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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)
December 23, 1997
Advanta Automobile Receivables Trust 1997-2
(Exact name of registrant as specified in its charter)
United States 333-19733 pending
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
c/o Advanta Auto 19034
Finance Corporation (Zip Code)
Attention: Kevin Shipe
500 Office Center Drive, Suite 400
Ft. Washington, Pennsylvania
(Address of Principal Executive Offices)
Registrant's telephone number, including area code (215) 444-4663
____________________________________________________________________
(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
1997-2 (the "Trust") issued $20,000,000 5.85625% Class A-1 Asset Backed Notes,
$31,000,000 6.19% Class A-2 Asset Backed Notes, $29,000,000 6.22% Class A-3
Asset Backed Notes, $16,192,000 6.26% Class A-4 Asset Backed Notes (together,
the "Notes") on December 23, 1997. The Trust also issued, in a private
placement, $36,486,749 6.26% 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 December 1, 1997, between the Trust and Norwest Bank Minnesota,
National Association, 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 24, 1997 and the Prospectus Supplement dated
December 17, 1997 filed pursuant to Rule 424(b)(5) 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 December 17, 1997, among Advanta
Auto Finance Corporation and Prudential Securities Incorporated.
4.1 Indenture, dated as of December 1, 1997, between Advanta Automobile
Receivables Trust 1997-2 and Norwest Bank Minnesota, National Association, as
Trustee and Trust Collateral Agent.
4.2 Amended and Restated Trust Agreement dated as of December 23, 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 December 1, 1997, among
Advanta Automobile Receivables Trust 1997-2, as Issuer, Advanta Auto Finance
Corporation, as Master Servicer, Advanta Auto Receivables Corp. I, as Seller,
and Norwest Bank Minnesota, National Association, as Trust Collateral Agent.
4.4 Note Guaranty Surety Bond, dated as of December 23, 1997 and delivered
by Financial Security Assurance Inc.
8.1 Opinion of Dewey Ballantine LLP as to certain tax matters, dated as of
December 23, 1997.
10.1 Purchase Agreement, dated as of December 1, 1997, among Advanta Auto
Finance Corporation, as Seller, and Advanta Auto Receivables Corp. I, as
Purchaser.
10.2 Indemnification Agreement, dated December 23, 1997, among Financial
Security Assurance Inc., Advanta Auto Receivables Corp. I and Prudential
Securities Incorporated.
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 1997-2
By: Advanta Auto Finance Corporation, as Master Servicer
By: /s/ David Plante
---------------------------------
Name: David Plante
Title: President
Dated: January 12, 1998
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
1.1 Underwriting Agreement, dated as of December 17, 1997, among
Advanta Auto Finance Corporation and Prudential Securities
Incorporated.
4.1 Indenture, dated as of December 1, 1997, between Advanta
Automobile Receivables Trust 1997-2 and Norwest Bank Minnesota,
National Association, as Trustee and Trust Collateral Agent.
4.2 Amended and Restated Trust Agreement, dated as of December 23,
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 December 1, 1997, among
Advanta Automobile Receivables Trust 1997-2, as Issuer, Advanta
Auto Finance Corporation, as Master Servicer, Advanta Auto
Receivables Corp. I, as Seller, and Norwest Bank Minnesota,
National Association, as Trust Collateral Agent.
4.4 Note Guaranty Surety Bond, dated as of December 23, 1997 and
delivered by Financial Security Assurance Inc.
8.1 Opinion of Dewey Ballantine LLP as to certain tax matters, dated
as of December 23, 1997.
10.1 Purchase Agreement, dated as of December 23, 1997, among Advanta
Auto Finance Corporation, as Seller, and Advanta Auto Receivables
Corp. I, as Purchaser.
10.2 Indemnification Agreement, dated December 23, 1997, among
Financial Security Assurance Inc., Advanta Auto Receivables Corp.
I and Prudential Securities Incorporated.
23.1 Consent of Coopers & Lybrand L.L.P. regarding financial
statements of Financial Security Assurance Inc. and their report.
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EXECUTION COPY
ADVANTA AUTO FINANCE CORPORATION
Automobile Receivables Asset Backed Notes
Series 1997-2
5.85625% Class A-1 Asset Backed Notes
6.19% Class A-2 Asset Backed Notes
6.22% Class A-3 Asset Backed Notes
6.26% Class A-4 Asset Backed Notes
UNDERWRITING AGREEMENT
Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
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 December 1, 1997, between Advanta Automobile
Receivables Trust 1997-2 (the "Trust") and Norwest Bank Minnesota, National
Association, as indenture trustee (the "Indenture Trustee"). The Trust will be
formed pursuant to a Trust Agreement to be dated as of December 17, 1997, as
amended, 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 December 1, 1997 among Receivables I, the
Company, the Trust and Norwest Bank Minnesota, National Association 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 have filed one or more amendments thereto, and may have used a
Preliminary Final Prospectus,
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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 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
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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 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
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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
LLP, 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 December [23], 1997 or at such other time or date as shall be
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
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(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 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 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
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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 LLP, 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;
(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
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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 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;
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(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, 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 LLP,
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;
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(ii) no stop order suspending the effectiveness of the
Registration Statement has 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.
(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
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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 LLP, 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 LLP.
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
10
<PAGE>
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 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
11
<PAGE>
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 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.
12
<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 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,
13
<PAGE>
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,
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 One New York Plaza, New York,
New York 10292; or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at 500 Office Center Drive, Suite 400, Fort
Washington, Pennsylvania 19034, 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.
14
<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: /s/ David Plante
-----------------------------
Name: David Plante
Title: President
The foregoing Agreement
is hereby confirmed and
accepted as of December 1, 1997.
Prudential Securities Incorporated
By: Prudential Securities Incorporated
By:/s/ Scott Corman
---------------------------------
Name: Scott Corman
Title: Vice-President
[Signature Page for the Underwriting Agreement]
15
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Class Initial Principal Amount of Securities Purchase Price to Underwriter
Purchased by Underwriter disregarding accrued interest
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A-1 $20,000,000 99.75000%
- --------------------------------------------------------------------------------------------------------
Class A-2 $31,000,000 99.75000%
- --------------------------------------------------------------------------------------------------------
Class A-3 $29,000,000 99.75000%
- --------------------------------------------------------------------------------------------------------
Class A-4 $16,192,000 99.75000%
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXECUTION COPY
------------------------------------------------------------------------
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-2
CLASS A-1 5.85625% Asset Backed Notes
CLASS A-2 6.19% Asset Backed Notes
CLASS A-3 6.22% Asset Backed Notes
CLASS A-4 6.26% Asset Backed Notes
INDENTURE
Dated as of December 1, 1997
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee and Trust Collateral Agent
------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. 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...................................15
SECTION 2.6 Persons Deemed Owner.........................................................16
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest........................16
SECTION 2.8 Cancellation.................................................................17
SECTION 2.9 Release of Collateral........................................................17
SECTION 2.10 Book-Entry Notes.............................................................18
SECTION 2.11 Notices to Clearing Agency...................................................18
SECTION 2.12 Definitive Notes.............................................................19
ARTICLE III. Covenants........................................................................19
SECTION 3.1 Payment of Principal and Interest............................................19
SECTION 3.2 Maintenance of Office or Agency..............................................19
SECTION 3.3 Money for Payments to be Held in Trust.......................................20
SECTION 3.4 Existence....................................................................21
SECTION 3.5 Protection of Trust Property.................................................21
SECTION 3.6 Opinions as to Trust Property................................................22
SECTION 3.7 Performance of Obligations; Servicing of Receivables.........................23
SECTION 3.8 Negative Covenants...........................................................24
SECTION 3.9 Annual Statement as to Compliance............................................24
SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain Terms...........................25
SECTION 3.11 Successor or Transferee......................................................27
SECTION 3.12 No Other Business............................................................27
SECTION 3.13 No Borrowing.................................................................27
SECTION 3.14 Master Servicer's Obligations................................................27
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities............................27
SECTION 3.16 Capital Expenditures.........................................................28
SECTION 3.17 Compliance with Laws.........................................................28
SECTION 3.18 Restricted Payments..........................................................28
SECTION 3.19 Notice of Events of Default..................................................28
SECTION 3.20 Further Instruments and Acts.................................................28
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 3.21 Amendments of Sale and Servicing Agreement and Trust Agreement...............28
SECTION 3.22 Income Tax Characterization..................................................28
ARTICLE IV. Satisfaction and Discharge........................................................29
SECTION 4.1 Satisfaction and Discharge of Indenture......................................29
SECTION 4.2 Application of Trust Money...................................................30
SECTION 4.3 Repayment of Monies Held by Note Paying Agent................................30
ARTICLE V. Remedies...........................................................................30
SECTION 5.1 Events of Default............................................................30
SECTION 5.2 Rights Upon Event of Default.................................................32
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee..............33
SECTION 5.4 Remedies.....................................................................35
SECTION 5.5 Optional Preservation of the Receivables.....................................37
SECTION 5.6 Priorities...................................................................37
SECTION 5.7 Limitation of Suits..........................................................38
SECTION 5.8 Unconditional Rights of Noteholders To Receive Principal and Interest........39
SECTION 5.9 Restoration of Rights and Remedies...........................................39
SECTION 5.10 Rights and Remedies Cumulative...............................................39
SECTION 5.11 Delay or Omission Not a Waiver...............................................39
SECTION 5.12 Control by Noteholders.......................................................39
SECTION 5.13 Waiver of Past Defaults......................................................40
SECTION 5.14 Undertaking for Costs........................................................40
SECTION 5.15 Waiver of Stay or Extension Laws.............................................41
SECTION 5.16 Action on Notes..............................................................41
SECTION 5.17 Performance and Enforcement of Certain Obligations...........................41
SECTION 5.18 Subrogation..................................................................42
SECTION 5.19 Preference Claims............................................................42
ARTICLE VI. The Trustee and the Trust Collateral Agent........................................43
SECTION 6.1 Duties of Trustee............................................................43
SECTION 6.2 Rights of Trustee and the Trust Collateral Agent.............................45
SECTION 6.3 Individual Rights of Trustee.................................................46
SECTION 6.4 Trustee's Disclaimer.........................................................46
SECTION 6.5 Notice of Defaults...........................................................47
SECTION 6.6 Reports by Trustee to Holders................................................47
SECTION 6.7 Compensation and Indemnity...................................................47
SECTION 6.8 Replacement of Trustee.......................................................48
SECTION 6.9 Successor Trustee by Merger..................................................49
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee................................50
SECTION 6.11 Eligibility: Disqualification................................................51
SECTION 6.12 Preferential Collection of Claims Against Issuer.............................51
SECTION 6.13 Appointment and Powers.......................................................51
SECTION 6.14 Performance of Duties........................................................52
SECTION 6.15 Limitation on Liability......................................................52
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 6.16 Reliance Upon Documents......................................................53
SECTION 6.17 Successor Trust Collateral Agent.............................................53
SECTION 6.18 Compensation.................................................................54
SECTION 6.19 Representations and Warranties of the Trustee and the Trust Collateral
Agent.......................................................................54
SECTION 6.20 Waiver of Setoffs............................................................55
SECTION 6.21 Control by the Controlling Party.............................................55
ARTICLE VII. Noteholders' Lists and Reports...................................................55
SECTION 7.1 Issuer To Furnish To Trustee Names and Addresses of Noteholders..............55
SECTION 7.2 Preservation of Information; Communications to Noteholders...................55
SECTION 7.3 Reports by Issuer............................................................56
SECTION 7.4 Reports by Trustee...........................................................56
ARTICLE VIII. Accounts, Disbursements and Releases............................................57
SECTION 8.1 Collection of Money..........................................................57
SECTION 8.2 Release of Trust Property....................................................57
SECTION 8.3 Opinion of Counsel...........................................................57
ARTICLE IX. Supplemental Indentures...........................................................58
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders.......................58
SECTION 9.2 Supplemental Indentures with Consent of Noteholders..........................59
SECTION 9.3 Execution of Supplemental Indentures.........................................61
SECTION 9.4 Effect of Supplemental Indenture.............................................61
SECTION 9.5 Conformity With Trust Indenture Act..........................................61
SECTION 9.6 Reference in Notes to Supplemental Indentures................................61
ARTICLE X. Redemption of Notes................................................................61
SECTION 10.1 Redemption...................................................................61
SECTION 10.2 Form of Redemption Notice....................................................62
SECTION 10.3 Notes Payable on Redemption Date.............................................62
ARTICLE XI. Miscellaneous.....................................................................63
SECTION 11.1 Compliance Certificates and Opinions, etc....................................63
SECTION 11.2 Form of Documents Delivered to Trustee.......................................64
SECTION 11.3 Acts of Noteholders..........................................................65
SECTION 11.4 Notices, etc. to Trustee, Issuer and Rating Agencies.........................66
SECTION 11.5 Notices to Noteholders; Waiver...............................................67
SECTION 11.6 Alternate Payment and Notice Provisions......................................67
SECTION 11.7 Conflict with Trust Indenture Act............................................68
SECTION 11.8 Effect of Headings and Table of Contents.....................................68
SECTION 11.9 Successors and Assigns.......................................................68
SECTION 11.10 Separability.................................................................68
SECTION 11.11 Benefits of Indenture........................................................68
SECTION 11.12 Legal Holidays...............................................................68
SECTION 11.13 GOVERNING LAW................................................................69
SECTION 11.14 Counterparts.................................................................69
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
SECTION 11.15 Recording of Indenture.......................................................69
SECTION 11.16 Trust Obligation.............................................................69
SECTION 11.17 No Petition..................................................................69
SECTION 11.18 Inspection...................................................................70
SECTION 11.19 Limitation of Liability......................................................70
EXHIBITS
Exhibit A-1 -- Form of Class A-1 Note
Exhibit A-2 -- Form of Class A-2 Note
Exhibit A-3 -- Form of Class A-3 Note
Exhibit A-4 -- Form of Class A-4 Note
</TABLE>
iv
<PAGE>
INDENTURE dated as of December 1, 1997, between ADVANTA AUTOMOBILE
RECEIVABLES TRUST 1997-2, a Delaware business trust (the "Issuer"), and Norwest
Bank Minnesota, National Association, a national banking association, 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 5.85625%
Asset Backed Notes (the "Class A-1 Notes"), Class A-2 6.19% Asset Backed Notes
(the "Class A-2 Notes"), Class A-3 6.22% Asset Backed Notes (the "Class A-3
Notes"), Class A-4 6.26% Asset Backed Notes (the "Class A-4 Notes"), (the Class
A-4 Notes and, together with the Class A-3 Notes, Class A-2 Notes and 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 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 December 1, 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 (but none of its obligations) in and to (a) the Receivables and all
monies paid or payable thereon or in respect thereof after the Cutoff date
(including amounts due on or before the Cutoff Date but received by Advanta, the
Seller or the Issuer after the Cutoff Date); (b) an assignment of the security
interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Issuer in the Financed Vehicles; (c)
all rights of the Seller against Dealers pursuant to Dealer Agreements, Dealer
Assignments or Unaffiliated Originator Receivables Purchase Agreements; (d) any
proceeds and the right to receive proceeds with respect to the 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 Purchase
Agreement, as applicable; (e) all rights under any Service Contracts on the
related Financed Vehicles; (f) any proceeds and the right to receive proceeds
with respect to the 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; (g) 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; (h) the Issuer's
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;
(i) 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; (j) 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, (k) 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, assigned to
the Issuer pursuant to the Sale and Servicing Agreement); and (l) all present
and future claims, demands, causes and choses 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 required in this
Indenture to the best of its ability to the
2
<PAGE>
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 states of
New York and Minnesota 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.
