<PAGE>
<PAGE>
As filed with the Securities and Exchange Commission on August 9, 1996
REGISTRATION NO. 333-______
=======================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S - 3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
ADVANTA GOLD MASTER TRUST
ADVANTA NATIONAL BANK
(ORIGINATOR OF THE ASSETS OF THE TRUST DESCRIBED HEREIN)
(EXACT NAME OF THE REGISTRANT AS SPECIFIED IN ITS CHARTER)
UNITED STATES 23-2804492
(State of other jurisdiction (IRS Employer
of incorporation or Identification Number)
organization)
501 CARR ROAD
WILMINGTON, DELAWARE 19809
(302) 791-6262
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
GENE S. SCHNEYER, ESQ.
ADVANTA CORP.
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
FIVE HORSHAM BUSINESS CENTER
HORSHAM, PENNSYLVANIA 19044-2209
(215) 657-4000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------<PAGE>
COPIES TO:
ROBERT F. HUGI
MAYER, BROWN & PLATT
190 SOUTH LASALLE STREET
SUITE 3900
CHICAGO, ILLINOIS 60603
(312) 782-0600
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement as
determined by market conditions.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING
OFFERED PURSUANT TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK
THE FOLLOWING BOX. / /
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE
OFFERED ON A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE
SECURITIES ACT OF 1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION
WITH DIVIDEND OR INTEREST REINVESTMENT PLANS, CHECK THE FOLLOWING BOX. /X/
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN
OFFERING PURSUANT TO RULE 462(b) UNDER THE SECURITIES ACT, PLEASE CHECK THE
FOLLOWING BOX AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF
THE EARLIER EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. / /
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT
TO RULE 462(c) UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST
THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. / /
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE
434, PLEASE CHECK THE FOLLOWING BOX. / /
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Amount Proposed maximum Proposed maximum Amount of
Title of Securities to be offering price aggregate registration
being registered registered(1) per unit(2) offering price(2) fee
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Backed
Certificates...... $1,000,000 100% $1,000,000 $344.83
- ----------------------------------------------------------------------------------------
<FN>
(1) In U.S. Dollars, and, if any Asset Backed Securities are to be issued
at an original issue discount, such greater amount as shall result in
an aggregate offering price of $1,000,000.
(2) Estimated solely for the purpose of calculating the registration fee.
--------------------------------------------------------------
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
Subject to completion, dated __________________, 1996
Prospectus
Advanta Gold Master Trust
Asset Backed Securities, Issuable In Series
Advanta National Bank
Transferor and Servicer
This Prospectus relates to certain Asset Backed Securities (the
"Certificates") which may be issued from time to time by Advanta Gold
Master Trust (the "Trust") in one or more series (each a "Series"). The
Trust will be formed pursuant to a pooling and servicing agreement between
Advanta National Bank ("ANB"), as transferor (in such capacity, the
"Transferor") and as servicer (in such capacity, the "Servicer"), and The
Bank of New York, as Trustee. The property of the Trust will include a
portfolio of VISA(R) and MasterCard(R) credit card receivables or other
revolving credit account receivables (the "Receivables") generated from
time to time in the ordinary course of business in a portfolio of accounts
(the "Accounts") owned by ANB, all monies due in payment of the Receivables
and certain other property (which may include participation interests in
other pooled assets), as more fully described herein and, with respect to
any Series, in the related Prospectus Supplement.
The Certificates will be offered from time to time under this Prospectus on
terms determined for each Series at the time of the sale and as described
in the related Prospectus Supplement. Each Series will consist of one or
more Classes, one or more of which may be fixed rate Certificates, floating
rate Certificates, zero coupon Certificates or another type of Certificates
as specified in the related Prospectus Supplement. Payments of interest on
and principal of each Class will be made as specified in the related
Prospectus Supplement. Any Series may include one or more Classes which
are subordinated in right and priority to the extent described in the
related Prospectus Supplement to payment of principal or interest to one or
more other Classes of such Series.
Each Certificate will represent an interest in the Trust, and each Holder
will be entitled to receive a varying percentage of each month's
collections with respect to the Receivables at the times and in the manner
described herein and, with respect to any Series, in the related Prospectus
Supplement. One or more Classes of a Series may be entitled to the
benefits of a cash collateral guaranty or account, collateral interest,
discount collateral interest, letter of credit, surety bond, insurance
policy or other form of enhancement as specified in the Prospectus
Supplement relating to such Series.
THE CERTIFICATES WILL REPRESENT INTERESTS IN THE TRUST AND WILL NOT
REPRESENT INTERESTS IN OR RECOURSE OBLIGATIONS OF ADVANTA CORP., ADVANTA
NATIONAL BANK OR ANY AFFILIATE THEREOF. A CERTIFICATE IS NOT A DEPOSIT AND
IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE "FDIC").
THE RECEIVABLES ARE NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Potential investors should consider, among other things, the information
set forth in "Risk Factors" commencing on page [23] herein.
The Certificates offered by this Prospectus and by the related Prospectus
Supplement are offered by the underwriters, if any, subject to prior sale,
to withdrawal, cancellation or modification of the offer without notice, to
delivery to and acceptance by the underwriters, if any, and certain further
conditions. Retain this Prospectus for future reference. This Prospectus
may not be used to consummate sales of the securities offered hereby unless
accompanied by a Prospectus Supplement.
____________, 1996
<PAGE>
TABLE OF CONTENTS
Page
PROSPECTUS SUPPLEMENT 6
REPORTS TO HOLDERS 6
AVAILABLE INFORMATION 6
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 6
SUMMARY OF TERMS 8
RISK FACTORS 23
FORMATION OF THE TRUST 28
ANB'S CREDIT CARD ACTIVITIES 28
General 28
Acquisition and Use of Credit Cards 29
Billing and Payments 30
Description of FDR 31
Delinquencies 31
Interchange 32
Competition 32
USE OF PROCEEDS 32
ANB AND ADVANTA CORP. 32
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES 33
Transfer of Receivables 33
Certain Matters Relating to Receivership and Bankruptcy 34
Consumer Protection Laws 35
DESCRIPTION OF THE CERTIFICATES 36
General 36
Book-Entry Registration 38
Definitive Certificates 41
The Advanta Certificate; Additional Transferors 42
Interest Payments; Accretion of Discount 43
Principal Payments 43
Shared Principal Collections 44
Sharing of Excess Finance Charge Collections 44
Paired Series 44
Groups 45
New Issuances 45
Transfer and Assignment of Receivables 46
Liquidation of Receivables 47
Representations, Warranties and Covenants 48
Automatic Account Additions 55
Removal of Accounts 56
Servicing Procedures 56
Discount Option 56
Trust Accounts 57
Series Percentage and Transferor Percentage 58
Deposit of Collections 59
Operation of Excess Funding Account 59
Defaulted Receivables; Rebates and Fraudulent Charges 59
Final Payment of Principal and Interest; Termination 60
Trust Pay Out Events 61
Servicing Compensation and Payment of Expenses 62
Certain Matters Regarding the Servicer 63
Indemnification 64
Servicer Default 64
Reports to Holders 66
Evidence as to Compliance 66
Amendments 67
Defeasance 68
List of Holders 69
The Trustee 69
ENHANCEMENT 69
General 69
Subordination 70
Letter of Credit 70
Cash Collateral Guaranty or Account 70
Collateral Interest 71
Surety Bond or Insurance Policy 71
Spread Account 71
FEDERAL INCOME TAX CONSEQUENCES 71
General 71
Treatment of the Certificates as Debt 72
Treatment of the Trust 73
Taxation of Interest Income of U.S. Certificate Owners 75
Sale or Exchange of Certificates 76
Non-U.S. Certificate Owners 76
Information Reporting and Backup Withholding 77
State and Local Taxation 78
ERISA CONSIDERATIONS 78
PLAN OF DISTRIBUTION 80
UNDERWRITING 80
LEGAL MATTERS 80
Index of Principal Terms 81
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES 84
Initial Settlement 84
Secondary Market Trading 84
Certain U.S. Federal Income Tax Documentation Requirements 86
<PAGE>
PROSPECTUS SUPPLEMENT
A Prospectus Supplement relating to a Series to be offered thereby
and hereby will, among other things, set forth with respect to such Series:
(a) the initial aggregate principal amount, the certificate interest rate
(or method for determining it) and authorized denominations of each Class
of such Series; (b) certain information concerning the Receivables and
other property, if any, allocated for such Series; (c) the expected date or
dates on which the principal amount of the Certificates will be paid to
Holders; (d) the extent to which any Class within a Series is subordinated
to any other Class of such Series or any other Series; (e) the identity of
each Class of floating rate Certificates, fixed rate Certificates and zero
coupon Certificates included in such Series, if any, or such other type of
Class of Certificates; (f) the Distribution Dates for the respective
Classes; (g) relevant financial information with respect to the Receivables
and other property, if any; (h) additional information with respect to any
Series Enhancement, guaranteed investment contract or other agreement
relating to such Series; (i) the plan of distribution of such Series; and
(j) whether the Certificates are to be issuable in registered or book-entry
form.
REPORTS TO HOLDERS
Unless and until Definitive Certificates are issued, monthly and
annual reports, containing information concerning the Trust and prepared by
the Servicer, will be sent on behalf of the Trust to Cede & Co., as
registered holder of the Certificates, pursuant to the Pooling and
Servicing Agreement. See "Description of the Certificates--Book Entry
Registration," "--Reports to Holders" and "--Evidence as to Compliance."
Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. ANB does not
intend to send any of its financial reports to Holders. The Servicer will
file with the Securities and Exchange Commission (the "Commission") such
reports with respect to the Trust as are required under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the Commission thereunder.
AVAILABLE INFORMATION
ANB, as originator of the assets of the Trust, has filed a
Registration Statement under the Securities Act of 1933, as amended (the
"Act"), with the Commission on behalf of the Trust with respect to the
Certificates offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement and amendments thereof and
exhibits thereto, which are available for inspection without charge at the
public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549; 7 World Trade Center, Suite 1300,
New York, New York 10048; and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of the Registration Statement and amendments
thereof and exhibits thereto may be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All reports and other documents filed by the Servicer with respect to
the Trust pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of
the offering of the Certificates shall be deemed to be incorporated by
reference into this Prospectus and to be part hereof. Any statement
contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained in any
subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Servicer will provide without charge to each person to whom a
copy of this Prospectus is delivered, on the written or oral request of any
such person, a copy of any or all of the documents incorporated herein by
reference, except the exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Written
requests for such copies should be directed to the Servicer at Five Horsham
Business Center, 300 Welsh Road, Horsham, Pennsylvania 19044. Telephone
requests for such copies should be directed to the Servicer at (215)
657-4000.
SUMMARY OF TERMS
The following is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and in the
Prospectus Supplement with respect to the Series offered thereby, and to
the Pooling and Servicing Agreement and the Series Supplement with respect
to such Series (the "Series Supplement") between ANB, as Transferor and
Servicer, and The Bank of New York (or another bank or trust company
qualified under the Pooling and Servicing Agreement and named in the
Prospectus Supplement for the related Series), as Trustee (collectively,
the Pooling and Servicing Agreement and any Series Supplement are sometimes
referred to as the "Pooling and Servicing Agreement"). Certain capitalized
terms used herein are defined elsewhere in this Prospectus. A listing of
the pages on which some of such terms are defined is found in the "Index of
Principal Terms."
Trust The Advanta Gold Master Trust (the "Trust") will
be formed pursuant to a pooling and servicing
agreement between Advanta National Bank ("ANB")
as transferor of interests in certain
receivables to the Trust (in such capacity, the
"Transferor") and as servicer (in such capacity,
the "Servicer"), and The Bank of New York, as
trustee (the "Trustee"). The Trust assets will
include a portfolio of receivables (the
"Receivables") arising under selected MasterCard
and VISA* <F1> credit card accounts or other
revolving credit accounts (the "Accounts")
initially selected from a portfolio of revolving
credit card accounts owned by ANB (such
portfolio, together with the portfolio of
revolving credit card accounts or other
revolving credit accounts owned by ANB's
affiliate, Advanta National Bank USA ("AUS"), is
referred to herein as the "Advanta Credit Card
Portfolio"), all monies due or to become due and
all amounts received with respect thereto, all
proceeds of the Receivables, the right to
receive certain Interchange attributed to
cardholder charges for merchandise and services
in the Accounts, certain amounts recovered from
Accounts in which the Receivables have been
written off as uncollectible, proceeds of credit
insurance policies relating to the Receivables,
all monies on deposit in certain bank accounts
of the Trust and the benefits of any type of
enhancement ("Series Enhancement") issued with
respect to any Series (the drawing on or payment
of such Series Enhancement being available only
to Holders of a specified Series or Class unless
otherwise indicated in the related Prospectus
Supplement). The Trust assets may also include
participations (including 100% participations)
representing interests in a pool of assets
primarily consisting of revolving credit
receivables or other loan receivables (secured
and unsecured), and any interests in both such
types of receivables, including securities
representing or backed by both such types of
receivables, and other self-liquidating
financial assets and collections thereon
(collectively, "Participation Interests"). The
Transferor will convey to the Trust all
Receivables existing under certain designated
Accounts at the time of the formation of the
Trust and all Receivables arising under such
Accounts from time to time thereafter. In
addition, ANB and any Additional Transferors may
convey in the future all Receivables existing
under certain designated Additional Accounts
(including Automatic Additional Accounts) and
all Receivables thereafter arising in such
Additional Accounts. The term "Transferor", as
used herein includes any Additional Transferor
from and after the time that it becomes an
Additional Transferor.
*<F1> MasterCard and VISA are registered trademarks of MasterCard
International Incorporated and VISA USA, Inc., respectively.</F1>
Securities Offered The investor certificates issued by the Trust,
including any investor certificates offered
pursuant to this Prospectus and any Prospectus
Supplement (the "Certificates"), represent
interests in the Trust, which, with respect to
each Series, will consist of the right to
receive, to the extent necessary to make the
required payments with respect to the
Certificates of such Series at the times and in
the amounts specified in the related Series
Supplement, the portion of collections allocable
to Holders of such Series pursuant to the
Pooling and Servicing Agreement and the related
Series Supplement, funds on deposit in the
Collection Account and the Excess Funding
Account allocable to Holders of such Series
pursuant to the Pooling and Servicing Agreement
and the related Series Supplement, funds on
deposit in any deposit, trust, escrow or similar
account maintained for the benefit of such
Series or any Class of such Series (each, a
"Series Account") and funds available pursuant
to any related Series Enhancement (collectively,
with respect to all Series, the "Investor
Interest"). The Certificates of any Series or
Class will not represent any interest in any
Series Account or Series Enhancement for the
benefit of any other Series or Class. The
Certificates may be issued from time to time
pursuant to the Pooling and Servicing Agreement
and a related Series Supplement. Each Series
will consist of one or more classes (each a
"Class"), one or more of which may be Classes of
fixed rate Certificates, floating rate
Certificates, zero coupon Certificates or other
types of Certificates. Each Class may differ
in, among other things, the priority of
principal payments, the priority of interest
payments, the maturity date, distribution dates
and rate of interest. Additionally, the
Certificates of one or more Classes may be
subordinated to the Certificates of one or more
other Classes with respect to the right to
receive payments of principal, interest, or both
under the circumstances and in such amounts as
described herein and in the related Prospectus
Supplement. The term "Holders" refers to
holders of the Certificates, and the term
"Series" refers to any series of Certificates
issued by the Trust. See "Description of the
Certificates."
Unless otherwise specified in the related
Prospectus Supplement, the Certificates of a
Series will be available for purchase in minimum
denominations of $1,000 and in integral
multiples of $1,000 in excess thereof and will
be available only in book-entry form, except in
certain limited circumstances. The Trust assets
will be allocated among the Investor Interest of
each Series, including certain providers of
Series Enhancement holding uncertificated
subordinated interests, and the interest of the
holders of the Transferor Certificates (the
"Transferor Interest"). The Transferor Interest
represents the right to the assets of the Trust
not allocated to the Investor Interest. The
term "Transferor Amount" refers to, at any time
of determination, an amount equal to (a) the sum
of the aggregate amount of principal Receivables
in the Trust and the principal amount on deposit
in the Excess Funding Account at such time (such
sum being the "Trust Principal Balance"), minus
(b) the sum of the amount of Principal
Receivables and the amount on deposit in the
Excess Funding Account allocated to each Series
then outstanding (for each Series, its "Invested
Amount"). The Transferor Amount will fluctuate
as the Trust Principal Balance changes from time
to time. The term "Investor Amount" for a Series
will be set forth in the Series Supplement for
such Series and, for a Series offered hereby,
the related Prospectus Supplement, and generally
refers to the principal amount of the Investor
Interest in the assets of the Trust.
The Certificates of a Class offered hereby and
pursuant to a Prospectus Supplement will
represent the right to receive from the assets
of the Trust allocated to the applicable Series
funds up to (but not in excess of) the amounts
required to make any payments of interest on the
Certificates of such Class specified in the
related Prospectus Supplement, and payments of
principal during any related Amortization Period
to the extent specified in the related
Prospectus Supplement.
Each Class of Certificates will include the
right to receive (but only to the extent needed
to make required payments under the Pooling and
Servicing Agreement) varying percentages of
collections of Finance Charge Receivables and
Principal Receivables for the related Monthly
Period. During the Revolving Period relating to
such Class, subject to certain limitations,
collections of Principal Receivables allocable
to the Certificates of such Class will generally
be allocated and paid to the holders of the
Transferor Certificates or to other Series.
During any Amortization Period relating to such
Class, collections of Principal Receivables will
be allocated to such Class as provided herein
and in the related Prospectus Supplement.
The Certificates of each Series represent the
right to receive payments from the Trust only
and do not represent interests in or recourse
obligations of Advanta Corp., ANB or any
affiliate thereof. None of the Certificates,
the Accounts, the Receivables or the
Participations are insured or guaranteed by the
FDIC or any other governmental agency or
instrumentality.
New Issuances The Pooling and Servicing Agreement authorizes
the Trustee to issue three types of
certificates: (i) one or more Series of
Certificates which will be transferable and have
the characteristics described below, (ii) a
Certificate, evidencing ANB's interest as
Transferor (the "Advanta Certificate"), which
will initially be held by ANB and which is
transferable in certain circumstances and (iii)
Supplemental Certificates delivered in exchange
for a portion of the Advanta Certificate under
certain circumstances described in the Pooling
and Servicing Agreement (each, a "Supplemental
Certificate", and, together with the Advanta
Certificate, the "Transferor Certificates").
A new issuance of Certificates (a "New
Issuance") may occur only upon satisfaction of
the following conditions: (i) on or before the
fifth day immediately preceding the date of such
New Issuance, the Transferor must notify the
Trustee and the Servicer of such issuance and
its date; and on or before the tenth day
immediately preceding the date of such New
Issuance, the Transferor shall have given each
Rating Agency notice of such issuance and (ii)
the Transferor shall have delivered to the
Trustee (a) the related Series Supplement
specifying the Principal Terms of the new
Series, (b) any agreement relating to the Series
Enhancement, (c) written confirmation from the
Transferor that (1) the Transferor has notified
the Rating Agencies of such New Issuance, and
(2) during the ten-day period following such
notification, no Rating Agency has notified the
Transferor that the New Issuance will result in
the Rating Agency reducing or withdrawing its
rating of any outstanding Series or Class, (d)
an officer's certificate from the Transferor
stating that the Transferor reasonably believes
that such New Issuance will not cause a Pay Out
Event to occur with respect to any Series, and
(e) if any Series of Certificates are
outstanding that were characterized as debt at
the time of their issuance, an opinion of
counsel to the effect that, for Federal tax
purposes, the New Issuance will not adversely
affect the tax characterization of Certificates
of any outstanding Series or Class that were
characterized as debt at the time of their
issuance, that the Trust will not be deemed to
be an association (or publicly traded
partnership) taxable as a corporation and that
such New Issuance will not cause an event in
which gain or loss would be recognized by any
holder of Certificates of any outstanding Series
or Class that were characterized as debt at the
time of their issuance (a "Tax Opinion"). The
Transferor may offer a Series to the public or
other investors under a prospectus or other
disclosure document (a "Disclosure Document") in
transactions either registered under the Act or
exempt from registration thereunder, directly or
through one or more underwriters or placement
agents, in fixed-price offerings or in
negotiated transactions or otherwise.
Receivables The Receivables will arise in Accounts that have
been selected from the portion of the Advanta
Credit Card Portfolio owned by ANB, based on
criteria specified in the Pooling and Servicing
Agreement as applied at the close of business on
the date to be specified in the initial
Prospectus Supplement with respect to initial
Accounts the Receivables of which will be
conveyed (the "Initial Accounts") or, with
respect to Additional Accounts or Participation
Interests to be included in the Trust, the date
specified in the related assignment of such
Additional Accounts or Participation Interests
to the Trust (each, a "Related Cut Off Date").
The Receivables consist of amounts charged by
cardholders for merchandise, services and cash
advances (collectively, the "Principal
Receivables"), plus the related periodic finance
charges, annual membership fees and annual
service charges, late fees, overlimit fees, cash
advance fees, all other fees and charges with
respect to Accounts designated by the Transferor
to be included as Finance Charge Receivables
(collectively, the "Finance Charge
Receivables"). If the Transferor exercises its
discount option, an amount equal to the product
of the Discount Percentage and the amount of all
or any specified portion of Principal
Receivables (which may be limited to Principal
Receivables created after the effective date of
such option) will be treated as Discount Option
Receivables and added to Finance Charge
Receivables. See "Description of the
Certificates--Discount Option." In addition,
certain Interchange (as described in the Series
Supplements) attributed to cardholder charges
for merchandise and services and any applicable
Trust- level yield supplement amount designated
as such by the Transferor in writing to the
Servicer and the Trustee (which amount does not
otherwise constitute a Trust asset and is
deposited into the Collection Account) will be
treated as collections of Finance Charge
Receivables for purposes of the Pooling and
Servicing Agreement. All new Receivables
arising in such Accounts will be conveyed to the
Trust, except as described herein, but will not
affect the amount of the initial Investor Amount
of a Series. The total amount of Receivables
will fluctuate from day to day, because the
amount of new Receivables arising in the
Accounts and the amount of payments collected on
existing Receivables will usually differ each
day. Because the Transferor Interest represents
the interest in the Principal Receivables and
the Excess Funding Account not represented by
the Certificates of any Series, the amount of
the Transferor Interest in Principal Receivables
will fluctuate daily as Receivables are
collected and new Receivables are conveyed to
the Trust. See "The Receivables" in the
Prospectus Supplement.
Registration
of Certificates Unless otherwise specified in the related
Prospectus Supplement, the Certificates of each
Series initially will be represented by
certificates registered in the name of Cede &
Co. ("Cede"), as the nominee of The Depository
Trust Company ("DTC"). No person acquiring a
beneficial interest in the Certificates of a
Series (a "Certificate Owner") will be entitled
to receive a definitive certificate representing
such person's interest (a "Definitive
Certificate"), except in the event that
Definitive Certificates of such Series are
issued under the limited circumstances described
herein and in the related Prospectus Supplement.
See "Description of the Certificates--Definitive
Certificates."
Clearance and Settlement Unless otherwise provided in the related
Prospectus Supplement, Certificate Owners of
each Series offered hereby may elect to hold
their Certificates through any of (i) DTC (in
the United States) or (ii) Cedel or Euroclear
(in Europe). Transfers within DTC, Cedel or
Euroclear, as the case may be, will be made in
accordance with the usual rules and operating
procedures of the relevant system. Cross-market
transfers between persons holding directly or
indirectly through DTC, on the one hand, and
counterparties holding directly or indirectly
through Cedel or Euroclear, on the other, will
be effected in DTC through the relevant
Depositaries of Cedel or Euroclear. See
"Description of the Certificates--Book-Entry
Registration."
Servicer Advanta National Bank. The principal executive
offices of Advanta National Bank are located at
501 Carr Road, Wilmington, Delaware 19809.
Transferor Advanta National Bank is the Transferor.
Subject to certain conditions described herein
under "Description of the Certificates--The
Advanta Certificate; Additional Transferors,"
ANB may designate one or more Additional
Transferors to transfer Receivables or
Participation Interests to the Trust from time
to time. Any such Additional Transferors may
own Accounts and generate Receivables directly
or may purchase Receivables from another entity
that owns the related Accounts. Any such
Additional Transferors will generally have the
same rights and obligations as those of ANB, as
Transferor, described herein, and the term
"Transferor" as used herein includes any
Additional Transferor. Any entity that owns
Accounts from which Receivables are transferred,
directly or indirectly, to the Trust is called a
"Credit Card Originator."
Collections All collections of Receivables and Participation
Interests, if any, will be allocated by the
Servicer between amounts collected on Principal
Receivables and amounts collected on Finance
Charge Receivables. All such amounts will then
be allocated in accordance with the respective
interests of the Holders of each Class of each
Series as described in the related Prospectus
Supplement. The Servicer will deposit all
collections of Receivables and Participation
Interests, if any, distributable to Holders in
an eligible account established for such purpose
(the "Collection Account") no later than the day
prior to the applicable Distribution Date. The
"Distribution Date" for a Series will be the
fifteenth day of each month (or, if such day is
not a business day, the next business day) or
such other date specified in the Series
Supplement for a Series. See "Description of
the Certificates--Series Percentage and
Transferor Percentage" herein and "Description
of the Certificates--Allocation Percentages" in
the Prospectus Supplement.
Interest Any interest on the Certificates for any
Interest Period with respect to a Series will be
distributed as set forth in the related
Prospectus Supplement. Interest payments in
respect of a Series will generally be funded
from the portion of Finance Charge Receivables
collected during the related Monthly Period
allocable to such Series and, if necessary and
if specified in the related Prospectus
Supplement, from any Series Enhancement
available for such Series. The terms "Monthly
Period" and, when applicable, "Interest Period"
have the meanings specified in the Prospectus
Supplement relating to each Series. In the case
of a Series of Certificates including one or
more zero coupon Classes (a "Zero Coupon
Series"), however, accreted discount on each
zero coupon Class may be paid from collections
of Principal Receivables or Finance Charge
Receivables allocable to that Series or from any
applicable Series Enhancement, as described in
the related Prospectus Supplement. See
"Description of the Certificates--Interest
Payments; Discount Accretion" and "Risk
Factors--Payments and Maturity."
Revolving Period During the period from the closing date with
respect to a Series (the "Relevant Closing
Date") and ending on the day immediately
preceding the commencement of an Amortization
Period with respect to such Series (the
"Revolving Period"), collections of Principal
Receivables allocated to the Certificates of
such Series will be paid from the Trust to the
holders of the Transferor Certificates, to other
Series or deposited in the Excess Funding
Account (except in certain limited
circumstances).
Amortization Periods;
Principal Payments Unless otherwise specified in the Prospectus
Supplement relating to any Class, at the end of
any Revolving Period for a Class, collections of
Principal Receivables that had been allocated to
Holders of such Class but had been paid to the
holders of the Transferor Certificates, to other
Series or deposited in the Excess Funding
Account will instead be either paid directly to
such Holders or accumulated for payment to such
Holders, in each case as specified in the
Prospectus Supplement relating to such Class.
The Revolving Period for a Series will end and
an amortization period shall commence either
upon the occurrence of a Pay Out Event with
respect to such Series (a "Rapid Amortization
Period") or at a scheduled date (a "Scheduled
Amortization Date") set forth in the Prospectus
Supplement applicable to such Series (a
"Controlled Amortization Period", "Limited
Amortization Period", "Principal Amortization
Period", "Optional Amortization Period",
"Controlled Accumulation Period" or other like
period, collectively referred to herein as an
"Amortization Period", in each case as described
in the related Prospectus Supplement). In the
event of a Rapid Amortization Period,
collections of Principal Receivables allocated
to Holders will generally be paid directly to
such Holders or accumulated in a Series Account
for the benefit of Holders or otherwise applied,
subject to any subordination provisions
specified in the related Prospectus Supplement.
See "Description of the Certificates--Trust Pay
Out Events" for a discussion of the events which
might lead to a Rapid Amortization Period with
respect to all Series outstanding. In the event
of another Amortization Period with respect to a
Class, collections of Principal Receivables will
either be paid directly to Holders in specified
amounts on a monthly or other periodic basis or
accumulated in a Series Account for the benefit
of Holders or otherwise applied, in each case as
set forth in the Prospectus Supplement relating
to such Class.
Funds on deposit in the Collection Account shall
at the direction of the Servicer be invested by
the Trustee in Eligible Investments selected by
the Servicer.
Shared Principal
Collections On each Distribution Date, (a) the Servicer
shall allocate Shared Principal Collections to
each Series entitled thereto (each, a "Principal
Sharing Series"), pro rata, in proportion to the
Principal Shortfalls, if any, with respect to
each such Series and (b) the Servicer shall
withdraw from the Collection Account and pay to
the holders of the Transferor Certificates an
amount equal to the excess, if any, of (x) the
aggregate amount for all outstanding Series of
collections of Principal Receivables which the
related Series Supplements specify are to be
treated as "Shared Principal Collections" for
such Distribution Date over (y) the aggregate
amount for all outstanding Principal Sharing
Series which the related Series Supplements
specify are "Principal Shortfalls" for such
Distribution Date. However, to the extent that
on any Distribution Date the Transferor Amount
is less than the Required Transferor Amount, the
Servicer will deposit into the Excess Funding
Account any Shared Principal Collections that
otherwise would be distributed to the holders of
the Transferor Certificates to the extent
necessary so that the Transferor Amount will
equal the Required Transferor Amount.
Sharing of Excess Collections
of Finance Charge
Receivables Collections of Finance Charge Receivables
allocable to any Series in excess of the amounts
necessary to make required payments with respect
to such Series may, if specified in the related
Series Supplement, be applied to cover
shortfalls, if any, with respect to amounts
payable from collections of Finance Charge
Receivables allocable to any other Series then
outstanding in the same group of Series (each, a
"Group"), pro rata based upon the amount of the
shortfall, as provided in the related Series
Supplement. Any remaining excess Collections of
Finance Charge Receivables for any Group will be
applied in the same manner to any remaining
shortfalls with respect to Series in other
Groups. Excess Collections of Finance Charge
Collections remaining after all of the above
applications will be transferred to the holders
of the Transferor Certificates.
Paired Series If specified in the Prospectus Supplement
relating to a Series, such Series may be paired
with another Series (each, a "Paired Series"),
such that a reduction in the Invested Amount of
one such Series results in an increase in the
Invested Amount of the other such Series.
Groups If specified in the Prospectus Supplements
relating to any Group, such Group may be
allocated all collections with respect to
certain portions of the Receivables and any
Participation Interests, so long as (a) each
Rating Agency confirms that such action will not
result in a reduction or withdrawal of its
rating of any Series or Class for which it is a
Rating Agency (as to any action, the "Rating
Agency Condition") and (b) such grouping will
not result in the occurrence of a Pay Out Event
with respect to any Series or materially
adversely affect the amount or timing of
distributions to be made to any Series or Class
(an "Adverse Effect").
Funding Period The Prospectus Supplement relating to a Series
of Certificates may specify that for a period
beginning on the Relevant Closing Date and
ending on a specified date before the
commencement of an Amortization Period for such
Series (a "Funding Period"), which period is
expected to be less than a year, the aggregate
amount of Principal Receivables and amounts on
deposit in the Excess Funding Account allocable
to such Series may be less than the aggregate
principal amount of the Certificates of such
Series and that funds in the amount of such
deficiency (the "Pre-Funding Amount") will be
held in a trust account (a "Pre-Funding
Account") established with the Trustee for the
benefit of Holders of such Series (and if
specified in the Prospectus Supplement relating
to such Series, the holder of the Discount
Collateral Interest issued with respect to such
Series) pending the transfer of additional
Principal Receivables to the Trust that results
in a net increase in the Trust Principal Balance
or pending the reduction of the Invested Amounts
of other Series issued by the Trust. The
Pre-Funding Amount may be up to [50%] of the
principal amount of the Certificates of a
Series. The related Prospectus Supplement will
specify the initial Invested Amount on the
Relevant Closing Date with respect to such
Series, the Investor Amount for such Series
(which will generally equal the aggregate
principal amount of the Certificates of such
Series) and the date by which the Invested
Amount is expected to equal the Investor Amount.
The Invested Amount will increase as the Trust
Principal Balance increases or as the Invested
Amounts of other Series are reduced.
During the Funding Period, funds on deposit in
the Pre-Funding Account for a Series of
Certificates will be withdrawn and paid to the
holders of the Transferor Certificates or their
assigns to the extent of any increases in the
Invested Amount. If the Invested Amount does
not for any reason equal the Investor Amount by
the end of the Funding Period, any amount
remaining in the Pre-Funding Account will be
payable to the Holders of such Series in the
manner and at such time as set forth in the
related Prospectus Supplement. Such payment
will reduce the aggregate principal amount of
such Certificates.
If so specified in the related Prospectus
Supplement, funds on deposit in the Pre-Funding
Account may be invested in Eligible Investments
or subject to a guaranteed rate or investment
agreement or other similar arrangement, and
investment earnings and any applicable payment
under any such investment arrangement will be
applied to pay interest on the Certificates of
such Series.
Enhancement Enhancement with respect to one or more Classes
of a Series ("Series Enhancement") may be
provided in the form of subordination, a letter
of credit, a cash collateral guaranty, a cash
collateral account, a collateral interest, a
discount collateral interest, a surety bond,
insurance policy or other form of support or any
combination of the above as specified in the
related Prospectus Supplement. Series
Enhancement may also be provided to a Class or
Classes of different Series by a cross-support
feature which requires that distributions of
principal or interest be made with respect to
Certificates of one or more Classes of a
particular Series before distributions are made
to one or more Classes of another Series.
The type, characteristics and amount of the
Series Enhancement will be determined based on
several factors, including the characteristics
of the Receivables and Accounts and other
property underlying or comprising the Trust
assets as of the Relevant Closing Date with
respect to any Series, and will be established
on the basis of requirements of each Rating
Agency rating the Certificates of such Series.
The terms of the Series Enhancement with respect
to any Series offered hereby will be described
in the related Prospectus Supplement. If so
specified in the Prospectus Supplement for a
Series, the level of Series Enhancement for such
Series may be reduced if the Rating Agency
Condition is satisfied. If so specified in the
related Prospectus Supplement, any such Series
Enhancement may apply only in the event of
certain types of losses and the protection
against losses provided by such Series
Enhancement will be limited. See "Enhancement"
and "Risk Factors--Limited Nature of Rating."
a. Subordination A Series of Certificates may include one or more
Classes of Certificates which are subordinate to
one or more other Classes of such Series. The
rights of the holders of any such subordinated
Certificates to receive distributions on any
Distribution Date for such Series will be
subordinate in right and priority to the rights
of the holders of Certificates which are senior
to such subordinated Certificates, but only to
the extent set forth in the related Prospectus
Supplement. If so specified in the related
Prospectus Supplement, subordination may apply
only in the event of certain types of losses or
shortfalls not covered by another Series
Enhancement. The related Prospectus Supplement
will also set forth information concerning the
amount of subordination of a Class or Classes of
subordinated Certificates in a Series, the
circumstances in which such subordination will
be applicable, the manner, if any, in which the
amount of subordination will decrease over time,
and the conditions under which amounts available
from payments that would otherwise be made to
holders of such subordinated Certificates will
be distributed to holders of Certificates which
are senior to such subordinated Certificates.
If cash flows otherwise distributable to holders
of a subordinated Class of a Series will be used
as support for a Class of another Series, the
related Prospectus Supplement will specify the
manner and conditions for applying such a
cross-support feature. See
"Enhancement--Subordination."
b. Letter of Credit If so specified in the related Prospectus
Supplement, support for a Series or one or more
Classes of a Series may be provided by one or
more letters of credit. A letter of credit may
provide limited protection against certain
losses in addition to or in lieu of another
Series Enhancement. The issuer of the letter of
credit (the "L/C Bank") will be obligated to
honor demands with respect to such letter of
credit, to the extent of the amount available
thereunder, to provide funds under the
circumstances and subject to such conditions as
are specified in the related Prospectus
Supplement. The liability of the L/C Bank under
its letter of credit may be reduced by the
amount of unreimbursed payments thereunder.
The maximum liability of an L/C Bank under its
letter of credit will generally be an amount
equal to a percentage specified in the related
Prospectus Supplement of the initial Investor
Amount of a Series or a Class of such Series.
