Officer of the Trust Collateral Agent, the Owner Trustee or a Responsible
Officer of the Trustee of a breach of any of the covenants set forth in Sections
4.5(a) or 4.6(a), the party discovering such breach shall give prompt written
notice to the others; provided, however, that the failure to give any such
notice shall not affect any obligation of Advanta under this Section 4.7. As of
the second Accounting Date following its discovery or receipt of notice of any
breach of any covenant set forth in Sections 4.5(a) or 4.6(a) which materially
and adversely affects the interests of the Securityholders or the Insurer in any
Receivable (including any Liquidated Receivable) (or, at Advanta's election, the
first Accounting Date so following) or the related Financed Vehicle, Advanta
shall, unless such breach shall have been cured in all material respects,
purchase from the Trust the Receivable affected by such breach and, on the
related Deposit Date, Advanta shall pay the related Purchase Amount and deposit
such Purchase Amounts into the Collection Account in accordance with Section 5.6
hereof. The Trust Collateral Agent shall notify the Insurer promptly, in
writing, of any failure by Advanta to so repurchase any Receivable. It is
understood and agreed that the obligation of Advanta to purchase any Receivable
(including any Liquidated Receivable) with respect to which such a breach has
occurred and is continuing shall, if such obligation is fulfilled, constitute
the sole remedy against Advanta for such breach available to the Insurer, the
Securityholders, the Owner Trustee or the Trust Collateral Agent; provided,
however, that Advanta shall indemnify the Trust, the Collateral Agent, the
Insurer, the Owner Trustee, the Trust Collateral Agent, the Trustee and the
Securityholders (and their respective directors, officers, employees and agents)
against all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
incurred by any of them as a result of third party claims arising out of the
events or facts giving rise to such breach.
SECTION 4.8. Total Servicing Fee; Payment of Certain Expenses
by Master Servicer. On each Distribution Date, the Master Servicer shall be
entitled to receive out of the Collection Account the Base Servicing Fee and any
Supplemental Servicing Fee for the related Collection Period pursuant to Section
5.7. The Master Servicer shall be required to pay all expenses incurred by it in
connection with its activities under this Agreement (including taxes imposed on
the Master Servicer, expenses incurred in connection with distributions and
reports
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made by the Master Servicer to Securityholders or the Insurer and all other
fees and expenses of the Owner Trustee, the Trust Collateral Agent or the
Trustee, except taxes levied or assessed against the Trust, and claims against
the Trust in respect of indemnification, which taxes and claims in respect of
indemnification against the Trust are expressly stated to be for the account of
Advanta). The Master Servicer shall be liable for the fees, charges and expenses
of the Owner Trustee, the Trust Collateral Agent, the Trustee, the Custodian,
the Collateral Agent, the Lockbox Bank, any Sub-Servicer and their respective
agents (and any fees under the Lockbox Agreement).
SECTION 4.9. Master Servicer's Certificate. No later than
10:00 a.m. New York City time on each Determination Date, the Master Servicer
shall deliver, or cause to be delivered, to the Trustee, the Owner Trustee, the
Trust Collateral Agent, the Insurer, the Collateral Agent, a Master Servicer's
Certificate executed by a responsible officer or agent of the Master Servicer
containing among other things, (i) all information necessary to enable the Trust
Collateral Agent to make any withdrawal and deposit required by Section 5.5, to
give any notice required by Section 5.5(b) and to make the distributions
required by Sections 5.7, (ii) all information to be provided to Securityholders
and the Insurer specified by Section 5.11 and (iii) a listing of all Warranty
Receivables and Administrative Receivables purchased as of the related Deposit
Date, identifying the Receivables so purchased. Receivables purchased by the
Master Servicer or by the Seller on the related Deposit Date and each Receivable
which became a Liquidated Receivable or which was paid in full during the
related Collection Period shall be identified by account number (as set forth in
the Schedule of Receivables). In addition to the information set forth in the
preceding sentence, the Master Servicer's Certificate shall also contain the
following information: (a) the Delinquency Ratio, Average Delinquency Ratio,
Default Ratio, Average Default Ratio, Net Loss Ratio and Average Net Loss Ratio
(as such terms are defined in the Spread Account Agreement) for such
Determination Date; (b) whether to the knowledge of the Master Servicer any
Trigger Event has occurred as of such Determination Date; (c) whether any
Trigger Event that may have occurred as of a prior Determination Date is deemed
cured as of such Determination Date; and (d) whether to the knowledge of the
Master Servicer an Insurance Agreement Event of Default has occurred.
SECTION 4.10. Annual Statement as to Compliance, Notice of
Master Servicer Termination Event.
(a) The Master Servicer shall deliver or cause to be delivered
to the Trustee, the Owner Trustee, the Trust Collateral Agent and the Insurer on
or before April 30 (or 120 days after the end of the Master Servicer's fiscal
year, if other than December 31) of each year, beginning on April 30, 1998, an
Officer's Certificate signed by any responsible officer of the Master Servicer,
or such Eligible Sub-Servicer who is performing the servicing duties of the
Master Servicer, dated as of December 31 (or other applicable date) of the
immediately preceding year, stating that (i) a review of the activities of the
Master Servicer, or such Eligible Sub-Servicer who is performing the servicing
duties of the Master Servicer, during the preceding 12-month period (or such
other period as shall have elapsed from the Closing Date to the date of the
first such certificate) and of its performance under this Agreement has been
made under such officer's supervision, and (ii) to such officer's knowledge,
based on such review, the Master Servicer, or such Eligible Sub-Servicer who
is performing the servicing duties of the Master Servicer, has fulfilled all
its obligations under this Agreement throughout such period, or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof.
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(b) The Master Servicer, or such Eligible Sub-Servicer who is
performing the servicing duties of the Master Servicer, shall deliver to the
Trustee, the Owner Trustee, the Trust Collateral Agent, the Insurer, the
Collateral Agent, and in the event that such notice is delivered by the
Sub-Servicer, to the Master Servicer, promptly after having obtained knowledge
thereof, but in no event later than two (2) Business Days thereafter, written
notice in an Officer's Certificate of any event which with the giving of notice
or lapse of time, or both, would become a Master Servicer Termination Event
under Section 10.1(a). The Seller or the Master Servicer shall deliver to the
Trustee, the Owner Trustee, the Trust Collateral Agent, the Insurer, the
Collateral Agent, the Master Servicer or the Seller (as applicable) promptly
after having obtained knowledge thereof, but in no event later than two (2)
Business Days thereafter, written notice in an Officer's Certificate of any
event which with the giving of notice or lapse of time, or both, would become a
Master Servicer Termination Event under any other clause of Section 10.1.
SECTION 4.11. Annual Independent Accountants' Report.
(a) The Master Servicer shall cause a firm of nationally
recognized independent certified public accountants (the "Independent
Accountants"), who may also render other services to the Master Servicer or to
the Seller, to deliver to the Trustee, the Owner Trustee, the Trust Collateral
Agent, the Insurer, on or before April 30 (or 120 days after the end of the
Master Servicer's fiscal year, if other than December 31) of each year,
beginning on April 30, 1998, with respect to the twelve months ended the
immediately preceding December 31 (or other applicable date) (or such other
period as shall have elapsed from the Closing Date to the date of such
certificate), a statement (the "Accountants' Report") addressed to the Board of
Directors of the Master Servicer, to the Trustee, the Owner Trustee, the Trust
Collateral Agent and to the Insurer, to the effect that such firm has audited
the books and records of the Master Servicer and that such audit (1) was made in
accordance with generally accepted auditing standards, and accordingly included
such tests of the accounting records and such other auditing procedures as such
firm considered necessary in the circumstances; (2) included an examination of
documents and records relating to the servicing of automobile installment sales
contracts under pooling and servicing agreements substantially similar one to
another (such statement to have attached thereto a schedule setting forth the
servicing agreements covered thereby, including this Agreement); (3) included an
examination of the delinquency and loss statistics relating to the Master
Servicer's portfolio of automobile installment sales contracts; and (4) except
as described in the statement, disclosed no exceptions or errors in the records
relating to automobile and light truck loans serviced for others that, in the
firm's opinion, generally accepted auditing standards requires such firm to
report. The Accountants' Report shall further state that (1) a review in
accordance with agreed upon procedures was made of three randomly selected
Master Servicer's Certificates for the Trust; (2) except as disclosed in the
Report, no exceptions or errors in the Master Servicer's Certificates so
examined were found; and (3) the delinquency and loss information relating to
the Receivables contained in the Master Servicer Certificates were found to be
accurate.
(b) The Accountants' Report shall also indicate that the firm
is independent of the Seller and the Master Servicer within the meaning of the
Code of Professional Ethics of the American Institute of Certified Public
Accountants.
(c) In the event such Independent Accountants require the
Trust Collateral Agent to agree to the procedures to be performed by such
Independent Accountants pursuant to this Section 4.11, the Master Servicer shall
direct the Trust Collateral Agent on the manner of such procedures to be
performed and the Trust Collateral Agent shall deliver such letter of
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agreement at the written direction of the Master Servicer. The Trust
Collateral Agent shall have no obligation, other than its customary standard
of care as set forth in the Basic Agreements, to make any independent
investigation or inquiry into, and shall have no obligation or liability with
respect to, the sufficiency or correctness of such procedures.
SECTION 4.12. Access to Certain Documentation and Information
Regarding Receivables. The Master Servicer shall provide to representatives of
the Trustee, the Owner Trustee, the Trust Collateral Agent and the Insurer
reasonable access to the documentation regarding the Receivables. In each case,
such access shall be afforded without charge but only upon reasonable request
and during normal business hours. Nothing in this Section shall derogate from
the obligation of the Master Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors, and the failure of the Master
Servicer to provide access as provided in this Section as a result of such
obligation shall not constitute a breach of this Section.
SECTION 4.13. Monthly Tape. On or before the fourth
Business Day, but in no event later than the fifth calendar day, of each
month, the Master Servicer will deliver or cause to be delivered to the Trust
Collateral Agent and the Insurer a computer tape and a diskette (or any other
electronic transmission acceptable to the Trust Collateral Agent and the
Insurer in a format acceptable to the Trust Collateral Agent and the Insurer,
containing the information with respect to the Receivables as of the preceding
Accounting Date necessary for preparation of the Master Servicer's Certificate
relating to the immediately succeeding Determination Date and necessary to
determine the application of collections as provided in Section 5.4. In
addition, upon the occurrence of a Master Servicer Termination Event the
Master Servicer shall, if so requested by the Controlling Party deliver to the
Trust Collateral Agent its Collection Records and its Monthly Records within
15 days after demand therefor and a computer tape containing as of the close
of business on the date of demand all of the data maintained by the Master
Servicer in computer format in connection with servicing the Receivables.
Other than the duties specifically set forth in this Agreement, the Trust
Collateral Agent shall have no obligations hereunder, including, without
limitation, to supervise, verify, monitor or administer the performance of the
Master Servicer or to verify the information contained on the computer tape
delivered pursuant to this Section 4.13 other than to verify that such
computer tape is in a readable format. Notwithstanding the foregoing, to the
extent that the Insurer informs the Trust Collateral Agent of a discrepancy in
the computer tape, the Trust Collateral Agent shall cooperate with the Insurer
and attempt to reconcile such discrepancies with the Master Servicer prior to
the related Distribution Date. In the absence of a reconciliation, the Master
Servicer's Certificate shall control for purposes of calculations and
distributions with respect to the related Distribution Date. In the event that
the Trust Collateral Agent and the Master Servicer are unable to reconcile
discrepancies with respect to the Master Servicer's Certificate, by the
related Distribution Date, the Master Servicer shall cause independent
accountants, at the Master Servicer's expense, to audit the Master Servicer's
Certificate and, prior to the Determination Date, reconcile the discrepancies.
The effect, if any, of such reconciliation shall be reflected in the Master
Servicer's Certificate for such next succeeding Determination Date. The Trust
Collateral Agent shall have no liability for any actions taken or omitted by
the Master Servicer.
SECTION 4.14. Retention and Termination of Master Servicer.
The Master Servicer hereby covenants and agrees to act as such under this
Agreement for an initial term, commencing on the Closing Date and ending on June
30, 1997, which term shall be extendible by the Controlling Party for successive
quarterly terms ending on each successive March 31, June 30, September 30, and
December 31 (or, pursuant to revocable written standing instructions from
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time to time to the Master Servicer and the Trust Collateral Agent for any
specified number of terms greater than one), until the Notes are paid in full.
Each such notice (including each notice pursuant to standing instructions,
which shall be deemed delivered at the end of successive quarterly terms for
so long as such instructions are in effect) (a "Master Servicer Extension
Notice") shall be delivered by the Insurer to the Trust Collateral Agent and
the Master Servicer. The Master Servicer hereby agrees that, as of the date
hereof and upon its receipt of any such Master Servicer Extension Notice, the
Master Servicer shall become bound, for the initial term beginning on the
Closing Date and for the duration of the term covered by such Master Servicer
Extension Notice, to continue as the Master Servicer subject to and in
accordance with the other provisions of this Agreement. Until such time as an
Insurer Default shall have occurred and be continuing the Trust Collateral
Agent agrees that if as of the fifteenth day prior to the last day of any term
of the Master Servicer the Trust Collateral Agent shall not have received any
Master Servicer Extension Notice from the Insurer, the Trust Collateral Agent
will, within five days thereafter, give written notice of such non-receipt to
the Insurer and the Master Servicer and the Master Servicer's term shall not
be extended unless a Master Servicer Extension Notice is received on or before
the last day of such term.
SECTION 4.15. Fidelity Bond and Errors and Omissions Policy.
The Master Servicer or such Eligible Sub-Servicer that is performing the
servicing duties of the Master Servicer, has obtained, and shall continue to
maintain in full force and effect, a Fidelity Bond and Errors and Omissions
Policy of a type and in such amount as is customary for servicers engaged in the
business of servicing automobile receivables.
ARTICLE V
Trust Accounts; Distributions;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts.
(a)(i) The Trust Collateral Agent, on behalf of the
Securityholders and the Insurer, shall establish and maintain in its
own name an Eligible Deposit Account (the "Collection Account"),
bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Trust Collateral Agent on
behalf of the Securityholders and the Insurer. The Collection Account
shall initially be established with the Trust Collateral Agent.
(ii) The Trust Collateral Agent, on behalf of the
Noteholders, shall establish and maintain in its own name an Eligible
Deposit Account (the "Note Distribution Account"), bearing a
designation clearly indicating that the funds deposited therein are
held for the benefit of the Trust Collateral Agent on behalf of the
Noteholders and the Insurer. The Note Distribution Account shall
initially be established with the Trust Collateral Agent.
(iii) The Trust Collateral Agent, on behalf of the
Certificateholders, shall establish and maintain in its own name an
Eligible Deposit Account (the "Certificate Distribution Account"),
bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Trust Collateral Agent on
behalf of the
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Certificateholders and the Insurer. The Certificate Distribution Account shall
initially be established with the Trust Collateral Agent.
(iv) The Trust Collateral Agent, on behalf of the
Securityholders and the Insurer, shall establish and maintain in its
own name an Eligible Deposit Account (the "Pre-Funding Account"),
bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Trust Collateral Agent on
behalf of the Securityholders and the Insurer. The Pre-Funding Account
shall initially be established with the Trust Collateral Agent.
(b) Funds on deposit in the Collection Account, the
Pre-Funding Account, the Note Distribution Account, the Certificate Distribution
Account and the Capitalized Interest Account (collectively, the "Trust
Accounts") shall be invested by the Trust Collateral Agent (or any custodian
with respect to funds on deposit in any such account) in Eligible Investments
selected in writing by the Master Servicer (pursuant to standing instructions or
otherwise) which, absent any instruction shall be the investments specified in
clause (d) of the definition of Eligible Investments set forth herein. Other
than as permitted by the Rating Agencies and the Insurer, funds on deposit in
any Account shall be invested in Eligible Investments that will mature so that
such funds will be available at the close of business on the Business Day
immediately preceding the following Distribution Date. Funds deposited in a
Trust Account on the day immediately preceding a Distribution Date upon the
maturity of any Eligible Investments are not required to be invested overnight.
All Eligible Investments will be held to maturity.
(c) All investment earnings of moneys deposited in the Trust
Accounts shall be deposited (or caused to be deposited) by the Trust Collateral
Agent in the Collection Account no later than the close of business on the
Business Day immediately preceding the related Distribution Date, and any loss
resulting from such investments shall be charged to the Collection Account. The
Master Servicer will not direct the Trust Collateral Agent to make any
investment of any funds held in any of the Trust Accounts unless the security
interest granted and perfected in such account will continue to be perfected in
such investment, in either case without any further action by any Person, and,
in connection with any direction to the Trust Collateral Agent to make any such
investment, if necessary, the Master Servicer shall deliver to the Trust
Collateral Agent an Opinion of Counsel to such effect.
(d) The Trust Collateral Agent shall not in any way be held
liable by reason of any insufficiency in any of the Trust Accounts resulting
from any loss on any Eligible Investment included therein except for losses
attributable to the Trust Collateral Agent's negligence or bad faith or its
failure to make payments on such Eligible Investments issued by the Trust
Collateral Agent, in its commercial capacity as principal obligor and not as
trustee, in accordance with their terms.
(e) If (i) the Master Servicer shall have failed to give
investment directions for any funds on deposit in the Trust Accounts to the
Trust Collateral Agent by 2:00 p.m. Eastern Time (or such other time as may be
agreed by the Issuer and Trust Collateral Agent) on any Business Day; or (ii) a
Default or Event of Default shall have occurred and be continuing with respect
to the Notes but the Notes shall not have been declared due and payable, or, if
such Notes shall have been declared due and payable following an Event of
Default, amounts collected or receivable from the Trust Property are being
applied as if there had not been such a declaration;
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then the Trust Collateral Agent shall, to the fullest extent practicable,
invest and reinvest funds in the Trust Accounts in one or more Eligible
Investments pursuant to paragraph (b) above.
(f)(i) The Trust Collateral Agent shall possess all right,
title and interest in all funds on deposit from time to time in the Trust
Accounts and in all proceeds thereof (excluding all Investment Earnings on the
Collection Account) and all such funds, investments, proceeds and income shall
be part of the Owner Trust Estate. Except as otherwise provided herein, the
Trust Accounts shall be under the sole dominion and control of the Trust
Collateral Agent for the benefit of the Noteholders and the Certificateholders,
as the case may be, and the Insurer. If, at any time, any of the Trust Accounts
ceases to be an Eligible Deposit Account, the Trust Collateral Agent (or the
Master Servicer on its behalf) shall within five Business Days (or such longer
period as to which each Rating Agency and the Insurer may consent) establish a
new Trust Account as an Eligible Deposit Account and shall transfer any cash
and/or any investments to such new Trust Account. In connection with the
foregoing, the Master Servicer agrees that, in the event that any of the Trust
Accounts are not accounts with the Trust Collateral Agent, the Master Servicer
shall notify the Trust Collateral Agent in writing promptly upon any of such
Trust Accounts ceasing to be an Eligible Deposit Account.
(ii) With respect to the Trust Account Property:
(A) any Trust Account Property or any property in the
Certificate Distribution Account that is held in deposit
accounts shall be held solely in the Eligible Deposit
Accounts; and, except as otherwise provided herein, each such
Eligible Deposit Account shall be subject to the exclusive
custody and control of the Trust Collateral Agent, and the
Trust Collateral Agent shall have sole signature authority
with respect thereto;
(B) any Trust Account Property that constitutes
Physical Property shall be delivered to the Trust Collateral
Agent in accordance with paragraph (a) of the definition of
"Delivery" and shall be held, pending maturity or disposition,
solely by the Trust Collateral Agent or a financial
intermediary (as such term is defined in Section 8-313(4) of
the UCC) acting solely for the Trust Collateral Agent;
(C) any Trust Account Property that is a book-entry
security held through the Federal Reserve System pursuant to
Federal book-entry regulations shall be delivered in
accordance with paragraph (b) of the definition of "Delivery"
and shall be maintained by the Trust Collateral Agent, pending
maturity or disposition, through continued book-entry
registration of such Trust Account Property as described in
such paragraph; and
(D) any Trust Account Property that is an
"uncertificated security" under Article 8 of the UCC and that
is not governed by clause (C) above shall be delivered to the
Trust Collateral Agent in accordance with paragraph (c) of the
definition of "Delivery" and shall be maintained by the Trust
Collateral Agent, pending maturity or disposition, through
continued registration of the Trust Collateral Agent's (or its
nominee's) ownership of such security.
(g) The Master Servicer shall have the power, revocable by the
Insurer or, with the consent of the Insurer by the Trustee or by the Owner
Trustee with the consent of the Trustee,
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to instruct the Trust Collateral Agent to make withdrawals and payments from
the Trust Accounts for the purpose of permitting the Master Servicer and the
Trust Collateral Agent to carry out its respective duties hereunder.
SECTION 5.2. Capitalized Interest Account.
(a) The Master Servicer shall cause the Trust Collateral Agent
to establish and maintain an Eligible Deposit Account (the "Capitalized Interest
Account") with the Trust Collateral Agent, bearing a designation clearly
indicating that the funds deposited therein are held in trust for the benefit
of the Noteholders, Certificateholders and the Insurer.
On or prior to the Closing Date, the Seller shall deposit an
amount equal to the Capitalized Interest Account Initial Deposit into the
Capitalized Interest Account.
(b)(i) On the Distribution Dates occurring in April, May and
June of 1997 the Trust Collateral Agent shall, in accordance with the Master
Servicer's Certificate, withdraw from the Capitalized Interest Account the
Monthly Capitalized Interest Amount for such Distribution Date and deposit
such amount in the Collection Account as further provided in Section 5.7.
(ii) On the Distribution Dates occurring in April, May and
June of 1997 the Master Servicer shall instruct the Trust Collateral
Agent in writing to withdraw from the Capitalized Interest Account and
pay to the Seller on such Distribution Date an amount equal to the
Overfunded Capitalized Interest Amount for such Distribution Date. Any
amounts remaining in the Capitalized Interest Account on the
Distribution Date which immediately follows the end of the Pre-Funding
Period after taking into account the transfer pursuant to Section
5.7(a)(i) shall be remitted by the Trust Collateral Agent to the
Seller. Upon any such distributions to the Seller, the Noteholders, the
Certificateholders and the Insurer will have no further rights in, or
claims to, such amounts.
SECTION 5.3. Certain Reimbursements to the Master Servicer.
The Master Servicer will be entitled to be reimbursed from amounts on deposit
in the Collection Account with respect to a Collection Period for amounts
previously deposited in the Collection Account but later determined by the
Master Servicer to have resulted from mistaken or postings or checks returned
for insufficient funds. The amount to be reimbursed hereunder shall be paid to
the Master Servicer on the related Distribution Date pursuant to Section
5.7(b)(i) upon certification by the Master Servicer of such amounts and the
provision of such information to the Trust Collateral Agent and the Insurer as
may be necessary in the opinion of the Insurer to verify the accuracy of such
certification. In the event that the Insurer has not received evidence
satisfactory to it of the Master Servicer's entitlement to reimbursement
pursuant to this Section, the Insurer shall (unless an Insurer Default shall
have occurred and be continuing) give the Trust Collateral Agent notice to
such effect, following receipt of which the Trust Collateral Agent shall not
make a distribution to the Master Servicer in respect of such amount pursuant
to Section 5.7, or if the Master Servicer prior thereto has been reimbursed
pursuant to Section 5.7, the Trust Collateral Agent shall withhold such
amounts from amounts otherwise distributable to the Master Servicer on the
next succeeding Distribution Date.
SECTION 5.4. Application of Collections. All collections for
the Collection Period shall be applied by the Master Servicer as follows:
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With respect to each Simple Interest Receivable (other than a
Purchased Receivable), payments by or on behalf of the Obligor, (other than
Supplemental Servicing Fees with respect to such Receivable, to the extent
collected) shall be applied to interest and principal in accordance with the
Simple Interest Method. With respect to each Rule of 78s Receivable (other than
a Purchased Receivable), payments by or on behalf of the Obligor, (other than
Supplemental Servicing Fees with respect to such Receivable, to the extent
collected) shall be applied to interest and principal in accordance with the
Rule of 78s Method. With respect to each Actuarial Receivable, (other than a
Purchased Receivable), payments by or on behalf of the Obligor, (other than
Supplemental Servicing Fees with respect to such Receivable, to the extent
collected) shall be applied to interest and principal in accordance with the
Actuarial Method.
All amounts collected that are payable to the Master Servicer
as Supplemental Servicing Fees hereunder shall be deposited in the Collection
Account and paid to the Master Servicer in accordance with Section 5.7(b).
SECTION 5.5. Withdrawals from Series 1997-1 Spread Account.
(a) In the event that the Master Servicer's Certificate with
respect to any Determination Date shall state that the sum of (i) the Available
Funds plus (ii) the Note Prepayment Amount with respect to such Determination
Date is less than the sum of the amounts payable on the related Distribution
Date pursuant to clauses (i) through (v) of Section 5.7(b) (such deficiency
being a "Deficiency Claim Amount") then on the Deficiency Claim Date immediately
preceding such Distribution Date, the Trust Collateral Agent shall deliver to
the Collateral Agent, the Owner Trustee, the Insurer, the fiscal agent set forth
in the Spread Account Agreement, if necessary, and the Master Servicer, by hand
delivery, telex or facsimile transmission, a written notice in substantially the
form of Exhibit C attached hereto (a "Deficiency Notice") specifying the
Deficiency Claim Amount for such Distribution Date and the Note Policy Claim
Amount, if any. Such Deficiency Notice shall direct the Collateral Agent to
remit such Deficiency Claim Amount (to the extent of the funds available to be
distributed pursuant to the Spread Account Agreement) to the Trust Collateral
Agent for deposit in the Collection Account on the related Distribution Date.
(b) Any Deficiency Notice shall be delivered by 10:00 am., New
York City time, on the fourth Business Day preceding such Distribution Date. The
amounts distributed by the Collateral Agent to the Trust Collateral Agent
pursuant to a Deficiency Notice shall be deposited by the Trust Collateral Agent
into the Collection Account pursuant to Section 5.6.
SECTION 5.6. Additional Deposits.
(a) Advanta and the Seller, as applicable, shall deposit or
cause to be deposited in the Collection Account on the Determination Date
following the date on which such obligations are due the aggregate Purchase
Amount with respect to Purchased Receivables. On or before each Draw Date, the
Trust Collateral Agent shall remit to the Collection Account any amounts
delivered to the Trust Collateral Agent by the Collateral Agent.
(b) The proceeds of any purchase or sale of the assets of the
Trust described in Section 11.1 hereof shall be deposited in the Collection
Account.
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SECTION 5.7. Distributions.
(a) On each Distribution Date, the Trust Collateral Agent
shall (based solely on the information contained in the Master Servicer's
Certificate delivered on the related Determination Date unless the Insurer shall
have notified the Trust Collateral Agent of any errors or deficiencies with
respect thereto) cause to be made the following transfers and distributions in
the amounts set forth in the Master Servicer's Certificate for such Distribution
Date:
(i) During the Pre-Funding Period, from the Capitalized
Interest Account to the Collection Account, in immediately available
funds, the Monthly Capitalized Interest Amount for such Distribution
Date; and
(ii) If such Distribution Date is the Mandatory Redemption
Date, from the Pre-Funding Account to the Collection Account, in
immediately available funds, the Pre- Funded Amount after giving effect
to the purchase of Subsequent Receivables, if any, on the Mandatory
Redemption Date.
(b) On each Distribution Date, the Trust Collateral Agent
shall (x) distribute all amounts deposited by the Insurer pursuant to Section
5.12 as directed by the Insurer and (y) (based solely on the information
contained in the Master Servicer's Certificate delivered with respect to the
related Determination Date unless the Insurer shall have notified the Trust
Collateral Agent in writing of any errors or deficiencies with respect thereto)
distribute the following amounts from the Collection Account unless otherwise
specified, to the extent of the sources of funds stated to be available
therefor, and in the following order of priority:
(i) from the Distribution Amount, to the Master Servicer,
the Base Servicing Fee for the related Collection Period, any
Supplemental Servicing Fees for the related Collection Period, and any
amounts specified in Section 5.3, to the extent the Master Servicer has
not reimbursed itself in respect of such amounts pursuant to Section
5.3 and to the extent not retained by the Master Servicer;
(ii) from the Distribution Amount, to each of the Trustee
and the Owner Trustee, their respective accrued and unpaid trustees'
fees and expenses and any accrued and unpaid expenses of the Trust
Collateral Agent;
(iii) from the Distribution Amount and from amounts, if
any, paid under the Note Policy with respect to such Distribution Date,
to the Note Distribution Account, the Noteholders' Interest
Distributable Amount;
(iv) (A) from the Distribution Amount and from amounts, if
any, paid under the Note Policy with respect to such Distribution Date
to the Note Distribution Account, the Noteholders' Principal
Distributable Amount and (B) from amounts on deposit in the Collection
Account which were released from the Pre-Funding Account in accordance
with Section 5.7 (a)(ii), on the Mandatory Redemption Date, the Note
Prepayment Amount;
(v) from the Distribution Amount, to the Insurer, to the
extent of any amounts owing to the Insurer under the Insurance
Agreement and not paid;
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(vi) from Available Funds to the Series 1997-1 Spread
Account, an amount, if necessary, required to increase the amount
therein to the Requisite Amount (after taking into account all
withdrawals from the Series 1997-1 Spread Account on such Distribution
Date);
(vii) from Available Funds, to the Certificate
Distribution Account, the Certificateholders' Interest Distributable
Amount; and
(viii) from Available Funds, to the Certificate
Distribution Account, the Certificateholders' Principal Distributable
Amount;
(ix) from Available Funds, any remaining Available Funds
to the Seller;
provided, however, that, (A) following an acceleration of the Notes or, (B) if
an Insurer Default shall have occurred and be continuing and an Event of Default
pursuant to Section 5.1(i), 5.1(ii), 5.1(iv), 5.1(v) or 5.1(vi) of the Indenture
shall have occurred and be continuing, in each case, to the extent actually
known by a Trust Officer of the Trust Collateral Agent, or (C) the receipt of
Insolvency Proceeds pursuant to Section 11.1(b), amounts deposited in the Note
Distribution Account and the Certificate Distribution Account (including any
such Insolvency Proceeds) shall be paid to the Noteholders and the
Certificateholders, pursuant to Section 5.6 of the Indenture.
(c) Each Certificateholder, by its acceptance of its
Certificate will be deemed to have consented to the provisions of paragraph (b)
above relating to the priority of distributions, and will be further deemed to
have acknowledged that no property rights in any amount of or the proceeds of
any such amount shall vest in such Certificateholder until such amounts have
been distributed to such Certificateholder pursuant to such provisions;
provided, that the foregoing shall not restrict the right of any
Certificateholder, upon compliance with the provisions hereof, from seeking to
compel the performance of the provisions hereof by the parties hereto.
In furtherance of and not in limitation of the foregoing, each
Certificateholder, by acceptance of its Certificate, specifically acknowledges
that no amounts shall be received by it, nor shall it have any right to receive
any amounts, unless and until such amounts have been distributed pursuant to
clauses (vii) or (viii) above to such Certificateholder. Each Certificateholder,
by acceptance of its Certificate, further specifically acknowledges that it has
no right to or interest in any monies at any time held pursuant to the Spread
Account Agreement or pursuant hereto prior to the release of such monies as
aforesaid, such monies being held in trust for the benefit of the Noteholders
and the Insurer. Notwithstanding the foregoing, in the event that it is ever
determined that the monies held in the Spread Account constitute a pledge of
collateral, then the provisions of this Agreement and the Spread Account
Agreement shall be considered to constitute a security agreement and the Seller
and the Certificateholders hereby grant to the Collateral Agent for the benefit
of the Trustee and the Insurer a first priority perfected security interest in
such amounts, to be applied as set forth in Section 3.03 of the Spread Account
Agreement. In addition, each Certificateholder, by acceptance of its
Certificate, hereby appoints the Seller as its agent to pledge a first priority
perfected security interest in the Spread Account, and any amounts held therein
from time to time to the Collateral Agent for the benefit of the Trustee and the
Insurer pursuant to the Spread Account Agreement and agrees to execute and
deliver such instruments of conveyance, assignment, grant, confirmation, etc.,
as well as any financing statements, in each case as the Insurer shall consider
reasonably necessary in order to
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perfect the Collateral Agent's Security Interest in the Collateral (as such
terms are defined in the Spread Account Agreement).
(d) In the event that the Collection Account is maintained
with an institution other than the Trust Collateral Agent, the Master Servicer
shall instruct and cause such institution to make all deposits and distributions
pursuant to Section 5.7(b) on the related Distribution Date.