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"Class A-1 Notes" means the Class A-1 5.85625% Asset Backed Notes,
substantially in the form of Exhibit A-1.
"Class A-1 Interest Rate" means, 5.85625% per annum (computed on the basis
of the actual number of days elapsed in a 360-day year).
"Class A-2 Notes" means the Class A-2 6.19% Asset Backed Notes,
substantially in the form of Exhibit A-2.
"Class A-2 Interest Rate" means, 6.19% per annum (computed on the basis of
a 360-day year consisting of twelve 30-day months).
"Class A-3 Notes" means the Class A-3 6.22% Asset Backed Notes,
substantially in the form of Exhibit A-3.
"Class A-3 Interest Rate" means, 6.22% per annum (computed on the basis of
a 360-day year consisting of twelve 30-day months).
"Class A-4 Notes" means the Class A-4 6.26% Asset Backed Notes,
substantially in the form of Exhibit A-4.
"Class A-4 Interest Rate" means, 6.26% 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 December 23, 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 Sixth Street and
Marquette Avenue, Minneapolis, Minnesota, 55479-0070, Attention: Corporate Trust
Services-Asset Backed Administration or at such other address as the Trustee may
designate from
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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).
"Cutoff Date" means the opening of business on December 1, 1997.
"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.
"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
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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.
"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.
"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, (ii) Class A-2 Notes, the Class A-2 Interest Rate, (iii)
Class A-3 Notes, the Class A-3 Interest Rate, and (iv) Class A-4 Notes, the
Class A-4 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.
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"Note" means a Class A-1 Note, a Class A-2 Note, a Class A-3 Note or a
Class A-4 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, 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:
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(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, has been made); 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 pledgee's 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.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
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"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.
"Responsible Officer" means, with respect to the Trustee or the Owner
Trustee (as defined in the Trust Agreement), any officer within the Corporate
Trust Office of the 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 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 December 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.
"State" means any one of the 50 states of the United States of America or
the District of Columbia.
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"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, Norwest Bank Minnesota, National
Association, 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 Norwest Bank Minnesota, National Association, a national
banking association, not in its individual capacity but as trustee under this
Indenture, or any successor trustee under this Indenture.
"Trustee Fee" means the fees due to the Trustee, the Trust Collateral Agent
and the Collateral Agent as may be set forth in that certain fee letter, dated
as of the date hereof between the Master Servicer and Norwest Bank Minnesota,
National Association.
"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.
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"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"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 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
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
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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.
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, the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes, in each case together with the Trustee's
certificate of authentication, shall be in substantially the form set forth in
Exhibit A-1, A-2, A-3 and A-4, 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, A-2, A-3 and A-4 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.
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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 $20,000,000, Class A-2 Notes
for original issue in an aggregate principal amount of $31,000,000, Class A-3
Notes for original issue in the aggregate principal amount of $29,000,000 and
Class A-4 Notes for original issue in the aggregate principal amount of
$16,192,000. The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and
Class A-4 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 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.
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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
and 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 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, A-2, A-3 and A-4
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
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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.
Any Noteholder using the assets 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 1986, as
amended, or (iii) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity to purchase the Notes, or to whom
the Notes are transferred, will be deemed to have represented that the
acquisition and continued holding of the Notes will be covered by a U.S.
Department of Labor Class Exemption.
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 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
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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 and 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, the
Class A-2 Note, the Class A-3 Note and Class A-4 Note set forth in Exhibits A-1,
A-2, A-3 and A-4, 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, the Class A-2
Note, the Class A-3 Note and Class A-4 Note set forth in Exhibits A-1, A-2, A-3
and A-4, 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 in accordance with its customary
procedures. 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 in accordance with
its customary procedures. 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.
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
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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.
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
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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 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, (ii) for the benefit of the Class A-2 Notes, to the Class
A-2 Noteholders, (iii) for the benefit of the Class A-3 Notes, to Class A-3
Noteholders and (iv) for the benefit of the Class A-4 Notes, to Class A-4
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 or Minneapolis, Minnesota, 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
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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.
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
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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 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 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
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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 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
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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 be 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.
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(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.
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
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(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
(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
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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 Certificateholder;
(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 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
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 conveyance or transfer and the Issuer or the Person (if
other than the Issuer) acquiring or surviving such conveyance or transfer
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 1997-2
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 1997-2 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.
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 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
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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.
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, the Trust Collateral
Agent 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
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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.
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 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
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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
(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
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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, on behalf of the Insurer, 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 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
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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 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.
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(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
(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 5.13.
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
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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, 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) Reserved.
(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;
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(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 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):
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(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
(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
5.1(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
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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.
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(a) 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;
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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 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;
(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.
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;
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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 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
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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 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
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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 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
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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 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,
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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, supersedes 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, 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 willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
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(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 by the Controlling Party or 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 reasonable 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 required to be maintained pursuant to this
Indenture and the Sale and Servicing Agreement, relating to the Notes or the
Collateral, 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 or the Collateral, 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.
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(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 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 Norwest Bank Minnesota, National Association, 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 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 willful misconduct,
negligence or bad faith.
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(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, the Basic Documents 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 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 customary for the care and skill exercised by trustees
under similar circumstances.
(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
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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.
SECTION 6.7 Compensation and Indemnity. (a) Pursuant to Section 5.7(a) 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 the Trustee Fee as 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 defend or shall cause the Master Servicer to defend any claim for
indemnity that may arise against the Trustee and the Trust Collateral Agent or
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 willful 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
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after the occurrence of a Default specified in Section 5.1(v) or (vi) 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 to the Spread Account
Agreement shall be limited to the right to receive the distributions referred to
in Section 5.7(a) of the Sale and Servicing Agreement.
SECTION 6.8 Replacement of Trustee. The Trustee may resign at any time upon
60 days prior written notice 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 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
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(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 deliver a notice of such
removal, resignation or vacancy to the Noteholders and the Insurer and 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, the Insurer (provided that no Insurer Default shall
have occurred and be continuing) and to the Issuer. Thereupon the resignation or
removal of the retiring Trustee 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
Controlling Party 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 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. The Trustee shall provide the Rating Agencies and the
Insurer with written notice of any such transaction as soon as practical
thereafter.
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
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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;
(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
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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 vest
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 Norwest Bank
Minnesota, National Association, as the Trust Collateral Agent with respect to
the Collateral, and Norwest Bank Minnesota, National Association, 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 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
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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
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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 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 under this Indenture at any time upon 60 days prior
written notice with the prior written consent of the Issuer and the Insurer;
provided that the Trust Collateral Agent shall not so resign unless it shall
also resign as Trustee hereunder; provided, however that such resignation shall
not be effective until a Successor Trust Collateral Agent shall have accepted
appointment as Successor Trust Collateral Agent.
(c) Removal. 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.
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(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 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
Trustee Fee it is entitled to receive in its capacity as Trustee.
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
national banking association, duly organized, validly existing and in good
standing under the laws of the United States 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
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hereunder and thereunder, have been duly authorized by all necessary corporate
proceedings which 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.
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. Unless otherwise
specifically set forth herein, 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.
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
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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).
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.
(c) The Trustee shall not have any duty or obligation with respect to any
reports or other information delivered to it pursuant to this Section 7.3.
SECTION 7.4 Reports by Trustee. If required by TIA ss. 313(a), within 60
days after each August 31, beginning with August 31, 1998, 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.
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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 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
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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.
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 prior written notice to
the Rating Agencies and 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 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
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(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 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
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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.
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.
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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 Issuer shall, bear a
notation as to any matter provided for in such supplemental indenture. If the
Issuer shall so determine, new Notes so modified as to conform, in the opinion
of 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.
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 Five Business Days prior to the Redemption Date whereupon all such
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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 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(b), the Master Servicer or the Issuer
shall 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 of
record, as of the close of business on the date which is four 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 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 (b)), 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.
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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 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.
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(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.
(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
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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 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.
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(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. 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 1997-2, 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 Insured: 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 communication should also be
sent to the attention of the General
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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
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of each such agreement and the Trustee will cause payments to be made and
notices to be given in accordance with such agreements.
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 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.
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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.
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.
69
<PAGE>
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.
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.
[Signature Page Follows]
70
<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 1997-2
By: WILMINGTON TRUST COMPANY, not
in its individual capacity but solely as
Owner Trustee
By: /s/ Emmett Harmon
---------------------------------------
Name: Emmett Harmon
Title: Vice-President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its
individual capacity but solely as Trustee and
Trust Collateral Agent
By: /s/ Daniel Rolczynski
---------------------------------------
Name: Daniel W. Rolczynski
Title: Corporate Trust Officer
[Signature Page for the Indenture]
71
<PAGE>
EXHIBIT A-1
[Form of Note]
REGISTERED $20,000,000
No. A-1-1
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 00756DAC1
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 1997-2
CLASS A-1 5.85625% ASSET BACKED NOTES
Advanta Automobile Receivables Trust 1997-2, 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 MILLION DOLLARS ($20,000,000),
such amount payable on each Distribution Date in an amount equal to 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
until the Class A-1 Note Balance is equal to zero, provided, however, that the
entire unpaid principal amount of this Note shall be due and payable on the
January, 1999 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 December 1, 1997. Interest will be computed on
<PAGE>
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.
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 and 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-1-2
<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 1997-2
WILMINGTON TRUST COMPANY, not
in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By _________________________________
Name:
Title:
A-1-3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as Trustee
By ___________________________
Authorized Signatory
A-1-4
<PAGE>
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-1 5.85625% Asset Backed Notes (herein called the
"Class A-1 Notes"), all issued under an Indenture dated as of December 1, 1997
(such indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and Norwest Bank Minnesota, National Association, 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, the Class A-2 Notes, the Class A-3 Notes and the Class
A-4 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 January 15, 1998.
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(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
A-1-5
<PAGE>
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 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 Minneapolis, Minnesota.
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 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.
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
A-1-6
<PAGE>
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, the Trust Collateral Agent 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, 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.
Any Noteholder using the assets 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 1986, as
amended, or (iii) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity to purchase the Notes, or to whom
the Notes are transferred, will be deemed to have represented that the
acquisition and continued holding of the Notes will be covered by a U.S.
Department of Labor Class Exemption.
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
A-1-7
<PAGE>
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 or 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.
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 the 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:______________ ____________________________
Signature Guaranteed:
_____________________________ ____________________________
A-1-9
<PAGE>
EXHIBIT A-2
[Form of Note]
REGISTERED $31,000,000
No. A-2-1
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 00756DAD9
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 1997-2
CLASS A-2 6.19% ASSET BACKED NOTES
Advanta Automobile Receivables Trust 1997-2, 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 THIRTY-ONE MILLION DOLLARS
($31,000,000), such amount payable on each Distribution Date in an amount equal
to 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 until the Class A-2 Note balance is equal to zero; provided, however,
that the entire unpaid principal amount of this Note shall be due and payable on
the June, 200_ 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 December 1, 1997. Interest will be computed on
A-2-1
<PAGE>
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.
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 and 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, the Trust Collateral Agent 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.
Date: December _______, 1997 ADVANTA AUTOMOBILE
RECEIVABLES TRUST 1997-2
By 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: December _____, 1997 NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
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 6.19% Asset Backed Notes (herein called the "Class
A-2 Notes"), all issued under an Indenture dated as of December 1, 1997 (such
indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and Norwest Bank Minnesota, National Association, 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, the Class A-2 Notes, the Class A-3 Notes and the Class
A-4 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 January 15, 1998. 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(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
A-2-5
<PAGE>
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 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 Minneapolis, Minnesota.
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 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.
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,
A-2-6
<PAGE>
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 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.
Any Noteholder using the assets 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 1986, as
amended, or (iii) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity to purchase the Notes, or to whom
the Notes are transferred, will be deemed to have represented that the
acquisition and continued holding of the Notes will be covered by a U.S.
Department of Labor Class Exemption.
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
A-2-7
<PAGE>
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Note (or any one or 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.
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:______________ ____________________________
Signature Guaranteed:
_____________________________ ____________________________
A-2-9
<PAGE>
EXHIBIT A-3
[Form of Note]
REGISTERED $29,000,000
No. A-1-3
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 00756DAE7
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 1997-2
CLASS A-3 6.22% ASSET BACKED NOTES
Advanta Automobile Receivables Trust 1997-2, 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 DOLLARS
($29,000,000), such amount payable on each Distribution Date in an amount equal
to the aggregate amount, if any, payable from the Note Distribution Account in
respect of principal on the Class A-3 Notes pursuant to Section 3.1 of the
Indenture until the Class A-3 Note Balance is equal to zero; provided, however,
that the entire unpaid principal amount of this Note shall be due and payable on
the July, 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 December 1, 1997. Interest will be computed on
A-3-1
<PAGE>
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.