The maximum amount available at any time to be
paid under a letter of credit will be determined
in the manner specified therein and in the
related Prospectus Supplement. See
"Enhancement--Letter of Credit."
c. Cash Collateral Guaranty
or Account If so specified in the related Prospectus
Supplement, support for a Series or one or more
Classes of a Series may be provided by a
guaranty (the "Cash Collateral Guaranty")
secured by the deposit of cash or certain
permitted investments in an account (the "Cash
Collateral Account") reserved for the
beneficiaries of the Cash Collateral Guaranty or
by a Cash Collateral Account alone. The amount
available pursuant to the Cash Collateral
Guaranty or the Cash Collateral Account will be
the lesser of amounts on deposit in the Cash
Collateral Account and an amount specified in
the related Prospectus Supplement. The related
Prospectus Supplement will set forth the
circumstances under which payments are made to
beneficiaries of the Cash Collateral Guaranty
from the Cash Collateral Account or from the
Cash Collateral Account directly.
d. Collateral Interest If so specified in the related Prospectus
Supplement, support for a Series of Certificates
or one or more Classes thereof may be provided
initially by an uncertificated, subordinated
interest in the Trust (the "Collateral
Interest") in an amount initially equal to a
percentage specified in the related Prospectus
Supplement of the initial Investor Amount.
e. Discount Collateral
Interest If so specified in the related Prospectus
Supplement, support for a Series of Certificates
or one or more Classes thereof may be provided
by an uncertificated, subordinated interest in
the Trust which will be available to cover
shortfalls affecting the accretion of discount
or payment of interest and if specified in the
related Prospectus Supplement, certain other
items (the "Discount Collateral Interest") in an
amount specified in the related Prospectus
Supplement.
f. Surety Bond or Insurance
Policy If so specified in the related Prospectus
Supplement, support for a Series or one or more
Classes of a Series may be provided by the
posting of a surety bond or the issuance of
insurance by an insurance company, in each
instance designed to assure the distribution of
interest or principal on the Certificates of
such Class or Series in the manner and amount
specified in the related Prospectus Supplement.
g. Spread Account If so specified in the related Prospectus
Supplement, support for a Series or one or more
Classes of a Series may be provided by the
periodic deposit of certain available excess
cash flow from the Trust assets into an account
(the "Spread Account") intended to assure the
subsequent distribution of interest or principal
on the Certificates of such Class or Series in
the manner specified in the related Prospectus
Supplement.
Record Date The last day of the month preceding any
Distribution Date, except as otherwise specified
with respect to a Series in the related
Prospectus Supplement.
Optional Repurchase If specified in a Prospectus Supplement, the
Investor Amount of a Series may be subject to
optional repurchase by the Transferor on any
Distribution Date after such Investor Amount is
less than or equal to a certain specified level,
unless certain events as specified in the
Pooling and Servicing Agreement have occurred.
The purchase price on the Distribution Date on
which such purchase occurs will be as specified
in the related Prospectus Supplement and will
generally be equal to the Investor Amount plus
accrued and unpaid interest on the applicable
Certificates. See "Description of the
Certificates--Optional Repurchase" in the
Prospectus Supplement.
Final Payment of Principal
and Interest; Termination
of Trust The interest of the Holders of a Series in the
Trust will terminate following the earliest of
(i) the day after the Distribution Date on which
the Investor Amount of such Series is paid in
full, (ii) a date specified in the Series
Supplement for such Series (the "Stated Series
Termination Date") and (iii) the termination of
the Trust (the "Trust Termination Date"). All
principal and interest will be due and payable
no later than the Stated Series Termination
Date.
Trustee The Bank of New York.
Tax Status Except as set forth in the related Prospectus
Supplement, it is anticipated that Special Tax
Counsel to ANB will render an opinion, in
connection with the issuance of each Series,
that the Certificates of a Series (or certain
Classes thereof) will be properly characterized
as indebtedness for Federal income tax purposes.
It is anticipated that under the Pooling and
Servicing Agreement, the Certificate Owners of
each Class as to which such opinion is rendered
will be deemed to agree to treat the
Certificates as indebtedness for tax purposes.
See "Federal Income Tax Consequences" for
additional information concerning the
application of Federal income tax laws.
ERISA Considerations Under regulations issued by the Department of
Labor, the Trust's assets would not be deemed
"plan assets" of any employee benefit plan
holding interests in the Certificates of a
Series if certain conditions are met. If the
Trust's assets were deemed to be "plan assets"
of an employee benefit plan, there is
uncertainty as to whether existing exemptions
from the "prohibited transaction" rules of the
Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), would apply to all
transactions involving the Trust's assets. No
assurance can be given with respect to any
offering of the Certificates of any Series that
the conditions which would allow the Trust's
assets not to be "plan assets" will be met,
although the intention of the Underwriters (but
not their assurance) as to whether the
Certificates of a particular Series will be
"publicly-offered securities", and therefore
eligible for an ERISA exemption, will be set
forth in the related Prospectus Supplement.
Accordingly, fiduciaries or other persons
contemplating purchasing interests in the
Certificates of any Series with "plan assets" of
any employee benefit plan should consult their
counsel before making a purchase. See "ERISA
Considerations."
Certificate Rating Unless otherwise specified in the related
Prospectus Supplement, it will be a condition to
the issuance of the Certificates offered by this
Prospectus and the related Prospectus Supplement
that they be rated in one of the four highest
applicable rating categories by at least one
nationally recognized statistical rating
organization selected by the Transferor (each
such rating organization rating any Series, a
"Rating Agency"). The rating or ratings
applicable to the Certificates of each Class
will be as set forth in the related Prospectus
Supplement. The Certificates offered pursuant
to this Prospectus and the related Prospectus
Supplement must be investment grade asset-backed
securities within the meaning of the Act and the
rules promulgated thereunder.
A security rating should be evaluated
independently of similar ratings of different
types of securities. A rating is not a
recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at
any time by the assigning rating organization.
Each rating should be evaluated independently of
any other rating. See "Risk Factors--Limited
Nature of Rating."
RISK FACTORS
Limited Liquidity. There can be no assurance that a secondary market
for the Certificates of any Series will develop or, if it does develop,
that such market will provide Holders with liquidity of investment or that
it will continue for the life of the Certificates of such Series. The
underwriters of any Series offered hereby presently expect to make a
secondary market in the Certificates offered hereby and pursuant to any
Prospectus Supplement, but have no obligation to do so.
Certain Legal Aspects. The Transferor will warrant in the Pooling
and Servicing Agreement that the transfer of the Receivables to the Trust
will be either a valid transfer and assignment of all right, title and
interest in the Receivables and all proceeds thereof to the Trust or the
grant to the Trust of a security interest in such property to the Trust.
The Transferor will take certain actions required to perfect the Trust's
interest in the Receivables. The Transferor will also warrant that if the
transfer by it to the Trust is deemed to be a grant to the Trust of a
security interest in the Receivables, upon the filing of financing
statements required to be filed under the Pooling and Servicing Agreement,
the Trust will have a first priority perfected security interest therein.
Nevertheless, if the transfer of the Receivables and all proceeds thereof
to the Trust is deemed to create a security interest therein, a tax or
government lien on property of the Transferor arising before Receivables
come into existence may have priority over the Trust's interest in such
Receivables. See "Certain Legal Aspects of the Receivables--Transfer of
Receivables."
To the extent that ANB, as the initial Transferor has granted a
security interest in the Receivables to the Trust and that security
interest was validly perfected before any insolvency of ANB and was not
granted or taken in contemplation of insolvency or with the intent to
hinder, delay or defraud ANB or its creditors, that security interest
should not be subject to avoidance in the event of insolvency and
receivership, and payments to the Trust with respect to the Receivables
should not be subject to recovery by a conservator or receiver for the
Transferor. If, however, the conservator or receiver were to assert a
contrary position, or were to require the Trustee to establish its right to
those payments by submitting to and completing the administrative claims
procedure established under the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA"), or the conservator or receiver were to
request a stay of proceedings with respect to ANB as provided under FIRREA,
delays in payments on the Certificates and possible reductions in the
amount of those payments could occur. The discussion above should apply
equally to any Additional Transferor that was a bank or other financial
institution subject to the Federal Deposit Insurance Act (together with
ANB, each a "Bank Transferor"), and similar consequences could follow from
the insolvency or receivership of a Credit Card Originator that was a bank
or other financial institution subject to the Federal Deposit Insurance Act
and that transferred Receivables to the Trust indirectly through a
Transferor without becoming a Transferor itself.
If an Additional Transferor that was not a bank or other financial
institution subject to the Federal Deposit Insurance Act were to become a
debtor in a bankruptcy case and a creditor or trustee in bankruptcy of such
debtor or such debtor itself were to take the position that the transfer of
Receivables by that Transferor to the Trust should be characterized as a
pledge of such Receivables to secure a borrowing of such Transferor, then
delays in payments on the Certificates and possible reductions in the
amount of those payments could occur. If the transfer of Receivables by
such a Transferor to the Trust is treated as a sale, such Receivables
should not generally be part of the Transferor's bankruptcy estate and
should not be available to the Transferor's creditors. In a 1993 case,
however, the U.S. Court of Appeals for the Tenth Circuit concluded that
accounts receivable sold by a debtor prior to a filing for bankruptcy
remain property of the debtor's bankruptcy estate. If the conclusions in
that case were applied in such a Transferor's bankruptcy, the Receivables
sold to the Trust by that Transferor would be subject to claims of certain
creditors, which could result in delays in payments on the Certificates and
possible reductions in the amount of those payments. Similar consequences
could follow if a Credit Card Originator that was not a bank or other
financial institution subject to the Federal Deposit Insurance Act and that
transferred Receivables to the Trust indirectly through a Transferor
without becoming a Transferor itself were to become a debtor in a
bankruptcy case.
In the event of a Servicer Default, if a conservator or receiver is
appointed for the Servicer, and no Servicer Default other than such
conservatorship or receivership or insolvency of the Servicer exists, the
conservator or receiver may have the power to prevent either the Trustee or
Holders from effecting a transfer of servicing to a successor Servicer. If
a conservator or receiver were appointed for ANB or any Additional
Transferor (unless the Rating Agency Condition has been satisfied and a Tax
Opinion has been delivered as to the failure to take the following actions
with respect to any Additional Transferor) pursuant to the Pooling and
Servicing Agreement, new Principal Receivables would not be transferred to
the Trust, and the Trustee would sell the Receivables (unless Holders
representing more than 50% of the Investor Amount of each Series, or if any
such Series has more than one Class, of each Class of such Series and each
of ANB and any Additional Transferor (unless ANB or such Additional
Transferor is the subject of such Insolvency Event), and any holder of a
Supplemental Certificate and certain other parties specified in the Series
Supplements instruct otherwise), thereby causing early termination of the
Trust and a loss to all or some Holders if the net proceeds of such sale
were insufficient to pay Certificates in full. Upon the occurrence of a
Pay Out Event, if a conservator or receiver was appointed for any
Transferor and no Pay Out Event other than such conservatorship,
receivership or insolvency of a Transferor existed, the conservator or
receiver may have the power to prevent the early sale, liquidation or
disposition of the Receivables and the commencement of the Rapid
Amortization Period. In addition, a conservator or receiver for any
Transferor may have the power to cause early payment of the Certificates.
See "Certain Legal Aspects of the Receivables--Certain Matters Relating to
Receivership."
The Accounts and the Receivables are subject to numerous Federal and
state consumer protection laws which impose requirements on the making and
collection of consumer loans. Such laws, as well as any new laws or
rulings which may be adopted, may adversely affect the Servicer's ability
to collect on the Receivables or maintain previous levels of finance
charges, annual cardholder fees and other fees, and failure by the Servicer
to comply with such requirements also could adversely affect the Servicer's
ability to collect on the Receivables. Pursuant to the Pooling and
Servicing Agreement, ANB and any Additional Transferor will covenant to
accept the transfer of all Receivables in an Account, upon the breach of
certain representations and warranties relating to requirements of law
applicable to such Transferor and any related Credit Card Originator, if
any Receivable in such Account becomes a Defaulted Receivable or the
Trust's rights in, to or under such Receivables are impaired or the
proceeds thereof are not available to the Trust free and clear of any lien
(subject to certain cure periods). ANB and any Additional Transferor will
also make certain other representations and warranties relating to the
validity and enforceability of the Accounts and the Receivables. However,
the Trustee will not make any examination of the Receivables or the records
relating thereto for the purpose of establishing the presence or absence of
defects, compliance with such representations and warranties, or for any
other purpose. The sole remedy if any such representation or warranty is
breached and such breach continues beyond the applicable cure period, if
any, is that the applicable Transferor or the Servicer, as the case may be,
will generally be obligated to accept the transfer of all Receivables in
the Account affected thereby. In addition, in the event of a breach of
certain representations and warranties, each Transferor may be obligated to
accept the reassignment and transfer of all Receivables transferred by it
to the Trust, which reassignment will constitute the sole remedy available
to Holders with respect to any such breach. See "Description of the
Certificates--Representations, Warranties and Covenants" and "Certain Legal
Aspects of the Receivables--Consumer Protection Laws."
Application of Federal and state bankruptcy and debtor relief laws
would affect the interests of the Holders in the Receivables, if such laws
result in any Receivables being written off as uncollectible. See
"Description of the Certificates--Receivables in Defaulted Accounts;
Rebates and Fraudulent Charges."
Competition in the Bank Credit Card Industry. The bank credit card
industry is highly competitive. There is increased competitive use of
advertising, target marketing and pricing competition in interest rates and
annual cardholder fees as both traditional and new credit card issuers seek
to expand or to enter the market. As a result of this competition, certain
major credit card issuers assess finance charges for selected portions of
their portfolios at rates lower than the rates currently being assessed on
the Accounts. ANB, and its affiliate, AUS, have attempted to respond to
this increased competition by marketing cards to customers primarily
without an annual fee and by attempting to offer customers a finance charge
rate below that generally available from their competitors, as well as by
using introductory rates for a set period of time (generally less than 12
months in length). In addition, ANB has been in the business of acquiring
accounts through direct mail solicitation since September 1995, and AUS has
been in that business since 1983. ANB's ability to compete in the credit
card industry will affect its ability to generate new Receivables. See
"ANB's Credit Card Activities--Competition."
Payments and Maturity. The Receivables in the Trust may be paid at
any time, and there is no assurance that there will be additional
Receivables created in the Accounts or that any particular pattern of
cardholder repayments will occur. The continuation of the Revolving Period
of a Series will be dependent upon the continued generation of new
Receivables for the Trust. A significant decline in the amount of
Receivables generated in the Accounts could result in the occurrence of a
Series Pay Out Event for one or more Series and the commencement of the
Rapid Amortization Period for each such Series. In addition, increased
convenience use, where cardholders pay their Account balances in full on or
prior to the due date, which is generally the 25th day subsequent to the
monthly billing date (the "Due Date"), and thus avoid all finance charges
on purchases, would decrease the effective yield on the Accounts, and could
cause the commencement of the Rapid Amortization Period for one or more
Series, as well as decreased protection to holders of Certificates against
defaults under the Accounts. Convenience use is more common among
cardholders who are not assessed any annual cardholder fee than among those
who pay such fees, and a substantial majority of the cardholders on the
Accounts are not charged an annual cardholder fee. The Transferors and
Credit Card Originators may temporarily waive authorized increases in
finance charges on certain accounts notwithstanding increases in the prime
rate or the London interbank offered rate, and although ANB is not
currently doing so, it may decide to do so in the future. A decrease in
the rate of payment by cardholders could delay the return of principal to
the Holders during the Amortization Periods for each Series. See
"Receivable Yield Considerations" in the Prospectus Supplement. The
Pooling and Servicing Agreement provides that the Transferor will be
required to designate Additional Accounts the Receivables of which will be
added to the Trust in the event that the Transferor Amount or the amount of
the Principal Receivables is not maintained at a certain minimum amount and
may under certain circumstances elect to add the Receivables in selected
Accounts to the Trust. If Additional Accounts are not designated by the
Transferor when required, a Series Pay Out Event for one or more Series may
occur and result in the commencement of a Rapid Amortization Period for
such Series. See "Description of the Certificates--Trust Pay Out Events"
herein and "Description of the Certificates--Series Pay Out Events and
Trust Pay Out Events" in the Prospectus Supplement for a discussion of
other events which might lead to the commencement of the Rapid Amortization
Period for a Series.
Social, Geographic and Economic Factors. Changes in card use,
payment patterns and the rate of defaults by cardholders may result from a
variety of social, economic and geographic factors. Economic factors
include the rate of inflation, the unemployment rates and relative interest
rates offered for various types of loans. Adverse changes in economic
conditions in any states where cardholders are located could have a direct
impact on the timing and amount of payments on the Certificates of any
Series. See "ANB's Credit Card Activities" herein and in the Prospectus
Supplement. ANB is unable to determine and has no basis to predict
whether, or to what extent, economic, social or geographic factors will
affect future card use or repayment patterns.
Prepayment Resulting from Pre-Funding Account. With respect to any
Series having a Pre-Funding Account, if there is an insufficient amount of
Principal Receivables in the Trust at the end of the applicable Funding
Period, the Certificateholders of such Series will be repaid principal from
amounts on deposit in the Pre-Funding Account (to the extent of such
insufficiency) following the end of such Funding Period, as described more
fully in the Prospectus Supplement. Such repayment of principal would be
prior to the scheduled date of such repayment, so Holders would receive a
principal payment earlier than they expected. In addition, Holders would
not receive the benefit of the applicable Certificate Rate for the period
of time originally expected on the amount of such early repayment.
Transferor's Ability to Change Terms of the Receivables. The
Transferors and Credit Card Originators will generally have the right to
determine the finance charges and the other fees and charges which will be
applicable from time to time on the Accounts, to alter the minimum monthly
payment required under the Accounts and to change various other terms of
its agreement with cardholders with respect to the Accounts. A decrease in
the finance charges and the other fees and charges assessed on the Accounts
should decrease the effective yield on the Accounts and could result in the
occurrence of a Series Pay Out Event for one or more Series and
commencement of the Rapid Amortization Period for each such Series. Under
the Pooling and Servicing Agreement, ANB and any Additional Transferor will
agree, unless required by law or as is otherwise necessary, in its or the
related Credit Card Originator's sole discretion, to maintain its or the
related Credit Card Originator's lending business on a competitive basis
based on a good faith assessment by the Transferor or the related Credit
Card Originator of the nature of its competition in the lending business,
it will not (or will enforce covenants in any applicable Receivables
Purchase Agreements restricting the right of any related Credit Card
Originator to) reduce the annual percentage rate at which finance charges
are assessed on the Receivables or the other fees and charges assessed on
any of the Accounts owned by it, if, as a result of such reduction, either
(i) the Transferor's or the related Credit Card Originator's reasonable
expectation is that such reduction will cause a Series Pay Out Event to
occur, or (ii) such reduction is not also applied to any comparable
segments of revolving credit accounts owned by the Transferor or the
related Credit Card Originator which have characteristics the same as, or
substantially similar to, such Accounts (except as otherwise restricted by
an affinity, endorsement, sponsorship or other agreement between the
Transferor or the related Credit Card Originator and an unrelated third
party or by the applicable credit card agreements). ANB and any Additional
Transferor will also covenant that it will change the terms relating to any
of the Accounts owned by it only if the change is made applicable to the
comparable segment of the revolving credit accounts owned by it with
characteristics the same as or substantially similar to such Accounts,
subject to compliance with all requirements of law and except as otherwise
restricted by an affinity, endorsement, sponsorship or other agreement
between the Transferor or the related Credit Card Originator and an
unrelated third party or by the applicable credit card agreements. In
servicing the Accounts, the Servicer will be required to exercise the same
care and apply the same policies that it exercises in handling similar
matters for its own comparable accounts. Except as set forth above, the
Pooling and Servicing Agreement does not contain any restrictions on the
ability of a Transferor or Credit Card Originator to change the terms of
the Accounts or the Receivables. See "Description of the
Certificates--Representations, Warranties and Covenants." There can be no
assurance that changes in applicable law, changes in the marketplace or
prudent business practice might not result in a determination by any
Transferor or Credit Card Originator to decrease finance charges or other
fees and charges for existing accounts, or take actions which would
otherwise change the terms of the Accounts. In addition, there can be no
assurance that a change made in the terms of the Accounts would not result
in the downgrade of the rating of the Certificates. For purposes of this
Prospectus, a Credit Card Originator is referred to as "related" to a
Transferor if Receivables arising in Accounts owned by that Credit Card
Originator are sold, directly or indirectly, to that Transferor for
purposes of transfer to the Trust, and "Receivables Purchase Agreement"
means any agreement entered into between a Credit Card Originator and a
Transferor (or between either a Credit Card Originator or a Transferor and
another Person that acts as an intermediate transferee of receivables
originated by a Credit Card Originator) relating to the sale of Receivables
arising in Accounts.
Limited Nature of Rating. Any rating assigned to the Certificates of
a Series or a Class of a Series by a Rating Agency will reflect such Rating
Agency's assessment solely of the likelihood that Holders will receive the
payments of interest and principal required to be made under the Pooling
and Servicing Agreement and will be based primarily on the value of the
Receivables in the Trust and the availability of any Series Enhancement
with respect to such Series or Class of such Series. The rating will not
be a recommendation to purchase, hold or sell Certificates of such Series
or Class of such Series, and such rating will not comment as to the
marketability of such Certificates, any market price or suitability for a
particular investor. There is no assurance that any rating will remain for
any given period of time or that any rating will not be lowered or
withdrawn entirely by a Rating Agency, if in such Rating Agency's judgment,
circumstances so warrant.
Master Trust Considerations. The Trust, as a master trust, is
expected to issue multiple Series from time to time subsequent to the date
of this Prospectus. While the Principal Terms of any Series will be
specified in a Series Supplement, the provisions of a Series Supplement
and, therefore, the terms of any additional Series, will not be subject to
the prior review or consent of holders of the Certificates of any
previously issued Series. Such Principal Terms may include methods for
allocating collections, provisions creating different or additional
security or other Series Enhancement, provisions subordinating such Series
to another Series or other Series (if the Series Supplement relating to
such Series so permits) to such Series, and any other amendment or
supplement to the Pooling and Servicing Agreement which is made applicable
only to such Series. Such Principal Terms, including any subordination or
other relationship of a Series to other subsequently or previously issued
Series, will be described in the Prospectus Supplement relating to such
Series. The issuance of any additional Series is subject to (a) the
requirement that the Servicer notifies the Rating Agencies of such New
Issuance, and for ten days after receiving such notice no Rating Agency
notifies the Servicer that the New Issuance will result in the Rating
Agency reducing or withdrawing its rating of any outstanding Series or
Class and, (b) if any Series outstanding was characterized as debt at the
time of its issuance, the delivery of a Tax Opinion. There can be no
assurance, however, that the Principal Terms of any Series issued from time
to time hereafter might not have an impact on the timing and amount of
payments received by a Holder of any other Series. No Series Supplement
relating to a Series may change the terms of the Pooling and Servicing
Agreement applicable to the Certificates of any other Series, whether such
other Series have been issued before or after the Series to which such
Series Supplement relates. However, the Holders of any Series issued in
addition to outstanding Series will have voting rights which, with respect
to certain votes, waivers or consents under the Pooling and Servicing
Agreement, will reduce the percentage interest represented by the
Certificates of the outstanding Series of the aggregate unpaid principal
amount of the Certificates of all Series that are entitled to vote. Such
votes, waivers and consents include directing the appointment of a
successor Servicer following a Servicer Default, amending the Pooling and
Servicing Agreement and directing a reassignment of the entire portfolio of
Accounts. See "Description of the Certificates--New Issuances."
FORMATION OF THE TRUST
The Trust will be formed, in accordance with the laws of the State of
New York, pursuant to the Pooling and Servicing Agreement. The Transferor
will transfer to the Trust, without recourse, all of its right, title and
interest in and to all Receivables arising and created under the Accounts,
in exchange for the certificates of Series to be issued plus the Advanta
Certificate, which initially represents the entire Transferor Interest.
The Trust assets will consist of the Receivables, all monies due or to
become due thereunder and all amounts received with respect thereto, all
proceeds of the Receivables, the right to receive certain Interchange
attributed to charges for merchandise and services, and proceeds of credit
insurance policies relating to the Receivables, all monies on deposit in
certain bank accounts of the Trust and the benefits of any Series
Enhancements issued with respect to any Series (the drawing on or payment
of such Series Enhancement being available only to Holders of the Series to
which such Series Enhancement relates). The Trust assets may also include
Participation Interests.
The Trust will not engage in any activity other than acquiring and
holding the Receivables, issuing Certificates with respect to each Series
issued by the Trust, the Advanta Certificate and Supplemental Certificates,
making payments thereon, obtaining Series Enhancement applicable to any
Series and activities related thereto. As a consequence, the Trust is not
expected to have any need for, or sources of, capital resources other than
the assets of the Trust.
ANB'S CREDIT CARD ACTIVITIES
General
The Receivables which the Transferor will convey to the Trust
pursuant to the Pooling and Servicing Agreement initially will be, except
as otherwise described in the Prospectus Supplement, generated from
transactions made by holders of selected MasterCard and VISA credit card
accounts, including regular and premium accounts, from that portion of the
Advanta Credit Card Portfolio comprised of Accounts owned by ANB. Both
premium and regular accounts undergo the same credit analysis, but premium
accounts have higher initial credit limits because of the higher incomes of
the cardholders. In addition, premium accounts generally offer a wider
variety of services to the cardholders, and those that charge annual
cardholder fees generally have higher annual cardholder fees than regular
accounts that have annual cardholder fees. Servicing of the Advanta Credit
Card Portfolio is performed primarily by ANB and AUS; however, certain data
processing and administrative functions associated with the servicing of
the Advanta Credit Card Portfolio are currently performed on behalf of ANB
and AUS by First Data Resources, Inc. ("FDR"). See "Description of FDR."
If FDR were to fail or become insolvent, delays in processing and recovery
of information with respect to charges incurred by cardholders could occur,
and the replacement of the services that FDR currently provides to ANB
could be time-consuming. As a result, delays in payments to Holders of any
Series outstanding at such time could occur.
Set forth below is certain information relating to the activities of
ANB. ANB commenced operations in February 1995 but carries on a consumer
lending business that AUS has been engaged in for a significantly longer
period of time. Because ANB and AUS (together, the "Banks") operate a
largely unified consumer lending business under the same credit and
servicing policies, their activities and policies are discussed
collectively below, and certain historical performance information in the
Prospectus Supplements will cover accounts originated by both of the Banks
(along with any other Credit Card Originators). Initially, however, ANB is
the only Transferor, and AUS is not a party to the Pooling and Servicing
Agreement. While ANB is permitted to designate AUS as an Additional
Transferor, there can be no assurance that this will in fact take place.
The Prospectus Supplement may amend, modify or supplement such information.
To the extent the Trust assets include any Participation Interests or
Receivables other than those of the type described herein, the Prospectus
Supplement will describe the nature and characteristics of such
Participation Interests or Receivables.
Acquisition and Use of Credit Cards
Substantially all of the Banks' new accounts are generated through
direct mail and telemarketing solicitation of potential cardholders.
Beginning in 1983 and continuing through 1987, AUS acquired lists of
potential cardholders from various sources. The lists were delivered to a
third-party processor, which after deleting existing cardholders, sorted
the names based on addresses and delivered the names to a credit bureau.
Credit bureaus were selected based on AUS's evaluation of their relative
strength in a geographic area. The credit bureau identified those
individuals who met AUS's predetermined credit criteria. Selected
demographic criteria were then applied to determine the individuals to be
solicited. Beginning in 1987, AUS began employing a more direct method of
identifying potential cardholders. AUS engages the credit bureau to
identify those individuals in the credit bureau's own files who meet the
AUS's credit and demographic criteria. Prior to 1987, individuals
solicited were offered AUS's credit cards, subject to AUS's verification of
information regarding employment and income, which occurred only under
certain circumstances. Since March 1987, AUS has obtained a second credit
bureau report on each individual who responds positively to a solicitation
and offered a credit card to that person only if the second report confirms
the individual's eligibility.
Since July 1985, the criteria applied by AUS to evaluate potential
cardholders have included credit scoring using a model developed by the
Fair, Isaacs Companies, an independent firm experienced in developing
credit scoring models. Credit scoring evaluates a potential cardholder's
credit profile to arrive at an estimate of the associated credit risk.
Credit scoring models are developed by statistically evaluating common
characteristics and their correlation with credit risk. Since beginning
operations in February 1995, ANB has adopted the procedures and criteria
currently used by AUS, as described above.
Potential cardholders must meet minimum credit and income level
standards established by the Banks to receive a specific credit limit.
Cardholders not meeting the minimum standards for the initial product offer
are offered a reduced credit limit for which they qualify. Generally,
initial credit lines of up to $6,000 and $3,500 are offered for premium and
regular cards, respectively. Beginning in May 1993 credit line offers of
$7,500 and $10,000 have been tested on a limited basis, with most credit
line offers remaining at the $6,000 or less level. Cardholders may request
to have their credit line increased upon completion of a full application.
After a review of the full application and credit bureau report, the Banks
decide whether to extend additional credit. Also, the Banks may initiate
credit line increases for cardholders meeting minimum standards for usage
and payment history established by the Banks.
Accounts are opened with an initial term of one year. At the
anniversary date, accounts which meet certain criteria for usage and
payment history are reissued for one to three year terms.
Each cardholder is subject to an agreement governing the terms and
conditions of the related MasterCard or VISA account. Pursuant to each
such agreement, the Credit Card Originator that owns the Account reserves
the right, upon advance notice to the cardholder, to change or terminate
any terms, conditions, services or features of its MasterCard and VISA
accounts at any time, including increasing or decreasing finance charges,
other fees and charges or minimum payment terms. The agreement with each
cardholder provides that the relevant Credit Card Originator may apply such
changes, when applicable, to current outstanding balances as well as to
future transactions. However, the laws of the state in which particular
cardholders reside may limit the ability of the relevant Bank to apply
changes. For example, under applicable state law, certain fees and charges
are prohibited altogether. See "Risk Factors--Certain Legal Aspects" and
"Certain Legal Aspects of the Receivables--Consumer Protection Laws."
A cardholder may use the credit card for purchases, balance transfers
or cash advances. Cardholders make purchases when using the credit card to
buy goods or services. A cash advance is made when a credit card is used
to obtain cash from a financial institution or an automated teller machine
or when the cardholder uses special drafts issued by the relevant Credit
Card Originator to draw against the cardholder's credit line. The Banks
generally limit the amount of credit available for cash advances on new
accounts to 50% of the total credit line. The majority of the accounts,
the receivables of which are expected to be included in the Trust, are
subject to the 50% limitation.
When a cardholder uses the credit card issued by a bank under
contract with MasterCard International, Inc. or VISA USA, Inc. (a "member
bank"), the seller of goods or services or the provider of cash advances
generally sells the resulting receivable to a merchant bank, which in turn
sells the receivable (usually indirectly, through a clearing corporation
and its agent bank) to the member bank for its face amount less interchange
and other fees. The member bank is usually required by its contracts with
MasterCard International, Inc. and VISA USA, Inc. to purchase and pay daily
for all receivables generated by use of credit cards issued by the member
bank. If the member bank were to fail to perform such obligations,
MasterCard International, Inc. or VISA USA, Inc. would have the right to
cancel the credit cards issued by the member bank.
Billing and Payments
Each Bank, using FDR as its service bureau, generates and mails to
cardholders monthly statements summarizing account activity. For the
majority of accounts, cardholders receive a 25-day grace period on
purchases. All cardholders must make a minimum monthly payment equal to
finance and other charges, plus 1/100th of their principal balance, or, if
greater, a stated minimum monthly payment (generally $10).
All fees, charges and credit insurance premiums assessed by the Banks
are automatically charged to an account and are included in the account
balance at the end of each billing cycle. The finance charges assessed by
the Banks are calculated by multiplying the average daily balances of cash
advances and previously billed unpaid purchases in an account by the
applicable daily periodic rate, and then multiplying the resulting product
by the number of days in the billing cycle. Finance charges are not
assessed in most circumstances on purchases if all balances shown in the
billing statement are paid by the Due Date. Under certain conditions
related to customer performance, the Banks may immediately convert the
annual percentage rate applicable to existing and future balances to a
higher rate.
The Banks primarily offer cards to customers without an annual fee.
The Banks also assess miscellaneous transaction fees, including cash
advance and draft fees, late and overlimit charges, and returned check,
returned draft, and draft stop payment charges. Such miscellaneous fees
are not expected to constitute a material portion of Finance Charge
Receivables.
Description of FDR
Certain data processing and administrative functions associated with
the servicing of the Advanta Credit Card Portfolio are currently being
performed on behalf of the Banks by FDR. FDR was established in 1968 as
the data processing unit of Midamerica Bankcard Association and was
acquired by American Express Company in 1980. In April 1992, American
Express sold a minority share of FDR through an initial public offering of
stock in FDR's parent company, First Data Corporation. In March 1993,
American Express sold a portion of its remaining share, and now retains
only 21.5% of First Data Corporation. FDR is the leading third-party
processor of MasterCard and VISA card transactions in the United States
and, following the purchase of Signet Limited, the United Kingdom. During
1992, FDR processed approximately 2.3 billion credit card transactions for
more than 700 financial institution clients and over 61 million accounts.
FDR serves over 40% of all bank credit card accounts serviced by
third-party processors in the United States.
FDR's home office in the United States is located in Omaha, Nebraska,
with regional offices located in Atlanta, Georgia, Boston, Massachusetts
and San Mateo, California. FDR currently has approximately 5,000 full and
part time employees.
Delinquencies
Each account is billed monthly on or about the same day of the month.
An account is "contractually delinquent" if the minimum payment indicated
on the cardholder's statement is not received by the Due Date. For
purposes of determining the delinquency of an account, the period from one
monthly billing statement to the next is considered a period of 30 days,
regardless of the actual number of days elapsed. Efforts to collect
contractually delinquent credit card receivables currently are made by the
Banks' service center personnel or the Banks' designees. Collection
activities include statement messages, formal collection letters and
telephone calls. Collection personnel initiate telephone contact with
cardholders as early as one day contractually delinquent. The intensity at
which collection activity is pursued depends on the risk the account
presents to the Bank that owns such account, which is determined by
behavioral scoring and adaptive control techniques. If initial telephone
contact fails to resolve the delinquency, the Bank that owns such account
continues to contact the cardholder by telephone and by mail. Although
such arrangements are made infrequently, the Banks may also enter into
arrangements with cardholders to extend or otherwise change payment
schedules. Delinquency levels are monitored by management of both the
Collections and Asset Quality departments of the Banks, and information is
reported daily to senior management. Accounts are charged off when they
become 186 days contractually delinquent, at which time non-bankrupt
accounts are generally referred to outside collection agencies. The Banks
charge-off accounts within 30 days after receipt of any notice that the
customer has died or filed for bankruptcy, and within 90 days after receipt
of any notice of fraudulent charges within such account. The credit
evaluation, servicing and charge-off policies and collection practices of
the Banks may change from time to time in accordance with each Bank's
business judgment and applicable laws and regulations.
Information with respect to the delinquency and loss experience of
the Advanta Credit Card Portfolio, including charts relating to such
information, is contained in the Prospectus Supplement.
Interchange
Creditors participating in the VISA and MasterCard International
associations receive certain fees ("Interchange") as partial compensation
for taking credit risk, absorbing fraud losses and funding receivables for
a limited period prior to initial billing. Under the VISA and MasterCard
International systems, a portion of the Interchange in connection with
cardholder charges for merchandise and services is passed from banks which
clear the transactions for merchants to credit card-issuing banks.
Interchange approximates [1.3%] of the transaction amount. VISA and
MasterCard International may from time to time change the amount of
Interchange reimbursed to banks issuing their credit cards. In respect of
Interchange attributed to the cardholder charges for merchandise and
services in the Accounts, collections of Finance Charge Receivables with
respect to any Monthly Period will be deemed to include Interchange as
calculated pursuant to the related Series Supplement for any Series.