SECTION 5.8. Note Distribution Account.
(a) On each Distribution Date, the Trust Collateral Agent
shall distribute all amounts on deposit in the Note Distribution Account, as
such amounts on deposit in the Note Distribution Account are specified on the
Monthly Servicer's Certificate, to Noteholders in respect of the Notes to the
extent of amounts due and unpaid on the Notes for principal and interest in the
following amounts and in the following order of priority:
(i) accrued and unpaid interest on the Notes; provided
that if there are not sufficient funds in the Note Distribution Account
to pay the entire amount of accrued and unpaid interest then due on
each Class of Notes, the amount in the Note Distribution Account shall
be applied to the payment of such interest on each Class of Notes pro
rata on the basis of the amount of accrued and unpaid interest due on
each Class of Notes;
(ii) any amounts deposited in the Note Distribution
Account with respect to the Note Prepayment Amount, shall be
distributed to the Holders of the Class A-1 Notes and the Class A-2
Notes as a principal payment. The principal payments will be applied
sequentially to the Class A-1 Notes and the Class A-2 Notes, in that
order, until the respective principal amount of such Class of Notes has
been paid in full. No principal will be paid on the Class A-2 Notes
until the principal of the Class A-1 Notes has been paid in full.
(iii) to the Holders of the Class A-1 Notes, the
Noteholders' Principal Distributable Amount until the outstanding
principal balance of the Class A-1 Notes is reduced to zero; and
(iv) to the Holders of the Class A-2 Notes, the
Noteholders' Principal Distributable Amount until the outstanding
principal balance of the Class A-2 Notes is reduced to zero.
(b) On each Distribution Date, the Trust Collateral Agent
shall send to each Noteholder the statement provided to the Trust Collateral
Agent by the Master Servicer pursuant to Section 5.11 hereof on such
Distribution Date.
(c) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to a Noteholder, such tax shall
reduce the amount otherwise distributable to the Noteholder in accordance with
this Section. The parties hereto hereby agree to provide to the Trust Collateral
Agent the information any such party may have, if any, with respect to any such
withholding tax. The Trust Collateral Agent is hereby authorized and directed to
retain from amounts otherwise distributable to the Noteholders sufficient funds
for the payment of any tax that is legally owed by the Trust (but such
authorization shall not prevent the Trust Collateral Agent from contesting any
such tax in appropriate proceedings, and withholding payment of such tax,
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if permitted by law, pending the outcome of such proceedings). The amount of any
withholding tax imposed with respect to a Noteholder shall be treated as cash
distributed to such Noteholder at the time it is withheld by the Trust and
remitted to the appropriate taxing authority. If there is a possibility that
withholding tax is payable with respect to a distribution (such as a
distribution to a non-US Noteholder), the Trust Collateral Agent may in its sole
discretion withhold such amounts in accordance with this clause (c). In the
event that a Noteholder wishes to apply for a refund of any such withholding
tax, the Trust Collateral Agent shall reasonably cooperate with such Noteholder
in making such claim so long as such Noteholder agrees to reimburse the Trust
Collateral Agent for any out-of-pocket expenses incurred.
(d) Distributions required to be made to Noteholders on any
Distribution Date shall be made to each Noteholder of record on the preceding
Record Date either by wire transfer, in immediately available funds, to the
account of such Holder at a bank or other entity having appropriate facilities
therefor, if such Noteholder shall have provided to the Note Registrar
appropriate written instructions at least five Business Days prior to such
Distribution Date and such Holder's Notes in the aggregate evidence a
denomination of not less than $1,000,000 or, if not, by check mailed to such
Noteholder at the address of such holder appearing in the Note Register;
provided, however, that, unless Definitive Notes have been issued pursuant to
Section 3.13 of the Trust Agreement, with respect to Notes registered on the
Record Date in the name of the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), distributions will be made by wire transfer in
immediately available funds to the account designated by such nominee.
Notwithstanding the foregoing, the final distribution in respect of any Note
(whether on the Final Scheduled Distribution Date or otherwise) will be payable
only upon presentation and surrender of such Note at the office or agency
maintained for that purpose by the Note Registrar pursuant to Section 2.4 of the
Indenture.
SECTION 5.9. Certificate Distribution Account.
(a) On each Distribution Date, the Trust Collateral Agent
shall distribute all amounts on deposit in the Certificate Distribution Account,
as such amounts on deposit in the Certificate Distribution Account are
specified on the Monthly Servicer's Certificate, to Certificateholders in
respect of the Certificates to the extent of amounts due and unpaid on the
Certificates for principal and interest in the following amounts and in the
following order of priority:
(i) accrued and unpaid interest on the Certificates;
provided that if there are not sufficient funds in the Certificate
Distribution Account to pay the entire amount of accrued and unpaid
interest then due on the Certificates, the amount in the Certificate
Distribution Account shall be applied to the payment of such interest
on the Certificates pro rata on the basis of the amount of accrued and
unpaid interest due on the Certificates;
(ii) to the Holders of the Certificates, the
Certificateholders' Principal Distributable Amount until the
outstanding principal balance of the Certificates is reduced to zero.
(b) On each Distribution Date, the Trust Collateral Agent
shall send to each Certificateholder the statement provided to the Trust
Collateral Agent by the Master Servicer pursuant to Section 5.11 hereof on such
Distribution Date. The Trust Collateral Agent hereby acknowledges that Advanta
Auto Receivables Corp. I will be the initial Certificateholder of the
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Certificates. The Owner Trustee hereby agrees that it will provide written
notice to the Trust Collateral Agent of any transfer of any Certificates and any
information that the Trust Collateral Agent may reasonably request to enable it
to perform its duties under this Section 5.9.
(c) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to a Certificateholder, such tax
shall reduce the amount otherwise distributable to the Certificateholder in
accordance with this Section. The parties hereto hereby agree to provide to the
Trust Collateral Agent the information any such party may have, if any, with
respect to any such withholding tax. The Trust Collateral Agent is hereby
authorized and directed to retain from amounts otherwise distributable to the
Certificateholders sufficient funds for the payment of any tax that is legally
owed by the Trust (but such authorization shall not prevent the Trust Collateral
Agent from contesting any such tax in appropriate proceedings, and withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings). The amount of any withholding tax imposed with respect to a
Certificateholder shall be treated as cash distributed to such Certificateholder
at the time it is withheld by the Trust and remitted to the appropriate taxing
authority. If there is a possibility that withholding tax is payable with
respect to a distribution (such as a distribution to a non-US
Certificateholder), the Trust Collateral Agent may in its sole discretion
withhold such amounts in accordance with this clause (c). In the event that an
Certificateholder wishes to apply for a refund of any such withholding tax, the
Trust Collateral Agent shall reasonably cooperate with such Certificateholder in
making such claim so long as such Certificateholder agrees to reimburse the
Trust Collateral Agent for any out-of-pocket expenses incurred.
(d) Any funds remaining in the Certificate Distribution
Account after distribution of all amounts specified in this Section shall be
distributed to the Seller.
(e) Distributions required to be made to Certificateholders on
any Distribution Date shall be made to each Certificateholder of record on the
preceding Record Date either by wire transfer, in immediately available funds,
to the account of such Holder at a bank or other entity having appropriate
facilities therefor, if such Certificateholder shall have provided to the
Certificate Registrar appropriate written instructions at least five Business
Days prior to such Distribution Date and such Holder's Certificates in the
aggregate evidence a denomination of not less than $1,000,000, or, if not, by
check mailed to such Certificateholder at the address of such holder appearing
in the Certificate Register; Notwithstanding the foregoing, the final
distribution in respect of any Certificate (whether on the Final Scheduled
Distribution Date or otherwise) will be payable only upon presentation and
surrender of such Certificate at the office or agency maintained for that
purpose by the Certificate Registrar pursuant to Section 3.8 of the Trust
Agreement.
SECTION 5.10. Pre-Funding Account.
(a) On the Closing Date, the Trust Collateral Agent will
deposit, on behalf of the Seller, in the Pre-Funding Account $0 from the
proceeds of the sale of the Notes. On each Subsequent Transfer Date, the Master
Servicer shall instruct the Trust Collateral Agent to withdraw from the
Pre-Funding Account (i) an amount equal to 85.5% of the Principal Balance of the
Subsequent Receivables transferred to the Issuer on such Subsequent Transfer
Date and to distribute such amount to or upon the order of the Seller upon
satisfaction of the conditions set forth in this Agreement with respect to such
transfer and (ii) an amount equal to the Subsequent
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Spread Account Deposit on such Subsequent Transfer Date upon satisfaction of
the conditions set forth in this Agreement with respect to such transfer.
(b) If the Pre-Funded Amount has not been reduced to zero on
the date on which the Pre-Funding Period ends after giving effect to any
reductions in the Pre-Funded Amount on such date, the Master Servicer shall
instruct the Trust Collateral Agent to withdraw from the Pre-Funding Account on
the Mandatory Redemption Date the Pre-Funded Amount (exclusive of any
Pre-Funding Earnings) and deposit an amount equal to the Note Prepayment Amount
in the Note Distribution Account in accordance with the priority of payments
under Section 5.7(b).
SECTION 5.11. Statements to Certificateholders and
Noteholders. On or prior to each Determination Date, the Master Servicer shall
provide, or cause to be provided, to the Trust Collateral Agent (with a copy to
the Insurer and the Rating Agencies) for the Trust Collateral Agent to forward
to each Noteholder of record, and to each Certificateholder of record, a
statement setting forth at least the following information as to the Notes and
the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal
of each Class of Notes and to the Certificate Balance of the
Certificates;
(ii) the amount of such distribution allocable to interest
on or with respect to each Class of Notes and to the Certificates;
(iii) the amount of such distribution payable out of amounts
withdrawn from the Series 1997-1 Spread Account or pursuant to a claim
on the Note Policy;
(iv) the Pool Balance as of the close of business on the
last day of the preceding Collection Period;
(v) the aggregate outstanding principal amount of each Class
of the Notes, the Note Pool Factor for each such Class, the Certificate
Balance and the Certificate Pool Factor after giving effect to payments
allocated to principal reported under (i) above;
(vi) the amount of the Servicing Fee paid to the Master
Servicer with respect to the related Collection Period and/or due but
unpaid with respect to such Collection Period or prior Collection
Periods, as the case may be;
(vii) the Noteholders' Interest Carryover Shortfall, the
Certificateholders' Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, and the Certificateholders' Principal
Carryover Shortfall;
(viii) the amount of the aggregate Realized Losses, if any,
for the second preceding Collection Period;
(ix) the aggregate Purchase Amounts for Receivables, if any,
that were repurchased in such period;
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(x) for Distribution Dates during the Pre-Funding Period
(if any), the remaining Pre-Funded Amount; and
(xi) for the final Subsequent Transfer Date, the amount of any
remaining Pre-Funded Amount that has not been used to fund the
purchase of Subsequent Receivables and is passed through as principal
to Noteholders and Certificateholders.
Each amount set forth pursuant to paragraph (i), (ii), (iii), (vi), (vii), (xi)
and (xii) above shall be expressed as a dollar amount per $1,000 of the initial
principal balance of the Notes (or Class thereof) or the initial Certificate
Balance, as applicable.
SECTION 5.12. Optional Deposits by the Insurer. The Insurer
shall at any time, and from time to time, with respect to a Distribution Date,
have the option (but shall not be required, except in accordance with the terms
of a Policy) to deliver amounts to the Trust Collateral Agent for deposit into
the Collection Account for any of the following purposes: (i) to provide funds
in respect of the payment of fees or expenses of any provider of services to the
Trust with respect to such Distribution Date, or (ii) to include such amount to
the extent that without such amount a draw would be required to be made on the
Note Policy.
ARTICLE VI
The Note Policy
SECTION 6.1. Claims Under Note Policy.
(a) In the event that the Trust Collateral Agent has delivered
a Deficiency Notice with respect to any Determination Date pursuant to Section
5.5 hereof, the Trust Collateral Agent shall on the related Draw Date determine
the Note Policy Claim Amount for the related Distribution Date. If the Note
Policy Claim Amount specified on the Deficiency Notice for such Distribution
Date is greater than zero, the Trust Collateral Agent shall furnish to the
Insurer no later than 12:00 noon New York City time on the related Draw Date a
completed Notice of Claim (as defined in (b) below) in the amount of the Note
Policy Claim Amount. Amounts paid by the Insurer pursuant to a claim submitted
under this Section 6.1. shall be deposited by the Trust Collateral Agent into
the Note Distribution Account for payment pursuant to paragraph (b) below to
Noteholders on the related Distribution Date.
(b) Any notice delivered by the Trust Collateral Agent to the
Insurer pursuant to subsection 6.1(a) shall specify the Note Policy Claim Amount
claimed under the Note Policy and shall constitute a "Notice of Claim" under the
Note Policy. In accordance with the provisions of the Note Policy, the Insurer
is required to pay to the Trust Collateral Agent the Note Policy Claim Amount
properly claimed thereunder by 12:00 noon, New York City time, on the later of
(i) the third Business Day following receipt on a Business Day of the Notice of
Claim, and (ii) the applicable Distribution Date. Any payment made by the
Insurer under the Note Policy shall be applied solely to the payment of the
Notes, and for no other purpose.
(c) The Trust Collateral Agent shall (i) receive as
attorney-in-fact of each Noteholder any Note Policy Claim Amount from the
Insurer and (ii) deposit the same in the Note Distribution Account for
distribution to Noteholders. Any and all Note Policy Claim Amounts
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disbursed by the Trust Collateral Agent from claims made under the Note Policy
shall not be considered payment by the Trust or from the Series 1997-1 Spread
Account with respect to such Notes, and shall not discharge the obligations of
the Trust with respect thereto.
(d) The Trust Collateral Agent shall keep a complete and
accurate record of all funds deposited by the Insurer into the Collection
Account and the allocation of such funds to payment of interest on and principal
paid in respect of any Note. The Insurer shall have the right to inspect such
records at reasonable times upon one Business Day's prior notice to the Trust
Collateral Agent.
(e) The Trust Collateral Agent shall be entitled to enforce on
behalf of the Noteholders the obligations of the Insurer under the Note Policy.
Notwithstanding any other provision of this Agreement or any Basic Document, the
Noteholders are not entitled to make any claims under the Note Policy or
institute proceedings directly against the Insurer.
SECTION 6.2. Preference Claims.
(a) In the event that the Trust Collateral Agent has received
a certified copy of an order of the appropriate court that any Noteholders'
Interest Distributable Amount or Noteholders' Principal Distributable Amount
paid on a Note has been avoided in whole or in part as a preference payment
under applicable bankruptcy law, the Trust Collateral Agent shall so notify the
Insurer, shall comply with the provisions of the Note Policy to obtain payment
by the Insurer of such avoided payment, and shall, at the time it provides
notice to the Insurer, notify Holders of the Notes by mail that, in the event
that any Noteholder's payment is so recoverable, such Noteholder will be
entitled to payment pursuant to the terms of the Note Policy. The Trust
Collateral Agent shall furnish to the Insurer its records evidencing the
payments of principal of and interest on Notes, if any, which have been made by
the Trust Collateral Agent and subsequently recovered from Noteholders, and the
dates on which such payments were made. Pursuant to the terms of the Note
Policy, the Insurer will make such payment on behalf of the Noteholder to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order (as defined in the Note Policy) and not to the Trust Collateral Agent
or any Noteholder directly (unless a Noteholder has previously paid such payment
to the receiver, conservator, debtor-in-possession or trustee in bankruptcy, in
which case the Insurer will make such payment to the Trust Collateral Agent for
distribution to such Noteholder upon proof of such payment reasonably
satisfactory to the Insurer).
(b) The Trust Collateral Agent shall promptly notify the
Insurer of any proceeding or the institution of any action (of which the Trust
Collateral Agent has actual knowledge) seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership, rehabilitation
or similar law (a "Note Preference Claim") of any distribution made with respect
to the Notes. Each Holder, by its purchase of Notes, and the Trust Collateral
Agent hereby agree that so long as an Insurer Default shall not have occurred
and be continuing, the Insurer may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim including, without limitation, (i) the direction of any appeal
of any order relating to any Preference Claim and (ii) the posting of any
surety, supersedeas or performance bond pending any such appeal at the expense
of the Insurer, but subject to reimbursement as provided in the Insurance
Agreement.
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SECTION 6.3. Surrender of Policy. The Trust Collateral Agent
shall surrender the Note Policy to the Insurer for cancellation upon the
expiration of such policy in accordance with the terms thereof.
ARTICLE VII
RESERVED
ARTICLE VIII
The Seller
SECTION 8.1. Representations of Seller. The Seller makes the
following representations on which the Insurer shall be deemed to have relied
in executing and delivering the Note Policy and on which the Issuer is deemed
to have relied in acquiring the Receivables. The representations speak as of
the execution and delivery of this Agreement and as of the Closing Date, in
the case of Initial Receivables, and as of the applicable Subsequent Transfer
Date, in the case of Subsequent Receivables, and shall survive the sale of the
Receivables to the Issuer and the pledge thereof to the Trustee pursuant to
the Indenture.
(a) Schedule of Representations. The representations and
warranties set forth on the Schedule of Representations attached hereto as
Schedule B are true and correct.
(b) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Nevada, with power and authority to own its properties and
to conduct its business as such properties are currently owned and such business
is currently conducted, and had at all relevant times, and now has, power,
authority and legal right to acquire, own and sell the Receivables and the Other
Conveyed Property transferred to the Trust.
(c) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing and has obtained all
necessary licenses and approvals in all jurisdictions where the failure to do so
would materially and adversely affect Seller's ability to transfer the
Receivables and the Other Conveyed Property to the Trust pursuant to this
Agreement, or the validity or enforceability of the Receivables and the Other
Conveyed Property or to perform Seller's obligations hereunder and under the
Seller's Basic Documents.
(d) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and its Basic Documents and to
carry out its terms and their terms, respectively; the Seller has full power and
authority to sell and assign the Receivables and the Other Conveyed Property to
be sold and assigned to and deposited with the Trust by it and has duly
authorized such sale and assignment to the Trust by all necessary corporate
action; and the execution, delivery and performance of this Agreement and the
Seller's Basic Documents have been duly authorized by the Seller by all
necessary corporate action.
(e) Valid Sale, Binding Obligations. This Agreement effects a
valid sale, transfer and assignment of the Receivables and the Other Conveyed
Property, enforceable against
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the Seller and creditors of and purchasers from the Seller; and this Agreement
and the Seller's Basic Documents, when duly executed and delivered, shall
constitute legal, valid and binding obligations of the Seller enforceable in
accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
(f) No Violation. The consummation of the transactions
contemplated by this Agreement and the Basic Documents and the fulfillment of
the terms of this Agreement and the Basic Documents shall not conflict with,
result in any breach of any of the terms and provisions of or constitute (with
or without notice, lapse of time or both) a default under the certificate of
incorporation or by-laws of the Seller, or any indenture, agreement, mortgage,
deed of trust or other instrument to which the Seller is a party or by which it
is bound, or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, other than this Agreement, or violate any
law, order, rule or regulation applicable to the Seller of any court or of any
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or any of its properties.
(g) No Proceedings. There are no proceedings or
investigations pending or, to the Seller's knowledge, threatened against the
Seller, before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction over the Seller
or its properties (A) asserting the invalidity of this Agreement or any of the
Basic Documents, (B) seeking to prevent the issuance of the Securities or the
consummation of any of the transactions contemplated by this Agreement or any
of the Basic Documents, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement or any
of the Basic Documents, or (D) seeking to adversely affect the federal income
tax or other federal, state or local tax attributes of the Securities.
(h) Approvals. All approvals, authorizations, consents, order
or other actions of any person, corporation or other organization, or of any
court, governmental agency or body or official, required in connection with the
execution and delivery by the Seller of this Agreement and the consummation of
the transactions contemplated hereby have been or will be taken or obtained on
or prior to the Closing Date.
(i) No Consents. The Seller is not required to obtain the
consent of any other party or any consent, license, approval or authorization,
or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement which has not already been obtained.
(j) Chief Executive Office. The chief executive office of
the Seller is at 1325 Airmotive Way, Suite 130, Reno, Nevada 89502.
SECTION 8.2. Corporate Existence.
(a) During the term of this Agreement, the Seller will keep in
full force and effect its existence, rights and franchises as a corporation
under the laws of the jurisdiction of its
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incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, any Subsequent
Transfer Agreement, the Basic Documents and each other instrument or agreement
necessary or appropriate to the proper administration of this Agreement and
the transactions contemplated hereby.
(b) During the term of this Agreement, the Seller shall
observe the applicable legal requirements for the recognition of the Seller as a
legal entity separate and apart from its Affiliates, including as follows:
(i) the Seller shall maintain corporate records and
books of account separate from those of its Affiliates;
(ii) except as otherwise provided in this Agreement, the
Seller shall not commingle its assets and funds with those of its
Affiliates;
(iii) the Seller shall hold such appropriate meetings of
its Board of Directors as are necessary to authorize all the Seller's
corporate actions required by law to be authorized by the Board of
Directors, shall keep minutes of such meetings and of meetings of its
stockholder(s) and observe all other customary corporate formalities
(and any successor Seller not a corporation shall observe similar
procedures in accordance with its governing documents and applicable
law);
(iv) the Seller shall at all times hold itself out to the
public under the Seller's own name as a legal entity separate and
distinct from its Affiliates; and
(v) all transactions and dealings between the Seller and
its Affiliates will be conducted on an arm's-length basis.
SECTION 8.3. Liability of Seller; Indemnities. The Seller
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken under this Agreement by the Seller and the
representations made by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Trust, the Insurer, the Trustee and the Trust
Collateral Agent from and against any taxes that may at any time be asserted
against any such Person with respect to the transactions contemplated in this
Agreement and any of the Basic Documents (except any income taxes arising out of
fees paid to the Owner Trustee, the Trust Collateral Agent, the Trustee and the
Insurer and except any taxes to which the Owner Trustee, the Trust Collateral
Agent or the Trustee may otherwise be subject to), including any sales, gross
receipts, general corporation, tangible personal property, privilege or license
taxes (but, in the case of the Issuer, not including any taxes asserted with
respect to, federal or other income taxes arising out of distributions on the
Certificates and the Notes) and costs and expenses in defending against the
same.
(b) The Seller shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Trustee, the Trust Collateral Agent, the Insurer,
the Certificateholders and the Noteholders from and against any loss, liability
or expense incurred by reason of (i) the Seller's willful misfeasance, bad faith
or negligence in the performance of its duties under this Agreement, or by
reason of reckless disregard of its obligations and duties under this Agreement
and (ii) the
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Seller's or the Issuer's violation of Federal or state securities laws in
connection with the offering and sale of the Notes and the Certificates.
(c) The Seller shall indemnify, defend and hold harmless the
Owner Trustee, Trustee and the Trust Collateral Agent and their respective
officers, directors, employees and agents from and against any and all costs,
expenses, losses, claims, damages and liabilities arising out of, or incurred in
connection with the acceptance or performance of the trusts and duties set forth
herein and in the Basic Documents except to the extent that such cost, expense,
loss, claim, damage or liability shall be due to the willful misfeasance, bad
faith or negligence (except for errors in judgment) of the Owner Trustee.
Indemnification under this Section shall survive the
resignation or removal of the Owner Trustee, the Trustee or the Trust Collateral
Agent and the termination of this Agreement or the Indenture or the Trust
Agreement or the Custodian Agreement, as applicable, and shall include
reasonable fees and expenses of counsel and other expenses of litigation. If the
Seller shall have made any indemnity payments pursuant to this Section and the
Person to or on behalf of whom such payments are made thereafter shall collect
any of such amounts from others, such Person shall promptly repay such amounts
to the Seller, without interest.
SECTION 8.4. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Seller shall be a party or (c) which may succeed to the properties and assets of
the Seller substantially as a whole, which Person in any of the foregoing cases
(x) has a certificate of incorporation containing provisions relating to
limitations on business and other matters substantially identical to those
contained in the Seller's certificate of incorporation and (y) executes an
agreement of assumption to perform every obligation of the Seller under this
Agreement, shall be the successor to the Seller hereunder without the execution
or filing of any document or any further act by any of the parties to this
Agreement; provided, however, that (i) the Seller shall have received the
written consent of the Insurer prior to entering into any such transaction, (ii)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.1 shall have been breached and no Master
Servicer Termination Event, and no event which, after notice or lapse of time,
or both, would become a Master Servicer Termination Event shall have happened
and be continuing, (iii) the Seller shall have delivered to the Owner Trustee,
the Trust Collateral Agent, the Trustee and the Insurer an Officer's Certificate
and an Opinion of Counsel each stating that such consolidation, merger or
succession and such agreement of assumption comply with this Section and that
all conditions precedent, if any, provided for in this Agreement relating to
such transaction have been complied with, (iv) the Rating Agency Condition shall
have been satisfied with respect to such transaction, (v) the Seller shall have
delivered to the Owner Trustee, the Trust Collateral Agent, the Trustee and the
Insurer an Opinion of Counsel stating that, in the opinion of such counsel,
either (A) all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary fully to preserve and
protect the interest of the Trust Collateral Agent, the Owner Trustee and the
Trustee, respectively, in the Receivables and reciting the details of such
filings or (B) no such action shall be necessary to preserve and protect such
interest, and (vi) immediately after giving effect to such transaction, no
Insurance Agreement Event of Default and no event that, after notice or lapse of
time, or both, would become an Insurance Agreement Event of Default shall have
occurred and be continuing. The Seller shall provide notice of any merger,
consolidation or succession pursuant to this Section 8.4 to each Rating Agency
and the Trust Collateral Agent and shall have received confirmation from
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each Rating Agency that the then current rating of the Securities will not be
downgraded as a result of such merger, consolidation or succession.
Notwithstanding anything herein to the contrary, the execution of the foregoing
agreement of assumption and compliance with clauses (i), (ii), (iii), (iv), (v)
and (vi) above shall be conditions to the consummation of the transactions
referred to in clauses (a), (b) or (c) above.
SECTION 8.5. Limitation on Liability of Seller and Others. The
Seller and any director or officer or employee or agent of the Seller may rely
in good faith on the written advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising under any Basic Document. The Seller shall not be under any obligation
to appear in, prosecute or defend any legal action that shall not be incidental
to its obligations under this Agreement, and that in its opinion may involve it
in any expense or liability.
SECTION 8.6. Seller May Own Certificates or Notes. The
Seller and any Affiliate thereof may in its individual or any other capacity
become the owner or pledgee of Certificates or Notes with the same rights as
it would have if it were not the Seller or an Affiliate thereof, except as
expressly provided herein or in any Basic Document. Notes or Certificates so
owned by the Seller or such Affiliate shall have an equal and proportionate
benefit under the provisions of the Basic Documents, without preference,
priority, or distinction as among all of the Notes or Certificates; provided,
however, that any Notes or Certificates owned by the Seller or any Affiliate
thereof, during the time such Notes or Certificates are owned by them, shall
be without voting rights for any purpose set forth in the Documents and will
not be entitled to the benefits of the Note Policy. The Seller shall notify
the Owner Trustee, the Trustee, the Trust Collateral Agent and the Insurer
promptly after it or any of its Affiliates become the owner or pledgee of a
Certificate or a Note.
ARTICLE IX
The Master Servicer
SECTION 9.1. Representations of Master Servicer. The Master
Servicer makes the following resentations on which the Insurer shall be deemed
to have relied in executing and delivering the Note Policy and on which the
Issuer is deemed to have relied in acquiring the Receivables. The
representations speak as of the execution and delivery of this Agreement and
as of the Closing Date, in the case of the Initial Receivables, and as of the
applicable Subsequent Transfer Date, in the case of the Subsequent Receivables,
and shall survive the sale of the Receivables to the Issuer and the pledge
thereof to the Trustee pursuant to the Indenture.
(i) Representations and Warranties. The representations
and warranties set forth on the Schedule of Representations attached
hereto as Schedule B are true and correct, provided that such
representations and warranties contained therein and herein shall not
apply to any entity other than Advanta;
(ii) Organization and Good Standing. The Master Servicer
has been duly organized and is validly existing and in good standing
under the laws of its jurisdiction of organization, with power,
authority and legal right to own its properties and to conduct its
business as such properties are currently owned and such business is
currently
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conducted, and had at all relevant times, and now has, power, authority
and legal right to enter into and perform its obligations under this
Agreement;
(iii) Due Qualification. The Master Servicer is duly
qualified to do business as a foreign corporation in good standing and
has obtained all necessary licenses and approvals, in all jurisdictions
in which the ownership or lease of property or the conduct of its
business (including the servicing of the Receivables as required by
this Agreement) requires or shall require such qualification;
(iv) Power and Authority. The Master Servicer has the
power and authority to execute and deliver this Agreement and its Basic
Documents and to carry out its terms and their terms, respectively, and
the execution, delivery and performance of this Agreement and the
Master Servicer's Basic Documents have been duly authorized by the
Master Servicer by all necessary corporate action;
(v) Binding Obligation. This Agreement and the Master
Servicer's Basic Documents shall constitute legal, valid and binding
obligations of the Master Servicer enforceable in accordance with their
respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding
in equity or at law;
(vi) No Violation. The consummation of the transactions
contemplated by this Agreement and the Master Servicer's Basic
Documents, and the fulfillment of the terms of this Agreement and the
Master Servicer's Basic Documents, shall not conflict with, result in
any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time) a default under, the articles of
incorporation or bylaws of the Master Servicer, or any indenture,
agreement, mortgage, deed of trust or other instrument to which the
Master Servicer is a party or by which it is bound, or result in the
creation or imposition of any Lien upon any of its properties pursuant
to the terms of any such indenture, agreement, mortgage, deed of trust
or other instrument, other than this Agreement, or violate any law,
order, rule or regulation applicable to the Master Servicer of any
court or of any federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the
Master Servicer or any of its properties, or any way materially
adversely affect the interest of the Securityholders or the Trust in
any Receivable or affect the Master Servicer's ability to perform its
obligations under this Agreement;
(vii) No Proceedings. There are no proceedings or
investigations pending or, to the Master Servicer's knowledge,
threatened against the Master Servicer, before any court, regulatory
body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Master Servicer or its
properties (A) asserting the invalidity of this Agreement or any of the
Basic Documents, (B) seeking to prevent the issuance of the Securities
or the consummation of any of the transactions contemplated by this
Agreement or any of the Basic Documents, or (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Master Servicer of its obligations under, or the
validity or enforceability of, this Agreement or any of the
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Basic Documents or (D) seeking to adversely affect the federal income
tax or other federal, state or local tax attributes of the Securities;
(viii) Approvals. All approvals, authorizations, consents,
order or other actions of any person, corporation or other
organization, or of any court, governmental agency or body or official,
required in connection with the execution and delivery by the Master
Servicer of this Agreement and the consummation of the transactions
contemplated hereby have been or will be taken or obtained on or prior
to the Closing Date.
(ix) No Consents. The Master Servicer is not required to
obtain the consent of any other party or any consent, license, approval
or authorization, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement which has not
already been obtained.
(x) Chief Executive Office. The chief executive office
of Advanta is located at Four Horsham Business Center, 300 Welsh Road,
Philadelphia, PA 19044.
SECTION 9.2. Liability of Master Servicer; Indemnities.
(a) The Master Servicer (in its capacity as such) shall be
liable hereunder only to the extent of the obligations in this Agreement
specifically undertaken by the Master Servicer and the representations made by
the Master Servicer and to the extent not covered in Section 3.04
[Indemnification] of the Insurance Agreement.
(b) The Master Servicer shall defend, indemnify and hold
harmless the Trust, the Trustee, the Trust Collateral Agent, the Owner Trustee,
the Insurer, their respective officers, directors, agents and employees, and the
Securityholders from and against any and all costs, expenses, losses, damages,
claims and liabilities, including reasonable fees and expenses of counsel and
expenses of litigation arising out of or resulting from the use, ownership or
operation by the Master Servicer or any Affiliate thereof of any Financed
Vehicle;
The Master Servicer shall indemnify, defend and hold harmless
the Trustee, the Trust Collateral Agent and the Owner Trustee and their
respective officers, directors, agents and employees from and against any taxes
that may at any time be asserted against any of such parties with respect to the
transactions contemplated in this Agreement except to the extent that such
costs, expenses, losses, damages, claims and liabilities arise out of the
negligence or wilfully misconduct of such parties.