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 and 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-3-2
<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 1997-2
WILMINGTON TRUST COMPANY, not
in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By _________________________________
Name:
Title:
A-3-3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as Trustee
By ___________________________
Authorized Signatory
A-3-4
<PAGE>
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-3 6.22% Asset Backed Notes (herein called the "Class
A-3 Notes"), all issued under an Indenture dated as of December 1, 1997 (such
indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and Norwest Bank Minnesota, National Association, 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, the Class A-2 Notes, the Class A-3 Notes and the Class
A-4 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-3 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 January 15, 1998.
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(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-3 Notes
shall be made pro rata to the Class A-3 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
A-3-5
<PAGE>
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 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 Minneapolis, Minnesota.
The Issuer shall pay interest on overdue installments of interest at the
Class A-3 Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed 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.
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 or the Owner Trustee in its individual capacity, (ii) any
A-3-6
<PAGE>
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, the Trust Collateral Agent 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.
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.
Any Noteholder using the assets 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 1986, as
amended, or (iii) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity to purchase the Notes, or to whom
the Notes are transferred, will be deemed to have represented that the
acquisition and continued holding of the Notes will be covered by a U.S.
Department of Labor Class Exemption.
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 or more Predecessor Notes) shall be conclusive and binding
upon
A-3-7
<PAGE>
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.
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-3-8
<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 the 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:______________ ____________________________
Signature Guaranteed:
_____________________________ ____________________________
A-3-9
<PAGE>
EXHIBIT A-4
[Form of Note]
REGISTERED $16,192,000
No. A-1-4
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 00756DAF4
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 1997-2
CLASS A-4 6.26% ASSET BACKED NOTES
Advanta Automobile Receivables Trust 1997-2, 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 SIXTEEN MILLION ONE HUNDRED AND
NINETY-TWO THOUSAND DOLLARS ($16,192,000), such amount payable on each
Distribution Date in an amount equal to the aggregate amount, if any, payable
from the Note Distribution Account in respect of principal on the Class A-4
Notes pursuant to Section 3.1 of the Indenture until the Class A-4 Note Balance
is equal to zero; provided, however, that the entire unpaid principal amount of
this Note shall be due and payable on the March, 2005 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
A-4-1
<PAGE>
been paid, from December 1, 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.
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 and 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
A-4-2
<PAGE>
any benefit under the Indenture referred to on the reverse hereof, or be valid
or obligatory for any purpose.
A-4-3
<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 1997-2
WILMINGTON TRUST COMPANY, not
in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By _________________________________
Name:
Title:
A-4-4
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as Trustee
By ___________________________
Authorized Signatory
A-4-5
<PAGE>
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-4 6.26% Asset Backed Notes (herein called the "Class
A-4 Notes"), all issued under an Indenture dated as of December 1, 1997 (such
indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and Norwest Bank Minnesota, National Association, 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, the Class A-2 Notes, the Class A-3 Notes and the Class
A-4 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-4 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 January 15, 1998.
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(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-4 Notes
shall be made pro rata to the Class A-4 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
A-4-6
<PAGE>
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 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 Minneapolis, Minnesota.
The Issuer shall pay interest on overdue installments of interest at the
Class A-4 Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed 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.
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 or the Owner Trustee in its individual capacity, (ii) any
A-4-7
<PAGE>
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, the Trust Collateral Agent 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 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.
Any Noteholder using the assets 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 1986, as
amended, or (iii) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity to purchase the Notes, or to whom
the Notes are transferred, will be deemed to have represented that the
acquisition and continued holding of the Notes will be covered by a U.S.
Department of Labor Class Exemption.
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 or more Predecessor Notes) shall be conclusive and binding
upon
A-4-8
<PAGE>
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.
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-4-9
<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 the 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:______________ ____________________________
Signature Guaranteed:
_____________________________ ____________________________
A-4-10
<PAGE>
EXECUTION COPY
AMENDED AND RESTATED TRUST AGREEMENT
between
ADVANTA AUTO RECEIVABLES CORP. I
and
WILMINGTON TRUST COMPANY
Owner Trustee
Dated as of December 23, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
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ARTICLE I Definitions..........................................................................1
Section 1.1. Capitalized Terms....................................................................1
Section 1.2. Other Definitional Provisions........................................................4
Section 1.3. Action by or Consent of Noteholders and Certificateholders...........................4
Section 1.4. Material Adverse Effect..............................................................5
ARTICLE II Organization.........................................................................5
Section 2.1. Name.................................................................................5
Section 2.2. Office...............................................................................5
Section 2.3. Purposes and Powers..................................................................5
Section 2.4. Appointment of Owner Trustee.........................................................6
Section 2.5. Initial Capital Contribution of Trust Estate.........................................6
Section 2.6. Declaration of Trust.................................................................6
Section 2.7. Liability............................................................................7
Section 2.8. Title to Trust Property..............................................................7
Section 2.9. Situs of Trust.......................................................................7
Section 2.10. Representations and Warranties of the Depositor......................................7
Section 2.11. Federal Income Tax Allocations.......................................................9
Section 2.12. Covenants of the Depositor...........................................................9
Section 2.13. Covenants of the Certificateholders.................................................10
ARTICLE III Certificates and Transfer of Interests..............................................11
Section 3.1. Initial Ownership...................................................................11
Section 3.2. The Certificates....................................................................11
Section 3.3. Authentication of Certificates......................................................11
Section 3.4. Registration of Transfer and Exchange of Certificates...............................11
Section 3.5. Mutilated, Destroyed, Lost or Stolen Certificates...................................14
Section 3.6. Persons Deemed Certificateholders...................................................14
Section 3.7. Access to List of Certificateholders' Names and Addresses...........................15
Section 3.8. Maintenance of Office or Agency.....................................................15
Section 3.9. ERISA Restrictions..................................................................15
Section 3.10. Securities Matters..................................................................16
ARTICLE IV Voting Rights and Other Actions.....................................................16
Section 4.1. Prior Notice to Holders with Respect to Certain Matters.............................16
Section 4.2. Action by Certificateholders with Respect to Certain Matters........................17
Section 4.3. Action by Certificateholders with Respect to Bankruptcy.............................17
</TABLE>
(i)
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<TABLE>
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Section 4.4. Restrictions on Certificateholders' Power...........................................17
Section 4.5. Majority Control....................................................................18
Section 4.6. Rights of Insurer...................................................................18
ARTICLE V Certain Duties......................................................................18
Section 5.1. Accounting and Records to the Noteholders, Certificateholders, the Internal Revenue
Service and Others..................................................................18
Section 5.2. Signature on Returns; Tax Matters Partner...........................................19
Section 5.3. Underwriting Agreement..............................................................19
ARTICLE VI Authority and Duties of Owner Trustee...............................................19
Section 6.1. General Authority...................................................................19
Section 6.2. General Duties......................................................................20
Section 6.3. Action upon Instruction.............................................................20
Section 6.4. No Duties Except as Specified in this Agreement or in Instructions..................21
Section 6.5. No Action Except under Specified Documents or Instructions..........................21
Section 6.6. Restrictions........................................................................21
ARTICLE VII Concerning the Owner Trustee........................................................21
Section 7.1. Acceptance of Trusts and Duties.....................................................21
Section 7.2. Furnishing of Documents.............................................................23
Section 7.3. Representations and Warranties......................................................23
Section 7.4. Reliance; Advice of Counsel.........................................................23
Section 7.5. Not Acting in Individual Capacity...................................................24
Section 7.6. Owner Trustee Not Liable for Certificates or Receivables............................24
Section 7.7. Owner Trustee May Own Certificates and Notes........................................25
Section 7.8. Payments from Owner Trust Estate....................................................25
Section 7.9. Doing Business in Other Jurisdictions...............................................25
ARTICLE VIII Compensation of Owner Trustee.......................................................25
Section 8.1. Owner Trustee's Fees and Expenses...................................................25
Section 8.2. Indemnification.....................................................................25
Section 8.3. Payments to the Owner Trustee.......................................................26
Section 8.4. Non-recourse Obligations............................................................26
ARTICLE IX Termination of Trust Agreement......................................................26
Section 9.1. Termination of Trust Agreement......................................................26
ARTICLE X Successor Owner Trustees and Additional Owner Trustees..............................28
Section 10.1. Eligibility Requirements for Owner Trustee..........................................28
</TABLE>
(ii)
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<TABLE>
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Section 10.2. Resignation or Removal of Owner Trustee.............................................28
Section 10.3. Successor Owner Trustee.............................................................29
Section 10.4. Merger or Consolidation of Owner Trustee............................................29
Section 10.5. Appointment of Co-Trustee or Separate Trustee.......................................30
ARTICLE XI Miscellaneous.......................................................................31
Section 11.1. Supplements and Amendments..........................................................31
Section 11.2. No Legal Title to Owner Trust Estate in Certificateholders..........................32
Section 11.3. Limitations on Rights of Others.....................................................32
Section 11.4. Notices.............................................................................32
Section 11.5. Severability........................................................................33
Section 11.6. Separate Counterparts...............................................................33
Section 11.7. Assignments; Insurer................................................................33
Section 11.8. No Petition.........................................................................33
Section 11.9. No Recourse.........................................................................34
Section 11.10. Headings............................................................................34
Section 11.11. GOVERNING LAW.......................................................................34
Section 11.12. Master Servicer.....................................................................34
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
</TABLE>
(iii)
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT dated as of December 23, 1997 between
ADVANTA AUTO RECEIVABLES CORP. I, a Nevada corporation (the "Depositor"), and
WILMINGTON TRUST COMPANY, a Delaware banking corporation as Owner Trustee (the
"Owner Trustee").
WHEREAS, the Depositor and the Owner Trustee have entered into a Trust
Agreement, dated as of December 17, 1997 (the "Original Trust Agreement"); and
WHEREAS, the Depositor and the Owner Trustee wish to amend and restate the
Original Trust Agreement by entering into this Agreement.
NOW THEREFORE, in consideration of the covenants and agreements contained
herein, the parties hereto agree as follows:
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 Amended and Restated 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 ss. 3.09.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Codess.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.
<PAGE>
"Certificate of Trust" shall mean the Certificate of Trust in the form of
Exhibit B to be filed for the Trust pursuant to ss. 3810(a) of the Business
Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the register
mentioned and the registrar appointed pursuant to ss. 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 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 ss. 3.9.
"Expenses" shall have the meaning assigned to such term in ss. 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 ss.
8.2.
"Indenture" shall mean the Indenture dated as of December 1, 1997, among
the Issuer and Norwest Bank Minnesota, National Association, as Trust Collateral
Agent and Trustee, as the same may be amended and supplemented from time to
time.
"Indenture Trustee" shall mean, initially Norwest Bank Minnesota, National
Association, 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 ss.
6.3.
2
<PAGE>
"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 December 1, 1997, as the same may be amended and supplemented from time to
time.
"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 Amended and Restated Spread
Account Agreement, dated as of December 1, 1997, among Advanta Auto Receivables
Corp. I, the Insurer, Bankers Trust Company and Norwest Bank Minnesota, National
Associaiton, 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, Norwest Bank
Minnesota, National Association, in its capacity as collateral agent, including
its successors in interest, until and unless a successor Person shall have
become the Trust Collateral Agent
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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 of this Agreement; ss. 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.
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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 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.
ARTICLE II
Organization
Section 2.1. Name. There is hereby formed a trust to be known as "Advanta
Auto Receivables Trust 1997-2", 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:
(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 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;
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(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.
(b) 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 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.
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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
Minnesota. Payments will be received by the Trust only in Delaware or Minnesota
and payments will be made by the Trust only from Delaware or Minnesota. 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 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.
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(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) Binding Obligations. This Agreement, when duly executed and delivered,
shall constitute legal, valid and binding obligations of the Depositor
enforceable against the Depositor in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and be
equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
(e) 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.
(f) 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.
(g) 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.
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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
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
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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 ss. 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, 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 ss. 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
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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 ss. 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 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 ss. 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, 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 ss. 3.8, a Certificate Register in which, subject to such
reasonable regulations
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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 statement 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 institutional 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 MADE UNLESS SUCH RESALE OR TRANSFER (A) IS MADE IN
ACCORDANCE WITH ss. 3.4 OF THE OWNER TRUST AGREEMENT PERTAINING TO THE
ADVANTA AUTO RECEIVABLES TRUST 1997-2 (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.
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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 ss. 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 ss. 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 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 not 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.
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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
ss. 5.7(a) 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 ss. 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 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
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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 ss. 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 ss.
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.
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Section 3.10. Securities Matters. Notwithstanding anything contained herein
to the contrary, the Owner Trustee shall not be responsible for ascertaining
whether any transfer 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.
Section 3.11. Paying Agent. Distributions on the Certificate to be made
pursuant to the Sale and Servicing Agreement shall be made 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 the
Certificate or the making of any notation therein.
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 ss. 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.
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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, commence any proceeding or other actions contemplated by ss.
2.13(d) hereof 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 ss. 2.13(d) hereof 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 ss. 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
ss. 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 ss. 6.3; it being understood and
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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 ss. 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.
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 ss. 3.10 of the
Indenture), (iv) amend the Certificate of Trust or (v) amend this Agreement in
accordance with ss. 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 ss. 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
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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 ss. 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 ss. as directed in writing by the Depositor. The Owner Trustee shall sign
all tax information returns, if any, filed pursuant to this ss. 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 ss. 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 ss. 754 of the Code.
Section 5.2. Signature on Returns; Tax Matters Partner. (a) Notwithstanding
the provisions of ss. 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.
Section 5.3. Underwriting Agreement. The Master Servicer is hereby
authorized to execute and deliver on behalf of the Trust the Underwriting
Agreement with respect to the Notes.
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 $20,000,000, Class A-2
Notes in the aggregate principal amount of $31,000,000, Class A-3 Notes in the
aggregate principal amount of $29,000,000, and Class A-4 Notes in the aggregate
principal amount of $16,192,000. 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.
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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 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
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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 ss. 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 ss. 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 ss. 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
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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 ss. 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 ss. 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;
(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
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(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
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specifically prescribed herein, the Owner Trustee may for all purposes hereof
rely on a certificate, signed by the president or 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.
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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 or the Trust Collateral Agent under this Agreement or any of
the Basic Documents to which the Trust or the 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 ss. 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
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"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
ss. 7.1. The indemnities contained in this ss. and the rights under ss. 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.
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 ss. 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 ss. 8.2
and the rights under ss. 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 ss. 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.