Competition
The bank credit card industry is highly competitive. There is
increased competitive use of advertising, target marketing and pricing
competition in interest rates and annual cardholder fees as both
traditional and new credit card issuers seek to expand or to enter the
market. The Banks issue MasterCard and VISA credit cards to customers
nationwide, competing with certain money center banks and other large
nationwide issuers, as well as with regional and local banks, savings and
loan associations and other depository institutions, many of whom have
sizeable branch systems through which credit cards are marketed to the
institutions' customer bases. Many of these competitors have greater
capital resources and a larger depositor base than either Bank. Certain
major credit card issuers assess finance charges for selected portions of
their portfolios at rates significantly lower than the rates currently
being assessed on the Accounts. The Banks have primarily responded to the
increased competition by marketing cards to customers without an annual fee
and by using introductory rates for a set period of time (generally less
than 12 months in length).
The Trust will be dependent upon ANB's continued ability to generate
new Receivables. ANB's ability to compete in the credit card industry will
directly affect its ability to generate new Receivables. If the rate at
which new Receivables are generated declines significantly, a Pay Out Event
with respect to a Series could occur and the Rapid Amortization Period with
respect to such Series could commence.
USE OF PROCEEDS
The net proceeds from the sale of each Series offered hereby and by
the related Prospectus Supplement will be paid to the Transferor. The
Transferor will use such proceeds to provide liquidity for anticipated
future asset growth and will use the balance for general corporate
purposes.
ANB AND ADVANTA CORP.
ANB is an indirect wholly owned subsidiary of Advanta Corp.
("Advanta"), and was chartered as a national bank in February 1995. ANB
engages in a consumer lending business that has been engaged in for a
significantly longer period of time by AUS, which was chartered as a
national bank in December 1962. From 1926 to 1962, AUS was a Delaware
trust company. AUS was acquired by Advanta in 1982. Prior to the
enactment of the Competitive Equality Bank Act of 1987 ("CEBA"), AUS was a
"non-bank" bank which did not, and currently does not, make commercial
loans.
ANB operates under the National Banking Act and is subject to
examination, supervision and regulation by the Office of the Comptroller of
the Currency. ANB's deposits are insured by the FDIC, and ANB is a member
of the Federal Reserve Bank of Philadelphia.
Under certain grandfathering provisions of CEBA, Advanta is not
required to register as a bank holding company under the Bank Holding
Company Act of 1956, as amended, because AUS was a "non-bank" bank prior to
the enactment of CEBA and complies with certain restrictions set forth in
CEBA. Consequently, Advanta is not subject to Federal Reserve Board
examination.
The principal executive office of ANB is located at 501 Carr Road,
Wilmington, Delaware 19809 (telephone: (302) 791-6262).
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Transfer of Receivables
ANB and any Additional Transferor will warrant in the Pooling and
Servicing Agreement that the transfer of the Receivables by it to the Trust
constitutes either a valid transfer and assignment to the Trust of all
right, title and interest of such Transferor in and to the Receivables or a
valid grant to the Trust of a first priority perfected security interest in
the Receivables free and clear of liens arising from or through the
applicable Transferor, except for certain potential tax liens, the interest
of the holders of the Advanta Certificate and any Supplemental Certificates
and the Transferors' rights to receive interest and investment earnings
(net of losses and investment expenses) in respect of the Collection
Account or (to the extent specified in the related Series Supplement) any
Series Account. For a discussion of the Trust's rights arising from a
breach of these warranties, see "Description of the
Certificates--Representations, Warranties and Covenants."
The Receivables are "accounts" or "general intangibles" for purposes
of the Uniform Commercial Code (the "UCC"). Both the transfer of accounts
and the transfer of accounts as security for an obligation are treated
under Article 9 of the UCC as creating a security interest therein and are
subject to its provisions, and the filing of appropriate financing
statements is required to perfect the security interest of the Trust. If a
transfer of general intangibles is deemed to create a security interest,
the UCC applies and filing of an appropriate financing statement is also
required in order to perfect the Trust's security interest in the
Receivables. Financing statements covering the Receivables will be filed
with the appropriate governmental authority to protect the interests of the
Trust in the Receivables. If a transfer of general intangibles is deemed
not to create a security interest, the filing of a financing statement is
not required to protect the Trust's interest from third parties.
There are certain limited circumstances under the UCC in which a
prior or subsequent transferee of Receivables coming into existence after
the date on which such Receivables are transferred to the Trust could have
an interest in such Receivables with priority over the Trust's interest.
Under the Pooling and Servicing Agreement, however, ANB and any Additional
Transferor will warrant that it has transferred the Receivables to the
Trust free and clear of the lien of any third party, except for certain tax
liens. In addition, ANB and any Additional Transferor will covenant that,
except as permitted by the Pooling and Servicing Agreement, it will not
sell, pledge, assign, transfer or grant any lien on any Receivable (or any
interest therein) other than to the Trust. A tax or other government lien
on property of any Transferor arising prior to the time a Receivable comes
into existence may also have priority over the interest of the Trust in
such Receivable. In addition, if the FDIC were appointed as receiver of a
Transferor, certain administrative expenses of the receiver may also have
priority over the interest of the Trust in the Receivables arising from the
Accounts owned by such Transferor.
Certain Matters Relating to Receivership and Bankruptcy
FIRREA, which became effective August 9, 1989, sets forth certain
powers that the FDIC could exercise if it were appointed as receiver of a
Transferor that is a bank or other financial institution subject to the
Federal Deposit Insurance Act (a "Bank Transferor").
Subject to clarification by FDIC regulations or interpretations, it
would appear from the positions taken by the FDIC before the passage of
FIRREA that the FDIC in its capacity as receiver for a Bank Transferor
would not interfere with the timely transfer to the Trust of payments
collected on the Receivables arising from the Accounts owned by the Bank
Transferor or interfere with the timely liquidation of Receivables as
described below. To the extent that the Bank Transferor has granted a
security interest in the Receivables to the Trust, and that security
interest was validly perfected before any insolvency of the Bank Transferor
and was not taken or granted in contemplation of insolvency or with the
intent to hinder, delay or defraud the Bank Transferor or its creditors,
that security interest should not be subject to avoidance, and payments to
the Trust with respect to the Receivables should not be subject to recovery
by the FDIC as receiver of the Bank Transferor. If, however, the FDIC were
to assert a contrary position, or were to require the Trustee to establish
its right to those payments by submitting to and completing the
administrative claims procedure established under FIRREA, delays in
payments on the Certificates of any Series outstanding at such time and
possible reductions in the amount of those payments could occur. Similar
consequences could follow from the insolvency or receivership of a Credit
Card Originator that was a bank or other financial institution subject to
the Federal Deposit Insurance Act and that transferred Receivables to the
Trust indirectly through a Transferor without becoming a Transferor itself.
If an Additional Transferor that was not a bank or other financial
institution subject to the Federal Deposit Insurance Act were to become a
debtor in a bankruptcy case and a creditor or trustee in bankruptcy of such
debtor or such debtor itself were to take the position that the transfer of
Receivables by that Transferor to the Trust should be characterized as a
pledge of such Receivables to secure a borrowing of such Transferor, then
delays in payments on the Certificates and possible reductions in the
amount of those payments could occur. If the transfer of Receivables by
such a Transferor to the Trust is treated as a sale, such Receivables
should not generally be part of the Transferor's bankruptcy estate and
should not be available to the Transferor's creditors. In a 1993 case,
however, the U.S. Court of Appeals for the Tenth Circuit concluded that
accounts receivable sold by a debtor prior to a filing for bankruptcy
remain property of the debtor's bankruptcy estate. If the conclusions in
that case were applied in such a Transferor's bankruptcy, the Receivables
sold to the Trust by that Transferor would be subject to claims of certain
creditors, which could result in delays in payments on the Certificates and
possible reductions in the amount of those payments. Similar consequences
could follow if a Credit Card Originator that was not a bank or other
financial institution subject to the Federal Deposit Insurance Act and that
transferred Receivables to the Trust indirectly through a Transferor
without becoming a Transferor itself were to become a debtor in a
bankruptcy case.
The Pooling and Servicing Agreement provides that, upon the
commencement of an Insolvency Event with respect to any Transferor or
Credit Card Originator (unless the Rating Agency Condition has been
satisfied as to not treating an Insolvency Event with respect to such
Transferor or Credit Card Originator as a Trust Pay Out Event), the
affected Transferor will promptly give notice thereof to the Trustee, and a
Trust Pay Out Event will occur. Under the Pooling and Servicing Agreement,
if the Insolvency Event relates to any Transferor (unless the Rating Agency
Condition has been satisfied and a Tax Opinion has been delivered as to the
failure to take the following actions upon an Insolvency Event with respect
to any Transferor) no new Principal Receivables will be transferred to the
Trust and, unless otherwise instructed within a specified period by the
holders of Certificates evidencing more than 50% of the Investor Amount of
each Series (or if any such Series has more than one Class, of each Class
of such Series) and each of ANB and any Additional Transferors (unless ANB
or such Additional Transferor is the subject of such Insolvency Event), and
any holder of a Supplemental Certificate and certain other parties
specified in the Series Supplements, or unless otherwise prohibited by law,
the Trustee will proceed to sell, dispose of or otherwise liquidate the
Receivables in a commercially reasonable manner and on commercially
reasonable terms. The proceeds from the sale of the Receivables would then
be treated by the Trustee as collections on the Receivables. This
procedure could be delayed as described above. Upon the occurrence of a
Pay Out Event, if a conservator or receiver is appointed for a Transferor
and no Pay Out Event other than such conservatorship or receivership or
insolvency of the Transferor exists, the conservator or receiver may have
the power to prevent the early sale, liquidation or disposition of
Receivables and the commencement of a Rapid Amortization Period with
respect to any outstanding Series. In addition, a conservator or receiver
for a Transferor may have the power to cause early payment of the
Certificates or to prohibit the continued transfer of Principal Receivables
to the Trust.
In the event of a Servicer Default, if a conservator or receiver is
appointed for the Servicer, and no Servicer Default other than such
conservatorship or receivership or insolvency of the Servicer exists, the
conservator or receiver may have the power to prevent either the Trustee or
Holders from effecting a transfer of servicing to a successor Servicer.
Consumer Protection Laws
The relationship of the cardholder and credit card issuer is
extensively regulated by Federal and state consumer protection laws. With
respect to credit cards issued by ANB, the most significant of these laws
include the Federal Truth-in-Lending Act, Equal Credit Opportunity Act,
Fair Credit Reporting Act, Fair Debt Collection Practice Act, Electronic
Funds Transfer Act and National Bank Act, as well as the Delaware Banking
Code and comparable statutes in the states in which cardholders reside.
These statutes impose disclosure requirements when a credit card account is
advertised, when it is opened, at the end of monthly billing cycles, upon
account renewal for accounts on which annual fees are assessed and at year
end and, in addition, limit cardholder liability for unauthorized use,
prohibit certain discriminatory practices in extending credit and impose
certain limitations on the type of account-related charges that may be
assessed. Federal legislation requires credit card issuers to disclose to
consumers the interest rates, annual cardholder fees, grace periods and
balance calculation methods associated with their credit card accounts.
Cardholders are entitled under current law to have payments and credits
applied to the credit card account promptly, to receive prescribed notices
and to have billing errors resolved promptly.
The Trust may be liable for certain violations of consumer protection
laws that apply to the Receivables, either as assignee of a Transferor with
respect to obligations arising before transfer of the Receivables to the
Trust or as a party directly responsible for obligations arising after the
transfer. In addition, a cardholder may be entitled to assert such
violations by way of set-off against his obligation to pay the amount of
Receivables owing. ANB and each Additional Transferor will covenant in the
Pooling and Servicing Agreement to accept the transfer of all Receivables
in an Account that is owned by it or a related Credit Card Originator,
under certain circumstances, if any Receivable in such Account has not been
created in compliance with the requirements of such laws. ANB and each
Additional Transferor will also agree in the Pooling and Servicing
Agreement to indemnify the Trust for, among other things, any liability
arising from such violations. See "Description of the
Certificates--Representations, Warranties and Covenants."
Application of Federal and state bankruptcy and debtor relief laws
would adversely affect the interests of the Holders if such laws result in
any Receivables being written off as uncollectible. See "Description of
the Certificates--Defaulted Receivables; Rebates and Fraudulent Charges."
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued in Series pursuant to the Pooling and
Servicing Agreement (as supplemented by a Series Supplement thereto with
respect to each Series) entered into between ANB, as the sole initial
Transferor of Receivables and as Servicer of the Accounts and the
Receivables, and The Bank of New York, as Trustee for the Holders of each
Series. Pursuant to the Pooling and Servicing Agreement, the Transferor
may from time to time execute Series Supplements thereto among the
Transferor, the Servicer and the Trustee in order to issue additional
Series. See "--New Issuances." The Trustee will provide a copy of the
Pooling and Servicing Agreement (without exhibits or schedules), including
any Series Supplements for Certificates offered hereby, to Holders of any
Series without charge upon written request. A copy of the form of Pooling
and Servicing Agreement has been filed with the Commission as an exhibit to
the Registration Statement of which this Prospectus forms a part.
The following summaries describe certain provisions common to each
Series. The summaries do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, the provisions of the
Pooling and Servicing Agreement and the Series Supplement relating to each
Series. When particular provisions or terms used in the Pooling and
Servicing Agreement or any Series Supplement are referred to herein, such
provisions or terms shall be as specified in the Pooling and Servicing
Agreement or Series Supplement.
General
The Pooling and Servicing Agreement does not limit the amount of
Certificates that can be issued thereunder and provides that any Series may
be issued thereunder up to the aggregate principal amount specified in the
related Series Supplement that may be entered into among the Transferor,
the Servicer and the Trustee. Each Series will consist of one or more
Classes, one or more of which may be floating rate Certificates, fixed rate
Certificates, zero coupon Certificates or another type of Certificates as
specified in the related Prospectus Supplement. A Series may include a
Class or Classes that are subordinated in right of payment of principal
and/or interest to another Class or other Classes of such Series or any
other Series. If so specified in a related Prospectus Supplement, such
subordinated Class or Classes may be offered hereby and by the related
Prospectus Supplement. Each Series will be issued in the minimum
denominations for each Class specified in the related Prospectus
Supplement.
The Certificates of any Series will generally represent the right to
receive, to the extent of amounts then payable on the applicable Series of
Certificates, from the assets of the Trust, a floating percentage (in the
case of Principal Receivables during the Revolving Period of a Series and
Finance Charge Receivables and Defaulted Receivables during the Revolving
Period and the Amortization Period of a Series) or a fixed percentage (in
the case of Principal Receivables during any Amortization Period for a
Series) (each, a "Series Percentage") of all cardholder payments on the
Receivables.
The Transferor holds the interest in the Principal Receivables and
amounts in the Excess Funding Account (excluding investment earnings) not
represented by the Certificates of all outstanding Series (the "Transferor
Interest"), including the right to a percentage (the "Transferor
Percentage") of all cardholder payments on the Receivables.
During the Revolving Period for any Series that is not a Zero Coupon
Series, the Invested Amount for such Series will generally remain constant
except in certain limited circumstances or unless otherwise specified in
the related Prospectus Supplement. See "--Defaulted Receivables; Rebates
and Fraudulent Charges" and "--Funding Period." During the Revolving
Period for a Zero Coupon Series, the Invested Amount and the Investor
Amount for such Series will generally increase, as accreted discount is
added to the Invested Amount on a periodic basis specified in the related
Prospectus Supplement. The amount of Principal Receivables, however, will
vary each day as new Principal Receivables are created and others are paid.
The Transferor Amount will fluctuate daily, therefore, to reflect changes
in the amount of the Principal Receivables. When a Series is amortizing,
the Invested Amount for such Series will generally decline for each Monthly
Period as cardholder payments of Principal Receivables allocated to such
Series are collected and held for distribution to the Holders on the
following Distribution Date or deposited in a Series Account for the
benefit of such Series or a Class of such Series for payment to the
applicable Holders when due. As a result, the Transferor Amount will
generally increase each month to reflect the reductions in the Invested
Amount of a Series and will also change to reflect the variations in the
amount of Principal Receivables.
The Trust assets will include the Receivables, all monies due or to
become due thereunder and all amounts received with respect thereto, all
proceeds of the Receivables, the right to receive certain Interchange,
proceeds of credit insurance policies relating to the Receivables, all
monies on deposit in certain bank accounts of the Trust and the benefits of
any Series Enhancement issued with respect to any Series (the drawing on or
payment of such Series Enhancement being available only to Holders of such
Series or Class of such Series). The Trust assets may also include
Participation Interests.
Unless otherwise specified in the related Prospectus Supplement,
Certificates of each Series initially will be represented by certificates
registered in the name of the nominee of DTC (together with any successor
depository selected by the Transferor, the "Depository") except as set
forth below. Unless otherwise specified in the related Prospectus
Supplement, with respect to each Series of Certificates, beneficial
interests in the Certificates will be available for purchase in minimum
denominations of $1,000 and integral multiples of $1,000 in excess thereof
in book-entry form only. The Transferor has been informed by DTC that
DTC's nominee will be Cede. Accordingly, Cede is expected to be the holder
of record of each Series of Certificates. No Certificate Owner acquiring
an interest in the Certificates will be entitled to receive a certificate
representing such person's interest in the Certificates. Unless and until
Definitive Certificates are issued for any Series under the limited
circumstances described herein, all references herein to actions by Holders
shall refer to actions taken by DTC upon instructions from its Participants
(as defined below), and all references herein to distributions, notices,
reports and statements to Holders shall refer to distributions, notices,
reports and statements to DTC or Cede, as the registered holder of the
Certificates, as the case may be, for distribution to Certificate Owners in
accordance with DTC procedures. See "--Book-Entry Registration" and
"--Definitive Certificates."
If so specified in the Prospectus Supplement relating to a Series,
application will be made to list the Certificates of such Series, or all or
a portion of any Class thereof, on the Luxembourg Stock Exchange or any
other specified exchange.
Book-Entry Registration
Unless otherwise specified in the related Prospectus Supplement, with
respect to each Series of Certificates, Holders may hold their Certificates
through DTC (in the United States) or Cedel or Euroclear (in Europe) if
they are participants of such systems, or indirectly through organizations
that are participants in such systems.
Cede, as nominee for DTC, will hold the global Certificates. Cedel
and Euroclear will hold omnibus positions on behalf of the Cedel
Participants and the Euroclear Participants, respectively, through
customers' securities accounts in Cedel's and Euroclear's names on the
books of their respective depositaries (collectively, the "Depositaries")
which in turn will hold such positions in customers' securities accounts in
the Depositaries' names on the books of DTC.
Unless and until Definitive Certificates are issued, it is
anticipated that the only Holder of the Certificates will be Cede, as
nominee of DTC. No Certificate Owner acquiring an interest in Certificates
of a Series which have been issued in book-entry form will be entitled to
receive a certificate representing such person's interest in the
Certificates of such Series unless and until Definitive Certificates are
issued under the limited circumstances described herein. All references
herein to actions by Holders of a Series shall refer (unless Definitive
Certificates are so issued with respect to such Series) to actions taken by
DTC, Cedel or Euroclear upon instructions from DTC Participants, Cedel
Participants or Euroclear Participants, respectively, and all references
herein to distributions, notices, reports and statements to Holders shall
refer to distributions, notices, reports and statements to DTC or Cede, as
the registered holder of the Certificates of such Series, as the case may
be, for distribution to Certificate Owners of such Series in accordance
with DTC procedures. See "--Definitive Certificates." Distributions will
be made to DTC in immediately available funds.
DTC is a limited-purpose trust company organized under the laws of
the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York UCC, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. DTC holds securities for its
participating organizations ("Participants") and facilitate the clearance
and settlement of securities transactions between Participants through
electronic book-entry changes in accounts of its Participants, thereby
eliminating the need for physical movement of certificates. Participants
include securities brokers and dealers (including the Underwriters), banks,
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system also is available to
others ("Indirect Participants") such as banks, brokers, dealers and trust
companies that clear through, or maintain a custodial relationship with,
Participants, either directly or indirectly.
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between Cedel Participants and Euroclear Participants
will occur in the ordinary way in accordance with their applicable rules
and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC (other than Cedel Participants and Euroclear Participants), on
the one hand, and directly or indirectly through Cedel Participants or
Euroclear Participants, on the other, will be effected in DTC in accordance
with DTC rules on behalf of the relevant European international clearing
system by its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international
clearing system by the counterparty in such system in accordance with its
rules and procedures and within its established deadlines (European time).
The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its
Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment
in accordance with normal procedures for same-day funds settlement
applicable to DTC. Cedel Participants and Euroclear Participants may not
deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business
day following the DTC settlement date, and such credits or any transactions
in such securities settled during such processing will be reported to the
relevant Cedel Participant or Euroclear Participant on such business day.
Cash received in Cedel or Euroclear as a result of sales of securities by
or through a Cedel Participant or a Euroclear Participant to a DTC
Participant will be received with value on the DTC settlement date but will
be available in the relevant Cedel or Euroclear cash account only as of the
business day following settlement in DTC.
Certificate Owners of a Series that are not Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership
of, or other interests in, Certificates of such Series may do so only
through Participants and Indirect Participants. In addition, Certificate
Owners of a Series will receive all distributions of principal of and
interest on the Certificates of such Series from the Paying Agent through
the Participants who in turn will receive them from DTC. Under a
book-entry system, Certificate Owners of a Series may experience some delay
in their receipt of payments, since such payments will be forwarded by the
Trustee to Cede, as nominee for DTC. DTC will forward such payments to its
Participants, which thereafter will forward the payments to Indirect
Participants or Certificate Owners of such Series. Certificate Owners of a
Series will not be recognized by the Trustee as Holders of such Series, as
such term is used in the Pooling and Servicing Agreement, and Certificate
Owners of a Series will only be permitted to exercise the rights of Holders
of such Series indirectly through DTC and its Participants, who in turn
will exercise the rights of Holders of such Series through DTC.
Under the rules, regulations and procedures creating and affecting
DTC and its operations, DTC is required to make book-entry transfers among
Participants on whose behalf it acts with respect to the Certificates of a
Series and is required to receive and transmit distributions of principal
of and interest on the Certificates of such Series. Participants and
Indirect Participants with which Certificate Owners of a Series have
accounts with respect to the Certificates of such Series similarly are
required to make book-entry transfers and receive and transmit such
payments on behalf of their respective Certificate Owners. Accordingly,
although Certificate Owners of a Series will not possess Certificates of
such Series, such Certificate Owners will receive payments and will be able
to transfer their interests.
Because DTC may only act on behalf of Participants, who in turn act
on behalf of Indirect Participants and certain banks, the ability of a
Certificate Owner of a Series to pledge Certificates to persons or entities
that do not participate in the DTC system, or otherwise take actions in
respect of such Certificates, may be limited due to the lack of a physical
certificate for such Certificates.
DTC has advised the Servicer that it will take any action permitted
to be taken by a Holder of a Series under the Pooling and Servicing
Agreement only at the direction of one or more Participants to whose
account with DTC the Certificates of such Series are credited.
Additionally, DTC has advised the Servicer that it will take such actions
with respect to specified percentages of the applicable Investor Amount
only at the direction of and on behalf of Participants whose holdings
include undivided interests that constitute such specified percentages.
DTC may take conflicting actions with respect to other undivided interests
to the extent that such actions are taken on behalf of Participants whose
holdings include such undivided interests.
Cedel Bank, societe anonyme ("Cedel") is incorporated under the laws
of Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ("Cedel Participants") and facilitates the
clearance and settlement of securities transactions between Cedel
Participants through electronic book-entry changes in accounts of Cedel
Participants, thereby eliminating the need for physical movement of
certificates. Transactions may be settled in Cedel in any of 34
currencies, including United States dollars. Cedel provides to its Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and
securities lending and borrowing. Cedel interfaces with domestic markets
in several countries. As a professional depository, Cedel is subject to
regulation by the Luxembourg Monetary Institute. Cedel Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations and may include the
underwriters of any Series of Certificates. Indirect access to Cedel is
also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Cedel Participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System ("Euroclear Participants") and to
clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk
from lack of simultaneous transfers of securities and cash. Transactions
may now be settled in any of 32 currencies, including United States
dollars. The Euroclear System includes various other services, including
securities lending and borrowing and interfaces with domestic markets in
more than 25 countries generally similar to the arrangement for
cross-market transfers with DTC described above. The Euroclear System is
operated by Morgan Guaranty Trust Company of New York, Brussels, Belgium
office (the "Euroclear Operator" or "Euroclear"), under contract with
Euroclear Clearance System, Societe Cooperative, a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the
Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for the Euroclear System.
Euroclear Participants include banks (including central banks), securities
brokers and dealers and other professional financial intermediaries and may
include the underwriters of any Series of Certificates. Indirect access to
the Euroclear System is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear Participant, either
directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such,
it is regulated and examined by the Board of Governors of the Federal
Reserve System and the New York State Banking Department, as well as the
Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System and
applicable Belgian law (collectively, the "Terms and Conditions"). The
Terms and Conditions govern transfers of securities and cash within the
Euroclear System, withdrawal of securities and cash from the Euroclear
System, and receipts of payments with respect to securities in the
Euroclear System. All securities in the Euroclear System are held on a
fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under the Terms
and Conditions only on behalf of Euroclear Participants and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to Certificates held through Cedel or
Euroclear will be credited to the cash accounts of Cedel Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions
will be subject to tax reporting in accordance with relevant United States
tax laws and regulations. See "Federal Income Tax Consequences." Cedel or
the Euroclear Operator, as the case may be, will take any other action
permitted to be taken by a Holder under a related agreement on behalf of a
Cedel Participant or Euroclear Participant only in accordance with its
relevant rules and procedures and subject to its Depositary's ability to
effect such actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Certificates among
participants of DTC, Cedel and Euroclear, they are under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time.
Definitive Certificates
Book-entry Certificates of a Series will be re-issued in fully
registered, certificated form ("Definitive Certificates") to Certificate
Owners of such Series or their respective nominees rather than to DTC or
its nominee, only if (i) the Transferor advises the Trustee in writing that
DTC is no longer willing or able properly to discharge its responsibilities
as Depository with respect to any Class of Certificates of such Series, and
the Trustee or the Transferor is unable to locate a qualified successor,
(ii) the Transferor, at its option, advises the Trustee that it elects to
terminate the book-entry system with respect to such Series or Class
through DTC, or (iii) after the occurrence of a Servicer Default,
Certificate Owners of such Series or Class evidencing more than 50% of the
aggregate unpaid principal amount of such Series or Class advise the
Trustee and DTC through Participants in writing that the continuation of a
book-entry system with respect to the Certificates of such Series or Class
through DTC (or a successor thereto) is no longer in the best interest of
the Certificate Owners of such Certificates.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Certificates of such Series. Upon
surrender by DTC of the definitive certificates representing the
Certificates of such Series or Class and instructions for re-registration,
the Transferor will execute and the Trustee will authenticate and deliver
such Certificates as Definitive Certificates, and thereafter the Trustee
will recognize the holders of such Definitive Certificates as holders under
the Pooling and Servicing Agreement ("Holders").
Distribution of principal and interest on the Definitive Certificates
of a Series will be made by the Paying Agent for such Series directly to
Holders of such Series in accordance with the procedures set forth herein
and in the Pooling and Servicing Agreement. Any interest or principal
payments on each Distribution Date will be made to Holders in whose names
the Definitive Certificates were registered at the close of business on the
related Record Date for a Series. Distributions will be made by check
mailed to the address of such Holder as it appears on the register
maintained by the Trustee. The final payment on any Certificate (whether
Definitive Certificates or the Certificates registered in the name of Cede
representing the Certificates), however, will be made only upon
presentation and surrender of such Certificate at the office or agency
specified in the notice of final distribution to respective Holders. The
Trustee will provide such notice to registered Holders of such Series not
later than the fifth day of the month of such final distribution.
Definitive Certificates of a Series will be transferable and
exchangeable at the offices of the Transfer Agent and Registrar for such
Series. No service charge will be imposed for any registration of transfer
or exchange, but the Transfer Agent and Registrar of such Series may
require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection therewith.
The Advanta Certificate; Additional Transferors
The Pooling and Servicing Agreement provides that the Transferor may
surrender the Advanta Certificate to the Trustee in exchange for a newly
issued Advanta Certificate and one or more additional certificates (each, a
"Supplemental Certificate") for transfer or assignment to a person
designated by the Transferor upon the execution and delivery of a
supplement to the Pooling and Servicing Agreement (which supplement will be
subject to the amendment section of the Pooling and Servicing Agreement to
the extent that it amends any of the terms of the Pooling and Servicing
Agreement; see "--Amendments"). However, the Transferor must give written
notice of any such exchange to each Rating Agency, and no such exchange may
occur if (a) the Transferor Amount (excluding the interest represented by
any Supplemental Certificate) would be less than 2% of the total amount of
Principal Receivables after giving effect to such exchange or (b) any
Series of Certificates are outstanding that were characterized as debt at
the time of their issuance, in each case unless the Transferor shall have
delivered to the Trustee and each Rating Agency an opinion of counsel,
dated the date of such exchange, to the effect that such exchange does not
adversely affect the conclusions reached in any of the Tax Opinions
delivered in connection with the issuance of any applicable Series of
Certificates. Any transfer or exchange of a Supplemental Certificate is
subject to the condition described in clause (a) above.
In addition, the Advanta Certificate (or any interest therein) may be
transferred to any entity, subject to delivery of an opinion concerning tax
matters of the type described above. Any such transferee will be deemed to
be a "Transferor" for purposes of the provisions of the Pooling and
Servicing Agreement regarding the Transferor indemnification and
liquidation of the Receivables upon the occurrence of an Insolvency Event
(unless the Rating Agency Condition has been satisfied and a Tax Opinion
has been delivered as to the failure to treat such transferee as a
"Transferor" for such purposes). See "-- Liquidation of Receivables" and
"-- Indemnification."
ANB may designate affiliates of ANB or other persons to be included
as Transferors ("Additional Transferors") under the Pooling and Servicing
Agreement (by means of an amendment to the Pooling and Servicing Agreement
that will not require the consent of any Holder; see "-- Amendments"). In
connection with such designation, ANB must surrender the Advanta
Certificate to the Trustee in exchange for a newly issued Advanta
Certificate modified to reflect the Additional Transferor's interest in the
Transferor Interest. The conditions set forth in the preceding two
paragraphs with respect to the issuance of a Supplemental Certificate or
the transfer of the Advanta Certificate, as applicable, must be satisfied
prior to such designation and exchange, and any applicable conditions
described in "-- Addition of Accounts" must be satisfied with respect to
the transfer of Receivables or Participation Interests by any Additional
Transferor to the Trust. Any Additional Transferor may itself be a Credit
Card Originator or may obtain Receivables, directly or indirectly, from one
or more other Credit Card Originators pursuant to one or more Receivables
Purchase Agreements (which may be entered into directly between the
Additional Transferor and a Credit Card Originator or may be entered into
by the Additional Transferor with an intermediate purchaser that, in turn,
enters into a Receivables Purchase Agreement with a Credit Card
Originator). Following the inclusion of an Additional Transferor, the
Additional Transferor will be treated in the same manner as ANB, in its
capacity as Transferor, and each Additional Transferor generally will have
the same obligations and rights as ANB, in its capacity as Transferor
described herein. In addition, an existing Transferor may, by an amendment
to the Pooling and Servicing Agreement that will not require the consent of
any Holder (but will require an opinion as to tax matters of the type
referred to above), cease to be a direct Transferor and instead sell
Receivables to another Transferor (directly or indirectly as described
above) pursuant to one or more Receivables Purchase Agreements for transfer
to the Trust.
Interest Payments; Accretion of Discount
Each Class of a Series will accrue interest at the rate per annum
specified in, or in the manner determined in, the related Prospectus
Supplement (calculated on the basis specified in the related Prospectus
Supplement). Interest on all Certificates will be due and payable on the
Distribution Dates specified in the related Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement, interest for a
Class of a Series will be calculated based on the outstanding principal
amount of such Class at the end of the rate determination period preceding
the applicable Distribution Date.
To the extent provided in the related Prospectus Supplement, a Series
may include one or more Classes of floating rate Certificates. The
interest rate on floating rate Certificates will be a variable or
adjustable rate. It is the Transferor's present intention, subject to
changing market conditions, that the floating interest rate formula or
index be based on an established financial index in the national or
international financial markets. The Distribution Dates for floating rate
Certificates will be set forth in the related Prospectus Supplement and
need not be the same as the Distribution Dates for the other Certificates
of such Series, but may be either more or less frequent. For each Class of
floating rate Certificates, the related Prospectus Supplement will set
forth the initial floating rate certificate interest rate (or the method of
determining it), the dates or the method for determining the dates on which
the floating rate certificate interest rate is adjusted, and the formula,
index or other method by which such interest rate is determined on such
dates.
Any Zero Coupon Series will include one or more Classes of
Certificates that, for all or some portion of their term, will not receive
current payments of interest but instead will have an invested amount that
will grow over time as accreted discount is added to such invested amount.
The rate at which original issue discount accretes on zero coupon
Certificates will be specified in the related Prospectus Supplement.
Amounts representing accreted discount may ultimately be payable to the
Holders of such Certificates from collections of Principal Receivables
allocable to such Series, collections of Finance Charge Receivables
allocable to such Series, Series Enhancements or some combination of the
foregoing, all as specified in the related Prospectus Supplement.
Principal Payments
Unless otherwise specified in the related Prospectus Supplement, the
Revolving Period for a Class of Certificates begins on the Relevant Closing
Date and ends on the day before an Amortization Period or, if applicable,
an Accumulation Period (as defined in the related Prospectus Supplement)
begins for such Class. On each Distribution Date with respect to the
Revolving Period, collections of Principal Receivables allocable to the
Investor Interest of a Series will, subject to certain limitations, be paid
to the holders of the Transferor Certificates, to amortizing or
accumulating Series or deposited in the Excess Funding Account. After an
Amortization Period begins with respect to any Class of Certificates,
collections of Principal Receivables allocable to such Class will no longer
be paid to the holders of the Transferor Certificates, to amortizing or
accumulating Series or deposited in the Excess Funding Account but will
generally either be deposited in the Collection Account or a Series Account
to be distributed to Holders on a date or dates specified in the related
Prospectus Supplement or paid to such Holders on the Distribution Dates
specified in the related Prospectus Supplement following the commencement
of the Amortization Period. To the extent that collections of Principal
Receivables are available, subject to any controlled distribution amount or
controlled deposit amount or other limitation set forth in the related
Prospectus Supplement, payments of principal will be paid to Holders of a
Class (directly from the Collection Account or after accumulation for some
period in a specified Series Account) until the Investor Amount of such
Class has been paid in full, except that if one or more Classes is
subordinated in right of payment of principal to another Class or Classes,
the Holders of such subordinated Class or Classes will, to the extent
provided in the related Prospectus Supplement, receive payment only after
the Investor Amount of the senior Class or Classes has been paid in part or
in full.
Funds on deposit in the Collection Account or any Series Account may
be subject to a guaranteed rate agreement or guaranteed investment contract
or other mechanism specified in the related Prospectus Supplement intended
to assure a minimum rate of return on the investment of such funds. In
order to enhance the likelihood of the payment in full of the principal
amount of a Class of Certificates at the end of an Accumulation Period,
such Class of Certificates may be subject to a maturity guaranty or other
similar mechanism specified in the related Prospectus Supplement.
Shared Principal Collections
On each Distribution Date, (a) the Servicer will allocate Shared
Principal Collections to each Principal Sharing Series, pro rata, in
proportion to the Principal Shortfalls, if any, with respect to each such
Series and (b) the Servicer will withdraw from the Collection Account and
pay to the holders of the Transferor Certificates an amount equal to the
excess, if any, of (x) the aggregate amount for all outstanding Series of
collections of Principal Receivables which the related Series Supplements
specify are to be treated as "Shared Principal Collections" for such
Distribution Date over (y) the aggregate amount for all outstanding
Principal Sharing Series which the related Series Supplements specify are
"Principal Shortfalls" for such Distribution Date. However, if on any
Distribution Date the Transferor Amount is less than the Required
Transferor Amount, the Servicer will not distribute to the holders of the
Transferor Certificates any Shared Principal Collections that otherwise
would be distributed to them, but will deposit such funds in the Excess
Funding Account to the extent necessary so that the Transferor Amount will
equal the Required Transferor Amount.
Sharing of Excess Finance Charge Collections
Collections of Finance Charge Receivables allocable to any Series in
excess of the amounts necessary to make required payments with respect to
such Series may, if specified in the related Series Supplement, be applied
to cover shortfalls, if any, with respect to amounts payable from
collections of Finance Charge Receivables allocable to any other Series
then outstanding as provided in the related Series Supplement.