(c) The Master Servicer (when the Master Servicer is Advanta)
shall indemnify, defend and hold harmless the Trust, the Trustee, the Trust
Collateral Agent, the Owner Trustee, the Insurer, their respective officers,
directors, agents and employees and the Securityholders from and against any
taxes that may at any time be asserted against any of such parties with respect
to the transactions contemplated in this Agreement, including, without
limitation, any sales, gross receipts, tangible or intangible personal property,
privilege or license taxes (but not including any federal or other income taxes,
including franchise taxes asserted with respect to, and as of the date of, the
sale of the Receivables and the Other Conveyed Property to the Trust or the
issuance and original sale of the Securities) and costs and expenses in
defending against the same;
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The Master Servicer (when the Master Servicer is not Advanta)
shall indemnify, defend and hold harmless the Trust, the Trustee, the Trust
Collateral Agent, the Owner Trustee, the Insurer, their respective officers,
directors, agents and employees and the Securityholders from and against any
taxes with respect to the sale of Receivables in connection with servicing
hereunder that may at any time be asserted against any of such parties with
respect to the transactions contemplated in this Agreement, including, without
limitation, any sales, gross receipts, tangible or intangible personal property,
privilege or license taxes (but not including any federal or other income taxes,
including franchise taxes asserted with respect to, and as of the date of, the
sale of the Receivables and the Other Conveyed Property to the Trust or the
issuance and original sale of the Securities) and costs and expenses in
defending against the same; and
(d) The Master Servicer shall indemnify, defend and hold
harmless the Trust, the Trustee, the Trust Collateral Agent, the Owner Trustee,
the Insurer, their respective officers, directors, agents and employees and the
Securityholders from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss, claim,
damage, or liability arose out of, or was imposed upon the Trust, the Trustee,
the Trust Collateral Agent, the Insurer or the Securityholders by reason of the
breach of this Agreement by the Master Servicer, the negligence, misfeasance, or
bad faith of the Master Servicer in the performance of its duties under this
Agreement or by reason of reckless disregard of its obligations and duties under
this Agreement.
(e) Advanta shall indemnify, defend and hold harmless the
Trust, the Trustee, the Trust Collateral Agent, the Owner Trustee, the Insurer,
their respective officers, directors, agents and employees and the
Securityholders from and against any loss, liability or expense incurred by
reason of the violation by Master Servicer or Seller of federal or state
securities laws in connection with the registration or the sale of the
Securities.
(f) Indemnification under this Article shall survive the
termination of this Agreement and will survive the early resignation or removal
of any of the parties hereto and shall include, without limitation, reasonable
fees and expenses of counsel and expenses of litigation. If the Master Servicer
has made any indemnity payments pursuant to this Article and the recipient
thereafter collects any of such amounts from others, the recipient shall
promptly repay such amounts collected to the Master Servicer, without interest.
Notwithstanding any other provision of this Agreement, the obligations of the
Master Servicer shall not terminate or be deemed released upon the resignation
or termination of Advanta as the Master Servicer and shall survive any
termination of this Agreement.
SECTION 9.3. Merger or Consolidation of, or Assumption of
the Obligations of the Master Servicer or the Trust Collateral Agent.
(a) Advanta shall not merge or consolidate with any other
person, convey, transfer or lease substantially all its assets as an entirety to
another Person, or permit any other Person to become the successor to Advanta's
business unless, after the merger, consolidation, conveyance, transfer, lease or
succession, the successor or surviving entity shall be capable of fulfilling the
duties of Advanta contained in this Agreement. Any corporation (i) into which
Advanta may be merged or consolidated, (ii) resulting from any merger or
consolidation to which Advanta shall be a party, (iii) which acquires by
conveyance, transfer, or lease substantially all of the assets of Advanta, or
(iv) succeeding to the business of Advanta, in any of the foregoing cases shall
execute an agreement of assumption to perform every obligation of Advanta under
this
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Agreement and, whether or not such assumption agreement is executed, shall be
the successor to Advanta under this Agreement without the execution or filing
of any paper or any further act on the part of any of the parties to this
Agreement, anything in this Agreement to the contrary notwithstanding; provided,
however, that nothing contained herein shall be deemed to release Advanta from
any obligation. Advanta shall provide notice of any merger, consolidation or
succession pursuant to this Section 9.2(a) to the Owner Trustee, the Trust
Collateral Agent, the Securityholders, the Insurer and each Rating Agency.
Notwithstanding the foregoing, Advanta shall not merge or consolidate with any
other Person or permit any other Person to become a successor to Advanta's
business, unless (x) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 4.6 shall have been breached
(for purposes hereof, such representations and warranties shall speak as of the
date of the consummation of such transaction) and no event that, after notice or
lapse of time, or both, would become an Insurance Agreement Event of Default
shall have occurred and be continuing, (y) Advanta shall have delivered to the
Owner Trustee, the Trust Collateral Agent, the Rating Agencies and the Insurer
an Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section 9.2(a) and that all conditions precedent, if any, provided for in
this Agreement relating to such transaction have been complied with, and (z)
Advanta shall have delivered to the Owner Trustee, the Trust Collateral Agent,
the Rating Agencies and the Insurer an Opinion of Counsel, stating in the
opinion of such counsel, either (A) all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary to preserve and protect the interest of the Trust in the Receivables
and the Other Conveyed Property and reciting the details of the filings or (B)
no such action shall be necessary to preserve and protect such interest.
(b) Any Person (i) into which the Trust Collateral Agent may
be merged or consolidated, (ii) resulting from any merger or consolidation to
which the Trust Collateral Agent shall be a party, (iii) which acquires by
conveyance, transfer or lease substantially all of the assets of the Trust
Collateral Agent, or (iv) succeeding to the business of the Trust Collateral
Agent, in any of the foregoing cases shall execute an agreement of assumption to
perform every obligation of the Trust Collateral Agent under this Agreement and,
whether or not such assumption agreement is executed, shall be the successor to
the Trust Collateral Agent under this Agreement without the execution or filing
of any paper or any further act on the part of any of the parties to this
Agreement, anything in this Agreement to the contrary notwithstanding. In the
event that the resulting entity does not meet the eligibility requirements set
forth in Section 6.11 of the Indenture, the Trust Collateral Agent, upon the
written request of the Insurer, shall resign. Nothing contained herein shall be
deemed to release the Trust Collateral Agent from any obligation.
SECTION 9.4. Limitation on Liability of Master Servicer,
Trust Collateral Agent and Others.
(a) Neither Advanta, the Trust Collateral Agent, the Trustee
nor any of the directors or officers or employees or agents of Advanta, the
Trustee or the Trust Collateral Agent shall be under any liability to the Trust
or the Securityholders, except as provided in this Agreement, for any action
taken or for refraining from the taking of any action pursuant to this
Agreement; provided, however, that this provision shall not protect Advanta, the
Trustee, the Trust Collateral Agent or any such person against any liability
that would otherwise be imposed by reason of a breach of this Agreement or
willful misfeasance, bad faith or negligence (excluding errors in judgment) in
the performance of duties (including negligence with respect to the Master
Servicer's indemnification obligations hereunder), by reason of reckless
disregard of obligations
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and duties under this Agreement or any violation of law by the Master Servicer,
the Trustee, the Trust Collateral Agent or such person, as the case may be;
provided further that this provision shall not affect any liability to
indemnify the Trust Collateral Agent, the Trustee and the Owner Trustee for
costs, taxes, expenses, claims, liabilities, losses or damages paid by the
Trust Collateral Agent, the Trustee and the Owner Trustee, in their individual
capacities. Advanta, the Trust Collateral Agent, the Trustee and any director,
officer, employee or agent of Advanta or Trust Collateral Agent may rely in
good faith on the written advice of counsel or on any document of any kind
prima facie properly executed and submitted by any Person respecting any
matters arising under this Agreement. The Trust Collateral Agent shall not be
required to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if the repayment of such funds or adequate written
indemnity against such risk or liability is not reasonably assured to it in
writing prior to the expenditure of risk of such funds or incurrence of
financial liability.
(b) Notwithstanding anything herein to the contrary, the Trust
Collateral Agent shall not be liable for any obligation of the Master Servicer
contained in this Agreement, and the Trust Collateral Agent and the Owner
Trustee, the Seller, the Insurer and the Securityholders shall look only to the
Master Servicer to perform such obligations.
(c) The parties expressly acknowledge and consent to Bankers
Trust Company acting in the possible dual capacity of successor Master Servicer
and in the capacity as Trust Collateral Agent. Bankers Trust Company may, in
such dual or other capacity, discharge its separate functions fully, without
hinderance or regard to conflict of interest principles, duty of loyalty
principles or other breach of fiduciary duties to the extent that any such
conflict or breach arises from the performance by Bankers Trust Company of
express duties set forth in the this Agreement in any of such capacities, all of
which defenses, claims or assertions are hereby expressly waived by the other
parties hereto and the Securityholders except in the case of gross negligence
and willful misconduct by Bankers Trust Company.
SECTION 9.5. Delegation of Duties. The Master Servicer may
delegate duties under this Agreement to an Affiliate of Advanta, or, pursuant
to Section 9.7, to a Sub-Servicer with the prior written consent of the Insurer
(unless an Insurer Default shall have occurred and be continuing) and the
Trust Collateral Agent; provided, however, that such consent shall not be
required for the initial delegation to LSI Financial Group. The Master
Servicer also may at any time perform through sub-contractors the specific
duties of (i) repossession of Financed Vehicles, (ii) tracking Financed
Vehicles' insurance and (iii) pursuing the collection of deficiency balances
on certain Liquidated Receivables, in each case, without the written consent
of the Insurer and may perform other specific duties through such
sub-contractors in accordance with Master Servicer's customary servicing
policies and procedures, with the prior consent of the Insurer; provided,
however, that no such delegation or sub-contracting duties by the Master
Servicer shall relieve the Master Servicer of its responsibility with respect
to such duties. So long as no Insurer Default shall have occurred and be
continuing neither Advanta or any party acting as Master Servicer hereunder
shall appoint any subservicer hereunder without the prior written consent of
the Insurer and the Trust Collateral Agent.
SECTION 9.6. Master Servicer and Trust Collateral Agent Not
to Resign.
(a) Subject to the provisions of Section 9.3, the Master
Servicer shall not resign from the obligations and duties imposed on it by this
Agreement as Master Servicer except upon
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a determination that by reason of a change in legal requirements the
performance of its duties under this Agreement would cause it to be in
violation of such legal requirements in a manner which would have a material
adverse effect on the Master Servicer, and the Insurer (so long as an Insurer
Default shall not have occurred and be continuing) or a Security Majority (if
an Insurer Default shall have occurred and be continuing) does not elect to
waive the obligations of the Master Servicer to perform the duties which
render it legally unable to act or to delegate those duties to another Person.
Any such determination permitting the resignation of the Master Servicer shall
be evidenced by an Opinion of Counsel to such effect delivered and acceptable
to the Trust Collateral Agent, the Owner Trustee and the Insurer (unless an
Insurer Default shall have occurred and be continuing). No resignation of the
Master Servicer shall become effective until, so long as no Insurer Default
shall have occurred and be continuing, the Trust Collateral Agent or an entity
acceptable to the Insurer shall have assumed the responsibilities and
obligations of the Master Servicer or, if an Insurer Default shall have
occurred and be continuing, the Trust Collateral Agent or a successor Master
Servicer that is an Eligible Sub-Servicer shall have assumed esponsibilities
and obligations of the Master Servicer.
(b) Subject to the provisions of Section 9.3, the Trust
Collateral Agent shall not resign from the obligations and duties imposed on it
by this Agreement as Trust Collateral Agent and successor Master Servicer except
(i) upon a determination that by reason of a change in legal requirements the
performance of its duties under this Agreement would cause it to be in violation
of such legal requirements in a manner which would have a material adverse
effect on the Trust Collateral Agent and the Insurer (so long as an Insurer
Default shall not have occurred and be continuing) or a Security Majority (if an
Insurer Default shall have occurred and be continuing) does not elect to waive
the obligations of the Trust Collateral Agent to perform the duties which render
it legally unable to act or to delegate those duties to another Person or (ii)
the Trust Collateral Agent is no longer in the business of providing servicing
and/or administrative services of the type contemplated herein (any such
determination shall be evidenced by an Officer's Certificate to such effect
delivered to the Insurer and the Trust Collateral Agent) or (iii) subject to
paragraph (c) below, upon 30 days written notice to the Insurer, the Trustee,
the Owner Trustee and the Master Servicer. Any such determination permitting the
resignation of the Trust Collateral Agent pursuant to clause (i) above shall be
evidenced by an Opinion of Counsel to such effect delivered and acceptable to
the Master Servicer, the Owner Trustee and the Insurer (unless an Insurer
Default shall have occurred and be continuing). No resignation of the Trust
Collateral Agent shall become effective until, so long as no Insurer Default
shall have occurred and be continuing, an entity acceptable to the Insurer shall
have assumed the responsibilities and obligations of the Trust Collateral Agent
or, if an Insurer Default shall have occurred and be continuing a Person that is
an Eligible Sub-Servicer and an entity that satisfies the eligibility
requirements set forth in Section 6.11 of the Indenture shall have assumed the
responsibilities and obligations of the Trust Collateral Agent; provided,
however, that, subject to paragraph (c) below, in the event a successor servicer
is not appointed within 30 days after the Trust Collateral Agent has given
notice of its resignation and has provided the Opinion of Counsel required by
this Section 9.6, the Trust Collateral Agent may petition a court for the
appointment of a successor Trust Collateral Agent.
(c) Notwithstanding the provisions set forth in paragraph (b)
above, in the event that a Trigger Event or a Master Servicer Termination Event
has occurred, the Trust Collateral Agent shall not be able to resign as Trust
Collateral Agent and as successor Master Servicer pursuant to clause (b)(iii)
above and shall not petition a court for the appointment of a successor Trust
Collateral Agent. In the event that a Trigger Event or a Master Servicer
Termination Event
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has occurred subsequent to the provision of the notice specified in clause
(b)(iii) above, the parties hereto agree that such notice shall be deemed null
and void and of no further effect and the Trust Collateral Agent hereby agrees
to withdraw any petition before any court seeking the appointment of a
successor Trust Collateral Agent.
SECTION 9.7. Sub-Servicing Agreements Between Master Servicer
and Sub- Servicers. With the prior written consent of the Insurer, or if an
Insurer Default shall have occurred and be continuing, the Trust Collateral
Agent (such written consent not to be required with respect to the Sub-Servicing
Agreement with LSI Financial Group), the Master Servicer may enter into
Sub-Servicing Agreements for any servicing and administration of Receivables
with any institution which is in compliance with the laws of each state
necessary to enable it to perform its obligations under such Sub-Servicing
Agreement and which is an Eligible Sub-Servicer. The Master Servicer shall give
notice to the Insurer, the Trust Collateral Agent, the Owner Trustee, the
Trustee, Moody's and S&P of the appointment of any Sub-Servicer and shall
furnish to the Insurer, the Trustee, the Trust Collateral Agent and the Owner
Trustee, Moody's and S&P a copy of the Sub-Servicing Agreement. For purposes of
this Agreement, the Master Servicer shall be deemed to have received payments on
Receivables when any Sub-Servicer has received such payments. Any such
Sub-Servicing Agreement shall be consistent with and not violate the provisions
of this Agreement. Any such Sub-Servicing Agreement may be terminated by the
Insurer, or if an Insurer Default shall have occurred and be continuing, the
Trust Collateral Agent and the Owner Trustee, provided that the Master Servicer
has been terminated hereunder. The parties hereto acknowledge that with respect
to statements or certificates required to be delivered by the Master Servicer in
accordance with this Agreement, including but not limited to Sections 4.9, 4.10
and 4.11 hereof, that a statement or certificate delivered by the Sub-Servicer
shall be sufficient to discharge the Master Servicer's obligation to deliver
such Certificate or Statement.
SECTION 9.8. Successor Sub-Servicers. Each Sub-Servicing
Agreement shall expressly provide that the Master Servicer may terminate any
Sub-Servicing Agreement in accordance with the terms and conditions of such
Sub-Servicing Agreement and either directly service the related Receivables
itself or enter into a Sub-Servicing Agreement with a successor Sub-Servicer
that is an Eligible Sub-Servicer. The Trust Collateral Agent shall have no
duty or obligation to monitor or supervise the performance of any Sub-Servicer.
SECTION 9.9. Liability of Master Servicer. The Master Servicer
shall not be relieved of its obligations under this Agreement notwithstanding
any Sub-Servicing Agreement or any of the provisions of this Agreement relating
to agreements or arrangements between the Master Servicer and a Sub-Servicer or
otherwise, and the Master Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Receivables. The Master Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Master
Servicer by such Sub-Servicer and nothing contained in such Sub-Servicing
Agreement shall be deemed to limit or modify this Agreement. The Issuer shall
have no liability to the Master Servicer except for payment of the Servicing
Fee. The Issuer shall have no obligation to indemnify the Master Servicer for
costs or expenses, except with respect to the preceding sentence.
SECTION 9.10. No Contractual Relationship. Any Sub-Servicing
Agreement and any other transactions or services relating to the Receivables
involving a Sub-Servicer shall be deemed to be between the Sub-Servicer and
the Master Servicer alone and the Owner Trustee, the Issuer, the Trust
Collateral Agent shall not be deemed parties thereto and shall have no claims,
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rights, obligations, duties or liabilities with respect to any Sub-Servicer
except as set forth in Section 9.11; provided, however, that the Insurer shall
be a third party beneficiary of any Sub- Servicing Agreement.
SECTION 9.11. Assumption or Termination of Sub-Servicing
Agreement. In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Master Servicer
hereunder pursuant to Section 10.2, the Master Servicer's rights and obligations
under any Sub-Servicing Agreement then in force between the Master Servicer and
a Sub-Servicer may be terminated by the Insurer (or if an Insurer Default shall
have occurred and be continuing, either the Trust Collateral Agent or a Security
Majority) and the duties then being performed by the Sub-Servicer shall be
assumed by the Trust Collateral Agent (or such other successor Master Servicer
appointed by the Controlling Party) in accordance with Section 10.3. The Master
Servicer shall, upon the request of the Trust Collateral Agent, but at the
expense of the Master Servicer, deliver to the assuming party documents and
records relating to each Sub-Servicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best reasonable efforts to effect
the orderly and efficient transfer of the Sub- Servicing Agreements to the
assuming party.
ARTICLE X
Default
SECTION 10.1. Master Servicer Termination Event. For
purposes of this Agreement, each of the following shall constitute a "Master
Servicer Termination Event":
(a) Any failure by the Master Servicer to deliver, or cause to
be delivered, to the Trust Collateral Agent for distribution to Securityholders
any proceeds or payment required to be so delivered under the terms of this
Agreement (including deposits of the Purchase Amount pursuant to Section 3.2 and
Section 4.7) that continues unremedied for a period of two Business Days (one
Business Day with respect to payment of Purchase Amounts) after written notice
is received by the Master Servicer from the Trust Collateral Agent or (unless an
Insurer Default shall have occurred and be continuing) the Insurer or after
discovery of such failure by a Responsible Officer of the Master Servicer (but
in no event later than five Business Days after the Master Servicer is required
to make such delivery or deposit);
(b) Failure by the Master Servicer to deliver, or cause to be
delivered, to the Trust Collateral Agent and (so long as an Insurer Default
shall not have occurred and be continuing) the Insurer the Master Servicer's
Certificate by the Determination Date prior to the Distribution Date that
continues unremedied for a period of two Business Days and which failure shall
have occurred more than twice in any 12-month period, or failure on the part of
the Master Servicer to observe its covenants and agreements set forth in Section
9.3(a);
(c) Failure on the part of the Master Servicer duly to observe
or perform any other covenants or agreements of the Master Servicer set forth in
this Agreement (or, as to Advanta, if Advanta is the Master Servicer, the
Purchase Agreement), which failure (i) materially and adversely affects the
rights of Securityholders (determined without regard to the availability of
funds under the Note Policy), or of the Insurer (unless an Insurer Default shall
have occurred and be continuing), and (ii) continues unremedied for a period of
60 days after the date on which
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written notice of such failure, requiring the same to be remedied, shall have
been given to the Master Servicer by the Trust Collateral Agent or the Insurer
(or, if an Insurer Default shall have occurred and be continuing by any
Noteholder evidencing not less than 25% of the principal balance of the Notes);
(d) The entry of a decree or order for relief by a court or
regulatory authority having jurisdiction in respect of the Master Servicer in an
involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or another present or future, federal bankruptcy, insolvency or similar
law, or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Master Servicer or of any
substantial part of its property or ordering the winding up or liquidation of
the affairs of the Master Servicer or the commencement of an involuntary case
under the federal bankruptcy laws, as now or hereinafter in effect, or another
present or future federal or state bankruptcy, insolvency or similar law and
such case is not dismissed within 60 days; or
(e) The commencement by the Master Servicer of a voluntary
case under the federal bankruptcy laws, as now or hereafter in effect, or any
other present or future, federal or state, bankruptcy, insolvency or similar
law, or the consent by the Master Servicer to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of the Master Servicer or of any substantial part of
its property or the making by the Master Servicer of an assignment for the
benefit of creditors or the failure by the Master Servicer generally to pay its
debts as such debts become due or the taking of corporate action by the Master
Servicer in furtherance of any of the foregoing; or
(f) Any representation, warranty or statement of the Master
Servicer made in this Agreement or any certificate, report or other writing
delivered pursuant hereto shall prove to be incorrect in any material respect as
of the time when the same shall have been made, and the incorrectness of such
representation, warranty or statement has a material adverse effect on the
interests of the Trust, the Insurer or the Securityholders in the Receivables
and, within 30 days after written notice thereof shall have been given to the
Master Servicer by the Trust Collateral Agent or the Insurer (or, if an Insurer
Default shall have occurred and be continuing, a Securityholder), the
circumstances or condition in respect of which such representation, warranty or
statement was incorrect shall not have been eliminated or otherwise cured; or
(g) So long as an Insurer Default shall not have occurred and
be continuing, the Insurer shall not have delivered a Master Servicer Extension
Notice pursuant to Section 4.14; or
(h) So long as an Insurer Default shall not have occurred and
be continuing, (x) an Insurance Agreement Event of Default or (y) under any
other Insurance and Indemnity Agreement relating to any Series (as defined in
the Insurance Agreement) an Event of Default thereunder shall have occurred; or
(i) A claim is made under the Note Policy.
SECTION 10.2. Consequences of a Master Servicer Termination
Event. If a Master Servicer Termination Event shall occur and be continuing, the
Trust Collateral Agent (to the extent a Trust Officer of the Trust Collateral
Agent has actual knowledge thereof) and, in the event that an Insurer Default
shall have occurred and be continuing, the Security Majority, by notice given in
writing to the Master Servicer (and to the Trust Collateral Agent if given by
the
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Insurer or the Securityholders) or the Insurer, by written notice of the
non-extension of the term of the Master Servicer as referred to in Section 4.14,
may terminate all of the rights and obligations of the Master Servicer under
this Agreement. On or after the receipt by the Master Servicer of such written
notice or upon termination of the term of the Master Servicer pursuant to
Section 4.14, all authority, power, obligations and responsibilities of the
Master Servicer under this Agreement, whether with respect to the Notes, the
Certificates or the Other Conveyed Property or otherwise, automatically shall
pass to, be vested in and become obligations and responsibilities of the Trust
Collateral Agent (or such other successor Master Servicer appointed by the
Controlling Party in its sole and absolute discretion pursuant to Section
10.3(b)); provided, however, that the successor Master Servicer shall have no
liability with respect to any obligation which was required to be performed by
the terminated Master Servicer prior to the date that the successor Master
Servicer becomes the Master Servicer or any claim of a third party based on any
alleged action or inaction of the terminated Master Servicer.
The successor Master Servicer is authorized and empowered by
this Agreement to execute and deliver, on behalf of the terminated Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and the Other Conveyed
Property and related documents to show the Trust as lienholder or secured party
on the related Lien Certificates, or otherwise. The terminated Master Servicer
agrees to cooperate with the successor Master Servicer in effecting the
termination of the responsibilities and rights of the terminated Master Servicer
under this Agreement, including, without limitation, the transfer to the
successor Master Servicer for administration by it of all cash amounts that
shall at the time be held by the terminated Master Servicer for deposit, or have
been deposited by the terminated Master Servicer, in the Collection Account or
thereafter received with respect to the Receivables and the delivery to the
successor Master Servicer of all Receivable Files, Monthly Records and
Collection Records and a computer tape in readable form as of the most recent
Business Day containing all information necessary to enable the successor
Master Servicer or a successor Master Servicer to service the Receivables and
the Other Conveyed Property. If requested by the Controlling Party, the
successor Master Servicer shall terminate the Lockbox Agreement and direct the
Obligors to make all payments under the Receivables directly to the successor
Master Servicer (in which event the successor Master Servicer shall process
such payments in accordance with Section 4.2(e)), or to a lockbox established
by the successor Master Servicer at the direction of the Controlling Party, at
the terminated Master Servicer's expense. The terminated Master Servicer shall
grant the Trust Collateral Agent, the successor Master Servicer and the
Controlling Party reasonable access to the terminated Master Servicer's
premises at the terminated Master Servicer's expense.
SECTION 10.3. Appointment of Successor.
(a) On and after (i) the time the Master Servicer receives a
notice of termination pursuant to Section 10.2, (ii) upon non-extension of the
servicing term as referred to in Section 4.14, or (iii) upon the resignation of
the Master Servicer pursuant to Section 9.5, the Trust Collateral Agent (unless
the Insurer shall have exercised its option pursuant to Section 10.3(b) to
appoint an alternate successor Master Servicer) shall be the successor in all
respects to the Master Servicer in its capacity as servicer under this Agreement
and the transactions set forth or provided for in this Agreement, and shall be
subject to all the rights, responsibilities, restrictions, duties, liabilities
and termination provisions relating thereto placed on the Master Servicer by the
terms and provisions of this Agreement except as otherwise stated herein. The
Trust Collateral Agent
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and such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession. If a successor Master
Servicer is acting as Master Servicer hereunder, it shall be subject to
term-to-term servicing as referred to in Section 4.14 and to termination under
Section 10.2 upon the occurrence of any Master Servicer Termination Event
applicable to it as Master Servicer.
(b) The Insurer, or in the event that an Insurer Default shall
have occurred and be continuing, a Security Majority, may exercise at any time
its right to appoint as successor to the Master Servicer a Person other than the
Person serving as Trust Collateral Agent at the time, and (without limiting its
obligations under the Note Policy) shall have no liability to the Trust
Collateral Agent, Advanta, the Seller, the Person then serving as successor
servicer, any Securityholders or any other Person if it does so. Notwithstanding
the above, if the Trust Collateral Agent shall be legally unable or unwilling to
act as Master Servicer, and an Insurer Default shall have occurred and be
continuing, a Security Majority may petition a court of competent jurisdiction
to appoint any Eligible Sub-Servicer as the successor to the Master Servicer.
Pending appointment pursuant to the preceding sentence, the Trust Collateral
Agent shall act as successor Master Servicer unless it is legally unable to do
so, in which event the outgoing Master Servicer shall continue to act as Master
Servicer until a successor has been appointed and accepted such appointment.
Subject to Section 9.6, no provision of this Agreement shall be construed as
relieving the Trust Collateral Agent of its obligation to succeed as successor
Master Servicer upon the termination of the Master Servicer pursuant to Section
10.2, the resignation of the Master Servicer pursuant to Section 9.6 or the
non-extension of the servicing term of the Master Servicer, as referred to in
Section 4.14. If upon the termination of the Master Servicer pursuant to Section
10.2 or the resignation of the Master Servicer pursuant to Section 9.6, the
Insurer or in the event that an Insurer Default shall have occurred and be
continuing, a Security Majority, appoints a third party to serve as Master
Servicer other than the Trust Collateral Agent, the Trust Collateral Agent shall
not be relieved of its duties as successor Master Servicer hereunder.
(c) Any successor Master Servicer shall be entitled to such
compensation (whether payable out of the Collection Account or otherwise) as the
Master Servicer would have been entitled to under this Agreement if the Master
Servicer had not resigned or been terminated hereunder. Subject to the ability
of the Trust Collateral Agent pursuant to Section 9.6 (b) hereof, if any
successor Master Servicer is appointed as a result of the Trust Collateral
Agent's refusal (in breach of the terms of this Agreement) to act as Master
Servicer although it is legally able to do so, the Insurer and such successor
Master Servicer may agree on reasonable additional compensation to be paid to
such successor Master Servicer by the Trust Collateral Agent, which additional
compensation shall be paid by such breaching Trust Collateral Agent in its
individual capacity and solely out of its own funds. Subject to the ability of
the Trust Collateral Agent pursuant to Section 9.6 (b) hereof, if any successor
Master Servicer is appointed for any reason other than the Trust Collateral
Agent's refusal to act as Master Servicer although legally able to do so, the
Insurer and such successor Master Servicer may agree on additional compensation
to be paid to such successor Master Servicer, which additional compensation
shall be payable as provided in the Spread Account Agreement. In addition, any
successor Master Servicer shall be entitled to reasonable transition expenses
incurred in acting as successor Master Servicer, and to the extent such
transition expenses have not been paid by the outgoing Master Servicer, such
expenses shall not exceed $50,000 in the aggregate.
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SECTION 10.4. Notification to Noteholders and
Certificateholders. Upon any termination of, or appointment of a successor to,
the Master Servicer, the Trust Collateral Agent shall give prompt written notice
thereof to each Securityholder.
SECTION 10.5. Waiver of Past Defaults. So long as no Insurer
Default shall have occurred and be continuing, the Insurer (or, if an Insurer
Default shall have occurred and be continuing, the Security Majority) may, on
behalf of all Noteholders and Certificateholders, waive any default by the
Master Servicer in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Master Servicer Termination Event arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement. No such waiver
shall extend to any subsequent or other default or impair any right consequent
thereto. Written notice of such waiver shall be given promptly to each Rating
Agency.
SECTION 10.6. Termination of Trust Collateral Agent. If any of
the following events occur and shall be continuing, the Insurer (so long as an
Insurer Default shall not have occurred and be continuing), or, in the event
that an Insurer Default has occurred and is continuing, the Security Majority,
upon notice to the Securityholders, may terminate all of the duties of the Trust
Collateral Agent under this Agreement:
(i) the Trust Collateral Agent shall cease to meet the
eligibility requirements for the Indenture Trustee as set forth in
Section 6.11 of the Indenture and shall fail to resign after written
request therefor by the Insurer, or
(ii) the Trust Collateral Agent shall become incapable of
acting or shall be adjudged a bankrupt or insolvent, or a receiver of
the Trust Collateral Agent or of its property shall be appointed, or
any public officer shall take charge or control of the Trust Collateral
Agent or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation or
(iii) the Trust Collateral Agent has failed to
perform its duties hereunder.
On or after the receipt by the Trust Collateral Agent of such written notice,
all authority, power, obligations and responsibilities of the Trust Collateral
Agent under this Agreement, whether with respect to the Notes, the Certificates
or the Other Conveyed Property or otherwise, automatically shall pass to, be
vested in and become obligations and responsibilities of such other successor
servicer appointed by the Controlling Party. Nothing contained herein shall be
deemed to release the Trust Collateral Agent from any obligation.
SECTION 10.7. Successor to Master Servicer.
(a) The Trust Collateral Agent, in its capacity as successor
to the Master Servicer, shall perform such duties and only such duties as are
specifically set forth in this Agreement with respect to the assumption of any
servicing duties, including, without limitation, to supervise, verify, monitor
or administer the performance of the Master Servicer and no implied covenants or
obligations shall be read into this Agreement against the Trust Collateral
Agent.
(b) In the absence of bad faith or negligence on its part, the
Trust Collateral Agent may conclusively rely as to the truth of the statements
and the correctness of the opinions
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expressed therein, upon certificates or opinions furnished to the Trust
Collateral Agent and conforming to the requirements of this Agreement; but in
the ease of any such certificates or opinions, which by any provision hereof are
specifically required to be furnished to the Trust Collateral Agent, the Trust
Collateral Agent shall be under a duty to examine the same and to determine
whether or not they conform to the requirements of this servicing agreement.
(c) The Trust Collateral Agent shall have no liability for any
actions taken or omitted by the Master Servicer.
ARTICLE XI
Termination
SECTION 11.1. Optional Purchase of All Receivables.
(a) On the last day of any Collection Period as of which the
Pool Balance shall be less than or equal to 10% of the Original Pool Balance
plus the aggregate principal balance of the Subsequent Receivables, if any, sold
to the Trust, as of their respective Cutoff Dates, the Master Servicer and the
Seller each shall have the option to purchase the Owner Trust Estate, other than
the Trust Accounts (with the consent of the Insurer if such purchase would
result in a claim on either Policy or would result in any amount owing to the
Insurer under the Insurance Agreement remaining unpaid); provided, however, that
the amount to be paid for such purchase (as set forth in the following sentence)
shall be sufficient to pay the full amount of principal, premium, if any, and
interest then due and payable on the Notes and the Certificates. To exercise
such option, the Master Servicer or the Seller, as the case may be, shall
deposit pursuant to Section 5.6 in the Collection Account an amount equal to the
aggregate Purchase Amount for the Receivables (including Liquidated
Receivables), plus the appraised value of any other property held by the Trust,
such value to be determined by an appraiser mutually agreed upon by the Master
Servicer, the Insurer and the Trust Collateral Agent, and shall succeed to all
interests in and to the Trust.
