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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)
June 29, 1998
Advanta Automobile Receivables Trust 1998-1
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(Exact name of registrant as specified in its charter)
United States 333-19733 pending
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(State or Other Jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification No.)
c/o Advanta Auto 19034
Finance Corporation ------------
Attention: Kevin Shipe (Zip Code)
500 Office Center Drive, Suite 400
Ft. Washington, Pennsylvania
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code (215) 444-4200
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Securities and the Auto Loans
Advanta Auto Finance Corporation, as Sponsor, has registered
an issuance of $300,000,000 in principal amount of Securities (the
"Securities") on Form S-3. Pursuant to the Registration Statement, Advanta
Automobile Receivables Trust 1998-1 (the "Trust") issued $41,000,000 5.90%
Class A-1 Asset Backed Notes and $16,602,000 6.09% Class A-2 Asset Backed Notes
(together, the "Notes") on June 29, 1998. The Trust also issued, in a private
placement, $16,247,642 6.09% 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 June 1, 1998, 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 June 25, 1998 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 June 25, 1998, among
Advanta Auto Finance Corporation and Salomon Brothers Inc.
4.1 Indenture, dated as of June 1, 1998, between Advanta
Automobile Receivables Trust 1998-1 and Norwest Bank Minnesota, National
Association, as Trustee and Trust Collateral Agent.
4.2 Trust Agreement, dated as of June 1, 1998, between
Advanta Auto Receivables Corp. I, as Depositor, and Wilmington Trust Company,
as Owner Trustee.
4.3 Sale and Servicing Agreement, dated as of June 1, 1998,
among Advanta Automobile Receivables Trust 1998-1, 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 June 29, 1998 and
delivered by Financial Security Assurance Inc.
8.1 Opinion of Dewey Ballantine LLP regarding tax matters,
dated as of June 29, 1998.
10.1 Purchase Agreement, dated as of June 1, 1998, among
Advanta Auto Finance Corporation, as Seller, and Advanta Auto Receivables Corp.
I, as Purchaser.
10.2 Indemnification Agreement, dated as of June 1, 1998,
among Financial Security Assurance Inc., Advanta Auto Receivables Corp. I and
Solomon Brothers Inc.
23.1 Consent of Coopers & Lybrand L.L.P. regarding financial
statements of Financial Security Assurance Inc. and their report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1998-1
By: Advanta Auto Finance Corporation, as Master Servicer
By: /s/ Mark Dunsheath
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Name: Mark Dunsheath
Title: Vice President
Dated: July 10, 1998
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EXHIBIT INDEX
Exhibit No. Description
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<TABLE>
<S> <C>
1.1 Underwriting Agreement, dated as of June 25, 1998, among Advanta Auto Finance
Corporation and Salomon Brothers Inc.
4.1 Indenture, dated as of June 1, 1998, between Advanta Automobile Receivables
Trust 1998-1 and Norwest Bank Minnesota, National Association, as Trustee and
Trust Collateral Agent.
4.2 Trust Agreement, dated as of June 1, 1998, between Advanta Auto Receivables Corp. I,
as Depositor, and Wilmington Trust Company, as Owner Trustee.
4.3 Sale and Servicing Agreement, dated as of June 1, 1998, among Advanta
Automobile Receivables Trust 1998-1, 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 June 29, 1998 and delivered by
Financial Security Assurance Inc.
8.1 Opinion of Dewey Ballantine LLP regarding tax matters, dated as of June 29,
1998.
10.1 Purchase Agreement, dated as of June 1, 1998, among Advanta Auto Finance
Corporation, as Seller, and Advanta Auto Receivables Corp. I, as Purchaser.
10.2 Indemnification Agreement, dated as of June 1, 1998, among Financial Security
Assurance Inc., Advanta Auto Receivables Corp. I and Salomon Brothers Inc.
23.1 Consent of Coopers & Lybrand L.L.P. regarding financial statements of
Financial Security Assurance Inc. and their report.
</TABLE>
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EXECUTION COPY
ADVANTA AUTO FINANCE CORPORATION
Automobile Receivables Asset Backed Notes
Series 1998-1
41,000,000 5.90% Class A-1 Asset Backed Notes
16,602,000 6.09% Class A-2 Asset Backed Notes
UNDERWRITING AGREEMENT
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Advanta Auto Receivables Corp. I, 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 June 1, 1998, between Advanta Automobile
Receivables Trust 1998-1 (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 June 1, 1998, by and
among the Company 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 June 1, 1998 among Receivables I, Advanta Auto
Finance corportation ("Advanta Auto"), 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, each of
which has previously been furnished to you. Such registration
statement,
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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
make the statements therein, in the light of the circumstance under
which they
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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 dated March 24, 1997 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
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to Rule 415 need be included in such registration statement at the
effective date thereof with respect to the securities so offered.
2. Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties set forth herein, the
Company agrees to sell to the Underwriter, and the Underwriter agrees to
purchase from the Company the Securities, at the purchase price and in the
principal amount set forth in Schedule I attached hereto.
3. Delivery and Payment. Delivery of and payment for the
Securities to be purchased by the Underwriter shall be made at the offices of
Dewey Ballantine 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 June 29, 1998 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 Advanta Auto 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
Company 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 Company are owned by Advanta Auto
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 Trust in accordance with
its terms (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency,
moratorium or other law affecting creditors' rights
generally from time to time in effect); and the Securities
have been duly authorized and, when executed and
authenticated in accordance with the provisions of the
Indenture and
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delivered to and paid for by the Underwriter pursuant to
this Agreement will constitute legal, valid and binding
obligations of the Trust 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 Advanta Auto, 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 or Advanta
Auto 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 or will be 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 is a party or is
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.
(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 Final 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 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.
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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, or in the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus,
or in any amendment thereof or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information (including any
Derived Information (as defined in Section 7(e) herein)) furnished to
the Company by or on behalf of any Underwriter or the Insurer through
the Underwriter specifically for inclusion therein; and provided,
further, that as toany Preliminary Final Prospectus this
10
<PAGE>
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
Final 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 Final 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 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
11
<PAGE>
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 Final 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 Automobile
Receivables which comprise part of the assets of the Trust.
The terms "Collateral term sheet" and "Structural term sheet"
shall have the respective meanings assigned to them in the February 13, 1995
letter (the "PSA Letter") of Cleary, Gottlieb, 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
12
<PAGE>
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 (f), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 7, each person who controls the Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of the Underwriter shall have the same rights to contribution as the
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the company shall have
the came rights to contribution as the Company, subject in each case to the
applicable terms and condition of this paragraph (d).
8. Termination. This Agreement shall be subject to termination
in the discretion of the Underwriter, by notice given to the Company prior to
delivery of and
13
<PAGE>
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 provisions of
Sections 6 and 7 hereof shall survive the termination or cancellation of this
Agreement.
10. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Underwriter, will be mailed,
delivered or telegraphed and confirmed to the Underwriter, at Seven World Trade
Center, New York, New York 10048; or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at 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 RECEIVABLES CORP. I
By: /s/ Mark Dunsheath
------------------------------
Name: Mark Dunsheath
Title: Vice President
The foregoing Agreement
is hereby confirmed and
accepted as of June 25, 1998:
SALOMON BROTHERS INC
By: /s/ John L. McWilliams, IV
---------------------------
Name: John L. McWilliams, IV
Title: Associate
[Signature Page for the Underwriting Agreement]
15
<PAGE>
SCHEDULE I
- --------------------------------------------------------------------------------
Class Initial Principal Amount of Securities Purchase Price to Underwriter
Purchased by Underwriter disregarding accrued interest
- -------------------------------------------------------------------------------
Class A-1 $41,000,000 99.5568973%
- -------------------------------------------------------------------------------
Class A-2 $16,602,000 99.5560173%
- -------------------------------------------------------------------------------
16
<PAGE>
EXHIBIT 4.1
<PAGE>
EXECUTION COPY
- -------------------------------------------------------------------------------
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1998-1
CLASS A-1 5.90% Asset Backed Notes
CLASS A-2 6.09% Asset Backed Notes
INDENTURE
Dated as of June 1, 1998
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee and Trust Collateral Agent
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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<S> <C> <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..........................14
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........................................................18
SECTION 2.10 Book-Entry Notes.............................................................18
SECTION 2.11 Notices to Clearing Agency...................................................19
SECTION 2.12 Definitive Notes.............................................................19
ARTICLE III. Covenants....................................................................20
SECTION 3.1 Payment of Principal and Interest............................................20
SECTION 3.2 Maintenance of Office or Agency..............................................20
SECTION 3.3 Money for Payments to be Held in Trust.......................................20
SECTION 3.4 Existence....................................................................22
SECTION 3.5 Protection of Trust Property.................................................22
SECTION 3.6 Opinions as to Trust Property................................................23
SECTION 3.7 Performance of Obligations; Servicing of Receivables.........................23
SECTION 3.8 Negative Covenants...........................................................24
SECTION 3.9 Annual Statement as to Compliance............................................25
SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain Terms...........................25
SECTION 3.11 Successor or Transferee......................................................28
SECTION 3.12 No Other Business............................................................28
SECTION 3.13 No Borrowing.................................................................28
SECTION 3.14 Master Servicer's Obligations................................................28
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities............................28
SECTION 3.16 Capital Expenditures.........................................................29
SECTION 3.17 Compliance with Laws.........................................................29
SECTION 3.18 Restricted Payments..........................................................29
SECTION 3.19 Notice of Events of Default..................................................29
SECTION 3.20 Further Instruments and Acts.................................................29
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 3.21 Amendments of Sale and Servicing Agreement and Trust Agreement...............29
SECTION 3.22 Income Tax Characterization..................................................30
ARTICLE IV. Satisfaction and Discharge...................................................30
SECTION 4.1 Satisfaction and Discharge of Indenture......................................30
SECTION 4.2 Application of Trust Money...................................................31
SECTION 4.3 Repayment of Monies Held by Note Paying Agent................................31
ARTICLE V. Remedies.....................................................................32
SECTION 5.1 Events of Default............................................................32
SECTION 5.2 Rights Upon Event of Default.................................................33
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee..............35
SECTION 5.4 Remedies.....................................................................37
SECTION 5.5 Optional Preservation of the Receivables.....................................38
SECTION 5.6 Priorities...................................................................38
SECTION 5.7 Limitation of Suits..........................................................39
SECTION 5.8 Unconditional Rights of Noteholders To Receive Principal and Interest........40
SECTION 5.9 Restoration of Rights and Remedies...........................................40
SECTION 5.10 Rights and Remedies Cumulative...............................................41
SECTION 5.11 Delay or Omission Not a Waiver...............................................41
SECTION 5.12 Control by Noteholders.......................................................41
SECTION 5.13 Waiver of Past Defaults......................................................42
SECTION 5.14 Undertaking for Costs........................................................42
SECTION 5.15 Waiver of Stay or Extension Laws.............................................42
SECTION 5.16 Action on Notes..............................................................43
SECTION 5.17 Performance and Enforcement of Certain Obligations...........................43
SECTION 5.18 Subrogation..................................................................43
SECTION 5.19 Preference Claims............................................................44
ARTICLE VI. The Trustee and the Trust Collateral Agent...................................45
SECTION 6.1 Duties of Trustee............................................................45
SECTION 6.2 Rights of Trustee and the Trust Collateral Agent.............................47
SECTION 6.3 Individual Rights of Trustee.................................................48
SECTION 6.4 Trustee's Disclaimer.........................................................48
SECTION 6.5 Notice of Defaults...........................................................48
SECTION 6.6 Reports by Trustee to Holders................................................49
SECTION 6.7 Compensation and Indemnity...................................................49
SECTION 6.8 Replacement of Trustee.......................................................50
SECTION 6.9 Successor Trustee by Merger..................................................51
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee................................52
SECTION 6.11 Eligibility: Disqualification................................................53
SECTION 6.12 Preferential Collection of Claims Against Issuer.............................53
SECTION 6.13 Appointment and Powers.......................................................53
SECTION 6.14 Performance of Duties........................................................54
SECTION 6.15 Limitation on Liability......................................................54
ii
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 6.16 Reliance Upon Documents......................................................55
SECTION 6.17 Successor Trust Collateral Agent.............................................55
SECTION 6.18 Compensation.................................................................56
SECTION 6.19 Representations and Warranties of the Trustee and the Trust Collateral Agent.57
SECTION 6.20 Waiver of Setoffs............................................................57
SECTION 6.21 Control by the Controlling Party.............................................57
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............................................................55
SECTION 7.4 Reports by Trustee...........................................................56
ARTICLE VIII. Accounts, Disbursements and Releases.........................................56
SECTION 8.1 Collection of Money..........................................................56
SECTION 8.2 Release of Trust Property....................................................57
SECTION 8.3 Opinion of Counsel...........................................................57
ARTICLE IX. Supplemental Indentures......................................................57
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders.......................57
SECTION 9.2 Supplemental Indentures with Consent of Noteholders..........................59
SECTION 9.3 Execution of Supplemental Indentures.........................................60
SECTION 9.4 Effect of Supplemental Indenture.............................................60
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....................................................61
SECTION 10.3 Notes Payable on Redemption Date.............................................62
ARTICLE XI. Miscellaneous................................................................62
SECTION 11.1 Compliance Certificates and Opinions, etc....................................62
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.........................65
SECTION 11.5 Notices to Noteholders; Waiver...............................................66
SECTION 11.6 Alternate Payment and Notice Provisions......................................67
SECTION 11.7 Conflict with Trust Indenture Act............................................67
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................................................................68
SECTION 11.14 Counterparts.................................................................68
iii
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<TABLE>
<S> <C> <C>
SECTION 11.15 Recording of Indenture.......................................................68
SECTION 11.16 Trust Obligation.............................................................69
SECTION 11.17 No Petition..................................................................69
SECTION 11.18 Inspection...................................................................69
SECTION 11.19 Limitation of Liability......................................................70
</TABLE>
EXHIBITS
Exhibit A-1 -- Form of Class A-1 Note
Exhibit A-2 -- Form of Class A-2 Note
iv
<PAGE>
INDENTURE dated as of June 1, 1998, between ADVANTA
AUTOMOBILE RECEIVABLES TRUST 1998-1, 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 5.90% Asset Backed Notes (the "Class A-1 Notes") and Class A-2 6.09%
Asset Backed Notes (the "Class A-2 Notes"), (the Class A-2 Notes, together
with the Class A-1 Notes, the "Notes"):
As security for the payment and performance by the Issuer of
its obligations under this Indenture and the Notes, the Issuer has agreed to
assign the 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 June 1, 1998 (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 the
following (collectively, the "Collateral"): (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.
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
any of the states of Delaware, Minnesota, New York, Pennsylvania and Nevada
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 5.90% Asset Backed
Notes, substantially in the form of Exhibit A-1.
"Class A-1 Interest Rate" means, 5.90% per annum (computed
on the basis of a 360-day year consisting of twelve 30-day months).
"Class A-2 Notes" means the Class A-2 6.09% Asset Backed
Notes, substantially in the form of Exhibit A-2.
"Class A-2 Interest Rate" means, 6.09% 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 June 29, 1998.
"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 the date of 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 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 June 12, 1998.
"Default" means any occurrence that is, or with notice or
the lapse of time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.10.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Executive Officer" means, with respect to any corporation,
the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation.
"Grant" means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, grant a lien upon
and a security interest in and right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of the Collateral or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Collateral and all other
monies payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights
and options, to bring proceedings in the name of the Granting party or
otherwise and generally to do and receive anything that the Granting party is
or may be entitled to do or receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a
Note is registered on the Note Register.
"Indebtedness" means, with respect to any Person at any
time, (a) indebtedness or liability of such Person for borrowed money whether
or not evidenced by bonds, debentures, notes or other instruments, or for the
deferred purchase price of property or services (including trade obligations);
(b) obligations of such Person as lessee under leases which should have been
or should be, in accordance with generally accepted accounting principles,
recorded as capital leases; (c) current liabilities of such Person in respect
of unfunded vested benefits under plans covered by Title IV of ERISA; (d)
obligations issued for or liabilities incurred on the account of such Person;
(e) obligations or liabilities of such Person arising under acceptance
facilities; (f) obligations of such Person under any guarantees, endorsements
(other than for collection or deposit in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds to invest in any Person or otherwise to assure a creditor against
loss; (g) obligations of such Person secured by any lien on property or assets
of such Person, whether or not the obligations have been assumed by such
Person; or (h) obligations of such Person under any interest rate or currency
exchange agreement.
"Indenture" means this Indenture as amended and supplemented
from time to time.
"Independent" means, when used with respect to any specified
Person, that the person (a) is in fact independent of the Issuer, any other
obligor upon the Notes, the Seller and any Affiliate of any of the foregoing
persons, (b) does not have any direct
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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, and (ii) Class A-2 Notes, the Class A-2
Interest Rate.
"Issuer" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each other
obligor on the Notes.
"Issuer Order" and "Issuer Request" means a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Trustee.
"Issuer Secured Obligations" means the Insurer Issuer
Secured Obligations and the Trustee Issuer Secured Obligations.
"Issuer Secured Parties" means each of the Trustee in
respect of the Trustee Issuer Secured Obligations and the Insurer in respect
of the Insurer Issuer Secured Obligations.
"Note" means a Class A-1 Note or a Class A-2 Note.
"Note Owner" means, with respect to a Book-Entry Note, the
person who is the owner of such Book-Entry Note, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of such
Clearing Agency).
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"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:
(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
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(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.
"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
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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 June 1, 1998, 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.
"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
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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.
"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.