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(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 ss. 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 ss. 5.7 of the Sale and Servicing Agreement.
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
ss. 3810 of the Business Trust Statute.
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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 ss. 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 ss. 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 ss. 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.
If at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of ss. 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 ss. 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
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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 ss. 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 ss. 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 ss. 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.
Any successor Owner Trustee appointed pursuant to this Section 10.3 shall
promptly file an amendment to the Certificate of Trust with the Secretary of
State identifying the name and principal place of business of such successor
Owner Trustee in the State of Delaware.
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 ss. 10.1, without the execution
or filing of any instrument or any further act on
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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 ss. 10.1 and no notice of the appointment of any co-trustee or
separate trustee shall be required pursuant to ss. 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
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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.
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
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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 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 ss. 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
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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.
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
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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, 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated 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:/s/ Emmett R. Harmon
--------------------------------
Name: Emmett R. Harmon
Title: Vice President
ADVANTA AUTO RECEIVABLES
CORP. I
Depositor
By:/s/ David Plante
--------------------------------
Name: David Plante
Title: President
Acknowledged and Agreed:
ADVANTA AUTO FINANCE CORPORATION
Master Servicer
By:/s/ David Plante
-----------------------------------
Name: David Plante
Title: President
[Signature Page for Amended and Restated Trust Agreement]
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EXHIBIT A
FORM OF CERTIFICATE
NUMBER $36,486,749.40
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 ss. 3.4 OF THE
OWNER TRUST AGREEMENT PERTAINING TO THE ADVANTA AUTO RECEIVABLES TRUST 1997-2
(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 SALE AND SERVICING AGREEMENT AND THE TRUST AGREEMENT. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
---------------------------------
6.26% 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.)
A-1
<PAGE>
THIS CERTIFIES THAT Advanta Auto Receivables Corp. I is the registered
owner of $36,486,749.40 nonassessable, fully-paid, beneficial ownership interest
in certain distributions of Advanta Automobile Receivables Trust 1997-2 (the
"Trust") formed by Advanta Auto Receivables Corp. I, a Nevada corporation (the
"Depositor"). The Certificates have a Certificate Rate of 6.26% per annum.
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
WILMINGTON TRUST COMPANY
not in its individual
capacity but solely as
Owner Trustee
by _______________________________________________________ Authenticating Agent
by _____________________________________________________________________________
The Trust was created pursuant to an Amended and Restated Trust Agreement
dated as of December 23, 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
"6.26% Asset Backed Certificates" (herein called the "Certificates"). Also
issued under the Indenture dated as of December 1, 1997, between the Trust and
Norwest Bank Minnesota, National Association, as trustee and trust collateral
agent, are four classes of Notes designated as "Class A-1 5.85625% Asset Backed
Notes" (the "Class A-1 Notes"), "Class A-2 6.19% Asset Backed Notes" (the "Class
A-2 Notes"), "Class A-3 6.22% Asset Backed Notes" (the "Class A-3 Notes"), and
"Class A-4 6.26% Asset Backed Notes" (the "Class A-4 Notes", together with the
Class A-1 Notes, the Class A-2 Notes and the Class A-3 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 December 1, 1997 between Advanta Auto Finance Corporation
and Advanta Auto Receivables Corp. I and all proceeds of the foregoing.
Under the Sale and Servicing 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
A-2
<PAGE>
(the "Distribution Date"), commencing on January 15, 1998, 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-4 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 ss. 5.7(a) 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 ss. 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 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.
A-3
<PAGE>
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-4
<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 1997-2
By: WILMINGTON TRUST COMPANY not in
its individual capacity but solely as Owner
Trustee
Dated: December __, 1997 By:______________________________
By: ____________________________
Name:
Title:
A-5
<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 registrable 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.
A-6
<PAGE>
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 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 ss.3(3) of ERISA) that is subject to the provisions of Title I of
ERISA, (b) a plan described in ss. 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-7
<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.
A-8
<PAGE>
EXHIBIT B
CERTIFICATE OF TRUST OF
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-2
This Certificate of Trust of Advanta Automobile Receivables Trust 1997-2
(the "Trust"), dated as of December 23, 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.).
Name. The name of the business trust formed hereby is Advanta Automobile
Receivables Trust 1997-2.
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.
This Certificate of Trust will be effective December 23, 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>
EXECUTION COPY
- --------------------------------------------------------------------------------
SALE AND SERVICING
AGREEMENT
among
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1997-2,
Issuer,
ADVANTA AUTO RECEIVABLES CORP. I,
Seller,
ADVANTA AUTO FINANCE CORPORATION,
Master Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trust Collateral Agent
Dated as of December 1, 1997
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
Definitions
SECTION 1.1. Definitions...................................................................1
SECTION 1.2. Other Definitional Provisions................................................25
SECTION 1.3. Usage of Terms...............................................................26
SECTION 1.4. Certain References...........................................................26
SECTION 1.5. No Recourse..................................................................26
SECTION 1.6. Action by or Consent of Noteholders and Certificateholders...................26
SECTION 1.7. Material Adverse Effect......................................................26
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Receivables....................................................27
SECTION 2.2. Further Encumbrance of Trust Property........................................28
ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties of Seller.....................................29
SECTION 3.2. Repurchase upon Breach.......................................................29
SECTION 3.3. Custody of Receivables Files.................................................30
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of the Master Servicer................................................32
SECTION 4.2. Collection of Receivable Payments; Modifications of Receivables;
Lockbox Agreements...........................................................33
SECTION 4.3. Realization Upon Receivables.................................................35
SECTION 4.4. Insurance....................................................................36
SECTION 4.5. Maintenance of Security Interests in Vehicles................................37
SECTION 4.6. Covenants, Representations, and Warranties of Master Servicer................38
SECTION 4.7. Purchase of Receivables Upon Breach of Covenant..............................39
SECTION 4.8. Total Servicing Fee; Payment of Certain Expenses by Master Servicer..........40
SECTION 4.9. Master Servicer's Certificate................................................40
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 4.10. Annual Statement as to Compliance, Notice of Master Servicer
Termination Event............................................................41
SECTION 4.11. Annual Independent Accountants' Report.......................................41
SECTION 4.12. Access to Certain Documentation and Information Regarding Receivables........42
SECTION 4.13. Monthly Tape.................................................................42
SECTION 4.14. Retention and Termination of Master Servicer.................................43
SECTION 4.15. Fidelity Bond and Errors and Omissions Policy................................44
ARTICLE V
Trust Accounts; Distributions;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts..............................................44
SECTION 5.2. Reserved.....................................................................46
SECTION 5.3. Certain Reimbursements to the Master Servicer................................46
SECTION 5.4. Application of Collections...................................................47
SECTION 5.5. Withdrawals from Series 1997-2 Spread Account................................47
SECTION 5.6. Additional Deposits..........................................................48
SECTION 5.7. Distributions................................................................48
SECTION 5.8. Note Distribution Account....................................................50
SECTION 5.9. Certificate Distribution Account.............................................52
SECTION 5.10. Reserved.....................................................................53
SECTION 5.11. Statements to Certificateholders and Noteholders.............................53
SECTION 5.12. Optional Deposits by the Insurer.............................................54
ARTICLE VI
The Note Policy
SECTION 6.1. Claims Under Note Policy.....................................................54
SECTION 6.2. Preference Claims............................................................55
SECTION 6.3. Surrender of Policy..........................................................56
ARTICLE VII
RESERVED
ARTICLE VIII
The Seller
SECTION 8.1. Representations of Seller....................................................56
SECTION 8.2. Corporate Existence..........................................................58
SECTION 8.3. Liability of Seller; Indemnities.............................................59
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 8.4. Merger or Consolidation of, or Assumption of the Obligations of, Seller......60
SECTION 8.5. Limitation on Liability of Seller and Others.................................61
SECTION 8.6. Seller May Own Certificates or Notes.........................................61
ARTICLE IX
The Master Servicer
SECTION 9.1. Representations of Master Servicer...........................................61
SECTION 9.2. Liability of Master Servicer; Indemnities....................................63
SECTION 9.3. Merger or Consolidation of, or Assumption of the Obligations of the
Master Servicer or the Trust Collateral Agent................................65
SECTION 9.4. Limitation on Liability of Master Servicer, Trust Collateral Agent
and Others...................................................................66
SECTION 9.5. Delegation of Duties.........................................................67
SECTION 9.6. Master Servicer and Trust Collateral Agent Not to Resign.....................67
SECTION 9.7. Sub-Servicing Agreements Between Master Servicer and Sub-Servicers...........68
SECTION 9.8. Successor Sub-Servicers......................................................69
SECTION 9.9. Liability of Master Servicer.................................................69
SECTION 9.10. No Contractual Relationship..................................................69
SECTION 9.11. Assumption or Termination of Sub-Servicing Agreement.........................69
ARTICLE X
Default
SECTION 10.1. Master Servicer Termination Event............................................70
SECTION 10.2. Consequences of a Master Servicer Termination Event..........................72
SECTION 10.3. Appointment of Successor.....................................................73
SECTION 10.4. Notification to Noteholders and Certificateholders...........................74
SECTION 10.5. Waiver of Past Defaults......................................................74
SECTION 10.6. Termination of Trust Collateral Agent........................................74
SECTION 10.7. Successor to Master Servicer.................................................75
ARTICLE XI
Termination
SECTION 11.1. Optional Purchase of All Receivables.........................................76
ARTICLE XII
Administrative Duties of the Master Servicer
SECTION 12.1. Administrative Duties........................................................77
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
SECTION 12.2. Records......................................................................79
SECTION 12.3. Additional Information to be Furnished to the Issuer.........................79
ARTICLE XIII
Miscellaneous Provisions
SECTION 13.1. Amendment....................................................................79
SECTION 13.2. Protection of Title to Trust.................................................81
SECTION 13.3. Notices......................................................................83
SECTION 13.4. Assignment...................................................................84
SECTION 13.5. Limitations on Rights of Others..............................................84
SECTION 13.6. Severability.................................................................84
SECTION 13.7. Separate Counterparts........................................................84
SECTION 13.8. Headings.....................................................................85
SECTION 13.9. Governing Law................................................................85
SECTION 13.10. Assignment to Trustee........................................................85
SECTION 13.11. Nonpetition Covenants........................................................85
SECTION 13.12. Limitation of Liability of Owner Trustee and the Trust Collateral Agent......85
SECTION 13.13. Independence of the Master Servicer..........................................86
SECTION 13.14. No Joint Venture.............................................................86
SCHEDULES
Schedule A - Schedule of Receivables
Schedule B - Schedule of Representations and Warranties
EXHIBITS
Exhibit A - Form of Servicer's Certificate
Exhibit B - Form of Deficiency Claim Notice
Exhibit C - Form of Request for Release and Receipt of Documents
Exhibit D - Form of Trustee's Acknowledgement
</TABLE>
iv
<PAGE>
SALE AND SERVICING AGREEMENT dated as of December 1, 1997, among ADVANTA
AUTOMOBILE RECEIVABLES TRUST 1997-2, 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
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association, 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 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 monthly
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 annual 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.
"Administrative Receivable" means, with respect to any Collection Period, a
Receivable which the Master Servicer is required to purchase pursuant to Section
4.7 on the Deposit Date with respect to such Collection Period.
<PAGE>
"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) 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, and (iv) the proceeds of any purchase or sale of the assets of the
Trust described in Section 11.1 hereof.
"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
Collection Period.
"Basic Documents" means this Agreement, the Certificate of Trust, the Trust
Agreement, the Indenture, the Spread Account Agreement, the Insurance Agreement,
the Indemnification Agreement, the Premium Letter, the Sub-Servicing Agreement
and other documents and certificates delivered in connection therewith.
2
<PAGE>
"Bulk Receivable" means any Receivable purchased under a bulk purchase
agreement.
"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, Minnesota,
Pennsylvania or New York are authorized or obligated to be closed.
"Certificate" means a Trust Certificate (as defined in the Trust
Agreement).
"Certificate Balance" equals, as of the Closing Date, $36,098,934 and as of
any date thereafter, the initial Certificate Balance (i) minus all amounts
allocable to principal previously distributed to Certificateholders and (ii)
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 initial Certificate Balance.
"Certificate Rate" means 6.26% 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 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 22 days) at
the Certificate Rate
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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-4 Notes are paid in full, 27.5%,
(ii) on the Distribution Date on which the Class A-4 Notes are paid in full, the
excess of 100% over the percentage necessary to pay the Class A-4 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, the Class A-2 Notes, the Class A-3 Notes
or the Class A-4 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 5.85625% 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.
"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.
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"Class A-2 Note Interest Rate" means 6.19% 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.
"Class A-3 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-3 Note Interest Rate" means 6.22% per annum (computed on the basis
of a 360-day year of twelve 30-day months).
"Class A-3 Notes" has the meaning assigned to such term in the Indenture.
"Class A-4 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-4 Note Interest Rate" means 6.26% per annum (computed on the basis
of a 360-day year of twelve 30-day months).
"Class A-4 Notes" has the meaning assigned to such term in the Indenture.
"Closing Date" means December 23, 1997.
"Collateral Agents" means (i) Norwest Bank Minnesota, National Association,
in its capacity as Collateral Agent under the Spread Account Agreement and (ii)
Bankers Trust Company in its capacity as Collateral Agent under the Spread
Account Agreement.
"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 opening of business on December 1, 1997 and ending on
the close of business on December 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.
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"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 Receivables.
"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 an 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 Collateral Agent and the Collateral
Agent, the principal corporate trust office of the Trustee, which at the time of
execution of this agreement is Sixth Street and Marquette Avenue, Minneapolis,
Minnesota 55479-0070, Attention: Corporate Trust Services-Asset Backed
Administration.
"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.
"Cutoff Date" means the opening of business on December 1, 1997.
"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
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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; provided, however, that any
Bulk Receivable repurchased by Advanta pursuant to Section 4.6(a)(vi) and
Section 4.7 hereof shall not be considered a "Defaulted Receivable".