(b) Upon any sale of the assets of the Trust pursuant to
Section 9.1 of the Trust Agreement, the Master Servicer shall instruct the Trust
Collateral Agent to deposit the proceeds from such sale after all payments and
reserves therefrom (including the expenses of such sale) have been made (the
"Insolvency Proceeds") in the Collection Account.
(c) Notice of any termination of the Trust shall be given by
the Master Servicer to the Owner Trustee, the Trustee, the Trust Collateral
Agent, the Insurer and the Rating Agencies as soon as practicable after the
Master Servicer has received notice thereof.
(d) Following the satisfaction and discharge of the Indenture,
the payment in full of the principal of and interest on the Notes, the payment
of all amounts due to the Insurer under the Insurance Agreement, the end of the
Term of the Note Policy (as defined therein) and the surrender of the Note
Policy by the Collateral Agent to the Insurer, the Certificateholders will
succeed to the rights of the Noteholders hereunder and the Owner Trustee will
succeed to the rights of, and assume the obligations of, the Trust Collateral
Agent pursuant to this Agreement.
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ARTICLE XII
Administrative Duties of the Master Servicer
SECTION 12.1. Administrative Duties.
(a) Duties with Respect to the Indenture. The
Master Servicer shall perform all its duties and the duties of the Issuer under
the Indenture. In addition, the Master Servicer shall consult with the Owner
Trustee as the Master Servicer deems appropriate regarding the duties of the
Issuer under the Indenture. The Master Servicer shall monitor the performance
of the Issuer and shall advise the Owner Trustee when action is necessary to
comply with the Issuer's duties under the Indenture. The Master Servicer shall
prepare for execution by the Issuer or shall cause the preparation by other
appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer to prepare, file
or deliver pursuant to the Indenture. In furtherance of the foregoing, the
Master Servicer shall take all necessary action that is the duty of the Issuer
to take pursuant to the Indenture, including, without limitation, pursuant to
Sections 2.7, 3.5, 3.6, 3.7, 3.9, 3.10, 3.17, 5.1, 5.4, 7.3, 8.3, 9.2, 9.3, 11.1
and 11.15 of the Indenture.
(b) Duties with Respect to the Issuer.
(i) In addition to the duties of the Master Servicer set
forth in this Agreement or any of the Basic Documents, the Master
Servicer shall perform such calculations and shall prepare for
execution by the Issuer or the Owner Trustee or shall cause the
preparation by other appropriate Persons of all such documents,
reports, filings, instruments, certificates and opinions as it shall be
the duty of the Issuer or the Owner Trustee to prepare, file or deliver
pursuant to this Agreement or any of the Basic Documents or under state
and federal tax and securities laws, and at the request of the Owner
Trustee shall take all appropriate action that it is the duty of the
Issuer to take pursuant to this Agreement or any of the Basic
Documents, including, without limitation, pursuant to Sections 2.6 and
2.11 of the Trust Agreement. In accordance with the directions of the
Issuer or the Owner Trustee, the Master Servicer shall administer,
perform or supervise the performance of such other activities in
connection with the Collateral (including the Basic Documents) as are
not covered by any of the foregoing provisions and as are expressly
requested by the Issuer or the Owner Trustee and are reasonably within
the capability of the Master Servicer.
(ii) Notwithstanding anything in this Agreement or any of
the Basic Documents to the contrary, the Master Servicer shall be
responsible for promptly notifying the Owner Trustee and the Trust
Collateral Agent in the event that any withholding tax is imposed on
the Issuer's payments (or allocations of income) to an Owner (as
defined in the Trust Agreement) as contemplated by this Agreement. Any
such notice shall be in writing and specify the amount of any
withholding tax required to be withheld by the Owner Trustee or the
Trust Collateral Agent pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the
Basic Documents to the contrary, the Master Servicer shall be
responsible for performance of the duties of the Issuer or the Seller
set forth in Section 5.1(a), (b), (c) and (d) of the Trust Agreement
with respect to, among other things, accounting and reports to Owners
(as defined in the
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Trust Agreement); provided, however, that once prepared by the Master
Servicer, the Depositor shall retain responsibility under
Section 5.1(g) of the Trust Agreement for the distribution of the
Schedule K-1s necessary to enable each Certificateholder to prepare
its federal and state income tax returns.
(iv) The Master Servicer shall perform the duties of the
Master Servicer specified in Section 10.2 of the Trust Agreement
required to be performed in connection with the resignation or removal
of the Owner Trustee, and any other duties expressly required to be
performed by the Master Servicer under this Agreement or any of the
Basic Documents.
(v) In carrying out the foregoing duties or any of its
other obligations under this Agreement, the Master Servicer may enter
into transactions with or otherwise deal with any of its Affiliates;
provided, however, that the terms of any such transactions or dealings
shall be in accordance with any directions received from the Issuer and
shall be, in the Master Servicer's opinion, no less favorable to the
Issuer in any material respect.
(c) Tax Matters. The Master Servicer shall prepare and file,
on behalf of the Seller, all tax returns, tax elections, financial statements
and such annual or other reports of the Issuer as are necessary for preparation
of tax reports as provided in Article V of the Trust Agreement, including
without limitation forms 1099 and 1066. All tax returns will be signed by the
Seller.
(d) Non-Ministerial Matters. With respect to matters that in
the reasonable judgment of the Master Servicer are non-ministerial, the Master
Servicer shall not take any action pursuant to this Article XII unless within a
reasonable time before the taking of such action, the Master Servicer shall have
notified the Owner Trustee and the Insurer of the proposed action and the Owner
Trustee and, with respect to items (A), (B), (C) and (D) below, the Insurer
shall not have withheld consent or provided an alternative direction. For the
purpose of the preceding sentence, "non-ministerial matters" shall include:
(A) the amendment of or any supplement to the
Indenture;
(B) the initiation of any claim or lawsuit by the
Issuer and the compromise of any action, claim or lawsuit
brought by or against the Issuer (other than in connection
with the collection of the Receivables);
(C) the amendment, change or modification of
this Agreement or any of the Basic Documents;
(D) the appointment of successor Note Registrars,
successor Paying Agents and successor Trustees pursuant to the
Indenture or the appointment of Successor Servicers or the
consent to the assignment by the Note Registrar, Paying Agent
or Trustee of its obligations under the Indenture; and
(E) the removal of the Trustee or the Trust Collateral
Agent.
(e) Exceptions. Notwithstanding anything to the contrary in
this Agreement, except as expressly provided herein or in the other Basic
Documents, the Master Servicer, in its
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capacity hereunder, shall not be obligated to, and shall not, (1) make any
payments to the Noteholders or Certificateholders under the Basic Documents, (2)
sell the Indenture Trust Property pursuant to Section 5.5 of the Indenture, (3)
take any other action that the Issuer directs the Master Servicer not to take on
its behalf or (4) in connection with its duties hereunder assume any
indemnification obligation of any other Person.
(f) The Trust Collateral Agent or any successor Master
Servicer shall not be responsible for any obligations or duties of the servicer
under Section 12.1.
SECTION 12.2. Records. The Master Servicer shall maintain
appropriate books of account and records relating to services performed under
this Agreement, which books of account and records shall be accessible for
inspection by the Issuer and the Trust Collateral Agent at any time during
normal business hours.
SECTION 12.3. Additional Information to be Furnished to the
Issuer. The Master Servicer shall furnish to the Issuer and the Trust Collateral
Agent from time to time such additional information regarding the Collateral as
the Issuer and the Trust Collateral Agent shall reasonably request.
ARTICLE XIII
Miscellaneous Provisions
SECTION 13.1. Amendment.
(a) This Agreement may be amended from time to time by the
parties hereto, with the consent of the Trustee (which consent may not be
unreasonably withheld), with the prior written consent of the Insurer (so long
as no Insurer Default has occurred and is continuing) but without the consent of
any of the Noteholders or the Certificateholders, to cure any ambiguity, to
correct or supplement any provisions in this Agreement, to comply with any
changes in the Code, or to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be inconsistent with the
provisions of this Agreement or the Insurance Agreement; provided, however, that
such action shall not adversely affect in any material respect the interests of
any Noteholder or Certificateholder; and, provided further, that if an Insurer
Default has occurred and is continuing, such action shall not materially
adversely affect the interests of the Insurer.
This Agreement may also be amended from time to time by the
parties hereto, with the consent of the Insurer, the consent of the Trustee, the
consent of the Holders of Notes evidencing not less than a majority of the
outstanding principal amount of the Notes and the consent of the Holders (as
defined in the Trust Agreement) of Certificates evidencing not less than a
majority of the Certificate Balance (which consent of such Holders of Notes and
Certificates given pursuant to this Section 13.1 or pursuant to any other
provision of this Agreement shall be conclusive and binding on such Holder and
on all future Holders of such securities and of any Security issued upon the
transfer thereof or in exchange thereof or in lieu thereof whether or not
notation of such consent is made upon the security) for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided, however, that no
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such amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables or
distributions that shall be required to be made for the benefit of the
Noteholders or the Certificateholders or (b) reduce the aforesaid percentage of
the outstanding principal amount of the Notes and the Certificate Balance, the
Holders of which are required to consent to any such amendment, without the
consent of the Holders of all the outstanding Notes and the Holders (as defined
in the Trust Agreement) of all the outstanding Certificates, of each class
affected thereby; and provided, further, that if an Insurer Default has not
occurred and is continuing, such action shall not materially adversely affect
the interest of the Insurer.
Promptly after the execution of any such amendment or consent,
the Trust Collateral Agent shall furnish written notification of the substance
of such amendment or consent to each Securityholder.
It shall not be necessary for the consent of
Certificateholders or Noteholders pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Noteholders or Certificateholders
provided for in this Agreement) and of evidencing the authorization of any
action by Noteholders or Certificateholders shall be subject to such reasonable
requirements as the Trustee or the Owner Trustee, as applicable, may prescribe,
including the establishment of record dates.
The Owner Trustee, the Trust Collateral Agent and the Trustee
may, but shall not be obligated to, enter into any amendment which affects the
Issuer's, the Owner Trustee's, the Trust Collateral Agent's or the Trustee's, as
applicable, own rights, duties or immunities under this Agreement or otherwise.
Prior to the execution of any amendment to this Agreement, the
Trustee and the Trust Collateral Agent shall be entitled to receive or rely upon
an Opinion of Counsel stating that the execution of such amendment is authorized
or permitted by this Agreement and that all conditions precedent to the
execution and delivery of such amendment have been satisfied.
(b) Notwithstanding anything to the contrary contained in
subsection 13.1(a) above, the provisions of the Agreement relating to (i) the
Spread Account Agreement, the Series 1997-1 Spread Account, the Requisite
Amount, a Trigger Event or any component definition of a Trigger Event and (ii)
any additional sources of funds which may be added to the Series 1997-1 Spread
Account or uses of funds on deposit in the Series 1997-1 Spread Account may be
amended in any respect by the Seller, the Master Servicer, the Insurer and the
Collateral Agent (the consent of which shall not be withheld or delayed with
respect to any amendment that does not adversely affect the Collateral Agent)
without the consent of, or notice to, the Noteholders or the Certificateholders.
SECTION 13.2. Protection of Title to Trust.
(a) The Seller shall execute and file such financing
statements and cause to be executed and filed such continuation statements, all
in such manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Issuer and the interests of the Trust
Collateral Agent and the Insurer in the Receivables and the Other Conveyed
Property and in the proceeds thereof. The Seller shall deliver (or cause to be
delivered) to the Insurer, the
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Owner Trustee and the Trust Collateral Agent file-stamped copies of, or
filing receipts for, any document filed as provided above, as soon as
available following such filing.
(b) Neither the Seller nor the Master Servicer shall change
its name, identity or corporate structure in any manner that would, could or
might make any financing statement or continuation statement filed in accordance
with paragraph (a) above seriously misleading within the meaning of ss. 9-402(7)
of the UCC, unless it shall have given the Insurer, the Owner Trustee, the Trust
Collateral Agent and the Trustee at least thirty days' prior written notice
thereof and shall have promptly filed appropriate amendments to all previously
filed financing statements or continuation statements. Promptly upon such
filing, the Seller or the Master Servicer, as the case may be, shall deliver an
Opinion of Counsel in form and substance reasonably satisfactory to the Insurer,
the Trust Collateral Agent and the Trustee, stating either (A) all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trust and the Trust
Collateral Agent in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or (B)
no such action shall be necessary to preserve and protect such interest.
(c) Each of the Seller and the Master Servicer shall have an
obligation to give the Insurer, the Owner Trustee, the Trust Collateral Agent
and the Trustee at least 60 days' prior written notice of any relocation of its
principal executive office if, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement and shall promptly file any such amendment. The Master Servicer shall
at all times maintain each office from which it shall service Receivables, and
its principal executive office, within the United States of America.
(d) The Master Servicer shall maintain accounts and records as
to each Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(e) The Master Servicer shall maintain or cause to be
maintained, a computer systems so that, from and after the time of sale under
this Agreement of the Receivables to the Issuer, such master computer records
(including any backup archives) that refer to a Receivable shall indicate
clearly the interest of the Trust in such Receivable and that such Receivable is
owned by the Trust. Indication of the Trust's interest in a Receivable shall be
deleted from or modified on such computer systems when, and only when, the
related Receivable shall have been paid in full or repurchased by Advanta or the
Seller.
(f) If at any time the Seller or Advanta shall propose to
sell, grant a security interest in or otherwise transfer any interest in
automotive receivables to any prospective purchaser, lender or other transferee,
the Master Servicer shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including any restored from
backup archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Trust unless such Receivable has been paid in full or repurchased
by Advanta or the Seller.
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(g) Upon request, the Master Servicer shall furnish or cause
to be furnished to the Insurer, the Owner Trustee or to the Trustee, within five
Business Days, a list of all Receivables (by contract number and name of
Obligor) then held as part of the Trust, together with a reconciliation of such
list to the Schedule of Receivables and to each of the Master Servicer's
Certificates furnished before such request indicating removal of Receivables
from the Trust. The Trustee shall hold any such list and Schedule of Receivables
for examination by interested parties during normal business hours at the
Corporate Trust Office upon reasonable notice by such Persons of their desire to
conduct an examination.
(h) The Master Servicer shall deliver to the Insurer, the
Owner Trustee, the Trust Collateral Agent and the Trustee:
(1) simultaneously with the execution and delivery of the
Agreement and, if required pursuant to Section 13.1, of each amendment,
an Opinion of Counsel stating that, in the opinion of such Counsel, in
form and substance reasonably satisfactory to the Insurer, either (A)
all financing statements and continuation statements have been executed
and filed that are necessary fully to preserve and protect the interest
of the Trust and the Trustee in the Receivables, and reciting the
details of such filings or referring to prior Opinions of Counsel in
which such details are given, or (B) no such action shall be necessary
to preserve and protect such interest or (C) any action which is
necessary to preserve and protect such interest during the following
12-month period; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cutoff Date, an Opinion of Counsel, dated as of a date during
such 90-day period, stating that, in the opinion of such counsel,
either (A) all financing statements and continuation statements have
been executed and filed that are necessary fully to preserve and
protect the interest of the Trust and the Trustee in the Receivables,
and reciting the details of such filings or referring to prior Opinions
of Counsel in which such details are given, or (B) no such action shall
be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above
shall specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.
(i) The Master Servicer shall permit the Trustee, the Trust
Collateral Agent, the Insurer and their respective agents, during regular
business hours and upon reasonable advance notice, to inspect and make copies of
the records regarding any Receivables or any other portion of the Receivables.
SECTION 13.3. Notices. All demands, notices and
communications upon or to the Seller, the Master Servicer, the Owner Trustee,
the Trustee, the Insurer or the Rating Agencies under this Agreement shall be in
writing, personally delivered, or mailed by certified mail, or sent by confirmed
telecopier transmission and shall be deemed to have been duly given upon receipt
(a) in the case of the Seller to Advanta Auto Receivables Corp. I, 1325
Airmotive Way, Suite 130, Reno, Nevada 89502, (b) in the case of the Master
Servicer to Advanta Auto Finance Corporation, Four Horsham Business Center,
Horsham, PA 19044, Attention: Chief Financial Officer, Telecopier #
215-444-4682, (c) in the case of the Issuer or the Owner Trustee, at the
Corporate Trust Office of the Owner Trustee, Telecopier # 302-651-8882, (d) in
the case
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of the Trustee, the Trust Collateral Agent or the Collateral Agent, at the
Corporate Trust Office, Telecopier # 212-250-6439, (e) in the case of the
Insurer, to Financial Security Assurance Inc., 350 Park Avenue, New York, New
York 10022; Attention: Senior Vice President, Surveillance (in each case in
which notice or other communication to the Insurer refers to a Master Servicer
Termination Event, a claim on a Policy, a Deficiency Notice pursuant to Section
5.5 of this Agreement or with respect to which failure on the part of the
Insurer to respond shall be deemed to constitute consent or acceptance, then a
copy of such notice or other communication should also be sent to the attention
of each of the General Counsel and the Head -Financial Guaranty Group and shall
be marked to indicate "URGENT MATERIAL ENCLOSED") Telecopier # 212-339- 3518,
(f) in the case of Moody's, to Moody's Investors Service, Inc., ABS Monitoring
Department, 99 Church Street, New York, New York 10007, Telecopier #
212-553-0344, and (g) in the case of Standard & Poor's, to Standard & Poor's
Ratings Group, 25 Broadway - 15th Floor, New York, New York 10004, Attention:
Asset Backed Surveillance Department, Telecopier # 212- 208-1582. Any notice
required or permitted to be mailed to a Noteholder or Certificateholder shall be
given by first class mail, postage prepaid, at the address of such Holder as
shown in the Certificate Register or Note Register, as applicable. Any notice so
mailed within the time prescribed in the Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder or
Noteholder shall receive such notice.
SECTION 13.4. Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Notwithstanding anything to the contrary
contained herein, except as provided ln Sections 8.4 and 9.3 and as provided in
the provisions of this Agreement concerning the resignation of the Master
Servicer, this Agreement may not be assigned by the Seller or the Master
Servicer without the prior written consent of the Owner Trustee, the Trust
Collateral Agent, the Trustee and the Insurer (or if an Insurer Default shall
have occurred and be continuing the Holders of Notes evidencing not less than
66% of the principal amount of the outstanding Notes and the Holders of
Certificates evidencing not less than 66% of the Certificate Balance).
SECTION 13.5. Limitations on Rights of Others. The
provisions of this Agreement are solely for the benefit of the parties hereto
and for the benefit of the Certificateholders (including the Seller), the
Trustee and the Noteholders, as third-party beneficiaries. The Insurer
and its successors and assigns shall be a third-party beneficiary to the
provisions of this Agreement, and shall be entitled to rely upon and directly
enforce such provisions of this Agreement so long as no Insurer Default shall
have occurred and be continuing. Except as expressly stated otherwise herein,
any right of the Insurer to direct, appoint, consent to, approve of, or take any
action under this Agreement, shall be a right exercised by the Insurer in its
sole and absolute discretion. The Insurer may disclaim any of its rights and
powers under this Agreement (but not its duties and obligations under the Note
Policy) upon delivery of a written notice to the Owner Trustee. Nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Owner Trust Estate
or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 13.6. Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
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SECTION 13.7. Separate Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 13.8. Headings. The headings of the various Articles
and Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 13.9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 13.10. Assignment to Trustee. The Seller hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to the Trustee pursuant to the Indenture for the
benefit of the Noteholders and the Insurer of all right, title and interest of
the Issuer in, to and under the Receivables and/or the assignment of any or all
of the Issuer's rights and obligations hereunder to the Trustee.
SECTION 13.11. Nonpetition Covenants. (a) Notwithstanding any
prior termination of this Agreement, the Master Servicer and the Seller shall
not, prior to the date which is one year and one day after the termination of
this Agreement with respect to the Issuer, acquiesce, petition or otherwise
invoke or cause the Issuer to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the Issuer
under any federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement,
the Master Servicer shall not, prior to the date that is one year and one day
after the termination of this Agreement with respect to the Seller, acquiesce
to, petition or otherwise invoke or cause the Seller to invoke the process of
any court or government authority for the purpose of commencing or sustaining a
case against the Seller under any federal or state bankruptcy, insolvency or
similar law, appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator, or other similar official of the Seller or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Seller.
SECTION 13.12. Limitation of Liability of Owner Trustee
and Trustee.
(a) Notwithstanding anything contained herein to the contrary,
this Agreement has been countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner Trustee have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
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subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been executed and delivered by Bankers Trust Company not in
its individual capacity but solely as Trust Collateral Agent and in no event
shall Bankers Trust Company, have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of the Issuer.
(c) In no event shall Wilmington Trust Company, in any of its
capacities hereunder, be deemed to have assumed any duties of the Owner Trustee
under the Delaware Business Trust Statute, common law, or the Trust Agreement.
SECTION 13.13. Independence of the Master Servicer. For all
purposes of this Agreement, the Master Servicer shall be an independent
contractor and shall not be subject to the supervision of the Issuer, the Trust
Collateral Agent or the Owner Trustee with respect to the manner in which it
accomplishes the performance of its obligations hereunder. Unless expressly
authorized by this Agreement, the Master Servicer shall have no authority to act
for or represent the Issuer or the Owner Trustee in any way and shall not
otherwise be deemed an agent of the Issuer or the Owner Trustee.
SECTION 13.14. No Joint Venture. Nothing contained in this
Agreement (i) shall constitute the Master Servicer and either of the Issuer or
the Owner Trustee as members of any partnership, joint venture, association,
syndicate, unincorporated business or other separate entity, (ii) shall be
construed to impose any liability as such on any of them or (iii) shall be
deemed to confer on any of them any express, implied or apparent authority to
incur any obligation or liability on behalf of the others.
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IN WITNESS WHEREOF, the parties hereto have caused this Sale
and Servicing Agreement to be duly executed and delivered by their respective
duly authorized officers as of the day and the year first above written.
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-1
by the Wilmington Trust Company,
not in its individual capacity
but solely as Owner Trustee on
behalf of the Trust,
by ___________________________
Title:
ADVANTA AUTO RECEIVABLES CORP. I, Seller,
by ___________________________
Name:
Title:
ADVANTA AUTO FINANCE CORPORATION, in
its individual capacity and as Master
Servicer,
by ___________________________
Name:
Title:
BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Trust Collateral
Agent
by ___________________________
Name:
Title:
<PAGE>
SCHEDULE A
SCHEDULE OF RECEIVABLES
<PAGE>
SCHEDULE B
REPRESENTATIONS AND WARRANTIES OF THE SELLER
1. Characteristics of Receivables. Each Receivable (A) was originated
by a Dealer for the retail sale of a Financed Vehicle in the ordinary course of
such Dealer's business in accordance with either (i) Advanta's credit policies
or (ii) credit policies which were reviewed by Advanta prior to a purchase of a
Receivable by Advanta and such Dealer had all necessary licenses and permits to
originate Receivables in the state where such Dealer was located, was purchased
directly or indirectly by an Unaffiliated Originator from such Dealer under an
existing Dealer Agreement or pursuant to a Dealer Assignment with an
Unaffiliated Originator, was validly assigned by such Dealer to an Unaffiliated
Originator pursuant to a Dealer Assignment, and then validly assigned by Advanta
to the Seller (B) contains customary and enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for realization
against the collateral security, (C) is a Receivable which provides for level
monthly payments (provided that the period in the first Collection Period and
the payment in the final Collection Period of the Receivable may be minimally
different from the normal period and level payment) which, if made when due,
shall fully amortize the Amount Financed over the original term and (D) has not
been amended or collections with respect to which waived, other than as
evidenced in the Receivable File relating thereto.
2. No Fraud or Misrepresentation. Each Receivable (A) was originated by
a Dealer, (B) was sold by the Dealer directly or indirectly to an Unaffiliated
Originator, (C) was sold by an Unaffiliated Originator to Advanta and (D) was
sold by Advanta to the Seller without any fraud or misrepresentation in any
case.
3. Compliance with Law. All requirements of applicable federal, state
and local laws, and regulations thereunder (including, without limitation, usury
laws, the Federal Truth-in- Lending Act, the Equal Credit Opportunity Act, the
Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, the Federal Trade Commission Act, the Moss-Magnuson Warranty Act,
the Federal Reserve Board's Regulations "B" and "Z", the Soldiers' and Sailors'
Civil Relief Act of 1940, as amended, each applicable state Motor Vehicle Retail
Installment Sales Act, and state adaptations of the National Consumer Act and of
the Uniform Consumer Credit Code and other consumer credit laws and equal credit
opportunity and disclosure laws) in respect of the Receivables, the Financed
Vehicles and the sale of any physical damage, credit life and credit accident
and health insurance and any extended service contracts, have been complied with
in all material respects, and each Receivable, the sale of the Financed Vehicle
evidenced by each Receivable and the sale of any physical damage, credit life
and credit accident and health insurance and any extended service contracts
complied at the time it was originated or made and now complies in all material
respects with all applicable legal requirements.
4. Origination. Each Receivable was originated in the United States
and materially conforms to all requirements of the "Dealer Underwriting Guide"
applicable to such Receivable at the time of origination, or with respect to
Receivables assigned to Advanta, at the time of such assignment.
5. Binding Obligation. Each Receivable represents the genuine, legal,
valid and binding payment obligation of the Obligor thereon, enforceable by the
holder thereof in
<PAGE>
accordance with its terms, except (A) as enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the enforcement
of creditors' rights generally and by equitable limitations on the availability
of specific remedies, regardless of whether such enforceability is considered in
a proceeding in equity or at law and (B) as such Receivable may be modified by
the application after the Cutoff Date of the Soldiers' and Sailors' Civil Relief
Act of 1940, as amended; and all parties to each Receivable had full legal
capacity to execute and deliver such Receivable and all other documents related
thereto and to grant the security interest purported to be granted thereby.
6. No Government Obligor. No Obligor is the United States of America
or any State or any agency, department, subdivision or instrumentality thereof.
7. Obligor Bankruptcy. At the related Cutoff Date, no Obligor had
been identified on the records of Advanta as being the subject of a current
bankruptcy proceeding.
8. Schedule of Receivables. The information set forth in the Schedule
of Receivables has been produced from the Electronic Ledger and was true and
correct in all material respects as of the close of business on the related
Cutoff Date.
9. Marking Records. By the Closing Date or Subsequent Transfer Date, as
applicable, the Seller will have caused the portions of the Electronic Ledger
relating to the Receivables to be clearly and unambiguously identified to show
that the Receivables have been sold to the Seller by the Master Servicer and
resold by the Seller to the Trust in accordance with the terms of the Sale and
Servicing Agreement.
10. Computer Tape. The Computer Tape made available by the Seller to
the Trust on the Closing Date or Subsequent Transfer Date, as applicable, was
complete and accurate as of the related Cutoff Date and includes a description
of the same Receivables that are described in the Schedule of Receivables.
11. Adverse Selection. No selection procedures adverse to the
Securityholders or the Insurer were utilized in selecting the Receivables from
those receivables owned by the Seller or purchased by Advanta from Unaffiliated
Originators which met the selection criteria contained in the Sale and Servicing
Agreement.
12. Chattel Paper. The Receivables constitute chattel paper within
the meaning of the UCC as in effect in the States of Texas and New York.
13. One Original. There is only one original executed copy of each
Receivable.
14. Receivable Files Complete. There exists a Receivable File
pertaining to each Receivable and such Receivable File contains, without
limitation, (a) a fully executed original of the Receivable, (b) the original
or, in certain specific instances, a copy of the original Lien Certificate or
application therefor together with an assignment of the Lien Certificate
executed by the Unaffiliated Originator to Advanta and by Advanta to the Seller,
and, an assignment of the Lien Certificate executed by the Seller to the Trustee
and (c) an original credit application signed by the Obligor. Each of such
documents which is required to be signed by the Obligor has been signed by the
Obligor in the appropriate spaces. All blanks on any form described in clauses
(a), (b) and (c) above have been properly filled in and each form has otherwise
been correctly
B-2
<PAGE>
prepared. Notwithstanding the above, a copy of the complete
Receivable File for each Receivable, which fulfills the documentation
requirements of the Dealer Underwriting Guide as in effect at the time of
purchase is in the possession of the Master Servicer or its bailee.
15. Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, and the Financed Vehicle securing each such
Receivable has not been released from the lien of the related Receivable in
whole or in part. No terms of any Receivable have been waived, altered or
modified in any respect since its origination, except by instruments or
documents identified in the Receivable File. No Receivable has been modified as
a result of application of the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
16. Lawful Assignment. No Receivable was originated in, or is subject
to the laws of, any jurisdiction the laws of which would make unlawful, void or
voidable the sale, transfer and assignment of such Receivable under this
Agreement or pursuant to transfers of the Securities. The Seller has not entered
into any agreement with any account debtor that prohibits, restricts or
conditions the assignment of any portion of the Receivables.
17. Good Title. No Receivable has been sold, transferred, assigned or
pledged by the Seller to any Person other than the Issuer; immediately prior to
the conveyance of the Receivables to the Trust pursuant to this Agreement or
Subsequent Transfer Agreement, as applicable, the Seller was the sole owner
thereof and had good and indefeasible title thereto, free of any Lien and, upon
execution and delivery of this Agreement by the Seller, the Trust shall have
good and indefeasible title to and will be the sole owner of such Receivables,
free of any Lien. No Dealer has a participation in, or other right to receive,
proceeds of any Receivable. The Seller has not taken any action to convey any
right to any Person that would result in such Person having a right to payments
received under the related Insurance Policies or the related Dealer Agreements,
Dealer Assignments or Unaffiliated Originator Receivables Purchase Agreements or
to payments due under such Receivables.
18. Security Interest in Financed Vehicle. Each Receivable created
or shall create a valid, binding and enforceable first priority security
interest in favor of Advanta, the Trust Collateral Agent or an Unaffiliated
Originator in the Financed Vehicle. The Lien Certificate and original
certificate of title for each Financed Vehicle show, or if a new or replacement
Lien Certificate is being applied for with respect to such Financed Vehicle the
Lien Certificate will be received within 180 days of the Closing Date or
Subsequent Transfer Date, as applicable, and will show Advanta, the Trust
Collateral Agent or an Unaffiliated Originator named as the original secured
party under each Receivable as the holder of a first priority security interest
in such Financed Vehicle. With respect to each Receivable for which the Lien
Certificate has not yet been returned from the Registrar of Titles, Advanta has
received written evidence from the related Dealer that such Lien Certificate
showing Advanta, the Trust Collateral Agent or an Unaffiliated Originator as
first lienholder has been applied for and (i) the Unaffiliated Originator's
security interest has been validly assigned to Advanta, pursuant to the
Unaffiliated Originator Receivables Purchase Agreement, if applicable, (ii)
Advanta's security interest has been validly assigned to the Seller pursuant to
the Purchase Agreement and (iii) the Seller's security interest has been validly
assigned by the Seller to the Trust pursuant to this Agreement. If the
Receivable was originated in a state in which a filing or recording is required
of the secured party to perfect a security interest in motor vehicles, such
filings or recordings have been duly made to show Advanta, the Trust Collateral
Agent or an Unaffiliated Originator as the original secured party
B-3
<PAGE>
under the related Receivable. Immediately after the sale, transfer and
assignment thereof by the Seller to the Trust, each Receivable will be secured
by an enforceable and perfected first priority security interest in the Financed
Vehicle in favor of the Trustee as secured party, which security interest is
prior to all other Liens upon and security interests in such Financed Vehicle
which now exist or may hereafter arise or be created (except, as to priority,
for any lien for taxes, labor or materials affecting a Financed Vehicle arising
subsequent to the Cutoff Date). As of the related Cutoff Date there were no
Liens or claims for taxes, work, labor or materials affecting a Financed Vehicle
which are or may be Liens prior or equal to the Liens of the related Receivable.
19. All Filings Made. All filings (including, without limitation, UCC
filings) required to be made by any Person and actions required to be taken or
performed by any Person in any jurisdiction to give the Trust a first priority
perfected lien on, or ownership interest in, the Receivables and the proceeds
thereof and the Other Conveyed Property have been made, taken or performed.
20. No Impairment. The Seller has not done anything to convey any right
to any Person that would result in such Person having a right to payments due
under the Receivable or otherwise to impair the rights of the Trust, the
Insurer, the Trustee, the Trust Collateral Agent and the Securityholders in any
Receivable or the proceeds thereof.