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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) any form of the word "include" shall be deemed to be
followed by the words "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 Receivable or the
interest therein of the Trust, the Noteholders, the Certificateholders or the
Insurer (or any similar or analogous determination), such determination shall
be made by the Insurer in its reasonable discretion and after notifying the
Trustee and the Seller of such potential breach or (x) if an Insurer Default
shall have occurred and be continuing, or (y) upon (i) the expiration of the
Note Policy in accordance with the terms thereof and (ii) the payment of all
amounts owing to the Insurer under this Agreement and the Insurance Agreement,
by a Security Majority.
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SECTION 1.6 Conflict with TIA. If any provision hereof
limits, qualifies or conflicts with a provision of the TIA that is required
under the TIA to be part of and govern this Indenture, the latter provision
shall control. If any provision of this Indenture modifies or excludes any
provision of the TIA that may be so modified or excluded, the latter
provisions shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
ARTICLE II.
The Notes
SECTION 2.1 Form. The Class A-1 Notes and the Class A-2
Notes, in each case together with the Trustee's certificate of authentication,
shall be in substantially the form set forth in Exhibits A-1 and A-2,
respectively, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by
the officers executing such Notes, as evidenced by their execution of the
Notes. Any portion of the text of any Note may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed,
lithographed or engraved or produced by any combination of these methods (with
or without steel engraved borders), all as determined by the officers
executing such Notes, as evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The
terms of the Notes set forth in Exhibits A-1 and A-2 are part of the terms of
this Indenture.
SECTION 2.2 Execution, Authentication and Delivery. The
Notes shall be executed on behalf of the Issuer by any of its Authorized
Officers. The signature of any such Authorized Officer on the Notes may be
original or facsimile.
Notes bearing the original or facsimile signature of
individuals who were at any time Authorized Officers of the Issuer shall bind
the Issuer, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such Notes or
did not hold such offices at the date of such Notes.
The Trustee shall upon receipt of the Note Policy and Issuer
Order for authentication and delivery, authenticate and deliver Class A-1
Notes for original issue in an aggregate principal amount of $41,000,000 and
Class A-2 Notes for original issue in an aggregate principal amount of
$16,602,000. The Class A-1 Notes and the Class A-2 Notes outstanding at any
time may not exceed such principal 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
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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 $1,000).
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.
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
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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 and A-2
duly executed by the Holder thereof or such Holder's attorney duly authorized
in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar which requirements
include membership or participation in Securities Transfer Agents Medallion
Program ("Stamp") or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for,
Stamp, all in accordance with the Exchange Act, and (ii) accompanied by such
other documents as the Note Registrar may require.
No service charge shall be made to a Holder for any
registration of transfer or exchange of Notes, but the Note Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.3 or 9.6 not
involving any transfer.
Notwithstanding the preceding provisions of this section,
the Issuer shall not be required to make, and the Note Registrar shall not
register, transfers or exchanges of Notes selected for redemption for a period
of 15 days preceding the Distribution Date.
Any Noteholder using the assets of (i) an employee benefit
plan (as defined in Section 3(3) of ERISA) that is subject to the provisions
of Title I of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code
or (iii) any entity whose underlying assets include plan assets by reason of a
plan's investment in the entity to
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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 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.
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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 and the Class A-2 Note set forth in Exhibits A-1 and A-2,
respectively, and such interest shall be due and payable on each Distribution
Date as specified therein. Any installment of interest or
principal, if any, payable on any Note which is punctually paid or duly
provided for by the Issuer on the applicable Distribution Date shall be paid
to the Person in whose name such Note (or one or more Predecessor Notes) is
registered on the Record Date, by check mailed first-class, postage prepaid,
to such Person's address as it appears on the Note Register on such Record
Date, except that, unless Definitive Notes have been issued pursuant to
Section 2.12, with respect to Notes registered on the Record Date in the name
of the nominee of the Clearing Agency (initially, such nominee to be Cede &
Co.), payment will be made by wire transfer in immediately available funds to
the account designated by such nominee and except for the final installment of
principal payable with respect to such Note on a Distribution Date or on the
Final Scheduled Distribution Date (and except for the Redemption Price for any
Note called for redemption pursuant to Section 10.1(a)) which shall be payable
as provided below. The funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.3.
(b) The principal of each Note shall be payable in
installments on each Distribution Date as provided in the forms of the Class
A-1 Note and the Class A-2 Note set forth in Exhibits A-1 and A-2,
respectively. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes shall be due and payable, if not previously paid, on the
date on which an Event of Default shall have occurred and be continuing, if
the Trustee or the Holders of the Notes 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
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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 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;
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(ii) the Note Registrar and the Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and
the giving of instructions or directions hereunder) as the sole
Holder of the Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions
of this Section shall control;
(iv) the rights of Note Owners shall be exercised only
through the Clearing Agency and shall be limited to those established
by law and agreements between such Note Owners and the Clearing
Agency and/or the Clearing Agency Participants. Unless and until
Definitive Notes are issued pursuant to Section 2.12, the initial
Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit payments of principal of
and interest on the Notes to such Clearing Agency Participants;
(v) whenever this Indenture requires or permits actions to
be taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount of the
Notes, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions to
such effect from Note Owners and/or Clearing Agency Participants
owning or representing, respectively, such required percentage of the
beneficial interest in the Notes and has delivered such instructions
to the Trustee; and
(vi) Note Owners may receive copies of any reports sent to
Noteholders pursuant to this Indenture, upon written request,
together with a certification that they are Note Owners and payment
of reproduction and postage expenses associated with the distribution
of such reports, from the Trustee at the Corporate Trust Office.
SECTION 2.11 Notices to Clearing Agency. Whenever a notice
or other communication to the Noteholders is required under this Indenture,
unless and until Definitive Notes shall have been issued to Note Owners
pursuant to Section 2.12, the Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes to the
Clearing Agency, and shall have no obligation to the Note Owners.
SECTION 2.12 Definitive Notes. If (i) the Master Servicer
advises the Trustee in writing that the Clearing Agency is no longer willing
or able to properly discharge its responsibilities with respect to the Notes,
and the Master Servicer is unable to locate a qualified 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,
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then the Clearing Agency shall notify all Note Owners and the Trustee of the
occurrence of any such event and of the availability of Definitive Notes to
Note Owners requesting the same. Upon surrender to the Trustee of the
typewritten Note or Notes representing the Book-Entry Notes by the Clearing
Agency, accompanied by registration instructions, the Issuer shall execute and
the Trustee shall authenticate the Definitive Notes in accordance with the
instructions of the Clearing Agency. None of the Issuer, the Note Registrar or
the Trustee shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Notes, the Trustee shall
recognize the Holders of the Definitive Notes as Noteholders.
ARTICLE III.
Covenants
SECTION 3.1 Payment of Principal and Interest. The Issuer
will duly and punctually pay the principal of and interest on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting
the foregoing, the Issuer will cause to be distributed all amounts on deposit
in the Note Distribution Account on a Distribution Date deposited therein
pursuant to the Sale and Servicing Agreement (i) for the benefit of the Class
A-l Notes, to Class A-1 Noteholders, and (ii) for the benefit of the Class A-2
Notes, to the Class A-2 Noteholders. Amounts properly withheld under the Code
or any applicable state tax law 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 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
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Paying Agent shall agree with the Trustee (and if the Trustee acts as Note
Paying Agent, it hereby so agrees), subject to the provisions of this Section,
that such Note Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Trustee written notice of any default by the
Issuer of which it has actual knowledge (or any other obligor upon
the Notes) in the making of any payment required to be made with
respect to the Notes;
(iii) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to
the Trustee all sums so held in trust by such Note Paying Agent;
(iv) immediately resign as a Note Paying Agent and forthwith
pay to the Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be
met by a Note Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Issuer Order direct any Note Paying Agent to pay to the Trustee all sums held
in trust by such Note Paying Agent, such sums to be held by the Trustee upon
the same trusts as those upon which the sums were held by such Note Paying
Agent; and upon such a payment by any Note Paying Agent to the Trustee, such
Note Paying Agent shall be released from all further liability with respect to
such money.
Subject to applicable laws with respect to the escheat of
funds, any money held by the Trustee or any Note Paying Agent in trust for the
payment of any amount due with respect to any Note and remaining unclaimed for
two years after such amount has become due and payable shall be discharged
from such trust and be paid to the Issuer on Issuer Request, with the consent
of the Insurer (unless an Insurer Default shall have occurred and be
continuing); and 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
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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 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;
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(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 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
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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.
(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;
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(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
(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
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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 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
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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
(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
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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 1998-1 will be released from every covenant and agreement of
this Indenture to be observed or performed on the part of the Issuer with
respect to the Notes immediately upon the delivery of written notice to the
Trustee stating that Advanta Automobile Receivables Trust 1998-1 is to be so
released.
SECTION 3.12 No Other Business. The Issuer shall not engage
in any business other than financing, purchasing, owning, selling and managing
the Receivables in the manner contemplated by this Indenture and the Basic
Documents and activities incidental thereto.
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
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.
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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 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
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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 t
he giving of notice of redemption by the Trustee in the
name, and at the expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited
with the Trust Collateral Agent cash or direct obligations
of or obligations guaranteed by the United States of America
(which will mature prior to the date such amounts are
payable), in trust for such purpose, in an amount sufficient
to pay and discharge the entire indebtedness on such Notes
not theretofore delivered to the Trustee for cancellation
when due on the Final Scheduled Distribution Date or
Redemption Date (if Notes shall have been called for
redemption pursuant to Section 10.1(a)), as the case may be;
(B) the Issuer has paid or caused to be paid all Insurer Issuer Secured
Obligations and all Trustee Issuer Secured Obligations; and
(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
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herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
SECTION 4.2 Application of Trust Money . All monies
deposited with the Trustee pursuant to Section 4.1 hereof shall be held in
trust and applied by it, in accordance with the provisions of the Notes and
this Indenture, to the payment, either directly or through any Note Paying
Agent, as the Trustee may determine, to the Holders of the particular Notes
for the payment or redemption of which such monies have been deposited with
the Trustee, of all sums due and to become due thereon for principal and
interest; but such monies need not be segregated from other funds except to
the extent required herein or in the Sale and Servicing Agreement or required
by law.
SECTION 4.3 Repayment of Monies Held by Note Paying Agent.
In connection with the satisfaction and discharge of this Indenture with
respect to the Notes, all monies then held by any Note Paying Agent other than
the Trustee under the provisions of this Indenture with respect to such Notes
shall, upon demand of the Issuer, be paid to the Trustee to be held and
applied according to Section 3.3 and thereupon such Note Paying Agent shall be
released from all further liability with respect to such monies.
ARTICLE V.
Remedies
SECTION 5.1 Events of Default. "Event of Default," wherever
used herein, means any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(i) default in the payment of any interest on any Note when
the same becomes due and payable, and such default shall continue for
a period of five days (solely for purposes of this clause, a payment
on the Notes funded by the Insurer or the Collateral Agent pursuant
to the Spread Account Agreement shall be deemed to be a payment made
by the Issuer); or
(ii) default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due
and payable and such default shall continue for a period of five days
(solely for purposes of this clause, a payment on the Notes funded by
the Insurer or the Collateral Agent, 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
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Issuer and the Trustee, and not rescinded, a written notice specifying
that such Insurance Agreement Indenture Cross Default constitutes an
Event of Default under the Indenture; or
(iv) so long as an Insurer Default shall have occurred and
be continuing, default in the observance or performance of any
covenant or agreement of the Issuer made in this Indenture (other
than a covenant or agreement, a default in the observance or
performance of which is elsewhere in this Section specifically dealt
with), or any representation or warranty of the Issuer made in this
Indenture or in any certificate in connection herewith proving to
have been incorrect in any material respect as of the time when the
same shall have been made, and such default shall continue or not be
cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been
eliminated or otherwise cured, for a period of 30 days (or for such
longer period, not in excess of 90 days, as may be reasonably
necessary to remedy such default; provided that such default is
capable of remedy within 90 days or less and the Master Servicer, on
behalf of the Owner Trustee, delivers an Officer's Certificate to the
Trustee to the effect that the Issuer has commenced, or will promptly
commence and diligently pursue, all reasonable efforts to remedy such
default) after there shall have been given, by registered or
certified mail, to the Issuer by the Trustee or to the Issuer and the
Trustee by the Holders of at least 25% of the Outstanding Amount of
the Notes, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(v) so long as an Insurer Default shall have occurred and be
continuing, the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Property in an involuntary case under
any applicable Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Issuer or for any substantial part of the Trust
Property, or ordering the winding-up or liquidation of the Issuer's
affairs, and such decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or
(vi) so long as an Insurer Default shall have occurred and
be continuing, the commencement by the Issuer of a voluntary case
under any applicable Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by the Issuer
to the entry of an order for relief in an involuntary case under any
such law, or the consent by the Issuer to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial
part of the Trust Property, or the making by the Issuer of any
general assignment for the benefit of creditors, or the failure by
the Issuer generally to pay its debts as such debts become due, or
the taking of action by the Issuer in furtherance of any of the
foregoing.
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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.
(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
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(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
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
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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;
(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
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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):
(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
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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 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
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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;
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;
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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;
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
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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 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;
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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 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.
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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 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
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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, 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.
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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;
(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.
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(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.
(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
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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.
(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
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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 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
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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 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
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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
(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
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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 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
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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 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.
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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 appoint
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 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.
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SECTION 6.15 Limitation on Liability. Neither the Trust
Collateral Agent nor any of its directors, officers, employees and agents
shall be liable for any action taken or omitted to be taken by it or them
hereunder, or in connection herewith, except that the Trust Collateral Agent
shall be liable for its negligence, bad faith or willful misconduct; nor shall
the Trust Collateral Agent be responsible for the validity, effectiveness,
value, sufficiency or enforceability against the Issuer of this Indenture or
any of the Indenture Collateral (or any part thereof). Notwithstanding any
term or provision of this Indenture, the Trust Collateral Agent shall incur no
liability to the Issuer or the Issuer Secured Parties for any action taken or
omitted by the Trust Collateral Agent in connection with the Indenture
Collateral, except for the negligence, bad faith or willful misconduct on the
part of the Trust Collateral Agent, and, further, shall incur no liability to
the Issuer Secured Parties except for negligence, bad faith or willful
misconduct in carrying out its duties to the Issuer Secured Parties. Subject
to Section 6.16, the Trust Collateral Agent shall be protected and shall incur
no liability to any such party in conclusively relying upon the accuracy,
acting in reliance upon the contents, and assuming the genuineness of any
notice, demand, certificate, signature, instrument or other document
reasonably believed by the Trust Collateral Agent to be genuine and to have
been duly executed by the appropriate signatory, and (absent actual knowledge
to the contrary) the Trust Collateral Agent shall not be required to make any
independent investigation with respect thereto. The Trust Collateral Agent
shall at all times be free independently to establish to its reasonable
satisfaction, but shall have no duty to independently verify, the existence or
nonexistence of facts that are a condition to the exercise or enforcement of
any right or remedy hereunder or under any of the Basic Documents. The Trust
Collateral Agent may consult with counsel, and shall not be liable for any
action taken or omitted to be taken by it hereunder in good faith and in
accordance with the advice of such counsel. The Trust Collateral Agent shall
not be under any obligation to exercise any of the remedial rights or powers
vested in it by this Indenture or to follow any direction from the Controlling
Party unless it shall have received security or indemnity satisfactory to the
Trust Collateral Agent against the costs, expenses and liabilities which might
be incurred by it.
SECTION 6.16 Reliance Upon Documents. In the absence of
negligence, bad faith or willful misconduct on its part, the Trust Collateral
Agent shall be entitled to rely on any 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
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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.
(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,
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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 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
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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 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
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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.
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
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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 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
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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
(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,
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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 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;
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(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.
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
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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 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 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
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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.
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
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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.
(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.
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(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 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
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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.
(b) The fact and date of the execution by any person of any
such instrument or writing may be proved in any customary manner of the
Trustee.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Notes shall bind the
Holder of every Note issued upon the registration thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered
to be done by the Trustee or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Note.
SECTION 11.4 Notices, etc. to Trustee, Issuer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to or filed with:
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(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 1998-1, in care of Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, DE 19890-0001 Attention:
Corporate Trust Administration, or at any other address previously furnished
in writing to the Trustee by Issuer. The Issuer shall promptly transmit any
notice received by it from the Noteholders to the Trustee.
(c) The Insurer by the Issuer or the Trustee shall be
sufficient for any purpose hereunder if in writing and mailed by first-class
mail personally delivered or telexed or telecopied to the recipient as
follows:
To the 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 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
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(unless otherwise herein expressly provided) if in writing and mailed,
first-class, postage prepaid to each Noteholder affected by such event, at his
address as it appears on the Note Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Noteholders is given by mail, neither the
failure to mail such notice nor any defect in any notice so mailed to any
particular Noteholder shall affect the sufficiency of such notice with respect
to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Trustee
but such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Trustee shall be
deemed to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating
Agencies, failure to give such notice shall not affect any other rights or
obligations created hereunder, and shall not under any circumstance constitute
a Default or Event of Default.
SECTION 11.6 Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Trustee or any Note Paying
Agent to such Holder, that is different from the methods provided for in this
Indenture for such payments or notices, provided that such methods are
reasonable and consented to by the Trustee (which consent shall not be
unreasonably withheld). The Issuer will furnish to the Trustee a copy of each
such agreement and the Trustee will cause payments to be made and notices to
be given in accordance with such agreements.
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.
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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.
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
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counsel to the Trust or any other counsel reasonably acceptable to the Trustee
and the Insurer) to the effect that such recording is necessary either for the
protection of the Noteholders or any other person secured hereunder or for the
enforcement of any right or remedy granted to the Trustee or the Trust
Collateral Agent under this Indenture or the Collateral Agent under the Spread
Account Agreement.