Paired Series
If specified in the Prospectus Supplement relating to a Series, such
Series may be paired with another Series (each, a "Paired Series"), such
that a reduction in the Invested Amount of one such Series results in an
increase in the Invested Amount of the other such Series.
Groups
If specified in the Prospectus Supplements relating to any Group of
Series, such Series may be allocated all collections with respect to
certain portions of the Receivables and any Participation Interests,
provided that the Rating Agency Condition is satisfied and that such
grouping will not result in an Adverse Effect. In addition, sharing of
excess collections of Principal Receivables or Excess Finance Charge
Receivables, as described above, may be carried out initially or
exclusively within Groups, to the extent specified in the related
Prospectus Supplements.
New Issuances
The Pooling and Servicing Agreement authorizes the Transferor to
execute and direct the Trustee to authenticate and deliver three types of
certificates: (i) one or more Series of Certificates which are transferable
and have the characteristics described below, (ii) an Advanta Certificate,
evidencing the Transferor's interest, which will initially be held by ANB
and which is transferable in certain circumstances to other entities and
(iii) Supplemental Certificates delivered in exchange for a portion of the
Advanta Certificate under certain circumstances described in the Pooling
and Servicing Agreement. The Advanta Certificate and the Supplemental
Certificates (collectively, the "Transferor Certificates") represent the
ownership interest in the remainder of the Trust assets not allocated
pursuant to the Pooling and Servicing Agreement to the Investor Interest,
including certain rights to receive collections with respect to the
Receivables and other amounts pursuant to the Pooling and Servicing
Agreement (the "Transferor Interest"). The Series Supplement for a Series
will specify the following terms with respect to any new Series: (i) its
name or designation, (ii) its initial Investor Amount (or method for
calculating such amount), (iii) its certificate rate (or method for the
determination thereof), (iv) the payment date or dates and the date or
dates from which interest shall accrue or original issue discount shall
accrete, (v) the method for allocating collections to Holders of such
Series, (vi) the designation of any Series Accounts to be used by such
Series and the terms governing the operation of any such Series Accounts,
(vii) the method of calculating the servicing fee with respect thereto,
(viii) the terms of any form of Series Enhancement with respect thereto,
(ix) the terms on which the Certificates of such Series may be exchanged
for Certificates of another Series, repurchased by the Transferor or
remarketed to other investors, (x) the Stated Series Termination Date of
such Series, (xi) the number of Classes of such Series and, if such Series
consists of more than one Class, the rights and priorities of each such
Class, (xii) the extent to which the Certificates of such Series will be
issuable in temporary or permanent global form (and, in such case, the
depositary for such global Certificate or Certificates, the terms and
conditions, if any, upon which such global Certificate may be exchanged, in
whole or in part, for Definitive Certificates, and the manner in which any
interest payable on a temporary or global Certificate will be paid), (xiii)
whether such Certificates may be issued as bearer certificates and any
limitations imposed thereon, (xiv) the priority of such Series with respect
to any other Series, (xv) the Group, if any, to which such Series belongs,
(xvi) whether or not such Series is a Principal Sharing Series, and (xvii)
any other terms of such Series (all such terms the "Principal Terms" of
such Series). None of the Transferor, the Servicer, the Trustee or the
Trust is required or intends to obtain the consent of any Holder of any
outstanding Series to issue any additional Series. However, as a condition
of a New Issuance, (a) the Servicer must notify the Rating Agencies of such
New Issuance, without any Rating Agency notifying the Servicer within the
ten-day period following delivery of the Servicer's notice that the New
Issuance will result in the Rating Agency reducing or withdrawing its
rating of any outstanding Series or Class and (b) if any outstanding Series
was characterized as debt at the time of its issuance, the Transferor must
deliver a Tax Opinion. The Transferor may offer any Series under a
Disclosure Document in transactions either registered under the Act, or
exempt from registration thereunder, directly, through one or more
underwriters or placement agents, in fixed-price offerings or in negotiated
transactions or otherwise. Any such Series may be issued in fully
registered or book-entry form in minimum denominations determined by the
Transferor.
The Pooling and Servicing Agreement permits New Issuances such that
each Series has a period during which amortization or accumulation of the
principal amount thereof is intended to occur which may have a different
length and begin on a different date than such periods for any other
Series. Further, one or more Series may be in their Amortization Periods
while other Series are not. Thus, certain Series may not be amortizing or
accumulating, while other Series are amortizing or accumulating. Moreover,
one or more Series, or Classes of a Series, may have the benefits of forms
of Series Enhancement different from the forms of Series Enhancement
available with respect to another Class or Classes of any other Series.
Under the Pooling and Servicing Agreement, the Trustee will hold any form
of Series Enhancement only on behalf of the Holders of the Series (or
Class) with respect to which it relates. Collections allocated to Finance
Charge Receivables not used to pay interest on the Certificates will be
allocated as provided in the related Series Supplement. There is no limit
to the number of New Issuances that the Transferor may perform under the
Pooling and Servicing Agreement. The Trust will terminate only as provided
in the Pooling and Servicing Agreement.
Under the Pooling and Servicing Agreement and pursuant to a Series
Supplement, a New Issuance may occur only upon satisfaction of the
following conditions: (i) on or before the fifth day immediately preceding
the Relevant Closing Date, the Transferor shall have given the Trustee and
the Servicer notice of such issuance and its date; and on or before the
tenth day immediately preceding the Relevant Closing Date, the Transferor
shall have given each Rating Agency notice of such issuance and its date
and (ii) the Transferor shall have delivered to the Trustee (a) a related
Series Supplement specifying the Principal Terms of the new Series, (b) any
agreement relating to the Series Enhancement, (c) written confirmation that
the Transferor has given each Rating Agency written notice of the
contemplated issuance and that for a period of ten days after such notice
is given, no Rating Agency has notified the Transferor in writing that such
issuance will result in a reduction or withdrawal of the then current
rating of any outstanding Series or Class with respect to which it is a
Rating Agency, (d) an officer's certificate from the Transferor stating
that the Transferor reasonably believes that such issuance will not cause a
Pay Out Event to occur with respect to any Series, and (e) if any Series of
Certificates are outstanding that were characterized as debt at the time of
their issuance, a Tax Opinion. Upon satisfaction of such conditions, the
Trustee will execute the related Series Supplement and authenticate the
Certificates of the new Series upon execution thereof by ANB. Upon
satisfaction of the above conditions, the Transferor may also cause the
Trustee to enter into one or more agreements pursuant to which the Trustee
would sell purchased interests in the Receivables and certain other Trust
assets to one or more purchasers. Such agreement(s) would specify terms
similar to Principal Terms for any such purchased interests and may grant
the purchaser(s) of such interests, or an agent or other representative of
such purchaser(s), notice and consultation rights with respect to any
rights or actions of Trustee. Any such purchased interest would be treated
as a Series of Certificates for purposes of all calculations and
allocations under the Pooling and Servicing Agreement.
Transfer and Assignment of Receivables
The Transferor will transfer and assign to the Trust all of its
right, title and interest in and to specifically identified Receivables
existing in the Accounts owned by the Transferor on the day of the relevant
transfer and assignment and in and to all Receivables created in the
Accounts thereafter and all proceeds thereof.
In connection with a transfer of the Receivables to the Trust, the
Transferor will annotate and indicate in its computer files that the
Receivables have been conveyed to the Trust for the benefit of the Holders.
In addition, the Transferor will provide to the Trustee a computer file or
a microfiche list containing a true and complete list of all Accounts owned
by the Transferor the Receivables of which have been designated for
inclusion in the Trust which specifies for each such Account, its account
number and aggregate amount outstanding as of the Related Cut Off Date.
The Transferor will not deliver to the Trustee any other records or
agreements relating to such Accounts or the Receivables. The records and
agreements relating to such Accounts and the Receivables maintained by the
Transferor or the Servicer will not be segregated by the Transferor or the
Servicer from other documents and agreements relating to other credit card
accounts and receivables and will not be stamped or marked to reflect the
transfer of the Receivables to the Trust. The Transferor will file UCC
financing statements meeting the requirements of applicable state law with
respect to the Receivables. See "Risk Factors--Certain Legal Aspects" and
"Certain Legal Aspects of the Receivables."
Liquidation of Receivables
If an Insolvency Event occurs with respect to ANB or any Additional
Transferor, such Transferor and (unless the Rating Agency Condition has
been satisfied and a Tax Opinion has been delivered as to the failure to
take the following actions upon an Insolvency Event with respect to any
Additional Transferor) all other Transferors will immediately cease to
transfer Principal Receivables and Discount Option Receivables to the Trust
and promptly notify the Trustee thereof. Notwithstanding any cessation of
the transfer to the Trust of additional Principal Receivables, Principal
Receivables transferred to the Trust prior to the occurrence of such
Insolvency Event and collections in respect of such Principal Receivables
and Finance Charge Receivables whenever created, accrued in respect of such
Principal Receivables, will continue to be a part of the Trust. Within 15
days after receipt of such notice by the Trustee of the occurrence of such
Insolvency Event, the Trustee will (i) publish a notice in an authorized
newspaper that an Insolvency Event has occurred and that the Trustee
intends to sell, dispose of or otherwise liquidate the Receivables on
commercially reasonable terms and in a commercially reasonable manner and
(ii) give notice to the Holders describing the applicable provisions of the
Pooling and Servicing Agreement and requesting instructions from the
Holders. Unless the Trustee has received instructions within 90 days from
the date notice is first published from (x) Holders evidencing more than
50% of the Investor Amount of each Series or, with respect to any Series
with two or more Classes, of each Class, to the effect that such Holders
disapprove of the liquidation of the Receivables and wish to continue
having Principal Receivables transferred to the Trust as before such
Insolvency Event, and (y) any Transferor (other than the Transferor that is
the subject of such Insolvency Event), including any Additional Transferor,
and any holder of a Supplemental Certificate and certain other parties
specified in the Series Supplements, to such effect, the Trustee will
promptly sell, dispose of or otherwise liquidate the Receivables in a
commercially reasonable manner and on commercially reasonable terms, which
will include the solicitation of competitive bids. The Trustee may obtain
a prior determination from any applicable conservator, receiver or
liquidator that the terms and manner of any proposed sale, disposition or
liquidation are commercially reasonable.
The proceeds from the sale, disposition or liquidation of the
Receivables pursuant to the previous paragraph ("Insolvency Proceeds") will
be immediately deposited in the Collection Account. The Trustee will
determine conclusively the amount of the Insolvency Proceeds which are
deemed to be Finance Charge Receivables and Principal Receivables. The
Insolvency Proceeds will be allocated and distributed to Holders in
accordance with the terms of each Series Supplement and the Trust will
terminate immediately thereafter.
Representations, Warranties and Covenants
ANB and any Additional Transferor will make representations and
warranties relating to the Receivables as of the Relevant Closing Date and,
with respect to Receivables in Additional Accounts, as of the related
Addition Date, to the effect, among other things, that (i) the applicable
Trust Documents and, in the case of Additional Accounts, the related
assignment document, each constitute legal, valid and binding obligations
of such Transferor enforceable against such Transferor in accordance with
their terms, subject to bankruptcy, insolvency, reorganization, moratorium
and similar laws of general applicability relating to or affecting the
enforcement of creditors' rights in general and, if applicable, the rights
of creditors of national banks under United States law and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity), (ii) the schedule of Accounts
referred to in the Pooling and Servicing Agreement is an accurate and
complete listing in all material respects of the Accounts owned by the
Transferor as of the Related Cut Off Date and the information contained
therein with respect to the identity of such Accounts and the Receivables
existing thereunder is true and correct in all material respects as of the
Related Cut Off Date, (iii) each Receivable conveyed to the Trust by the
Transferor has been conveyed to the Trust free and clear of any lien other
than liens permitted by the Pooling and Servicing Agreement, (iv) all
authorizations, consents, orders or approvals of or registrations or
declarations with any governmental authority required to be obtained,
effected or given by the Transferor in connection with the conveyance by
the Transferor of Receivables to the Trust have been duly obtained,
effected or given and are in full force and effect, (v) either the Pooling
and Servicing Agreement and, in the case of Additional Accounts, the
related assignment document, each constitute a valid sale, transfer and
assignment to the Trust of all right, title and interest of the Transferor
in the Receivables conveyed to the Trust by the Transferor and the proceeds
thereof or, if the Pooling and Servicing Agreement or the related
assignment document does not constitute a sale of such property, it
constitutes a grant of a security interest in such property to the Trustee,
for the benefit of the Holders, which, in the case of Receivables then
existing and the proceeds thereof, is enforceable upon execution and
delivery of the Pooling and Servicing Agreement or the related assignment
document as of the applicable date and which will be enforceable with
respect to such Receivables thereafter created and the proceeds thereof
upon such creation and that upon the filing of financing statements
required pursuant to the Pooling and Servicing Agreement, the Trustee, for
the benefit of the Holders, shall have a first priority perfected security
or ownership interest in such property and (subject to Section 9-306 of the
UCC) proceeds except for (x) liens permitted under the Pooling and
Servicing Agreement, (y) the interest of the Transferor as holder of the
Advanta Certificate or the interest of any holder of any Supplemental
Certificate and (z) the Transferor's right to receive interest accruing on
and investment earnings if any in respect of the Collection Account or any
Series Account, as provided in the Pooling and Servicing Agreement or the
related Series Supplement, (vi) except as expressly provided in the Pooling
and Servicing Agreement or the related Series Supplement, neither the
Transferor nor any person claiming through or under such Transferor has any
claim to or interest in the Collection Account, the Excess Funding Account,
any Series Account or any Series Enhancement, (vii) as of the Related Cut
Off Date, each Initial Account or Additional Account owned by the
Transferor or a related Credit Card Originator is an Eligible Account,
(viii) as of the Related Cut Off Date, each Receivable contained in any
related Account owned by the Transferor or a related Credit Card Originator
and being designated on such date is an Eligible Receivable, (ix) as of the
date of the creation of any new Receivable in an Account owned by the
Transferor or a related Credit Card Originator, such Receivable is an
Eligible Receivable, and (x) no selection procedure has been used by the
Transferor (or, based upon representations and warranties in the applicable
Receivables Purchase Agreement, by any related Credit Card Originator)
which it reasonably believes would result in the selection of an Account
that would be materially adverse to the interests of Holders of any Series.
"Trust Documents" means, as to any Transferor, the Pooling and Servicing
Agreement, the Series Supplements and any Receivables Purchase Agreements
to which it is a party.
In the event (i) any representation or warranty of the Transferor
described in clause (ii), (iii), (iv), (vii), (viii), (ix) or (x) above is
not true and correct in any material respect as of the date specified
therein with respect to any Receivable transferred to the Trust by any
Transferor or an Account owned by any Transferor or a related Credit Card
Originator and as a result of such breach any Receivables in the related
Account become Defaulted Receivables or the Trust's rights in, to or under
such Receivables or the proceeds of such Receivables are impaired or such
proceeds are not available for any reason to the Trust free and clear of
any lien, within 60 days (or such longer period, not in excess of 150 days,
as may be agreed to by the Trustee) after the earlier to occur of the
discovery thereof by the Transferor or other Servicer or receipt by the
Transferor of notice thereof given by the Trustee or, with respect to
certain breaches relating to prior liens, immediately upon the earlier to
occur of such discovery or notice or (ii) a Receivable is evidenced by an
instrument or chattel paper to the extent (and subject to the limitations)
provided in the Pooling and Servicing Agreement with respect to any
Receivables transferred to the Trust by the Transferor, then the Transferor
shall accept reassignment of all Receivables in the related Account
("Ineligible Receivables") on the terms and conditions set forth below;
provided, however, that such Receivables will not be deemed to be
Ineligible Receivables and will not be reassigned to the Transferor if, on
any day prior to the end of such 60-day or longer period (if applicable),
(x) either (A) in the case of an event described in clause (i) above the
relevant representation and warranty shall be true and correct in all
material respects as if made on such day or (B) in the case of an event
described in clause (ii) above the circumstances causing such Receivable to
become an Ineligible Receivable shall no longer exist and (y) the
Transferor shall have delivered to the Trustee an officer's certificate
describing the nature of such breach and the manner in which the relevant
representation and warranty became true and correct. Such Ineligible
Receivables shall be automatically removed from the Trust by the Servicer
deducting the portion of the Ineligible Receivables reassigned to the
Transferor which are Principal Receivables from the aggregate amount of
Principal Receivables used to calculate the Transferor Amount, the Series
Percentages and any other percentage used to allocate within or among
Series that is applicable to any Series. In the event that, following the
exclusion of such Principal Receivables from the calculation of the
Transferor Amount, the Transferor Amount would be less than the Required
Transferor Amount, not later than 12:00 noon, New York City time, on the
first Distribution Date following the Monthly Period in which such
reassignment obligation arises, the Transferor shall make a deposit into
the Excess Funding Account in immediately available funds in an amount
equal to the amount by which the Transferor Amount would be reduced below
the Required Transferor Amount (up to the amount of such Principal
Receivables).
Upon the deposit, if any, required to be made to the Excess Funding
Account as provided in the Pooling and Servicing Agreement and the
reassignment of Ineligible Receivables, the Trustee, on behalf of the
Trust, will automatically be deemed to transfer such Ineligible Receivables
to the Transferor or its designee, without recourse. The Trustee will
execute such documents and instruments of transfer or assignment and take
such other actions as shall reasonably be requested by the Transferor to
effect the conveyance of Ineligible Receivables described above. The
obligation of the Transferor to accept reassignment of any Ineligible
Receivables, and to make the deposits, if any, required to be made to the
Excess Funding Account as provided in the Pooling and Servicing Agreement,
will constitute the sole remedy respecting the event giving rise to such
obligation available to Holders (or the Trustee on behalf of the Holders.)
The obligations of each Transferor (including any Additional Transferor) to
accept reassignment of the Receivables will be several and not joint with
respect to the Receivables transferred by such Transferor to the Trust.
ANB and any Additional Transferor will also make representations and
warranties to the Trust to the effect, among other things, that as of the
Relevant Closing Date with respect to each Series (i) it is a national
banking association or corporation duly organized and validly existing in
good standing under the laws of the jurisdiction of its organization or
incorporation and has full corporate power, authority and legal right to
own its property and conduct its business as such properties are presently
owned and such business is presently conducted, and to execute, deliver and
perform its obligations under its Trust Documents and to execute and
deliver to the Trustee the Certificates pursuant thereto; (ii) it is duly
qualified to do business and is in good standing as a foreign corporation
(or is exempt from such requirements), and has obtained all necessary
licenses and approvals in each jurisdiction in which failure to so qualify
or to obtain such licenses and approvals would render any cardholder
agreement relating to an Account owned by it or any Receivable transferred
to the Trust by it unenforceable by the Transferor, the Servicer or the
Trustee or would have a material adverse effect on the Holders of any
Series; provided, however, that no representation or warranty will be made
with respect to any qualification, licenses or approvals which the Trustee
has or may be required at any time to obtain if any, in connection with the
transactions contemplated by the Pooling and Servicing Agreement; (iii) the
execution and delivery of the Trust Documents by the Transferor and, in the
case of ANB, the execution and delivery to the Trustee of the
Certificates, and the consummation by such Transferor of the transactions
provided for in the Trust Documents have been duly authorized by the
Transferor by all necessary corporate action on the part of the Transferor
and each Trust Document, from the time of its execution, will be an
official record of the Transferor; (iv) the execution and delivery by the
Transferor of its Trust Documents and, in the case of ANB, the
Certificates, the performance by the Transferor of the transactions
contemplated by its Trust Documents and the fulfillment by the Transferor
of the terms thereof, will not conflict with, result in any breach of any
of the material terms of, or constitute (with or without notice or lapse of
time or both) a material default under, any indenture, contract, agreement,
mortgage, deed of trust or other material instrument to which the
Transferor is a party or by which it or any of its properties are bound;
(v) the execution and delivery by it of its Trust Documents and, in the
case of ANB, the Certificates, the performance by the Transferor of the
transactions contemplated by its Trust Documents and the fulfillment by the
Transferor of the terms thereof will not conflict with or violate any
requirements of law applicable to the Transferor, (vi) there are no
proceedings or investigations, pending or, to the best knowledge of the
Transferor, threatened against it, before any governmental authority (a)
asserting the invalidity of its Trust Documents or the Certificates, (b)
seeking to prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by its Trust Documents or the
Certificates, (c) seeking any determination or ruling that, in the
reasonable judgment of the Transferor, would materially and adversely
affect the performance by it of its obligations with respect to its Trust
Documents, (d) seeking any determination or ruling that would materially
and adversely affect the validity or enforceability of its Trust Documents
or the Certificates, or (e) seeking to affect adversely the income tax
attributes of the Trust or the Certificates of any Series under the United
States federal or Delaware state income or franchise tax systems; (vii) all
approvals, authorizations, consents, orders or other actions of any person
or of any governmental authority or other Person required in connection
with the execution and delivery by the Transferor of its Trust Documents
and, in the case of ANB, the Certificates, the performance by the
Transferor of the transactions contemplated by its Trust Documents and the
fulfillment by it of the terms thereof, have been obtained, except such as
may be required by state securities or "blue sky" laws in connection with
the distribution of the Certificates; (viii) no Insolvency Event with
respect to the Transferor has occurred and the transfer of the Receivables
by the Transferor to the Trust has not been made in contemplation of the
occurrence thereof; and (ix) the Transferor either is an insured
institution for the purposes of the Federal Deposit Insurance Act or is a
bankruptcy-remote entity.
The Pooling and Servicing Agreement provides that the representations
and warranties set forth in the immediately preceding paragraph will
survive the transfer and assignment by the Transferor of the Receivables to
the Trust. Upon discovery by the Transferor, the Servicer or the Trustee
of a breach of any of the representations and warranties by the Transferor
set forth in the preceding paragraph, the party discovering such breach
will give prompt written notice to the others and the Transferor will
cooperate with the Servicer and the Trustee in attempting to cure the
breach.
An "Eligible Account" is defined in the Pooling and Servicing
Agreement to mean a revolving credit card account or other revolving credit
account owned by ANB, in the case of the Initial Accounts, or any Credit
Card Originator, in the case of Additional Accounts, which account, as of
the Related Cut Off Date: (a) is in existence and maintained by ANB, in the
case of the Initial Accounts, or any Credit Card Originator, in the case of
Additional Accounts; (b) is payable in United States dollars; (c) except as
provided below, has not been identified as an account the credit card or
cards with respect to which have been reported to the applicable Credit
Card Originator as having been lost or stolen; (d) has, as its billing
address, an address located in the United States, its territories or
possessions or a United States military address, except that an Account
having as its most recent billing address an address that does not comply
with the foregoing will not be deemed to be ineligible as described in this
clause (d) if, on the determination date, the aggregate number of all such
Accounts is less than 2% of the aggregate number of all Accounts at such
time; (e) has an obligor who has not been identified by the applicable
Credit Card Originator as an employee of such Credit Card Originator or any
of its affiliates; (f) except as provided below, does not have any
Receivables which are Defaulted Receivables; and (g) except as provided
below, does not have any Receivables which have been identified by the
applicable Credit Card Originator as having been incurred as a result of
fraudulent use of any related credit card.
The Pooling and Servicing Agreement provides that Eligible Accounts
may include Accounts, the Receivables of which have been written off, or
with respect to which the Transferor believes the related obligor is
bankrupt, or as to which certain Receivables have been identified by the
obligor as having been incurred as a result of fraudulent use of any credit
cards, or as to which any credit cards have been reported to the Transferor
as lost or stolen, in each case as of the Related Cut Off Date; provided
that (a) the balance of all Receivables included in such Accounts is
reflected on the books and records of the Transferor (and is treated for
purposes of the Pooling and Servicing Agreement) as "zero", and (b)
charging privileges with respect to all such Accounts have been canceled in
accordance with the relevant credit card guidelines.
An "Eligible Receivable" is defined in the Pooling and Servicing
Agreement to mean each Receivable (a) which has arisen under an Eligible
Account, (b) which was created in compliance with all requirements of law
applicable to the related Credit Card Originator, the failure to comply
with which would have a material adverse effect upon Holders and pursuant
to a credit card agreement which complies with all requirements of law
applicable to such Credit Card Originator, the failure to comply with which
would have a material adverse effect upon Holders, (c) with respect to
which all material consents, licenses, approvals or authorizations of, or
registrations or declarations with, any governmental authority required to
be obtained or given by such Credit Card Originator in connection with the
creation of such Receivable or the execution, delivery and performance by
such Credit Card Originator of its obligations, if any, under the related
credit card agreement have been duly obtained or given and are in full
force and effect as of such date of creation of such Receivable, (d) as to
which, at the time of its transfer to the Trust, the Transferor or the
Trust will have good and marketable title, free and clear of all liens,
encumbrances, charges and security interests (except for certain tax liens
permitted by the Pooling and Servicing Agreement), (e) which has been the
subject of either (i) a valid transfer and assignment from the Transferor
to the Trust of all of the Transferor's right, title and interest therein
or (ii) the grant of a first priority perfected security interest therein
(and in the proceeds thereof), (f) which at and after the time of transfer
to the Trust is the legal, valid and binding payment obligation of the
obligor thereon, legally enforceable against such obligor in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws,
now or hereafter in effect, affecting the enforcement of creditors' rights
in general and except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in equity);
(g) which constitutes either an "account" or a "general intangible" under
and as defined in Article 9 of the UCC; (h) which, at the time of its
transfer to the Trust, has not been waived or modified except as permitted
in accordance with the credit card guidelines and which waiver or
modification is reflected in the Servicer's computer file of revolving
credit accounts; (i) which, at the time of its transfer to the Trust, is
not subject to any right of rescission, setoff, counterclaim or any other
defense of the obligor (including the defense of usury), other than
defenses arising out of applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights in general and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or
equity) or as to which the Servicer is required by the Pooling and
Servicing Agreement to make an adjustment; (j) as to which, at the time of
its transfer to the Trust, the related Credit Card Originator has satisfied
all obligations to be fulfilled by such Credit Card Originator at such
time; and (k) as to which, at the time of its transfer to the Trust,
neither such Credit Card Originator nor the related Transferor has taken
any action which, or failed to take any action the omission of which,
would, at the time of its transfer to the Trust, impair the rights of the
Trust or the Holders therein.
The Trustee will not make any initial or periodic general examination
of the Receivables or any records relating to the Receivables for the
purpose of establishing the presence or absence of defects, compliance with
any Transferor's representations and warranties or for any other purpose.
The Servicer, however, has agreed to deliver to the Trustee on or before
March 31 of each year an opinion of counsel with respect to the validity of
the security interest of the Trust in and to the Receivables and certain
other components of the Trust.
Each Transferor will covenant in the Pooling and Servicing Agreement
that, except as otherwise required by any requirement of law, or as is
deemed by such Transferor or the related Credit Card Originator in its sole
discretion to be necessary in order for such Transferor or the related
Credit Card Originator to maintain its lending business on a competitive
basis, based on a good faith assessment by such Transferor or the related
Credit Card Originator of the nature of the competition in the lending
business, such Transferor will not (or will enforce covenants in any
applicable Receivables Purchase Agreements restricting the right of the
related Credit Card Originators to) at any time reduce the annual
percentage rate at which periodic finance charges are assessed on any
Receivable or the other fees and charges assessed on the Accounts owned by
it if, as a result of such reduction, either (i) such Transferor's or the
related Credit Card Originator's reasonable expectation is that such
reduction would cause a Series Pay Out Event to occur or (ii) such
reduction is not also applied to any comparable segments of revolving
credit accounts owned by such Transferor or the related Credit Card
Originator which have characteristics the same as, or substantially similar
to, such Accounts (except as restricted by an affinity, endorsement,
sponsorship or other agreement between such Transferor or the related
Credit Card Originator and an unrelated third party or by the applicable
credit card agreements).
Each Transferor will also covenant that it may only change (or permit
the related Credit Card Originator to change) the terms relating to any of
the Accounts owned by it or the related Credit Card Originator in any
respect only if in the reasonable judgment of such Transferor (or the
related Credit Card Originator) the change is made applicable to the
comparable segment of the revolving credit accounts owned by such
Transferor or the related Credit Card Originator with characteristics the
same as, or substantially similar to, the Accounts, subject to compliance
with all requirements of law and except as restricted by an affinity,
endorsement, sponsorship or other agreement between the Transferor or the
related Credit Card Originator and an unrelated third party or by the
applicable credit card agreements.
Addition of Accounts
Pursuant to the Pooling and Servicing Agreement, the Transferor may
(under certain circumstances and subject to certain limitations and
conditions) and, under certain conditions, will be required to designate
from time to time additional Eligible Accounts to be included as Accounts
("Additional Accounts"), and will convey to the Trust all Receivables of
such Additional Accounts, whether such Receivables are then existing or
thereafter created. A date on which Additional Accounts are designated to
the Trust is referred to herein as an "Addition Date."
Each Additional Account must be an Eligible Account as of the Related
Cut Off Date. No selection procedures believed by the Transferor to be
adverse to the interests of the Holders may be used in selecting Additional
Accounts from the available Eligible Accounts in the Advanta Credit Card
Portfolio. However, since Additional Accounts may not have been part of
the Advanta Credit Card Portfolio at the time of the initial transfer of
Accounts to the Trust, Additional Accounts may not be of the same credit
quality as the Initial Accounts. Additional Accounts may have been
originated by ANB or another Credit Card Originator at a later date using
credit criteria different from those that were applied to the initial
Accounts or may have been acquired by ANB or another Credit Card Originator
from another credit card issuer that had different credit criteria. In
addition, the Pooling and Servicing Agreement will provide that the
selection of Accounts based upon the fact that they are subject to a low
introductory interest rate will be deemed not to be materially adverse to
the interests of the Holders of any Series.
Required Additions. Generally, if either (x) the Transferor Amount
is less than the Required Transferor Amount or (y) the aggregate amount of
Principal Receivables is less than the Required Principal Balance, the
Transferor will be required to designate additional Eligible Accounts to be
included as Accounts in a sufficient amount such that, after giving effect
to such addition, the Transferor Amount is at least equal to the Required
Transferor Amount and the aggregate amount of Principal Receivables is at
least equal to the Required Principal Balance as of the close of business
on the applicable Addition Date. In lieu of, or in addition to, so
designating Additional Accounts, the Transferor may, subject to the
conditions specified below and in the Pooling and Servicing Agreement,
convey to the Trust participations (including 100% participations)
representing interests in a pool of assets primarily consisting of
revolving credit card receivables, other revolving credit account
receivables, consumer loan receivables (secured and unsecured), and any
interests in any such types of receivables, including securities
representing or backed by both such types of receivables, and other
self-liquidating financial assets (including "eligible assets" as such term
is defined in Rule 3a-7 under the Investment Company Act (or any successor
to such Rule)) owned by the Transferor or any affiliate of the Transferor
and collections thereon ("Participation Interests").
"Required Transferor Amount" means, as of any date, the result of (a)
the product of the Required Transferor Percentage and the aggregate amount
of Principal Receivables plus (or minus) (b) any amount specified in any
Series Supplement.
"Required Transferor Percentage" currently means [5%] (or, if
different, the highest percentage specified in the Series Supplement for
any outstanding Series). The Transferor may increase or reduce the
Required Transferor Percentage, so long as the Transferor provides at least
15 days' prior notice of such change to the Trustee and each Rating Agency
and, in the case of any reduction, the Transferor delivers to the Trustee
(a) an officer's certificate stating that the Transferor reasonably
believes that such reduction will not then or thereafter have an Adverse
Effect, (b) if the Required Transferor Percentage is to be reduced below
2%, a Tax Opinion and (c) confirmation that (i) the Transferor has given
each Rating Agency written notice of the decrease, and (ii) for a period of
ten days after such notice is given, no Rating Agency has notified the
Transferor in writing that such decrease will result in a reduction or
withdrawal of the then current rating of any outstanding Series or Class
with respect to which it is a Rating Agency.
"Required Principal Balance" means, as to any date, the sum of the
Series Invested Amounts for each Series minus the amount on deposit in the
Excess Funding Account.
Restricted Additions. The Transferor may from time to time, at its
sole discretion, subject to the conditions specified below, designate
additional Eligible Accounts to be included as Accounts or Participation
Interests to be included as Trust assets, in either case as of the
applicable Addition Date.
Conditions to Required and Restricted Additions. On the Addition
Date with respect to any Additional Accounts or Participation Interests,
the Receivables in such Additional Accounts or such Participation Interests
will be transferred to the Trust, subject to the satisfaction of the
following conditions: (i) each Transferor which owns (or directly or
indirectly purchases Receivables from a Credit Card Originator that owns)
any such Additional Account or is transferring any such Participation
Interest (a "Participating Transferor") must give the Trustee, the Servicer
and each Rating Agency prior written notice of the addition; (ii) in the
case of Additional Accounts, the Participating Transferors shall have
delivered to the Trustee copies of any necessary UCC-1 financing
statements; (iii) as of each of the Related Cut Off Date and the Addition
Date, no Insolvency Event with respect to the Participating Transferors
shall have occurred, nor shall the transfer of the Receivables arising in
the Additional Accounts or of the Participation Interests to the Trust have
been made in contemplation of the occurrence thereof; (iv) except in the
case of certain required additions, the Rating Agency Condition shall have
been satisfied; (v) each Participating Transferor shall have delivered to
the Trustee an officer's certificate as to certain matters, including that
such Participating Transferor reasonably believes that (1) the addition by
such Participating Transferor of the Receivables arising in the Additional
Accounts or of the Participation Interests to the Trust will not cause a
Pay Out Event to occur with respect to any Series and (2) in the case of
Additional Accounts, no selection procedure was used by such Participating
Transferor or a related Credit Card Originator which would result in a
selection of Additional Accounts (from among the available Eligible
Accounts owned by such Participating Transferor or the related Credit Card
Originator) that would be materially adverse to the interests of the
Holders of any Series as of the Addition Date (it being understood that the
selection of Accounts based upon the fact that they are subject to a low
introductory interest rate shall be deemed not to be materially adverse to
the interests of the Holders of any Series); (vi) each Participating
Transferor shall have delivered to the Trustee and each Rating Agency an
opinion of counsel stating the validity and perfection of the transfer of
the Receivables created in such Additional Accounts to the Trustee; (vii)
in the case of a designation of Additional Accounts, the Participating
Transferors shall have delivered to the Trustee (A) the computer file or
microfiche list containing a true and complete list of such Additional
Accounts and (B) a duly executed, written assignment; and (viii) unless the
Rating Agency Condition is satisfied, the number of Additional Accounts so
designated with respect to a required addition with respect to any of the
three consecutive Monthly Periods commencing in January, April, July and
October of each calendar year, commencing on October 1, 1996, shall not
exceed 15% of the number of Accounts as of the first day of the calendar
year during which such Monthly Periods commence (or, if later, the cut-off
date for the initial Series issued by the Trust) and the number of
Additional Accounts so designated during any calendar year shall not exceed
20% of the number of Accounts as of the first day of such calendar year
(or, if later, the cut-off date for the initial Series issued by the
Trust).
Whenever the designation of Additional Accounts (or Automatic
Additional Accounts, as described below) is contingent upon the
satisfaction of the Rating Agency Condition, the Rating Agency Condition
will be deemed to have been satisfied if (i) the Transferor gives each
Rating Agency written notice of the contemplated action, and (ii) for a
period of ten days after such notice is given, no Rating Agency notifies
the Transferor in writing that such action will result in a reduction or
withdrawal of the then current rating of any outstanding Series or Class
with respect to which it is a Rating Agency.
Automatic Account Additions
The Transferor may from time to time, at its sole discretion, subject
to and in compliance with the limitations and the applicable conditions
specified below and in clauses (ii), (iii), (v) and (vii) under "Conditions
to Restricted and Required Additions" above, designate Eligible Accounts
("Automatic Additional Accounts") to be included as Accounts as of the
applicable Addition Date.
Unless the Rating Agency Condition is satisfied, (i) no Automatic
Additional Accounts owned by a Credit Card Originator which is not ANB or
an affiliate of ANB may be designated to the Trust if, after giving effect
to such designation, the aggregate amount of Principal Receivables which
arose from Accounts owned by Credit Card Originators which are not ANB and
its affiliates represents more than 50% of the aggregate amount of
Principal Receivables at such time, and (ii) the number of Automatic
Additional Accounts designated with respect to any of the three
consecutive Monthly Periods commencing in January, April, July and October
of each calendar year, commencing on October 1, 1996, shall not exceed 15%
of the number of Accounts as of the first day of the calendar year (or, if
later, the cut-off date for the initial Series issued by the Trust) during
which such Monthly Periods commence and the number of Automatic Additional
Accounts designated during any such calendar year will not exceed 20% of
the number of Accounts as of the first day of such calendar year (or, if
later, the cut-off date for the initial Series issued by the Trust).