"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" means with respect to the Trust Account Property:
(1) the perfection and priority of a security interest in which is governed
by the law of a jurisdiction which has adopted the 1978 Revision to Article
Eight of the UCC:
(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 (other than
certificated securities) and are susceptible of physical delivery, transfer
thereof to the Trust Collateral Agent by physical delivery to the Trust
Collateral Agent, indorsed to, or registered in the name of, the Trust
Collateral Agent or its nominee or indorsed in blank and such additional or
alternative procedures as may hereafter become appropriate to effect the
complete transfer of ownership of any such Collateral to the Trust
Collateral Agent free and clear of any adverse claims, consistent with
changes in applicable law or regulations or the interpretation thereof;
(b) with respect to a "certificated security" (as defined in Section
8-102(1)(a) of the UCC), transfer thereof:
(i) by physical delivery of such certificated security to the
Trust Collateral Agent, provided that if the certificated security is
in registered form, it shall be indorsed to, or registered in the name
of, the Trust Collateral Agent or indorsed in blank;
(ii) by physical delivery of such certificated security to a
"financial intermediary" (as defined in Section 8-313(4) of the UCC)
of
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the Trust Collateral Agent specially indorsed to or issued in the name
of the Trust Collateral Agent;
(iii) by the sending by a financial intermediary, not a "clearing
corporation" (as defined in Section 8-102(3) of the UCC), of a
confirmation of the purchase and the making by such financial
intermediary of entries on its books and records identifying as
belonging to the Trust Collateral Agent of (A) a specific certificated
security in the financial intermediary's possession, (B) a quantity of
securities that constitute or are part of a fungible bulk of
certificated securities in the financial intermediary's possession, or
(C) a quantity of securities that constitute or are part of a fungible
bulk of securities shown on the account of the financial intermediary
on the books of another financial intermediary; or
(iv) by the making by a clearing corporation of appropriate
entries on its books reducing the appropriate securities account of
the transferor and increasing the appropriate securities account of
the Trust Collateral Agent or a Person designated by the Trust
Collateral Agent by the amount of such certificated security, provided
that in each case: (A) the clearing corporation identifies such
certificated security for the sole and exclusive account of the Trust
Collateral Agent or the Person designated by the Trust Collateral
Agent, (B) such certificated security shall be subject to the clearing
corporation's exclusive control, (C) such certificated security is in
bearer form or indorsed in blank or registered in the name of the
clearing corporation or custodian bank or a nominee of either of them,
(D) custody of such certificated security shall be maintained 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 control
of the clearing corporation and (E) such certificated security is
shown on the account of the transferor thereof on the books of the
clearing corporation prior to the making of such entries; and such
additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Collateral to the Trust Collateral Agent free and clear of any adverse
claims, consistent with changes in applicable law or regulations or
the interpretation thereof;
(c) 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 property to an appropriate book-entry account
maintained with a Federal Reserve Bank by a financial intermediary which is
also a "depositary" 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
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Agent of the purchase by the financial intermediary on behalf of the Trust
Collateral Agent of such book-entry security; 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
and indicating that such financial intermediary holds such book-entry
security solely an agent for the Trust Collateral Agent; and such
additional or alternative procedures as may hereafter become appropriate to
effect complete transfer of ownership of any such Collateral to the Trust
Collateral Agent free of any adverse claims, consistent with changes in
applicable law or regulations or the interpretation thereof;
(d) with respect to any Trust Account Property that is an
"uncertificated security" (as defined in Section 8-102(1)(b) of the UCC)
and that is not governed by clause (c) above, transfer thereof:
(i) by registration of the transfer thereof to the Trust
Collateral Agent, on the books and records of the issuer thereof;
(ii) by the sending of a confirmation by a financial intermediary
of the purchase, and the making by such financial intermediary of
entries on its books and records identifying as belonging to the Trust
Collateral Agent (A) a quantity of securities which constitute or are
part of a fungible bulk of uncertificated securities registered in the
name of the financial intermediary or (B) a quantity of securities
which constitute or are part of a fungible bulk of securities shown on
the account of the financial intermediary on the books of another
financial intermediary; or
(iii) by the making by a clearing corporation of appropriate
entries on its books reducing the appropriate account of the
transferor and increasing the account of the Trust Collateral Agent or
a person designated by the Trust Collateral Agent by the amount of
such uncertificated security, provided that in each case: (A) the
clearing corporation identifies such uncertificated security for the
sole and exclusive use of the Trust Collateral Agent or the Person
designated by the Trust Collateral Agent, (B) such uncertificated
security is registered in the name of the clearing corporation or a
custodian bank or a nominee of either, and (C) such uncertificated
security is shown on the account of the transferor on the books of the
clearing corporation prior to the making of such entries; and
(e) in each case of delivery contemplated herein, the Trust Collateral
Agent shall make appropriate notations on its records, and shall cause same
to be made of the records of its nominees, indicating that such securities
are held in trust pursuant to and as provided in this Agreement.
(2) the perfection and priority of a security interest in which is governed
by the law of a jurisdiction which has adopted the 1994 Revision to Article 8 of
the UCC:
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(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 (other than
certificated securities) and are susceptible of physical delivery, transfer
thereof to the Trust Collateral Agent by physical delivery to the Trust
Collateral Agent, indorsed to, or registered in the name of, the Trust
Collateral Agent or its nominee or indorsed in blank and such additional or
alternative procedures as may hereafter become appropriate to effect the
complete transfer of ownership of any such Collateral to the Trust
Collateral Agent free and clear of any adverse claims, consistent with
changes in applicable law or regulations or the interpretation thereof;
(b) with respect to a "certificated security" (as defined in Section
8-102(a)(4) of the UCC), transfer thereof:
(i) by physical delivery of such certificated security to the
Trust Collateral Agent, provided that if the certificated security is
in registered form, it shall be indorsed to, or registered in the name
of, the Trust Collateral Agent or indorsed in blank;
(ii) by physical delivery of such certificated security in
registered form to a "securities intermediary" (as defined in Section
8-102(a)(14) of the UCC) acting on behalf of the Trust Collateral
Agent if the certificated security has been specially endorsed to the
Trust Collateral Agent by an effective endorsement.
(c) 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 property to an appropriate book-entry account
maintained with a Federal Reserve Bank by a securities intermediary which
is also a "depositary" pursuant to applicable federal regulations and
issuance by such securities intermediary of a deposit advice or other
written confirmation of such book-entry registration to the Trust
Collateral Agent of the purchase by the securities intermediary on behalf
of the Trust Collateral Agent of such book-entry security; the making by
such securities 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 and indicating that such securities intermediary holds
such book-entry security solely as agent for the Trust Collateral Agent;
and such additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such Collateral
to the Trust Collateral Agent free of any adverse claims, consistent with
changes in applicable law or regulations or the interpretation thereof;
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(d) with respect to any Trust Account Property that is an
"uncertificated security" (as defined in Section 8-102(a)(18) of the UCC)
and that is not governed by clause (c) above, transfer thereof:
(i) (A) by registration to the Trust Collateral Agent as the
registered owner thereof, on the books and records of the issuer
thereof.
(B) by another Person (not a securities intermediary) either
becomes the registered owner of the uncertificated security on behalf
of the Trust Collateral Agent, or having become the registered owner
acknowledges that it holds for the Trust Collateral Agent.
(ii) the issuer thereof has agreed that it will comply with
instructions originated by the Trust Collateral Agent without further
consent of the registered owner thereof.
(e) in each case of delivery contemplated herein, the Trust Collateral
Agent shall make appropriate notations on its records, and shall cause same
to be made of the records of its nominees, indicating that securities are
held in trust pursuant to and as provided in this Agreement.
(f) with respect to a "security entitlement" (as defined in Section
8-102(a)(17) of the UCC):
(i) if a securities intermediary (A) indicates by book entry that
a "financial asset" (as defined in Section 8-102(a)(9) of the UCC) has
been credited to be the Trust Collateral Agent's "securities account"
(as defined in Section 8-501(a) of the UCC), (B) receives a financial
asset (as so defined) from the Trust Collateral Agent or acquires a
financial asset for the Trust Collateral Agent, and in either case,
accepts it for credit to the Trust Collateral Agent's securities
account (as so defined), (C) becomes obligated under other law,
regulation or rule to credit a financial asset to the Trust Collateral
Agent's securities account, or (D) has agreed that it will comply with
"entitlement orders" (as defined in Section 8-102(a)(8) of the UCC)
originated by the Trust Collateral Agent without further consent by
the "entitlement holder" (as defined in Section 8-102(a)(7) of the
UCC), of a confirmation of the purchase and the making by such
securities intermediary of entries of its books and records
identifying as belonging to the Trust Collateral Agent or (I) specific
certificated security in the securities intermediary's possession,
(II) a quantity of securities that constitute or are part of a
fungible bulk of certificated securities in the securities
intermediary's possession, or (III) a quantity of securities that
constitute or are part of a fungible bulk of securities shown on the
account of the securities intermediary on the books of another
securities intermediary.
"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.
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"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.
"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 January 15, 1998.
"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 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-2 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, acting 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),
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.
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"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-2+ 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 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-2+ by Standard & Poor's and P-1 by Moody's; and
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(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) Nuvell Financial Services Corp. 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 January 1999 Distribution Date, (ii) the Class A-2 Notes, the
September 2000 Distribution Date, (iii) the Class A-3 Notes, the October 2001
Distribution Date, (iv) the Class A-4 Notes, the October 2003 Distribution Date
and (v) the Certificates, the October 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.
"Flow Receivable" means any Receivable purchased under a flow purchase
agreement.
"Indemnification Agreement" means the Indemnification Agreement dated as of
December 1, 1997, among the Insurer, the Seller and Prudential Securities
Incorporated, as the same may be amended and supplemented from time to time.
"Indenture" means the Indenture dated as of December 1, 1997, between the
Issuer and Norwest Bank Minnesota, National Association, as Trust Collateral
Agent and Trustee, as the same may be amended and supplemented from time to
time.
"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,
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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 of 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 December 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
(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
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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, the Class A-2
Interest Period, the Class A-3 Interest Period and the Class A-4 Interest
Period.
"Interest Rate" means, with respect to (i) the Class A-1 Notes, the Class
A-1 Note Interest Rate, (ii) the Class A-2 Notes, the Class A-2 Note Interest
Rate, (iii) the Class A-3 Notes, the Class A-3 Note Interest Rate, and (iv) the
Class A-4 Notes, the Class A-4 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 1997-2.
"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) such Receivable has been liquidated by the Master
Servicer through the sale of the Financed Vehicle, (ii) 60 days have elapsed
since the Master Servicer repossessed the Financed Vehicle, (iii) proceeds have
been received in respect of such Receivable which, in the Master Servicer's
reasonable judgment, constitute the final amounts recoverable in respect of such
Receivable, (iv) 5% or more of a Scheduled Payment shall have become 120 or more
days delinquent (or, in the case where the Obligor of such Receivable is subject
to an Insolvency Event, 5% of more of a Scheduled Payment shall have become 180
or more days delinquent), except in the case of a
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repossessed Financed Vehicle or (v) 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).
"Lockbox Agreement" means an agreement, in form and substance acceptable to
the Controlling Party, which shall initially be the Lockbox Agreement dated as
of April 10, 1995 between Nuvell Financial Services Corp. (formerly LSI
Financial Group) and First Tennessee Bank, 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 Bank, National Association.
"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 A hereto.
"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 1997-2 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
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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.
"Noteholder" means the Person in whose name a Note is registered on the
Note Register.
"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
Class A-3 Notes and the Class A-4 Notes, the product of (x) the Interest Rate
for such Class 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-4 Notes have been paid in full, 72.5%;
(ii) on
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the Distribution Date on which the principal amount of the Class A-4 Notes is
reduced to zero, the percentage not greater than the percentage necessary to pay
the Class A-4 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 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, the lesser of
(i) the Scheduled Payments (as such term is defined in the Note Policy) on the
Notes and (ii) the excess, if any, of (x) the amount required to be distributed
pursuant to clauses (i) through (iv) of Section 5.7(a) 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.
"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 Controlling Party.
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"Original Pool Balance" means the sum, as of any date, of the Pool Balance
as of the Cutoff Date which shall be equal to $132,290,934.00.
"Other Conveyed Property" means all property conveyed by the Seller to the
Trust pursuant to Section 2.1(b) through (j) of this Agreement.
"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, reduced by any principal amounts previously paid (excluding Purchased
Receivables and Liquidated Receivables).
"Premium Letter" means the side letter among the Insurer, the Seller, the
Master Servicer and the Trust Collateral Agent dated the date of issuance of the
Note Policy in respect of the premium payable in consideration of the issuance
of the Note Policy.
"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
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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 December 1, 1997, pursuant to which the Seller acquired the
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 Master Servicer in writing (who shall
then immediately notify the Seller, 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, (which Schedule may
be in an acceptable electronic format).
"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.
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"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 set forth 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.
"Securities" means the Notes and the Certificates.
"Securityholder" means the Noteholders and the Certificateholders.
"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 1997-2 Spread Account" means the account designated as such,
established and maintained pursuant to the Spread Account Agreement.
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"Series 1997-2 Supplement" means the Series 1997-2 Supplement dated as of
December 1, 1997 among the Insurer, the Seller and the Trust Collateral Agent as
Trustee and Collateral Agent, as the same may be modified, supplemented or
otherwise amended in accordance with the terms thereof.
"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 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 as amended and restated as of December 1, 1997 among the
Insurer, the Seller, Bankers Trust Company as Trustee under the Series 1997-1
Securitization Agreements (as defined therein) and Collateral Agent for the
Bankers Trust Collateral (as defined therein) and Norwest Bank Minnesota,
National Association as Trustee with respect to each Series issued subsequent to
Series 1997-1 and as Collateral Agent for the Norwest Collateral (as defined
therein), as the same may be modified, supplemented or otherwise amended in
accordance with the terms thereof.
"Spread Account Deposit" means an amount as set forth in the Spread Account
Agreement.
"Standard & Poor's" means Standard & Poor's Ratings Services, or its
successor.
"Sub-Servicer" means any Eligible Sub-Servicer with whom Advanta has
entered into a Sub-Servicing Agreement. Initially, the Sub-Servicer will be
Nuvell Financial Services Corp. (formerly 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
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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 December 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 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 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 1997-2 Spread Account
to the Trust Collateral Agent and the Insurer pursuant to the Spread Account
Agreement, the Series 1997-2 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.
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"Trustee Fee" means the fees due to the Trustee, the Trust Collateral Agent
and the Collateral Agent as may be set forth in that certain fee agreement dated
as of the date hereof between the Master Servicer and Norwest Bank Minnesota,
National Association.