SECTION 11.16 Trust Obligation. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the
Seller, the Master Servicer, the Owner Trustee, the Trust Collateral Agent or
the Trustee on the Notes or under this Indenture or any certificate or other
writing delivered in connection herewith or therewith, against (i) the Seller,
the Master Servicer, the Trust Collateral Agent, the Trustee or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director,
employee or agent of the Seller, the Master Servicer, the Trust Collateral
Agent, the Trustee or the Owner Trustee in its individual capacity, any holder
of a beneficial interest in the Issuer, the Seller, the Trust Collateral
Agent, the Master Servicer, the Owner Trustee or the Trustee or of any
successor or assign of the Seller, the Master Servicer, the Trust Collateral
Agent, the Trustee or the Owner Trustee in its individual capacity, except as
any such Person may have expressly agreed (it being understood that the
Trustee, the Trust Collateral Agent and the Owner Trustee have no such
obligations in their individual capacity) and except that any such owner or
beneficiary shall be fully liable, to the extent provided by applicable law,
for any unpaid consideration for stock, unpaid capital contribution or failure
to pay any installment or call owing to such entity. For all purposes of this
Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
SECTION 11.17 No Petition. The Trustee and the Trust
Collateral Agent, by entering into this Indenture, and each Noteholder, by
accepting a Note, hereby covenant and agree that they will not at any time
institute against the Seller or the Issuer, or join in any institution against
the Seller or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, this Indenture or any of the Basic
Documents.
SECTION 11.18 Inspection. The Issuer agrees that, on
reasonable prior notice, it will permit any representative of the Trustee or
of the Insurer, during the Issuer's normal business hours, to examine all the
books of account, records, reports, and other papers of the Issuer, to make
copies and extracts therefrom, to cause such books to be audited by
independent certified public accountants, and to discuss the Issuer's affairs,
finances and accounts with the Issuer's officers, employees, and independent
certified public accountants, all at such reasonable times and as often as may
be reasonably requested. The Trustee shall and shall cause its representatives
to hold in confidence all such information except to the extent disclosure may
be required by law (and all reasonable applications for confidential treatment
are unavailing) and except to the extent that the Trustee may reasonably
determine that such disclosure is consistent with its Obligations hereunder.
69
<PAGE>
SECTION 11.19 Limitation of Liability. It is expressly
understood and agreed by the parties hereto that (a) this Agreement is
executed and delivered by Wilmington Trust Company, not individually or
personally but solely as Owner Trustee of the Issuer under the Trust
Agreement, in the exercise of the powers and authority conferred and vested in
it, (b) each of the representations, undertakings and agreements herein made
on the part of the Issuer is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust Company but
is made and intended for the purpose for binding only the Issuer, (c) nothing
herein contained shall be construed as creating any liability on Wilmington
Trust Company individually or personally, to perform any covenant either
expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties to this Agreement and by any person claiming
by, through or under them and (d) under no circumstances shall Wilmington
Trust Company be personally liable for the payment of any indebtedness or
expenses of the Issuer or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaking by the
Issuer under this Agreement or any related documents.
[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 1998-1
By: WILMINGTON TRUST COMPANY, not in
its individual capacity but solely as Owner
Trustee
By: /s/ Debra Eberly
--------------------------------
Name: Debra Eberly
Title: Administrative Account Manager
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in itsindividual
capacity but solely as Trustee and
Trust Collateral Agent
By: /s/ Daniel W. Rolczynski
---------------------------------
Name: Daniel W. Rolczynski
Title: Corporate Trust Officer
[Signature Page for the Indenture]
71
<PAGE>
EXHIBIT A-1
[Form of Note]
REGISTERED $41,000,000
No. A-1-1
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 00756DAG2
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 1998-1
CLASS A-1 5.90% ASSET BACKED NOTES
Advanta Automobile Receivables Trust 1998-1, a business
trust organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
CEDE & CO., or registered assigns, the principal sum of FORTY-ONE MILLION
DOLLARS ($41,000,000), such amount payable on each Distribution Date in an
amount equal to the result obtained by multiplying (i) a fraction the
numerator of which is $41,000,000 and the denominator of which is $41,000,000
by (ii) the aggregate amount, if any, payable from the Note Distribution
Account in respect of principal on the Class A-1 Notes pursuant to Section 3.1
of the Indenture 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 October, 2001 Distribution Date (the "Final Scheduled
Distribution Date"). This Note shall bear interest from the Closing Date until
the principal of this Note is paid (or made available for payment) at the rate
per annum shown above (the "Class A-1 Interest Rate"). Interest on this Note
shall be paid as provided in Section 3.1 of the Indenture. Interest on this
Note shall be calculated on the basis of a 360-day year consisting of twelve
30-day months. This Note shall accrue interest with respect to each
Distribution Date during the
A-1-1
<PAGE>
period (the "Interest Period") from and including the 15th day of the
immediately preceding calendar month to and including the 14th day of the
calendar month in which such Distribution Date occurs (or, in the case of the
initial Interest Period, from and including the Closing Date to and including
the 14th day of the calendar month in which the initial Distribution Date
occurs). Interest on this Note shall be paid on each Distribution Date in an
amount equal to the product of (i) one-twelfth (or, in the case of the first
Distribution Date only, a fraction, the numerator of which is equal to the
number of days in the initial Interest Period and the denominator of which is
equal to 360) of the Class A-1 Interest Rate and (ii) 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) or, in the
case of the first Distribution Date only, on the Closing Date. 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
A-1-2
<PAGE>
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-1-3
<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 1998-1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By: _________________________________
Name:
Title:
Date: June 29, 1998
A-1-4
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in
the within-mentioned Indenture.
Date: June 29, 1998 NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, not
in its individual capacity but solely as Trustee
By___________________________
Authorized Signatory
A-1-5
<PAGE>
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Class A-1 5.90% Asset Backed Notes (herein called
the "Class A-1 Notes"), all issued under an Indenture dated as of June 1, 1998
(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 and the Class A-2 Notes (together, the
"Notes") are and will be equally and ratably secured by the collateral pledged
as security therefor as provided in the Indenture.
Principal of the Class A-1 Notes will be payable on each
Distribution Date in an amount described on the face hereof. "Distribution
Date" means the 15th day of each month, or, if any such date is not a Business
Day, the next succeeding Business Day, commencing July 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 Person entitled thereto at the address of such Person as it
appears on the Note Register as
A-1-6
<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-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 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
A-1-7
<PAGE>
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 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-1-8
<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-1-9
<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 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:
Dated: ________________ _____________________________
-----------------------
*NOTICE: The signature to this assignment must correspond
with the name of the registered owner as it appears on the face of the within
Note in every particular, without alteration, enlargement or any change
whatever.
A-1-10
<PAGE>
EXHIBIT A-2
[Form of Note]
REGISTERED $16,602,000
No. A-2-1
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 00756DAH0
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 1998-1
CLASS A-2 6.09% ASSET BACKED NOTES
Advanta Automobile Receivables Trust 1998-1, a business
trust organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
CEDE & CO., or registered assigns, the principal sum of SIXTEEN MILLION SIX
HUNDRED TWO THOUSAND DOLLARS ($16,602,000), such amount payable on each
Distribution Date in an amount equal to the result obtained by multiplying (i)
a fraction the numerator of which is $16,602,000 and the denominator of which
is $16,602,000 by (ii) the aggregate amount, if any, payable from the Note
Distribution Account in respect of principal on the Class A-2 Notes pursuant
to Section 3.1 of the Indenture 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 December, 2003 Distribution Date (the "Final
Scheduled Distribution Date"). This Note shall bear interest from the Closing
Date until the principal of this Note is paid (or made available for payment)
at the rate per annum shown above (the "Class A-2 Interest Rate"). Interest on
this Note shall be paid as provided in Section 3.1 of the Indenture. Interest
on this Note shall be calculated on the basis of a 360-day year consisting of
twelve 30-day months. This Note shall accrue interest with respect to each
Distribution Date during the period (the "Interest Period") from and including
the 15th
A-1-1
<PAGE>
day of the immediately preceding calendar month to and including the
14th day of the calendar month in which such Distribution Date occurs (or, in
the case of the initial Interest Period, from and including the Closing Date
to and including the 14th day of the calendar month in which the initial
Distribution Date occurs). Interest on this Note shall be paid on each
Distribution Date in an amount equal to the product of (i) one-twelfth (or, in
the case of the first Distribution Date only, a fraction, the numerator of
which is equal to the number of days in the initial Interest Period and the
denominator of which is equal to 360) of the Class A-2 Interest Rate and (ii)
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) or, in the case of the first Distribution Date only, on the
Closing Date. 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
A-2-2
<PAGE>
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-2-3
<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 1998-1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By: _________________________________
Name:
Title:
Date: June 29, 1998
A-2-4
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in
the within-mentioned Indenture.
Date: June 29, 1998 NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, not
in its individual capacity but solely as Trustee
By___________________________
Authorized Signatory
A-2-5
<PAGE>
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Class A-2 6.09% Asset Backed Notes (herein called
the "Class A-2 Notes"), all issued under an Indenture dated as of June 1, 1998
(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 and the Class A-2 Notes (together, the
"Notes") are and will be equally and ratably secured by the collateral pledged
as security therefor as provided in the Indenture.
Principal of the Class A-2 Notes will be payable on each
Distribution Date in an amount described on the face hereof. "Distribution
Date" means the 15th day of each month, or, if any such date is not a Business
Day, the next succeeding Business Day, commencing July 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-2 Notes shall be made pro rata to the Class A-2 Noteholders entitled
thereto.
Payments of interest on this Note due and payable on each
Distribution Date, together with the installment of principal, if any, to the
extent not in full payment of this Note, shall be made by check mailed to the
Person whose name appears as the Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on each
Record Date, except that with respect to Notes registered on the Record Date
in the name of the nominee of the Clearing Agency (initially, such nominee to
be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall
be mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as
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<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-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, the Master
Servicer, the Trustee, the Trust Collateral Agent or the Owner Trustee in its
A-2-7
<PAGE>
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 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-2-8
<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-2-9
<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 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:
Dated: ________________ _____________________________
-----------------------
*NOTICE: The signature to this assignment must correspond
with the name of the registered owner as it appears on the face of the within
Note in every particular, without alteration, enlargement or any change
whatever.
A-2-10
<PAGE>
EXHIBIT 4.2
<PAGE>
EXECUTION COPY
TRUST AGREEMENT
between
ADVANTA AUTO RECEIVABLES CORP. I
and
WILMINGTON TRUST COMPANY
Owner Trustee
Dated as of June 1, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
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
Section 3.11. Paying Agent........................................................................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
Section 4.4. Restrictions on Certificateholders' Power...........................................17
Section 4.5. Majority Control....................................................................18
</TABLE>
(i)
<PAGE>
<TABLE>
<S> <C> <C>
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........................................24
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...............................27
Section 10.1. Eligibility Requirements for Owner Trustee..........................................27
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.......................................29
ARTICLE XI Miscellaneous.......................................................................31
Section 11.1. Supplements and Amendments..........................................................31
</TABLE>
(ii)
<PAGE>
<TABLE>
<S> <C> <C>
Section 11.2. No Legal Title to Owner Trust Estate in Certificateholders
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........................................................................33
Section 11.10. Headings...........................................................................33
Section 11.11. GOVERNING LAW......................................................................34
Section 11.12. Master Servicer....................................................................34
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
</TABLE>
(iii)
<PAGE>
TRUST AGREEMENT dated as of June 1, 1998 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").
ARTICLE I
Definitions
Section 1.1. Capitalized Terms. For all purposes of this
Agreement, the following terms shall have the meanings set forth below:
"Advanta" shall mean Advanta Auto Finance Corporation.
"Affiliate" shall mean with respect to any specified Person,
a Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, or owns,
directly or indirectly, 50% or more of, the Person specified.
"Agreement" shall mean this Trust Agreement, as the same may
be amended and supplemented from time to time.
"Basic Documents" shall mean this Agreement, the Certificate
of Trust, the Sale and Servicing Agreement, the Spread Account Agreement, [the
Spread Account Agreement Supplement,] the Insurance Agreement, the Indenture
and the other documents and certificates delivered in connection therewith.
"Benefit Plan" shall have the meaning assigned to such term
in ss. 3.9.
"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 with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Agreement and such letters, numbers or other marks of
identification, legends and endorsements as may, consistently herewith, be
determined by the officers executing such Certificate, as evidenced by their
execution of the Certificate.
"Certificate Distribution Account" shall mean the account
designated as such as established and maintained pursuant to the Sale and
Servicing Agreement.
"Certificate of Trust" shall mean the Certificate of Trust in
the form of Exhibit B to be filed for the Trust pursuant to 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.
<PAGE>
"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 June 1,
1998, 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 Trustee" 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.
"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.
2
<PAGE>
"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 June 1, 1998, 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 Master 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 Association, 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 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.
3
<PAGE>
(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 any form of the word
"include" shall be deemed to be followed by the words "without limitation."
(e) The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
Section 1.3. Action by or Consent of Noteholders and
Certificateholders. Whenever any provision of this Agreement refers to action
to be taken, or consented to, by Noteholders or Certificateholders, such
provision shall be deemed to refer to the Certificateholder or Noteholder, as
the case may be, of record as of the Record Date immediately preceding the date
on which such action is to be taken, or consent given, by Noteholders or
Certificateholders. Solely for the purposes of any action to be taken, or
consented to, by Noteholders or Certificateholders, any Note or Certificate
registered in the name of the Seller or any Affiliate thereof shall be deemed
not to be outstanding; provided, however, that, solely for the purpose of
determining whether the Indenture Trustee or the Trust Collateral Agent is
entitled to rely upon any such action or consent, only Notes or Certificates
which the Owner Trustee, the Indenture Trustee or the Trust Collateral Agent,
respectively, knows to be so owned shall be so disregarded.
Section 1.4. Material Adverse Effect. Whenever a
determination is to be made under this Agreement as to whether a given event,
action, course of conduct or set of facts or circumstances could or would have
a material adverse effect on the Noteholders or Certificateholders (or any
similar or analogous determination), such determination shall be made without
taking into account the funds available from claims under the Policy. Whenever
a determination is to be made under this Agreement whether a breach of
representation, warranty or covenant has or could have a material adverse
effect on a Receivable or the interest therein of the Trust, the Noteholders,
the
4
<PAGE>
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
Organization
Section 2.1. Name. There is hereby formed a trust to be known
as "Advanta Auto Receivables Trust 1998-1", in which name the Owner Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
Section 2.2. Office. The office of the Trust shall be in care
of the Owner Trustee at the Corporate Trust Office or at such other address as
the Owner Trustee may designate by written notice to the Certificateholders and
the Depositor.
Section 2.3. Purposes and Powers. (a) The purpose of the
Trust is, and the Trust shall have the power and authority, to engage in the
following activities:
(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;
(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
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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.
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
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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 of any Certificateholder in or to its 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.
(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
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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 by 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.
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
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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 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
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(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 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.
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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 minimum denominations of $100,000 and integral multiples of $1,000 in
excess thereof (except for one Certificate which may be issued in a minimum
denomination and/or an integral multiple other than those specified above)..
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 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
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to an effective registration statement under the Securities Act or is to the
Depositor or unless it shall have received (i) an investment letter acceptable
to and in form and substance satisfactory to the Owner Trustee 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 1998-1 (THE "AGREEMENT") AND
(B) IS MADE (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, (ii) IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND APPLICABLE STATE SECURITIES LAWS, (iii) TO THE SELLER
OR (iv) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A UNDER THE SECURITIES ACT THAT IS AWARE THAT THE RESALE
OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A AND
(C) UPON THE SATISFACTION OF CERTAIN OTHER REQUIREMENTS
SPECIFIED IN THE AGREEMENT. NEITHER THE SELLER, THE MASTER
SERVICER, THE TRUST NOR THE OWNER TRUSTEE IS OBLIGATED TO
REGISTER THE CERTIFICATES UNDER THE SECURITIES ACT OR ANY
APPLICABLE STATE SECURITIES LAWS.
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The Certificate Registrar shall provide the Trust Collateral
Agent with a list of the names and addresses of the Certificateholder(s) 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 Securities Exchange Act of
1934, as amended (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.
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).
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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 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
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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 Code, or (iii) any entity whose underlying
assets include plan assets by reason of a plan's investment in the entity
(each, a "Benefit Plan"). By accepting and holding its beneficial ownership
interest in its Certificate, the Holder thereof shall be deemed to have
represented and warranted that it is not a Benefit Plan.
Section 3.10. Securities Matters. Notwithstanding anything
contained herein to the contrary, the Owner Trustee shall not be responsible
for ascertaining whether any transfer complies with the registration provisions
or exemptions from the Securities Act, the Exchange Act, applicable state
securities law or the Investment Company Act of 1940, as amended; 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
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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.
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
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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 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,
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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 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, if applicable), and direct the Owner Trustee or
the Master Servicer, as the case may be, to make such elections as may from
time to time be required or appropriate under any applicable state or Federal
statute or rule or regulation thereunder so as to maintain the Trust's
characterization as a branch, or if applicable, as a partnership, for Federal
income tax purposes and (d) collect or cause to be collected any withholding
tax as described in and in accordance with 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. 5.1 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
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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 $41,000,000 and Class A-2 Notes in the aggregate principal amount of
$16,602,000. In addition to the foregoing, the Owner Trustee is authorized, but
shall not be obligated, to take all actions required of the Trust pursuant to
the Basic Documents. The Owner Trustee is further authorized from time to time
to take such action as the Instructing Party recommends with respect to the
Basic Documents so long as such activities are consistent with the terms of the
Basic Documents.