21. Receivable Not Assumable. No Receivable is assumable by another
Person in a manner which would release the Obligor thereof from such Obligor's
obligations to the Seller with respect to such Receivable.
22. No Defenses. No Receivable is subject to any right of rescission,
setoff, counterclaim or defense and no such right has been asserted or
threatened with respect to any Receivable.
23. No Default. There has been no default, breach, violation or event
permitting acceleration under the terms of any Receivable (other than payment
delinquencies of not more than 59 days as of the Cutoff Date and other than
payment delinquencies of more than 59 days which have been cured and which the
Obligor of such Receivable has had no further delinquency of more than 59 days),
and no condition exists or event has occurred and is continuing that with
notice, the lapse of time or both would constitute a default, breach, violation
or event permitting acceleration under the terms of any Receivable, and there
has been no waiver of any of the foregoing. As of the related Cutoff Date no
Financed Vehicle had been repossessed.
24. Insurance. At the time of origination of each Receivable, the
related Financed Vehicle is required to be covered by a comprehensive and
collision insurance policy (i) in an amount at least equal to the lesser of,
excluding any deductible, (a) its maximum insurable value or (b) the principal
amount due from the Obligor under the related Receivable, (ii) naming Advanta or
an Unaffiliated Originator and its successors and assigns as loss payee and
(iii) insuring against loss and damage due to fire, theft, transportation,
collision and other risks generally covered by comprehensive and collision
coverage. Each Receivable requires the Obligor to maintain physical loss and
damage insurance, naming Advanta or an Unaffiliated Originator and its
successors and assigns as additional insured parties, and each Receivable
permits the holder thereof to obtain physical loss and damage insurance at the
expense of the Obligor if the Obligor fails to do so. No Financed Vehicle is
insured under a policy of Force-Placed Insurance on the related Cutoff Date.
B-4
<PAGE>
25. Certain Characteristics of Initial Receivables. (i) Each Receivable
had a remaining maturity, as of the Cutoff Date, of at least 7 months but not
more than 60 months; (ii) each Receivable had an original maturity of at least
24 months but not more than 72 months; (iii) each Receivable had an original
principal balance of at least $3,000 and not more than $70,000; (iv) each
Receivable had a Principal Balance as of the Cutoff Date of at least $500 and
not more than $70,000; (v) each Receivable has an Annual Percentage Rate of at
least 11.95% and not more than 30.00%; (vi) no Receivable was more than 59 days
past due as of the Cutoff Date; (vii) no funds have been advanced by the Seller,
the Master Servicer, any Unaffiliated Originator, any Dealer, or anyone acting
on behalf of any of them in order to cause any Receivable to qualify under
subclause (vi) of this clause (25); (viii) no Receivable has a final scheduled
payment date after June, 2003; (ix) the Principal Balance of each Receivable set
forth in Schedule of Receivables is true and accurate as of the Cutoff Date, and
(x) as of the Cutoff Date, approximately 15.54% of the aggregate Principal
Balance for all the Receivables is attributable to loans for the purchase of new
Financed Vehicles, and approximately 84.46% of the aggregate Principal Balance
for all the Receivables is attributable to loans for the purchase of used
Financed Vehicles.
B-5
<PAGE>
EXHIBIT A
SUBSEQUENT TRANSFER AGREEMENT
TRANSFER No. OF SUBSEQUENT Receivables pursuant to a Sale
and Servicing Agreement dated as of March 1, 1997 (the "Sale and Servicing
Agreement"), among ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-1, a Delaware
business trust (the "Issuer"), ADVANTA AUTO RECEIVABLES CORP. I, a Nevada
corporation (the "Seller"), ADVANTA AUTO FINANCE CORPORATION, a Nevada
corporation (the "Master Servicer"), and BANKERS TRUST COMPANY, a New York
banking Corporation (the "Trust Collateral Agent").
W I T N E S S E T H:
WHEREAS pursuant to the Sale and Servicing Agreement, the
Seller wishes to convey the Subsequent Receivables to the Issuer; and
WHEREAS, the Issuer is willing to accept such conveyance
subject to the terms and conditions hereof.
NOW, THEREFORE, the Issuer, the Seller, the Master Servicer
and the Trust Collateral Agent hereby agree as follows:
1. Defined Terms. Capitalized terms used herein
shall have the meanings ascribed to them in the Sale and
Servicing Agreement unless otherwise defined herein.
"Subsequent Cutoff Date" shall mean, with respect to the
Subsequent Receivables conveyed hereby, _______________, 1997.
"Subsequent Transfer Date" shall mean. with
respect to the Subsequent Receivables conveyed hereby,
_____________, 1997.
2. Schedule of Receivables. Annexed hereto is a supplement to
Schedule A to the Sale and Servicing Agreement listing the Receivables that
constitute the Subsequent Receivables to be conveyed pursuant to this Agreement
on the Subsequent Transfer Date.
3. Conveyance of Subsequent Receivables. In consideration of
the Issuer's delivery to or upon the order of the Seller of $____________, the
Seller does hereby sell, transfer, assign, set over and otherwise convey to the
Issuer, without recourse (except as expressly provided in the Sale and Servicing
Agreement), all right, title and interest of the Seller in and to:
(a) the Subsequent Receivables and all moneys received
thereon, on and after the related Subsequent Cutoff Date;
(b) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Subsequent Receivables and any other interest
of the Seller in such Financed Vehicles;
<PAGE>
(c) any proceeds and the right to receive proceeds with
respect to the Subsequent Receivables from claim and the right to
receive proceeds on any physical damage, credit life or disability
insurance policies covering Financed Vehicles or Obligors;
(d) all rights of the Seller against the Dealers;
(e) any proceeds with respect to the Subsequent Receivables
from recourse to Dealers in respect to which the Master Servicer has
determined in accordance with its customary servicing procedures that
eventual payment in full is unlikely;
(f) the related Receivables Files;
(g) its rights and benefits, but none of its obligations or
burdens, under the Subsequent Transfer Agreement, including the
delivery requirements, representations and warranties and the cure and
repurchase obligations of Advanta under the Subsequent Purchase
Agreement, on or after the Subsequent Cutoff Date; and
(h) the proceeds of any and all of the foregoing.
4. Representations and Warranties of the Seller. The
Seller hereby represents and warrants to the Issuer as of the date of this
Agreement and as of the Subsequent Transfer Date that:
(a) Schedule of Representations. The representations and
warranties set forth on the Schedule of Representations attached hereto as
Schedule B are true and correct.
(b) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Nevada, with power and authority to own its properties and
to conduct its business as such properties are currently owned and such business
is currently conducted, and had at all relevant times, and now has, power,
authority and legal right to acquire, own and sell the Receivables and the Other
Conveyed Property transferred to the Trust.
(c) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing and has obtained all
necessary licenses and approvals in all jurisdictions where the failure to do so
would materially and adversely affect Seller's ability to transfer the
Receivables and the Other Conveyed Property to the Trust pursuant to this
Agreement, or the validity or enforceability of the Receivables and the Other
Conveyed Property or to perform Seller's obligations hereunder and under the
Seller's Basic Documents.
(d) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and its Basic Documents and to
carry out its terms and their terms, respectively; the Seller has full power and
authority to sell and assign the Receivables and the Other Conveyed Property to
be sold and assigned to and deposited with the Trust by it and has duly
authorized such sale and assignment to the Trust by all necessary corporate
action; and the execution, delivery and performance of this Agreement and the
Seller's Basic Documents have been duly authorized by the Seller by all
necessary corporate action.
A-2
<PAGE>
(e) Valid Sale, Binding Obligations. This Agreement effects a
valid sale, transfer and assignment of the Receivables and the Other Conveyed
Property, enforceable against the Seller and creditors of and purchasers from
the Seller; and this Agreement and the Seller's Basic Documents, when duly
executed and delivered, shall constitute legal, valid and binding obligations of
the Seller enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
(f) No Violation. The consummation of the transactions
contemplated by this Agreement and the Basic Documents and the fulfillment of
the terms of this Agreement and the Basic Documents shall not conflict with,
result in any breach of any of the terms and provisions of or constitute (with
or without notice, lapse of time or both) a default under the certificate of
incorporation or by-laws of the Seller, or any indenture, agreement, mortgage,
deed of trust or other instrument to which the Seller is a party or by which it
is bound, or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, other than this Agreement, or violate any
law, order, rule or regulation applicable to the Seller of any court or of any
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or any of its properties.
(g) No Proceedings. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller, before any
court, regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Seller or its properties (A)
asserting the invalidity of this Agreement or any of the Basic Documents, (B)
seeking to prevent the issuance of the Securities or the consummation of any of
the transactions contemplated by this Agreement or any of the Basic Documents,
(C) seeking any determination or ruling that might materially and adversely
affect the performance by the Seller of its obligations under, or the validity
or enforceability of, this Agreement or any of the Basic Documents, or (D)
seeking to adversely affect the federal income tax or other federal, state or
local tax attributes of the Securities.
(h) Approvals. All approvals, authorizations, consents, order
or other actions of any person, corporation or other organization, or of any
court, governmental agency or body or official, required in connection with the
execution and delivery by the Seller of this Agreement and the consummation of
the transactions contemplated hereby have been or will be taken or obtained on
or prior to the Closing Date.
(i) No Consents. The Seller is not required to obtain the
consent of any other party or any consent, license, approval or authorization,
or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement which has not already been obtained.
(j) Chief Executive Office. The chief executive office of the
Seller is at 1325 Airmotive Way, Suite 130, Reno, Nevada.
A-3
<PAGE>
(k) Principal Balance. The aggregate Principal Balance of the
Receivables listed on the supplement to Schedule A annexed hereto and conveyed
to the Issuer pursuant to this Agreement as of the Subsequent Cutoff Date is
$____________.
5. Conditions Precedent. The obligation of the Issuer to
acquire the Receivables hereunder is subject to the satisfaction, on or prior
to the Subsequent Transfer Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Seller in Section 4 of this Agreement
and in Section 6.1 of the Sale and Servicing Agreement shall be true and correct
as of the date of this Agreement and as of the Subsequent Transfer Date.
(b) Sale and Servicing Agreement Conditions. Each of the
conditions set forth in Section 2.2(b) to the Sale and Servicing Agreement
shall have been satisfied.
(c) Additional Information. The Seller shall have delivered to
the Issuer such information as was reasonably requested by the Issuer to satisfy
itself as to (i) the accuracy of the representations and warranties set forth in
Section 4 of this Agreement and in Section 6.1 of the Sale and Servicing
Agreement and (ii) the satisfaction of the conditions set forth in this Section
5.
6. Ratification of Agreement. As supplemented by this
Agreement, the Sale and Servicing Agreement is in all respects ratified and
confirmed and the Sale and Servicing Agreement as so supplemented by this
Agreement shall be read, taken and construed as one and the same instrument.
7. Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties in separate counterparts), each of
which shall be an original but all of which together shall constitute one and
the same instrument.
8. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-4
<PAGE>
IN WITNESS WHEREOF, the Issuer, the Seller and the Master
Servicer have caused this Agreement to be duly executed and delivered by their
respective duly authorized officers as of day and the year first above written.
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-1
by Wilmington Trust Company, not
in its individual capacity but
solely as Owner Trustee on
behalf of the Trust,
by _________________________
Title:
ADVANTA AUTO RECEIVABLES CORP. I, Seller,
by ___________________________
Title:
ADVANTA AUTO FINANCE CORPORATION, Master
Servicer,
by ___________________________
Title:
Acknowledged and Accepted:
BANKERS TRUST COMPANY,
not in its individual
capacity but solely as
Trust Collateral Agent
by _____________________________
Title:
A-5
<PAGE>
EXHIBIT B
FORM OF MASTER SERVICER'S CERTIFICATE
<PAGE>
EXHIBIT C
FORM OF DEFICIENCY CLAIM NOTICE
[Date]
Bankers Trust Company, as Collateral Agent
Four Albany Street
New York, New York 10006
Wilmington Trust Company, as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Advanta Auto Finance Corp., as Master Servicer
Four Horsham Business Center
Horsham, PA 19044
Fiscal Agent [if any]
[Address]
Re: Sale and Servicing Agreement, dated as of March 1, 1997 (the
"Agreement") among Advanta Auto Receivables Trust 1997-1, (the
"Issuer"), Advanta Auto Receivables Corp. I, (the "Seller"),
and Advanta Auto Finance Corporation (the "Master Servicer"),
and Bankers Trust Company, in its capacity as Trust Collateral
Agent.
Ladies and Gentlemen:
Reference is hereby made to Section 5.5(a) of the Agreement.
Capitalized terms not defined herein shall have the meanings ascribed thereto in
the Agreement.
Pursuant to Section 5.5(a) of the Agreement, please note the following
information with respect to the Distribution Date which is to occur on
_______________:
Deficiency Claim Amount: $______________________
Note Policy Claim Amount: $______________________
<PAGE>
The Collateral Agent shall remit Deficiency Claim Amount specified
above to the Trust Collateral Agent for deposit by the Trust Collateral Agent
into the Collection Account pursuant to Section 5.6 of the Agreement on the next
Draw Date which is to occur on _________________.
Sincerely,
BANKERS TRUST COMPANY
By:________________________
Name:
Title:
C-2
<PAGE>
EXHIBIT 4.4
<PAGE>
FINANCIAL GUARANTY
INSURANCE POLICY
Obligor: Advanta Automobile Receivables Trust 1997-1 Policy No.: 50581-N
Obligations: $55,575,000 Class A-1 Floating Rate Date of Issuance: 3/31/97
Asset Backed Notes and $29,925,000
Class A-2 6.75% Asset Backed Notes
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for
consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to
each Holder, subject only to the terms of this Policy (which includes each
endorsement hereto), the full and complete payment by the Obligor of Scheduled
Payments of principal of, and interest on, the Obligations.
For the further protection of each Holder, Financial Security
irrevocably and unconditionally guarantees :
(a) payment of the amount of any distribution of principal of, or
interest on, the Obligations made during the Term of this Policy to such
Holder that is subsequently avoided in whole or in part as a preference
payment under applicable law (such payment to be made by Financial
Security in accordance with Endorsement No. 1 hereto).
(b) payment of any amount required to be paid under this
Policy by Financial Security following Financial
Security's receipt of notice as described in Endorsement
No. 1 hereto.
Financial Security shall be subrogated to the rights of each Holder to
receive payments under the Obligations to the extent of any payment by Financial
Security hereunder.
Except to the extent expressly modified by an endorsement hereto, the
following terms shall have the meanings specified for all purposes of this
Policy. "Holder" means the registered owner of any Obligation as indicated on
the registration books maintained by or on behalf of the Obligor for such
purpose or, if the Obligation is in bearer form, the holder of the Obligation.
"Scheduled Payments" means payments which are scheduled to be made during the
Term of this Policy in accordance with the original terms of the Obligations
when issued and without regard to any amendment or modification of such
Obligations thereafter; payments which become due on an accelerated basis as a
result of (a) a default by the Obligor, (b) an election by the Obligor to pay
principal on an accelerated basis or (c) any other cause, shall not constitute
"Scheduled Payments" unless Financial Security shall elect, in its sole
discretion, to pay such principal due upon such acceleration together with any
accrued interest to the date of acceleration. "Term of this Policy" shall have
the meaning set forth in Endorsement No. 1 hereto.
This Policy sets forth in full the undertaking of Financial Security,
and shall not be modified, altered or affected by any other agreement or
instrument, including any modification or amendment thereto, or by the merger,
consolidation or dissolution of the Obligor. Except to the extent expressly
modified by an endorsement hereto, the premiums paid in respect of this Policy
are nonrefundable for any reason whatsoever, including payment, or provision
being made for payment, of the Obligations prior to maturity. This Policy may
not be canceled or revoked during the Term of this Policy. THIS POLICY IS NOT
COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76
OF THE NEW YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC.
has caused this Policy to be executed on its behalf by its
Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By /s/ Brian H. Mellstrom
--------------------------------
AUTHORIZED OFFICER
A subsidiary of Financial Security Assurance Holdings Ltd.
350 Park Avenue, New York, N.Y. 10022-6022 (212) 826-0100
Form 100NY (5/89)
[FORMFEED]
<PAGE>
ENDORSEMENT NO. 1 TO FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL SECURITY 350 Park Avenue
ASSURANCE INC. New York, New York 10022
OBLIGOR: ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-1
OBLIGATIONS: $55,575,000 Class A-1 Floating Rate Asset Backed Notes
$29,925,000 Class A-2 6.75% Asset Backed Notes
Policy No.: 50581-N
Date of Issuance: March 31, 1997
1. Definitions. For all purposes of this Policy, the terms specified
below shall have the meanings or constructions provided below. Capitalized terms
used herein and not otherwise defined herein shall have the meanings provided in
the Indenture unless the context shall otherwise require.
"Business Day" means any day other than (i) a Saturday or Sunday or
(ii) a day on which banking institutions in The City of New York, Wilmington,
Delaware or any other location of any successor Master Servicer, successor Owner
Trustee or successor Trust Collateral Agent are authorized or obligated by law,
executive order or government decree to be closed.
"Financial Security" means Financial Security Assurance
Inc., a New York stock insurance company.
"Indenture" means the Indenture, dated as of March 1, 1997, between
Advanta Automobile Receivables Trust 1997-1, a Delaware business trust, and
Bankers Trust Company, as Trustee and Trust Collateral Agent, as amended from
time to time in accordance with its terms.
"Policy" means this Financial Guaranty Insurance Policy and includes
each endorsement thereto.
"Receipt" and "Received" mean actual delivery to Financial Security and
to its Fiscal Agent (as defined below), if any, prior to 12:00 noon, New York
City time, on a Business Day; delivery either on a day that is not a Business
Day, or after 12:00 noon, New York City time, shall be deemed to be "Receipt" on
the next succeeding Business Day. If any notice or certificate given hereunder
by the Trust Collateral Agent is not in proper form or is not properly
completed, executed or delivered, it shall be deemed not to have been Received,
and Financial Security or its
<PAGE>
Fiscal Agent shall promptly so advise the Trust Collateral Agent and the
Trust Collateral Agent may submit an amended notice.
"Sale and Servicing Agreement" means the Sale and Servicing
Agreement, dated as of March 1, 1997, among the Obligor, as
Issuer, Advanta Auto Receivables Corp. I, as Seller, Advanta
Auto Finance Corporation, as Master Servicer, and Bankers Trust
Company as Trust Collateral Agent.
"Scheduled Payments" means, with respect to each Distribution Date, the
distribution to be made to the Noteholders in an aggregate amount equal to the
Noteholders' Interest Distributable Amount and the Noteholders' Principal
Distributable Amount due and payable on such Distribution Date, in each case in
accordance with the original terms of the Notes when issued and without regard
to any amendment or modification of the Notes, the Indenture, or the Sale and
Servicing Agreement, except amendments or modifications to which Financial
Security has given its prior written consent; provided, however, that Scheduled
Payments shall not include (x) any portion of the Noteholders' Interest
Distributable Amount due to Noteholders because the appropriate notice and
certificate for payment in proper form was not timely Received by Financial
Security, (y) any portion of the Noteholders' Interest Distributable Amount due
to Noteholders representing interest on any Noteholders' Interest Carryover
Shortfall, or (z) any Note Prepayment Amounts, unless, in each case, Financial
Security elects, in its sole discretion, to pay such amount in whole or in part.
Scheduled Payments do not include payments that become due on an accelerated
basis as a result of (a) a default by the Obligor, (b) an election by the
Obligor to pay principal on an accelerated basis, (c) the occurrence of an Event
of Default under the Indenture or (d) any other cause, unless, in each case,
Financial Security elects, in its sole discretion, to pay in whole or in part
such principal due upon acceleration, together with any accrued interest to the
date of acceleration. Scheduled Payments shall not include any amounts due in
respect of the Obligations attributable to any increase in interest rate,
penalty or other sum payable by the Obligor by reason of any default or event of
default in respect of the Obligations, or by reason of any deterioration of the
creditworthiness of the Obligor nor shall Scheduled Payments include, nor shall
coverage be provided under the Policy in respect of, any taxes, withholding or
other charge imposed by any governmental authority due in connection with the
payment of any Scheduled Payment to a Noteholder.
"Term Of This Policy" means the period from and including the Date of
Issuance to and including the latest of the date on which (i) the outstanding
principal amount of Notes has been reduced to zero and all distributions of
Noteholders' Interest Distributable Amount (other than any portion of the
Noteholders' Interest Distributable Amount constituting interest on any
Noteholders' Interest Carryover Shortfall) have been paid on the Notes, (ii) any
period during which any payment on the Notes could have been avoided in whole or
in part as a preference payment under applicable bankruptcy, insolvency,
receivership or similar law has expired, and (iii) if any proceedings requisite
to avoidance as a preference payment have been commenced prior to the occurrence
of (i) and (ii), a final and nonappealable order in resolution of each such
proceeding has been entered.
<PAGE>
"Trust Collateral Agent" means Bankers Trust Company, a national
banking association, in its capacity as Trust Collateral Agent under the Sale
and Servicing Agreement and any successor in such capacity.
2. Notices and Conditions to Payment in Respect of Scheduled Payments.
Following Receipt by Financial Security of a notice and certificate from the
Trust Collateral Agent in the form attached as Exhibit A to this Endorsement,
Financial Security will pay any amount payable hereunder in respect of Scheduled
Payments on the Obligations out of the funds of Financial Security on the later
to occur of (a) 12:00 noon, New York City time, on the third Business Day
following such Receipt; and (b) 12:00 noon, New York City time, on the
Distribution Date to which such claim relates. Payments due hereunder in respect
of Scheduled Payments will be disbursed by wire transfer of immediately
available funds to the Policy Payments Account established pursuant to the Sale
and Servicing Agreement or, if no such Policy Payments Account has been
established, to the Trust Collateral Agent.
Financial Security shall be entitled to pay any amount hereunder in
respect of Scheduled Payments on the Obligations, including any amount due on
the Obligations on an accelerated basis, whether or not any notice and
certificate shall have been Received by Financial Security as provided above.
Financial security shall be entitled to pay hereunder any amount due on the
Obligations on an accelerated basis at any time or from time to time, in whole
or in part, prior to the scheduled date of payment thereof; Scheduled Payments
insured hereunder shall not include interest, in respect of principal paid
hereunder on an accelerated basis, accruing from and after the date of such
payment of principal. Financial Security's obligations hereunder in respect of
Scheduled Payments shall be discharged to the extent funds are disbursed by
Financial Security as provided herein whether or not such funds are properly
applied by the Trust Collateral Agent.
3. Notices and Conditions to Payment in Respect of Scheduled Payments
Avoided as Preference Payments. If any Scheduled Payment is avoided as a
preference payment under applicable bankruptcy, insolvency, receivership or
similar law, Financial Security will pay such amount out of the funds of
Financial Security on the later of (a) the date when due to be paid pursuant to
the Order (as defined below) or (b) the first to occur of (i) the fourth
Business Day following Receipt by Financial Security from the Trust Collateral
Agent of (A) a certified copy of the order (the "Order") of the court or other
governmental body that exercised jurisdiction to the effect that the Noteholder
is required to return the amount of any Scheduled Payment distributed with
respect to the Notes during the Term Of This Policy because such distributions
were avoidable as preference payments under applicable bankruptcy law, (B) a
certificate of the Noteholder that the Order has been entered and is not subject
to any stay and (C) an assignment duly executed and delivered by the Noteholder,
in such form as is reasonably required by Financial Security and provided to the
Noteholder by Financial Security, irrevocably assigning to Financial Security
all rights and claims of the Noteholder relating to or arising under the Notes
against the debtor that made such preference payment or otherwise with respect
to such preference payment, or (ii) the date of Receipt by Financial Security
from the Trust Collateral
<PAGE>
Agent of the items referred to in clauses (A), (B) and
(C) above if, at least four Business Days prior to such date of Receipt,
Financial Security shall have Received written notice from the Trust Collateral
Agent that such items were to be delivered on such date and such date was
specified in such notice. Such payment shall be disbursed to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Order
and not to the Trust Collateral Agent or any Noteholder directly (unless a
Noteholder has previously paid such amount to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, in which case
such payment shall be disbursed to the Trust Collateral Agent for distribution
to such Noteholder upon proof of such payment reasonably satisfactory to
Financial Security). In connection with the foregoing, Financial Security shall
have the rights provided pursuant to Section 6.2 of the Sale and Servicing
Agreement.
4. Governing Law. This Policy shall be governed by and
construed in accordance with the laws of the State of New York,
without giving effect to the conflict of laws principles thereof.
5. Fiscal Agent. At any time during the Term Of This Policy, Financial
Security may appoint a fiscal agent (the "Fiscal Agent") for purposes of this
Policy by written notice to the Trust Collateral Agent at the notice address
specified in the Sale and Servicing Agreement specifying the name and notice
address of the Fiscal Agent. From and after the date of receipt of such notice
by the Trust Collateral Agent, (i) copies of all notices and documents required
to be delivered to Financial Security pursuant to this Policy shall be
simultaneously delivered to the Fiscal Agent and to Financial Security and shall
not be deemed Received until Received by both and (ii) all payments required to
be made by Financial Security under this Policy may be made directly by
Financial Security or by the Fiscal Agent on behalf of Financial Security. The
Fiscal Agent is the agent of Financial Security only and the Fiscal Agent shall
in no event be liable to any Noteholder for any acts of the Fiscal Agent or any
failure of Financial Security to deposit, or cause to be deposited, sufficient
funds to make payments due under this Policy.
6. Waiver of Defenses. To the fullest extent permitted by applicable
law, Financial Security agrees not to assert, and hereby waives, for the benefit
of each Noteholder, all rights (whether by counterclaim, setoff or otherwise)
and defenses (including, without limitation, the defense of fraud), whether
acquired by subrogation, assignment or otherwise, to the extent that such rights
and defenses may be available to Financial Security to avoid payment of its
obligations under this Policy in accordance with the express provisions of this
Policy.
<PAGE>
Policy No.: 50581-N Date of Issuance: March 31, 1997
7. Notices. All notices to be given hereunder shall be in
writing (except as otherwise specifically provided herein) and
shall be mailed by registered mail or personally delivered or
telecopied to Financial Security as follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President - Surveillance
Re: Advanta Automobile Receivables Trust 1997-1
$55,575,000 Class A-1 Floating Rate Asset Backed Notes
$29,925,000 6.75% Class A-2 Asset Backed Notes
Telecopy No.: (212) 339-3518
Confirmation: (212) 826-0100
Financial Security may specify a different address or addresses by writing
mailed or delivered to the Trust Collateral Agent.
8. Priorities. In the event any term or provision of the
face of this Policy is inconsistent with the provisions of this
Endorsement, the provisions of this Endorsement shall take
precedence and shall be binding.
9. Exclusions From Insurance Guaranty Funds. This Policy is not covered
by the Property/Casualty Insurance Security Fund specified in Article 76 of the
New York Insurance Law. This Policy is not covered by the Florida Insurance
Guaranty Association created under Part II of Chapter 631 of the Florida
Insurance Code. In the event Financial Security were to become insolvent, any
claims arising under this Policy are excluded from coverage by the California
Insurance Guaranty Association, established pursuant to Article 14.2 of Chapter
1 of Part 2 of Division 1 of the California Insurance Code.
10. Surrender of Policy. The Trust Collateral Agent shall
surrender this Policy to Financial Security for cancellation
upon expiration of the Term Of This Policy.
IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has
caused this Endorsement No. 1 to be executed by its Authorized
Officer.
FINANCIAL SECURITY ASSURANCE INC.
By /s/ Brian H. Mellstrom
-------------------------------
Authorized Officer
<PAGE>
Policy No.: 50581-N Date of Issuance: March 31, 1997
Exhibit A To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
(Letterhead of Trust Collateral Agent)
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Re: Advanta Automobile Receivables Trust 1997-1
$55,575,000 Class A-1 Floating Rate Asset Backed Notes
and $29,925,000 Class A-2 6.75% Asset Backed Notes
--------------------------------------------------------
The undersigned, a duly authorized officer of Bankers Trust Company,
(the "Trust Collateral Agent") hereby certifies to Financial Security Assurance
Inc. ("Financial Security"), with reference to Financial Guaranty Insurance
Policy No. 50581-N dated March 31, 1997 (the "Policy") issued by Financial
Security in respect of the $55,575,000 Class A-1 Floating Rate Asset Backed
Notes and $29,925,000 Class A-2 6.75% Asset Backed Notes of the above referenced
Trust (collectively, the "Notes"), that:
(i) The Trust Collateral Agent is the Trust
Collateral Agent under the Indenture for the Noteholders.
(ii) The sum of all amounts on deposit (or scheduled to be on
deposit) in the Note Distribution Account and available for
distribution to the Noteholders pursuant to the Sale and Servicing
Agreement will be $ ________ (the "Shortfall") less than the Scheduled
Payments with respect to the Distribution Date occurring , 19 .
(iii) The Trust Collateral Agent is making a claim under the
Policy for the Shortfall to be applied to distributions of Scheduled
Payments with respect to the Notes.
(iv) The Trust Collateral Agent agrees that, following receipt
of funds from Financial Security, it shall (a) hold such amounts in
trust and apply the same directly to the payment of Scheduled Payments
on the Obligations when due; (b) not apply such funds for any other
purpose; (c) not commingle such funds with other funds held by the
Trust Collateral Agent and (d) maintain an accurate record of such
payments with respect to each Note and the corresponding claim on the
Policy and proceeds thereof and, if the Note is required to be
surrendered or presented for such payment, shall stamp on each such
Note the legend "$[insert applicable amount] paid by Financial Security
<PAGE>
and the balance hereof has been canceled and reissued" and then shall
deliver such Note to Financial Security.
(v) The Trust Collateral Agent, on behalf of the Noteholders,
hereby assigns to Financial Security the rights of the Noteholders with
respect to the Notes to the extent of any payments under the Policy,
including, without limitation, any amounts due to the Noteholders in
respect of securities law violations arising from the offer and sale of
the Notes. The foregoing assignment is in addition to, and not in
limitation of, rights of subrogation otherwise available to Financial
Security in respect of such payments. The Trust Collateral Agent shall
take such action and deliver such instruments as may be reasonably
requested or required by Financial Security to effectuate the purpose
or provisions of this clause (v).
(vi) The Trust Collateral Agent, on its behalf and on behalf
of the Noteholders, hereby appoints Financial Security as agent and
attorney-in-fact for the Trust Collateral Agent and each such
Noteholder in any legal proceeding with respect to the Notes. The Trust
Collateral Agent hereby agrees that Financial Security may at any time
during the continuation of any proceeding by or against any debtor with
respect to which a Preference Claim (as defined below) or other claim
with respect to the Notes is asserted under the United States
Bankruptcy Code or any other applicable bankruptcy, insolvency,
receivership, rehabilitation or similar law (an "Insolvency
Proceeding") direct all matters relating to such Insolvency Proceeding,
including without limitation, (A) all matters relating to any claim in
connection with an Insolvency Proceeding seeking the avoidance as a
preferential transfer of any payment made with respect to the Notes (a
"Preference Claim"), (B) the direction of any appeal of any order
relating to any Preference Claim at the expense of Financial Security
but subject to reimbursement as provided in the Insurance Agreement and
(C) the posting of any surety, supersedeas or performance bond pending
any such appeal. In addition, the Trust Collateral Agent hereby agrees
that Financial Security shall be subrogated to, and the Trust
Collateral Agent on its behalf and on behalf of each Noteholder, hereby
delegates and assigns, to the fullest extent permitted by law, the
rights of the Trust Collateral Agent and each Noteholder in the conduct
of any Insolvency Proceeding, including, without limitation, all rights
of any party to an adversary proceeding or action with respect to any
court order issued in connection with any such Insolvency Proceeding.
(vii) Payment should be made by wire transfer
directed to [Specify Account].
Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the meanings
provided in the Policy.