Within 30 days after the Addition Date for any Automatic Additional
Accounts, the Transferor will deliver to the Trustee and each Rating Agency
an opinion of counsel as to the Automatic Additional Accounts included as
Accounts on such Addition Date, confirming the validity and perfection of
the transfer of Receivables in such Automatic Additional Accounts. If such
opinion of counsel with respect to any Automatic Additional Accounts is not
so received, the Transferor's right to designate Automatic Additional
Accounts will be suspended until such time as the Rating Agency Condition
is satisfied as to the resumed designation of Automatic Additional
Accounts. If the Transferor is unable to deliver an opinion of counsel
with respect to any Automatic Additional Account, such inability shall be
deemed to be a breach of the representation with respect to the Receivables
in such Automatic Additional Account, but the cure period for such breach
will not exceed 30 days.
Removal of Accounts
The Transferor may from time to time require the reassignment to it
or its designee of all Receivables then existing and thereafter created in
designated Accounts owned by the Transferor (the "Removed Accounts") or
Participation Interests designated by such Transferor. Any such removal
will require prior notice to the Trustee, the Servicer, each Rating Agency
and the provider of any Series Enhancement and satisfaction of the Rating
Agency Condition and certain other conditions specified in the Pooling and
Servicing Agreement, including delivery of an officer's certificate to the
effect that the Transferor reasonably believes that (a) such removal will
not cause a Pay Out Event to occur with respect to any Series, (b) no
selection procedure was used by the Transferor which would result in a
selection of Removed Accounts or Participation Interests that would be
materially adverse to the interests of the Holders of any Series as of the
Removal Date (it being understood that the selection of Accounts based upon
the fact that they no longer are subject to a low introductory interest
rate will be deemed not to be materially adverse to the interests of the
Holders of any Series) and (c) after giving effect to such removal, the
Transferor Amount will not be less than the Required Transferor Amount and
the aggregate outstanding balance of Principal Receivables will not be less
than the Required Principal Balance. No removal may occur if more than 10%
of the Receivables outstanding are more than thirty days contractually
delinquent. Notwithstanding the above, the Transferor will be permitted to
designate any Account that has had a zero balance for twelve calendar
months without satisfying the conditions referred to above.
Servicing Procedures
Pursuant to the Pooling and Servicing Agreement, the Servicer will be
responsible for servicing and administering the Receivables in accordance
with the Servicer's customary and usual servicing procedures for servicing
receivables comparable to the Receivables and in accordance with its
customary guidelines.
Discount Option
The Pooling and Servicing Agreement provides that the Transferor may
from time to time designate a percentage or percentages, which may be a
fixed percentage or a variable percentage based on a formula (the "Discount
Percentage"), of all or any specified portion of Principal Receivables
(which may be limited to Principal Receivables created after the effective
date of such option) to be treated as Finance Charge Receivables (the
"Discount Option Receivables"). The Transferor also may reduce or withdraw
the Discount Percentage from time to time after one has been adopted. The
Pooling and Servicing Agreement requires the Transferor to provide to the
Servicer, the Trustee and each Rating Agency 30 days' prior written notice
before a Discount Percentage goes into effect and provides that a Discount
Percentage may not go into effect unless (a) the Rating Agency Condition is
satisfied and (b) in the reasonable belief of the Transferor, such Discount
Percentage will not cause a Pay Out Event (or event that with notice, the
lapse of time or both would become a Pay Out Event) to occur. On the date
of processing of any collections, the product of the Discount Percentage
and collections of Receivables that arise in the Accounts on such day on or
after the date such option is exercised that otherwise would be Principal
Receivables will be deemed "Discount Option Receivable Collections" and
treated in the same manner as collections of Finance Charge Receivables.
Trust Accounts
The Servicer will cause to be established and maintained, in the name
of the Trustee, for the benefit of Holders of all Series, a "Collection
Account", which at all times is required to be either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account with
the corporate trust department of a depository institution organized under
the laws of the United States or any one of the states thereof, including
the District of Columbia (or any domestic branch of a foreign bank), and
acting as a trustee for funds deposited in such account, so long as any of
the securities of such depository institution shall have a credit rating
from each Rating Agency in one of its generic credit rating categories
which signifies investment grade (an "Eligible Deposit Account"). The
Servicer will also cause to be established and maintained, in the name of
the Trustee, an "Excess Funding Account," which also is required to be an
Eligible Deposit Account. An "Eligible Institution" is defined as (I) a
depository institution, organized under the laws of the United States or
any one of the states thereof, including the District of Columbia (or any
domestic branch of a foreign bank) which at all times (a) has either (i)
long-term unsecured debt rating of A1 or better by Moody's Investors
Service Inc. ("Moody's") or (ii) a certificate of deposit rating of P-1 by
Moody's, (b) has either (i) a long-term unsecured debt rating of AAA by
Standard & Poor's Ratings Services ("Standard & Poor's") or (ii) a
certificate of deposit rating of A-1+ by Standard & Poor's and (c) is a
member of the FDIC or (II) any other institution that is acceptable to each
Rating Agency. If so qualified, the Trustee or the Servicer may be
considered an Eligible Institution.
Funds in the Collection Account and the Excess Funding Account will
be invested, at the direction of the Servicer, in "Eligible Investments"
consisting of book-entry securities, negotiable instruments or securities
represented by instruments in bearer or registered form which evidence: (a)
direct obligations of, and obligations fully guaranteed as to timely
payment of principal and interest by, the United States of America; (b)
demand deposits, time deposits or certificates of deposit (having original
maturities of no more than 365 days) of depository institutions or trust
companies incorporated under the laws of the United States of America or
any state thereof (or domestic branches of foreign banks) and subject to
supervision and examination by federal or state banking or depository
institution authorities; provided, that at the time of the Trust's
investment or contractual commitment to invest therein, the short-term debt
rating of such depository institution or trust company shall be in the
highest investment category of each Rating Agency; (c) commercial paper or
other short-term obligations having, at the time of the Trust's investment
or contractual commitment to invest therein, a rating from each Rating
Agency in its highest investment category; (d) notes or bankers'
acceptances (having original maturities of no more than 365 days) issued by
any depository institution or trust company referred to in (b) above; (e)
investments in money market funds rated in the highest investment category
by each Rating Agency or otherwise approved in writing by each Rating
Agency; (f) time deposits, other than as referred to in clause (e) above,
with a person the commercial paper of which has a credit rating from each
Rating Agency in its highest investment category; or (g) any other
investments approved in writing by each Rating Agency. Investments
referred to in clauses (e) and (g) above will not be made if as a result
the Trustee would be required to register as an investment company under
the Investment Company Act. The Trustee, acting as the initial paying
agent (together with any successor thereto in such capacity and any entity
specified in a Series Supplement to act in such capacity for the related
Series, collectively, the "Paying Agent"), shall have the revocable power
to withdraw funds from the Collection Account for the purpose of making
distributions to the Holders of any Series pursuant to the related Series
Supplement.
Funding Period
For any Series of Certificates, the related Prospectus Supplement may
specify that during a Funding Period, all or a portion of the principal
amount of such Series (the "Pre-Funding Amount") will be held in a
Pre-Funding Account pending the transfer of additional Receivables to the
Trust that results in an increase in the Trust Principal Balance or pending
the reduction of the Investor Amounts of other Series issued by the Trust.
The related Prospectus Supplement will specify the initial Invested Amount
with respect to such Series, the Investor Amount and the date by which the
Invested Amount is expected to equal the Investor Amount. The Invested
Amount will increase as Receivables are added to the Trust or as the
Invested Amounts of other Series are reduced. This feature is intended to
permit the Transferor to issue a new Series of Certificates at an opportune
time, if the Invested Amount of existing Series are expected to be reduced
or additional Receivables are expected to be included in a Trust at a
subsequent time. Holders will not incur any costs, direct or indirect, as
a result of the exercise of this feature. If the Invested Amount does not
equal the Investor Amount by the end of the Funding Period, Holders of the
affected Series will receive principal repayments prior to the expected
date of receipt. Any designation of Additional Accounts (or
Participations) during the Funding Period will be subject to the same
conditions and protections applicable at any other time.
During the Funding Period, funds on deposit in the Pre-Funding
Account for a Series of Certificates will be withdrawn and paid to the
holders of the Transferor Certificates to the extent of any increases in
the Invested Amount. If the Invested Amount does not for any reason equal
the Investor Amount by the end of the Funding Period, any amount remaining
in the Pre-Funding Account will be payable to the Holders of such Series in
the manner and at such time as is set forth in the related Prospectus
Supplement. Such payment will reduce the aggregate principal amount of
such Certificates.
Monies in the Pre-Funding Account will be invested by the Trustee in
Eligible Investments and, if so specified in the related Prospectus
Supplement, will be subject to a guaranteed rate or investment agreement or
other similar arrangement, and, in connection with each Distribution Date
during the Funding Period, investment earnings on funds in the Pre-Funding
Account during the related Monthly Period will be withdrawn from the
Pre-Funding Account and deposited, together with any applicable payment
under a guaranteed rate or investment agreement or other similar
arrangement, into the Collection Account for distribution in respect of
interest on the Certificates of the related Series in the manner specified
in the related Prospectus Supplement.
Series Percentage and Transferor Percentage
Pursuant to the Pooling and Servicing Agreement, the Servicer will
allocate between the Series, including each Class of each Series, and the
Transferor Interest all amounts collected with respect to Finance Charge
Receivables, Principal Receivables and all Defaulted Receivables. The
Servicer will make each allocation by reference to the applicable Series
Percentage for each Series and the Transferor Percentage in each case. The
Series Percentages for each Series will be as set forth in the related
Series Supplement and, with respect to each Series offered hereby, in each
Prospectus Supplement.
The "Transferor Percentage" in all cases means the excess of 100%
over the aggregate Series Percentages of all Series then outstanding for
the applicable category of Receivables.
Deposit of Collections
Except as provided below or in a Series Supplement, the Servicer will
deposit into the Collection Account, no later than the second business day
following the date of processing, any payment collected by the Servicer on
the Receivables. The Servicer need not deposit amounts allocated to the
Transferor Certificates and certain amounts allocated to Holders of a
Series, as specified in the related Series Supplement, into the Collection
Account. In addition, if ANB is the Servicer, and ANB (x) maintains a
certificate of deposit rating of A-1 or better by Standard & Poor's and P-1
by Moody's (or such other rating below A-1 or P-1, as the case may be, that
is satisfactory to each Rating Agency) or (y) ANB has provided to the
Trustee a letter of credit covering the collection risk of the Servicer
acceptable to each Rating Agency, the Servicer need not make daily deposits
of collections into the Collection Account, but may make a single monthly
deposit into the Collection Account in immediately available funds.
Operation of Excess Funding Account
On each Business Day, Shared Principal Collections within a Group
may, so long as either (x) no Series in such Group is in an Amortization
Period or (y) no Series in such Group that is in an Amortization Period
will have a Series Principal Shortfall on the related Transfer Date, at the
option of the Transferor, be applied (or held in the Collection Account for
later application) as principal with respect to any variable funding
certificate in that Group or be withdrawn from the Collection Account and
paid to the holders of the Transferor Certificates. On each Distribution
Date, (a) the Servicer will allocate Shared Principal Collections for each
Group not previously so applied or paid to each Series within that Group,
pro rata, in proportion to their respective Principal Shortfalls, and any
remainder may, at the option of the Transferors, be applied as principal
with respect to any variable funding certificate in that Group and (b) the
Servicer will withdraw from the Collection Account or applicable Series
Account and pay to the holders of the Transferor Certificates any amounts
representing Shared Principal Collections remaining after the allocations
and applications referred to in clause (a). Notwithstanding the foregoing,
if on any day the Transferor Amount (determined after giving effect to any
transfer of Principal Receivables to the Trust on such day), is less than
the Required Transferor Amount, the Servicer will not distribute to the
holders of the Transferor Certificates any Shared Principal Collections
that otherwise would be distributed to them, but instead will deposit such
funds in the Excess Funding Account to the extent required so that the
Transferor Amount equals the Required Transferor Amount.
On each Business Day on which there are funds on deposit in the
Excess Funding Account, the Servicer will determine the amount (if any) by
which the Transferor Amount exceeds the Required Transferor Amount on such
date and will instruct the Trustee to withdraw such amount from the Excess
Funding Account and pay it to the holders of the Transferor Certificates.
In addition, on any Transfer Date on which one or more Series is in an
Amortization Period, the Servicer will determine the aggregate amount of
Principal Shortfalls, if any, for each such Series (after giving effect to
the allocation and payment provisions in the Series Supplement with respect
to each such Series), and will instruct the Trustee to withdraw such amount
(up to the Excess Funding Amount after giving effect to any withdrawal
required by the preceding sentence) from the Excess Funding Account on the
succeeding Distribution Date and allocate such amount among each such
Series as if such amount were Shared Principal Collections and all
outstanding Series were included in a single Group.
Defaulted Receivables; Rebates and Fraudulent Charges
The term "Defaulted Receivables" means, for any Monthly Period, all
Principal Receivables which are charged off as uncollectible in such
Monthly Period in accordance with the Servicer's credit card guidelines and
customary and usual servicing procedures for servicing revolving credit
card and other revolving credit account receivables comparable to the
Receivables. A Principal Receivable shall become a Defaulted Receivable on
the day on which such Principal Receivable is recorded as charged off on
the Servicer's computer master file of revolving credit accounts. The term
"Defaulted Amount" means, for any Monthly Period, an amount (which shall
not be less than zero) equal to (a) the amount of Principal Receivables
which became Defaulted Receivables in such Monthly Period, minus (b) the
amount of any Defaulted Receivables included in any Account the Receivables
in which the Transferor or the Servicer became obligated to accept
reassignment or assignment in accordance with the terms of the Pooling and
Servicing Agreement during such Monthly Period. However, if an Insolvency
Event occurs with respect to any Transferor, the amount of such Defaulted
Receivables which are subject to reassignment to such Transferor in
accordance with the terms of the Pooling and Servicing Agreement shall not
be added to the sum so subtracted and, if certain events involving
insolvency occur with respect to the Servicer, the amount of such Defaulted
Receivables which are subject to reassignment or assignment to the Servicer
in accordance with the terms of the Pooling and Servicing Agreement shall
not be added to the sum so subtracted.
On each day that the Servicer adjusts downward the amount of any
Receivable because of a rebate, refund, unauthorized charge or billing
error to a cardholder, or because such Receivable was created in respect of
merchandise which was refused or returned by a cardholder, or if the
Servicer otherwise adjusts downward the amount of any Receivable without
receiving collections therefor or charging off such amount as
uncollectible, then, in any such case, the amount of Principal Receivables
used to calculate the Transferor Amount, the Series Percentages and any
other percentages used to allocate within or among Series will be reduced
by the amount of the adjustment. Similarly, the amount of Principal
Receivables used to calculate the Transferor Amount, the Series Percentages
and any other percentage used to allocate within or among Series will be
reduced by the amount of any Receivable discovered to have been created
through a fraudulent or counterfeit charge. If after the exclusion of such
Principal Receivables from the calculation of the Transferor Amount the
Transferor Amount would be less than the Required Transferor Amount, the
Transferor shall be required to pay an amount equal to such deficiency into
the Excess Funding Account (up to the amount of such Principal
Receivables).
Final Payment of Principal and Interest; Termination
Subject to prior termination as described herein and in the
Prospectus Supplement, the interest of the Holders of a Series in the Trust
will terminate following the earliest of (i) the day after the Distribution
Date on which the final payment of principal and interest is made to the
Holders of such Series, (ii) the date specified for termination in the
applicable Series Supplement (the "Stated Series Termination Date" for such
Series) and (iii) the Trust Termination Date. If the Investor Amount of
any Series would be greater than zero on the Stated Series Termination Date
for such Series or such earlier date specified in the related Series
Supplement, the Trustee will sell or cause to be sold Principal Receivables
and the related Finance Charge Receivables (or interests therein), as
specified in the Pooling and Servicing Agreement and the related Series
Supplement, in an amount equal to 100% of the Investor Amount of the
Certificates of such Series and accrued and unpaid interest thereon on such
date (but not more than the applicable Series Percentages of Receivables on
such date for the Certificates of such Series). The Transferor will have a
right of first refusal in any such case. The proceeds of such sale will be
allocated and distributed in accordance with the applicable Series
Supplement.
The Trust will only terminate on the earliest to occur of (a) the day
following the payment date on which the aggregate Investor Amount and
Series Enhancement investor amounts, if any, of each Series is zero
(provided that the Transferor has delivered a written notice to the Trustee
electing to terminate the Trust), (b) December 31, 2046, or (c) if the
Receivables are sold, disposed of or liquidated following the occurrence of
an Insolvency Event with respect to any applicable Transferor as described
under "--Trust Pay Out Events", immediately following such sale,
disposition or liquidation (the "Trust Termination Date"). Upon
termination of the Trust, all right, title and interest in the Receivables
and other funds of the Trust (other than amounts in accounts maintained by
the Trust for the final payment of principal and interest to Holders) will
be conveyed and transferred to the Transferor.
Trust Pay Out Events
The Revolving Period for all outstanding Series will continue through
a date specified in the related Series Supplement unless a Trust Pay Out
Event or a Series specific pay out event (a "Series Pay Out Event")
specified in the related Series Supplement with respect to such Series (and
for a Series offered hereby, the related Prospectus Supplement) occurs
prior to such date. A "Trust Pay Out Event" occurs with respect to all
Series upon the occurrence of any of the following:
(a) an Insolvency Event relating to any Transferor or Credit
Card Originator (unless the Rating Agency Condition has been
satisfied as to not treating an Insolvency Event with respect to such
Transferor or Credit Card Originator as a Trust Pay Out Event);
(b) the Trust shall become subject to regulation by the
Commission as an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company
Act"); or
(c) any Transferor (other than a Transferor that is excluded
from clause (a) above pursuant to the parenthetical phrase at the end
of that clause) is unable for any reason to transfer Receivables to
the Trust in accordance with the provisions of the Pooling and
Servicing Agreement.
In addition, a Series Pay Out Event may occur with respect to a
specific Series if a Series Pay Out Event affecting such Series, as
specified in the related Series Supplement and described in the related
Prospectus Supplement, occurs with respect to such Series. A "Pay Out
Event" means, with respect to any Series, a Trust Pay Out Event or a Series
Pay Out Event. On the date on which a Pay Out Event with respect to a
Series is deemed to have occurred, the Rapid Amortization Period with
respect to such Series will commence. In such event, distributions of
principal will be made to the Holders of such Series in the priority
provided for in the related Series Supplement and described in the related
Prospectus Supplement. If, because of the occurrence of a Pay Out Event,
the Rapid Amortization Period begins earlier than the Scheduled
Amortization Date or the expected final payment date of such Series,
Holders of such Series will begin receiving distributions of principal
earlier than they otherwise would have, which may shorten the final
maturity of the Certificates of such Series.
An "Insolvency Event" will occur with respect to any person if that
person consents to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings of or relating to such person or of
or relating to all or substantially all of its property, or a decree or
order of a court or agency or supervisory authority having jurisdiction in
the premises for the appointment of a conservator or receiver or liquidator
in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of
its affairs, is entered against such person; or such person admits in
writing its inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or reorganization
statute, make any assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations.
If an Insolvency Event occurs with respect to a Transferor, that
Transferor and (unless the Rating Agency Condition has been satisfied and a
Tax Opinion has been delivered as to the failure to take the following
actions upon an Insolvency Event with respect to any other Transferor) each
other Transferor will immediately cease to transfer Principal Receivables
to the Trust and promptly notify the Trustee thereof. Notwithstanding any
cessation of the transfer to the Trust of additional Principal Receivables,
Principal Receivables transferred to the Trust prior to the occurrence of
such Insolvency Event and collections in respect of such Principal
Receivables and Finance Charge Receivables whenever created, accrued in
respect of such Principal Receivables, shall continue to be a part of the
Trust. Within 15 days after receipt of such notice by the Trustee of the
occurrence of such Insolvency Event (unless the Rating Agency Condition has
been satisfied and a Tax Opinion has been delivered as to the failure to
take the following actions with respect to any other Transferor), the
Trustee will (i) publish a notice in an authorized newspaper that an
Insolvency Event has occurred and that the Trustee intends to sell, dispose
of or otherwise liquidate the Receivables on commercially reasonable terms
and in a commercially reasonable manner and (ii) give notice to the Holders
describing the applicable provisions of the Pooling and Servicing Agreement
and requesting instructions from the Holders. Unless the Trustee has
received instructions within 90 days from the date notice is first
published from (x) Holders evidencing more than 50% of the Investor Amount
of each Series or, with respect to any Series with two or more Classes, of
each Class, to the effect that such Holders disapprove of the liquidation
of the Receivables and wish to continue having Principal Receivables
transferred to the Trust as before such Insolvency Event, and (y) any
Transferor (other than the Transferor that is the subject of such
Insolvency Event), including any Additional Transferor, and any holder of a
Supplemental Certificate and certain other parties specified in the Series
Supplements, to such effect, the Trustee will promptly sell, dispose of or
otherwise liquidate the Receivables in a commercially reasonable manner and
on commercially reasonable terms, which shall include the solicitation of
competitive bids. The Trustee may obtain a prior determination from any
such conservator, receiver or liquidator that the terms and manner of any
proposed sale, disposition or liquidation are commercially reasonable.
The proceeds from the sale, disposition or liquidation of the
Receivables pursuant to the previous paragraph ("Insolvency Proceeds") will
be immediately deposited in the Collection Account. The Trustee will
determine conclusively the amount of the Insolvency Proceeds which are
deemed to be Finance Charge Receivables and Principal Receivables. The
Insolvency Proceeds will be allocated and distributed to Holders in
accordance with the terms of each Series Supplement and the Trust will
terminate immediately thereafter.
If the portion of such proceeds allocated to the Holders and the
proceeds of any collections on the Receivables in the Collection Account
and the amounts available under any Series Enhancement are not sufficient
to pay in full the remaining amount due on the Certificates, the Holders
will suffer a corresponding loss. See "Certain Legal Aspects of the
Receivables--Certain Matters Relating to Receivership" for a discussion of
the impact of Federal legislation on the Trustee's ability to liquidate the
Receivables.
Servicing Compensation and Payment of Expenses
The Servicer's compensation for its servicing activities and
reimbursement for its expenses for any Monthly Period will be a servicing
fee (the "Servicing Fee") payable monthly no later than the related
Distribution Date in an amount equal to one-twelfth of the product of (a)
the weighted average of the applicable servicing fee rates with respect to
each Series outstanding (based upon the applicable servicing fee rate for
each Series and the Invested Amount of such Series or other amount
specified in the applicable Series Supplement) and (b) the amount of
Principal Receivables outstanding on the last day of the prior Monthly
Period. The Servicing Fee will be allocated among the Transferor Interest
and the Investor Amounts of all Series. The share of the Servicing Fee
allocable to the Investor Amount of a particular Series (the "Monthly
Servicing Fee") will be determined in accordance with the applicable Series
Supplement. The remainder of the Servicing Fee will be paid by the Holders
of other Series and by the holders of the Transferor Certificates and in no
event will the Trust, the Trustee or the Holders of any Series be liable
for the share of the Servicing Fee to be paid by the holders of the
Transferor Certificates. Unless otherwise provided in any Series
Supplement, in the case of the first Monthly Period with respect to any
Series, the Monthly Servicing Fee will accrue from the Closing Date with
respect to such Series.
The Servicer will pay from its servicing compensation certain
expenses incurred in connection with servicing the Receivables including
payment of the fees and disbursements of the Trustee, any Paying Agent and
transfer agent and registrar and independent accountants and other fees
which are not expressly stated in the Pooling and Servicing Agreement to be
payable by the Trust or the Holders of a Series other than Federal, state,
local and foreign income, franchise or other taxes, if any, or any interest
or penalties with respect thereto, imposed upon the Trust.
Certain Matters Regarding the Servicer
The Servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement, except upon determination that (i) the
performance of its duties under the Pooling and Servicing Agreement is no
longer permissible under applicable law and (ii) there is no reasonable
action which the Servicer could take to make the performance of its duties
thereunder permissible under applicable law. Any such determination
permitting the resignation of the Servicer will be evidenced by an opinion
of counsel to such effect delivered to the Trustee. No such resignation
will become effective until the Trustee or a successor Servicer that is an
Eligible Servicer has assumed the responsibilities and obligations of the
Servicer in accordance with the Pooling and Servicing Agreement.
"Eligible Servicer" means the Trustee, or if the Trustee is not
acting as Servicer, an entity which, at the time of its appointment as
Servicer, (i) is servicing a portfolio of revolving credit accounts, (ii)
is legally qualified and has the capacity to service the Accounts, (iii)
has demonstrated the ability to professionally and completely service a
portfolio of similar accounts in accordance with high standards of skill
and care, (iv) is qualified to use the software that is then being used to
service the Accounts or obtains the right to use, or has its own software,
which is adequate to perform its duties under the Pooling and Servicing
Agreement, and (v) has a net worth of at least $50,000,000 as of the end of
its most recent fiscal quarter.
Pursuant to the Pooling and Servicing Agreement, ANB, as Servicer has
the right to delegate any of its responsibilities and obligations as
Servicer to any entity that agrees to conduct such duties in accordance
with the Pooling and Servicing Agreement and the Transferor's credit card
guidelines. ANB currently contracts and intends to continue to contract
with Advanta Service Corp., an affiliate of ANB, and FDR to perform certain
of its servicing activities. Notwithstanding any such delegation to any
entity, the Servicer will continue to be liable for all of its obligations
under the Pooling and Servicing Agreement.
Indemnification
The Pooling and Servicing Agreement provides that each Transferor
(excluding any Additional Transferor, if the Rating Agency Condition has
been satisfied and a Tax Opinion has been delivered with respect to such
exclusion) will be liable, directly to the injured party, for any loss,
liability, expense, damage or injury suffered or sustained by reason of any
acts, omissions or alleged acts or omissions or otherwise arising out of or
based upon the arrangement created by the Pooling and Servicing Agreement
or any Series Supplement (to the extent any property of the Trust remaining
after the Holders and Series Enhancers have been paid in full is
insufficient to pay such losses, claims, damages or liabilities), as though
the Pooling and Servicing Agreement or such Series Supplement created a
general partnership under the Delaware Uniform Partnership Law in which the
Transferor is general partner. However, the Transferors will not
indemnify: (i) the Trustee if such acts, omissions or alleged acts or
omissions constitute or are caused by fraud, negligence, or willful
misconduct by the Trustee; (ii) the Trust, the Holders or the Certificate
Owners for any liabilities, costs or expenses of the Trust with respect to
any action taken by the Trustee at the request of the Holders; (iii) the
Trust, the Holders or the Certificate Owners as to any losses, claims or
damages incurred by any of them in their capacities as investors, including
losses incurred as a result of Defaulted Receivables; and (iv) Holders or
the Certificate Owners for any liabilities, costs or expenses of the
Holders or the Certificate Owners arising under any tax law relating to any
Federal, state, local or foreign income or franchise taxes or any other tax
imposed on or measured by income (or any interest or penalties with respect
thereto or arising from a failure to comply therewith) required to be paid
by or for the account of the Holders or the Certificate Owners in
connection herewith to any taxing authority. Any such indemnification will
not be payable from the Trust assets.
The Pooling and Servicing Agreement also provides that the Servicer
will indemnify and hold harmless the Trust and the Trustee from and against
any loss, liability, expense, damage or injury suffered or sustained by
reason of any acts or omissions of the Servicer with respect to the Trust
pursuant to the Pooling and Servicing Agreement, including any judgment,
award, settlement, reasonable attorneys' fees and other costs or expenses
incurred in connection with the defense of any action, proceeding or claim.
However, the Servicer will not indemnify: (i) the Trustee if such acts or
omissions constitute or are caused by fraud, negligence, or willful
misconduct by the Trustee; (ii) the Trust, the Holders or the Certificate
Owners for any liabilities, costs or expenses of the Trust with respect to
any action taken by the Trustee at the request of the Holders; (iii) the
Trust, the Holders or the Certificate Owners as to any losses, claims or
damages incurred by any of them in their capacities as investors, including
losses incurred as a result of Defaulted Receivables; or (iv) the Trust,
Holders or Certificate Owners for any liabilities, costs or expenses of the
Trust, the Holders or the Certificate Owners arising under any tax law.
Any such indemnification will not be payable from the Trust assets.
Servicer Default
In the event of any Servicer Default, so long as the Servicer Default
shall not have been remedied, the Trustee, or Holders evidencing more than
50% of the aggregate Investor Amount of the Certificates of all Series, by
notice to the Servicer (and to the Trustee if given by Holders) (a
"Termination Notice"), may terminate all but not less than all of the
rights and obligations of the Servicer as Servicer under the Pooling and
Servicing Agreement and in and to the Receivables and the proceeds thereof.
The rights and interest of the Transferor under the Pooling and Servicing
Agreement and in the Transferor Certificate will not be affected by such
termination. However, if within 60 days of receipt of a Termination
Notice, the Trustee does not receive any bids from Eligible Servicers in
accordance with the Pooling and Servicing Agreement to act as a successor
Servicer and receives an officer's certificate of the Servicer to the
effect that the Servicer cannot in good faith cure the Servicer Default
which gave rise to the Termination Notice, then the Trustee will offer the
Transferor the right at its option to purchase the Investor Interest on the
next succeeding Distribution Date. The purchase price for the Investor
Interest will be equal to the sum of the amounts specified therefor in the
related Series Supplements. The Transferor will notify the Trustee in
writing prior to the Record Date for the Distribution Date of the purchase
if it is exercising such option. If the Transferor exercises such option,
the Transferor will (i) if such Transferor's short-term deposits or
long-term unsecured debt obligations are not rated at the time at least P-3
or Baa3, respectively, by Moody's, deliver to the Trustee an opinion of
counsel (which must be an independent outside counsel), to the effect that
the purchase would not be considered a fraudulent conveyance and (ii)
deposit the purchase price into the Collection Account on such Distribution
Date in immediately available funds.
A "Servicer Default" refers to any of the following events:
(a) any failure by the Servicer to make any payment, transfer
or deposit or to give instructions or notice to the Trustee pursuant
to the Pooling and Servicing Agreement or any Series Supplement on or
before the date occurring five business days after the date such
payment, transfer, deposit or such instruction or notice is required
to be made or given, as the case may be, under the terms of the
Pooling and Servicing Agreement or any Series Supplement;
(b) failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of
the Servicer set forth in the Pooling and Servicing Agreement or any
Series Supplement, which has a material adverse effect on the Holders
of any Series or Class and which failure continues unremedied for a
period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, has been given to the
Servicer by the Trustee, or to the Servicer and the Trustee by
Holders evidencing more than 50% of the aggregate Investor Amount of
all Series then outstanding (or, with respect to any failure that
does not relate to all Series, the Series to which such failure
relates); or the Servicer delegates its duties under the Pooling and
Servicing Agreement except as permitted under the terms thereof, a
responsible officer of the Trustee has actual knowledge of such
delegation and such delegation continues unremedied for 15 days after
the date on which written notice thereof, requiring the same to be
remedied, has been given to the Servicer by the Trustee, or to the
Servicer and the Trustee by Holders evidencing more than 50% of the
aggregate Investor Amount of all Series;
(c) any representation, warranty or certification made by the
Servicer in the Pooling and Servicing Agreement or any Series
Supplement or in any certificate delivered pursuant to the Pooling
and Servicing Agreement or any Series Supplement proves to have been
incorrect when made, which has a material adverse effect on the
Holders of any Series or Class and which continues to be incorrect in
any material respect for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied,
has been given to the Servicer by the Trustee, or to the Servicer and
the Trustee by Holders evidencing more than 50% of the aggregate
Investor Amount of all Series then outstanding (or, with respect to
any such representation, warranty or certification that does not
relate to all Series, the Series to which such representation,
warranty or certification relates); or
(d) an Insolvency Event occurs with respect to the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
under clauses (a), (b) or (c), will not, for certain limited periods,
constitute a Servicer Default if such delay or failure (i) could not be
prevented by the exercise of reasonable diligence by the Servicer and (ii)
was caused by an act of God or the public enemy, acts of declared or
undeclared war, terrorism, public disorder, rebellion or sabotage,
epidemics, landslides, lightning, fire, hurricanes, earthquakes, floods or
similar causes. The preceding sentence will not relieve the Servicer from
using its best efforts to perform its respective obligations in a timely
manner in accordance with the terms of the Pooling and Servicing Agreement
and any Series Supplement and the Servicer will provide the Trustee, each
Rating Agency, the holders of the Transferor Certificates and the Holders
of all Series with an officer's certificate giving prompt notice of such
failure or delay by it, together with a description of its efforts to so
perform its obligations.
Reports to Holders
Unless otherwise specified in the related Prospectus Supplement, on
each Distribution Date for a Series, the Paying Agent will forward to each
Holder of such Series a statement prepared by the Servicer setting forth,
among other things, (a) the total amount distributed to Holders of each
Class of such Series, (b) the amount of any distribution allocable to
principal on such Certificates, (c) the amount of such distribution
allocable to interest on such Certificates, (d) the aggregate amount of
collections processed during the prior Monthly Period and allocated in
respect of the Certificates, (e) the amount of collections of Principal
Receivables processed during the prior Monthly Period and allocated in
respect of the Certificates, (f) the amount of collections of Finance
Charge Receivables processed during the prior Monthly Period and allocated
in respect of the Certificates, (g) the Series Percentage with respect to
each Class of Certificates with respect to Principal Receivables and
Finance Charge Receivables, each as of the end of the last day of the prior
Monthly Period, (h) the aggregate outstanding balance of Accounts which are
30 or more days contractually delinquent, by class of delinquency, as of
the end of the last day of the prior Monthly Period, (i) the Defaulted
Amount for the prior Monthly Period, (j) the amount of the Monthly
Servicing Fee for each Class for the prior Monthly Period, and (k) the
amount of any Series Enhancement, if any, available with respect to each
Class as of the close of business on such Distribution Date.
On or before a date of each calendar year specified in the related
Prospectus Supplement, ending in the year following the Stated Series
Termination Date, the Paying Agent will furnish to each person who at any
time during the preceding calendar year was a Holder of record of a Series
a statement prepared by the Servicer containing the information required to
be contained in the regular monthly report to Holders of such Series, as
set forth in clauses (a), (b) and (c) above, aggregated for such calendar
year or the applicable portion thereof during which such person was a
Holder, together with such other customary information (consistent with the
treatment of the Certificates as debt) as the Trustee or the Servicer deems
necessary or desirable to enable the Holders of such Series to prepare
their tax returns.
Evidence as to Compliance
The Pooling and Servicing Agreement provides that on or before
November 30th of 1997 and each subsequent calendar year, the Servicer will
cause a firm of nationally recognized independent public accountants (who
may also render other services to the Servicer or the Transferor) to
furnish a report (addressed to the Servicer) to the Trustee, the Servicer
and each Rating Agency to the effect that such firm has examined
management's assertion about the Servicer's compliance with certain
applicable terms and conditions set forth in the Pooling and Servicing
Agreement and any Series Supplements in connection with the servicing of
the Receivables and that, based upon such examination, in such firm's
opinion, management's assertion that the Servicer complied with such terms
and conditions is fairly stated except for such exceptions as such firm
shall believe to be immaterial and such other exceptions as shall be set
forth in such statement. In addition, on or before November 30 of each
such calendar year, such accountants will apply certain procedures agreed
upon with the Servicer to compare the mathematical calculations of certain
amounts contained in the monthly Servicer's certificates delivered during
the period covered by such report with the computer reports of the Servicer
which were the source of such amounts and deliver a report to the Trustee
setting forth the agreed upon procedures performed and the results of such
procedures, including any exceptions they believe to be significant.
The Pooling and Servicing Agreement provides for delivery to the
Trustee on or before November 30 of 1997 and each subsequent calendar year
of a statement signed by an authorized officer of the Servicer to the
effect that the Servicer has, or has caused to be, fully performed its
obligations in all material respects under the Pooling and Servicing
Agreement and any Series Supplements throughout the preceding year or, if
there has been a default in the performance of any such obligations,
specifying the nature and status of the default.