Section 6.2. General Duties. It shall be the duty of the
Owner Trustee to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and to administer the
Trust in the interest of the Holders, subject to the Basic Documents and in
accordance with the provisions of this Agreement. Notwithstanding the
foregoing, the Owner Trustee shall be deemed to have discharged its duties and
responsibilities hereunder and under the Basic Documents to the extent the
Master Servicer has agreed in the Sale and Servicing Agreement to perform any
act or to discharge any duty of the Trust or the Owner Trustee hereunder or
under any Basic Document, and the Owner Trustee shall not be liable for the
default or failure of the Master Servicer to carry out its obligations under
the Sale and Servicing Agreement.
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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 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 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.
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
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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 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
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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 by the Trust Collateral Agent or the Master Servicer under the
Sale and Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or otherwise
or in relation to this Agreement or any Basic Document, at the request, order
or direction of the Instructing Party or any of the Certificateholders, unless
such Instructing Party or Certificateholders have offered to the Owner Trustee
security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any Basic Document shall not be construed as a duty, and the
Owner Trustee shall not be
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answerable for other than its negligence, bad faith or willful misconduct in
the performance of any such act.
Section 7.2. Furnishing of Documents. The Owner Trustee shall
furnish to the Certificateholders promptly upon receipt of a written request
therefor, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Basic Documents.
Section 7.3. Representations and Warranties. The Owner
Trustee hereby represents and warrants, in its individual capacity, to the
Depositor, the Holders and the Insurer (which shall have relied on such
representations and warranties in issuing the Policies) that:
(a) It is a Delaware banking corporation, duly organized and
validly existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated hereby
nor compliance by it with any of the terms or provisions hereof will contravene
any federal or Delaware state law, governmental rule or regulation governing
the banking or trust powers of the Owner Trustee or any judgment or order
binding on it, or constitute any default under its charter documents or by-laws
or any indenture, mortgage, contract, agreement or instrument to which it is a
party or by which any of its properties may be bound.
Section 7.4. Reliance; Advice of Counsel. (a) The Owner
Trustee shall incur no liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper believed by it to be genuine and
believed by it to be signed by the proper party or parties. The Owner Trustee
may accept a certified copy of a resolution of the board of directors or other
governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full
force and effect. As to any fact or matter the method of the determination of
which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or 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
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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 (other
than the signature of the Owner Trustee on the Notes), or of any Receivable or
related documents. The Owner Trustee shall at no time have any responsibility
or liability for or with respect to the legality, validity and enforceability
of any Receivable, or the perfection and priority of any security interest
created by any Receivable in any Financed Vehicle or the maintenance of any
such perfection and priority, or for or with respect to the sufficiency of the
Owner Trust Estate or its ability to generate the payments to be distributed to
Certificateholders under this Agreement or the Noteholders under the Indenture,
including, without limitation: the existence, condition and ownership of any
Financed Vehicle; the existence and enforceability of any insurance thereon;
the existence and contents of any Receivable on any computer or other record
thereof; the validity of the assignment of any Receivable to the Trust or of
any intervening assignment; the completeness of any Receivable; the performance
or enforcement of any Receivable; the compliance by the Depositor, the Master
Servicer or any other Person with any warranty or representation made under any
Basic Document or in any related document or the accuracy of any such warranty
or representation or any action of the Trustee or the Master Servicer or any
subservicer taken in the name of the Owner Trustee.
Section 7.7. Owner Trustee May Own Certificates and Notes.
The Owner Trustee in its individual or any other capacity may become the owner
or pledge of Certificates or Notes and may deal with the Depositor, the Trustee
and the Master Servicer in banking transactions with the same rights as it
would have if it were not Owner Trustee.
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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 "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
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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.
(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
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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.
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
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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 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.
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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 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
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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 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
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prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
ARTICLE XI
Miscellaneous
Section 11.1. Supplements and Amendments. (a) This Agreement
may be amended by the Depositor and the Owner Trustee, with the prior written
consent of the Insurer (so long as an Insurer Default shall not have occurred
and be continuing) and with prior written notice to the Rating Agencies,
without the consent of any of the Noteholders or, in the event that the
Depositor is not the sole Certificateholder, the Certificateholders, (i) to
cure any ambiguity or defect or (ii) to correct, supplement or modify any
provisions in this Agreement; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel which may be based upon a certificate of the
Master Servicer, adversely affect in any material respect the interests of any
Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time,
with the prior written consent of the Insurer (so long as an Insurer Default
shall not have occurred and be continuing) by the Depositor and the Owner
Trustee, with prior written notice to the Rating Agencies, to the extent such
amendment materially and adversely affects the interests of the Noteholders,
with the consent of the Noteholders evidencing not less than a majority of the
Outstanding Amount of the Notes and, the consent of the Certificateholders
evidencing not less than a majority of the Certificate Balance (which consent
of any Holder of a Certificate or Note given pursuant to this section or
pursuant to any other provision of this Agreement shall be conclusive and
binding on such Holder and on all future Holders of such Certificate or Note
and of any Certificate or Note issued upon the transfer thereof or in exchange
thereof or in lieu thereof whether or not notation of such consent is made upon
the Certificate or Note) for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that, subject to the express rights of
the Insurer under the Basic Documents, no such amendment shall (a) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that shall be required
to be made for the benefit of the Noteholders or the Certificateholders or (b)
reduce the aforesaid percentage of the Outstanding Amount of the Notes and the
Certificate Balance, the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all the outstanding Notes and
Holders of all outstanding Certificates.
Promptly after the execution of any such amendment or
consent, the Owner Trustee shall furnish written notification of the substance
of such amendment or consent to each Certificateholder, the Trustee and each of
the Rating Agencies.
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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. 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 11.3. Notices. (a) Unless otherwise expressly
specified or permitted by the terms hereof, all notices shall be in writing and
shall be deemed given upon receipt personally delivered, delivered by overnight
courier or mailed first class mail or certified mail, in each case return
receipt requested, and shall be deemed to have been duly given upon receipt, if
to the Owner Trustee, addressed to the Corporate Trust Office; if to the
Depositor, addressed to Advanta Auto Receivables Corp. I, 1325 Airmotive Way,
Suite 130, Reno, Nevada 89502; if to the holder of the Insurer, addressed to
Insurer, Financial Security Assurance Inc., 350 Park Avenue, New York, NY
10022, Attention: Surveillance Department, Telex No.: (212) 688-3101,
Confirmation: (212) 826-0100, Telecopy Nos.: (212) 339-3518, (212) 339-3529 (in
each case in which notice or other communication to Financial Security refers
to an Event of Default, a claim on the Policies or with respect to which
failure on the part of Financial Security to respond shall be deemed to
constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of the General Counsel and
the Head-Financial Guaranty Group "URGENT MATERIAL ENCLOSED"); or, as to each
party, at such other address as shall be designated by such party in a written
notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this
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Agreement shall be conclusively presumed to have been duly given, whether or
not the Certificateholder receives such notice.
Section 11.4. 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 11.5. 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 11.6. 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 11.7. No Petition. The Owner Trustee (not in its
individual capacity but solely as Owner Trustee), by entering into this
Agreement, each Certificateholder, by accepting a Certificate, and the Trustee
and each Noteholder by accepting the benefits of this Agreement, hereby
covenants and agrees that they will not at any time institute against the
Depositor, or join in any institution against the Depositor of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Certificates, the Notes,
this Agreement or any of the Basic Documents.
Section 11.8. 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 11.9. 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.
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Section 11.10. 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 11.11. 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.
34
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IN WITNESS WHEREOF, the parties hereto have caused this
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/ Debra Eberly
-----------------------------------
Name: Debra Eberly
Title: Administrative Account Manager
ADVANTA AUTO RECEIVABLES CORP. I
Depositor
By: /s/ Mark Dunsheath
-----------------------------------
Name: Mark Dunsheath
Title: Vice President
Acknowledged and Agreed:
ADVANTA AUTO FINANCE CORPORATION
Master Servicer
By: /s/ Mark Dunsheath
--------------------------------------
Name: Mark Dunsheath
Title: Vice President
[Signature Page for Trust Agreement]
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EXHIBIT A
[Form of Certificate]
NUMBER $16,247,642
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 1998-1
(THE "AGREEMENT") AND (B) IS MADE (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, (ii) IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS, (iii) TO THE SELLER OR (iv) TO A PERSON WHO THE TRANSFEROR REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT THAT IS AWARE THAT THE RESALE OR OTHER TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A AND (C) UPON THE SATISFACTION OF CERTAIN
OTHER REQUIREMENTS SPECIFIED IN THE AGREEMENT. NEITHER THE SELLER, THE MASTER
SERVICER, THE TRUST NOR THE OWNER TRUSTEE IS OBLIGATED TO REGISTER THE
CERTIFICATES UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
THE PRINCIPAL OF THIS CERTIFICATE IS DISTRIBUTABLE IN
INSTALLMENTS AS SET FORTH IN THE 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.
---------------------------------
6.09% 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 $16,247,642 nonassessable, fully-paid, beneficial ownership
interest in certain distributions of Advanta Automobile Receivables Trust
1998-1 (the "Trust") formed by Advanta Auto Receivables Corp. I, a Nevada
corporation (the "Depositor"). The Certificates have a Certificate Rate of
6.09% 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
The Trust was created pursuant to a Trust Agreement dated as
of June 1, 1998 (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 "6.09% Asset Backed Certificates" (herein called the
"Certificates"). Also issued under the Indenture dated as of June 1, 1998,
between the Trust and Norwest Bank Minnesota, National Association, as trustee
and trust collateral agent, are two classes of Notes designated as "Class A-1
5.90% Asset Backed Notes" (the "Class A-1 Notes") and "Class A-2 6.09% Asset
Backed Notes" (the "Class A-2 Notes" and, together with the Class A-1 Notes,
the "Notes"). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, to which Trust Agreement the
holder of this Certificate by virtue of the acceptance hereof assents and by
which such holder is bound. The property of the Trust includes a pool of motor
vehicle retail installment sale contracts secured by new and used automobiles,
vans or light duty trucks (the "Receivables"), all monies due or received
thereunder on or after the Cutoff Date, security interests in the vehicles
financed thereby, certain bank accounts and the proceeds thereof, proceeds from
claims on certain insurance policies, certain other rights under the Trust
Agreement and the Sale and Servicing Agreement, all right, title and interest
of the Depositor in and to the Purchase Agreement dated as of June 1, 1998
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 (the "Distribution Date"), commencing on
July 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
A-2
<PAGE>
interest in the amount to be distributed to Certificateholders on such
Distribution Date. No principal will be paid on the Certificate until the Class
A-2 Notes have been paid in full.
The holder of this Certificate acknowledges and agrees that
its rights to receive distributions in respect of this Certificate are
subordinated to the rights of the Noteholders as described in the Sale and
Servicing Agreement, the Indenture and the Trust Agreement, as applicable.
The holder of this Certificate, by acceptance of this
Certificate, specifically acknowledges that it has no right to or interest in
any monies at any time held pursuant to the Spread Account Agreement or prior
to the release of such monies pursuant to 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.
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
A-3
<PAGE>
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 1998-1
By: WILMINGTON TRUST COMPANY
not in its individual capacity but solely as
as Owner Trustee
Dated: June 29, 1998 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
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 1998-1
This Certificate of Trust of Advanta Automobile Receivables
Trust 1998-1 (the "Trust") is being duly executed and filed by the undersigned,
as trustee, to form a business trust under the Delaware Business Trust Act, 12
Del. Code ss. 3801 et seq. (the "Act").
1. The name of the business trust formed hereby is Advanta
Automobile Receivables Trust 1998-1.
2. The name and business address of the Trustee of the Trust
in the State of Delaware is Wilmington Trust Company, Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890-0001, Attn: Corporate Trust
Administration.
3. This Certificate of Trust will be effective as of June 1,
1998.
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate of Trust in accordance with Section 3811(a) of the Act.
WILMINGTON TRUST COMPANY
not in its individual capacity but solely as
Owner Trustee of the Trust
By:
----------------------------------------
Name:
Title:
B-1
<PAGE>
EXHIBIT 4.3
<PAGE>
EXECUTION COPY
- --------------------------------------------------------------------------------
SALE AND SERVICING
AGREEMENT
among
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1998-1,
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 June 1, 1998
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
SECTION 1.1. Definitions.....................................................1
SECTION 1.2. Other Definitional Provisions..................................25
SECTION 1.3. Usage of Terms.................................................25
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
<PAGE>
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.......................................................47
SECTION 5.3. Certain Reimbursements to the Master Servicer..................47
SECTION 5.4. Application of Collections.....................................47
SECTION 5.5. Withdrawals from Series 1998-1 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
2
<PAGE>
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........................................68
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............71
SECTION 10.3. Appointment of Successor.......................................72
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
3
<PAGE>
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
4
<PAGE>
SALE AND SERVICING AGREEMENT dated as of June 1, 1998, among
ADVANTA AUTOMOBILE RECEIVABLES TRUST 1998-1, a Delaware business trust (the
"Issuer"), ADVANTA AUTO RECEIVABLES CORP. I, a Nevada corporation (the
"Seller"), ADVANTA AUTO FINANCE CORPORATION, a Nevada corporation (the "Master
Servicer"), and 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; and
WHEREAS, the Master Servicer is willing to service all such
receivables;
NOW, THEREFORE, in consideration of the premises 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 of the payment
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.
1
<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.
"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>
"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,
$16,247,642 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 Interest Period" means, with respect to the
initial Certificate Interest Period, the period commencing on the Closing Date
and ending on the 14th calendar day of the month in which the first Distribution
Date occurs and, with respect to any subsequent Certificate Interest Period, the
period beginning on the 15th calendar day of the month in which the prior
Certificate Interest Period ended and ending on the 14th calendar day of the
following month.
"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 6.09% 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.
3
<PAGE>
"Certificateholders' Monthly Interest Distributable Amount"
means, with respect to any Distribution Date for the Certificates, the product
of the following: (i) the product of (x) the Certificate Rate and (y) a
fraction, the numerator of which is 30 (or in the case of the first Distribution
Date, the number of days elapsed from and including the Closing Date to but
excluding the first Distribution Date, which number is 16 days) and the
denominator of which is 360; and (ii) the outstanding Certificate Balance
immediately preceding such Distribution Date.
"Certificateholders' Monthly Principal Distributable Amount"
means, with respect to any Distribution Date, the Certificateholders' Percentage
of the Principal Distributable Amount.
"Certificateholders' Percentage" means (i) for each
Distribution Date prior to the Distribution Date on which the Class A-2 Notes
are paid in full, 22%, (ii) on the Distribution Date on which the Class A-2
Notes are paid in full, the excess of 100% over the percentage necessary to pay
the Class A-2 Notes in full, and (iii) for each Distribution Date thereafter to
and including the Distribution Date on which the Certificate Balance is reduced
to zero, the lesser of (x) 100% and (y) the percentage necessary to reduce the
Certificate Balance to zero.
"Certificateholders' Principal Carryover Shortfall" means, as
of the close of any Distribution Date, the excess of the Certificateholders'
Monthly Principal Distributable Amount and any outstanding Certificateholders'
Principal Carryover Shortfall from the preceding Distribution Date, over the
amount in respect of principal that is actually deposited in the Certificate
Distribution Account on such current Distribution Date.
"Certificateholders' Principal Distributable Amount" means,
with respect to any Distribution Date, the sum of the Certificateholders'
Monthly Principal Distributable Amount for such Distribution Date and the
Certificateholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date; provided, however, that the Certificateholders'
Principal Distributable Amount (i) shall not exceed the Certificate Balance and
(ii) shall equal the Certificate Balance on the Final Scheduled Distribution
Date for the Certificates.
"Class" means the Class A-1 Notes or the Class A-2 Notes, as
the context requires.
"Class A-1 Interest Period" means, with respect to the initial
Class A-1 Interest Period, the period commencing on the Closing Date and ending
on the 14th calendar day of the month in which the first Distribution Date
occurs and, with respect to any subsequent Class A-1 Interest Period, the period
beginning on the 15th calendar day of the month in which the prior Class A-1
Interest Period ended and ending on the 14th calendar day of the following
month.
"Class A-1 Note Interest Rate" means 5.90% per annum (computed
on the basis of a 360-day year consisting of twelve 30-day months).
4
<PAGE>
"Class A-1 Notes" has the meaning assigned to such term in
the Indenture.
"Class A-2 Interest Period" means, with respect to the initial
Class A-2 Interest Period, the period commencing on the Closing Date and ending
on the 14th calendar day of the month in which the first Distribution Date
occurs and, with respect to any subsequent Class A-2 Interest Period, the period
beginning on the 15th calendar day of the month in which the prior Class A-2
Interest Period ended and ending on the 14th calendar day of the following
month.
"Class A-2 Note Interest Rate" means 6.09% per annum (computed
on the basis of a 360-day year consisting of twelve 30-day months).
"Class A-2 Notes" has the meaning assigned to such term in
the Indenture.
"Closing Date" means June 29, 1998.
"Collateral Agent" means Norwest Bank Minnesota, National
Association, 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 June 12,
1998 and ending on the close of business on June 30, 1998. With respect to each
subsequent Distribution Date, the preceding calendar month. Any amount stated
"as of the close of business of the last day of a Collection Period" shall give
effect to the following calculations as determined as of the end of the day on
such last day: (i) all applications of collections, and (ii) all distributions.
"Collection Records" means all manually prepared or computer
generated records relating to collection efforts or payment histories with
respect to the Receivables.
"Computer Tape" means the computer tapes or other electronic
media furnished by the Seller to the Issuer and its assigns describing certain
characteristics of the 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.