"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.
(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
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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
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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, 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 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 Receivables and all monies received thereon on or after the
Cutoff Date (including amounts due on or before the Cutoff Date but
received by Advanta, the Seller or the Issuer on or after the Cutoff Date);
(b) The security interests in the Financed Vehicles granted by
Obligors pursuant to the 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
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 Receivables;
(d) all rights of the Seller against Dealers or Unaffiliated
Originators pursuant to Dealer Agreements, Dealer Assignments or
Unaffiliated Originator Receivables Purchase Agreements;
(e) all rights under any Service Contracts on the related Financed
Vehicles;
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(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;
(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. 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
Trust 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.
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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, 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.
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,
or with respect to any exceptions appearing on any exception report delivered by
the Trust Collateral Agent, 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
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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 to the extent the Trust Collateral Agent has actual knowledge of such
failure.
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 Trustee, 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, the
Trust Collateral Agent shall act as custodian of the following documents or
instruments in its possession which shall be delivered to 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);
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(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.
Prior to the Closing Date, the Trust Collateral Agent shall (A) conduct a
physical inventory of the Receivable Files relating to the Receivables in order
to confirm that the Trust Collateral Agent is in possession of a Receivable File
for each Receivable listed in the relevant Schedule of Receivables delivered to
the Trust Collateral Agent and (B) perform a review of the Receivable Files
relating to such Receivables that would enable the Trust Collateral Agent to
determine that each Receivable File includes (i) a fully executed original
retail installment sales contract or promissory note, (ii) the original or copy
of a Lien Certificate or application therefor or such other documents received
from the relevant authority showing Advanta, Bankers Trust Company or an
Unaffiliated Originator as the secured party and (iii) an original credit
application or copy thereof signed by the Obligor. As evidence of the
performance of such inventory and review, on or prior to the Closing Date,
within 5 Business Days of the Trust Collateral Agent's receipt of the Receivable
Files, the Trust Collateral Agent shall deliver to the Insurer, the Owner
Trustee, the Seller and the Master Servicer, an Acknowledgement in the form of
Exhibit D hereto.
(b) Upon payment in full of any Receivable, the Master Servicer will notify
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
Trust Collateral Agent shall, upon written request of an officer of the Master
Servicer and delivery to the Trust Collateral Agent of a receipt signed by such
officer, each in the form attached hereto as Exhibit C, cause the original
Receivable and the related Receivable File to be released to the Master
Servicer. The Trustee and the Trust Collateral Agent may rely and shall be
protected when acting or refraining from acting upon any certificate, request or
receipt under this Section. The
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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 Trust Collateral Agent when its need by the Master Servicer has
ceased unless the Receivable is repurchased as described in Section 3.2 or 4.7.
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 with
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; provided, however, that the Master Servicer shall
not materially change its servicing standards and procedures without the prior
written consent of the Insurer. 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
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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 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 reasonably 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
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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 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
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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 Bank 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 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
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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 reasonably 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).
(c) The Master Servicer agrees that prior to delivering any repossessed
Finance Vehicle for sale to any dealer, it shall make such filings and effect
such notices as are necessary under Section 9-114(1) of the UCC to preserve its
ownership interest (or security interest, as the case may be) in such
repossessed Financed Vehicle.
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 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
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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 reasonably 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 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
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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 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 in connection with such action shall be
reimbursed to the Master Servicer, 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
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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 Agents for the benefit
of the Trust Collateral Agent and Insurer, and the restrictions on
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;
(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; and
(vi) Servicing Conversion. The Master Servicer shall ensure that all
of the Receivables being serviced by it have made at least one payment to
the Master Servicer or any Sub-Servicer or agent thereof no later than 45
days after the first scheduled payment date following the transfer of
servicing rights with respect to each such Receivable to the Master
Servicer.
(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 to the extent
the Trust Collateral Agent has actual knowledge of such failure. It is
understood and agreed that the obligation of Advanta to purchase
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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
Agents, 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 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 Agents, 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 and the Collateral Agents, 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)
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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.
(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 Agents,
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 Agents,
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
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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 (with a copy delivered to the Rating Agencies), 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.
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 Determination Date for 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. The Trust
Collateral Agent shall use such tape or diskette to verify and recalculate the
Note Policy Claim Amount, the Deficiency Claim Amount, the flow of funds as set
forth in Section 5.7(a) hereof, the Average Default Rate, the Average
Delinquency Rate and
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the Average Net Loss Rate (as such terms are defined in the Insurance Agreement)
for the related month and verify and recalculate the information set forth in
Section 5.11 hereof on the Master Servicer's Certificate delivered by the Master
Servicer to the extent any such given information is capable of verification or
recalculation, and the Trust Collateral Agent shall certify to the Insurer that
it has recalculated the Master Servicer's Certificate in accordance with this
Section 4.13 and shall notify the Master Servicer and the Insurer of any
discrepancies, in each case, on or before the second Business Day following the
Determination Date. In the event that the Trust Collateral Agent reports any
discrepancies, the Master Servicer and the Trust Collateral Agent shall attempt
to reconcile such discrepancies prior to the related Deficiency Claim Date, but
in the absence of a reconciliation, the Master Servicer's Certificate shall
control for the purpose 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 a Master
Servicer Certificate by the related Distribution Date, the Servicer shall cause
the Independent Accountants, at the Master Servicer's expense, to audit the
Master Servicer's Certificate and, prior to the fifth Business Day, but in no
event later than the eighth calendar day, of the following month, 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.
In addition, upon the occurrence of an Insurance Agreement Event of Default 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.
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 March 31, 1998, which
term shall be extendible by the Controlling Party for successive quarterly terms
ending on each successive June 30, September 30, December 31 and March 31 (or,
pursuant to revocable written standing instructions from 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
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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 Certificateholders and the Insurer.
The Certificate Distribution Account shall initially be established with
the Trust Collateral Agent.
(b) Funds on deposit in the Collection Account, the Note Distribution
Account and the Certificate Distribution 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
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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 monies 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; 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
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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.
SECTION 5.2. Reserved.
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 deposits or postings or checks returned for
insufficient funds. The amount to be reimbursed hereunder shall be paid to the
Master Servicer on the related
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Distribution Date pursuant to Section 5.7(a)(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:
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(a).
SECTION 5.5. Withdrawals from Series 1997-2 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(a) (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
Agents, 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 B 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 Agents to remit such
Deficiency Claim Amount (to the extent of the funds available to be distributed
pursuant
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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 Agents.
(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.
SECTION 5.7. Distributions.
(a) 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 in writing 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 by the close of business on the Business Day
immediately preceding such Distribution Date 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 the Owner Trustee, the accrued
and unpaid fees of the Owner Trustee, and to the Trustee, the Trust
Collateral Agent and the Collateral Agent, the accrued and unpaid Trustee
Fee and the accrued and unpaid transition expenses of the Trustee, the
Trust Collateral Agent and the Collateral Agent incurred in acting as
successor Master Servicer, which such expenses shall not exceed $50,000 in
the aggregate;
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(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) 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;
(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;
(vi) from Available Funds to the Series 1997-2 Spread Account, all
Available Funds remaining after the distributions pursuant to clauses (i)
through (v) above;
(vii) from amounts, if any, released from the Series 1997-2 Spread
Account on such Distribution Date, to the Certificate Distribution Account,
the Certificateholders' Interest Distributable Amount; and
(viii) from amounts, if any, released from the Series 1997-2 Spread
Account on such Distribution Date, to the Certificate Distribution Account,
the Certificateholders' Principal Distributable Amount;
(ix) from amounts, if any, released from the Series 1997-2 Spread
Account on such Distribution Date, any remaining amounts, if any, released
from the Series 1997-2 Spread Account or the Series 1997-1 Spread Account
on such Distribution Date, 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.
(b) 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
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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 perfect the Collateral Agent's Security
Interest in the Collateral (as such terms are defined in the Spread Account
Agreement).
(c) 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(a) 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) 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;
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(iii) 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;
(iv) to the Holders of the Class A-3 Notes, the Noteholders' Principal
Distributable Amount until the outstanding principal balance of the Class
A-3 Notes is reduced to zero; and
(v) to the Holders of the Class A-4 Notes, the Noteholders' Principal
Distributable Amount until the outstanding principal balance of the Class
A-4 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, 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 Indenture,
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
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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 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
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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. Reserved.
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 1997-2 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; and
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(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 Base Servicing Fee and any Supplemental
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; and
(ix) the aggregate Purchase Amounts for Receivables, if any, that were
repurchased in such period.
Each amount set forth pursuant to paragraph (i), (ii), (iii), (vi) and (vii)
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
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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 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 1997-2 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 Note Distribution Account and 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 during normal business hours 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,
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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, supersedes or performance bond pending any such appeal at the expense of
the Insurer, but subject to reimbursement as provided in the Insurance
Agreement.
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 and shall survive the sale
of the Receivables to the Issuer and the pledge thereof to the Trustee pursuant
to the Indenture.
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(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 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
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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, 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 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 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, 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;
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(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 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,
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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
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and the Trust Collateral Agent and shall have received confirmation from 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 Basic 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 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 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;
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(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 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
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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 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, 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 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 500 Office Center Drive, Suite 400, Fort Washington, PA 19034.
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;
(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
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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, except to the extent that such
costs, expenses, losses, damages, claims and liabilities arise out of the
negligence or willful misconduct of such parties.;
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
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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) The Master Servicer 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 the Master
Servicer'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 the Master Servicer contained in this
Agreement. Any corporation (i) into which the Master Servicer may be merged or
consolidated, (ii) resulting from any merger or consolidation to which the
Master Servicer shall be a party, (iii) which acquires by conveyance, transfer,
or lease substantially all of the assets of the Master Servicer, or (iv)
succeeding to the business of the Master Servicer, in any of the foregoing cases
shall execute an agreement of assumption to perform every obligation of the
Master Servicer under this Agreement and, whether or not such assumption
agreement is executed, shall be the successor to the Master Servicer 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 the Master Servicer from any obligation. the Master
Servicer shall provide notice of any merger, consolidation or succession
pursuant to this Section 9.3(a) to the Owner Trustee, the Trust Collateral
Agent, the Securityholders, the Insurer and each Rating Agency. Notwithstanding
the foregoing, the Master Servicer shall not merge or consolidate with any other
Person or permit any other Person to become a successor to the Master Servicer'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) the Master Servicer 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 9.3(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
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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 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 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 and the Trustee 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.
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(c) The parties expressly acknowledge and consent to Norwest Bank
Minnesota, National Association acting in the possible dual capacity of
successor Master Servicer and in the capacity as Trust Collateral Agent. Norwest
Bank Minnesota, National Association may, in such dual or other capacity,
discharge its separate functions fully, without hindrance 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 Norwest Bank Minnesota, National Association of express duties
set forth in 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 Norwest Bank Minnesota, National Association.
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 Nuvell Financial Services Corp. 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
written consent of the Insurer; provided, however, that no such delegation or
sub-contracting of 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 nor 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 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
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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
the responsibilities 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 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. Any such
determination permitting the resignation of the Trust Collateral Agent 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.
SECTION 9.7. Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers. With the prior written consent of (i) the Insurer, or (ii) 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 Nuvell Financial Services Corp.), 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,
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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 acceptable to the Insurer (so long as no Insurer Event of Default
has occurred and is continuing). 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 Base
Servicing Fee and any Supplemental 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, 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
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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 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 (or if Advanta
or an Affiliate of the Seller is the Master Servicer, the Seller) in an
involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or another present or future,
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federal bankruptcy, insolvency or similar law, or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Master Servicer (or if Advanta or an Affiliate of the Seller is the
Master Servicer, the Seller) or of any substantial part of its property or
ordering the winding up or liquidation of the affairs of the Master Servicer (or
if Advanta or an Affiliate of the Seller is the Master Servicer, the Seller) 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 (or if Advanta or an Affiliate
of the Seller is the Master Servicer, the Seller) 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 (or if Advanta or an Affiliate of the Seller is the
Master Servicer, the Seller) to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Master Servicer (or if Advanta or an Affiliate of the
Seller is the Master Servicer, the Seller) or of any substantial part of its
property or the making by the Master Servicer (or if Advanta or an Affiliate of
the Seller is the Master Servicer, the Seller) of an assignment for the benefit
of creditors or the failure by the Master Servicer (or if Advanta or an
Affiliate of the Seller is the Master Servicer, the Seller) generally to pay its
debts as such debts become due or the taking of corporate action by the Master
Servicer (or if Advanta or an Affiliate of the Seller is the Master Servicer,
the Seller) 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.
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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) at the direction of the Insurer 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 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 (i) 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 and (ii) no obligation to perform any repurchase or advancing
obligations, if any, of the 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
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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 the time the Master Servicer receives a notice of
termination pursuant to Section 10.2, upon non-extension of the servicing term
as referred to in Section 4.14, or upon the resignation of the Master Servicer
pursuant to Section 9.6, 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 provided it is not unable to so act 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 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
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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 payable by the outgoing Master Servicer, and to the
extent such transition expenses have not been paid by the outgoing Master
Servicer or pursuant to the Spread Account Agreement, such expenses payable
pursuant to the Agreement shall not exceed $50,000 in the aggregate.
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 Trustee as set forth in Section 6.11 of the Indenture
and shall fail to resign after written request therefor by the Insurer,
(ii) a court having jurisdiction in the premises in respect of the
Trust Collateral Agent in an involuntary case or proceeding under federal
or state
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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 official) for the Trust Collateral Agent or for any substantial
part of the Trust Collateral Agent's property, or ordering the winding-up
or liquidation of the Trust Collateral Agent'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
Trust Collateral Agent and such case is not dismissed within 60 days;
(iv) the Trust Collateral Agent 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 Trust
Collateral Agent or any substantial part of the Trust Collateral Agent's
property, or makes any assignment for the benefit of credits 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 Trust Collateral Agent has failed to perform its duties
hereunder; and
(vi) the Trust Collateral Agent otherwise becomes incapable of acting.
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 successor Trust
Collateral Agent appointed by the Controlling Party.
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
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 expressed therein, upon certificates or opinions
furnished to the Trust Collateral Agent and conforming to the requirements of
this Agreement; but in the case of any such certificates or opinions, which by
any provision hereof are
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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 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, as of the
Cutoff Date, 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 the 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.