Copies of all statements, certificates and reports furnished to the
Trustee may be obtained by a request in writing delivered to the Trustee.
Amendments
Any Trust Document may be amended from time to time by the
Transferors, the Servicer and the Trustee, without Holder consent, provided
that each Transferor has delivered to the Trustee an officer's certificate
to the effect that such Transferor reasonably believes that such amendment
will not have an Adverse Effect and that the Rating Agency Condition has
been satisfied. Amendments may be made as described in the foregoing
sentence in order (among other things) to (1) provide additional Series
Enhancement for the benefit of the Holders of any Series (or reduce such
Series Enhancement), (2) add one or more Participation Interests to the
Trust, (3) designate one or more Additional Transferors (provided that the
Rating Agency Condition need not be satisfied in connection with any
designation of AUS as an Additional Transferor), (4) provide for an
existing Transferor to discontinue direct transfers of Receivables to the
Trust and instead transfer Receivables indirectly through another
Transferor, (5) cure any ambiguity or correct or supplement any provision
contained in such Trust Document which may be defective or inconsistent
with any other provisions in any other Trust Document, (6) enable all or a
portion of the Trust to qualify as, and to permit an election to be made to
cause the Trust to be treated as, a "financial asset securitization
investment trust," as described in the provisions of the "Seven Year
Balanced Budget Act of 1995," H.R. 2491, 104th Cong., 1st Sess. (1995), or
to enable the Trust to qualify and an election to be made for similar
treatment under such comparable subsequent Federal income tax provisions as
may ultimately be enacted into law (and, in connection with any such
election, to modify or eliminate existing provisions of each Trust Document
relating to the intended Federal income tax treatment of the Certificates
and the Trust in the absence of such election, which may include
elimination of the sale of Receivables and termination of the Trust upon
the occurrence of an Insolvency Event pursuant to the Pooling and Servicing
Agreement and the provisions of the Pooling and Servicing Agreement
relating to the liability of the Transferor as general partner), (7) enable
all or a portion of the Trust to qualify as a partnership for federal
income tax purposes under applicable regulations on the classification of
entities as partnerships or corporations under the Code adopted as final
regulations after the date hereof, and to the extent that such regulations
eliminate or modify the need therefor, to modify or eliminate existing
provisions of the Trust Documents relating to the intended availability of
partnership treatment of the Trust for federal income tax purposes and (8)
enable Receivables transferred to the Trust to be derecognized by the
related Transferors under GAAP and the Trust to not be treated as a member
of any Transferor's consolidated group under GAAP.
Any Trust Document may also be amended by the Transferor, the
Servicer and the Trustee with the consent of the holders of Certificates
evidencing not less than 66 2/3% of the aggregate Investor Amount of all
adversely affected Series of Certificates for the purpose of adding any
provisions to, changing in any manner or eliminating any of the provisions
of the Pooling and Servicing Agreement or any Series Supplement or of
modifying in any manner the rights of Holders. No such amendment, however,
may (a) reduce in any manner the amount of or delay the timing of
distributions to be made to Holders or deposits of amounts to be so
distributed or the amount available under any Series Enhancement without
the consent of each affected Holder, (b) change the definition of or the
manner of calculating the interest of any Holder without the consent of
each affected Holder, (c) reduce the aforesaid percentage required to
consent to any such amendment without the consent of each Holder or (d)
adversely affect the rating of any Series or Class by each Rating Agency
without the consent of Holders of such Series or Class evidencing not less
than 66 2/3% of the aggregate Investor Amount of such Series or Class. Any
amendment shall be deemed not to adversely affect any outstanding Series
with respect to which the Transferor delivers an opinion of counsel that
such amendment will not have an Adverse Effect with respect to such Series.
Promptly following the execution of any such amendment, the Trustee will
furnish written notice (provided to the Trustee by the Servicer) of the
substance of such amendment to each Holder.
Defeasance
Pursuant to the Pooling and Servicing Agreement, the Transferor may
terminate its substantive obligations in respect of any Series or all
outstanding Series (the "Defeased Series") by depositing with the Trustee
(such deposit to be made from other than the Transferor's or any affiliate
of the Transferor's funds), under the terms of an irrevocable trust
agreement satisfactory to the Trustee, monies or Eligible Investments (or a
combination thereof) sufficient to make all remaining scheduled interest
and principal payments on the Defeased Series on the dates scheduled for
such payments and to pay all amounts owing to any provider of Series
Enhancement with respect to such Defeased Series. To achieve that end, the
Transferor has the right to use collections on Receivables allocated to the
Defeased Series and available to purchase additional Receivables to be
applied to purchase Eligible Investments rather than additional
Receivables. Prior to their first exercise of their right to substitute
monies or Eligible Investments for Receivables, the Transferor shall
deliver to the Trustee a Tax Opinion with respect to such deposit and
termination of obligations and to the Servicer and the Trustee written
notice from each Rating Agency that the Rating Agency Condition shall have
been satisfied. In addition, the Transferor must comply with certain other
requirements set forth in the Pooling and Servicing Agreement, including
requirements that the Transferor deliver to the Trustee an opinion of
counsel to the effect that the deposit and termination of obligations will
not require the Trust to register as an "investment company" within the
meaning of the Investment Company Act and that it will not cause the Trust
or any portion thereof to be treated as an association or publicly traded
partnership taxable as a corporation, and that the Transferor deliver to
the Trustee and certain providers of Series Enhancement a certificate of an
authorized officer stating that, based on the facts known to such officer
at the time, in the reasonable opinion of such Transferor, such deposit and
termination of obligations will not at the time of its occurrence cause a
Pay Out Event or an event that, after the giving of notice or the lapse of
time, would constitute a Pay Out Event, to occur with respect to any
Series. If the Transferor discharges its substantive obligations in
respect of the Defeased Series, any Series Enhancement for the affected
Series might no longer be available to make payments with respect thereto.
List of Holders
Upon application of Holders of record representing interests in the
Trust aggregating not less than 10% of the aggregate unpaid principal
amount of any Series or all Series, as applicable, the Trustee will, having
been adequately indemnified by such Holders, within five business days of
such request, afford such Holders access during business hours to the
current list of registered Holders of such Series or all Series, as
applicable, for purposes of communicating with other Holders with respect
to their rights under the Pooling and Servicing Agreement or any Series
Supplement or the Certificates.
The Trustee
The Bank of New York will be the Trustee under the Pooling and
Servicing Agreement. The Transferor, the Servicer and their respective
affiliates may from time to time enter into normal banking and trustee
relationships with the Trustee and its affiliates. The Trustee, the
Transferor, the Servicer and any of their respective affiliates may hold
Certificates in their own names. In addition, for purposes of meeting the
legal requirements of certain local jurisdictions, the Trustee will have
the power to appoint a co-trustee or separate trustees of all or any part
of the Trust. In the event of such appointment, all rights, powers, duties
and obligations conferred or imposed upon the Trustee by the Pooling and
Servicing Agreement will be conferred or imposed upon the Trustee and such
separate trustee or co-trustee jointly, or, in any jurisdiction in which
the Trustee is incompetent or unqualified to perform certain acts, singly
upon such separate trustee or co-trustee who shall exercise and perform
such rights, powers, duties and obligations solely at the direction of the
Trustee.
The Trustee may resign at any time, in which event the Servicer will
be obligated to appoint a successor Trustee. The Servicer may also remove
the Trustee if the Trustee ceases to be eligible to continue as such under
the Pooling and Servicing Agreement, is legally unable to act or if the
Trustee becomes bankrupt or insolvent. In such circumstances, the Servicer
will be obligated to appoint a successor Trustee. Any resignation or
removal of the Trustee and appointment of a successor Trustee does not
become effective until acceptance of the appointment by the successor
Trustee.
ENHANCEMENT
General
For any Series, Series Enhancement may be provided with respect to
one or more Classes thereof. Series Enhancement may be in the form of the
subordination of one or more Classes of the Certificates of such Series, a
letter of credit, the establishment of a cash collateral guaranty or
account, a collateral interest, a discount collateral interest, a surety
bond, insurance, the use of cross support features or another method of
Series Enhancement described in the related Prospectus Supplement, or any
combination of the foregoing. If so specified in the related Prospectus
Supplement, any form of Series Enhancement may be structured so as to be
drawn upon by more than one Class to the extent described therein.
Unless otherwise specified in the related Prospectus Supplement for a
Series, the Series Enhancement will not provide protection against all
risks of loss and will not guarantee repayment of the entire principal
balance of the Certificates and interest thereon. If losses occur which
exceed the amount covered by the Series Enhancement or which are not
covered by the Series Enhancement, Holders will bear their allocable share
of deficiencies.
If Series Enhancement is provided with respect to a Series, the
related Prospectus Supplement will include a description of (a) the amount
payable under such Series Enhancement, (b) any conditions to payment
thereunder not otherwise described herein, (c) the conditions (if any)
under which the amount payable under such Series Enhancement may be reduced
and under which such Series Enhancement may be terminated or replaced and
(d) any provisions of any agreement relating to such Series Enhancement
material to the Holders of such Series. Additionally, the related
Prospectus Supplement may set forth certain information with respect to the
issuer of any third-party Series Enhancement, including (i) a brief
description of its principal business activities, (ii) its principal place
of business, place of incorporation and the jurisdiction under which it is
chartered or licensed to do business, (iii) if applicable, the identity of
regulatory agencies which exercise primary jurisdiction over the conduct of
its business and (iv) its total assets, and its stockholders' or
policyholders' surplus, if applicable, as of the date specified in the
Prospectus Supplement.
Subordination
If so specified in the related Prospectus Supplement, one or more
Classes of a Series may be subordinated to one or more other Classes of a
Series. If so specified in the related Prospectus Supplement, the rights
of the holders of the subordinated Certificates to receive distributions of
principal and/or interest on any Distribution Date will be subordinated to
such rights of the holders of the Certificates which are senior to such
subordinated Certificates to the extent set forth in the related Prospectus
Supplement. The amount of subordination will decrease whenever certain
amounts otherwise payable to the holders of subordinated Certificates are
paid to the holders of the Certificates which are senior to such
subordinated Certificates.
Letter of Credit
If so specified in the related Prospectus Supplement, a letter of
credit with respect to a Series or Class of Certificates may be issued by
the bank or financial institution specified in the related Prospectus
Supplement (the "L/C Bank"). Under the letter of credit, the L/C Bank will
be obligated to honor drawings thereunder in an aggregate fixed dollar
amount, net of unreimbursed payments thereunder, equal to the amount
described in the related Prospectus Supplement. The amount available under
the letter of credit will be reduced to the extent of the unreimbursed
payments thereunder.
Cash Collateral Guaranty or Account
If specified in the related Prospectus Supplement, the Certificates
of any Class or Series may have the benefit of a Cash Collateral Guaranty
issued pursuant to a trust agreement between a cash collateral depositor, a
cash collateral trustee and the Transferor and the Servicer or a Cash
Collateral Account directly. The Cash Collateral Guaranty will generally
be an obligation of the cash collateral trust and not of the cash
collateral depositor, the cash collateral trustee (except to the extent of
amounts on deposit in the cash collateral account), the Trustee or ANB as
Transferor and Servicer.
The Servicer will determine on each Determination Date with respect
to the Series enhanced by the Cash Collateral Guaranty or the Cash
Collateral Account whether a deficiency exists with respect to the payment
of interest and/or principal on the Certificates so enhanced. If the
Servicer determines that a deficiency exists, it shall instruct the Trustee
to draw an amount equal to such deficiency from the Cash Collateral
Guaranty or the Cash Collateral Account, up to the maximum amount available
thereunder.
Collateral Interest
If so specified in the Prospectus Supplement, support for a Series of
Certificates or one or more Classes thereof may be provided initially by an
uncertificated, subordinated interest in the Trust (the "Collateral
Interest") in an amount initially equal to a percentage of the Certificates
of such Series specified in the Prospectus Supplement.
Discount Collateral Interest
If so specified in the related Prospectus Supplement, support for a
Series of Certificates or one or more Classes thereof may be provided by an
uncertificated, subordinated interest in the Trust which will be available
to cover shortfalls affecting the accretion of discount or payment of
interest (the "Discount Collateral Interest") in an amount specified in the
related Prospectus Supplement and may cover other items if specified in the
related Prospectus Supplement.
Surety Bond or Insurance Policy
If so specified in the related Prospectus Supplement, insurance with
respect to a Series or Class of Certificates may be provided by one or more
insurance companies. Such insurance will guarantee, with respect to one or
more Classes of the related Series, distributions of interest or principal
in the manner and amount specified in the related Prospectus Supplement.
If so specified in the related Prospectus Supplement, a surety bond
may be purchased for the benefit of the holders of any Series or Class of
such Series to assure distributions of interest or principal with respect
to such Series or Class of Certificates in the manner and amount specified
in the related Prospectus Supplement.
Spread Account
If so specified in the related Prospectus Supplement, support for a
Series or one or more Classes of a Series may be provided by the periodic
deposit of certain available excess cash flow from the Trust assets into an
account (the "Spread Account") intended to assure the subsequent
distribution of interest and principal on the Certificates of such Class or
Series in the manner specified in the related Prospectus Supplement.
FEDERAL INCOME TAX CONSEQUENCES
General
The following is a general discussion of material federal income tax
consequences relating to the purchase, ownership and disposition of a
Certificate offered hereby. This discussion is based on current law, which
is subject to changes that could prospectively or retroactively modify or
adversely affect the tax consequences summarized below. The discussion
does not address all of the tax consequences relevant to a particular
Certificate Owner in light of that Certificate Owner's circumstances, and
some Certificate Owners may be subject to special tax rules and limitations
not discussed below. Each prospective Certificate Owner is urged to
consult its own tax adviser in determining the federal, state, local and
foreign income and any other tax consequences of the purchase, ownership
and disposition of a Certificate.
For purposes of this discussion, "U.S. Person" means a citizen or
resident of the United States, a corporation or partnership organized in or
under the laws of the United States, any state thereof, or any political
subdivision of either (including the District of Columbia), or an estate or
trust the income of which is includible in gross income for U.S. federal
income tax purposes regardless of its source. The term "U.S. Certificate
Owner" means any U.S. Person and any other person to the extent that the
income attributable to its interest in a Certificate is effectively
connected with that person's conduct of a U.S. trade or business. The term
"non-U.S. Certificate Owner" means any person other than a U.S. Certificate
Owner.
The discussion assumes that a Certificate is issued in registered
form, has all payments denominated in U.S. dollars and has a term that
exceeds one year. Moreover, the discussion assumes that the interest
formula for the Certificate meets the requirements for "qualified stated
interest" under Treasury regulations (the "OID regulations") relating to
original issue discount ("OID"), and that any OID on the Certificate (i.e.,
any excess of the principal amount of the Certificate over its issue price)
does not exceed a de minimis amount (i.e., 0.25 percent of its principal
amount multiplied by the number of full years until its maturity date), all
within the meaning of the OID regulations. Moreover, the discussion
assumes that the Certificates are of a type, as set forth below, which
counsel is of the opinion will be debt for federal income tax purposes.
The applicable Prospectus Supplement will set forth a discussion of any
additional material tax consequences with respect to Certificates not
conforming to the foregoing assumptions.
Treatment of the Certificates as Debt
The Transferor and the Certificate Owners express in the Pooling and
Servicing Agreement the intent that for federal, state and local income and
franchise tax purposes, the Certificates will be debt secured by the
Receivables. The Transferor, by entering into the Pooling and Servicing
Agreement, and each investor, by the acceptance of a beneficial interest in
a Certificate, will agree to treat the Certificates as debt for federal,
state and local income and franchise tax purposes. However, the Pooling
and Servicing Agreement is generally ambiguous in characterizing the
transfer of Receivables, and because different criteria are used in
determining the non-tax accounting treatment of the transaction, the
Transferor will treat the Pooling and Servicing Agreement for certain
non-tax accounting purposes as causing a transfer of an ownership interest
in the Receivables and not as creating a debt obligation.
A basic premise of federal income tax law is that the economic
substance of a transaction generally determines its tax consequences. The
form and non-tax characterization of a transaction, while relevant factors,
are not conclusive evidence of its economic substance. In appropriate
circumstances, the courts have allowed taxpayers as well as the Internal
Revenue Service (the "IRS") to treat a transaction in accordance with its
economic substance as determined under federal income tax law, even though
the participants in the transaction have characterized it differently for
non-tax purposes.
The determination of whether the economic substance of a transfer of
an interest in property is instead a loan secured by the transferred
property has been made by the IRS and the courts on the basis of numerous
factors designed to determine whether the transferor has relinquished (and
the transferee has obtained) substantial incidents of ownership in the
property. Among those factors, the primary ones examined are whether the
transferee has the opportunity to gain if the property increases in value,
and has the risk of loss if the property decreases in value. Except as
otherwise specified in the related Prospectus Supplement, Mayer, Brown &
Platt, counsel to the Transferor ("Special Tax Counsel"), will deliver its
opinion generally to the effect that, under current law as in effect on the
Relevant Closing Date, although no transaction closely comparable to that
contemplated herein has been the subject of any Treasury regulation,
revenue ruling or judicial decision, for federal income tax purposes the
Certificates will not constitute an ownership interest in the Receivables,
but properly will be characterized as debt. Except where indicated to the
contrary, the following discussion assumes that the Certificates are debt
for federal tax purposes.
Treatment of the Trust
General. The Pooling and Servicing Agreement permits the issuance of
Certificates and certain other interests in the Trust (including Collateral
Interests), each of which may be treated for federal income tax purposes
either as debt or as equity interests in the Trust. If all of the
Certificates and other interests (other than the Advanta Certificate) in
the Trust were characterized as debt, the Trust might be characterized as a
security arrangement for debt collateralized by the Receivables and issued
directly by the Transferor (or other holders of the Advanta Certificate).
Under such a view, the Trust would be disregarded for federal income tax
purposes. Alternatively, if some of the Transferor Certificates, the
Certificates and other interests in the Trust were characterized as equity
therein, the Trust might be characterized as a separate entity owning the
Receivables, issuing its own debt, and jointly owned by the Transferor (or
other holders of the Advanta Certificate) and any other holders of equity
interests in the Trust. The Transferor may elect to take any action
available to qualify any interest in the Trust as a partnership interest
for Federal, state or local income tax purposes (excluding any such
interest as to which an opinion of counsel was delivered at issuance
stating that such interest would be treated as indebtedness for Federal
income tax purposes) so long as (a) a Tax Opinion is delivered to the
Trustee in connection with any such action and (b) any consents required by
any Series Supplement or loans or purchase agreement relating to any
affected interest in the Trust is obtained.
Possible Treatment of the Trust as a Partnership, a Publicly Traded
Partnership or an Association. Although, as described above, Special Tax
Counsel will deliver its opinion that the Certificates will properly be
treated as debt for federal income tax purposes, such opinion will not bind
the IRS and thus no assurance can be given that such treatment will
prevail. If the IRS were to contend successfully that some or all of the
Transferor Certificates, the Certificates or any other interests in the
Trust (including any Collateral Interest) were equity in the Trust for
federal income tax purposes, all or a portion of the Trust could be
classified as a partnership or an association taxable as a corporation for
such purposes. Because Special Tax Counsel will deliver its opinion that
the Certificates will be characterized as debt for federal income tax
purposes and because any holder of an interest in a Collateral Interest
will agree to treat that interest as debt for such purposes, no attempt
will be made to comply with any tax reporting requirements that would apply
as a result of such alternative characterizations.
If the Trust were treated in whole or in part as a partnership in
which some or all holders of interests in the publicly offered Certificates
were partners, that partnership could be classified as a publicly traded
partnership taxable as a corporation. Further, regulations published by
the Treasury Department on December 4, 1995 (the "Regulations") could cause
the Trust to constitute a publicly traded partnership even if all holders
of interests in the publicly offered Certificates are treated as holding
debt. The Regulations generally apply to taxable years beginning after
December 31, 1995. If the Trust were classified as a publicly traded
partnership, whether by reason of the treatment of publicly offered
Certificates as equity or by reason of the Regulations, it would avoid
taxation as a corporation if its income was not derived in the conduct of a
"financial business;" however, whether the income of the Trust would be so
classified is unclear.
Under the Code and the Regulations, a partnership will be classified
as a publicly traded partnership if equity interests therein are traded on
an "established securities market," or are "readily tradable" on a
"secondary market" or its "substantial equivalent." The Transferor intends
to take measures designed to reduce the risk that the Trust could be
classified as a publicly traded partnership by reason of interests in the
Trust other than the publicly traded Certificates. Although the Transferor
expects such measures will ultimately be successful, certain of the actions
that may be necessary for avoiding the treatment of such interests as
"readily tradable" on a "secondary market" or its "substantial equivalent"
are not fully within the control of the Transferor. As a result, there can
be no assurance that the measures the Transferor intends to take will in
all circumstances be sufficient to prevent the Trust from being classified
as a publicly traded partnership under the Regulations.
If the Trust were treated as a partnership other than a publicly
traded partnership taxable as a corporation, that partnership would not be
subject to federal income tax. Rather, each item of income, gain, loss and
deduction of the partnership generated through the ownership of the related
Receivables would be taken into account directly in computing taxable
income of the Transferor (or the holders of the Advanta Certificate) and
any Certificate Owners treated as partners in accordance with their
respective partnership interests therein. The amounts and timing of income
reportable by any Certificate Owners treated as partners would likely
differ from that reportable by such Certificate Owners had they been
treated as owning debt. In addition, if the Trust were treated in whole or
in part as a partnership other than a publicly traded partnership, income
derived from the partnership by any Certificate Owner that is a pension
fund or other tax-exempt entity may be treated as unrelated business
taxable income. Partnership characterization also may have adverse state
and local income or franchise tax consequences for a Certificate Owner.
From time to time, legislation has been introduced in Congress that would
affect the treatment of any "large partnership," defined as any partnership
in which there are at least 250 partners in a taxable year. Under such
legislative proposals, among other things, the availability of certain
deductions to partners may be limited, and certain computations (such as
those relating to the level of allowable miscellaneous itemized deductions
and the netting of capital gains and losses) would be made at the
partnership rather than the partner level. No prediction can be made
regarding whether any such legislation will be enacted or, if so, what its
ultimate effective date will be.
If the arrangement created by the Pooling and Servicing Agreement
were treated in whole or in part as a publicly traded partnership or an
association taxable as a corporation, that entity would be subject to
federal income tax at corporate tax rates on its taxable income generated
by ownership of the related Receivables. That tax could result in reduced
distributions to Certificate Owners. No distributions from the Trust would
be deductible in computing the taxable income of the corporation, except to
the extent that any Certificates were treated as debt of the corporation
and distributions to the related Certificate Owners were treated as
payments of interest thereon. In addition, distributions to Certificate
Owners not treated as holding debt would be dividend income to the extent
of the current and accumulated earnings and profits of the corporation;
Certificate Owners may not be entitled to any dividends received deduction
in respect of such income.
Pending Legislation. The Senate and the House of Representatives
have each recently passed versions of the "Small Business Jobs Protection
Act of 1996," H.R. 3448 (the "Bill"). Each version of the Bill contains
provisions creating a new type of entity for federal income tax purposes
called a "financial asset securitization investment trust" or "FASIT". The
FASIT provisions of the Bill generally will enable certain arrangements
similar to the Trust to elect to be treated as a FASIT. Under the FASIT
provisions of the Bill, a FASIT generally would avoid federal income
taxation and could issue securities substantially similar to the
Certificates, and those securities would be treated as debt for federal
income tax purposes. Upon satisfying certain conditions set forth in the
Agreement, the Transferor will be permitted to amend the Agreement and any
Series Supplement in order to enable all or a portion of the Trust to
qualify as a FASIT and to permit a FASIT election to be made with respect
thereto, and to make such modifications to the Agreement and any Supplement
as may be permitted by reason of the making of such an election. See
"Description of the Certificates - Amendments." However, there can be no
assurance that the version, if any, of the Bill that emerges from the
conference committee will contain the FASIT provisions in their present
form or at all, or that the President will sign the Bill if it is enacted
by Congress. There also can be no assurance that the Transferor will or
will not cause any permissible FASIT election to be made with respect to
the Trust or amend the Agreement or any Series Supplement in connection
with any election. However, if such an election is made, it may cause a
holder to recognize gain (but not loss) with respect to its Certificate,
even though Special Counsel is of the opinion that a Certificate will be
treated as debt for federal income tax purposes without regard to the
election and the Certificate would be treated as debt following the
election. Additionally, any such election and any related amendments to
the Agreement and any Series Supplement may have other tax and non-tax
consequences to Certificate Owners. Accordingly, prospective Certificate
Owners should consult their tax advisors with regard to the effects of any
such election and any permitted related amendments on them in their
particular circumstances.
Taxation of Interest Income of U.S. Certificate Owners
General. Stated interest on a beneficial interest in a Certificate
will be includible in gross income in accordance with a U.S. Certificate
Owner's method of accounting.
Original Issue Discount. If the Certificates are issued with
original issue discount ("OID"), the provisions of sections 1271 through
1273 and 1275 of the Internal Revenue Code of 1986 (the "Code") will apply
to the Certificates. Under those provisions, a U.S. Certificate Owner
(including a cash basis holder) generally would be required to accrue the
OID on its interest in a Certificate in income for federal income tax
purposes on a constant yield basis, resulting in the inclusion of OID in
income somewhat in advance of the receipt of cash attributable to that
income. In general, a Certificate will be treated as having OID to the
extent that its "stated redemption price" exceeds its "issue price," if
such excess is more than 0.25 percent multiplied by the weighted average
life of the Certificate (determined by taking into account only the number
of complete years following issuance for any partial principal payments).
Under section 1272(a)(6) of the Code, special provisions apply to debt
instruments on which payments may be accelerated due to prepayments of
other obligations securing those debt instruments. However, no regulations
have been issued interpreting those provisions, and the manner in which
those provisions would apply to the Certificates is unclear. Additionally,
because the failure to pay interest currently on a Certificate is not a
default and may not be considered to give rise to any penalty or remedy to
compel payment, the IRS could take the position based on Treasury
Regulations that all of the interest payable on a Certificate should be
included in its stated redemption price at maturity. If sustained, such
treatment should not significantly affect the tax liability of most
Certificate Owners, but prospective U.S. Certificate Owners should consult
their own tax advisors concerning the impact to them in their particular
circumstances.
Market Discount. A U.S. Certificate Owner who purchases an interest
in a Certificate at a discount that exceeds any unamortized OID may be
subject to the "market discount" rules of sections 1276 through 1278 of the
Code. These rules provide, in part, that gain on the sale or other
disposition of a Certificate and partial principal payments on a
Certificate are treated as ordinary income to the extent of accrued market
discount. The market discount rules also provide for deferral of interest
deductions with respect to debt incurred to purchase or carry a Certificate
that has market discount.
Market Premium. A U.S. Certificate Owner who purchases an interest
in a Certificate at a premium may elect to offset the premium against
interest income over the remaining term of the Certificate in accordance
with the provisions of section 171 of the Code.
Sale or Exchange of Certificates
Upon a sale or exchange of an interest in a Certificate, a U.S.
Certificate Owner generally will recognize gain or loss equal to the
difference between the amount realized on the sale or exchange and the U.S.
Certificate Owner's adjusted basis in its interest in the Certificate. A
taxable exchange of a Certificate also could occur as a result of the
Transferor's substitution of money or investments for Receivables; see
"Description of the Certificates - Defeasance." The adjusted basis in the
interest in the Certificate will equal its cost, increased by any OID or
market discount includible in income with respect to the interest in the
Certificate prior to its sale and reduced by any principal payments
previously received with respect to the interest in the Certificate and any
amortized premium. Subject to the market discount rules, gain or loss will
generally be capital gain or loss if the interest in the Certificate was
held as a capital asset. Capital losses generally may be used by a
corporate taxpayer only to offset capital gains and by an individual
taxpayer only to the extent of capital gains plus $3,000 of other income.
Non-U.S. Certificate Owners
In general, a non-U.S. Certificate Owner will not be subject to U.S.
federal income tax on interest (including OID) on a beneficial interest in
a Certificate unless (i) the non-U.S. Certificate Owner is a direct or
indirect 10 percent or greater shareholder of, or a controlled foreign
corporation related to, either Transferor, (ii) if the Trust is treated as
a partnership, the non-U.S. Certificate Owner owns a direct or indirect 10
percent or greater capital or profits interest therein, (iii) the
Certificate Owner is a bank described in Code Section 881(c)(3)(A), (iv)
such interest is contingent interest described in Code Section 871(h)(4),
or (v) the non-U.S. Certificate Owner bears certain relationships to
holders of either the Transferor Certificates other than the Transferor or
Investor Certificates not properly characterized as debt. To qualify for
the exemption from taxation, the last U.S. Person in the chain of payment
prior to payment to a non-U.S. Certificate Owner (the "Withholding Agent")
must have received (in the year in which a payment of interest or principal
occurs or in either of the two preceding years) a statement that (i) is
signed by the non-U.S. Certificate Owner under penalties of perjury, (ii)
certifies that the non-U.S. Certificate Owner is not a U.S. Person and
(iii) provides the name and address of the non-U.S. Certificate Owner. The
statement may be made on a Form W-8 or substantially similar substitute
form, and the non-U.S. Certificate Owner must inform the Withholding Agent
of any change in the information on the statement within 30 days of the
change. If a Certificate is held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide a signed statement to the Withholding Agent.
However, in that case, the signed statement must be accompanied by a Form
W-8 or substitute form provided by the non-U.S. Certificate Owner to the
organization or institution holding the Certificate on behalf of the
non-U.S. Certificate Owner. The U.S. Treasury Department is considering
implementation of further certification requirements aimed at determining
whether the issuer of a debt obligation is related to holders thereof.
Generally, any gain or income realized by a non-U.S. Certificate
Owner upon retirement or disposition of an interest in a Certificate will
not be subject to U.S. federal income tax, provided that (i) in the case of
a Certificate Owner that is an individual, such Certificate Owner is not
present in the United States for 183 days or more during the taxable year
in which such retirement or disposition occurs and (ii) in the case of gain
representing accrued interest, the conditions described in the preceding
paragraph for exemption from withholding are satisfied. Certain exceptions
may be applicable, and an individual non-U.S. Certificate Owner should
consult a tax adviser.
If the Certificates were treated as an interest in a partnership, the
recharacterization could cause a non-U.S. Certificate Owner to be treated
as engaged in a trade or business in the United States. In that event, the
non-U.S. Certificate Owner would be required to file a federal income tax
return and, in general, would be subject to U.S. federal income tax
(including the branch profits tax) on its net income from the partnership.
Further, certain withholding obligations apply with respect to income
allocable or distributions made to a foreign partner. That withholding may
be at a rate as high as 39.6 percent. If some or all of the Certificates
were treated as stock in a corporation, any related dividend distributions
to a non-U.S. Certificate Owner generally would be subject to withholding
of tax at the rate of 30 percent, unless that rate were reduced by an
applicable tax treaty.
Information Reporting and Backup Withholding
Backup withholding of U.S. federal income tax at a rate of 31 percent
may apply to payments made in respect of a Certificate to a registered
owner who is not an "exempt recipient" and who fails to provide certain
identifying information (such as the registered owner's taxpayer
identification number) in the manner required. Generally, individuals are
not exempt recipients whereas corporations and certain other entities are
exempt recipients. Payments made in respect of a U.S. Certificate Owner
must be reported to the IRS, unless the U.S. Certificate Owner is an exempt
recipient or otherwise establishes an exemption. Compliance with the
identification procedures (described in the preceding section) would
establish an exemption from backup withholding for a non-U.S. Certificate
Owner who is not an exempt recipient.
In addition, upon the sale of a Certificate to (or through) a
"broker," the broker must withhold 31 percent of the entire purchase price,
unless either (i) the broker determines that the seller is a corporation or
other exempt recipient or (ii) the seller provides certain identifying
information in the required manner, and in the case of a non-U.S.
Certificate Owner certifies that the seller is a non-U.S. Certificate Owner
(and certain other conditions are met). Such a sale must also be reported
by the broker to the IRS, unless either (i) the broker determines that the
seller is an exempt recipient or (ii) the seller certifies its non-U.S.
status (and certain other conditions are met). Certification of the
registered owner's non-U.S. status normally would be made on Form W-8 under
penalties of perjury, although in certain cases under proposed Treasury
regulations it may be possible to submit other documentary evidence. As
defined by Treasury regulations, the term "broker" includes all persons who
stand ready to effect sales made by others in the ordinary course of a
trade or business, as well as brokers and dealers registered as such under
the laws of the United States or a state. These requirements generally
will apply to a U.S. office of a broker, and the information reporting
requirements generally will apply to a foreign office of a U.S. broker as
well as to a foreign office of a foreign broker (i) that is a controlled
foreign corporation within the meaning of section 957(a) of the Code or
(ii) 50 percent or more of whose gross income from all sources for the
three-year period ending with the close of its taxable year preceding the
payment (or for such part of the period that the foreign broker has been in
existence) was effectively connected with the conduct of a trade or
business within the United States.
Any amounts withheld under the backup withholding rules from a
payment to a Certificate Owner would be allowed as a refund or a credit
against such Certificate Owner's U.S. federal income tax, provided that the
required information is furnished to the IRS.
The backup withholding rules have not been issued in final form and
therefore are potentially subject to change.
State and Local Taxation
The discussion above does not address the taxation of the Trust or
the tax consequences of the purchase, ownership or disposition of an
interest in the Certificates under any state or local tax law. Each
investor should consult its own tax adviser regarding state and local tax
consequences.
ERISA CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit certain
pension, profit sharing or other employee benefit plans, individual
retirement accounts or annuities, employee annuity plans and Keogh plans
(each, a "Plan") from engaging in certain transactions involving "plan
assets" with persons that are "parties in interest" under ERISA or
"disqualified persons" under the Code with respect to the Plan. ERISA also
imposes certain duties on persons who are fiduciaries of Plans subject to
ERISA or Section 4975 of the Code and prohibits certain transactions
between a Plan and parties in interest with respect to such Plans. Under
ERISA, any person who exercises any authority or control respecting the
management or disposition of the assets of a Plan is considered to be a
fiduciary of such Plan (subject to certain exceptions not here relevant).
A violation of these "prohibited transaction" rules may generate excise tax
and other liabilities under ERISA and Section 4975 of the Code for such
persons, unless a statutory regulatory or administrative exemption is
available. Plans that are governmental plans (as defined in section 3(32)
of ERISA) and certain church plans (as defined in section 3(33) of ERISA)
are not subject to ERISA requirements.
Plan fiduciaries must determine whether the acquisition and holding
of the Certificates of a Series and the operations of the Trust would
result in direct or indirect prohibited transactions under ERISA or Section
4975 of the Code. The operations of the Trust could result in prohibited
transactions if Plans that purchase the Certificates of a Series are deemed
to own an interest in the underlying assets of the Trust. There may also
be an improper delegation of the responsibility to manage Plan assets if
Plans that purchase the Certificates are deemed to own an interest in the
underlying assets of the Trust.
Pursuant to a regulation (the "Regulation") issued by the Department
of Labor ("DOL") concerning the definition of what constitutes the "plan
assets" of a Plan, the assets and properties of certain entities (including
certain insurance company general accounts) in which a Plan makes an equity
investment could be deemed to be assets of the Plan in certain
circumstances. Accordingly, if Plans purchase Certificates of a Series,
the Trust could be deemed to hold Plan assets unless one of the exceptions
under the Regulation is applicable to the Trust.
The Regulation only applies to the purchase by a Plan of an "equity
interest" in an entity. Because the Certificates will represent beneficial
interests in a Trust, and despite the agreement of the Transferor and the
Certificate Owners to treat each Series of Certificates as debt
instruments, the Certificates are likely to be considered equity interests
in the Trust for purposes of the Regulation, with the result that the
assets of the Trust are likely to be treated as "plan assets" of the
investing Plans for purposes of ERISA and Section 4975 of the Code, unless
either of the following exceptions applies. The Regulation contains an
exception that provides that if a Plan acquires a "publicly-offered
security," the issuer of the security is not deemed to hold plan assets. A
publicly-offered security is a security that is (i) freely transferable,
(ii) part of a class of securities that is owned by 100 or more investors
independent of the issuer and of one another and (iii) either is (A) part
of a class of securities registered under Section 12(b) or 12(g) of the
Exchange Act or (B) sold to the Plan as part of an offering of securities
to the public pursuant to an effective registration statement under the Act
and the class of securities of which such security is a part is registered
under the Exchange Act within 120 days (or such later time as may be
allowed by the Commission) after the end of the fiscal year of the issuer
during which the offering of such securities to the public occurred. In
addition, the Regulation provides that, if at all times more than 75% of
the value of all classes of equity interests in Certificates of a Series
are held by investors other than benefit plan investors (which is defined
as including Plans and other employee benefit plans not subject to ERISA,
such as governmental or foreign plans, as well as entities holding assets
deemed to be "plan assets"), the investing plan's assets will not include
any of the underlying assets of the Trust.