5
<PAGE>
"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 June 12, 1998.
"Dealer" means a dealer who sold a Financed Vehicle and who
originated and assigned the respective Receivable, directly or indirectly, to an
Unaffiliated Originator or Advanta under a Dealer Agreement or pursuant to a
Dealer Assignment.
"Dealer Agreement" means any agreement between a Dealer and an
Unaffiliated Originator or Advanta relating to the acquisition of Receivables
from a Dealer by an Unaffiliated Originator or Advanta, as applicable.
"Dealer Assignment" means, with respect to a Receivable, the
assignment executed by a Dealer conveying such Receivable either to an
Unaffiliated Originator or to Advanta.
"Dealer Underwriting Guide" means either (i) the underwriting
guidelines used by or on behalf of Advanta in the origination and purchase of
Receivables, as amended from time to time or (ii) the underwriting guidelines
used in the origination of Receivables as reviewed by Advanta prior to the
purchase of Receivables by Advanta.
"Defaulted Receivable" means, with respect to any Distribution
Date, a Receivable with respect to which: (i) any portion of a Scheduled Payment
is 90 or more days delinquent, (ii) the Servicer has repossessed the related
Financed Vehicle (and any applicable redemption period has expired) or (iii)
such Receivable is in default and the Servicer has determined in good faith that
payments thereunder are not likely to be
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resumed; provided, however, that any Pool Receivable repurchased by Advanta
pursuant to 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 as follows 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 8 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 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
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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 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
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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; or
(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:
(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,
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<PAGE>
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; or
(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; 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 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;
(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:
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<PAGE>
(i) transfer thereof by registration to the
Trust Collateral Agent as the registered owner thereof, on the
books and records of the issuer thereof, or by another Person
(not a securities intermediary) that 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; and
(e) with respect to a "security entitlement" (as
defined in Section 8-102(a)(17) of the UCC), if a securities
intermediary (i) 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), (ii) 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), (iii)
becomes obligated under other law, regulation or rule to credit a
financial asset to the Trust Collateral Agent's securities account, or
(iv) 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 (A) specific certificated security in the
securities intermediary's possession, (B) a quantity of securities that
constitute or are part of a fungible bulk of certificated securities in
the securities 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 securities intermediary on the books of
another securities intermediary.
In each case of delivery contemplated hereinabove, 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.
"Deposit Date" means, with respect to any Collection Period,
the Business Day immediately preceding the related Determination Date.
"Depositor" shall mean the Seller in its capacity as
Depositor under the Trust Agreement.
"Determination Date" means, with respect to any Distribution
Date, the earlier of (i) the eighth day of the calendar month in which such
Distribution Date occurs (or if such day is not a Business Day, the next
Business Day) or (ii) the fifth Business Day preceding such Distribution Date.
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"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 July 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.
"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;
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(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 A-1 and from
Moody's of P-1;
(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
(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.
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"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 October, 2001 Distribution Date, (ii) the Class A-2
Notes, the December, 2003 Distribution Date, and (iii) the Certificates, the
December, 2003 Distribution Date.
"Financed Vehicle" means an automobile or light-duty truck,
van or minivan, together with all accessions thereto, securing an Obligor's
indebtedness under the respective Receivable.
"Flow Receivable" means any Receivable purchased under a
flow purchase agreement.
"Indemnification Agreement" means the Indemnification
Agreement dated as of June 1, 1998, among the Insurer, the Seller and Salomon
Brothers Inc, as the same may be amended and supplemented from time to time.
"Indenture" means the Indenture dated as of June 1, 1998,
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, 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
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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 June 1, 1998, 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 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
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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 or the Certificate Interest Period, as applicable.
"Interest Rate" means (i) in the case of the Class A-1 Notes,
the Class A-1 Note Interest Rate,, and (ii) in the case of the Class A-2 Notes,
the Class A-2 Note Interest Rate.
"Investment Earnings" means, with respect to any Distribution
Date and Trust Account, the investment earnings on amounts on deposit in such
Trust Account on such Distribution Date.
"Issuer" means Advanta Automobile Receivables Trust 1998-1.
"Lien" means a security interest, lien, charge, pledge,
equity, or encumbrance of any kind, other than tax liens, mechanics' liens and
any liens that attach to the respective Receivable by operation of law as a
result of any act or omission by the related Obligor.
"Lien Certificate" means, with respect to a Financed Vehicle,
an original certificate of title, certificate of lien or other notification
issued by the Registrar of Titles of the applicable state to a secured party
which indicates that the lien of the secured party on the Financed Vehicle is
recorded on the original certificate of title. In any jurisdiction in which the
original certificate of title is required to be given to the Obligor, the term
"Lien Certificate" shall mean only a certificate or notification issued to a
secured party.
"Liquidated Receivable" means, with respect to any Collection
Period, a Receivable as to which (i) 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
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
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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 1998-1 Spread Account and drawings under the
Note Policy) net of (i) reasonable expenses, which expenses shall not include
any deficiency balances or post-disposition recoveries collected, incurred by
the Master Servicer in connection with the collection of such Receivable and the
repossession and disposition of the Financed Vehicle and (ii) amounts that are
required to be refunded to the Obligor on such Receivable; provided, however,
that the Liquidation Proceeds with respect to any Receivable shall in no event
be less than zero.
"Note Distribution Account" means the account designated as
such, established and maintained pursuant to Section 5.1.
"Noteholder" means the Person in whose name a Note is
registered on the Note Register.
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"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 for either the Class A-1 Notes or the
Class A-2 Notes, the product of the following: (i) 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,
which number is 16 days) and the denominator of which is 360; and (ii) the
outstanding principal amount of such Class of Notes immediately preceding such
Distribution Date.
"Noteholders' Monthly Principal Distributable Amount" means,
with respect to any Distribution Date, the Noteholders' Percentage of the
Principal Distributable Amount.
"Noteholders' Percentage" means (i) for each Distribution Date
prior to the Distribution Date on which the Class A-2 Notes have been paid in
full, 78%; (ii) on the Distribution Date on which the principal amount of the
Class A-2 Notes is reduced to zero, the percentage not greater than the
percentage necessary to pay the Class A-2 Notes in full; and (iii) for each
Distribution Date thereafter, zero.
"Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Noteholders' Monthly Principal
Distributable Amount and any 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
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Distribution Date and the Noteholders' Principal Carryover Shortfall as 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, any vice
president, any treasurer, assistant treasurer, secretary or assistant secretary
of the Seller, the Issuer or the Master Servicer, as appropriate.
"Opinion of Counsel" means an opinion of counsel reasonably
acceptable to the Controlling Party.
"Original Pool Balance" means the sum, as of any date, of the
Pool Balance as of the Cutoff Date which shall be equal to $73,849,642.
"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.
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"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" means the instruments, certificates and
other property referred to in paragraphs (1)(a), (1)(b), (2)(a) and 2(b) of 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).
"Pool Receivable" means any Receivable purchased under a
pool purchase agreement.
"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 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 June 1, 1998, pursuant to which the Seller
acquired the Receivables, as such Agreement may be amended from time to time.
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"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 this Agreement.
"Registrar of Titles" means, with respect to any state, the
governmental agency or body responsible for the registration of, and the
issuance of certificates of title relating to, motor vehicles and liens thereon.
"Requisite Amount" has the meaning 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."
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"Rule of 78s Receivable" means a Receivable under which the
portion of a payment allocable to interest and the portion of a payment
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" means 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 1998-1 Spread Account" means the account designated as
such, established and maintained pursuant to the Spread Account Agreement.
"Series 1998-1 Supplement" means the Series 1998-1 Supplement
dated as of June 1, 1998 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.
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"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 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
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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 June
1, 1998, 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
1998-1 Spread Account to the Trust Collateral Agent and the Insurer pursuant to
the Spread Account Agreement, the Series 1998-1 Spread Account shall not under
any circumstances be deemed to be a part of or otherwise includable in the Trust
or the Trust Property.
"Trustee" means the Person acting as Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"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
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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 this 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 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; any form of the word "include" shall be deemed to be
followed by the words
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"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, Schedules and Exhibits to this Agreement.
SECTION 1.4. Certain References. Unless the context clearly
requires otherwise, all references to the Principal Balance of a Receivable as
of any date of determination shall refer to the close of business on such day,
or as of the first day of an Interest Period shall refer to the opening of
business on such day. All references to the last day of an Interest Period
shall refer to the close of business on such day.
SECTION 1.5. No Recourse. Without limiting the obligations
of Advanta hereunder, no recourse may be taken, directly or indirectly, under
this Agreement or any certificate or other writing delivered in connection
herewith or therewith, against any stockholder, officer or director, as such,
of Advanta, or of any predecessor or successor of Advanta.
SECTION 1.6. Action by or Consent of Noteholders and
Certificateholders. Whenever any provision of this Agreement refers to action
to be taken, or consented to, by Noteholders or Certificateholders, such
provision shall be deemed to refer to the Certificateholder or Noteholder, as
the case may be, of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given, by Noteholders or
Certificateholders. Solely for the purposes of any action to be taken, or
consented to, by Noteholders or Certificateholders, any Note or Certificate
registered in the name of Advanta or any Affiliate thereof shall be deemed not
to be outstanding; provided, however, that solely for the purpose of
determining whether a Trust Officer of the Trustee or the Trust Collateral
Agent is entitled to rely upon any such action or consent, only Notes or
Certificates which the Owner Trustee, the Trust Officer of the Trustee or the
Trust Collateral Agent, respectively, actually knows to be so owned shall be
so disregarded.
SECTION 1.7. Material Adverse Effect. Whenever a
determination is to be made under this Agreement as to whether a given event,
action, course of conduct or set of facts or circumstances could or would have
a material adverse effect on the Securityholders (or any similar or analogous
determination), such determination shall be made without taking into account
the funds available from claims under the Note Policy. Whenever a
determination is to be made under this Agreement whether a breach of a
representation, warranty or covenant has or could have a material adverse
effect on a Receivable or the interest therein of the Trust, the Noteholders,
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
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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;
(f) the related Receivables Files and any and all other
documents that Advanta keeps on file in accordance with its customary
procedures relating to the Receivables, the Obligors or the Financed Vehicles;
(g) property (including the right to receive future
Liquidation Proceeds) that secures a Receivable and that has been acquired by
or on behalf of the Trust pursuant to liquidation of such Receivable;
(h) all funds on deposit from time to time in the Trust
Accounts (less all investments and proceeds thereof), and all rights of the
Issuer therein;
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(i) all of the Seller's right, title and interest in its
rights and benefits, but none of its obligations or burdens, under the
Purchase Agreement, including the delivery requirements, representations and
warranties and the cure and repurchase obligations of Advanta under the
Purchase Agreement; and
(j) the proceeds of any and all of the foregoing.
It is the intention of the Seller that the transfer and
assignment contemplated by this Agreement shall constitute a sale of the
Receivables and other Trust Property from the Seller to the Issuer and the
beneficial interest in and title to the Receivables and the other Trust Property
shall not be part of the Seller's estate in the event of the filing of a
bankruptcy petition by or against the Seller under any bankruptcy law. In the
event that, notwithstanding the intent of the Seller, the transfer and
assignment contemplated hereby is held not to be a sale, this Agreement shall
constitute a grant of a security interest in the property referred to in this
Section 2.1 for the benefit of the Securityholders and the Insurer.
SECTION 2.2. 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. 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
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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: the representations and warranties
set forth on the Schedule of Representations attached hereto as Schedule B are
true and correct. 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.
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 (excluding, for this purpose, June, 1998). In consideration
of and simultaneously with the repurchase of the Receivable, the Seller shall
remit, or cause Advanta to remit, to the Collection Account the Purchase
Amount in the manner specified in Section 5.6 and the Issuer and the Trust
Collateral Agent shall perform such acts and execute such assignments,
termination statements and other documents as may reasonably be requested by
such person in order to effect such repurchase, it being understood that the
Seller shall undertake the preparation of any such documents and the payment
of any costs associated therewith (including any required filing fees). 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
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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 any extension agreements);
(ii) The original credit application, or a copy
thereof, of each Obligor, fully executed by each such
Obligor on Advanta's or the applicable Unaffiliated
Originator's customary form, or on a form approved by
Advanta, for such application; and
(iii) The original certificate of title (when
received) and otherwise such documents, if any, that
Advanta keeps on file in accordance with its customary
procedures indicating that the Financed Vehicle is owned
by the Obligor and subject to the interest of (x) Advanta
or the Trust Collateral Agent as first lienholder or
secured party (including any Lien Certificate received by
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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 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.
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ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of the Master Servicer. The Master
Servicer is hereby authorized to act as agent for the Trust and in such
capacity shall manage, service, administer and make collections on the
Receivables, and perform the other actions required by the Master Servicer
under this Agreement. The Master Servicer agrees that its servicing of the
Receivables shall be carried out 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 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 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
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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 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
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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 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
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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 Lockbox 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 entering into settlements with Obligors, by the
Master Servicer in order to realize upon such a Receivable. The foregoing is
subject to the provision that, in any case in which the Financed Vehicle shall
have suffered damage, the Master Servicer shall not expend funds in connection
with any repair or towards the repossession of such Financed Vehicle unless it
shall determine in its discretion that such repair and/or repossession shall
increase the proceeds of liquidation of the related Receivable by an amount
greater than the amount of such expenses. All amounts received upon
liquidation of a Financed Vehicle shall be remitted directly by the Master
Servicer to the Collection Account without deposit into any intervening
account as soon as practicable, but in no event later than the Business Day
after receipt thereof. The Master Servicer shall be entitled to recover all
reasonable expenses incurred by it in the course of repossessing and
liquidating a Financed Vehicle. The Master Servicer shall recover such
reasonable expenses based on the information contained in the Master
Servicer's Certificate delivered on the related Determination Date. The Master
Servicer shall pay on behalf of the Trust any personal property taxes assessed
on repossessed Financed Vehicles. The Master Servicer shall be entitled to
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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 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.
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(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 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 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
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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 the
Receivables except for the Lien in favor of the Trust
Collateral Agent for the benefit of the Securityholders
and Insurer, the Lien imposed by the Spread Account
Agreement in favor of the Collateral Agent for the benefit
of the Trust Collateral Agent and Insurer, and the
restrictions on 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
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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 (or, at Advanta's election, the first)
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 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. In consideration of and simultaneously
with the purchase of the Receivable, the Issuer and the Trust Collateral Agent
shall perform such acts and execute such assignments, termination statements
and other documents as may reasonably be requested by Advanta in order to
effect such purchase, it being understood that the preparation of any such
documents and the payment of any costs associated therewith (including any
required filing fees) shall be undertaken by Advanta. 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 any Receivable (including any Liquidated
Receivable) with respect to which such a breach has occurred
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and is continuing shall, if such obligation is fulfilled, constitute the sole
remedy against Advanta for such breach available to the Insurer, the
Securityholders, the Owner Trustee or the Trust Collateral Agent; provided,
however, that Advanta shall indemnify the Trust, the Collateral Agent, the
Insurer, the Owner Trustee, the Trust Collateral Agent, the Trustee and the
Securityholders (and their respective directors, officers, employees and
agents) against all costs, expenses, losses, damages, claims and liabilities,
including reasonable fees and expenses of counsel, which may be asserted
against or incurred by any of them as a result of third party claims arising
out of the events or facts giving rise to such breach.
SECTION 4.8. Total Servicing Fee; Payment of Certain
Expenses by Master Servicer. On each Distribution Date, the Master Servicer
shall be entitled to receive out of the Collection Account the Base Servicing
Fee and any Supplemental Servicing Fee for the related Collection Period
pursuant to Section 5.7. The Master Servicer shall be required to pay all
expenses incurred by it in connection with its activities under this Agreement
(including taxes imposed on the Master Servicer, expenses incurred in
connection with distributions and reports made by the Master Servicer to
Securityholders or the Insurer and all other fees and expenses of the Owner
Trustee, the Trust Collateral Agent or the Trustee, except taxes levied or
assessed against the Trust, and claims against the Trust in respect of
indemnification, which taxes and claims in respect of indemnification against
the Trust are expressly stated to be for the account of Advanta). The Master
Servicer shall be liable for the fees, charges and expenses of the Owner
Trustee, the Trust Collateral Agent, the Trustee, the Custodian, the
Collateral Agent, the Lockbox Bank, any Sub-Servicer and their respective
agents (and any fees under the Lockbox Agreement).
SECTION 4.9. Master Servicer's Certificate. No later than
10:00 a.m. New York City time on each Determination Date, the Master Servicer
shall deliver, or cause to be delivered, to the Trustee, the Owner Trustee,
the Trust Collateral Agent, the Insurer and the Collateral Agent, a Master
Servicer's Certificate executed by a responsible officer or agent of the
Master Servicer containing among other things, (i) all information necessary
to enable the Trust Collateral Agent to make any withdrawal and deposit
required by Section 5.5, to give any notice required by Section 5.5(b) and to
make the distributions required by Sections 5.7, (ii) all information to be
provided to Securityholders and the Insurer specified by Section 5.11 and
(iii) a listing of all Warranty Receivables and Administrative Receivables
purchased as of the related Deposit Date, identifying the Receivables so
purchased. Receivables purchased by the Master Servicer or by the Seller on
the related Deposit Date and each Receivable which became a Liquidated
Receivable or which was paid in full during the related Collection Period
shall be identified by account number (as set forth in the Schedule of
Receivables). In addition to the information set forth in the preceding
sentence, the Master Servicer's Certificate shall also contain the following
information: (a) the Delinquency Ratio, Average Delinquency Ratio, Default
Ratio, Average Default Ratio, Net Loss Ratio and Average Net Loss Ratio (as
such terms are defined in the Spread Account Agreement) for such Determination
Date; (b) whether to the knowledge of the Master Servicer any Trigger Event
has occurred as of such Determination Date; (c) whether any Trigger Event that
may have occurred as of a prior Determination Date is
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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, 1999, 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 Agent, and in the event that such notice is delivered by the
Sub-Servicer, to the Master Servicer, promptly after having obtained knowledge
thereof, but in no event later than two (2) Business Days thereafter, written
notice in an Officer's Certificate of any event which with the giving of
notice or lapse of time, or both, would become a Master Servicer Termination
Event under Section 10.1(a). The Seller or the Master Servicer shall deliver
to the Trustee, the Owner Trustee, the Trust Collateral Agent, the Insurer,
the Collateral Agent, the Master Servicer or the Seller (as applicable)
promptly after having obtained knowledge thereof, but in no event later than
two (2) Business Days thereafter, written notice in an Officer's Certificate
of any event which with the giving of notice or lapse of time, or both, would
become a Master Servicer Termination Event under any other clause of Section
10.1.