<PAGE>
Policy No.: 50581-N Date of Issuance: March 31, 1997
IN WITNESS WHEREOF, the Trust Collateral Agent has executed and
delivered this Notice of Claim and Certificate as of the ____ day of _________,
_____.
BANKERS TRUST COMPANY,
not in its individual capacity but solely as
Trust Collateral Agent
By ____________________________________
Title: ___________________
- -----------------------------------------------------------------
For Financial Security or Fiscal Agent Use Only
Wire transfer sent on ________________ by _____________________
Confirmation Number ________________
<PAGE>
EXHIBIT 10.1
<PAGE>
EXECUTION COPY
PURCHASE AGREEMENT
between
ADVANTA AUTO FINANCE CORPORATION
Seller
and
ADVANTA AUTO RECEIVABLES CORP. I
Purchaser
dated as of
March 1, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS
SECTION 1.1 General.................................................................. 1
SECTION 1.2 Specific Terms........................................................... 1
SECTION 1.3 Usage of Terms........................................................... 3
SECTION 1.4 Certain References....................................................... 4
SECTION 1.5 No Recourse.............................................................. 4
SECTION 1.6 Action by or Consent of Noteholders and
Certificateholders....................................................... 4
SECTION 1.7 Material Adverse Effect.................................................. 4
ARTICLE II
CONVEYANCE OF THE RECEIVABLES
AND THE OTHER CONVEYED PROPERTY
SECTION 2.1 Conveyance of the Initial Receivables and the Initial
Other Conveyed Property.................................................. 5
SECTION 2.2 Conveyance of the Subsequent Receivables and the
Subsequent Other Conveyed Property....................................... 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of Seller................................. 7
SECTION 3.2 Representations and Warranties of Purchaser.............................. 9
ARTICLE IV
COVENANTS OF SELLER
SECTION 4.1 Protection of Title of Purchaser......................................... 12
SECTION 4.2 Other Liens or Interests................................................. 13
SECTION 4.3 Costs and Expenses....................................................... 13
SECTION 4.4 Indemnification.......................................................... 14
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE V
REPURCHASES
SECTION 5.1 Repurchase of Receivables Upon Breach of Warranty........................ 16
SECTION 5.2 Reassignment of Purchased Receivables.................................... 16
SECTION 5.3 Waivers.................................................................. 17
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Liability of Seller...................................................... 17
SECTION 6.2 Merger or Consolidation of Seller or Purchaser........................... 17
SECTION 6.3 Limitation on Liability of Seller and Others............................. 18
SECTION 6.4 Seller May Own Notes or Certificates..................................... 18
SECTION 6.5 Amendment................................................................ 18
SECTION 6.6 Notices.................................................................. 19
SECTION 6.7 Merger and Integration................................................... 19
SECTION 6.8 Severability of Provisions............................................... 20
SECTION 6.9 Intention of the Parties................................................. 20
SECTION 6.10 Governing Law............................................................ 20
SECTION 6.11 Counterparts............................................................. 20
SECTION 6.12 Conveyance of the Receivables and the Other
Conveyed Property to the Issuer.......................................... 20
SECTION 6.13 Nonpetition Covenant..................................................... 21
EXHIBITS
EXHIBIT A Form of Subsequent Purchase Agreement
SCHEDULE A Schedule of Receivables
SCHEDULE B Representations and Warranties of the Seller
</TABLE>
ii
<PAGE>
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, dated as of March 1, 1997, executed
between Advanta Auto Receivables Corp. I, a Nevada corporation, as purchaser
("Purchaser"), and Advanta Auto Finance Corporation, a Nevada corporation, as
seller ("Seller").
W I T N E S S E T H :
WHEREAS, Purchaser has agreed to purchase from Seller, and
Seller, pursuant to this Agreement, is transferring to Purchaser the Initial
Receivables and Other Conveyed Property, and with respect to the Subsequent
Receivables will transfer on the related Subsequent Transfer Date, the
Subsequent Receivables and the Subsequent Other Conveyed Property.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter contained, and for other good and valuable
consideration, the receipt of which is acknowledged, Purchaser and Seller,
intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 General. Capitalized terms used herein without
definition shall have the respective meanings assigned to such terms in the Sale
and Servicing Agreement dated as of March 1, 1997, by and among the Seller, in
its capacity as Master Servicer, Advanta Automobile Receivables Trust 1997-1, as
Issuer, the Purchaser, as Seller and Bankers Trust Company, as Indenture Trustee
and Trust Collateral Agent.
SECTION 1.2 Specific Terms. Whenever used in this Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"Agreement" means this Purchase Agreement and all amendments
hereof and supplements hereto.
"Closing Date" means March 31, 1997.
"Indenture Trustee" means Bankers Trust Company, and any
successor Indenture Trustee appointed and acting pursuant to the Indenture.
<PAGE>
"Initial Other Conveyed Property" means all monies,
instruments, rights and other property conveyed by the Seller to the Purchaser
pursuant to this Agreement other than the Initial Receivables.
"Initial Receivables" means the Receivables listed on the
Schedule of Receivables attached hereto as Schedule A.
"Issuer" means Advanta Automobile Receivables Trust 1997-1.
"Other Conveyed Property" means all money, instruments, rights
and other property that are subject or intended to be subject to the lien and
security interest of the Indenture (including all property and interests granted
to the Trust Collateral Agent), including all proceeds thereof, other than the
Receivables.
"Owner Trustee" means Wilmington Trust Company, as Owner
Trustee appointed and acting pursuant to the Trust Agreement.
"Receivables" means the Initial Receivables and the Subsequent
Receivables.
"Related Documents" means any Subsequent Purchase Agreement,
the Notes, the Certificates, the Custodian Agreement, the Sale and Servicing
Agreement, the Indenture, the Trust Agreement, the Policy, the Spread Account
Agreement, the Spread Account Agreement Supplement, the Insurance Agreement, the
Indemnification Agreement and the Underwriting Agreement. The Related Documents
to be executed by any party are referred to herein as "such party's Related
Documents," "its Related Documents" or by a similar expression.
"Repurchase Event" means the occurrence of a breach of any of
Seller's representations and warranties hereunder or any other event which
requires the repurchase of a Receivable by Seller under the Sale and Servicing
Agreement.
"Sale and Servicing Agreement" means the Sale and Servicing
Agreement referred to in Section 1.1 hereof.
"Schedule of Receivables" means the schedule of Initial
Receivables sold and transferred pursuant to this Agreement which is attached
hereto as Schedule A.
"Schedule of Representations" means the Schedule of
Representations and Warranties attached hereto as Schedule B.
"Security Majority" means a majority by principal amount of
the Noteholders so long as the Notes are outstanding and a majority by principal
amount of the Certificateholders thereafter.
2
<PAGE>
"Subsequent Cutoff Date" means the opening of business on the
first day of the calendar month in which particular Subsequent Receivables are
conveyed to the Purchaser pursuant to this Agreement.
"Subsequent Other Conveyed Property" means all property
conveyed by the Seller to the Purchaser pursuant to the Subsequent Purchase
Agreement other than the Subsequent Receivables.
"Subsequent Purchase Agreement" means an agreement by and
between the Seller and the Purchaser pursuant to which the Purchaser will
acquire Subsequent Receivables.
"Subsequent Receivables" means the Receivables transferred to
the Purchaser pursuant to Section 2.2, which shall be listed on Schedule A to
the related Subsequent Purchase Agreement.
"Subsequent Transfer Date" means, with respect to Subsequent
Receivables, any date, occurring not more frequently than once a month, during
the Pre- Funding Period on which Subsequent Receivables are to be transferred to
the Purchaser pursuant to this Agreement, and a Subsequent Purchase Agreement is
executed and delivered.
"Trust Collateral Agent" means Bankers Trust Company, as trust
collateral agent and any successor trust collateral agent appointed and acting
pursuant to the Sale and Servicing Agreement.
"Trustee" means Bankers Trust Company, as Indenture Trustee
appointed and acting pursuant to the Sale and Servicing Agreement.
"Unaffiliated Originator" means any third party originator or
owner of Receivables.
SECTION 1.3 Usage of Terms. With respect to all terms used in
this Agreement, the singular includes the plural and the plural includes the
singular; words importing any gender include the other gender; references to
"writing" include printing, typing, lithography, and other means of reproducing
words in a visible form; references to agreements and other contractual
instruments include all subsequent amendments thereto or changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement or the Sale and Servicing Agreement; references to Persons include
their permitted successors and assigns; the terms "include" or "including" mean
"include without limitation" or "including without limitation; "the words
"herein", "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other
subdivision, and Article, Section, Schedule and Exhibit references, unless
otherwise specified, refer to Articles and Sections of Schedules and Exhibits to
this Agreement.
3
<PAGE>
SECTION 1.4 Certain References. All references to the
Principal Balance of a Receivable as of any date of determination shall refer to
the close of business on such day, or as of the first day of a Monthly Period
shall refer to the opening of business on such day. All references to the last
day of a Monthly Period shall refer to the close of business on such day.
SECTION 1.5 No Recourse. Without limiting the obligations of
Seller hereunder, no recourse may be taken, directly or indirectly, under this
Agreement or any certificate or other writing delivered in connection herewith
or therewith, against any stockholder, officer or director, as such, of Seller,
or of any predecessor or successor of Seller.
SECTION 1.6 Action by or Consent of Noteholders and
Certificateholders. Whenever any provision of this Agreement refers to action to
be taken, or consented to, by Noteholders or Certificateholders, such provision
shall be deemed to refer to the Certificateholder or Noteholder, as the case may
be, of record as of the Record Date immediately preceding the date on which such
action is to be taken, or consent given, by Noteholders or Certificateholders.
Solely for the purposes of any action to be taken, or consented to, by
Noteholders or Certificateholders, any Note or Certificate registered in the
name of the Seller or any Affiliate thereof shall be deemed not to be
outstanding; provided, however, that, solely for the purpose of determining
whether the Indenture Trustee or the Trust Collateral Agent is entitled to rely
upon any such action or consent, only Notes or Certificates which the Owner
Trustee, the Indenture Trustee or the Trust Collateral Agent, respectively,
knows to be so owned shall be so disregarded.
SECTION 1.7 Material Adverse Effect. Whenever a determination
is to be made under this Agreement as to whether a given event, action, course
of conduct or set of facts or circumstances could or would have a material
adverse effect on the Certificateholders, the Noteholders or the Trust (or any
similar or analogous determination), such determination shall be made without
taking into account the funds available from claims under the Policy. Whenever a
determination is to be made under this Agreement whether a breach of a
representation, warranty or covenant has or could have a material adverse effect
on a Receivable or the interest therein of the Trust, the Noteholders, the
Certificateholders or the Insurer (or any similar or analogous determination),
such determination shall be made by the Insurer in its reasonable discretion and
after notifying the Trustee and the Seller of such potential breach or (x) if an
Insurer Default shall have occurred and be continuing, or (y) upon (i) the
expiration of the Policy in accordance with the terms thereof and (ii) the
payment of all amounts owing to the Insurer under the Sale and Servicing
Agreement and the Insurance Agreement, by a Security Majority.
4
<PAGE>
ARTICLE II
CONVEYANCE OF THE RECEIVABLES
AND THE OTHER CONVEYED PROPERTY
SECTION 2.1 Conveyance of the Initial Receivables and the
Initial Other Conveyed Property.
(a) Subject to the terms and conditions of this Agreement,
Seller hereby sells, transfers, assigns, and otherwise conveys to Purchaser
without recourse (but without limitation of its obligations in this Agreement),
and Purchaser hereby purchases, all right, title and interest of Seller in and
to:
(i) the Initial Receivables and all monies paid or payable
thereon on or after the Initial Cutoff Date (including amounts due on
or before the Initial Cutoff Date but received by the Seller on or
after the Initial Cutoff Date);
(ii) the security interests in the Financed Vehicles granted
by Obligors pursuant to the Initial Receivables and any other interest
of the Seller in such Financed Vehicles;
(iii) any proceeds and the right to receive proceeds with
respect to the Initial Receivables from claims on any physical damage,
credit life or disability insurance policies covering Financed Vehicles
or Obligors, including rebates of insurance premiums relating to the
Receivables and any proceeds from the liquidation of the Initial
Receivables;
(iv) all rights of the Seller against Dealers pursuant to
Dealer Agreements, Dealer Assignments or Unaffiliated Originator
Receivables
Purchase Agreements;
(v) all rights under any Service Contracts on the related
Financed Vehicles;
(vi) the related Receivables Files and any and all other
documents that the Seller keeps on file in accordance with its
customary procedures relating to the Receivables, the Obligors or the
Financed Vehicles;
(vii) property (including the right to receive future Net
Liquidation Proceeds) that secures a Receivable and that has been
acquired by or on behalf of the Purchaser pursuant to liquidation of
such Receivable;
(viii) the proceeds of any and all of the foregoing.
5
<PAGE>
It is the intention of Seller and Purchaser that the transfer
and assignment contemplated by this Agreement shall constitute a sale of the
Initial Receivables and the Initial Other Conveyed Property from Seller to
Purchaser, conveying good title thereto free and clear of any liens, and the
beneficial interest in and title to the Initial Receivables and the Initial
Other Conveyed Property shall not be part of Seller's estate in the event of the
filing of a bankruptcy petition by or against Seller under any bankruptcy or
similar law.
(b) Simultaneously with the conveyance of the Initial
Receivables and the Initial Other Conveyed Property to Purchaser, Purchaser has
paid or caused to be paid to or upon the order of Seller an amount equal to the
book value of the Initial Receivables on the books and records of the Seller, by
wire transfer of immediately available funds.
SECTION 2.2 Conveyance of the Subsequent Receivables and the
Subsequent Other Conveyed Property.
(a) On each Subsequent Transfer Date and simultaneously with
the execution and delivery of the related Subsequent Purchase Agreement, the
Seller shall sell, transfer, assign, and otherwise convey to Purchaser without
recourse (but without limitation of its obligations in this Agreement), and
Purchaser shall purchase, all right, title and interest of Seller in and to:
(i) the Subsequent Receivables listed on Schedule A to the
related Subsequent Transfer Agreement and all monies paid or payable
thereon on or after the related Subsequent Transfer Date (including
amounts due on or before the Subsequent Cutoff Date but received by the
Seller on or after the Subsequent Cutoff Date);
(ii) the security interests in the Financed Vehicles granted
by Obligors pursuant to the Subsequent Receivables and any other
interest of the Seller in such Financed Vehicles;
(iii) any proceeds and the right to receive proceeds with
respect to such Subsequent Receivables from claims on any physical
damage, credit life or disability insurance policies covering the
related Financed Vehicles or Obligors, including rebating of insurance
premiums relating to the Receivables, and any proceeds from the
liquidation of the Subsequent Receivables;
(iv) all rights of the Seller against the Dealers pursuant to
Dealer Agreements; Dealer Assignments or Unaffiliated Originator
Receivables Purchase Agreements;
(v) all rights under any Service Contracts on the related
Financed Vehicles:
6
<PAGE>
(vi) the related Receivables Files; and any and all other
documents that the Seller keeps on file in accordance with its
customary procedures relating to the Receivables, the Obligors or the
Financed Vehicles;
(vii) property (including the right to receive future Net
Liquidation Proceeds) that secures a Receivable and that has been
acquired by or on behalf of the Purchaser pursuant to liquidation of
such Receivable;
(viii) the proceeds of any and all of the foregoing.
It is the intention of Seller and Purchaser that the transfer
and assignment contemplated by such Agreement shall constitute a sale of the
Subsequent Receivables and the Subsequent Other Conveyed Property from Seller to
Purchaser, conveying good title thereto free and clear of any liens, and the
beneficial interest in and title to the Subsequent Receivables and the
Subsequent Other Conveyed Property shall not be part of Seller's estate in the
event of the filing of a bankruptcy petition by or against Seller under any
bankruptcy or similar law.
(b) Simultaneously with the conveyance of the Subsequent
Receivables and the Subsequent Other Conveyed Property to Purchaser, Purchaser
shall pay or cause to be paid to or upon the order of Seller an amount equal to
the book value of the Subsequent Receivables on the books and records of the
Seller, by wire transfer of immediately available funds.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of Seller. Seller
makes the following representations and warranties as of the date hereof and as
of the Subsequent Transfer Date, as the case may be, on which Purchaser relies
in purchasing the Receivables and the Other Conveyed Property and in
transferring the Receivables and the Other Conveyed Property to the Issuer under
the Sale and Servicing Agreement and on which the Insurer will rely in issuing
the Policy. Such representations are made as of the execution and delivery of
this Agreement and as of the execution and delivery of any Subsequent Purchase
Agreement, but shall survive the sale, transfer and assignment of the
Receivables and the Other Conveyed Property hereunder and under any Subsequent
Purchase Agreement, and the sale, transfer and assignment thereof by Purchaser
to the Issuer under the Sale and Servicing Agreement. Seller and Purchaser agree
that Purchaser will assign to Issuer all Purchaser's rights under this Agreement
and that the Indenture Trustee will thereafter be entitled to enforce this
Agreement against Seller in the Indenture Trustee's own name on behalf of the
Securityholders.
7
<PAGE>
(i) Schedule of Representations. The representations and
warranties set forth on the Schedule of Representations with respect to
the Initial Receivables as of the date hereof, and with respect to the
Subsequent Receivables as of the related Subsequent Transfer Date, are
true and correct.
(ii) Organization and Good Standing. Seller has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Nevada, with power and authority to own
its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at
all relevant times, and now has, power, authority and legal right to
acquire, own and sell the Receivables and the Other Conveyed Property
to be transferred to Purchaser.
(iii) Due Qualification. Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of its property or the conduct of its business
requires such qualification.
(iv) Power and Authority. Seller has the power and authority
to execute and deliver this Agreement and its Related Documents and to
carry out its terms and their terms, respectively; Seller has full
power and authority to sell and assign the Receivables and the Other
Conveyed Property to be sold and assigned to and deposited with
Purchaser hereunder and has duly authorized such sale and assignment to
Purchaser by all necessary corporate action; and the execution,
delivery and performance of this Agreement and Seller's Related
Documents have been duly authorized by Seller by all necessary
corporate action.
(v) Valid Sale; Binding Obligations. This Agreement and
Seller's Related Documents have been duly executed and delivered, shall
effect a valid sale, transfer and assignment of the Receivables and the
Other Conveyed Property to the Purchaser, enforceable against Seller
and creditors of and purchasers from Seller; and this Agreement and
Seller's Related Documents constitute legal, valid and binding
obligations of Seller enforceable in accordance with their respective
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations
on the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(vi) No Violation. The consummation of the transactions
contemplated by this Agreement and the Related Documents and the
fulfillment of the terms of this Agreement and the Related Documents
shall not conflict with, result in any breach of any of the terms and
provisions of or constitute (with or without notice, lapse of time or
both) a default under, the articles of incorporation or bylaws of
Seller, or any indenture, agreement, mortgage, deed of trust or other
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instrument to which Seller is a party or by which it is bound, or
result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than this Agreement,
the Spread Account Agreement, the Sale and Servicing Agreement and the
Indenture, or violate any law, order, rule or regulation applicable to
Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over Seller or any of its properties.
(vii) No Proceedings. There are no proceedings or
investigations pending or, to Seller's knowledge, threatened against
Seller, before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having jurisdiction over
Seller or its properties (i) asserting the invalidity of this Agreement
or any of the Related Documents, (ii) seeking to prevent the issuance
of the Notes or the consummation of any of the transactions
contemplated by this Agreement or any of the Related Documents, (iii)
seeking any determination or ruling that might materially and adversely
affect the performance by Seller of its obligations under, or the
validity or enforceability of, this Agreement or any of the Related
Documents or (iv) seeking to affect adversely the federal income tax or
other federal, state or local tax attributes of, or seeking to impose
any excise, franchise, transfer or similar tax upon, the transfer and
acquisition of the Receivables and the Other Conveyed Property
hereunder or under the Sale and Servicing Agreement.
(viii) Chief Executive Office. The chief executive office of
Seller is located at Four Horsham Business Center, 300 Welsh Road,
Building Four, Horsham, PA 19044.
(ix) No Consents. The Seller is not required to obtain the
consent of any other party or any consent, license, approval or
authorization, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement which has not
already been obtained.
(x) Approvals. All approvals, authorizations, consents, order
or other actions of any person, corporation or other organization, or
of any court, governmental agency or body or official, required in
connection with the execution and delivery by the Seller of this
Agreement and the consummation of the transactions contemplated hereby
or will be taken or obtained on or prior to the Closing Date.
SECTION 3.2 Representations and Warranties of Purchaser.
Purchaser makes the following representations and warranties, on which Seller
relies in selling, assigning, transferring and conveying the Receivables and the
Other Conveyed Property to Purchaser hereunder. Such representations are made as
of the execution and delivery
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of this Agreement, but shall survive the sale, transfer and assignment of the
Receivables and the Other Conveyed Property hereunder and the sale, transfer and
assignment thereof by Purchaser to the Issuer under the Sale and Servicing
Agreement.
(i) Organization and Good Standing. Purchaser has been duly
organized and is validly existing and in good standing as a corporation
under the laws of the State of Nevada, with the power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at
all relevant times, and has, full power, authority and legal right to
acquire and own the Receivables and the Other Conveyed Property, and to
transfer the Receivables and the Other Conveyed Property to the Issuer
pursuant to the Sale and Servicing Agreement.
(ii) Due Qualification. Purchaser is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions where the
failure to do so would materially and adversely affect Purchaser's
ability to acquire the Receivables or the Other Conveyed Property, and
to transfer the Receivables and the Other Conveyed Property to the
Issuer pursuant to the Sale and Servicing Agreement, or the validity or
enforceability of the Receivables and the Other Conveyed Property or to
perform Purchaser's obligations hereunder and under the Purchaser's
Related Documents.
(iii) Power and Authority. Purchaser has the power, authority
and legal right to execute and deliver this Agreement and to carry out
the terms hereof and to acquire the Receivables and the Other Conveyed
Property hereunder; and the execution, delivery and performance of this
Agreement and all of the documents required pursuant hereto have been
duly authorized by Purchaser by all necessary action.
(iv) No Consent Required. Purchaser is not required to obtain
the consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery
or performance of this Agreement and the Related Documents, except for
such as have been obtained, effected or made.
(v) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, subject, as to enforceability,
to applicable bankruptcy, insolvency, reorganization, conservatorship,
receivership, liquidation and other similar laws and to general
equitable principles.
(vi) No Violation. The execution, delivery and performance by
Purchaser of this Agreement, the consummation of the transactions
contemplated by this Agreement and the Related Documents and the
fulfillment of the terms of
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this Agreement and the Related Documents do not and will not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the certificate of incorporation or bylaws of Purchaser, or conflict
with or breach any of the terms or provisions of, or constitute (with
or without notice or lapse of time) a default under, any indenture,
agreement, mortgage, deed of trust or other instrument to which
Purchaser is a party or by which Purchaser is bound or to which any of
its properties are subject, or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument
(other than the Sale and Servicing Agreement and the Spread Account
Agreement and the Indenture), or violate any law, order, rule or
regulation, applicable to Purchaser or its properties, of any federal
or state regulatory body, any court, administrative agency, or other
governmental instrumentality having jurisdiction over Purchaser or any
of its properties.
(vii) No Proceedings. There are no proceedings or
investigations pending, or, to the knowledge of Purchaser, threatened
against Purchaser, before any court, regulatory body, administrative
agency, or other tribunal or governmental instrumentality having
jurisdiction over Purchaser or its properties: (i) asserting the
invalidity of this Agreement or any of the Related Documents, (ii)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or any of the Related Documents, (iii)
seeking any determination or ruling that might materially and adversely
affect the performance by Purchaser of its obligations under, or the
validity or enforceability of, this Agreement or any of the Related
Documents or (iv) that may adversely affect the federal or state income
tax attributes of, or seeking to impose any excise, franchise, transfer
or similar tax upon, the transfer and acquisition of the Receivables
and the Other Conveyed Property hereunder or the transfer of the
Receivables and the Other Conveyed Property to the Issuer pursuant to
the Sale and Servicing Agreement.
(viii) Approvals. All approvals, authorizations, consents,
orders or other actions of any person, corporation or other
organization, or of any court, governmental agency or body or official,
required in connection with the execution and delivery by the Purchaser
of this Agreement and the consummation of the transactions contemplated
hereby or will be taken or obtained on or prior to the Closing Date.
In the event of any breach of a representation and warranty
made by Purchaser hereunder, Seller covenants and agrees that it will not take
any action to pursue any remedy that it may have hereunder, in law, in equity or
otherwise, until a year and a day have passed since the date on which all Notes,
Certificates, pass-through certificates or other similar securities issued by
Purchaser, or a trust or similar vehicle formed by Purchaser, have been paid in
full. Seller and Purchaser agree that damages
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will not be an adequate remedy for such breach and that this covenant may be
specifically enforced by Purchaser, Issuer or by the Indenture Trustee on behalf
of the Noteholders and Owner Trustee on behalf of the Certificateholders.
ARTICLE IV
COVENANTS OF SELLER
SECTION 4.1 Protection of Title of Purchaser.
(a) At or prior to the Closing Date, Seller shall have filed
or caused to be filed a UCC-1 financing statement, executed by Seller as seller
or debtor, naming Purchaser as purchaser or secured party and describing the
Initial Receivables and the Initial Other Conveyed Property being sold by it to
Purchaser as collateral, with the office of the Secretary of State of the State
of Nevada and in such other locations as Purchaser shall have required and as
shall be necessary to perfect the security interest of Purchaser in the
collateral. At or prior to any Subsequent Transfer Date, the Seller shall file
or cause to be filed a UCC-1 financing statement executed by the Seller, as
seller or debtor, naming the Purchaser as purchaser or secured party and
describing the Subsequent Receivables and the Subsequent Other Conveyed Property
being sold by it to the Purchaser as collateral, with the office of the
Secretary of State of the State of Nevada and in such other locations as
Purchaser shall require and shall be necessary to perfect the security interest
of Purchaser in the collateral. From time to time thereafter, Seller shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of
Purchaser under this Agreement, of the Issuer under the Sale and Servicing
Agreement and of the Trust Collateral Agent under the Indenture in the
Receivables and the Other Conveyed Property and in the proceeds thereof. Seller
shall deliver (or cause to be delivered) to Purchaser, the Trust Collateral
Agent and the Insurer file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing. In
the event that Seller fails to perform its obligations under this subsection,
Purchaser, Issuer or the Trust Collateral Agent may do so, at the expense of
Seller.
(b) Seller shall not change its name, identity, or corporate
structure in any manner that would, could or might make any financing statement
or continuation statement filed by Seller (or by Purchaser, Issuer or the Trust
Collateral Agent on behalf of Seller) in accordance with paragraph (a) above
seriously misleading within the meaning of ss. 9-402(7) of the UCC, unless it
shall have given Purchaser, Issuer and the Trust Collateral Agent at least 30
days' prior written notice thereof, and shall promptly file appropriate
amendments to all previously filed financing statements and continuation
statements.
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(c) Seller shall give Purchaser, the Issuer, the Insurer (so
long as an Insurer Default shall not have occurred and be continuing) and the
Trust Collateral Agent at least 30 days' prior written notice of any relocation
of its principal executive office if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement. Seller shall at all times maintain each office from which it services
Receivables and its principal executive office within the United States of
America.
(d) Prior to the Closing Date and with respect to Subsequent
Receivables, the Subsequent Transfer Date, Seller has maintained accounts and
records as to each Receivable accurately and in sufficient detail to permit (i)
the reader thereof to know at any time as of or prior to the Closing Date and
with respect to Subsequent Receivables, the Subsequent Transfer Date, the status
of such Receivable, including payments and recoveries made and payments owing
(and the nature of each) and (ii) reconciliation between payments or recoveries
on (or with respect to) each Receivable and the Principal Balance as of the
Closing Date and with respect to Subsequent Receivables, the Subsequent Transfer
Date. Seller shall maintain its computer systems so that, from and after the
time of sale under this Agreement of the Receivables to Purchaser, and the
conveyance of the Receivables by Purchaser to the Issuer, Seller's master
computer records (including archives) that shall refer to a Receivable indicate
clearly that such Receivable has been sold to Purchaser and has been conveyed by
Purchaser to the Issuer. Indication of the Issuer's ownership of a Receivable
shall be deleted from or modified on Seller's computer systems when, and only
when, the Receivable shall become a Purchased Receivable or shall have been paid
in full.
(e) If at any time Seller shall propose to sell, grant a
security interest in, or otherwise transfer any interest in any motor vehicle
receivables to any prospective purchaser, lender or other transferee, Seller
shall give to such prospective purchaser, lender, or other transferee computer
tapes, records, or print-outs (including any restored from archives) that, if
they shall refer in any manner whatsoever to any Receivable (other than a
Purchased Receivable), shall indicate clearly that such Receivable has been sold
to Purchaser, sold by Purchaser to Issuer, and is owned by the Issuer.
SECTION 4.2 Other Liens or Interests. Except for the
conveyances hereunder, Seller will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any Lien on the
Receivables or the Other Conveyed Property or any interest therein, and Seller
shall defend the right, title, and interest of Purchaser and the Issuer in and
to the Receivables and the Other Conveyed Property against all claims of third
parties claiming through or under Seller.
SECTION 4.3 Costs and Expenses. Seller shall pay all
reasonable costs and disbursements in connection with the performance of its
obligations hereunder and under its Related Documents.
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SECTION 4.4 Indemnification.
(a) Seller shall defend, indemnify and hold harmless
Purchaser, the Issuer, the Trust Collateral Agent, the Indenture Trustee, the
Owner Trustee, the Noteholders and the Certificateholders from and against any
and all costs, expenses, losses, damages, claims, and liabilities, arising out
of or resulting from any breach of any of Seller's representations and
warranties contained herein.
(b) Seller shall defend, indemnify and hold harmless
Purchaser, the Issuer, the Trust Collateral Agent, the Indenture Trustee, the
Owner Trustee, the Noteholders and the Certificateholders from and against any
and all costs, expenses, losses, damages, claims, and liabilities, arising out
of or resulting from the use, ownership or operation by Seller or any affiliate
thereof of a Financed Vehicle.
(c) Seller shall defend, indemnify and hold harmless
Purchaser, the Issuer, the Trust Collateral Agent, the Indenture Trustee, the
Owner Trustee, the Noteholders and the Certificateholders against any and all
costs, expenses, losses, damages, claims and liabilities arising out of or
resulting from any action taken, or failed to be taken, by it in respect of any
portion of the Receivables other than in accordance with this Agreement or the
Sale and Servicing Agreement.
(d) Seller agrees to pay, and shall defend, indemnify and hold
harmless Purchaser, the Issuer, the Trust Collateral Agent, the Indenture
Trustee, the Owner Trustee, the Noteholders and the Certificateholders from and
against any taxes that may at any time be asserted against Purchaser, the
Issuer, the Trust Collateral Agent, the Indenture Trustee, the Owner Trustee,
the Noteholders and the Certificateholders with respect to the transactions
contemplated in this Agreement, including, without limitation, any sales, gross
receipts, general corporation, tangible or intangible personal property,
privilege, or license taxes (but not including any taxes asserted with respect
to, and as of the date of, the sale, transfer and assignment of the Receivables
and the Other Conveyed Property to Purchaser and by Purchaser to the Issuer or
the issuance and original sale of the Notes or the Certificates, or asserted
with respect to ownership of the Receivables and Other Conveyed Property which
shall be indemnified by Seller pursuant to clause (e) below, or federal, state
or other income taxes, arising out of distributions on the Notes or the
Certificates or transfer taxes arising in connection with the transfer of the
Notes or the Certificates) and costs and expenses in defending against the same,
arising by reason of the acts to be performed by Seller under this Agreement or
imposed against such Persons.
(e) Seller agrees to pay, and to indemnify, defend and hold
harmless Purchaser, the Issuer, the Trust Collateral Agent, the Indenture
Trustee, the Owner Trustee, the Noteholders and the Certificateholders from, any
taxes which may at any time be asserted against such Persons with respect to,
and as of the date of, the conveyance or ownership of the Receivables or the
Other Conveyed Property hereunder and under any Subsequent Purchase Agreement
and the conveyance or ownership of the
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Receivables under the Sale and Servicing Agreement or the issuance and original
sale of the Notes or the Certificates, including, without limitation, any sales,
gross receipts, personal property, tangible or intangible personal property,
privilege or license taxes (but not including any federal or other income taxes,
including franchise taxes, arising out of the transactions contemplated hereby
or transfer taxes arising in connection with the transfer of the Notes or the
Certificates) and costs and expenses in defending against the same, arising by
reason of the acts to be performed by Seller under this Agreement or imposed
against such Persons.
(f) Seller shall defend, indemnify, and hold harmless
Purchaser, the Issuer, the Trust Collateral Agent, the Indenture Trustee, the
Owner Trustee, the Noteholders and the Certificateholders from and against any
and all costs, expenses, losses, claims, damages, and liabilities to the extent
that such cost, expense, loss, claim, damage, or liability arose out of, or was
imposed upon any of such Persons through the negligence, willful misfeasance, or
bad faith of Seller in the performance of its duties under this Agreement or by
reason of reckless disregard of Seller's obligations and duties under this
Agreement.
(g) Seller shall indemnify, defend and hold harmless
Purchaser, the Issuer, the Trust Collateral Agent, the Indenture Trustee, the
Owner Trustee, the Noteholders and the Certificateholders from and against any
loss, liability or expense incurred by reason of the violation by Seller of
federal or state securities laws in connection with the registration or the sale
of the Notes or the Certificates.