No assurance can be made with respect to any offering of the
Certificates of any Series that the conditions which would allow the
Trust's assets not to be "plan assets" will be met, although the intention
of the Underwriters (but not their assurance) as to whether interests in
the Certificates of a particular Series will be held by at least 100
independent investors at the conclusion of the offering for such Series,
and therefore qualify as publicly-offered securities eligible for the
exception under the Regulation, will be set forth in the related Prospectus
Supplement.
If interests in the Certificates of a Series fail to meet the
criteria of publicly-offered securities and the Trust's assets are deemed
to include assets of Plans that are Holders, transactions involving the
Trust and "parties in interest" or "disqualified persons" with respect to
such Plans might be prohibited under Section 406 of ERISA and Section 4975
of the Code unless an exemption is applicable. In addition, the Transferor
or any Underwriter of such Series may be considered to be a party in
interest, disqualified person or fiduciary with respect to an investing
Plan. Accordingly, an investment of "plan assets" of a Plan in
Certificates of such Series may be a prohibited transaction under ERISA and
Section 4975 of the Code unless such investment is subject to a statutory
or administrative exemption. Thus, for example, if a participant in any
Plan is a cardholder of one of the Accounts, under DOL interpretations the
purchase of interests in Certificates of such Series by such Plan could
constitute a prohibited transaction. Five class exemptions issued by the
DOL that could apply in such event are DOL Prohibited Transaction Exemption
96-23 (Class Exemption for Certain Transactions Determined by In-House
Asset Managers), Exemption 95-60 (Class Exemption for Certain Transactions
Involving Insurance Company General Accounts), Exemption 91-38 (Class
Exemption for Certain Transactions Involving Bank Collective Investment
Funds), Exemption 90-1 (Class Exemption for Certain Transactions Involving
Insurance Company Pooled Separate Accounts) and Exemption 84-14 (Class
Exemption for Plan Asset Transactions Determined by Independent Qualified
Professional Asset Managers). There is no assurance that these exemptions,
even if all of the conditions specified therein are satisfied, or any other
exemption will apply to all transactions involving the Trust's assets.
In light of the foregoing, fiduciaries or other persons contemplating
purchasing the Certificates (or any interest therein) on behalf or with
"plan assets" of any Plan should consult their own counsel regarding
whether the Trust assets represented by the Certificates would be
considered "plan assets," the consequences that would apply if the Trust's
assets were considered "plan assets," and the possibility of exemptive
relief from the prohibited transaction rules. Finally, Plan fiduciaries
and other Plan investors should consider the fiduciary standards under
ERISA or other applicable law in the context of the Plan's particular
circumstances before authorizing an investment of a portion of the Plan's
assets in the Certificates. Accordingly, among other factors, Plan
fiduciaries and other Plan investors should consider whether the investment
(i) satisfies the diversification requirements of ERISA or other applicable
law, (ii) is in accordance with the Plan's governing instruments, and (iii)
is prudent in light of the "Risk Factors" and other factors discussed
herein and in the related Prospectus Supplement.
PLAN OF DISTRIBUTION
The Certificates of any Series offered hereby and by the related
Prospectus Supplement may be offered by the underwriter or underwriters
named in the related Prospectus Supplement as agent or underwriter, or
through underwriting syndicates represented by such underwriter or
underwriters (collectively, the "Underwriters").
UNDERWRITING
The Prospectus Supplement relating to a Series will set forth the
terms of the offering of such Series and each Class within such Series,
including the name or names of the Underwriters, the proceeds to and their
intended use by the Transferor, and either the initial public offering
price, the discounts and commissions to the Underwriters and any discounts
or concessions allowed or reallowed to certain dealers, or the method by
which the price at which the Underwriters will sell the Certificates of
such Series will be determined.
The Underwriters will be obligated, subject to certain conditions, to
purchase all of the Certificates described in the Prospectus Supplement
relating to a Series if any such Certificates are purchased. The
Certificates may be acquired by the Underwriters for their own account and
may be resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying
prices determined at the time of sale.
The Transferor may also sell the Certificates offered hereby and by
means of the related Prospectus Supplements from time to time in negotiated
transactions or otherwise, at prices determined at the time of sale. Such
transactions may be effected by selling Certificates to or through dealers
and such dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the Transferor and any
purchasers of Certificates for whom they may act as agents.
The place and time of delivery for the Series in respect of which
this Prospectus is delivered will be set forth in the related Prospectus
Supplement.
LEGAL MATTERS
It is anticipated that certain legal matters relating to the issuance
of the Certificates of any Series will be passed upon for ANB by Gene S.
Schneyer, Esq., as General Counsel of Advanta Corp., the parent company of
ANB and in that capacity as counsel to ANB with respect to the matters
described herein and, with respect to the Federal tax consequences of such
issuance, by Special Tax Counsel. Mr. Schneyer owns or has the right to
acquire a number of shares of common stock of Advanta Corp. well below 1%
of the outstanding common stock of Advanta Corp. Certain legal matters
relating to the issuance of the Certificates of a Series and ERISA matters
will be passed upon for the Underwriters by the counsel named in the
Prospectus Supplement.
<PAGE>
Index of Principal Terms
Term Page No.
- ----- --------
Accounts 1, 8
Act 6
Addition Date 53
Additional Accounts 53
Additional Transferors 42
Advanta 32
Advanta Certificate 11
Advanta Consumer Credit Card Portfolio 8
Advanta [Consumer] Credit Card Portfolio" 8
Adverse Effect 17
Amendments 42
Amortization Period 15
ANB 1, 8
AUS 8, 25
Automatic Additional Accounts 55
Bank Transferor 34
Banks 29
Cash Collateral Account 20
Cash Collateral Guaranty 19
CEBA 33
Cede 13
Cedel 40
Cedel Participants 40
Certificate Owner 13
Certificates 1, 9
Class 9
Code 75
Collateral Interest 20, 71
Collection Account 14
Commission 6
Controlled Accumulation Period 15
Controlled Amortization Period 15
Cooperative 40
Credit Card Originator 14
Defaulted Amount 60
Defaulted Receivables 59
Defeased Series 68
Definitive Certificate 13
Definitive Certificates 41
Depositaries 38
Depository 37
Disclosure Document 12
Discount Collateral Interest 20
Discount Option Receivables 56
Discount Percentage 56
Distribution Date 14
DOL 78
DTC 13
Due Date 25
Eligible Account 51
Eligible Deposit Account 57
Eligible Institution 57
Eligible Investments 57
Eligible Receivable 51
Eligible Servicer 63
ERISA 21
Euroclear 40
Euroclear Operator 40
Euroclear Participants 40
Exchange Act 6
FDIC 1
FDR 28
Finance Charge Receivables 12
FIRREA 23
Funding Period 17
Group 16
Holders 10, 41
Indirect Participants 38
Ineligible Receivables 49
Initial Accounts 12
Insolvency Event 61
Insolvency Proceeds 48, 62
Interchange 32
Interest Period 14
Invested Amount 10
Investment Company Act 61
Investor Amount 10
Investor Interest 9
IRS 72
L/C Bank 19, 70
Limited Amortization Period 15
Member bank 30
Monthly Period 14
Monthly Servicing Fee 63
Moody's 57
New Issuance 11
OID 75
Optional Amortization Period 15
Paired Series 16, 44
Participants 38
Participating Transferor 54
Participation Interests 9, 54
Pay Out Event 61
Paying Agent 57
Plan 78
Plan assets 79
Pooling and Servicing Agreement 8
Pre-Funding Amount 17, 58
Principal Amortization Period 15
Principal Receivables 12
Principal Sharing Series 16
Principal Shortfalls 16
Principal Terms 45
Rapid Amortization Period 15
Rating Agency 22
Rating Agency Condition 17
Receivables 1, 8
Receivables Purchase Agreement 27
Regulation 78
Regulations 73
Related Cut Off Date 12
Relevant Closing Date 15
Removal Notice Date 56
Removed Accounts 56
Required Principal Balance 54
Required Transferor Amount 54
Required Transferor Percentage 54
Revolving Period 15
Scheduled Amortization Date 15
Series 1, 10
Series Account 9
Series Enhancement 8, 18
Series Pay Out Event 61
Series Percentage 37
Series Supplement 8
Servicer 1, 8
Servicer Default 65
Servicing Fee 62
Shared Principal Collections 16
Special Tax Counsel 72
Spread Account 20, 71
Standard & Poor's 57
Stated Series Termination Date 21, 60
Supplemental Certificate 11, 42
Tax Opinion 12
Termination Notice 64
Terms and Conditions 40
Transferor 1, 8
Transferor Amount 10
Transferor Certificates 11, 45
Transferor Interest 10, 37, 45
Transferor Percentage 37, 58
Trust 1, 8
Trust Documents 49
Trust Pay Out Event 61
Trust Principal Balance 10
Trust Termination Date 21, 61
Trustee 8
U.S. Certificate Owner 72
U.S. Person 71
UCC 33
Underwriters 80
Withholding Agent 76
Zero Coupon Series 14
Accounts 1, 8
Act 6
Addition Date 53
Additional Accounts 53
Additional Transferors 42
Advanta 32
Advanta Certificate 11
Advanta Consumer Credit Card Portfolio 8
Advanta [Consumer] Credit Card Portfolio" 8
Adverse Effect 17
Amendments 42
Amortization Period 15
ANB 1, 8
AUS 8
Automatic Additional Accounts 55
Bank Transferor 34
Banks 29
Cash Collateral Account 19
Cash Collateral Guaranty 19
CEBA 33
Cede 13
Cedel 40
Cedel Participants 40
Certificate Owner 13
Certificates 1, 9
Class 9
Code 75
Collateral Interest 20, 71
Collection Account 14
Commission 6
Controlled Accumulation Period 15
Controlled Amortization Period 15
Cooperative 40
Credit Card Originator 14
Defaulted Amount 60
Defaulted Receivables 59
Defeased Series 68
Definitive Certificate 13
Definitive Certificates 41
Depositaries 38
Depository 37
Disclosure Document 12
Discount Collateral Interest 20
Discount Option Receivables 56
Discount Percentage 56
Distribution Date 14
DOL 78
DTC 13
Due Date 25
Eligible Account 51
Eligible Deposit Account 57
Eligible Institution 57
Eligible Investments 57
Eligible Receivable 51
Eligible Servicer 63
ERISA 21
Euroclear 40
Euroclear Operator 40
Euroclear Participants 40
Exchange Act 6
FDIC 1
FDR 28
Finance Charge Receivables 12
FIRREA 23
Funding Period 17
Group 16
Holders 9, 41
Indirect Participants 38
Ineligible Receivables 49
Initial Accounts 12
Insolvency Event 61
Insolvency Proceeds 48, 62
Interchange 32
Interest Period 14
Invested Amount 10
Investment Company Act 61
Investor Amount 10
Investor Interest 9
IRS 72
L/C Bank 19, 70
Limited Amortization Period 15
Member bank 30
Monthly Period 14
Monthly Servicing Fee 63
Moody's 57
New Issuance 11
OID 75
Optional Amortization Period 15
Paired Series 16, 44
Participants 38
Participating Transferor 54
Participation Interests 9, 54
Pay Out Event 61
Paying Agent 57
Plan 78
Plan assets 79
Pooling and Servicing Agreement 8
Pre-Funding Account 17
Pre-Funding Amount 17, 58
Principal Amortization Period 15
Principal Receivables 12
Principal Sharing Series 16
Principal Shortfalls 16
Principal Terms 45
Rapid Amortization Period 15
Rating Agency 22
Rating Agency Condition 17
Receivables 1, 8
Receivables Purchase Agreement 27
Regulation 78
Regulations 73
Related Cut Off Date 12
Relevant Closing Date 15
Removal Notice Date 56
Removed Accounts 56
Required Principal Balance 54
Required Transferor Amount 54
Required Transferor Percentage 54
Revolving Period 15
Scheduled Amortization Date 15
Series 1, 10
Series Account 9
Series Enhancement 8, 18
Series Pay Out Event 61
Series Percentage 37
Series Supplement 8
Servicer 1, 8
Servicer Default 65
Servicing Fee 62
Shared Principal Collections 16
Special Tax Counsel 72
Spread Account 20, 71
Standard & Poor's 57
Stated Series Termination Date 21, 60
Supplemental Certificate 11, 42
Tax Opinion 12
Termination Notice 64
Terms and Conditions 40
Transferor 1, 8
Transferor Amount 10
Transferor Certificates 11, 45
Transferor Interest 10, 37, 45
Transferor Percentage 37, 58
Trust 1, 8
Trust Documents 49
Trust Pay Out Event 61
Trust Principal Balance 10
Trust Termination Date 21, 61
Trustee 8
U.S. Certificate Owner 72
U.S. Person 71
UCC 33
Underwriters 80
Withholding Agent 76
Zero Coupon Series 14
<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain circumstances, the globally offered Advanta Gold
Master Trust Asset Backed Securities (the "Global Securities") to be issued
in Series from time to time (each, a "Series") will be available only in
book-entry form. Investors in the Global Securities may hold such Global
Securities through any of The Depository Trust Company ("DTC"), Cedel or
Euroclear. The Global Securities will be tradeable as home market
instruments in both the European and U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in
accordance with conventional eurobond practice (i.e., seven calendar day
settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures
applicable to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Certificates will be effected on a
delivery-against-payment basis through the respective Depositaries of Cedel
and Euroclear (in such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain
requirements and deliver appropriate U.S. tax documents to the securities
clearing organizations or their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the
name of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on
their behalf as direct and indirect Participants in DTC. As a result,
Cedel and Euroclear will hold positions on behalf of their participants
through their respective Depositaries, which in turn will hold such
positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to prior Advanta Gold Master
Trust issues. Investor securities custody accounts will be credited with
their holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global
security and no "lock-up" or restricted period. Global Securities will be
credited to the securities custody accounts on the settlement date against
payment in same-day funds.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and
seller's accounts are located to ensure that settlement can be made on the
desired value date.
Trading between DTC Participants. Secondary market trading between
DTC Participants will be settled using the procedures applicable to prior
Advanta Gold Master Trust issues in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary
market trading between Cedel Participants or Euroclear Participants will be
settled using the procedures applicable to conventional eurobonds in
same-day funds.
Trading between DTC seller and Cedel or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC
Participant to the account of a Cedel Participant or a Euroclear
Participant, the purchaser will send instructions to Cedel or Euroclear
through a Cedel Participant or Euroclear Participant at least one business
day prior to settlement. Cedel or Euroclear will instruct the respective
Depositary, as the case may be, to receive the Global Securities against
payment. Payment will include interest accrued on the Global Securities
from and including the last coupon payment date to and excluding the
settlement date. Payment will then be made by the respective Depositary to
the DTC Participant's account against delivery of the Global Securities.
After settlement has been completed, the Global Securities will be credited
to the respective clearing system and by the clearing system, in accordance
with its usual procedures, to the Cedel Participant's or Euroclear
Participant's account. The Global Securities credit will appear the next
day (European time) and the cash debit will be back-valued to, and the
interest on the Global Securities will accrue from, the value date (which
would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (i.e., the trade
fails), the Cedel or Euroclear cash debit will be valued instead as of the
actual settlement date.
Cedel Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to
pre-position funds for settlement, either from cash on hand or existing
lines of credit, as they would for any settlement occurring within Cedel or
Euroclear. Under this approach, they may take on credit exposure to Cedel
or Euroclear until Global Securities are credited to their accounts one day
later.
As an alternative, if Cedel or Euroclear has extended a line of
credit to them, Cedel Participants or Euroclear Participants can elect not
to pre-position funds and allow that credit line to be drawn upon the
finance settlement. Under this procedure, Cedel Participants or Euroclear
Participants purchasing Global Securities would incur overdraft charges for
one day, assuming they cleared the overdraft when the Global Securities
were credited to their accounts. However, interest on the Global
Securities would accrue from the value date. Therefore, in many cases the
investment income on the Global Securities earned during that one-day
period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each Cedel Participant's or
Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for sending Global
Securities to the respective Depositary for the benefit of Cedel
Participants or Euroclear Participants. The sale proceeds will be
available to the DTC seller on the settlement date. Thus, to the DTC
Participant a cross-market transaction will settle no differently than a
trade between two DTC Participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, Cedel Participants and Euroclear
Participants may employ their customary procedures for transactions in
which Global Securities are to be transferred by the respective clearing
system, through the respective Depositary, to a DTC Participant. The
seller will send instructions to Cedel or Euroclear through a Cedel
Participant or Euroclear Participant at least one business day prior to
settlement. In these cases, Cedel or Euroclear will instruct the
respective Depositary, as appropriate, to deliver the bonds to the DTC
Participant's account against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment
date to and excluding the settlement date. The payment will then be
reflected in the account of the Cedel Participant or Euroclear Participant
the following day, and receipt of the cash proceeds in the Cedel
Participant's or Euroclear Participant's account would be back-valued to
the value date (which would be the preceding day, when settlement occurred
in New York). Should the Cedel Participant or Euroclear Participant have a
line of credit with its respective clearing system and elect to be in debit
in anticipation of receipt of the sale proceeds in its account, the
back-valuation will extinguish any overdraft charges incurred over that
one-day period. If settlement is not completed on the intended value date
(i.e., the trade fails), receipt of the cash proceeds in the Cedel
Participant's or Euroclear Participant's account would instead be valued as
of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedel Participants
or Euroclear Participants should note that these trades would automatically
fail on the sale side unless affirmative action were taken. At least three
techniques should be readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or
Euroclear accounts) in accordance with the clearing system's
customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would
give the Global Securities sufficient time to be reflected in their
Cedel or Euroclear account in order to settle the sale side of the
trade; or
(c) staggering the value dates for the buy and sell sides of
the trade so that the value date for the purchase from the DTC
Participant is at least one day prior to the value date for the sale
to the Cedel Participant or Euroclear Participant.
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Global Securities holding securities through
Cedel or Euroclear (or through DTC if the holder has an address outside the
U.S.) will be subject to the 30% U.S. withholding tax that generally
applies to payments of interest (including original issue discount) on
registered debt issued by U.S. Persons, unless (i) each clearing system,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business in the chain of intermediaries
between such beneficial owner and the U.S. entity required to withhold tax
complies with applicable certification requirements and (ii) such
beneficial owner takes one of the following steps to obtain an exemption or
reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of
Certificates that are non-U.S. Persons can obtain a complete
exemption from the withholding tax by filing a signed Form W-8
(Certificate of Foreign Status). If the information shown on Form
W-8 changes, a new Form W-8 must be filed within 30 days of such
change.
Exemption for non-U.S. Persons with effectively connected income
(Form 4224). A non-U.S. Person, including a non-U.S. corporation or
bank with a U.S. branch, for which the interest income is effectively
connected with its conduct of a trade or business in the United
States, can obtain an exemption from the withholding tax by filing
Form 4224 (Exemption from Withholding of Tax on Income Effectively
Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Persons resident in
treaty countries (Form 1001). Non-U.S. Persons that are Certificate
Owners residing in a country that has a tax treaty with the United
States can obtain an exemption or reduced tax rate (depending on the
treaty terms) by filing Form 1001 (Ownership, Exemption or Reduced
Rate Certificate). If the treaty provides only for a reduced rate,
withholding tax will be imposed at that rate unless the filer
alternatively files Form W-8. Form 1001 may be filed by the
Certificate Owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain
a complete exemption from the withholding tax by filing Form W-9
(Request for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate
Owner of a Global Security or, in the case of a Form 1001 or a Form
4224 filer, his agent, files by submitting the appropriate form to
the person through whom it holds (the clearing agency, in the case of
persons holding directly on the books of the clearing agency). Form
W-8 and Form 1001 are effective for three calendar years and Form
4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of
the United States or any political subdivision thereof or (iii) an estate
or trust the income of which is includible in gross income for United
States tax purposes, regardless of its source. This summary does not deal
with all aspects of U.S. Federal income tax withholding that may be
relevant to foreign holders of the Global Securities. Investors are
advised to consult their own tax advisors for specific tax advice
concerning their holding and disposing of the Global Securities.
<PAGE>
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Registration Fee............................................. $344.83
Printing and Engraving....................................... *
Trustee's Fees............................................... *
Legal Fees and Expenses...................................... *
Blue Sky Fees and Expenses................................... *
Accountants' Fees and Expenses............................... *
Rating Agency Fees........................................... *
Miscellaneous................................................ *
----------
Total ..................................... *
___________________
<FN>
* To be provided by amendment.
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article TENTH of the Articles of Association of ANB provides for
indemnification of officers, directors, employees and agents of ANB under
certain circumstances as follows:
(a) ANB shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of ANB) by reason of
the fact that he or she is or was an organizer, director, officer, employee
or agent of ANB, or is or was serving at the request of ANB as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such action, suit or
proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of ANB,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his or her conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the
best interests of ANB, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his or her conduct was
unlawful.
(b) ANB shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of ANB to procure a judgment in its favor
by reason of the fact that he or she is or was an organizer, director,
officer, employee or agent of ANB, or is or was serving at the request of
ANB as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him or her
in connection with the defense or settlement of such action or suit if he
or she acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of ANB and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to ANB unless
and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such
court shall deem proper.
(c) The indemnification provided by this Article does not authorize
ANB to indemnify any organizer, director, officer, employee, or agent
against expenses, penalties, or other payments incurred in an
administrative proceeding or action instituted by an appropriate bank
regulatory agency which proceeding or action results in a final order
against such organizer, director, officer, employee or agent assessing
civil money penalties or requiring affirmative action in the form of
payments to ANB.
(d) To the extent that an organizer, director, officer, employee or
agent of ANB has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in paragraphs (a) and (b), or in
defense of any claim, issue or matter therein, he or she shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.
(e) Any indemnification under paragraphs (a) and (b) (unless ordered
by a court) shall be made by ANB only as authorized in the specific case
upon a determination that indemnification of the organizer, director,
officer, employee or agent is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in paragraphs (a) and
(b). Such determination shall be made (1) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to
such action, suit or proceeding, or (2) if such a quorum is not obtainable,
or, even if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the shareholders.
(f) Expenses incurred by an organizer, officer, director, employee,
or agent in defending a civil or criminal action, suit, or proceeding may
be paid by ANB in advance of the final disposition of such action, suit or
proceeding provided that all advances are subject to reimbursement if it is
ultimately determined that the organizer, director, officer, employee, or
agent is not entitled to be indemnified by ANB as authorized in this
Article. Moreover, before any advances are made, the Board of Directors,
in good faith, must determine in writing, that all of the following
conditions are met:
(1) the officer, director, employee or agent has a substantial
likelihood of prevailing on the merits;
(2) in the event the organizer, officer, director, employee, or
agent does not prevail, he or she will have the financial
capability to reimburse ANB; and
(3) payment of expenses by ANB will not adversely affect its safety
and soundness.
If at any time the Board of Directors believes, or reasonably should
believe that either conditions (1), (2) or (3) above are no longer met, ANB
will cease paying such expenses or premiums. Further, before any advances
are made, the Board of Directors will enter into a written agreement with
the organizer, director, officer, employee, or agent specifying the
conditions under which he or she will be required to reimburse ANB. At a
minimum, the agreement will require reimbursement for expenses already
paid, if and to the extent the Board of Directors finds that the organizer,
director, officer, employee, or agent willfully misrepresented factors
relevant to the Board of Directors' determination of conditions (1) or (2)
above, or if a final order is entered in the action, suit, or proceeding
assessing civil money penalties or requiring payments to ANB. ANB will
ensure that it complies with all applicable laws and regulations affecting
loans to insiders and related interests in the event reimbursement is
required.
(g) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article shall not be deemed exclusive of any
rights to which a person seeking indemnification or advancement of expenses
may be entitled under any statute, bylaw, agreement, vote of shareholders
or disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
Notwithstanding the provisions of this Article, ANB may indemnify any
person referred to in paragraph (a) of this Article to the fullest extent
permitted under the statutes applicable to national banking Associations
and the rules, regulations and interpretations promulgated thereunder by
the primary regulator of national banking Associations, in each case now or
hereafter in effect.
(h) ANB shall have power to purchase and maintain insurance on
behalf of any person who is a director, officer, employee or agent of ANB,
or is or was serving at the request of ANB as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as
such, whether or not ANB would have the power to indemnify him or her
against such liability under the provisions of this Article. This
provision does not, however, authorize ANB to purchase insurance covering
civil money penalties assessed against a director or employee of ANB
pursuant to a formal order by an appropriate bank regulatory agency.
(i) For purposes of this Article, references to ANB shall include,
in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power
and authority to indemnify its directors, officers, and employees or
agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request
of such constituent corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
Article with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence
had continued.
(j) For purposes of this Article, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of ANB" shall include any
service as a director, officer, employee or agent of ANB which imposes
duties on, or involves services by such director, officer, employee, or
agent with respect to any employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in
a manner "not opposed to the best interests of ANB" as referred to in this
Article.
(k) The indemnification and advancement of expenses provided by or
granted pursuant to this Article shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be an
organizer, director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS
(a) Exhibits
- - - - - - -
1.1 -- Form of Underwriting Agreement.
4.1 -- Form of Pooling and Servicing Agreement.
4.2 -- Form of Series Supplement (including form of Certificate).
4.3 -- Form of Prospectus Supplement.
5.1 -- Opinion of Gene S. Schneyer, Esq. with respect to legality.
8.1 -- Opinion of Mayer, Brown & Platt with respect to tax matters.
23.1 -- Consent of Gene S. Schneyer, Esq. (included in his opinion
filed as Exhibit 5.1).
23.2 -- Consent of Mayer, Brown & Platt (included in its opinion
filed as Exhibit 8.1).
(b) Financial Statements
All financial statements, schedules and historical financial
information have been omitted as they are not applicable.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement; (i) To
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933; (ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; (iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement; provided, however, that (a)(i) and (a)(ii) will not
apply if the information required to be included in a post-effective
amendment thereby is contained in periodic reports filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(d) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in this registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(e) To provide to the underwriters specified in the underwriting
agreements at the closing, certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.
(f) That insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by the director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(g) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed
to be part of this registration statement as of the time it was declared
effective.
(h) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Township of Horsham,
Commonwealth of Pennsylvania, on July 15, 1996.
ADVANTA NATIONAL BANK
as originator of assets of the
Trust and Registrant
By /s/Robert A. Marshall
-------------------------
Robert A. Marshall
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Dennis Alter, Richard A. Greenawalt,
David D. Wesselink, Jeffrey D. Beck, Michael Coco and Gene Schneyer, and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for and in his name, place and
stead, in any and all capacities to sign any or all amendments (including
post-effective amendments) to this Registration Statement and any or all
other documents in connection therewith, and to file the same, with all
exhibits thereto, with the Securities and Exchange Commission, granting
unto said authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as might or could be done in person, hereby
ratifying and confirming all said attorneys-in-fact and agents or any of
them, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed on July 15, 1996 by
the following persons in the capacities indicated.
<TABLE>
<CAPTION>
Signatures Title
------------- ------
<S> <C>
/s/ Robert A. Marshall
- -----------------------
Robert A. Marshall President (Principal Executive
Officer) and Director
/s/ John J. Calamari
- ---------------------
John J. Calamari Vice President and Controller
(Principal Accounting Officer)
/s/ Edward E. Millman
- ----------------------
Edward E. Millman Vice President and Chief
Financial Officer
/s/ Jeffrey D. Beck
- ----------------------
Jeffrey D. Beck Senior Vice President and
Treasurer and Director
/s/ Ronald A. Averett
- ----------------------
Ronald A. Averett Vice President and Director
/s/ Richard A. Greenawalt
- --------------------------
Richard A. Greenawalt Director
/s/ Thomas A. Jackson
- ----------------------
Thomas A. Jackson Director
</TABLE>
<PAGE>
Exhibit Index
Exhibits
- --------
1.1 Form of Underwriting Agreement.
4.1 Form of Pooling and Servicing Agreement.
4.2 Form of Series Supplement (including form of Certificate).
4.3 Form of Prospectus Supplement.
5.1 Opinion of Gene S. Schneyer, Esq. with respect to legality.
8.1 Opinion of Mayer, Brown & Platt with respect to tax matters.
23.1 Consent of Gene S. Schneyer, Esq. (included in his opinion filed as
Exhibit 5.1).
23.2 Consent of Mayer, Brown & Platt (included in its opinion filed as
Exhibit 8.1).
Exhibit 1.1
Advanta Gold Master Trust
$_________ Class [A][B] [Zero Coupon] [Floating Rate] [___%]
Asset Backed Certificates, Series 1996-X
ADVANTA NATIONAL BANK
(AS TRANSFEROR AND SERVICER)
CLASS [A][B] UNDERWRITING AGREEMENT
________, 1996
[Name of Representative]
as Representative of the
Underwriters set forth herein
c/o [Address of Representative]
Ladies and Gentlemen:
1. Introductory. Advanta National Bank, a national banking
association ("ANB") proposes to cause the $__________ aggregate principal
amount of Advanta Gold Master Trust Class [A][B] [Floating Rate] [____%]
Asset Backed Certificates, Series 1996-X (the "Class [A][B] Certificates")
and the $________ aggregate principal amount of Advanta Gold Master Trust
Class [B][A] [Zero Coupon] [Floating Rate] [______%] Asset Backed
Certificates, Series 1996-X (the "Class [B][A] Certificates", and together
with the Class [A][B] Certificates, the "Certificates") to be issued under
a Pooling and Servicing Agreement, between ANB, as Transferor and Servicer,
and The Bank of New York, as Trustee (the "Trustee"), dated as of
_________, 1996, as supplemented by the Series 1996-X Supplement with
respect to the Certificates, dated as of _________, 1996 (together, the
"Pooling and Servicing Agreement") (references herein to the Pooling and
Servicing Agreement may, as the context requires, include all supplements,
including the Series 1996-X Supplement, to the Pooling and Servicing
Agreement).
The Class [B][A] Certificates are being sold concurrently
herewith pursuant to an underwriting agreement dated the date hereof (the
"Class [B][A] Underwriting Agreement"), between ANB and [the
representative] [the underwriter] named therein (the "Class [B][A]
Representative"). In addition, ANB, the Trustee and the Person(s)
designated therein as the ["Collateral Investors" (the "CA
Investors")]["Cash Collateral Provider"], will enter into a Loan Agreement,
dated as of ________, 1996 (the "Loan Agreement"), pursuant to which the
[CA Investors will purchase the Collateral Interest][Cash Collateral
Provider will fund the Cash Collateral Account] relating to the
Certificates. The assets of the Trust will include, among other things,
certain amounts due (the "Receivables") on a pool of VISA and MasterCard
credit card accounts of ANB (the "Accounts"), Interchange and recoveries on
Defaulted Receivables. To the extent not defined herein, capitalized terms
used herein have the meanings assigned in the Pooling and Servicing
Agreement.
ANB hereby agrees with _______, ___________, _________, and
________ (the "Underwriters") as follows:
2. Representations and Warranties of ANB. ANB represents and
warrants to, and agrees with, the Underwriters that:
(a) ANB is a national banking association duly organized and
validly existing in good standing under the laws of the United States, and
has all requisite corporate power, authority and legal right to own its
property and conduct its credit card business as such properties are
presently owned and such business is presently conducted, and to execute,
deliver and perform its obligations under this Agreement, the Class [B][A]
Underwriting Agreement, the Certificates and each of the Pooling and
Servicing Agreement and the Loan Agreement (the Pooling and Servicing
Agreement and the Loan Agreement, together, the "Transaction Documents").
(b) The execution and delivery of this Agreement, the Class
[B][A] Underwriting Agreement, the Certificates and each of the Transaction
Documents, the incurrence of the obligations herein and therein set forth
and the consummation of the transactions contemplated hereunder and
thereunder have been duly authorized by ANB by all necessary action on the
part of ANB.
(c) This Agreement and the Class [B][A] Underwriting Agreement
have been duly authorized and validly executed and delivered by ANB.
(d) Each of the Transaction Documents will be executed and
delivered by ANB on or before the Closing Date, and when executed and
delivered by the other parties thereto, will constitute a valid and binding
agreement of ANB, enforceable against ANB in accordance with its terms,
except to the extent that (i) the enforceability thereof may be subject to
insolvency, reorganization, moratorium, receivership or other similar laws
now or hereinafter in effect relating to creditors' or other obligee's
rights generally or the rights of creditors or other obligees insured by
the FDIC, (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought
and (iii) certain remedial provisions of the Pooling and Servicing
Agreement may be unenforceable in whole or in part under the UCC, but the
inclusion of such provisions does not render the other provisions of the
Pooling and Servicing Agreement invalid and, notwithstanding that such
provisions may be unenforceable in whole or in part, the Trustee, on behalf
of the Holders of the Certificates, will be able to enforce the remedies of
a secured party under the UCC.
(e) The Certificates will be issued pursuant to the terms of
the Pooling and Servicing Agreement and, when executed by ANB and
authenticated by the Trustee in accordance with the Pooling and Servicing
Agreement and delivered pursuant to this Agreement and the Class [B][A]
Underwriting Agreement, will be validly issued and outstanding and entitled
to the benefits of the Pooling and Servicing Agreement. The Certificates
will be in all material respects in the form contemplated by the Pooling
and Servicing Agreement and will conform to the description thereof
contained in the Prospectus and Registration Statement, as amended or
supplemented.
(f) ANB is not in violation of any Requirement of Law or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan agreement, note, lease or other instrument to which it is a
party or by which it is bound or to which any of its property is subject,
which violations or defaults separately or in the aggregate would have a
material adverse effect on ANB or the Trust.
(g) Neither the issuance and sale of the Certificates, nor the
execution and delivery by ANB of this Agreement, the Class [B][A]
Underwriting Agreement, the Certificates or the Transaction Documents, nor
the incurrence by ANB of the obligations herein or therein set forth, nor
the consummation of the transactions contemplated hereunder or thereunder,
nor the fulfillment of the terms hereof or thereof does or will (i) violate
any Requirement of Law presently in effect, applicable to it or its
properties or by which it or its properties are or may be bound or
affected, (ii) conflict with, or result in a breach of, or constitute a
default under, any indenture, contract, agreement, deed, lease, mortgage or
instrument to which it is a party or by which it or its properties are
bound, or (iii) result in the creation or imposition of any Lien upon any
of its property or assets, except for those encumbrances created under the
Pooling and Servicing Agreement.
(h) All consents, approvals, authorizations, orders, filings,
registrations or qualifications of or with any court or any other
governmental agency, board, commission, authority, official or body
required in connection with the execution and delivery by ANB of this
Agreement, the Class [B][A] Underwriting Agreement, the Certificates and
the Transaction Documents, the consummation of the transactions
contemplated hereunder and thereunder, and the fulfillment of the terms
hereof and thereof have been obtained or will have been obtained on or
before the Closing Date.
(i) All actions required to be taken by ANB as a condition to
the offer and sale of the Certificates as described herein or in the Class
[B][A] Underwriting Agreement or the consummation of any of the
transactions described in the Prospectus and Registration Statement have
been taken or, prior to the Closing Date, will be taken.
(j) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939.
(k) The representations and warranties made by ANB in the
Pooling and Servicing Agreement or in any Officer's Certificate of ANB
delivered pursuant to the Pooling and Servicing Agreement were true and
correct at the time made and will be true and correct on and as of the
Closing Date as if set forth herein.
(l) The Receivables conveyed to the Trust had an aggregate
outstanding balance determined as of _______, 1996 in the amount set forth
in the Prospectus.
(m) ANB agrees it has not granted, assigned, pledged or
transferred and shall not grant, assign, pledge or transfer to any Person a
security interest in, or any other right, title or interest in, the
Receivables, except as provided in the Pooling and Servicing Agreement, and
agrees to take all action required by the Pooling and Servicing Agreement
in order to maintain the security interest in the Receivables granted
pursuant to the Pooling and Servicing Agreement.