SECTION 4.11. Annual Independent Accountants' Report.
(a) The Master Servicer shall cause a firm of nationally
recognized independent certified public accountants (the "Independent
Accountants"), who may also render other services to the Master Servicer or to
the Seller, to deliver to the Trustee, the Owner Trustee, the Trust Collateral
Agent, the Insurer, on or before April 30 (or 120 days after the end of the
Master Servicer's fiscal year, if other than December 31) of each year,
beginning on April 30, 1999, with respect to the twelve months ended the
immediately preceding December 31 (or other applicable date) (or such other
period as shall have elapsed from the Closing Date to the date of such
certificate), a statement (the
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"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 the Average Net Loss Rate (as such terms are
defined in the Insurance Agreement) for
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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 Master 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
September 30, 1998, which term shall be extendible by the Controlling Party
for successive quarterly terms ending on each successive December 31, March
31, June 30 and September 30 (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 day prior to the last day
of any term of the Master Servicer the Trust
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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 (1)(a),
(1)(b), (2)(a) or (2)(b) (as appropriate) of the
definition of "Delivery" in Section 1.1 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 (1)(c) or 2(c) (as appropriate)
of the definition of "Delivery" in Section 1.1 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;
(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 (1)(d) or (2)(d) (as appropriate) of the
definition of "Delivery" in Section 1.1 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; and
(E) any Trust Account Property that is an "security
entitlement" as defined in Section 8-102(a)(17) of the UCC
shall be delivered to the Trust Collateral Agent in
accordance with paragraph (2)(e) of the definition of
"Delivery" in Section 1.1 and shall be maintained by the
Trust Collateral Agent, pending maturity or disposition,
as provided therein.
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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 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 1998-1 Spread Account.
(a) In the event that the Master Servicer's Certificate with
respect to any Determination Date shall state that the Available Funds 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
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preceding such Distribution Date, the Trust Collateral Agent shall deliver to
the Collateral Agent, the Owner Trustee, the Insurer, the fiscal agent set
forth in the Spread Account Agreement, if necessary, and the Master Servicer,
by hand delivery, telex or facsimile transmission, a written notice in
substantially the form of Exhibit 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 Agent to remit such Deficiency Claim Amount (to the extent of the
funds available to be distributed pursuant to the Spread Account Agreement) to
the Trust Collateral Agent for deposit in the Collection Account on the
related Distribution Date.
(b) Any Deficiency Notice shall be delivered by 10:00 a.m.,
New York City time, on the fourth Business Day preceding such Distribution
Date. The amounts distributed by the Collateral Agent to the Trust Collateral
Agent pursuant to a Deficiency Notice shall be deposited by the Trust
Collateral Agent into the Collection Account pursuant to Section 5.6.
SECTION 5.6. Additional Deposits.
(a) Advanta and the Seller, as applicable, shall deposit or
cause to be deposited in the Collection Account on the Determination Date
following the date on which such obligations are due the aggregate Purchase
Amount with respect to Purchased Receivables. On or before each Draw Date, the
Trust Collateral Agent shall remit to the Collection Account any amounts
delivered to the Trust Collateral Agent by the Collateral Agent.
(b) The proceeds of any purchase or sale of the assets of
the Trust described in Section 11.1 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;
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(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;
(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 1998-1 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
1998-1 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
1998-1 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
1998-1 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
(a) 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
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Certificateholder, upon compliance with the provisions hereof, from seeking to
compel the performance of the provisions hereof by the parties hereto.
In furtherance of and not in limitation of the foregoing, each
Certificateholder, by acceptance of its Certificate, specifically acknowledges
that no amounts shall be received by it, nor shall it have any right to receive
any amounts, unless and until such amounts have been distributed pursuant to
clauses (vii) or (viii) above to such Certificateholder. Each Certificateholder,
by acceptance of its Certificate, further specifically acknowledges that it has
no right to or interest in any monies at any time held pursuant to the Spread
Account Agreement or pursuant hereto prior to the release of such monies as
aforesaid, such monies being held in trust for the benefit of the Noteholders
and the Insurer. Notwithstanding the foregoing, in the event that it is ever
determined that the monies held in the Spread Account constitute a pledge of
collateral, then the provisions of this Agreement and the Spread Account
Agreement shall be considered to constitute a security agreement and the Seller
and the Certificateholders hereby grant to the Collateral Agent for the benefit
of the Trustee and the Insurer a first priority perfected security interest in
such amounts, to be applied as set forth in Section 3.03 of the Spread Account
Agreement. In addition, each Certificateholder, by acceptance of its
Certificate, hereby appoints the Seller as its agent to pledge a first priority
perfected security interest in the Spread Account, and any amounts held therein
from time to time to the Collateral Agent for the benefit of the Trustee and the
Insurer pursuant to the Spread Account Agreement and agrees to execute and
deliver such instruments of conveyance, assignment, grant, confirmation, etc.,
as well as any financing statements, in each case as the Insurer shall consider
reasonably necessary in order to 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
related Master 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;
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(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; and
(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.
(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 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
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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 related Master 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 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
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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 1998-1 Spread Account or
pursuant to a claim on the Note Policy;
(iv) the Pool Balance as of the close of business on
the last day of the preceding Collection Period;
(v) the aggregate outstanding principal amount of
each Class of 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;
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(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
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.
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(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 1998-1 Spread Account
with respect to such Notes, and shall not discharge the obligations of the
Trust with respect thereto.
(d) The Trust Collateral Agent shall keep a complete and
accurate record of all funds deposited by the Insurer into the 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, 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
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(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 (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, transfer and assignment of the Receivables to the
Issuer and the pledge thereof to the Trustee pursuant to the Indenture.
(a) Schedule of Representations. The representations and
warranties set forth on the Schedule of Representations attached hereto as
Schedule B are true and correct.
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(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 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.
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(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;
(ii) except as otherwise provided in this Agreement,
the Seller shall not commingle its assets and funds with
those of its Affiliates;
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(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), 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 the Seller's 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, 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
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willful misfeasance, bad faith or negligence (except for errors in judgment)
of the Owner Trustee.
Indemnification under this Section shall survive the
resignation or removal of the Owner Trustee, the Trustee or the Trust
Collateral Agent and the termination of this Agreement or the Indenture or the
Trust Agreement or the Custodian Agreement, as applicable, and shall include
reasonable fees and expenses of counsel and other expenses of litigation. If
the Seller shall have made any indemnity payments pursuant to this Section and
the Person to or on behalf of whom such payments are made thereafter shall
collect any of such amounts from others, such Person shall promptly repay such
amounts to the Seller, without interest.
SECTION 8.4. Merger or Consolidation of, or Assumption of
the Obligations of, Seller. Any Person (a) into which the Seller may be merged
or consolidated, (b) which may result from any merger or consolidation to
which the Seller shall be a party or (c) which may succeed to the properties
and assets of the Seller substantially as a whole, which Person in any of the
foregoing cases (x) has a certificate of incorporation containing provisions
relating to limitations on business and other matters substantially identical
to those contained in the Seller's certificate of incorporation and (y)
executes an agreement of assumption to perform every obligation of the Seller
under this Agreement, shall be the successor to the Seller hereunder without
the execution or filing of any document or any further act by any of the
parties to this Agreement; provided, however, that (i) the Seller shall have
received the written consent of the Insurer prior to entering into any such
transaction, (ii) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 3.1 shall have been
breached and no Master Servicer Termination Event, and no event which, after
notice or lapse of time, or both, would become a Master Servicer Termination
Event shall have happened and be continuing, (iii) the Seller shall have
delivered to the Owner Trustee, the Trust Collateral Agent, the Trustee and
the Insurer an Officer's Certificate and an Opinion of Counsel each stating
that such consolidation, merger or succession and such agreement of assumption
comply with this Section and that all conditions precedent, if any, provided
for in this Agreement relating to such transaction have been complied with,
(iv) the Rating Agency Condition shall have been satisfied with respect to
such transaction, (v) the Seller shall have delivered to the Owner Trustee,
the Trust Collateral Agent, the Trustee and the Insurer an Opinion of Counsel
stating that, in the opinion of such counsel, either (A) all financing
statements and continuation statements and amendments thereto have been
executed and filed that are necessary fully to preserve and protect the
interest of the Trust Collateral Agent, the Owner Trustee and the Trustee,
respectively, in the Receivables and reciting the details of such filings or
(B) no such action shall be necessary to preserve and protect such interest,
and (vi) immediately after giving effect to such transaction, no Insurance
Agreement Event of Default and no event that, after notice or lapse of time,
or both, would become an Insurance Agreement Event of Default shall have
occurred and be continuing. The Seller shall provide notice of any merger,
consolidation or succession pursuant to this Section 8.4 to each Rating Agency
and the Trust Collateral Agent and shall have received confirmation from 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
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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;
(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
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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 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
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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, Pennsylvania 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 Agreement, including any
sales, gross receipts, tangible or intangible personal property, privilege or
license taxes (but not including any federal or other income taxes, including
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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 any sales, gross receipts, tangible or intangible personal property,
privilege or license taxes (but not including any federal or other income
taxes, including franchise taxes asserted with respect to, and as of the date
of, the sale of the Receivables and the Other Conveyed Property to the Trust
or the issuance and original sale of the Securities) and costs and expenses in
defending against the same; and
(d) The Master Servicer shall indemnify, defend and hold
harmless the Trust, the Trustee, the Trust Collateral Agent, the Owner
Trustee, the Insurer, their respective officers, directors, agents and
employees and the Securityholders from and against any and all costs,
expenses, losses, claims, damages, and liabilities to the extent that such
cost, expense, loss, claim, damage, or liability arose out of, or was imposed
upon the Trust, the Trustee, the Trust Collateral Agent, the Insurer or the
Securityholders by reason of the breach of this Agreement by the Master
Servicer, the negligence, misfeasance, or bad faith of the Master Servicer in
the performance of its duties under this Agreement or by reason of reckless
disregard of its obligations and duties under this Agreement.
(e) Advanta shall indemnify, defend and hold harmless the
Trust, the Trustee, the Trust Collateral Agent, the Owner Trustee, the
Insurer, their respective officers, directors, agents and employees and the
Securityholders from and against any loss, liability or expense incurred by
reason of the violation by Master Servicer or Seller of federal or state
securities laws in connection with the registration or the sale of the
Securities.
(f) Indemnification under this Article shall survive the
termination of this Agreement and will survive the early resignation or
removal of any of the parties hereto and shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Master Servicer has made any indemnity payments pursuant to this Article and
the recipient thereafter collects any of such amounts from others, the
recipient shall promptly repay such amounts collected to the Master Servicer,
without interest. Notwithstanding any other provision of this Agreement, the
obligations of the Master Servicer shall not terminate or be deemed released
upon the resignation or termination of Advanta as the Master Servicer and
shall survive any termination of this Agreement.
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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 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
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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), 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, however, 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.
(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
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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) or
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 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.
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(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 one or more Sub-Servicing Agreements for any servicing
and administration of Receivables with any institution which is in compliance
with the laws of each state necessary to enable it to perform its obligations
under such Sub-Servicing Agreement and which is an Eligible Sub-Servicer. The
Master Servicer shall give notice to the Insurer, the Trust Collateral Agent,
the Owner Trustee, the Trustee, Moody's and S&P of the appointment of any
Sub-Servicer and shall furnish to the Insurer, the Trustee, the Trust
Collateral Agent and the Owner Trustee, Moody's and S&P a copy of the
Sub-Servicing Agreement. For purposes of this Agreement, the Master Servicer
shall be deemed to have received payments on Receivables when any Sub-Servicer
has received such payments. Any such Sub-Servicing Agreement shall be
consistent with and not violate the provisions of this Agreement. Any such
Sub-Servicing Agreement may be terminated by the Insurer, or if an Insurer
Default shall have occurred and be continuing, the Trust Collateral Agent and
the Owner Trustee, provided that the Master Servicer has been terminated
hereunder. The parties hereto acknowledge that with respect to statements or
certificates required to be delivered by the Master Servicer in accordance
with this Agreement, including, but not limited to, Sections 4.9, 4.10 and
4.11 hereof, that a statement or certificate delivered by the Sub-Servicer
shall be sufficient to discharge the Master Servicer's obligation to deliver
such certificate or statement.
SECTION 9.8. Successor Sub-Servicers. Each Sub-Servicing
Agreement shall expressly provide that the Master Servicer may terminate any
Sub-Servicing
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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 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.
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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 covenant, agreement or obligation (including any
financial obligation) 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, 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
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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, (i) an Insurance Agreement Event of Default or (ii) under
any other Insurance and Indemnity Agreement relating to any Series (as defined
in the Insurance Agreement) an Event of Default thereunder shall have
occurred; or
(i) A claim is made under the Note Policy.
SECTION 10.2. Consequences of a Master Servicer Termination
Event. If a Master Servicer Termination Event shall occur and be continuing,
the Trust Collateral Agent (to the extent a Trust Officer of the Trust
Collateral Agent has actual knowledge thereof) at the direction of the Insurer
(or, in the event that an Insurer Default shall have occurred and be
continuing, the Security Majority), by notice given in writing
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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 have (i)
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 the transfer to the successor Master Servicer
for administration by it of all cash amounts that shall at the time be held by
the terminated Master Servicer for deposit, or have been deposited by the
terminated Master Servicer, in the Collection Account or thereafter received
with respect to the Receivables and the delivery to the successor Master
Servicer of all Receivable Files, Monthly Records and Collection Records and a
computer tape in readable form as of the most recent Business Day containing all
information necessary to enable the successor Master Servicer or a successor
Master Servicer to service the Receivables and the Other Conveyed Property. If
requested by the Controlling Party, the successor Master Servicer shall
terminate the Lockbox Agreement and direct the Obligors to make all payments
under the Receivables directly to the successor Master Servicer (in which event
the successor Master Servicer shall process such payments in accordance with
Section 4.2(e)), or to a lockbox established by the successor Master Servicer at
the direction of the Controlling Party, at the terminated Master Servicer's
expense. The terminated Master Servicer shall grant the Trust Collateral Agent,
the successor Master Servicer and the Controlling Party reasonable access to the
terminated Master Servicer's premises at the terminated Master Servicer's
expense.
SECTION 10.3. Appointment of Successor.
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(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 that 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 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)
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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
this 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. The Trust Collateral Agent shall also
give courtesy copies of such notice to the Rating Agencies.
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 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
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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 specifically
required to be furnished to the Trust Collateral Agent, the Trust Collateral
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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 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 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 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 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 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 (i), (ii), (iii) and (iv) 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:
(i) the amendment of or any supplement to the
Indenture;
(ii) 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);
(iii) the amendment, change or modification of this
Agreement or any of the Basic Documents;
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(iv) 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
(v) 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, (i) make any payments to the Noteholders or
Certificateholders under the Basic Documents, (ii) sell the Indenture Trust
Property pursuant to Section 5.5 of the Indenture, (iii) take any other action
that the Issuer directs the Master Servicer not to take on its behalf or (iv)
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) and with the 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 Certificateholder; and provided further,
however, that if an Insurer Default has not
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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 (i)
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 (ii) 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 this Agreement relating to (i) the
Spread Account Agreement, the Series 1998-1 Spread Account, the Requisite
Amount, a Trigger Event or any component definition of a Trigger Event and
(ii) any additional sources of funds which may be added to the Series 1998-1
Spread Account or uses of funds on deposit in the Series 1998-1 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
this 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, Pennsylvania
19034, Attention: Chief Financial Officer, Telecopier # 215-444-4682, (c) in
the case of the Issuer or the Owner Trustee, to Wilmington Trust Company,
Rodney Square North 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration, Telecopier # 302-651-8882, (d) in
the case of the Trustee, the Trust Collateral Agent or the Collateral Agent,
to Norwest Bank Minnesota, National Association, Sixth Street and Marquette
Avenue, Minneapolis, Minnesota 55479-0070, 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-
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339-3518, (f) in the case of Moody's, to Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New York 10007, Telecopier
# 212-553-0344, and (g) in the case of Standard & Poor's, to Standard & Poor's
Ratings Group, 25 Broadway - 15th Floor, New York, New York 10004, Attention:
Asset Backed Surveillance Department, Telecopier # 212-208-1582. Any notice
required or permitted to be mailed to a Noteholder or Certificateholder shall
be given by first class mail, postage prepaid, at the address of such Holder
as shown in the Certificate Register or Note Register, as applicable. Any
notice so mailed within the time prescribed in this 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
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and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 13.8. Headings. The headings of the various Articles
and Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 13.9. Governing Law. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
SECTION 13.10. Assignment to Trustee. The Seller hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to the Trustee pursuant to the Indenture for
the benefit of the Noteholders and the Insurer of all right, title and
interest of the Issuer in, to and under the Receivables and/or the assignment
and delegation 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
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Wilmington Trust Company in its individual capacity or, except as expressly
provided in the Trust Agreement, as Owner Trustee have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely to
the assets of the Issuer. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
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, in its individual capacity 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 1998-1
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust
By: /s/ Debra Eberly
-------------------------------
Name: Debra Eberly
Title: Administrative Account Manager
ADVANTA AUTO RECEIVABLES CORP. I
By: /s/ Mark Dunsheath
-------------------------------
Name: Mark Dunsheath
Title: Vice President
ADVANTA AUTO FINANCE CORPORATION, in its
individual capacity and as Master Servicer,
By: /s/ Mark Dunsheath
-------------------------------
Name: Mark Dunsheath
Title: Vice President
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
not in its individual capacity but solely as
Trust Collateral Agent
By: /s/ Daniel W. 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]
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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 or Advanta from such Dealer under an existing Dealer
Agreement or pursuant to a Dealer Assignment, was validly assigned by such
Dealer to an Unaffiliated Originator or Advanta pursuant to a Dealer
Assignment, was validly assigned by the Unaffiliated Originator to Advanta (if
applicable) 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
Advanta or to an Unaffiliated Originator, (C) was sold by the Dealer or the
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 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.