(h) Seller shall indemnify, defend and hold harmless
Purchaser, the Issuer, the Trust Collateral Agent, the Indenture Trustee, the
Owner Trustee, the Noteholders and the Certificateholders from and against any
loss, liability or expense imposed upon, or incurred by, any of such Persons as
result of the failure of any Receivable, or the sale of the related Financed
Vehicle, to comply with all requirements of applicable law.
(i) Seller shall defend, indemnify, and hold harmless
Purchaser from and against all costs, expenses, losses, claims, damages, and
liabilities arising out of or incurred in connection with the acceptance or
performance of Seller's trusts and duties as Master Servicer under the Sale and
Servicing Agreement, except to the extent that such cost, expense, loss, claim,
damage, or liability shall be due to the willful misfeasance, bad faith, or
negligence (except for errors in judgment) of Purchaser.
Indemnification under this Section 4.4 shall include
reasonable fees and expenses of counsel and expenses of litigation and shall
survive termination of the Notes and the Certificates. The indemnity obligations
hereunder shall be in addition to any obligation that Seller may otherwise have.
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ARTICLE V
REPURCHASES
SECTION 5.1 Repurchase of Receivables Upon Breach of Warranty.
Upon the occurrence of a Repurchase Event, Seller shall, unless the breach which
is the subject of such Repurchase Event shall have been cured in all material
respects, repurchase the Receivable relating thereto from the Issuer by the last
day of the first full calendar month following the discovery by the Seller of
receipt by the Seller of notice of such breach and, simultaneously with the
repurchase of the Receivable, Seller shall deposit the Purchase Amount in full,
without deduction or offset, to the Collection Account, pursuant to Section 3.2
of the Sale and Servicing Agreement. It is understood and agreed that, except as
set forth in Section 6.1 hereof, the obligation of Seller to repurchase any
Receivable, as to which a breach occurred and is continuing, shall, if such
obligation is fulfilled, constitute the sole remedy against Seller for such
breach available to Purchaser, the Issuer, the Insurer, the Noteholders, the
Certificateholders, the Trust Collateral Agent on behalf of the Noteholders or
the Owner Trustee on behalf of Certificateholders. The provisions of this
Section 5.1 are intended to grant the Issuer and the Trust Collateral Agent a
direct right against Seller to demand performance hereunder, and in connection
therewith, Seller waives any requirement of prior demand against Purchaser with
respect to such repurchase obligation. Any such repurchase shall take place in
the manner specified in Section 3.2 of the Sale and Servicing Agreement.
Notwithstanding any other provision of this Agreement or the Sale and Servicing
Agreement to the contrary, the obligation of Seller under this Section shall not
terminate upon a termination of Seller as Master Servicer under the Sale and
Servicing Agreement and shall be performed in accordance with the terms hereof
notwithstanding the failure of the Master Servicer or Purchaser to perform any
of their respective obligations with respect to such Receivable under the Sale
and Servicing Agreement.
In addition to the foregoing and notwithstanding whether the
related Receivable shall have been purchased by Seller, Seller shall indemnify
the Issuer, the Trust Collateral Agent, the Indenture Trustee, the Owner
Trustee, the Insurer, the Noteholders and the Certificateholders against all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel, which may be asserted against or incurred by any
of them as a result of third party claims arising out of the events or facts
giving rise to such Repurchase Events.
SECTION 5.2 Reassignment of Purchased Receivables. Upon
deposit in the Collection Account of the Purchase Amount of any Receivable
repurchased by Seller under Section 5.1 hereof, Purchaser and the Issuer shall
take such steps as may be reasonably requested by Seller in order to assign to
Seller all of Purchaser's and the Issuer's right, title and interest in and to
such Receivable and all security and documents and all Other Conveyed Property
conveyed to Purchaser and the Issuer directly relating thereto, without
recourse, representation or warranty, except as to the absence of liens, charges
or encumbrances created by or arising as a result of actions of Purchaser or the
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Issuer. Such assignment shall be a sale and assignment outright, and not for
security. If, following the reassignment of a Purchased Receivable, in any
enforcement suit or legal proceeding, it is held that Seller may not enforce any
such Receivable on the ground that it shall not be a real party in interest or a
holder entitled to enforce the Receivable, Purchaser and the Issuer shall, at
the expense of Seller, take such steps as Seller deems reasonably necessary to
enforce the Receivable, including bringing suit in Purchaser's or in the
Issuer's name.
SECTION 5.3 Waivers. No failure or delay on the part of
Purchaser, or the Issuer as assignee of Purchaser, in exercising any power,
right or remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or remedy preclude
any other or future exercise thereof or the exercise of any other power, right
or remedy.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Liability of Seller. Seller shall be liable in
accordance herewith only to the extent of the obligations in this Agreement
specifically undertaken by Seller and the representations and warranties of
Seller.
SECTION 6.2 Merger or Consolidation of Seller or Purchaser.
Any corporation or other entity (i) into which Seller or Purchaser may be merged
or consolidated, (ii) resulting from any merger or consolidation to which Seller
or Purchaser is a party or (iii) succeeding to the business of Seller or
Purchaser, in the case of Purchaser, which corporation has a certificate of
incorporation containing provisions relating to limitations on business and
other matters substantively identical to those contained in Purchaser's
certificate of incorporation, provided that in any of the foregoing cases such
corporation shall execute an agreement of assumption to perform every obligation
of Seller or Purchaser, as the case may be, under this Agreement and, whether or
not such assumption agreement is executed, shall be the successor to Seller or
Purchaser, as the case may be, hereunder (without relieving Seller or Purchaser
of its responsibilities hereunder, if it survives such merger or consolidation)
without the execution or filing of any document or any further action by any of
the parties to this Agreement. Notwithstanding the foregoing, so long as an
Insurer Default shall not have occurred and be continuing, Purchaser shall not
merge or consolidate with any other Person or permit any other Person to become
the successor to Purchaser's business without the prior written consent of the
Insurer. Seller or Purchaser shall promptly inform the other party, the Issuer,
the Trust Collateral Agent, the Owner Trustee and, so long as an Insurer Default
shall not have occurred and be continuing, the Insurer of such merger,
consolidation or purchase and assumption. Notwithstanding the foregoing, as a
condition to the consummation of the transactions referred to in clauses (i),
(ii) and (iii) above, (x) immediately after giving effect to such transaction,
no representation or
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warranty made pursuant to Sections 3.1 and 3.2 of this Agreement shall have been
breached (for purposes hereof, such representations and warranties shall speak
as of the date of the consummation of such transaction) and no event that, after
notice or lapse of time, or both, would become an event of default under the
Insurance Agreement, shall have occurred and be continuing, (y) Seller or
Purchaser, as applicable, shall have delivered written notice of such
consolidation, merger or purchase and assumption to the Rating Agencies prior to
the consummation of such transaction and shall have delivered to the Issuer and
the Trust Collateral Agent an Officer's Certificate and an Opinion of Counsel
each stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section 6.2 and that all conditions precedent, if
any, provided for in this Agreement relating to such transaction have been
complied with, and (z) Seller or Purchaser, as applicable, shall have delivered
to the Issuer and the Trust Collateral Agent an Opinion of Counsel, stating, in
the opinion of such counsel, either (A) all financing statements and
continuation statements and amendments thereto have been executed and filed that
are necessary to preserve and protect the interest of the Issuer and the Trust
Collateral Agent in the Receivables and reciting the details of the filings or
(B) no such action shall be necessary to preserve and protect such interest.
SECTION 6.3 Limitation on Liability of Seller and Others.
Seller and any director, officer, employee or agent may rely in good faith on
the advice of counsel or on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under this
Agreement. Seller shall not be under any obligation to appear in, prosecute or
defend any legal action that is not incidental to its obligations under this
Agreement or its Related Documents and that in its opinion may involve it in any
expense or liability.
SECTION 6.4 Seller May Own Notes or Certificates. Subject to
the provisions of the Sale and Servicing Agreement, Seller and any Affiliate of
Seller may in its individual or any other capacity become the owner or pledgee
of Notes or Certificates with the same rights as it would have if it were not
Seller or an Affiliate thereof.
SECTION 6.5 Amendment.
(a) This Agreement may be amended by Seller and Purchaser with
the prior written consent of the Insurer (so long as an Insurer Default shall
not have occurred and be continuing) but without the consent of the Trust
Collateral Agent, the Owner Trustee or any of the Certificateholders or
Noteholders (i) to cure any ambiguity or (ii) to correct any provisions in this
Agreement; provided, however, that such action shall not adversely affect in any
material respect the interests of any Certificateholder or Noteholder.
(b) This Agreement may also be amended from time to time by
Seller and Purchaser, with the prior written consent of the Insurer (so long as
an Insurer Default shall not have occurred and be continuing) and with the
consent of the Trust
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Collateral Agent and, if required, a Security Majority in accordance with the
Sale and Servicing Agreement, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement,
or of modifying in any manner the rights of the Certificateholders or
Noteholders; provided, however, the Seller provides the Trust Collateral Agent
with an Opinion of Counsel, (which may be provided by the Seller's internal
counsel) that no such amendment shall increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
Receivables or distributions that shall be required to be made on any Note or
Certificate.
(c) It shall not be necessary for the consent of
Certificateholders or Noteholders pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents and of evidencing the authorization of the execution thereof by
Certificateholders or Noteholders shall be subject to such reasonable
requirements as the Trust Collateral Agent may prescribe, including the
establishment of record dates. The consent of a Holder of a Certificate or a
Note given pursuant to this Section or pursuant to any other provision of this
Agreement shall be conclusive and binding on such Holder and on all future
Holders of such Certificate or Note and of any Certificate or Note issued upon
the transfer thereof or in exchange thereof or in lieu thereof whether or not
notation of such consent is made upon the Certificate or Note.
Prior to the execution of any amendment to this Agreement, the
Trustee, the Trust Collateral Agent, if requested, shall be entitled to receive
and rely upon an Opinion of Counsel stating that the execution of such amendment
is authorized or permitted by this Agreement and that all conditions precedent
to the execution and delivery of such amendment have been satisfied.
SECTION 6.6 Notices. All demands, notices and communications
to Seller or Purchaser hereunder shall be in writing, personally delivered, or
sent by telecopier (subsequently confirmed in writing), reputable overnight
courier or mailed by certified mail, return receipt requested, and shall be
deemed to have been given upon receipt (a) in the case of Seller, to Advanta
Auto Finance Corporation, Four Horsham Business Center, 300 Welsh Road Building
Four, Horsham, PA 19044, Attention: Legal Department, or (b) in the case of
Purchaser, to Advanta Auto Receivables Corp. I, 1325 Airmotive Way, Suite 130,
Reno, Nevada 89502 or such other address as shall be designated by a party in a
written notice delivered to the other party or to the Issuer, Owner Trustee or
the Trust Collateral Agent, as applicable.
SECTION 6.7 Merger and Integration. Except as specifically
stated otherwise herein, this Agreement and Related Documents set forth the
entire understanding of the parties relating to the subject matter hereof, and
all prior understandings, written or oral, are superseded by this Agreement and
the Related Documents. This Agreement may not be modified, amended, waived or
supplemented except as provided herein.
19
<PAGE>
SECTION 6.8 Severability of Provisions. If any one or more of
the covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
SECTION 6.9 Intention of the Parties. The execution and
delivery of this Agreement shall constitute an acknowledgment by Seller and
Purchaser that they intend that the assignment and transfer herein contemplated
constitute a sale and assignment outright, and not for security, of the
Receivables and the Other Conveyed Property, conveying good title thereto free
and clear of any Liens, from Seller to Purchaser, and that the Receivables and
the Other Conveyed Property shall not be a part of Seller's estate in the event
of the bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding, or other proceeding under any federal or state bankruptcy or similar
law, or the occurrence of another similar event, of, or with respect to Seller.
In the event that such conveyance is determined to be made as security for a
loan made by Purchaser, the Issuer, the Noteholders or the Certificateholders to
Seller, the parties intend that Seller shall have granted to Purchaser a
security interest in all of Seller's right, title and interest in and to the
Receivables and the Other Conveyed Property conveyed pursuant to Section 2.1
hereof, and that this Agreement shall constitute a security agreement under
applicable law.
SECTION 6.10 Governing Law. This Agreement shall be construed
in accordance with the laws of the State of New York without regard to the
principles of conflicts of laws thereof and the obligations, rights and remedies
of the parties under this Agreement shall be determined in accordance with such
laws.
SECTION 6.11 Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 6.12 Conveyance of the Receivables and the Other
Conveyed Property to the Issuer. Seller acknowledges that Purchaser intends,
pursuant to the Sale and Servicing Agreement, to convey the Receivables and the
Other Conveyed Property, together with its rights under this Agreement, to the
Issuer on the date hereof and on the Subsequent Transfer Date in the case of
Subsequent Receivables. Seller acknowledges and consents to such conveyance and
pledge and waives any further notice thereof and covenants and agrees that the
representations and warranties of Seller contained in this Agreement and the
rights of Purchaser hereunder are intended to benefit the Insurer, the Issuer,
the Owner Trustee, the Trust Collateral Agent, the Noteholders and the
Certificateholders. In furtherance of the foregoing, Seller covenants and agrees
to perform its duties and obligations hereunder, in accordance with the terms
hereof for the benefit of the Insurer, the Issuer, the Owner Trustee, the Trust
Collateral Agent, the
20
<PAGE>
Noteholders and the Certificateholders and that, notwithstanding anything to the
contrary in this Agreement, Seller shall be directly liable to the Issuer, the
Owner Trustee, the Trust Collateral Agent, the Noteholders and the
Certificateholders (notwithstanding any failure by the Master Servicer, or the
Purchaser to perform their respective duties and obligations hereunder or under
Related Documents) and that the Trust Collateral Agent may enforce the duties
and obligations of Seller under this Agreement against Seller for the benefit of
the Insurer, the Owner Trustee, the Trust Collateral Agent, the Noteholders and
the Certificateholders.
SECTION 6.13 Nonpetition Covenant. Neither Purchaser nor
Seller shall petition or otherwise invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the
Purchaser or the Issuer under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Purchaser or the Issuer or any
substantial part of their respective property, or ordering the winding up or
liquidation of the affairs of the Purchaser or the Issuer.
21
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Purchase
Agreement to be duly executed by their respective officers as of the day and
year first above written.
ADVANTA AUTO FINANCE CORPORATION,
as Seller
By
----------------------------------
Name:
Title:
ADVANTA AUTO RECEIVABLES CORP. I,
as Purchaser
By
----------------------------------
Name:
Title:
Acknowledged and Accepted:
BANKERS TRUST COMPANY,
As Trustee and Trust Collateral Agent
By
--------------------------------------
Name:
Title:
<PAGE>
SCHEDULE A
SCHEDULE OF RECEIVABLES
<PAGE>
SCHEDULE B
REPRESENTATIONS AND WARRANTIES OF SELLER
1. Characteristics of Receivables. Each Receivable (A) was originated
by a Dealer for the retail sale of a Financed Vehicle in the ordinary course of
such Dealer's business in accordance with either (i) the Seller's credit
policies or (ii) credit policies which were reviewed by the Seller prior to a
purchase of a Receivable by the Seller and such Dealer had all necessary
licenses and permits to originate Receivables in the state where such Dealer was
located, was fully and properly executed by the parties thereto, was purchased,
directly or indirectly, by an Unaffiliated Originator from such Dealer under an
existing Dealer Agreement or pursuant to a Dealer Assignment with an
Unaffiliated Originator and was validly assigned by such Dealer to an
Unaffiliated Originator pursuant to a Dealer Assignment and then validly
assigned by an Unaffiliated Originator to the Seller (B) contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for realization against the collateral security, (C) is a
Receivable which provides for level monthly payments (provided that the period
in the first Collection Period and the payment in the final Collection Period of
the Receivable may be minimally different from the normal period and level
payment) which, if made when due, shall fully amortize the Amount Financed over
the original term and (D) has not been amended or collections with respect to
which waived, other than as evidenced in the Receivable File relating thereto.
2. No Fraud or Misrepresentation. Each Receivable was (A)
originated by a Dealer, (B) and was sold by the Dealer, directly or indirectly,
to an Unaffiliated Originator, (C) was sold by an Unaffiliated Originator to the
Seller and by the Seller to the Purchaser without any fraud or misrepresentation
in any case.
3. Compliance with Law. All requirements of applicable federal, state
and local laws, and regulations thereunder (including, without limitation, usury
laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the
Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, the Federal Trade Commission Act, the Moss-Magnuson Warranty Act,
the Federal Reserve Board's Regulations "B" and "Z", the Soldiers' and Sailors'
Civil Relief Act of 1940, as amended, each applicable state Motor Vehicle Retail
Installment Sales Act, and state adaptations of the National Consumer Act and of
the Uniform Consumer Credit Code and other consumer credit laws and equal credit
opportunity and disclosure laws) in respect of the Receivables, each and every
sale of Financed Vehicles and the sale of any physical damage, credit life and
credit accident and health insurance and any extended service contracts have
been complied with in all material respects, and each Receivable and the sale of
the Financed Vehicle evidenced by each Receivable complied at the time it was
originated or made and now complies in all material respects with all applicable
legal requirements.
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<PAGE>
4. Origination. Each Receivable was originated in the United
States and materially conforms to all requirements of the "Dealer Underwriting
Guide" applicable to such Receivable at the time of origination, or with respect
to Receivables assigned to the Seller, at the time of such assignment.
5. Binding Obligation. Each Receivable represents the genuine, legal,
valid and binding payment obligation of the Obligor thereon, enforceable by the
holder thereof in accordance with its terms, except (A) as enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such enforceability is
considered in a proceeding in equity or at law and (B) as such Receivable may be
modified by the application after the Cutoff Date of the Soldiers' and Sailors'
Civil Relief Act of 1940, as amended; and all parties to each Receivable had
full legal capacity to execute and deliver such Receivable and all other
documents related thereto and to grant the security interest purported to be
granted thereby.
6. No Government Obligor. No Obligor is the United States of
America or any State or any agency, department, subdivision or instrumentality
thereof.
7. Obligor Bankruptcy. At the related Cutoff Date, no Obligor
had been identified on the records of the Seller as being the subject of a
current bankruptcy proceeding.
8. Schedule of Receivables. The information set forth in the
Schedule of Receivables has been produced from the Electronic Ledger and was
true and correct in all material respects as of the close of business on the
related Cutoff Date.
9. Marking Records. By the Closing Date or Subsequent Transfer Date, as
applicable, the Seller will have caused the portions of the Electronic Ledger
relating to the Receivables to be clearly and unambiguously identified to show
that the Receivables have been sold to the Purchaser by the Seller and resold by
the Purchaser to the Trust in accordance with the terms of the Sale and
Servicing Agreement.
10. Computer Tape. The Computer Tape made available by the Seller
to the Purchaser on the Closing Date or Subsequent Transfer Date, as
applicable, was complete and accurate as of the related Cutoff Date and
includes a description of the same Receivables that are described in the
Schedule of Receivables.
11. Adverse Selection. No selection procedures adverse to the
Securityholders or the Insurer were utilized in selecting the Receivables from
those receivables owned by the Purchaser or purchased by the Seller from
Unaffiliated Originators which met the selection criteria contained in the Sale
and Servicing Agreement.
B-2
<PAGE>
12. Chattel Paper. The Receivables constitute chattel paper
within the meaning of the UCC as in effect in the States of Texas and New York.
13. One Original. There is only one original executed copy of
each Receivable.
14. Receivable Files Complete. There exists a Receivable File
pertaining to each Receivable and such Receivable File contains, without
limitation, (a) a fully executed original of the Receivable, (b) the original,
or in certain specific instances, a copy of the original, Lien Certificate or
application therefor together with an assignment of the Lien Certificate
executed by the Unaffiliated Originator to the Seller and by the Seller to the
Purchaser and an assignment of the Lien Certificate executed by the Purchaser to
the Trustee and (c) an original credit application signed by the Obligor. Each
of such documents which is required to be signed by the Obligor has been signed
by the Obligor in the appropriate spaces. All blanks on any form described in
clauses (a), (b) and (c) above have been properly filled in and each form has
otherwise been correctly prepared. Notwithstanding the above, a copy of the
complete Receivable File for each Receivable, which fulfills the documentation
requirements of the Dealer Underwriting Guide as in effect at the time of
purchase is in the possession of the Master Servicer or its bailee.
15. Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, and the Financed Vehicle securing each such
Receivable has not been released from the lien of the related Receivable in
whole or in part. No terms of any Receivable have been waived, altered or
modified in any respect since its origination, except by instruments or
documents identified in the Receivable File. No Receivable has been modified as
a result of application of the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
16. Lawful Assignment. No Receivable was originated in, or is subject
to the laws of, any jurisdiction the laws of which would make unlawful, void or
voidable the sale, transfer and assignment of such Receivable under this
Agreement or pursuant to transfers of the Securities. The Seller has not entered
into any agreement with any account debtor that prohibits, restricts or
conditions the assignment of any portion of the Receivables.
17. Good Title. No Receivable has been sold, transferred, assigned or
pledged by the Seller to any Person other than the Purchaser and the Issuer;
immediately prior to the conveyance of the Receivables to the Purchaser pursuant
to this Agreement or Subsequent Transfer Agreement, as applicable, the Seller
was the sole owner thereof and had good and indefeasible title thereto, free of
any Lien and, upon execution and delivery of this Agreement by the Seller, the
Purchaser shall have good and indefeasible title to and will be the sole owner
of such Receivables, free of any Lien. No Dealer has a participation in, or
other right to receive, proceeds of any Receivable. The Seller has not taken any
action to convey any right to any Person that would result in such Person having
a right to payments received under the related Insurance Policies or the related
Dealer Agreements,
B-3
<PAGE>
Dealer Assignments or Unaffiliated Originator Receivables Purchase Agreements or
to payments due under such Receivables.
18. Security Interest in Financed Vehicle. Each Receivable created or
shall create a valid, binding and enforceable first priority security interest
in favor of the Seller, the Trust Collateral Agent or an Unaffiliated Originator
in the Financed Vehicle. The Lien Certificate and original certificate of title
for each Financed Vehicle show, or if a new or replacement Lien Certificate is
being applied for with respect to such Financed Vehicle the Lien Certificate
will be received within 180 days of the Closing Date or Subsequent Transfer
Date, as applicable, and will show the Seller, the Trust Collateral Agent or an
Unaffiliated Originator named as the original secured party under each
Receivable as the holder of a first priority security interest in such Financed
Vehicle. With respect to each Receivable for which the Lien Certificate has not
yet been returned from the Registrar of Titles, the Seller has received written
evidence from the related Dealer that such Lien Certificate showing the Seller,
the Trust Collateral Agent or an Unaffiliated Originator as first lienholder has
been applied for and (i) the Unaffiliated Originator's security interest has
been validly assigned to the Seller, pursuant to the Unaffiliated Originator
Receivables Purchase Agreement, if applicable and (ii) the Seller's security
interest has been validly assigned to the Purchaser pursuant to this Agreement.
Immediately after the sale, transfer and assignment thereof by the Seller to the
Purchaser and from the Purchaser to the Trust, each Receivable will be secured
by an enforceable and perfected first priority security interest in the Financed
Vehicle in favor of the Trustee as secured party, which security interest is
prior to all other Liens upon and security interests in such Financed Vehicle
which now exist or may hereafter arise or be created (except, as to priority,
for any lien for taxes, labor or materials affecting a Financed Vehicle arising
subsequent to the Cutoff Date). As of the related Cutoff Date there were no
Liens or claims for taxes, work, labor or materials affecting a Financed Vehicle
which are or may be Liens prior or equal to the Liens of the related Receivable.
If the Receivable was originated in a state in which a filing or recording is
required of the secured party to perfect a security interest in motor vehicles,
such filings or recordings have been duly made to show the Seller, the Trust
Collateral Agent or an Unaffiliated Originator as the Original Secured Party
under the related Receivable.
19. All Filings Made. All filings (including, without limitation, UCC
filings) required to be made by any Person and actions required to be taken or
performed by any Person in any jurisdiction to give the Trust a first priority
perfected lien on, or ownership interest in, the Receivables and the proceeds
thereof and the Other Conveyed Property have been made, taken or performed.
20. No Impairment. The Seller has not done anything to convey any right
to any Person that would result in such Person having a right to payments due
under the Receivable or otherwise to impair the rights of the Trust, the
Purchaser, the Insurer, the Trustee, the Trust Collateral Agent and the
Securityholders in any Receivable or the proceeds thereof.
B-4
<PAGE>
21. Receivable Not Assumable. No Receivable is assumable by
another Person in a manner which would release the Obligor thereof from such
Obligor's obligations to the Seller with respect to such Receivable.
22. No Defenses. No Receivable is subject to any right of
rescission, setoff, counterclaim or defense and no such right has been asserted
or threatened with respect to any Receivable.
23. No Default. There has been no default, breach, violation or event
permitting acceleration under the terms of any Receivable (other than payment
delinquencies of not more than 59 days as of the Cut-Off Date and other than
payment delinquencies of more than 59 days which have been cured and which the
Obligor of such Receivable has had no further delinquency of more than 59 days),
and no condition exists or event has occurred and is continuing that with
notice, the lapse of time or both would constitute a default, breach, violation
or event permitting acceleration under the terms of any Receivable, and there
has been no waiver of any of the foregoing. As of the related Cutoff Date no
Financed Vehicle had been repossessed.
24. Insurance. At the time of origination of each Receivable, the
related Financed Vehicle is required to be covered by a comprehensive and
collision insurance policy (i) in an amount at least equal to the lesser of,
excluding any deductible, (a) its maximum insurable value or (b) the principal
amount due from the Obligor under the related Receivable, (ii) naming the Seller
or an Unaffiliated Originator and its successors and assigns as loss payee and
(iii) insuring against loss and damage due to fire, theft, transportation,
collision and other risks generally covered by comprehensive and collision
coverage. Each Receivable requires the Obligor to maintain physical loss and
damage insurance, naming the Seller or an Unaffiliated Originator and its
successors and assigns as additional insured parties, and each Receivable
permits the holder thereof to obtain physical loss and damage insurance at the
expense of the Obligor if the Obligor fails to do so. No Financed Vehicle is
insured under a policy of Force-Placed Insurance on the related Cutoff Date.
25. Certain Characteristics of Initial Receivables. (i) Each Receivable
had a remaining maturity, as of the Cutoff Date, of at least 7 months but not
more than 60 months; (ii) each Receivable had an original maturity of at least
24 months but not more 72 months; (iii) each Receivable had an original
principal balance of at least $3,000 and not more than $70,000; (iv) each
Receivable had a principal balance as of the Cutoff Date of at least $500 and
not more than $70,000; (v) each Receivable has an Annual Percentage Rate of at
least 11.95% and not more than 30.00%; (vi) no Receivable was more than 59 days
past due as of the Cutoff Date; (vii) no funds have been advanced by the Seller,
the Master Servicer, any Unaffiliated Originator, any Dealer, or anyone acting
on behalf of any of them in order to cause any Receivable to qualify under
subclause (vi) of this clause 25; (viii) no Receivable has a final scheduled
payment date after June, 2003; (ix) the principal balance of each Receivable set
forth in the Schedule of Receivables is true and accurate as
B-5
<PAGE>
of the Cutoff Date and (x) as of the Cutoff Date, approximately 84.46% by the
aggregate principal balance of the Initial Receivables is attributable to loans
for the purchase of used financed vehicles.
B-6
<PAGE>
EXHIBIT A
FORM OF SUBSEQUENT PURCHASE AGREEMENT
Transfer No. 1 of Subsequent Receivables, dated as of
___________________, pursuant to a Purchase Agreement (the "Purchase Agreement")
dated as of March 1, 1997, between Advanta Auto Finance Corporation, a Nevada
corporation (the "Seller") and Advanta Auto Receivables Corp. I, a Nevada
corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS pursuant to the Purchase Agreement, the Seller wishes
to convey the Subsequent Receivables to the Purchaser; and
WHEREAS, the Purchaser is willing to accept such conveyance
subject to the terms and conditions hereof.
NOW, THEREFORE, the Seller and the Purchaser hereby agree as
follows:
1. Defined Terms. Capitalized terms used herein shall
have the meanings ascribed to them in the Purchase Agreement unless otherwise
defined herein.
"Subsequent Cutoff Date" shall mean, with respect to the
Subsequent Receivables conveyed hereby, __________________________.
"Subsequent Transfer Date" shall mean. with respect to the
Subsequent Receivables conveyed hereby, ________________________.
2. Schedule of Receivables. Annexed hereto is a
supplement to Schedule A to the Purchase Agreement listing the Receivables that
constitute the Subsequent Receivables to be conveyed pursuant to this Agreement
on the Subsequent Transfer Date.
3. Conveyance of Subsequent Receivables. In consideration of
the Purchaser's delivery to or upon the order of the Seller of
$_______________________, the Seller does hereby sell, transfer, assign, set
over and otherwise convey to the Purchaser, without recourse (except as
expressly provided in the Purchase Agreement), all right, title and interest of
the Seller in and to:
(a) the Subsequent Receivables and all monies paid or payable
thereon, on and after the related Subsequent Cutoff Date (including
amounts due on or before
<PAGE>
the Subsequent Cutoff Date but received by the Seller after the
Subsequent Cutoff Date);
(b) the security interests in the Financed Vehicles
granted by Obligors pursuant to the Subsequent Receivables and any
other interest of the Seller in such Financed Vehicles;
(c) any proceeds and the right to receive proceeds with
respect to the Subsequent Receivables from claims on any physical
damage, credit life or disability insurance policies covering the
related Financed Vehicles or Obligors including rebating of premiums
relating to the Receivables, and any proceeds from the liquidation of
the Subsequent Receivables;
(d) all rights of the Seller against the Dealers or the
Unaffiliated Originators pursuant to Dealer Agreements; Dealer
Assignments; or Unaffiliated Originator Receivables Purchase
Agreements;
(e) the related Receivables Files and any and all other
documents that the Seller keeps on file in accordance with its
customary procedures relating to the Receivables, the Obligors or the
Financing Vehicles;
(f) the proceeds of any and all of the foregoing;
(g) all rights under any Service Contracts on the related
Financed Vehicles; and
(h) property (including the right to receive future Net
Liquidation Proceeds) that secures a Receivable and that has been
acquired by or on behalf of the Trust pursuant to liquidation of such
Receivables.
4. Representations and Warranties of the Seller. The Seller
hereby represents and warrants to the Purchaser as of the date of this Agreement
and as of the Subsequent Transfer Date that:
(a) Schedule of Representations. The representations and
warranties set forth on the Schedule of Representations attached as Schedule B
to the Purchase Agreement are true and correct.
(b) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Nevada, with power and authority to own its properties and
to conduct its business as such properties are currently owned and such business
is currently conducted, and had at all relevant times, and now has, power,
authority and legal right to acquire, own and sell
A-2
<PAGE>
the Subsequent Receivables and the Subsequent Other Conveyed Property
transferred to the Purchaser.
(c) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing and has obtained all
necessary licenses and approvals in all jurisdictions where the failure to do so
would materially and adversely affect Seller's ability to transfer the
Subsequent Receivables and the Subsequent Other Conveyed Property to the
Purchaser pursuant to this Agreement, or the validity or enforceability of the
Subsequent Receivables and the Subsequent Other Conveyed Property or to perform
Seller's obligations hereunder and under the Seller's Related Documents.
(d) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and its Related Documents and to
carry out its terms and their terms, respectively; the Seller has full power and
authority to sell and assign the Subsequent Receivables and the Subsequent Other
Conveyed Property to be sold and assigned to and deposited with the Purchaser by
it and has duly authorized such sale and assignment to the Purchaser by all
necessary corporate action; and the execution, delivery and performance of this
Agreement and the Seller's Related Documents have been duly authorized by the
Seller by all necessary corporate action.
(e) Valid Sale, Binding Obligations. This Agreement effects a
valid sale, transfer and assignment of the Subsequent Receivables and the
Subsequent Other Conveyed Property, enforceable against the Seller and creditors
of and purchasers from the Seller; and this Agreement and the Seller's Related
Documents, when duly executed and delivered, shall constitute legal, valid and
binding obligations of the Seller enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the availability of
specific remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(f) No Violation. The consummation of the transactions
contemplated by this Agreement and the Related Documents and the fulfillment of
the terms of this Agreement and the Related Documents shall not conflict with,
result in any breach of any of the terms and provisions of or constitute (with
or without notice, lapse of time or both) a default under the certificate of
incorporation or by-laws of the Seller, or any indenture, agreement, mortgage,
deed of trust or other instrument to which the Seller is a party or by which it
is bound, or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, other than this Agreement, or violate any
law, order, rule or regulation applicable to the Seller of any court or of any
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or any of its properties.