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(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 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;
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(D) the appointment of successor Note Registrars, successor Paying
Agents and successor Trustees pursuant to the Indenture or the appointment
of successor Master 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 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 Master 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), with prior written notice to the Rating
Agencies 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
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Certificateholder; and provided, further, that if an Insurer Default has not
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, 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) and with prior written notice to the Rating
Agencies for the purpose of adding any provisions to or changing in any manner
any provisions to 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 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
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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 1997-2 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 1997-2 Spread
Account or uses of funds on deposit in the Series 1997-2 Spread Account may be
amended in any respect by the Seller, the Master Servicer, the Insurer, the
Trust Collateral Agent 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 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
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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 system 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.
(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,
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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 Trust
Collateral Agent, 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, 500 Office Center Drive, Suite
400, Fort Washington, PA 19034, 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 of the Trustee, the Trust Collateral Agent or the Collateral Agent, at
the Corporate Trust Office, Telecopier # (612) 667-3464, (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 &
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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 in 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.
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.
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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 the Trust
Collateral Agent.
(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
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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 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 Norwest Bank Minnesota, National
Association not in its individual capacity but solely as Trust Collateral Agent
and in no event shall Norwest Bank Minnesota, National Association, 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
1997-2
by Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee on behalf of
the Trust,
by /s/ Emmet Harmon
-------------------------------------------
Title: Vice-President
ADVANTA AUTO RECEIVABLES CORP. I, Seller,
by /s/ David Plante
-------------------------------------------
Name: David Plante
Title: President
ADVANTA AUTO FINANCE CORPORATION, in its
individual capacity and as Master Servicer,
by /s/ David Plante
-------------------------------------------
Name: David Plante
Title: President
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trust
Collateral Agent
by /s/ Daniel Rolczynski
-------------------------------------------
Name: Daniel W. Rolczynski
Title: Corporate Trust Officer
[Signature Page for Sale and Servicing Agreement]
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SCHEDULE A
SCHEDULE OF RECEIVABLES
[SEE SCHEDULE A OF PURCHASE AGREEMENT, TAB 6]
<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, was validly assigned by the
Unaffiliated Originator to Advanta 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.
<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 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 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 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 Cutoff Date.
9. Marking Records. By the Closing Date, 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 was complete and accurate as of the 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 State of New York, Delaware, Nevada and
Pennsylvania.
13. One Original. There is only one original executed copy of each
Receivable.
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14. Receivable Files Complete. There exists a Receivable File pertaining to
each Receivable and such Receivable File contains, without limitation subject to
any exceptions which may appear on any exception report delivered by the Trust
Collateral Agent on the Closing Date to the Insurer, the Owner Trustee and the
Seller and which the Seller shall have 30 Business Days to cure, (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, (c) an original credit
application or copy thereof 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 and (d) evidence of any Insurance Policy. 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 Issuer; immediately prior to
the conveyance of the Receivables to the Trust pursuant to this Agreement, 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,
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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, and will show Advanta, the Trust
Collateral Agent, Bankers Trust Company 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,
Bankers Trust Company or an Unaffiliated Originator as first lienholder has been
applied for and (i) the Unaffiliated Originator's or Bankers Trust Company'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 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 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.
4
<PAGE>
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 29 days as of the Cutoff Date and other than
payment delinquencies of more than 29 days which have been cured and which the
Obligor of such Receivable has had no further delinquency of more than 29 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 Cutoff Date no Financed
Vehicle had been repossessed.
24. Insurance. At the time of origination of each Receivable, the related
Financed Vehicle is 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 Cutoff Date.
25. Certain Characteristics of Receivables. (i) Each Receivable had a
remaining maturity, as of the Cutoff Date, of at least 8 months but not more
than 65 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 $30,000; (iv) each
Receivable had a Principal Balance as of the Cutoff Date of at least $640 and
not more than $30,000; (v) each Receivable has an Annual Percentage Rate of at
least 8.00% and not more than 32.00%; (vi) no Receivable was more than 30 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 April, 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 81% of the aggregate Principal
Balance for all the Receivables is attributable to loans for the purchase of new
Financed Vehicles, and approximately 19% of the aggregate Principal Balance for
all the Receivables is attributable to loans for the purchase of used Financed
Vehicles.
26. Certain Characteristics of Flow Receivables. With respect to each Flow
Receivable, (i) the minimum credit bureau risk or FICO score for the related
Obligor was 540, as reported in the related credit report, (ii) the related
Obligor had prior automobile credit history as reported by either Equifax,
TransUnion or TRW and (iii) such Receivable was originated in accordance with
Advanta Auto Finance Corporation's
5
<PAGE>
established underwriting guidelines and no exception to such guidelines was made
to take into account the size of the downpayment provided by the related
Obligor.
27. Servicing Conversion. As of the Closing Date, all of the Bulk
Receivables are being serviced by the Master Servicer and, except with respect
to Bulk Receivables with aggregate Principal Balances not in excess of
$10,000,000, at least one payment has been received by the Master Servicer from
the related Obligor with respect to such Bulk Receivable.
6
<PAGE>
EXHIBIT A
FORM OF MASTER SERVICER'S CERTIFICATE
<PAGE>
EXHIBIT B
FORM OF DEFICIENCY CLAIM NOTICE
[Date]
Norwest Bank Minnesota, National Association, as Collateral Agent
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0070
Wilmington Trust Company, as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Advanta Auto Finance Corp., as Master Servicer
500 Office Center Drive
Suite 400
Fort Washington, Pennsylvania 19034
Fiscal Agent [if any]
[Address]
Re: Sale and Servicing Agreement, dated as of December 1, 1997
(the "Agreement") among Advanta Auto Receivables Trust 1997-2,
(the "Issuer"), Advanta Auto Receivables Corp. I, (the
"Seller"), Advanta Auto Finance Corporation (the "Master
Servicer"), and Norwest Bank Minnesota, National Association,
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,
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
By: ___________________________________
Name:
Title:
B-2
<PAGE>
EXHIBIT C
REQUEST FOR RELEASE AND RECEIPT OF DOCUMENTS
To: Norwest Bank Minnesota, National Association
Re: Sale and Servicing Agreement (the "Servicing
Agreement, dated as of December 1, 1997 between
Advanta Auto Receivables Corp. I (the "Seller"),
Advanta Automobile Receivables Trust 1997-2 (the
"Trust"), Advanta Auto Finance Corporation
individually and in its capacity as Servicer (the
"Servicer"), and Norwest Bank Minnesota, National
Association, as Trust Collateral Agent (the "Trust
Collateral Agent")
In connection with the administration of the Receivables held by you as the
Trust Collateral Agent, we request the release, and acknowledged receipt, of the
Receivable and related Receivable File described below, for the reason
indicated.
Obligor's Name, Customer Account Number and Vehicle Identification Number
________ 1. Receivable Paid in Full. All amounts received in connection with
such payments have been deposited into the Lockbox Account as
required pursuant to Section 3.3(b) of the Servicing Agreement
________ 2. Receivable Purchased from Trust pursuant to Section 3.2 or 4.7 of
the Servicing Agreement.
________ 3. Receivable is being serviced or subject to enforcement of rights
and remedies pursuant to Section 3.3(b) of the Servicing
Agreement.
________ 4. Other (explain)
If item 1 or 2 above is checked, and if all or part of the Receivable or
Receivable File was previously released to us, please release to us any
additional documents in your possession to the above specified Receivable.
<PAGE>
If Item 3 or 4 above is checked, upon our return of all of the above documents
to you as the Indenture Trustee, please acknowledge your receipt by signing in
the space indicated below and returning this form.
ADVANTA AUTO FINANCE CORPORATION
as Servicer
By: ____________________________
Name: __________________________
Title: _________________________
Date: __________________________
DOCUMENTS RETURNED TO THE TRUST COLLATERAL AGENT
Norwest Bank Minnesota, National Association (Trust Collateral Agent)
By: ____________________________
Name: __________________________
Title: _________________________
Date: __________________________
C-2
<PAGE>
EXHIBIT D
TRUST COLLATERAL AGENT'S ACKNOWLEDGEMENT
Norwest Bank Minnesota, National Association (the "Trust Collateral
Agent"), holds on behalf of the Securityholders certain "Receivable Files," as
described in the Sale and Servicing Agreement, dated as of December 1, 1997 (the
"Sale and Servicing Agreement"), among Advanta Automobile Receivables Trust
1997-2, Advanta Auto Receivables Corp. I., as Seller, Advanta Auto Finance
Corporation, as Master Servicer, and the Trust Collateral Agent, hereby
acknowledges receipt of the Receivable File for each Receivable listed in the
Schedule of Receivables attached as Schedule A to said Sale and Servicing
Agreement except as noted in the Exception List attached as Schedule I hereto.
IN WITNESS WHEREOF, Norwest Bank Minnesota, National Association has caused
this acknowledgement to be executed by its duly authorized officer as of this
23rd day of December, 1997.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trust Collateral Agent
by ___________________________________
Name:
Title:
<PAGE>
FINANCIAL GUARANTY
INSURANCE POLICY
[LOGO] FINANCIAL
SECURITY
ASSURANCE(SM)
Policy No.: 50654-N
Date of Issuance: 12/23/97
Obligor: Advanta Automobile Receivables Trust 1997-2
Obligations: $96,192,000 Asset Backed Notes, Classes A-1, A-2, A-3
and A-4, as described in Endorsement No. 1 hereto.
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/ Russell B. Brewer II
-------------------------------
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)
<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 1997-2
OBLIGATIONS: $20,000,000 Class A-1 5.85625% Asset Backed Notes
$31,000,000 Class A-2 6.19% Asset Backed Notes
$29,000,000 Class A-3 6.22% Asset Backed Notes
$16,192,000 Class A-4 6.26% Asset Backed Notes
Policy No.: 50654-N
Date of Issuance: December 23, 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,
Minneapolis, Minnesota 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 December 1, 1997, between
Advanta Automobile Receivables Trust 1997-2, a Delaware business trust, and
Norwest Bank Minnesota, National Association, 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 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 December 1, 1997, among the Obligor, as Issuer, Advanta Auto
Receivables Corp. I, as Seller, Advanta Auto Finance Corporation, as Master
Servicer, and Norwest Bank Minnesota, National Association as Trust Collateral
Agent.
<PAGE>
Policy No.: 50654-N Date of Issuance: December 23, 1997
"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 or (y) any portion of the Noteholders' Interest Distributable Amount
due to Noteholders representing interest on any Noteholders' Interest Carryover
Shortfall, 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.
"Trust Collateral Agent" means Norwest Bank Minnesota, National
Association, 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,
2
<PAGE>
Policy No.: 50654-N Date of Issuance: December 23, 1997
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 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.
3
<PAGE>
Policy No.: 50654-N Date of Issuance: December 23, 1997
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.
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 1997-2
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/ Russell B. Brewer II
Authorized Officer
4
<PAGE>
Policy No.: 50654-N Date of Issuance: December 23, 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 1997-2
$20,000,000 Class A-1 5.85625% Asset Backed Notes
$31,000,000 Class A-2 6.19% Asset Backed Notes
$29,000,000 Class A-3 6.22% Asset Backed Notes
$16,192,000 Class A-4 6.26% Asset Backed Notes
The undersigned, a duly authorized officer of Norwest Bank Minnesota,
National Association (the "Trust Collateral Agent"), hereby certifies to
Financial Security Assurance Inc. ("Financial Security"), with reference to
Financial Guaranty Insurance Policy No. 50654-N dated December 23, 1997 (the
"Policy") issued by Financial Security in respect of the above-referenced 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 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
A-1
<PAGE>
Policy No.: 50654-N Date of Issuance: December 23, 1997
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.
A-2
<PAGE>
Policy No.: 50654-N Date of Issuance: December 23, 1997
IN WITNESS WHEREOF, the Trust Collateral Agent has executed and delivered
this Notice of Claim and Certificate as of the ____ day of _________, _____.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
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 ________________
A-3
<PAGE>
December 23, 1997
TO THE ADDRESSEES LISTED
ON SCHEDULE I HERETO:
Re: Advanta Automobile Receivables Trust 1997-2
Ladies and Gentlemen:
We have acted as special tax counsel to Advanta Auto Finance
Corporation, a Nevada corporation ("Advanta"), Advanta Auto Receivables Corp. I,
a Nevada corporation ("AARC"), and Advanta Auto Receivables Trust 1997-2 (the
"Issuer"), as to certain matters in connection with the issuance of the
$20,000,000 5.85625% Class A-1 Asset Backed Notes and $31,000,000 6.19% Class
A-2 Asset Backed Notes, $29,000,000 6.22% Class A-3 Asset Backed Notes and
$16,192,000 6.26% Class A-4 Asset Backed Notes (the "Notes") which will be
issued pursuant to an Indenture (the "Indenture") dated as of December 1, 1997
between Advanta Auto Receivables Trust 1997-2 and Norwest Bank Minnesota,
National Association, (in that capacity, the "Indenture Trustee") and the
Certificates (the "Certificates") which will be issued pursuant to the Amended
and Restated Trust Agreement dated as of December 23, 1997 (the "Trust
Agreement") among the Issuer and Wilmington Trust Company (the "Owner Trustee").
The Notes and the Certificates are collectively referred to herein as the
"Securities."
As special tax counsel, we have reviewed such documents as we
deemed appropriate for the purposes of rendering the opinions set forth below,
including the following: (i) the Indenture, (ii) the Trust Agreement, and (iii)
a Prospectus dated March 24, 1997 and a Prospectus Supplement dated December 17,
1997 (together, the "Prospectus") with respect to the Notes. Capitalized terms
not otherwise defined herein have their respective meanings as set forth in the
Trust Agreement.
We have examined the question of whether the Notes issued under
the Indenture will be treated as indebtedness for federal income tax purposes.
Our analysis is based on the provisions of the Internal Revenue Code of 1986, as
amended, and the Treasury Regulations promulgated thereunder as in effect on the
date hereof and on existing judicial and administrative interpretations thereof.
These authorities are subject to change and to differing interpretations, which
could apply retroactively. The opinion of special tax counsel is not binding on
the courts or the Internal Revenue Service (the "IRS").