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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 or Dealers 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 Dealer or 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 and (d) evidence of any Insurance Policy.
Each of such documents which is required to be signed by the Obligor has been
signed by the Obligor in the appropriate spaces. All blanks on any form
described in clauses (a), (b) and (c) above have been properly filled in and
each form has otherwise been correctly prepared. Notwithstanding the above, a
copy of the complete Receivable File for each Receivable, which fulfills the
documentation requirements of the Dealer Underwriting Guide as in effect at
the time of purchase is in the possession of the Master Servicer or its
bailee.
15. Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, and the Financed Vehicle securing each such
Receivable has not been released from the lien of the related Receivable in
whole or in part. No terms of any Receivable have been waived, altered or
modified in any respect since its origination, except by instruments or
documents identified in the Receivable File. No Receivable has been modified
as a result of application of the Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
16. Lawful Assignment. No Receivable was originated in, or
is subject to the laws of, any jurisdiction the laws of which would make
unlawful, void or voidable the sale, transfer and assignment of such
Receivable under this Agreement or pursuant to transfers of the Securities.
The Seller has not entered into any agreement with any account debtor that
prohibits, restricts or conditions the assignment of any portion of the
Receivables.
17. Good Title. No Receivable has been sold, transferred,
assigned or pledged by the Seller to any Person other than the 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 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.
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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 60 months; (ii) each Receivable had an original
maturity of at least 24 months but not more than 66 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 $800 and not more than $30,000; (v) each Receivable has an
Annual Percentage Rate of at least 10.00% and not more than 29.00%; (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 June, 2003; (ix) the
Principal Balance of each Receivable set forth in Schedule of Receivables is
true and accurate as of the Cutoff Date, and (x) as of the Cutoff Date,
approximately 12.6% of the aggregate Principal Balance for all the Receivables
is attributable to loans for the purchase of new Financed Vehicles, and
approximately 87.4% 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's established underwriting
SB-5
<PAGE>
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
Pool Receivables are being serviced by the Master Servicer and, except with
respect to Pool Receivables with aggregate Principal Balances not in excess of
$27,000,000, at least one payment has been received by the Master Servicer
from the related Obligor with respect to such Pool Receivable.
SB-6
<PAGE>
EXHIBIT A
FORM OF MASTER SERVICER'S CERTIFICATE
[See Attached Pages]
A-1
<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 June 1, 1998 (the
"Agreement") among Advanta Auto Receivables Trust 1998-1, (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: $______________________
B-1
<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 June 1, 1998 between Advanta Auto Receivables Corp. I
(the "Seller"), Advanta Automobile Receivables Trust 1998-1
(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.
C-1
<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 June 1,
1998 (the "Sale and Servicing Agreement"), among Advanta Automobile Receivables
Trust 1998-1, 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 ____ day of _______________, 1998.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as
Trust Collateral Agent
By:__________________________
Name:
Title:
D-1
<PAGE>
EXHIBIT 4.4
<PAGE>
[LOGO]
FINANCIAL FINANCIAL GUARANTY
SECURITY INSURANCE POLICY
ASSURANCE (Registered)
Obligor: Advanta Automobile Policy No.: 50711-N
Receivables Trust 1998-1
Obligations: $57,602,000 Asset Backed Notes, Date of Issuance: 6/29/98
Classes A-1 and A-2, as described in
Endorsement No. 1 hereto.
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for
consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY GURANTEES 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 herto, 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. Brown 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 1998-1
OBLIGATTIONS: $41,000,000 Class A-1 5.90% Asset Backed Notes
$16,602,000 Class A-2 6.09% Asset Backed Notes
Policy No.: 50711-N
Date of Issuance: June 29, 1998
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 June 1, 1998, between Advanta
Automobile Receivables Trust 1998-1, 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.
"Noteholder" shall have the meaning set forth in the Indenture; provided,
however Noteholder shall not include the Obligor or any affiliates or
successors thereof in the event the Obigor, or any such affiliate or successor,
is a registered or beneficial owner of the Obligation.
"Policy" means this Financial Guaranty Insurance Policy and includes each
endorsement thereto.
"Receipt" and "Received" means 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 June 1, 1998, 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
<PAGE>
Policy No.: 50711-N Date of Issuance: June 29, 1998
as Trust Collateral Agent, as amended from time to time in accordance with its
terms.
"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.
2
<PAGE>
Policy No.: 50711-N Date of Issuance: June 29, 1998
Financial Security shall be entitled to pay any amount hereunder in
respect of Scheduled Payments on the Obligations, including any amount
due on the Obligations on an accelerated basis, whether or not any
notice and certificate shall have been Received by Financial Security as
provided above; provided, however, that by acceptance of this Policy the
Trust Collateral Agent agrees to provide upon request to Financial
Security a notice and certificate in respect of any such payments made
by Financial Security. 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 Payments 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
3
<PAGE>
Policy No.: 50711-N Date of Issuance: June 29, 1998
Security or by the Fiscal Agent on behalf of Financial Security. The Fiscal
Agent is the agent of Financial Security only and the Fiscal Agent shall in no
event be liable to any Noteholder for any acts of the Fiscal Agent or any
failure of Financial Security to deposit, or cause to be deposited, sufficient
funds to make payments due under this Policy.
6. Waiver of Defenses. To the fullest extent permitted by applicable law,
Financial Security agrees not to assert, and hereby waives, for the benefit of
each Noteholder, all rights (whether by counterclaim, setoff or otherwise) and
defenses (including, without limitation, the defense of fraud), whether acquired
by subrogation, assignment or otherwise, to the extent that such rights and
defenses may be available to Financial Security to avoid payment of its
obligations under this Policy in accordance with the express provisions of this
Policy.
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 1998-1
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 ASSSURANCE INC.
By /s/ [illegible]
-------------------------------
Authorized Officer
4
<PAGE>
Policy No.: 50711-N Date of Issuance: June 29, 1998
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 1998-1
$41,000,000 Class A-1 5.90% Asset Backed Notes
$16,602,000 Class A-2 6.90% 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. 50711-N dated June 29, 1998 (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 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
A-1
<PAGE>
Policy No.: 50711-N Date of Issuance: June 29, 1998
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.: 50711-N Date of Issuance: June 29, 1998
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>
EXHIBIT 8.1
<PAGE>
June 29, 1998
TO THE ADDRESSEES LISTED
ON SCHEDULE I HERETO:
Re: Advanta Automobile Receivables Trust 1998-1
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 1998-1 (the
"Issuer"), as to certain matters in connection with the issuance of the
$41,000,000 5.90% Class A-1 Asset Backed Notes and $16,602,000 6.09% Class A-2
Asset Backed Notes (the "Notes") which will be issued pursuant to an Indenture
(the "Indenture") dated as of June 1, 1998 between Advanta Auto Receivables
Trust 1998-1 and Norwest Bank Minnesota, National Association (in that capacity,
the "Indenture Trustee") and the Certificates (the "Certificates") which will be
issued pursuant to the Trust Agreement dated as of June 1, 1998 (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 June 25,
1998 (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 LLP
2
<PAGE>
SCHEDULE I
----------
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 1998-1
c/o Wilmington Trust Company,
as Owner Trustee
Rodney Square North
Wilmington, Delaware 19890-0001
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
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,
a division of McGraw-Hill Companies
25 Broadway
New York, New York 10004
Financial Security Assurance Inc.
350 Park Avenue
13th Floor
New York, New York 10022
<PAGE>
EXHIBIT 10.1
<PAGE>
EXECUTION COPY
PURCHASE AGREEMENT
between
ADVANTA AUTO FINANCE CORPORATION
Seller
and
ADVANTA AUTO RECEIVABLES CORP. I
Purchaser
dated as of
June 1, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
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......................................11
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.........................14
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........................................17
SECTION 6.8 Severability of Provisions....................................17
SECTION 6.9 Intention of the Parties......................................17
SECTION 6.10 Governing Law.................................................17
SECTION 6.11 Counterparts..................................................17
i
<PAGE>
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 Seller
ii
<PAGE>
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, dated as of June 1, 1998, 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 June 1, 1998, by and among Seller, in
its capacity as Master Servicer, Advanta Automobile Receivables Trust 1998-1,
as Issuer, 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.
"Closing Date" means June 29, 1998.
"Flow Receivable" means any Receivable purchased by 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.
"Issuer" means Advanta Automobile Receivables Trust 1998-1.
<PAGE>
"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, not in its
individual capacity but solely as Owner Trustee appointed and acting pursuant
to the Trust Agreement.
"Pool Receivable" means a Receivable purchased by Seller
pursuant to a pool purchase agreement.
"Receivables" means the Receivables listed on the Schedule
of Receivables attached hereto as Schedule A.
"Related Documents" means the Notes, the Certificates, the
Custodian Agreement (if any), the Sale and Servicing Agreement, the Indenture,
the Trust Agreement, the Policy, the Master Spread Account Agreement, the
Master Spread Account Agreement Supplement, the Insurance and Indemnity
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" or "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.
2
<PAGE>
"Unaffiliated Originator" means any third party originator
or owner of Receivables.
SECTION 1.3 Usage of Terms. With respect to all terms used
in this Agreement, the singular includes the plural and the plural includes
the singular; words importing any gender include the other gender; references
to "writing" include printing, typing, lithography, and other means of
reproducing words in a visible form; references to agreements and other
contractual instruments include all subsequent amendments thereto or changes
therein entered into in accordance with their respective terms and not
prohibited by this Agreement or the Sale and Servicing Agreement; references
to Persons include their permitted successors and assigns; any form of the
word "include" shall be deemed to be followed by the words "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 and 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 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
3
<PAGE>
determination), such determination shall be made without taking into account
the funds available from claims under the Policy. Whenever a determination is
to be made under this Agreement whether a breach of a representation, warranty
or covenant has or could have a material adverse effect on a Receivable or the
interest therein of the Trust, the Noteholders, the Certificateholders or the
Insurer (or any similar or analogous determination), such determination shall
be made by the Insurer in its reasonable discretion and after notifying the
Trustee and 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 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 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 Seller against Dealers or
Unaffiliated Originators pursuant to Dealer Agreements,
Dealer Assignments or Unaffiliated Originator Receivables
Purchase Agreements;
(v) all rights under any Service Contracts on the
related Financed Vehicles;
4
<PAGE>
(vi) the related Receivables Files and any and all
other documents that Seller keeps on file in accordance
with its customary procedures relating to the Receivables,
the Obligors or the Financed Vehicles;
(vii) property (including the right to receive future
Net Liquidation Proceeds) that secures a Receivable and
that has been acquired by or on behalf of 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 shall pay or cause 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 Seller (the "Book Value"), by wire
transfer of immediately available funds. Notwithstanding the foregoing, if
Seller so elects by written or oral notice to Purchaser, Seller shall have the
right to receive an amount of immediately available funds less than the Book
Value, in which event the difference between the Book Value and the amount of
immediately available funds actually paid to Seller shall be treated as a
contribution by Seller to the capital of Purchaser.
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.
5
<PAGE>
(ii) Organization and Good Standing. Seller has been
duly organized and is validly existing as a corporation in
good standing under the laws of the State of Nevada, with
power and authority to own its properties and to conduct
its business as such properties are currently owned and
such business is currently conducted, and had at all
relevant times, and now has, power, authority and legal
right to acquire, own and sell the Receivables and the
Other Conveyed Property to be transferred to Purchaser.
(iii) Due Qualification. Seller is duly qualified to
do business as a foreign corporation in good standing, and
has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of its
property or the conduct of its business requires such
qualification.
(iv) Power and Authority. Seller has the power and
authority to execute and deliver this Agreement and its
Related Documents and to carry out its terms and their
terms, respectively; Seller has full power and authority
to sell and assign the Receivables and the Other Conveyed
Property to be sold and assigned to and deposited with
Purchaser hereunder and has duly authorized such sale and
assignment to Purchaser by all necessary corporate action;
and the execution, delivery and performance of this
Agreement and Seller's Related Documents have been duly
authorized by Seller by all necessary corporate action.
(v) Valid Sale; Binding Obligations. This Agreement
and Seller's Related Documents have been duly executed and
delivered, shall effect a valid sale, transfer and
assignment of the Receivables and the Other Conveyed
Property to 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 Master Spread Account
Agreement, the Sale and Servicing Agreement and the
Indenture and any instruments, certificates and other
documents executed pursuant to the provisions thereof), or
violate any law, order, rule or regulation applicable to
Seller of any court or of any federal or state
6
<PAGE>
regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over
Seller or any of its properties.
(vii) No Proceedings. There are no proceedings or
investigations pending or, to Seller's knowledge,
threatened against Seller, before any court, regulatory
body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over
Seller or its properties (i) asserting the invalidity of
this Agreement or any of the Related Documents, (ii)
seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by
this Agreement or any of the Related Documents, (iii)
seeking any determination or ruling that might materially
and adversely affect the performance by Seller of its
obligations under, or the validity or enforceability of,
this Agreement or any of the Related Documents or (iv)
seeking to affect adversely the federal income tax or
other federal, state or local tax attributes of, or
seeking to impose any excise, franchise, transfer or
similar tax upon, the transfer and acquisition of the
Receivables and the Other Conveyed Property hereunder or
under the Sale and Servicing Agreement.
(viii) Chief Executive Office. The chief executive
office of Seller is located at 500 Office Center Drive,
Suite 400, Fort Washington, PA 19034.
(ix) No Consents. 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 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
7
<PAGE>
and legal right to acquire and own the Receivables and the
Other Conveyed Property, and to transfer the Receivables
and the Other Conveyed Property to the Issuer pursuant to
the Sale and Servicing Agreement.
(ii) Due Qualification. Purchaser is duly qualified
to do business as a foreign corporation in good standing,
and has obtained all necessary licenses and approvals in
all jurisdictions where the failure to do so would
materially and adversely affect Purchaser's ability to
acquire the Receivables or the Other Conveyed Property,
and to transfer the Receivables and the Other Conveyed
Property to the Issuer pursuant to the Sale and Servicing
Agreement, or the validity or enforceability of the
Receivables and the Other Conveyed Property or to perform
Purchaser's obligations hereunder and under 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, the Master Spread Account Agreement
and the Indenture and any instruments, certificates and
other
8
<PAGE>
documents executed pursuant to the provisions thereof), or
violate any law, order, rule or regulation, applicable to
Purchaser or its properties, of any federal or state
regulatory body, any court, administrative agency, or
other governmental instrumentality having jurisdiction
over Purchaser or any of its properties.
(vii) No Proceedings. There are no proceedings or
investigations pending, or, to the knowledge of Purchaser,
threatened against Purchaser, before any court, regulatory
body, administrative agency, or other tribunal or
governmental instrumentality having jurisdiction over
Purchaser or its properties: (i) asserting the invalidity
of this Agreement or any of the Related Documents, (ii)
seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any of the
Related Documents, (iii) seeking any determination or
ruling that might materially and adversely affect the
performance by Purchaser of its obligations under, or the
validity or enforceability of, this Agreement or any of
the Related Documents or (iv) that may adversely affect
the federal or state income tax attributes of, or seeking
to impose any excise, franchise, transfer or similar tax
upon, the transfer and acquisition of the Receivables and
the Other Conveyed Property hereunder or the transfer of
the Receivables and the Other Conveyed Property to the
Issuer pursuant to the Sale and Servicing Agreement.
(viii) Approvals. All approvals, authorizations,
consents, orders or other actions of any person,
corporation or other organization, or of any court,
governmental agency or body or official, required in
connection with the execution and delivery by 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
9
<PAGE>
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 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.
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(e) If at any time Seller shall propose to sell, grant a
security interest in, or otherwise transfer any interest in any motor vehicle
receivables to any prospective purchaser, lender or other transferee, Seller
shall give to such prospective purchaser, lender, or other transferee computer
tapes, records, or print-outs (including any restored from archives) that, if
they shall refer in any manner whatsoever to any Receivable (other than a
Purchased Receivable), shall indicate clearly that such Receivable has been
sold to Purchaser, sold by Purchaser to Issuer, and is owned by the Issuer.
SECTION 4.2 Other Liens or Interests. Except for the
conveyances hereunder, Seller will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any Lien on
the Receivables or the Other Conveyed Property or any interest therein, and
Seller shall defend the right, title, and interest of Purchaser and the Issuer
in and to the Receivables and the Other Conveyed Property against all claims
of third parties claiming through or under Seller.