A-3
<PAGE>
(g) No Proceedings. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller, before any
court, regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Seller or its properties (A)
asserting the invalidity of this Agreement or any of the Related Documents, (B)
seeking to prevent the consummation of any of the transactions contemplated by
this Agreement or any of the Related Documents, (C) seeking any determination or
ruling that might materially and adversely affect the performance by the Seller
of its obligations under, or the validity or enforceability of, this Agreement
or any of the Related Documents, or (D) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the Securities.
(h) Chief Executive Office. The chief executive office of
the Seller is at Four Horsham Business Center, 300 Welsh Road, Building Four,
Horsham, PA 19044.
(i) Principal Balance. The aggregate Principal Balance
of the Subsequent Receivables listed on the supplement to Schedule A annexed
hereto and conveyed to the Purchaser pursuant to this Agreement as of the
Subsequent Cutoff Date is $____________________.
(j) No Consents. The Seller is not required to obtain the
consent of any other party or any consent, license, approval or authorization,
or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement which has not already been obtained.
(k) Approvals. All approvals, authorizations, consents, orders
or other actions of any person, corporation or other organization, or of any
court, governmental agency or body or official, required in connection with the
execution and delivery by the Seller of this Agreement and the consummation of
the transactions contemplated hereby or will be taken or obtained on or prior to
the Closing Date.
5. Representations and Warranties of the Purchaser. The
Purchaser hereby represents and warrants to the Seller as of the date of this
Agreement and as of the Subsequent Transfer Date that:
Organization and Good Standing. Purchaser has been
duly organized and is validly existing and in good standing as a
corporation under the laws of the State of Nevada, with the power and
authority to own its properties and to conduct its business as such
properties are currently owned and such business is currently
conducted, and had at all relevant times, and has, full power,
authority and legal right to acquire and own the Receivables and the
Other Conveyed Property, and to transfer the Receivables and the Other
Conveyed Property to the Issuer pursuant to the Sale and Servicing
Agreement.
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<PAGE>
Due Qualification. Purchaser is duly qualified to
do business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions where the
failure to do so would materially and adversely affect Purchaser's
ability to acquire the Receivables or the Other Conveyed Property, and
to transfer the Receivables and the Other Conveyed Property to the
Issuer pursuant to the Sale and Servicing Agreement, or the validity or
enforceability of the Receivables and the Other Conveyed Property or to
perform Purchaser's obligations hereunder and under the Purchaser's
Related Documents.
Power and Authority. Purchaser has the power,
authority and legal right to execute and deliver this Agreement and to
carry out the terms hereof and to acquire the Receivables and the Other
Conveyed Property hereunder; and the execution, delivery and
performance of this Agreement and all of the documents required
pursuant hereto have been duly authorized by Purchaser by all necessary
action.
No Consent Required. Purchaser is not required to
obtain the consent of any other Person, or any consent, license,
approval or authorization or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery or performance of this Agreement and the Related
Documents, except for such as have been obtained, effected or made.
Binding Obligation. This Agreement constitutes a
legal, valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, subject, as to enforceability,
to applicable bankruptcy, insolvency, reorganization, conservatorship,
receivership, liquidation and other similar laws and to general
equitable principles.
No Violation. The execution, delivery and
performance by Purchaser of this Agreement, the consummation of the
transactions contemplated by this Agreement and the Related Documents
and the fulfillment of the terms of this Agreement and the Related
Documents do not and will not conflict with, result in any breach of
any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the certificate of
incorporation or bylaws of Purchaser, or conflict with or breach any of
the terms or provisions of, or constitute (with or without notice or
lapse of time) a default under, any indenture, agreement, mortgage,
deed of trust or other instrument to which Purchaser is a party or by
which Purchaser is bound or to which any of its properties are subject,
or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument (other than the Sale and
Servicing Agreement and the Spread Account Agreement), or violate any
law, order, rule or regulation, applicable to Purchaser or its
properties, of any federal or state regulatory body, any court,
administrative agency,
A-5
<PAGE>
or other governmental instrumentality having jurisdiction over
Purchaser or any of its properties.
No Proceedings. There are no proceedings or
investigations pending, or, to the knowledge of Purchaser, threatened
against Purchaser, before any court, regulatory body, administrative
agency, or other tribunal or governmental instrumentality having
jurisdiction over Purchaser or its properties: (i) asserting the
invalidity of this Agreement or any of the Related Documents, (ii)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or any of the Related Documents, (iii)
seeking any determination or ruling that might materially and adversely
affect the performance by Purchaser of its obligations under, or the
validity or enforceability of, this Agreement or any of the Related
Documents or (iv) that may adversely affect the federal or state income
tax attributes of, or seeking to impose any excise, franchise, transfer
or similar tax upon, the transfer and acquisition of the Receivables
and the Other Conveyed Property hereunder or the transfer of the
Receivables and the Other Conveyed Property to the Issuer pursuant to
the Sale and Servicing Agreement.
In the event of any breach of a representation and warranty
made by Purchaser hereunder, Seller covenants and agrees that it will not take
any action to pursue any remedy that it may have hereunder, in law, in equity or
otherwise, until a year and a day have passed since the date on which all Notes,
Certificates, pass-through certificates or other similar securities issued by
Purchaser, or a trust or similar vehicle formed by Purchaser, have been paid in
full. Seller and Purchaser agree that damages will not be an adequate remedy for
such breach and that this covenant may be specifically enforced by Purchaser,
Issuer or by the Trustee on behalf of the Noteholders and Owner Trustee on
behalf of the Certificateholders.
6. Conditions Precedent. The obligation of the Purchaser to
acquire the Subsequent Receivables hereunder is subject to the satisfaction, on
or prior to the Subsequent Transfer Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Seller in Section 4 of this Agreement
and in Section 3.1 of the Purchase Agreement shall be true and correct as of the
date of this Agreement and as of the Subsequent Transfer Date.
(c) Additional Information. The Seller shall have delivered to
the Purchaser such information as was reasonably requested by the Purchaser to
satisfy itself as to (i) the accuracy of the representations and warranties set
forth in Section 4 of this Agreement and in Section 3.1 of the Purchase
Agreement and (ii) the satisfaction of the conditions set forth in this Section.
A-6
<PAGE>
7. Ratification of Agreement. As supplemented by this
Agreement, the Purchase Agreement is in all respects ratified and confirmed and
the Purchase Agreement as so supplemented by this Agreement shall be read, taken
and construed as one and the same instrument.
8. Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties in separate counterparts), each of
which shall be an original but all of which together shall constitute one and
the same instrument.
9. Conveyance of the Receivables and the Other Conveyed
Property to the Issuer. Seller acknowledges that Purchaser intends, pursuant to
the Sale and Servicing Agreement, to convey the Receivables and the Other
Conveyed Property, together with its rights under this Agreement, to the Issuer
on the Subsequent Transfer Date. Seller acknowledges and consents to such
conveyance and pledge and waives any further notice thereof and covenants and
agrees that the representations and warranties of Seller contained in this
Agreement and the rights of Purchaser hereunder are intended to benefit the
Security Insurer, the Issuer, the Owner Trustee, the Trust Collateral Agent, the
Noteholders and the Certificateholders. In furtherance of the foregoing, Seller
covenants and agrees to perform its duties and obligations hereunder, in
accordance with the terms hereof for the benefit of the Insurer, the Issuer, the
Owner Trustee, the Trust Collateral Agent, the Noteholders and the
Certificateholders and that, notwithstanding anything to the contrary in this
Agreement, Seller shall be directly liable to the Issuer, the Owner Trustee, the
Trust Collateral Agent, the Noteholders and the Certificateholders
(notwithstanding any failure by the Servicer, the Backup Servicer or the
Purchaser to perform their respective duties and obligations hereunder or under
Related Documents) and that the Trust Collateral Agent may enforce the duties
and obligations of Seller under this Agreement against Seller for the benefit of
the Insurer, the Owner Trustee, the Trust Collateral Agent, the Noteholders and
the Certificateholders.
10. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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<PAGE>
IN WITNESS WHEREOF, the Seller and the Purchaser have caused
this Subsequent Purchase Agreement to be duly executed and delivered by their
respective duly authorized officers as of day and the year first above written.
ADVANTA AUTO FINANCE CORPORATION
as Seller
By: ___________________________
Name:
Title:
ADVANTA AUTO RECEIVABLES CORP. I
as Purchaser
By: ___________________________
Name:
Title:
Acknowledged and Accepted:
Bankers Trust Company
not in its individual
capacity but solely as
Trust Collateral Agent
By: ________________________________
Name:
Title:
<PAGE>
EXHIBIT 10.2
<PAGE>
EXECUTION COPY
INDEMNIFICATION AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
ADVANTA AUTO RECEIVABLES CORP. I
and
SALOMON BROTHERS INC
Dated as of March 1, 1997
Advanta Automobile Receivables Trust 1997-1
$55,575,000 Class A-1 Floating Rate Backed Notes
$29,925,000 6.75% Class A-2 Asset Backed Notes
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Definitions......................................... 1
Section 2. Representations, Warranties and Agreements of
Financial Security.................................. 3
Section 3. Representations, Warranties and Agreements of
the Underwriter..................................... 6
Section 4. Indemnification..................................... 7
Section 5. Indemnification Procedures.......................... 7
Section 6. Contribution........................................ 8
Section 7. Miscellaneous....................................... 9
EXHIBIT A - Opinion of Assistant General Counsel
<PAGE>
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT dated as of March 1, 1997, among FINANCIAL
SECURITY ASSURANCE INC. ("Financial Security"), ADVANTA AUTO RECEIVABLES CORP. I
(the "Company") and SALOMON BROTHERS INC (the "Underwriter").
Section 1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings provided below:
"Advanta" means Advanta Auto Finance Corporation, a Nevada corporation.
"Agreement" means this Indemnification Agreement, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof.
"Commission" means the Securities and Exchange Commission.
"Company Party" means any of the Company, its parent, subsidiaries and
affiliates and any shareholder, director, officer, employee, agent or
"controlling person" (as such term is used in the Securities Act) of any of the
foregoing.
"Federal Securities Laws" means the Securities Act, the Securities
Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company
Act of 1940, the Investment Advisers Act of 1940 and the Public Utility Holding
Company Act of 1935, each as amended from time to time, and the rules and
regulations in effect from time to time under such Acts.
"Financial Security Agreements" means this Agreement, the Stock Pledge
Agreement, the Spread Account Agreement and the Insurance Agreement.
"Financial Security Information" has the meaning provided in Section
2(g) hereof.
"Financial Security Party" means any of Financial Security, its parent,
subsidiaries and affiliates, and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Securities Act) of
any of the foregoing.
"Indemnified Party" means any party entitled to any indemnification
pursuant to Section 4 hereof.
"Indemnifying Party" means any party required to provide
indemnification pursuant to Section 4 hereof.
"Indenture" means the Indenture dated as of March 1, 1997 between
Advanta Automobile Receivables Trust 1997-1 and Bankers Trust Company, as
trustee and trust collateral agent.
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<PAGE>
"Insurance Agreement" means the Insurance and Indemnity Agreement,
dated as of March 1, 1997, among Financial Security, Advanta Automobile
Receivables Trust 1997-1, the Company and Advanta, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"Losses" means (a) any actual out-of-pocket damages incurred by the
party entitled to indemnification or contribution hereunder, (b) any actual
out-of-pocket costs or expenses incurred by such party, including reasonable
fees or expenses of its counsel and other expenses incurred in connection with
investigating or defending any claim, action or other proceeding which entitle
such party to be indemnified hereunder (subject to the limitations set forth in
Section 5 hereof), to the extent not paid, satisfied or reimbursed from funds
provided by any other Person other than an affiliate of such party (provided
that the foregoing shall not create or imply any obligation to pursue recourse
against any such other Person), plus (c) interest on the amount paid by the
party entitled to indemnification or contribution from the date of such payment
to the date of payment by the party who is obligated to indemnify or contribute
hereunder at the statutory rate applicable to judgments for breach of contract.
"Offering Document" means the Prospectus and any other material or
documents delivered by the Underwriter or any Underwriter Party to any Person in
connection with the offer or sale of the Securities.
"Person" means any individual, partnership, joint venture, corporation,
trust, unincorporated organization or other organization or entity (whether
governmental or private).
"Policy" means the financial guaranty insurance policy delivered by
Financial Security with respect to the Securities.
"Prospectus" means any prospectus or preliminary prospectus relating to
the Securities included in the Registration Statement or filed with the
Commission (including all documents, if any, incorporated by reference therein
and the information, if any, deemed to be part thereof pursuant to the Rules and
Regulations), as the same may be amended or supplemented from time to time;
provided, however, that if any revised prospectus shall be provided by the
Company for use in connection with the offering of the Securities which differs
from the Prospectus filed with the Commission pursuant to Rule 424 of the
Securities Act (whether or not such revised prospectus is required to be filed
by the Seller pursuant to Rule 424 of the Securities Act), the term "Prospectus"
shall refer to such revised Prospectus from and after the time it is first
provided to the Underwriter or any Underwriter Party for such use.
"Rating Agencies" has the meaning provided in the last paragraph of
Section 2 hereof.
"Registration Statement" means the registration statement on Form S-3
(No. 333-19733) including a prospectus and any amendments thereto relating to
the Securities, and any registration statement required to be filed under the
Securities Act or the Rules and Regulations (including all documents, if any,
incorporated by reference therein and the information, if any,
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<PAGE>
deemed to be part thereof pursuant to the Rules and Regulations), as the same
may be amended or supplemented from time to time.
"Securities" means the Advanta Automobile Receivables Trust 1997-1
$55,575,000 Class A-1 Floating Rate Asset Backed Notes and $29,925,000 6.75%
Class A-2 Asset Backed Notes, described in the Offering Document and issued
pursuant to the Indenture.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and any rule or regulation in effect from time to time under such Act.
"Spread Account Agreement" means the Master Spread Account Agreement
dated as of March , 1997 among the Company, the Collateral Agent specified
therein, Financial Security and the Trustee specified therein, as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof.
"Underwriter Information" has the meaning provided in Section 3(c)
hereof.
"Underwriting Agreement" means the Underwriting Agreement dated as of
March 1, 1997 between the Company and the Underwriter with respect to the offer
and sale of the Securities, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"Underwriting Party" means any of the Underwriter, its parent,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent of "controlling person" (as such item is used in the Securities Act) of
any of the foregoing.
Section 2. Representations, Warranties and Agreements of Financial
Security. Financial Security represents, warrants and agrees with the parties
hereto as follows:
(a) Organization, Etc. Financial Security is a stock
insurance company duly organized, validly existing and authorized to
transact financial guaranty insurance business under the laws of the
State of New York.
(b) Authorization, Etc. The Policy and the Financial
Security Agreements have been duly authorized, executed and delivered
by Financial Security.
(c) Validity, Etc. The Policy and the Financial Security
Agreements constitute valid and binding obligations of Financial
Security, enforceable against Financial Security in accordance with
their terms, subject, as to the enforcement of remedies, to bankruptcy,
insolvency, reorganization, rehabilitation, moratorium and other
similar laws affecting the enforceability of creditors' rights
generally applicable in the event of the bankruptcy or insolvency of
Financial Security and to the application of general principles of
equity and subject, in the case of this Agreement, to principles of
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<PAGE>
public policy limiting the right to enforce the indemnification
provisions contained herein.
(d) Exemption From Registration. The Policy is exempt from
registration under the Securities Act.
(e) No Conflicts. Neither the execution or delivery by
Financial Security of the Policy or the Financial Security Agreements,
nor the performance by Financial Security of its obligations
thereunder, will conflict with any provision of the certificate of
incorporation or the bylaws of Financial Security nor result in a
breach of, or constitute a default under, any material agreement or
other instrument to which Financial Security is a party or by which any
of its property is bound nor violate any judgment, order or decree
applicable to Financial Security of any governmental or regulatory
body, administrative agency, court or arbitrator having jurisdiction
over Financial Security (except that, in the published opinion of the
Securities and Exchange Commission, the indemnification provisions of
this Agreement, insofar as they relate to indemnification for
liabilities arising under the Securities Act, are against public policy
as expressed in the Securities Act and are therefore unenforceable).
(f) Financial Information. The consolidated balance sheets of
Financial Security as of December 31, 1994 and December 31, 1995 and
the related consolidated statements of income, changes in shareholder's
equity and cash flows for the fiscal years then ended and the interim
consolidated balance sheet of Financial Security as of December 31,
1996, and the related statements of income, changes in shareholder's
equity and cash flows for the interim period then ended, furnished by
Financial Security to the Underwriter, fairly present in all material
respects the financial condition of Financial Security as of such dates
and for such periods in accordance with generally accepted accounting
principles consistently applied (subject as to interim statements to
normal year-end adjustments) and since the date of the most current
interim consolidated balance sheet referred to above there has been no
change in the financial condition of Financial Security which would
materially and adversely affect its ability to perform its obligations
under the Policy.
(g) Financial Security Information. The information in the
Prospectus set forth under the caption "THE INSURER", or such
additional information as may be deemed to be included in the
Prospectus pursuant to the first paragraph under the heading
"Incorporation of Certain Documents By Reference" on page S-3 of the
Prospectus (as revised from time to time in accordance with the
provisions hereof, the "Financial Security Information") is limited and
does not purport to provide the scope of disclosure required to be
included in a prospectus with respect to a registrant in connection
with the offer and sale of securities of such registrant registered
under the Securities Act. Within such limited scope of disclosure,
however, as of the date of the Prospectus and as of the date hereof,
the Financial Security Information does not contain any untrue
statement of a
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<PAGE>
material fact, or omit to state a material fact necessary to make the
statements contained therein, in the light of the circumstances under
which they were made, not misleading.
(h) Additional Information. Financial Security will furnish
to the Underwriter or the Company, upon request of the Underwriter or
the Company, as the case may be, copies of Financial Security's most
recent financial statements (annual or interim, as the case may be)
which fairly present in all material respects the financial condition
of Financial Security as of the dates and for the periods indicated, in
accordance with generally accepted accounting principles consistently
applied except as noted therein (subject, as to interim statements, to
normal year-end adjustments). In addition, if the delivery of a
Prospectus relating to the Securities is required at any time prior to
the expiration of nine months after the time of issuance of the
Prospectus in connection with the offering or sale of the Securities,
the Company or the Underwriter will notify Financial Security of such
requirement to deliver a Prospectus and Financial Security will
promptly provide the Underwriter with any revisions to the Financial
Security Information that are in the judgment of Financial Security
necessary to prepare a supplement to the Prospectus.
(i) Opinion of Counsel. Financial Security will furnish to
the Underwriter and the Company, on the closing date for the sale of
the Securities an opinion of its Assistant General Counsel, to the
effect set forth in Exhibit A attached hereto, dated such closing date
and addressed to the Company and the Underwriter.
(j) Consents and Reports of Independent Accountants.
Financial Security will furnish to the Underwriter and the Company,
upon request, as comfort from its independent accountants in respect of
its financial condition, (i) at the expense of the Person specified in
the Insurance Agreement, a copy of the Prospectus, including either a
manually signed consent or a manually signed report of Financial
Security's independent accountants and (ii) the quarterly review letter
by Financial Security's independent accountants in respect of the most
recent interim financial statements of Financial Security.
Nothing in this Agreement shall be construed as a representation or warranty by
Financial Security concerning the rating of its claims-paying ability by Moody's
Investors Service, Inc. or Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, or any other rating agency (collectively, the "Rating
Agencies"). The Rating Agencies, in assigning such ratings, take into account
facts and assumptions not described in the Prospectus and the facts and
assumptions considered by the Rating Agencies, and the ratings issued thereby,
are subject to change over time.
Section 3. Representations, Warranties and Agreements of the
Underwriter. The Underwriter represents, warrants and agrees with the parties
hereto as follows:
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<PAGE>
(a) Compliance With Laws. The Underwriter will comply in all
material respects with all legal requirements in connection with offers
and sales of the Securities and make such offers and sales in the
manner provided in the Offering Document.
(b) Offering Document. The Underwriter will not use, or
distribute to other broker-dealers for use, any Offering Document in
connection with the offer and sale of the Securities unless such
Offering Document includes such information as has been furnished by
Financial Security for inclusion therein and the information therein
concerning Financial Security has been approved by Financial Security
in writing. Financial Security hereby consents to the information in
respect of Financial Security included in the Prospectus. Each Offering
Document will include the following statement:
"The Policy is not covered by the property/casualty insurance
security fund specified in Article 76 of the New York
Insurance Law".
Each Offering Document including financial information with respect to
Financial Security prepared in accordance with generally accepted
accounting principles will include the following statement immediately
preceding such financial information:
"The New York State Insurance Department recognizes only
statutory accounting practices for determining and reporting
the financial condition and results of operations of an
insurance company, for determining its solvency under the New
York Insurance Law, and for determining whether its financial
condition warrants the payment of a dividend to its
stockholders. No consideration is given by the New York State
Insurance Department to financial statements prepared in
accordance with generally accepted accounting principles in
making such determinations."
(c) Underwriter Information. All material provided by the
Underwriter for inclusion in the Offering Document (as revised from
time to time, the "Underwriter Information"), insofar as such
information relates to the Underwriter and the manner of offer and sale
of the Securities, is true and correct in all material respects. In
respect of the Prospectus, the Underwriter Information is limited to
the following: (i) the last two paragraphs on the front cover page of
the Offering Document concerning the terms of the Offering; (ii) the
first paragraph on page S-2 of the Offering Document concerning
stabilization activities; (iii) the third paragraph on page S-2
concerning market making activities and (iv) the information set under
the caption "UNDERWRITING" in the Offering Document.
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<PAGE>
Section 4. Indemnification.
(a) Financial Security agrees, upon the terms and subject to
the conditions provided herein, to indemnify, defend and hold harmless
each Company Party and each Underwriter Party against (i) any and all
Losses incurred by them with respect to the offer and sale of the
Securities and resulting from Financial Security's breach of any of its
representations, warranties or agreements set forth in Section 2 hereof
and (ii) any and all Losses to which any Company Party or Underwriter
Party may become subject, under the Securities Act or otherwise,
insofar as such Losses arise out of or result from an untrue statement
of a material fact contained in any Offering Document or the omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or
omission was made in the Financial Security Information included
therein in accordance with the provisions hereof.
(b) The Underwriter agrees, upon the terms and subject to the
conditions provided herein, to indemnify, defend and hold harmless each
Financial Security Party against (i) any and all Losses incurred by
them with respect to the offer and sale of the Securities and resulting
from the Underwriter's breach of any of its representations, warranties
or agreements set forth in Section 3 hereof and (ii) any and all Losses
to which any Financial Security Party may become subject, under the
Securities Act or otherwise, insofar as such Losses arise out of or
result from an untrue statement of a material fact contained in any
Offering Document or the omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or omission was made in the
Underwriter Information included therein.
(c) Upon the incurrence of any Losses for which a party is
entitled to indemnification hereunder, the Indemnifying Party shall
reimburse the Indemnified Party promptly upon establishment by the
Indemnified Party to the Indemnifying Party of the Losses incurred.
Section 5. Indemnification Procedures. Except as provided below in
Section 6 with respect to contribution, the indemnification provided herein by
an Indemnifying Party shall be the exclusive remedy of any and all Indemnified
Parties for the breach of a representation, warranty or agreement hereunder by
an Indemnifying Party; provided, however, that each Indemnified Party shall be
entitled to pursue any other remedy at law or in equity for any such breach so
long as the damages sought to be recovered shall not exceed the Losses incurred
thereby resulting from such breach. In the event that any action or regulatory
proceeding shall be commenced or claim asserted which may entitle an Indemnified
Party to be indemnified under this Agreement, such party shall give the
Indemnifying Party written or telegraphic notice of such action or claim
reasonably promptly after receipt of written notice thereof. The Indemnifying
Party shall be entitled to participate in and, upon notice to the Indemnified
Party, assume the defense of any such action or claim in reasonable cooperation
with, and with the
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<PAGE>
reasonable cooperation of, the Indemnified Party. The Indemnified Party shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof at the expense of the Indemnified Party; provided,
however, that the fees and expenses of such separate counsel shall be at the
expense of the Indemnifying Party if (i) the Indemnifying Party has agreed to
pay such fees and expenses, (ii) the Indemnifying Party shall have failed to
assume the defense of such action or proceeding and employ counsel satisfactory
to the Indemnified Party in any such action or proceeding or (iii) the named
parties to any such action or proceeding (including any impleaded parties)
include both the Indemnified Party and the Indemnifying Party, and the
Indemnified Party shall have been advised by counsel that (A) 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 (B) the representation of the
Indemnifying Party and the Indemnified Party by the same counsel would be
inappropriate or contrary to prudent practice, in which case, if the Indemnified
Party notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense of such action or
proceeding on behalf of such Indemnified Party, it being understood, however,
that the Indemnifying Party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys at any time for all the Company Parties, one such
firm for all Underwriter Parties and one such firm for all Financial Security
Parties, as the case may be, which firm shall be designated in writing by the
Company in respect of the Company Parties, by the Underwriter in respect of the
Underwriter Parties and by Financial Security in respect of the Financial
Security Parties. The Indemnifying Party shall not be liable for any settlement
of any such claim or action unless the Indemnifying Party shall have consented
thereto or be in default in its obligations hereunder. Any failure by an
Indemnified Party to comply with the provisions of this Section shall relieve
the Indemnifying Party of liability only if such failure is prejudicial to the
position of the Indemnifying Party and then only to the extent of such
prejudice.
Section 6. Contribution.
(a) To provide for just and equitable contribution if the
indemnification provided by any Indemnifying Party is determined to be
unavailable for any Indemnified Party (other than due to application of this
Section), each Indemnifying Party shall contribute to the Losses arising from
any breach of any of its representations, warranties or agreements contained in
this Agreement on the basis of the relative fault of each of the parties as set
forth in Section 6(b) below; provided, however, that an Indemnifying Party shall
in no event be required to contribute to all Indemnified Parties an aggregate
amount in excess of the Losses incurred by such Indemnified Parties resulting
from the breach of representations, warranties or agreements contained in this
Agreement.
(b) The relative fault of each Indemnifying Party, on the one hand, and
of each Indemnified Party, on the other, shall be determined by reference to,
among other things, whether the breach of, or alleged breach of, any
representations, warranties or agreements
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<PAGE>
contained in this Agreement relates to information supplied by, or action within
the control of, the Indemnifying Party or the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such breach.
(c) The parties agree that Financial Security shall be solely
responsible for the Financial Security Information and the Underwriter shall be
solely responsible for the Underwriter Information and that the balance of each
Offering Document shall be the responsibility of the Company.
(d) Notwithstanding anything in this Section 6 to the contrary, the
Underwriter shall not be required to contribute an amount in excess of the
amount by which the total underwriting discounts and commissions received by the
Underwriter exceeds the amount of any damages that such Underwriter has
otherwise been required to pay in respect of any breach by the Underwriter of
its representations or warranties contained in Section 3 hereof.
(e) 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.
(f) Upon the incurrence of any Losses entitled to contribution
hereunder, the contributor shall reimburse the party entitled to contribution
promptly upon establishment by the party entitled to contribution to the
contributor of the Losses incurred.
Section 7. Miscellaneous.
(a) Notices. All notices and other communications provided for under
this Agreement shall be delivered to the address set forth below or to such
other address as shall be designated by the recipient in a written notice to the
other party or parties hereto:
If to Financial Security: Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President --
Surveillance
Department (with a copy to the attention of
the General Counsel)
Re: Advanta Automobile Receivables Trust,
1997-1, Class A-1 Floating Rate Asset Backed
Notes, and 6.75% Class A-2 Asset Backed
Notes.
Confirmation: (212) 826-0100
Facsimile Nos.: (212) 339-3518,
(212) 339-3529
(in each case in which notice or other
communication to Financial Security refers
to an Event of Default, a claim on the
Policy or with respect to which failure on
the part of
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<PAGE>
Financial Security to respond shall be
deemed to constitute consent or acceptance,
then a copy of such notice or other
communication should also be sent to the
attention of each of the General Counsel and
the Head-Financial Guaranty Group and
shall be marked to indicate "URGENT
MATERIAL ENCLOSED.")
If to the Company: Advanta Auto Receivables Corp. I
1325 Airmotive Way, Suite 130
Reno, Nevada 89502
If to the Underwriter: Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Attention: Legal Department
Facsimile No: (212) 783-2274
Confirm No: (212) 783-3000
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(c) Assignments. This Agreement may not be assigned by any party
without the express written consent of each other party. Any assignment made in
violation of this Agreement shall be null and void.
(d) Amendments. Amendments of this Agreement shall be in writing
signed by each party hereto.
(e) Survival, Etc. The indemnity and contribution agreements contained
in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Indemnifying
Party, (ii) the issuance of the Securities or (iii) any termination of this
Agreement or the Policy. The indemnification provided in this Agreement will be
in addition to any liability which the parties may otherwise have and shall in
no way limit any obligations of the parties to the Underwriting Agreement or the
Insurance Agreement.
(f) Counterparts. This Agreement may be executed in counterparts by
the parties hereto, and all such counterparts shall constitute one and the same
instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indemnification
Agreement to be duly executed and delivered as of the date first above written.
FINANCIAL SECURITY ASSURANCE INC.
By: ____________________________
Name:
Title:
ADVANTA AUTO RECEIVABLES CORP. I
By: ____________________________
Name:
Title:
SALOMON BROTHERS INC
By: _____________________________
Name:
Title:
<PAGE>
EXHIBIT A
OPINION OF ASSISTANT GENERAL COUNSEL
Based upon the foregoing, I am of the opinion that:
1. Financial Security is a stock insurance company duly organized,
validly existing and authorized to transact financial guaranty insurance
business under the laws of the State of New York.
2. The Policy and the Financial Security Agreements have been duly
authorized, executed and delivered by Financial Security.
3. The Policy and the Financial Security Agreements constitute valid
and binding obligations of Financial Security, enforceable against Financial
Security in accordance with their terms, subject, as to the enforcement of
remedies, to bankruptcy, insolvency, reorganization, rehabilitation, moratorium
and other similar laws affecting the enforceability of creditors' rights
generally applicable in the event of the bankruptcy or insolvency of Financial
Security and to the application of general principles of equity and subject, in
the case of the Indemnification Agreement, to principles of public policy
limiting the right to enforce the indemnification provisions contained therein
insofar as they relate to indemnification for liabilities arising under
applicable securities laws.
4. The Policy is exempt from registration under the Securities Act of
1933, as amended (the "Act").
5. Neither the execution or delivery by Financial Security of the
Policy or the Financial Security Agreements, nor the performance by Financial
Security of its obligations thereunder, will conflict with any provision of the
certificate of incorporation or the bylaws of Financial Security or, to the best
of my knowledge, result in a breach of, or constitute a default under, any
agreement or other instrument to which Financial Security is a party or by which
it or any of its property is bound or, to the best of my knowledge, violate any
judgment, order or decree applicable to Financial Security of any governmental
or regulatory body, administrative agency, court or arbitrator having
jurisdiction over Financial Security (except that in the published opinion of
the Securities and Exchange Commission the indemnification provisions of the
Indemnification Agreement, insofar as they relate to indemnification for
liabilities arising under the Act, are against public policy as expressed in the
Act and are therefore unenforceable).
In addition, please be advised that I have reviewed the description of
Financial Security under the caption "THE INSURER" in the Prospectus Supplement
dated March 26, 1997, which supplements the Prospectus dated March 24, 1997 (the
"Offering Document") of the Company
<PAGE>
with respect to the Securities. The information provided in the Offering
Document with respect to Financial Security is limited and does not purport to
provide the scope of disclosure required to be included in a prospectus with
respect to a registrant under the Act in connection with the public offer and
sale of securities of such registrant. Within such limited scope of disclosure,
however, there has not come to my attention any information which would cause me
to believe that the description of Financial Security referred to above, as of
the date of the Offering Document, contained any untrue statement of a material
fact or omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (except that no opinion is rendered with respect to any financial
statements or other financial information contained or referred to therein).
A-2
<PAGE>
EXHIBIT 23.1
[ON COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
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We consent to the incorporation by reference in the Prospectus Supplement dated
March 26, 1997 (to the Prospectus dated March 24, 1997) of Advanta Auto
Receivables Corp. I relating to Advanta Automobile Receivables Trust 1997-1 of
our report dated January 24, 1997 on our audits of the consolidated financial
statements of Financial Security Assurance Inc. and Subsidiaries as of December
31, 1996 and 1995, and for each of the three years in the period ended December
31, 1996. We also consent to the reference to our Firm under the caption
"Experts".
/s/ Coopers and Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
New York, New York
March 26, 1997
