EXHIBIT 4.2
EXECUTION COPY
TRUST AGREEMENT
between
ADVANTA AUTO RECEIVABLES CORP. I
and
WILMINGTON TRUST COMPANY
Owner Trustee
Dated as of June 1, 1998
TABLE OF CONTENTS
Page
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
(i)
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
(ii)
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
EXHIBITS
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
(iii)
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.
"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 Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000-0000, 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.
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"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.
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(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
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 xxx 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
5
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
6
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
7
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
8
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
9
(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
14
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
15
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
16
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,
17
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
18
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.
19
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
20
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
21
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
22
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
23
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.
24
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
25
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
26
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
27
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.
28
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
29
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
30
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.
31
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, 0000 Xxxxxxxxx Xxx,
Xxxxx 000, Xxxx, Xxxxxx 00000; if to the holder of the Insurer, addressed to
Insurer, Financial Security Assurance Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, XX
00000, Attention: Surveillance Department, Telex No.: (000) 000-0000,
Confirmation: (000) 000-0000, Telecopy Nos.: (000) 000-0000, (000) 000-0000 (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
32
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.
33
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
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/ Xxxxx Xxxxxx
-----------------------------------
Name: Xxxxx Xxxxxx
Title: Administrative Account Manager
ADVANTA AUTO RECEIVABLES CORP. I
Depositor
By: /s/ Xxxx Xxxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President
Acknowledged and Agreed:
ADVANTA AUTO FINANCE CORPORATION
Master Servicer
By: /s/ Xxxx Xxxxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President
[Signature Page for Trust Agreement]
35
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
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
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
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
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
(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
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
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
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, Xxxxxx Square North, 0000
Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000, 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