SECTION 4.3 Costs and Expenses. Seller shall pay all
reasonable costs and disbursements in connection with the performance of its
obligations hereunder and under its Related Documents.
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,
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privilege, or license taxes (but not including any taxes asserted with respect
to, and as of the date of, the sale, transfer and assignment of the
Receivables and the Other Conveyed Property to Purchaser and by Purchaser to
the Issuer or the issuance and original sale of the Notes or the Certificates,
or asserted with respect to ownership of the Receivables and Other Conveyed
Property which shall be indemnified by Seller pursuant to clause (e) below, or
federal, state or other income taxes, arising out of distributions on the
Notes or the Certificates or transfer taxes arising in connection with the
transfer of the Notes or the Certificates) and costs and expenses in defending
against the same, arising by reason of the acts to be performed by Seller
under this Agreement or imposed against such Persons.
(e) Seller agrees to pay, and to indemnify, defend and hold
harmless Purchaser, the Issuer, the Trust Collateral Agent, the Indenture
Trustee, the Owner Trustee, the Noteholders and the Certificateholders from,
any taxes which may at any time be asserted against such Persons with respect
to, and as of the date of, the conveyance or ownership of the Receivables or
the Other Conveyed Property hereunder and 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.
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(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.
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 Seller or receipt by 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
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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 sell,
assign, convey and otherwise transfer to Seller all right, title and interest
of each of Purchaser and the Issuer in and to such Receivable and all security
and documents and all Other Conveyed Property conveyed to Purchaser or 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 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
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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 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
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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, Seller provides the Trust Collateral Agent
with an Opinion of Counsel, (which may be provided by Seller's internal
counsel) that no such amendment shall increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
Receivables or distributions that shall be required to be made on any Note or
Certificate.
(c) It shall not be necessary for the consent of
Certificateholders or Noteholders pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders or Noteholders shall be subject to such
reasonable requirements as the Trust Collateral Agent may prescribe, including
the establishment of record dates. The consent of a Holder of a Certificate or
a Note given pursuant to this Section or pursuant to any other provision of
this Agreement shall be conclusive and binding on such Holder and on all
future Holders of such Certificate or Note and of any Certificate or Note
issued upon the transfer thereof or in exchange thereof or in lieu thereof
whether or not notation of such consent is made upon the Certificate or Note.
Prior to the execution of any amendment to this Agreement,
the Trustee, the Trust Collateral Agent, if requested, shall be entitled to
receive and rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and that all conditions
precedent to the execution and delivery of such amendment have been satisfied.
SECTION 6.6 Notices. All demands, notices and communications
to Seller or Purchaser hereunder shall be in writing, personally delivered, or
sent by telecopier (subsequently confirmed in writing), reputable overnight
courier or mailed by certified mail, return receipt requested, and shall be
deemed to have been given upon receipt (a) in the case of Seller, to Advanta
Auto Finance Corporation, 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.
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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.
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
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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 Purchaser to perform
their respective duties and obligations hereunder or under Related Documents)
and that the Trust Collateral Agent may enforce the duties and obligations of
Seller under this Agreement against Seller for the benefit of the Insurer, the
Owner Trustee, the Trust Collateral Agent, the Noteholders and the
Certificateholders.
SECTION 6.13 Nonpetition Covenant. Neither Purchaser nor
Seller shall petition or otherwise invoke the process of any court or
government authority for the purpose of commencing or sustaining a case
against 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 Purchaser or the
Issuer or any substantial part of their respective property, or ordering the
winding up or liquidation of the affairs of 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/ Mark Dunsheath
---------------------------
Name: Mark Dunsheath
Title: Vice President
ADVANTA AUTO RECEIVABLES CORP. I,
as Purchaser
By /s/ Mark Dunsheath
---------------------------
Name: Mark Dunsheath
Title: Vice President
Acknowledged and Accepted:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
As Trustee and Trust Collateral Agent
By /s/ Daniel W. Rolczynski
----------------------------
Name: Daniel W. Rolczynski
Title: Corporate Trust Officer
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SCHEDULE A
SCHEDULE OF RECEIVABLES
[See the Attached Pages]
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) Seller's credit
policies or (ii) credit policies which were reviewed by Seller prior to a
purchase of a Receivable by 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 or Seller
from such Dealer under an existing Dealer Agreement or pursuant to a Dealer
Assignment and was validly assigned by such Dealer to an Unaffiliated
Originator or Seller pursuant to a Dealer Assignment and then validly assigned
by an Unaffiliated Originator to Seller (if applicable), (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) was sold by the Dealer, directly or indirectly, to Seller or
to an Unaffiliated Originator, (C) was sold by the Dealer or the Unaffiliated
Originator to Seller and by Seller to 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
A-1
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such Receivable at the time of origination, or with respect to Receivables
assigned to 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 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, 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
Purchaser by Seller and resold by Purchaser to the Trust in accordance with
the terms of the Sale and Servicing Agreement.
10. Computer Tape. The Computer Tape made available by Seller to
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 Purchaser or purchased by Seller from Unaffiliated
Originators or Dealers 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.
A-2
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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, Seller and the Master Servicer and which 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 Dealer or the Unaffiliated Originator to Seller
and by Seller to Purchaser and an assignment of the Lien Certificate executed
by 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. 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 Seller to any Person other than Purchaser and the Issuer;
immediately prior to the conveyance of the Receivables to Purchaser pursuant
to this Agreement, 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 Seller, 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.
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 Seller, the
A-3
<PAGE>
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 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, Seller has received written evidence from the related Dealer that such
Lien Certificate showing 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 Seller, pursuant to the Unaffiliated
Originator Receivables Purchase Agreement, if applicable and (ii) Seller's
security interest has been validly assigned to Purchaser pursuant to this
Agreement. Immediately after the sale, transfer and assignment thereof by
Seller to Purchaser and from 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 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. 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,
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 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.
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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 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 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 60 months; (ii) each Receivable had an original maturity of at least 24
months but not more than 66 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 $800 and
not more than $30,000; (v) each Receivable has an Annual Percentage Rate of at
least 10.00% and not more than 29.00%; (vi) no Receivable was more than 30
days past due as of the Cutoff Date; (vii) no funds have been advanced by
Seller, the Master Servicer, any Unaffiliated Originator, any Dealer, or
anyone acting on behalf of any of them in order to cause any Receivable to
qualify under subclause (vi) of this clause 25; (viii) no Receivable has a
final scheduled payment date after June, 2003; (ix) the Principal Balance of
each Receivable set forth in Schedule of Receivables is true and accurate as
of the Cutoff Date, and (x) as of the Cutoff Date, approximately 12.6% of the
aggregate Principal Balance for all the Receivables is attributable to loans
for the purchase of new Financed Vehicles, and approximately 87.4% 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 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 Seller's established underwriting guidelines
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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 Pool
Receivables are being serviced by the Master Servicer and, except with respect
to Pool Receivables with aggregate Principal Balances not in excess of
$27,000,000, at least one payment has been received by the Master Servicer
from the related Obligor with respect to such Pool Receivable.
<PAGE>
EXHIBIT 10.2
<PAGE>
EXECUTION COPY
INDEMNIFICATION AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
ADVANTA AUTO RECEIVABLES CORP. I
and
SALOMON BROTHERS INC
Dated as of June 1, 1998
Advanta Automobile Receivables Trust 1998-1
$41,000,000 5.90% Class A-1 Asset Backed Notes
$16,602,000 6.09% Class A-2 Asset Backed Notes
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Definitions.................................................1
Section 2. Representations, Warranties and Agreements
of Financial Security.......................................3
Section 3. Representations, Warranties and Agreements
of the Underwriter..........................................6
Section 4. Indemnification.............................................7
Section 5. Indemnification Procedures..................................7
Section 6. Contribution................................................8
Section 7. Miscellaneous...............................................9
EXHIBIT A - Opinion of Assistant General Counsel
<PAGE>
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT dated as of June 1, 1998, among FINANCIAL
SECURITY ASSURANCE INC. ("Financial Security"), ADVANTA AUTO RECEIVABLES CORP. I
(the "Company") and SALOMON BROTHERS INC (the "Underwriter").
Section 1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings provided below:
"Advanta" means Advanta Auto Finance Corporation, a Nevada corporation.
"Agreement" means this Indemnification Agreement, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof.
"Commission" means the Securities and Exchange Commission.
"Company Party" means any of the Company, its parent, subsidiaries and
affiliates and any shareholder, director, officer, employee, agent or
"controlling person" (as such term is used in the Securities Act) of any of the
foregoing.
"Federal Securities Laws" means the Securities Act, the Securities
Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company
Act of 1940, the Investment Advisers Act of 1940 and the Public Utility Holding
Company Act of 1935, each as amended from time to time, and the rules and
regulations in effect from time to time under such Acts.
"Financial Security Agreements" means this Agreement, the Stock Pledge
Agreement, the Spread Account Agreement and the Insurance Agreement.
"Financial Security Information" has the meaning provided in Section
2(g) hereof.
"Financial Security Party" means any of Financial Security, its parent,
subsidiaries and affiliates, and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Securities Act) of
any of the foregoing.
"Indemnified Party" means any party entitled to any indemnification
pursuant to Section 4 hereof.
"Indemnifying Party" means any party required to provide
indemnification pursuant to Section 4 hereof.
"Indenture" means the Indenture dated as of June 1, 1998 between
Advanta Automobile Receivables Trust 1998-1 and Norwest Bank Minnesota, National
Association, as trustee and trust collateral agent, as the same may be amended
and supplemented from time to time in accordance with its terms.
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<PAGE>
"Insurance Agreement" means the Insurance and Indemnity Agreement,
dated as of June 1, 1998, among Financial Security, Advanta Automobile
Receivables Trust 1998-1, the Company and Advanta, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"Losses" means (a) any actual out-of-pocket damages incurred by the
party entitled to indemnification or contribution hereunder, (b) any actual
out-of-pocket costs or expenses incurred by such party, including reasonable
fees or expenses of its counsel and other expenses incurred in connection with
investigating or defending any claim, action or other proceeding which entitle
such party to be indemnified hereunder (subject to the limitations set forth in
Section 5 hereof), to the extent not paid, satisfied or reimbursed from funds
provided by any other Person other than an affiliate of such party (provided
that the foregoing shall not create or imply any obligation to pursue recourse
against any such other Person), plus (c) interest on the amount paid by the
party entitled to indemnification or contribution from the date of such payment
to the date of payment by the party who is obligated to indemnify or contribute
hereunder at the statutory rate applicable to judgments for breach of contract.
"Offering Document" means the Prospectus and any other material or
documents delivered by the Underwriter or any Underwriter Party to any Person in
connection with the offer or sale of the Securities.
"Person" means any individual, partnership, joint venture, corporation,
trust, unincorporated organization or other organization or entity (whether
governmental or private).
"Policy" means the financial guaranty insurance policy delivered by
Financial Security with respect to the Securities.
"Prospectus" means any prospectus or preliminary prospectus relating to
the Securities included in the Registration Statement or filed with the
Commission (including all documents, if any, incorporated by reference therein
and the information, if any, deemed to be part thereof pursuant to the Rules and
Regulations), as the same may be amended or supplemented from time to time;
provided, however, that if any revised prospectus shall be provided by the
Company for use in connection with the offering of the Securities which differs
from the Prospectus filed with the Commission pursuant to Rule 424 of the
Securities Act (whether or not such revised prospectus is required to be filed
by the Seller pursuant to Rule 424 of the Securities Act), the term "Prospectus"
shall refer to such revised Prospectus from and after the time it is first
provided to the Underwriter or any Underwriter Party for such use.
"Rating Agencies" has the meaning provided in the last paragraph of
Section 2 hereof.
"Registration Statement" means the registration statement on Form S-3
(No. 333-19733) including a prospectus and any amendments thereto relating to
the Securities, and any registration statement required to be filed under the
Securities Act or the Rules and Regulations (including all documents, if any,
incorporated by reference therein and the information, if any,
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<PAGE>
deemed to be part thereof pursuant to the Rules and Regulations), as the same
may be amended or supplemented from time to time.
"Securities" means the Advanta Automobile Receivables Trust 1998-1
$41,000,000 5.90% Class A-1 Asset Backed Notes and $16,602,000 6.09% Class A-2
Asset Backed Notes described in the Offering Document and issued pursuant to the
Indenture.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and any rule or regulation in effect from time to time under such Act.
"Spread Account Agreement" means the Master Spread Account Agreement
dated as of March 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 has been supplemented by (i) the
Series 1997-2 Supplement, dated as of December 1, 1997, among the Seller,
Norwest Bank Minnesota, National Association ("Norwest"), as Collateral Agent
and Trustee, and Financial Security, and (ii) the Series 1998-1 Supplement,
dated as of June 1, 1998, among the Seller, Norwest, as Collateral Agent and
Trustee, and Financial Security and as may be further 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
June 25, 1998 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. 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
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<PAGE>
remedies, to bankruptcy, insolvency, reorganization, rehabilitation,
moratorium and other similar laws affecting the enforceability of
creditors' rights generally applicable in the event of the bankruptcy
or insolvency of Financial Security and to the application of general
principles of equity and subject, in the case of this Agreement, to
principles of 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, 1997 and December 31, 1996 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 March 31, 1998,
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-2 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
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<PAGE>
connection with the offer and sale of securities of such registrant
registered under the Securities Act. Within such limited scope of
disclosure, however, as of the date of the Prospectus and as of the
date hereof, the Financial Security Information does not contain any
untrue statement of a 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.
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<PAGE>
Section 3. The Underwriter represents, warrants and agrees with the
parties hereto as follows:
(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. 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,
1998-1,
$41,000,000 5.90% Class A-1 Asset Backed
Notes and
$16,602,000 6.09% Class A-2 Asset Backed
Notes.
Confirmation: (212) 826-0100
Facsimile Nos.: (212) 339-3518,
(212) 339-3529
(in each case in which notice or
other communication to Financial
Security refers to an Event of
Default, a claim on
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<PAGE>
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: Salomon Brothers Inc
7 World Trade Center
New York, New York 10048
Attention: Legal Department
Facsimile No: (212) 783-2274
Confirm No: (212) 783-3000
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(c) Assignments. This Agreement may not be assigned by any party
without the express written consent of each other party. Any assignment made in
violation of this Agreement shall be null and void.
(d) Amendments. Amendments of this Agreement shall be in writing signed
by each party hereto.
(e) Survival, Etc. The indemnity and contribution agreements contained
in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Indemnifying
Party, (ii) the issuance of the Securities or (iii) any termination of this
Agreement or the Policy. The indemnification provided in this Agreement will be
in addition to any liability which the parties may otherwise have and shall in
no way limit any obligations of the parties to the Underwriting Agreement or the
Insurance Agreement.
(f) Counterparts. This Agreement may be executed in counterparts by the
parties hereto, and all such counterparts shall constitute one and the same
instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indemnification
Agreement to be duly executed and delivered as of the date first above written.
FINANCIAL SECURITY ASSURANCE INC.
By:/s/ Ray Galkowski
----------------------------------
Name: Ray Galkowski
Title: Director
ADVANTA AUTO RECEIVABLES CORP. I
By:/s/ Mark Dunsheath
----------------------------------
Name: Mark Dunsheath
Title: Vice President
SALOMON BROTHERS INC
By: /s/ John L. McWilliams
----------------------------------
Name: John L. McWilliams
Title:
<PAGE>
EXHIBIT A
OPINION OF ASSISTANT GENERAL COUNSEL
Based upon the foregoing, I am of the opinion that:
1. Financial Security is a stock insurance company duly organized, validly
existing and authorized to transact financial guaranty insurance business under
the laws of the State of New York.
2. The Policy and the Financial Security Agreements have been duly
authorized, executed and delivered by Financial Security.
3. The Policy and the Financial Security Agreements constitute valid and
binding obligations of Financial Security, enforceable against Financial
Security in accordance with their terms, subject, as to the enforcement of
remedies, to bankruptcy, insolvency, reorganization, rehabilitation, moratorium
and other similar laws affecting the enforceability of creditors' rights
generally applicable in the event of the bankruptcy or insolvency of Financial
Security and to the application of general principles of equity and subject, in
the case of the Indemnification Agreement, to principles of public policy
limiting the right to enforce the indemnification provisions contained therein
insofar as they relate to indemnification for liabilities arising under
applicable securities laws.
4. The Policy is exempt from registration under the Securities Act of 1933,
as amended (the "Act").
5. Neither the execution nor 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 June 25, 1998, which supplements the Prospectus dated March 24, 1997 (the
"Offering Document") of the Company
<PAGE>
with respect to the Securities. The information provided in the Offering
Document with respect to Financial Security is limited and does not purport to
provide the scope of disclosure required to be included in a prospectus with
respect to a registrant under the Act in connection with the public offer and
sale of securities of such registrant. Within such limited scope of disclosure,
however, there has not come to my attention any information which would cause me
to believe that the description of Financial Security referred to above, as of
the date of the Offering Document, contained any untrue statement of a material
fact or omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (except that no opinion is rendered with respect to any financial
statements or other financial information contained or referred to therein).
A-2
<PAGE>
EXHIBIT 23.1
<PAGE>
[COOPERS & LYBRAND LETTERHEAD]
CONSENT of INDEPENDENT ACCOUNTANTS
-----------
We consent to the incorporation by reference in the Prospectus Supplement of
Salomon Smith Barney relating to the Advanta Automobile Receivables Trust 1998-1
of our report dated January 26, 1998, on our audits of the consolidated
financial statements of Financial Security Assurance Inc. and Subsidiaries as of
December 31, 1997 and 1996, and for each of the three years in the period ended
December 31, 1997. 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
June 25, 1998