In general, whether a transaction constitutes the issuance of
indebtedness for federal income tax purposes is a question of fact, the
resolution of which is based primarily upon the economic substance of the
instruments and the transaction pursuant to which they are issued rather than
the form of the transaction or the manner in which the instruments are labeled.
The IRS and the courts have set forth various factors to be taken into account
in determining whether or not a
<PAGE>
transaction constitutes the issuance of indebtedness for federal income tax
purposes, which we have reviewed as they apply to this transaction.
Based on the foregoing, and such legal and factual investigations
as we have deemed appropriate, we are of the opinion that for federal income tax
purposes:
(1) The Notes will be treated as indebtedness because (i) the
characteristics of the transaction strongly indicates that in economic
substance, the transaction is the issuance of indebtedness, (ii) the form of the
transaction is an issuance of indebtedness; and (iii) the parties have stated
unambiguously their intention to treat the transaction as the issuance of
indebtedness for tax purposes.
(2) The Issuer will not constitute an association (or a publicly
traded partnership) taxable as a corporation.
We express no opinion on any matter not discussed in this letter.
This opinion is rendered as of the Closing Date, for the sole benefit of the
addressees hereof and it may not be relied on by any other party or quoted
without our express consent in writing.
Very truly yours,
/s/ Dewey Ballantine
2
<PAGE>
SCHEDULE ONE
Advanta Auto Finance Corporation
500 Office Center Drive, Suite 400
Fort Washington, PA 19034
Advanta Auto Receivables Corp. I
1325 Airmotive Way, Suite 130
Reno, Nevada 89502
Advanta Automobile Receivables Trust 1997-2
c/o Wilmington Trust Company,
as Owner Trustee
Rodney Square North
Wilmington, Delaware 19890-0001
Prudential Securities Incorporated
Asset Backed Finance Group
One New York Plaza, 17th Floor
New York, NY 10292-2017
Norwest Bank Minnesota, National Association
as Indenture Trustee and
Trust Collateral Agent
Trust Services
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0070
Moody's Investors Service
99 Church Street
New York, New York 10007
Standard & Poor's Rating Group
25 Broadway
New York, New York 10004
Financial Security Assurance Inc.
350 Park Avenue
13th Floor
New York, New York 10022
<PAGE>
EXECUTION COPY
PURCHASE AGREEMENT
between
ADVANTA AUTO FINANCE CORPORATION
Seller
and
ADVANTA AUTO RECEIVABLES CORP. I
Purchaser
dated as of
December 1, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS ...................................................................................1
SECTION 1.1 General..........................................................................1
SECTION 1.2 Specific Terms...................................................................1
SECTION 1.3 Usage of Terms...................................................................3
SECTION 1.4 Certain References...............................................................3
SECTION 1.5 No Recourse......................................................................3
SECTION 1.6 Action by or Consent of Noteholders and Certificateholders.......................3
SECTION 1.7 Material Adverse Effect..........................................................3
ARTICLE II CONVEYANCE OF THE RECEIVABLES AND THE OTHER CONVEYED PROPERTY.................................4
SECTION 2.1 Conveyance of the Receivables and the Other Conveyed Property....................4
ARTICLE III REPRESENTATIONS AND WARRANTIES...............................................................5
SECTION 3.1 Representations and Warranties of Seller.........................................5
SECTION 3.2 Representations and Warranties of Purchaser......................................7
ARTICLE IV COVENANTS OF SELLER...........................................................................9
SECTION 4.1 Protection of Title of Purchaser.................................................9
SECTION 4.2 Other Liens or Interests........................................................10
SECTION 4.3 Costs and Expenses..............................................................11
SECTION 4.4 Indemnification.................................................................11
ARTICLE V REPURCHASES ..................................................................................13
SECTION 5.1 Repurchase of Receivables Upon Breach of Warranty...............................13
SECTION 5.2 Reassignment of Purchased Receivables...........................................13
SECTION 5.3 Waivers.........................................................................14
ARTICLE VI MISCELLANEOUS................................................................................14
SECTION 6.1 Liability of Seller.............................................................14
SECTION 6.2 Merger or Consolidation of Seller or Purchaser..................................14
SECTION 6.3 Limitation on Liability of Seller and Others....................................15
SECTION 6.4 Seller May Own Notes or Certificates............................................15
SECTION 6.5 Amendment.......................................................................15
SECTION 6.6 Notices.........................................................................16
SECTION 6.7 Merger and Integration..........................................................16
SECTION 6.8 Severability of Provisions......................................................16
SECTION 6.9 Intention of the Parties........................................................17
SECTION 6.10 Governing Law...................................................................17
SECTION 6.11 Counterparts....................................................................17
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
SECTION 6.12 Conveyance of the Receivables and the Other Conveyed Property to the Issuer.....17
SECTION 6.13 Nonpetition Covenant............................................................18
EXHIBITS
SCHEDULE A Schedule of Receivables
SCHEDULE B Representations and Warranties of the Seller
</TABLE>
ii
<PAGE>
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, dated as of December 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 Receivables and 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 December 1, 1997, by and among the Seller, in its capacity
as Master Servicer, Advanta Automobile Receivables Trust 1997-2, as Issuer, the
Purchaser, as Seller and Norwest Bank Minnesota, National Association, 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.
"Bulk Receivable" means a Receivable purchased by the Seller pursuant to a
bulk purchase agreement.
"Closing Date" means December 23, 1997.
"Flow Receivable" means any Receivable purchased by the Seller pursuant to
a flow purchase agreement.
"Indenture Trustee" means Norwest Bank Minnesota, National Association, and
any successor Indenture Trustee appointed and acting pursuant to the Indenture.
<PAGE>
"Issuer" means Advanta Automobile Receivables Trust 1997-2.
"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 Receivables listed on the Schedules of Receivables
attached hereto as Schedule A.
"Related Documents" means 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 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.
"Trust Collateral Agent" means Norwest Bank Minnesota, National
Association, as trust collateral agent and any successor trust collateral agent
appointed and acting pursuant to the Sale and Servicing Agreement.
"Trustee" means Norwest Bank Minnesota, National Association, as Indenture
Trustee appointed and acting pursuant to the Sale and Servicing Agreement.
"Unaffiliated Originator" means any third party originator or owner of
Receivables.
2
<PAGE>
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.
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
3
<PAGE>
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.
ARTICLE II
CONVEYANCE OF THE RECEIVABLES
AND THE OTHER CONVEYED PROPERTY
SECTION 2.1 Conveyance of the Receivables and the 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 Receivables and all monies paid or payable thereon on or after
the Cutoff Date (including amounts due on or before the Cutoff Date but
received by the Seller on or after the Cutoff Date);
(ii) the security interests in the Financed Vehicles granted by
Obligors pursuant to the 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 Receivables from claims on any physical damage, credit life or
disability insurance policies, if any, covering Financed Vehicles or
Obligors, including rebates of insurance premiums relating to the
Receivables and any proceeds from the liquidation of the 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;
4
<PAGE>
(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 this Agreement shall constitute a sale of the
Receivables and the 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 Receivables and the 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 Receivables and the 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 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 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 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. 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.
(i) Schedule of Representations. The representations and warranties
set forth on the Schedule of Representations with respect to the
Receivables as of the date hereof.
(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.
5
<PAGE>
(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 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
6
<PAGE>
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 500 Office Center Drive, Suite 400, Fort Washington, PA 19034.
(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 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
7
<PAGE>
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 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
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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 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 Receivables
and the 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. 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
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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.
(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 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 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. 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,
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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.
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.
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(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 the conveyance or ownership of the 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
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
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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 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
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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) and with prior written notice to the Rating Agencies
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), with prior written notice to
the Rating Agencies and with the consent of the Trust 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
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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, 400 Office Center Drive, Suite 400, Fort Washington, Pennsylvania
19034, 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.
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.
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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 and shall
have granted such security interest.
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. 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 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.
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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.
[Signature Page Follows]
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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 /s/ David Plante
-----------------------------------
Name: David Plante
Title: President
ADVANTA AUTO RECEIVABLES CORP. I,
as Purchaser
By /s/ David Plante
-----------------------------------
Name: David Plante
Title: President
Acknowledged and Accepted:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
As Trustee and Trust Collateral Agent
By /s/ Daniel Rolczynski
------------------------------------
Name: Daniel W. Rolczynski
Title: Corporate Trust Officer
[Signature Page for Purchase Agreement]
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SCHEDULE A
SCHEDULE OF RECEIVABLES
SCH-A-1
<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.
4. Origination. Each Receivable was originated in the United States and
materially conforms to all requirements of the "Dealer Underwriting Guide"
applicable to
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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, 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, 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.
12. Chattel Paper. The Receivables constitute chattel paper within the
meaning of the UCC as in effect in the States of Delaware, Nevada, Pennsylvania
and New York.
13. One Original. There is only one original executed copy of each
Receivable.
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14. Receivable Files Complete. There exists a Receivable File pertaining to
each Receivable and such Receivable File contains, without limitation, subject
to any exceptions which may appear on any exception report delivered by the
Trust Collateral Agent on the Closing Date to the Insurer, the Owner Trustee,
the Seller and the Master Servicer and which the Seller shall have 30 Business
Days to cure, (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, (c) an original credit application or copy thereof 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 and (d) evidence of any
Insurance Policy. 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, 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, Dealer
Assignments or Unaffiliated Originator Receivables Purchase Agreements or to
payments due under such Receivables.
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<PAGE>
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 and will show the Seller, the Trust
Collateral Agent, Bankers Trust Company 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, Bankers Trust Company or an Unaffiliated Originator or Bankers Trust
Company 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.
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.
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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 29 days as of the Cut-Off Date and other than
payment delinquencies of more than 29 days which have been cured and which the
Obligor of such Receivable has had no further delinquency of more than 29 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 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 Receivables. (i) Each Receivable had a
remaining maturity, as of the Cutoff Date, of at least 8 months but not more
than 65 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 $30,000; (iv) each Receivable had a
principal balance as of the Cutoff Date of at least $640 and not more than
$30,000; (v) each Receivable has an Annual Percentage Rate of at least 8% and
not more than 32.00%; (vi) no Receivable was more than 30 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
_______; (ix) the principal balance of each Receivable set forth in the Schedule
of Receivables is true and accurate as of the Cutoff Date and (x) as of the
Cutoff Date, approximately 81% by the aggregate principal balance of the
Receivables is attributable to loans for the purchase of used financed vehicles
and approximately 19% of the aggregate Principal Balance for all the Receivables
is attributable to loans for the purchase of used Financed Vehicles.
26. Certain Characteristics of Flow Receivables. With respect to each Flow
Receivable(i) the minimum credit bureau risk or FICO score for the related
Obligor was
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540 as reported on the related credit report, (ii) the related Obligor had prior
automobile credit history as reported by either Equifax, TransUnion or TRW and
(iii) such Receivable was originated in accordance with the Seller's established
underwriting guidelines and no exception to such guidelines was made to take
into account the size of the downpayment provided by the related Obligor.
27. Servicing Conversion. As of the Closing Date, all of the Bulk
Receivables are being serviced by the Master Servicer and, except with respect
to Bulk Receivables with aggregate Principal Balances not in excess of
$10,000,000, at least one payment has been received by the Master Servicer from
the related Obligor with respect to such Bulk Receivable..
A-6
<PAGE>
EXECUTION COPY
INDEMNIFICATION AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
ADVANTA AUTO RECEIVABLES CORP. I
and
PRUDENTIAL SECURITIES INCORPORATED
Dated as of December 23, 1997
Advanta Automobile Receivables Trust 1997-2
$20,000,000 5.85625 Class A-1 Asset Backed Notes
$31,000,000% 6.19% Class A-2 Asset Backed Notes
$29,000,000 6.22% Class A-3 Asset Backed Notes
$16,192,000 6.26% Class A-4 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 December 23, 1997, among FINANCIAL
SECURITY ASSURANCE INC. ("Financial Security"), ADVANTA AUTO RECEIVABLES CORP. I
(the "Company") and PRUDENTIAL SECURITIES INCORPORATED (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 December 1, 1997 between
Advanta Automobile Receivables Trust 1997-2 and Norwest Bank Minnesota, National
Association, as trustee and trust collateral agent.
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<PAGE>
"Insurance Agreement" means the Insurance and Indemnity Agreement, dated as
of December 1, 1997, among Financial Security, Advanta Automobile Receivables
Trust 1997-2, 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 1997-2
$20,000,000 5.85625% Class A-1 Asset Backed Notes, $31,000,000 6.19% Class A-2
Asset Backed Notes, $29,000,000 6.22% Class A-3 Asset Backed Notes and
$16,192,000 6.26% Class A-4 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 1, 1997, as amended and restated dated as of December 1, 1997 among
the Company, the Collateral Agents specified therein, Financial Security and the
Trustees 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
December 17, 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
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<PAGE>
general principles of equity and subject, in the case of this Agreement, to
principles of 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, 1996 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
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<PAGE>
any untrue statement of a 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, 1997-2,
$20,000,000 5.85625% Class A-1 Asset Backed Notes,
$31,000,000 6.19% Class A-2 Asset Backed Notes,
$29,000,000 6.22% Class A-3 Asset Backed Notes and
$16,192,000 6.26% Class A-4 Asset Backed Notes.
Confirmation: (212) 826-0100
Facsimile Nos.: (212) 339-3518, (212) 339-3529
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<PAGE>
(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 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: Prudential Securities Incorporated
One New York Plaza, 17th Floor
New York, New York 10292-2017
Attention: Asset-Backed Finance Group
Facsimile No: (212) 778-7401
Confirm No: (212) 778-1000
(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: /s/ Daniel Farrell
-------------------------------
Name: Daniel Farrell
Title: Managing Director
ADVANTA AUTO RECEIVABLES CORP. I
By: /s/ David Plante
-------------------------------
Name: David Plante
Title: President
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Scott Corman
-------------------------------
Name: Scott Corman
Title: Vice President
<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 December 17, 1997, which supplements the Prospectus dated March 24, 1997
(the "Offering Document") of the
<PAGE>
Company 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>
CONSENT of INDEPENDENT ACCOUNTANTS
---------------
We consent to the incorporation by reference in the Prospectus Supplement of
Advanta Auto Receivable Corp. relating to the Advanta Automobile Receivables
Trust 1997-2 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 & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
New York, New York
December 22, 1997