(n) A registration statement on Form S-3 (No. 333-_____),
including a form of prospectus and such amendments thereto as may have been
required to the date hereof, relating to the Certificates and the offering
thereof in accordance with Rule 415 under the Securities Act of 1933, as
amended (the "Act"), has been filed with, and has been declared effective
by, the Securities and Exchange Commission (the "Commission"). If any
post-effective amendment to such registration statement has been filed with
the Commission prior to the execution and delivery of this Agreement, the
most recent such amendment has been declared effective by the Commission.
For purposes of this Agreement, "Effective Time" means the date and time as
of which such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission, and
"Effective Date" means the date of the Effective Time. Such registration
statement, as amended at the Effective Time, is hereinafter referred to as
the "Registration Statement". ANB proposes to file with the Commission
pursuant to Rule 424(b) ("Rule 424(b)") under the Act a supplement (the
"Prospectus Supplement") to the prospectus included in the Registration
Statement (such prospectus, in the form it appears in the Registration
Statement or in the form most recently revised and filed with the
Commission pursuant to Rule 424(b), is hereinafter referred to as the "Base
Prospectus") relating to the Certificates and the method of distribution
thereof. The Base Prospectus and the Prospectus Supplement, together with
any amendment thereof or supplement thereto, are hereinafter referred to as
the "Prospectus".
(o) On the Effective Date, the Registration Statement conformed
in all respects to the requirements of the Act and the rules and
regulations of the Commission thereunder (the "Rules and Regulations") and
did not include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading; on the date of this Agreement, the
Registration Statement and the Prospectus conform, and at the time of
filing of the Prospectus pursuant to Rule 424(b) the Registration Statement
and the Prospectus will conform, in all respects with the requirements of
the Act and the Rules and Regulations; and, on the date of this Agreement
and on the Closing Date, neither of such documents includes, or will
include, any untrue statement of a material fact or omits, or will omit, to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except that the foregoing does not apply to
statements in or omissions from either of such documents based upon written
information furnished to ANB by the Underwriters specifically for use
therein.
(p) There has not been any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of ANB or its subsidiaries, taken as a whole, from _______,
1996.
3. Purchase, Sale, Payment and Delivery of the Certificates.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein
set forth, ANB agrees to sell to the Underwriters, and the Underwriters
agree to purchase from ANB, at a purchase price of ______% of the principal
amount thereof, $_______ aggregate principal amount of the Class [A][B]
Certificates, each Underwriter to purchase the amounts shown on Schedule A
hereto.
(b) ANB will deliver the Class [A][B] Certificates to the
Representative for the respective accounts of the several Underwriters
against payment of the purchase price in immediately available funds, drawn
to the order of ANB, at 10:00 a.m., New York City time, on _________, 1996,
or at such other time not later than seven full business days thereafter as
the Representative and ANB determine, such time being herein referred to as
the "Closing Date". The delivery of the Class [A][B] Certificates against
such payment on the Closing Date shall take place at the office of Mayer,
Brown & Platt in New York, New York 10019. Each of the Class [A][B]
Certificates to be so delivered shall be represented by one or more
definitive certificates registered in the name of Cede & Co., as nominee
for The Depository Trust Company. ANB shall make such definitive
certificates representing the Class [A][B] Certificates available for
inspection by the Underwriters at the office at which the Class [A][B]
Certificates are to be delivered no later than five hours before the close
of business in New York City on the Business Day prior to the Closing Date.
4. Offering by Underwriters. It is understood that after the
effectiveness of this Agreement, the Underwriters propose to offer the
Class [A][B] Certificates for sale to the public (which may include
selected dealers) as set forth in the Prospectus.
5. Certain Agreements of ANB. ANB agrees with the Underwriters
that:
(a) Immediately following the execution of this Agreement, ANB
will prepare a Prospectus Supplement setting forth the amount of
Certificates covered thereby and the terms thereof not otherwise specified
in the Base Prospectus, the price at which such Certificates are to be
purchased by the Underwriters and the Class [B][A] Representative, the
initial public offering price, the selling concessions and allowances, and
such other information as ANB deems appropriate. ANB will transmit the
Prospectus, including such Prospectus Supplement, to the Commission
pursuant to Rule 424(b) by a means reasonably calculated to result in
filing with the Commission pursuant to Rule 424(b). ANB will not file any
amendment of the Registration Statement with respect to the Class [A][B]
Certificates or supplement to the Prospectus unless a copy has been
furnished to the Representative for its review a reasonable time prior to
the proposed filing thereof or to which the Representative shall reasonably
object in writing. ANB will advise the Representative promptly of (i) the
effectiveness of any amendment or supplementation of the Registration
Statement or Prospectus, (ii) any request by the Commission for any
amendment or supplementation of the Registration Statement or the
Prospectus or for any additional information, (iii) the receipt by ANB of
any notification with respect to the suspension of qualification of the
Certificates for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purposes and (iv) the institution by the
Commission of any stop order proceeding in respect of the Registration
Statement, and will use its best efforts to prevent the issuance of any
such stop order and to obtain as soon as possible its lifting, if issued.
(b) If, at any time when a prospectus relating to the
Certificates is required to be delivered under the Act, any event occurs as
a result of which the Prospectus, as then amended or supplemented, would
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act, ANB
promptly will prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance. Neither the Representative's consent
to, nor the Underwriters' delivery of, any such amendment or supplement
shall constitute a waiver of any of the conditions set forth in Section 6.
(c) As soon as practicable, ANB will cause the Trust to make
generally available to the Certificateholders an earnings statement or
statements of the Trust covering a period of at least 12 months beginning
after the Effective Date which will satisfy the provisions of Section 11(a)
of the Act and Rule 158 of the Commission promulgated thereunder.
(d) ANB will furnish to the Representative copies of the
Registration Statement (one of which will be signed and will include all
exhibits), each related preliminary prospectus, the Prospectus and all
amendments and supplements to such documents, in each case as soon as
available and in such quantities as the Representative reasonably requests.
(e) ANB will endeavor to qualify the Class [A][B] Certificates
for sale under the securities or Blue Sky laws of such jurisdictions as the
Representative shall reasonably request and the determination of the
eligibility for investment of the Class [A][B] Certificates under the laws
of such jurisdictions as the Representative may designate and will continue
such qualifications in effect so long as required for the distribution of
the Class [A][B] Certificates; provided, however, that ANB shall not be
obligated to qualify to do business in any jurisdiction where such
qualification would subject ANB to general or unlimited service of process
in any jurisdiction where it is not now so subject.
(f) For a period from the date of this Agreement until the
retirement of the Class [A][B] Certificates, ANB, as Servicer, will furnish
to the Representative copies of each certificate and the annual statements
of compliance delivered to the Trustee pursuant to Article III of the
Pooling and Servicing Agreement and the annual independent certified public
accountant's servicing reports furnished to the Trustee and Servicer
pursuant to Article III of the Pooling and Servicing Agreement, by first
class mail as soon as practicable after such certificates, statements and
reports are furnished to the Trustee.
(g) So long as any Class [A][B] Certificate is outstanding, ANB
will furnish to the Representative, by first-class mail as soon as
practicable (i) all documents concerning the Certificates distributed by
ANB to Holders of the Certificates, or filed with the Commission pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(ii) any order of the Commission under the Act or the Exchange Act
applicable to the Trust or to ANB as originator of the assets of the Trust,
or pursuant to a "no-action" letter obtained from the staff of the
Commission by ANB and affecting the Trust or ANB as originator of the
assets of the Trust and (iii) from time to time, such other information
concerning the Trust as the Representative may reasonably request.
[(h) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated for any reason,
except as a result of a default by the Underwriters hereunder, ANB will pay
all expenses incident to the performance of its obligations under this
Agreement and will reimburse the Underwriters for any expenses (provided
that the Underwriters will reimburse ANB for one-half of such fees and
expenses of counsel and one-half of such printing costs and expenses)
incurred by them in connection with qualification of the Class [A][B]
Certificates for sale and determination of the eligibility of the Class
[A][B] Certificates for investment under the laws of such jurisdictions as
the Representative designates (other than any expenses relating to the
jurisdictions of Connecticut, Illinois, Indiana, Louisiana, Massachusetts,
Michigan, Missouri, New Jersey, Ohio and Pennsylvania) and the printing of
memoranda relating thereto, for any fees charged by investment rating
agencies for the rating of the Class [A][B] Certificates, for any filing
fee of the National Association of Securities Dealers, Inc. relating to the
Class [A][B] Certificates, and for expenses incurred in distributing
preliminary prospectuses and the Prospectus (including any amendments and
supplements thereto).]
(i) To the extent, if any, that any of the ratings provided
with respect to the Certificates by Moody's Investors Service, Inc. or
Standard & Poor's Ratings Services are conditional upon the furnishing of
documents or the taking of any other actions by ANB, ANB shall furnish such
documents and take any such other actions.
6. Conditions of the Obligations of the Underwriters. The
obligation of the Underwriters to purchase and pay for the Class [A][B]
Certificates will be subject to the accuracy of the representations and
warranties on the part of ANB herein, to the accuracy of the statements of
officers of ANB made pursuant to the provisions hereof, to the performance
by ANB of its obligations hereunder and to the following additional
conditions precedent:
(a) On or prior to the date of this Agreement, the
Representative shall have received a letter, dated the date of this
Agreement, of Arthur Andersen, LLP, confirming that they are independent
public accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder, substantially in the form
heretofore agreed to and otherwise in form and in substance satisfactory to
the Representative and its counsel.
(b) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 5(a) of this
Agreement; and, prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the
knowledge of ANB or the Representative, shall be contemplated by the
Commission.
(c) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, or any development involving
a prospective change, in or affecting particularly the business or
properties of ANB or Advanta Corp. which, in the Representative's judgment,
materially impairs the investment quality of the Certificates; (ii) any
downgrading in the rating of any debt securities of ANB or Advanta Corp. by
any "nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act), or any public announcement that any
such organization has under surveillance or review its rating of any such
debt securities (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating), (iii) any suspension or limitation of trading in securities
generally on the New York Stock Exchange, or any setting of minimum prices
for trading on such exchange, or any suspension of trading of any
securities of ANB or Advanta Corp. on any exchange or in the
over-the-counter market; (iv) any banking moratorium declared by Federal,
Delaware or New York authorities; or (v) any outbreak or escalation of
major hostilities in which the United States is involved, any declaration
of war by Congress or any other substantial national or international
calamity or emergency if, in the Representative's judgment, the effect of
any such outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the sale of and
payment for the Class [A][B] Certificates.
(d) The Representative shall have received an opinion, dated
the Closing Date, of Gene S. Schneyer, Vice President and General Counsel
of Advanta Corp., parent company of ANB, who, in that capacity has served
as counsel to ANB, to the effect that:
(i) ANB (x) has been duly chartered and is validly
existing as a national banking association under the laws of the
United States, with power and authority to own its properties and
conduct its business as described in the Prospectus; (y) is neither
required to qualify, nor required to register as a foreign
corporation, in any state in order to conduct its credit card
business, except where the failure to so qualify or register would not
have a material adverse affect upon the Holders of the Certificates;
and (z) has the power, authority and legal right to acquire, own and
service the Accounts and the Receivables.
(ii) ANB has the power and authority to execute and
deliver this Agreement, the Class [B][A] Underwriting Agreement, the
Pooling and Servicing Agreement, the Loan Agreement and the
Certificates and to consummate the transactions contemplated herein
and therein.
(iii) Each of the Class [B][A] Underwriting Agreement, the
Pooling and Servicing Agreement, the Loan Agreement and the
Certificates has been duly authorized, executed and delivered by ANB.
(iv) This Agreement has been duly authorized, executed and
delivered by ANB.
(v) The Registration Statement has become effective under
the Act and to the best of such counsel's knowledge no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or
threatened under the Act; the Registration Statement, the Prospectus
and each amendment thereof or supplement thereto (other than the
financial and statistical information contained therein) on their
respective effective dates or dates of issuance appear on their face
to be appropriately responsive in all material respects to the
applicable requirements of the Act and the Rules and Regulations; such
counsel has no reason to believe that either the Registration
Statement or the Prospectus, or any such amendment or supplement, as
of their respective dates, contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus, as amended or supplemented as of
the date of such opinion, contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (except that
such counsel may express no opinion as to (y) any financial
statements, schedules or other financial data included in the
Registration Statement, the Prospectus, or any such amendment or
supplement, or (z) the exhibits to the Registration Statement); and
the summaries in the Registration Statement and Prospectus of
statutes, legal proceedings, contracts and other documents are
accurate and fairly present the information required to be shown.
(vi) No consent, approval, authorization or order of, or
filing of UCC financing statements with any court or governmental
agency or body having jurisdiction over ANB is required for the
consummation of the transactions contemplated by this Agreement, the
Class [B][A] Underwriting Agreement, the Pooling and Servicing
Agreement or the Loan Agreement, except for (x) filing of UCC
financing statements with respect to the transactions contemplated in
the Pooling and Servicing Agreement; (y) such consents, approvals,
authorizations, orders or filings as have been obtained under the Act;
and (z) such consents, approvals, authorizations, orders or filings as
may be required under blue sky laws of any jurisdiction.
(vii) The execution, delivery and performance by ANB of
this Agreement, the Class [B][A] Underwriting Agreement, the Pooling
and Servicing Agreement and the Loan Agreement, the transfer of the
Receivables to the Trust, the issuance and sale of the Certificates
and the consummation of any other of the transactions contemplated
herein or in the Pooling and Servicing Agreement or the Loan Agreement
will not conflict with, result in a breach of or a violation of any of
the terms of, or constitute a default under, (x) the Articles of
Association or By-Laws of ANB or (y) any rule, order, statute or
regulation known to such counsel to be currently applicable to ANB, or
(z) any agreement or other instrument, known to such counsel, to which
ANB is a party or by which it is bound.
(viii) To such counsel's knowledge, there are no actions,
proceedings or investigations pending before any court, administrative
agency or other tribunal (w) asserting the invalidity of this
Agreement, the Class [B][A] Underwriting Agreement, the Pooling and
Servicing Agreement, the Loan Agreement or the Certificates, (x)
seeking to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by this
Agreement, the Class [B][A] Underwriting Agreement, the Pooling and
Servicing Agreement or the Loan Agreement, (y) which might materially
and adversely affect the performance by ANB of its obligations under,
or the validity or enforceability of, this Agreement, the Class [B][A]
Underwriting Agreement, the Pooling and Servicing Agreement, the Loan
Agreement or the Certificates or (z) seeking adversely to affect the
federal income tax attributes of the Certificates as described in the
Prospectus under the headings "Summary of Terms -- Tax Status" and
"U.S. Federal Income Tax Consequences".
(e) The Representative shall have received a letter of
[Richards, Layton & Finger], special Delaware counsel for ANB, to the
effect that the Representative may rely on those provisions of their
opinions to Moody's Investors Service, Inc. and Standard & Poor's Ratings
Services with respect to certain matters relating to the transfer of the
Receivables to the Trust, with respect to the perfection of the Trust's
interest in the Receivables and with respect to other related matters.
(f) The Representative shall have received an opinion of Mayer,
Brown & Platt, special counsel to ANB, addressed to the Representative,
dated the Closing Date and satisfactory in form and substance to the
Representative and its counsel, to the effect that the statements set forth
in the Prospectus under the headings "Summary of Terms -- Tax Status" and
"U.S. Federal Income Tax Consequences", to the extent that they constitute
matters of law or legal conclusions with respect thereto, have been
reviewed by such counsel and are correct in all material respects and to
the effect that the Certificates will be treated as indebtedness for
Federal income tax purposes.
(g) The Representative shall have received from Mayer, Brown &
Platt, special counsel for the Underwriters, such opinion or opinions,
dated the Closing Date, with respect to such matters relating to this
transaction as the Representative may require, and ANB shall have furnished
to such counsel such documents as they request for the purpose of enabling
them to pass upon such matters.
(h) The Representative shall have received a certificate from
ANB, dated the Closing Date, of two Vice Presidents or more senior officers
of ANB in which such officers, to the best of their knowledge after
reasonable investigation, shall state that (u) the representations and
warranties of ANB in this Agreement are true and correct in all material
respects on and as of the Closing Date, (v) ANB has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date, (w) the
representations and warranties of ANB, as Transferor and Servicer, in the
Pooling and Servicing Agreement are true and correct as of the dates
specified in the Pooling and Servicing Agreement, (x) no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or are threatened
by the Commission, (y) nothing has come to such officers' attention that
would lead such officers to believe that the Registration Statement or the
Prospectus, and any amendment or supplement thereto, as of its date and as
of the Closing Date, contained an untrue statement of a material fact or
omitted to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and (z) subsequent to the date of the Prospectus,
there has been no material adverse change in the financial position or
results of operation of ANB's credit card business except as set forth in
or contemplated by the Prospectus or as described in such certificate.
(i) The Representative shall have received an opinion of
[________], counsel to the Trustee, addressed to the Representative, dated
the Closing Date, satisfactory in form and substance to the Representative
and its counsel and substantially to the effect that:
(i) The Trustee has been duly incorporated and is validly
existing as a banking corporation under the laws of the State of New
York and has the power and authority to enter into and to perform all
actions required of it under the Pooling and Servicing Agreement and
the Loan Agreement.
(ii) Each of the Pooling and Servicing Agreement and the
Loan Agreement has been duly authorized, executed and delivered by the
Trustee and constitutes a legal, valid and binding obligation of the
Trustee, enforceable against the Trustee in accordance with its terms,
except as such enforceability may be limited by (y) bankruptcy,
insolvency, liquidation, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights in general, as
such laws would apply in the event of a bankruptcy, insolvency,
liquidation, reorganization, moratorium or similar occurrence
affecting the Trustee, and (z) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(iii) The Certificates have been duly authenticated and
delivered by the Trustee.
(iv) The execution and delivery of the Pooling and
Servicing Agreement and the Loan Agreement by the Trustee and the
performance by the Trustee of their terms do not conflict with or
result in a violation of (y) any law or regulation of the United
States of America or the State of New York governing the banking or
trust powers of the Trustee, or (z) the Certificate of Incorporation
or By-Laws of the Trustee.
(v) No approval, authorization or other action by, or
filing with, any governmental authority of the United States of
America or the State of New York having jurisdiction over the banking
or trust powers of the Trustee is required in connection with the
execution and delivery by the Trustee of the Pooling and Servicing
Agreement and the Loan Agreement or the performance by the Trustee
thereunder.
(j) The Representative shall have received an opinion of
counsel to [each CA Investor][the Cash Collateral Provider], addressed to
the Representative, dated the Closing Date, satisfactory to the
Representative and its counsel and substantially to the effect that:
(i) The [CA Investor][Cash Collateral Provider] is
validly existing as a foreign banking organization under the laws of
the State of New York and is duly licensed to maintain a branch office
in the State of New York.
(ii) The Loan Agreement has been duly authorized by all
necessary corporate action on the part of the [CA Investor][Cash
Collateral Provider].
(iii) The Loan Agreement has been duly executed and
delivered by the [CA Investor][Cash Collateral Provider] and, assuming
due authorization, execution and delivery of the Loan Agreement by the
other parties thereto, constitutes the legal, valid and binding
obligation of the [CA Investor][Cash Collateral Provider], enforceable
against the [CA Investor][Cash Collateral Provider] in accordance with
its terms under the laws of the State of New York, except as such
enforceability may be limited by (w) bankruptcy, insolvency,
receivership, conservatorship, reorganization, liquidation, moratorium
or other similar laws affecting the enforcement of creditor's rights
and remedies in general, as such laws would apply in the event of the
bankruptcy, insolvency, reorganization or liquidation of, or other
similar occurrence with respect to, the [CA Investor][Cash Collateral
Provider], or in the event of any moratorium or similar occurrence
affecting the [CA Investor][Cash Collateral Provider], (x) the
principles of law or equity relating to fraud, (y) general principles
of equity, including, but not limited to, the availability of certain
equitable remedies and (z) the refusal of a court to enforce a
covenant to indemnify on grounds that such covenant is contrary to
public policy.
(iv) The [New York Branch] of the [CA Investor][Cash
Collateral Provider] is duly licensed to do business in the State of
New York and is subject to regulation by the United States and the
State of New York. The [New York Branch] of the [CA Investor][Cash
Collateral Provider] is subject to service of process in the State of
New York.
(v) No consent, license (other than the license referred to
in paragraph (iv)), or approval of any governmental authority, agency
or instrumentality of the United States or the State of New York is
required in connection with the validity of, or the execution,
delivery, performance or enforceability of, the Loan Agreement.
[(k) The Representative shall have received an opinion of
foreign counsel to each CA Investor addressed to the Representative, dated
the Closing Date, satisfactory to the Representative and its counsel and
substantially to the effect that:
(i) The [CA Investor][Cash Collateral Provider] is a
banking corporation duly organized and validly existing under the laws
of the relevant foreign jurisdiction. The [CA Investor][Cash
Collateral Provider] has the corporate power and authority to execute,
deliver and perform, through its New York Branch, its obligations
under the Loan Agreement.
(ii) The Loan Agreement has been duly authorized by the [CA
Investor][Cash Collateral Provider] and, when duly executed and
delivered by an authorized officer of the [CA Investor][Cash
Collateral Provider], will constitute the legal, valid and binding
obligation of the [CA Investor][Cash Collateral Provider] enforceable
against the [CA Investor][Cash Collateral Provider] in accordance with
its terms, except as limited by bankruptcy, insolvency, liquidation,
reorganization, moratorium or other similar laws affecting generally
the enforcement of creditors' rights and remedies as the same may be
applied in the event of the bankruptcy, insolvency, liquidation,
reorganization or similar situation of the [CA Investor][Cash
Collateral Provider] or a moratorium applicable to the [CA
Investor][Cash Collateral Provider]. The obligations of the [CA
Investor][Cash Collateral Provider] under the Loan Agreement will rank
equally with general deposits and all other unsecured indebtedness of
the [CA Investor][Cash Collateral Provider] whether now or hereafter
outstanding which are not contractually subordinated to the payment of
such obligations.
(iii) Any final money judgment for a fixed and definite sum
by a competent New York Court or United States Court sitting in New
York obtained against the [CA Investor][Cash Collateral Provider] and
based upon the Loan Agreement should, upon request, be declared valid
and enforceable by the competent courts of the relevant foreign
jurisdiction, if such judgment is not subject to appeal and is
enforceable according to the laws of New York; provided, however, that
such judgment will not be enforced if its contents are in violation of
fundamental principles of the relevant foreign jurisdiction's legal
system or if it has been rendered in violation of such principles.
Such counsel knows of no reason why recognition of such judgment would
be deemed or held to the contrary to the relevant foreign
jurisdiction's legal system. In addition, enforcement may be refused
if the foreign state does not observe reciprocity. Reciprocity is
affirmed with regard to decisions of United States courts and of
courts of the State of New York. As a general rule it can be stated
that decisions of United States courts and of courts of the State of
New York are enforceable in the relevant foreign jurisdiction.
(iv) The parties to the Loan Agreement will alternatively
be able to proceed against the [CA Investor's][Cash Collateral
Provider's] head office in the relevant foreign jurisdiction, if the
[CA Investor][Cash Collateral Investor] defaults in its obligations
under the Loan Agreement.]
(l) The Representative shall have received evidence
satisfactory to it that the Class [A][B] Certificates shall be rated
[Aaa][Aa] by Moody's Investors Service, Inc. and [AAA][A] by Standard &
Poor's Ratings Services.
ANB will furnish the Representative with such conformed copies
of such opinions, certificates, letters and documents as the Representative
reasonably requests.
7. Indemnification and Contribution. (a) ANB will indemnify and
hold harmless the Underwriters against any losses, claims, damages or
liabilities, joint or several, to which the Underwriters may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and will reimburse the Underwriters for any legal or
other expenses reasonably incurred by the Underwriters in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the
foregoing indemnity with respect to any preliminary prospectus shall not
inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) from whom the person asserting any such
losses, claims, damages or liabilities purchased Class [A][B] Certificates
if such untrue statement or omission or alleged untrue statement or
omission made in such preliminary prospectus is eliminated or remedied in
the Prospectus (as amended or supplemented if ANB shall have furnished any
amendments or supplements thereto) and, if required by law, a copy of the
Prospectus (as so amended or supplemented) shall not have been furnished to
such person at or prior to the written confirmation of the sale of such
Class [A][B] Certificates to such person; and provided further, that ANB
will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with written
information furnished to ANB by the Underwriters specifically for use
therein.
(b) The Underwriters agree to indemnify and hold harmless ANB
against any losses, claims, damages or liabilities to which ANB may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to ANB by the Underwriters specifically for
use therein, and will reimburse any legal or other expenses reasonably
incurred by ANB in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under subsection (a) or (b) above, notify the indemnifying party of
the commencement thereof; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under subsection (a) or (b) above. In
case any such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party),
and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative
benefits received by ANB on the one hand and the Underwriters on the other
from the offering of the Class [A][B] Certificates or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of ANB
on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations. The
relative benefits received by ANB on the one hand and the Underwriters on
the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) of the Class [A][B]
Certificates received by ANB bear to the total underwriting discounts and
commissions received by the Underwriters with respect to the Class [A][B]
Certificates. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by ANB or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission with respect to the
Class [A][B] Certificates. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the
first sentence of this subsection (d) shall be deemed to include any other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), the
Underwriters shall not be required to contribute any amount in excess of
the amount by which the total price at which the Class [A][B] Certificates
underwritten by the Underwriters and distributed to the public were offered
to the public exceeds the amount of any damages which the Underwriters have
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission with respect to the Class [A][B]
Certificates. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(e) The obligations of ANB under this Section shall be in
addition to any liability which ANB may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls
the Underwriters within the meaning of the Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability which
the Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of ANB, to each officer of ANB who has
signed the Registration Statement and to each person, if any, who controls
ANB within the meaning of the Act.
8. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of ANB or its officers and of the Underwriters set forth in or
made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof,
made by or on behalf of the Underwriters, ANB or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Class [A][B] Certificates. If this
Agreement is terminated or if for any reason other than default by the
Underwriters the purchase of the Class [A][B] Certificates by the
Underwriters is not consummated, ANB shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the
respective obligations of ANB and the Underwriters pursuant to Section 7
shall remain in effect. If for any reason the purchase of the Class [A][B]
Certificates by the Underwriters is not consummated other than solely
because of the occurrence of any event specified in clause (iii), (iv) or
(v) of Section 6(c), ANB will reimburse the Underwriters for all
out-of-pocket expenses (including reasonable fees and disbursements of
counsel and reasonable costs and expenses of printing to the extent set
forth in Section 5(h)) reasonably incurred by them in connection with the
offering of the Class [A][B] Certificates.
9. Computational Materials and ABS Term Sheets. (a) Each
Underwriter agrees to provide to ANB, not less than two Business Days prior
to the date on which ANB is required to file the Prospectus Supplement
pursuant to Rule 424(b), any information used by it (in such written or
electronic format as required by ANB) with respect to the offering of the
Class [A][B] Certificates that constitutes "Computational Materials", as
defined in the Commission's No-Action Letter, dated May 20, 1994, addressed
to Kidder, Peabody Acceptance Corporation I, Kidder, Peabody & Co.
Incorporated and Kidder Structured Asset Corporation (as made generally
applicable to registrants, issuers and underwriters by the Commission's
response to the request of the Public Securities Association dated May 27,
1994 (the "Kidder/PSA Letter")), that is not contained in the Prospectus or
any preliminary prospectus (without taking into account information
incorporated therein by reference).
(b) Each Underwriter agrees to provide to ANB, not less than
two Business Days prior to the date on which ANB is required to file the
Prospectus Supplement pursuant to Rule 424(b), any information used by it
(in such written or electronic format as required by ANB) with respect to
the offering of the Class [A][B] Certificates that constitutes "ABS Term
Sheets", as defined in the Commission's No-Action Letter, dated February
17, 1995, addressed to the Public Securities Association, that is not
contained in the Prospectus or any preliminary prospectus (without taking
into account information incorporated therein by reference).
(c) Each Underwriter severally agrees, assuming all information
provided by ANB is accurate and complete in all material respects, to
indemnify and hold harmless ANB, each of the officers and directors of ANB
and each person who controls ANB within the meaning of Section 15 of the
Act against any and all losses, claims, damages or liabilities, joint or
several, to which they may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement of a
material fact contained in the Computational Materials or ABS Term Sheets,
if any, provided by such Underwriter, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and agrees
to reimburse each such indemnified party for any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending or preparing to defend any such loss, claim,
damage, liability or action as such expenses are incurred. The obligations
of an Underwriter under this Section 9(c) shall be in addition to any
liability that such Underwriter may otherwise have.
The procedures set forth in Sections 7(c) and 7(d) shall be
equally applicable to this Section 9(c).
10. Notices. All communications hereunder will be in writing and,
if sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to: [Name and Address of Representative].
11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
12. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
13. Financial Services Act. Each Underwriter represents and
warrants to, and agrees with, ANB that (w) it has complied and shall comply
with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the Class [A][B] Certificates
in, from or otherwise involving the United Kingdom; (x) it has only issued
or passed on and shall only issue or pass on in the United Kingdom any
document received by it in connection with the issue of the Class [A][B]
Certificates to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1995 or who is a person to whom the document may otherwise lawfully be
issued or passed on; (y) if that Underwriter is an authorized person under
Chapter III of Part 1 of the Financial Services Act 1986, it has only
promoted and shall only promote (as that term is defined in Regulation
1.02(2) of the Financial Services (Promotion of Unregulated Schemes)
Regulations 1991) to any person in the United Kingdom the scheme described
in the Prospectus if that person is of a kind described either in Section
76(2) of the Financial Services Act 1986 or in Regulation 1.04 of the
Financial Services (Promotion of Unregulated Schemes) Regulations 1991; and
(z) it is a person of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995.
<PAGE>
If you are in agreement with the foregoing, please sign two
counterparts hereof and return one to ANB whereupon this letter and your
acceptance shall become a binding agreement among ANB and the Underwriters.
Very truly yours,
ADVANTA NATIONAL BANK
By____________________
Name: ____________
Title: ____________
The foregoing Agreement is
hereby confirmed and accepted
as of the date hereof
[NAME OF REPRESENTATIVE]
as Representative of the
Underwriters set forth herein
By____________________
Name:
Title:
<PAGE>
SCHEDULE A
Class [A][B] Certificates
Underwriters Principal Amount of
Class [A][B] Certificates
<PAGE>
Exhibit 4.1
__________________________________________________________________
ADVANTA NATIONAL BANK,
as Servicer,
ADVANTA NATIONAL BANK,
as a Transferor
and
THE BANK OF NEW YORK,
Trustee
ADVANTA GOLD MASTER TRUST
POOLING AND SERVICING AGREEMENT
Dated as of ____________, 1996
__________________________________________________________________
<PAGE>
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitional Provisions.. . . . . . . 24
ARTICLE II CONVEYANCE OF RECEIVABLES
SECTION 2.01. Conveyance of Receivables.. . . . . . . . . 24
SECTION 2.02. Acceptance by Trustee.. . . . . . . . . . . 26
SECTION 2.03. Representations and Warranties of the
Transferors Relating to the Transferors . . 27
SECTION 2.04. Representations and Warranties of the
Transferors Relating to this Agreement and
the Receivables.. . . . . . . . . . . . . . 29
SECTION 2.05. Reassignment of Ineligible Receivables. . . 32
SECTION 2.06. Reassignment of Receivables in Trust
Portfolio.. . . . . . . . . . . . . . . . . 33
SECTION 2.07. Covenants of the Transferors. . . . . . . . 34
SECTION 2.08. Addition of Accounts. . . . . . . . . . . . 37
SECTION 2.09. Removal of Accounts and Participation
Interests . . . . . . . . . . . . . . . . . 41
SECTION 2.10. Account Allocations . . . . . . . . . . . . 43
SECTION 2.11. Discount Option . . . . . . . . . . . . . . 44
SECTION 2.12. Additional Transferors. . . . . . . . . . . 44
ARTICLE III ADMINISTRATION AND SERVICING
SECTION 3.01. Acceptance of Appointment and Other Matters
Relating to the Servicer. . . . . . . . . . 45
SECTION 3.02. Servicing Compensation. . . . . . . . . . . 46
SECTION 3.03. Representations, Warranties and Covenants
of the Servicer . . . . . . . . . . . . . . 47
SECTION 3.04. Reports and Records for the Trustee . . . . 50
SECTION 3.05. Annual Certificate of Servicer. . . . . . . 50
SECTION 3.06. Annual Servicing Report of Independent Public
Accountants; Copies of Reports Available. . 51
SECTION 3.07. Tax Treatment . . . . . . . . . . . . . . . 51
SECTION 3.08. Notices to ANB. . . . . . . . . . . . . . . 52
SECTION 3.09. Adjustments . . . . . . . . . . . . . . . . 52
SECTION 3.10. Reports to the Commission . . . . . . . . . 53
ARTICLE IV RIGHTS OF HOLDERS; ALLOCATION AND APPLICATION
OF COLLECTIONS
SECTION 4.01. Rights of Holders . . . . . . . . . . . . . 53
SECTION 4.02. Establishment of Collection Account and
Excess Funding Account. . . . . . . . . . . 54
SECTION 4.03. Collections and Allocations . . . . . . . . 55
SECTION 4.04. Shared Principal Collections; Excess Funding
Account . . . . . . . . . . . . . . . . . . 56
SECTION 4.05 Excess Finance Charge Collections . . . . . 57
SECTION 4.06. Allocation of Trust Assets to Series or
Groups. . . . . . . . . . . . . . . . . . . 57
ARTICLE V DISTRIBUTIONS AND REPORTS TO HOLDERS
ARTICLE VI THE CERTIFICATES
SECTION 6.01. The Certificates. . . . . . . . . . . . . . 58
SECTION 6.02. Authentication of Certificates. . . . . . . 59
SECTION 6.03. New Issuances . . . . . . . . . . . . . . . 59
SECTION 6.04. Registration of Transfer and Exchange
of Certificates . . . . . . . . . . . . . . 62
SECTION 6.05. Mutilated, Destroyed, Lost or Stolen
Certificates. . . . . . . . . . . . . . . . 65
SECTION 6.06. Persons Deemed Owners . . . . . . . . . . . 65
SECTION 6.07. Appointment of Paying Agent . . . . . . . . 66
SECTION 6.08. Access to List of Registered Holders'
Names and Addresses . . . . . . . . . . . . 67
SECTION 6.09. Authenticating Agent. . . . . . . . . . . . 67
SECTION 6.10. Book-Entry Certificates . . . . . . . . . . 68
SECTION 6.11. Notices to Clearing Agency. . . . . . . . . 69
SECTION 6.12. Definitive Certificate. . . . . . . . . . . 69
SECTION 6.13. Global Certificate; Exchange Date . . . . . 70
SECTION 6.14. Meetings of Holders . . . . . . . . . . . . 72
SECTION 6.15. Uncertificated Classes. . . . . . . . . . . 74
ARTICLE VII OTHER MATTERS RELATING TO THE TRANSFERORS
SECTION 7.01. Liability of the Transferors. . . . . . . . 74
SECTION 7.02. Merger or Consolidation of, or Assumption
of the Obligations of, the Transferors. . . 75
SECTION 7.03. Limitations on Liability of the Transferors 76
SECTION 7.04. Liabilities . . . . . . . . . . . . . . . . 76
ARTICLE VIII OTHER MATTERS RELATING TO THE SERVICER
SECTION 8.01. Liability of the Servicer . . . . . . . . . 77
SECTION 8.02. Merger or Consolidation of, or Assumption
of the Obligations of, the Servicer . . . . 77
SECTION 8.03. Limitation on Liability of the Servicer
and Others. . . . . . . . . . . . . . . . . 78
SECTION 8.04. Servicer Indemnification of the Trust and
the Trustee . . . . . . . . . . . . . . . . 78
SECTION 8.05. The Servicer Not To Resign. . . . . . . . . 79
SECTION 8.06. Access to Certain Documentation and
Information Regarding the Receivables . . . 79
SECTION 8.07. Delegation of Duties. . . . . . . . . . . . 80
SECTION 8.08. Examination of Records. . . . . . . . . . . 80
ARTICLE IX PAY OUT EVENTS
SECTION 9.01. Trust Pay Out Events. . . . . . . . . . . . 80
SECTION 9.02. Additional Rights Upon the Occurrence
of Certain Events . . . . . . . . . . . . . 81
ARTICLE X SERVICER DEFAULTS
SECTION 10.01. Servicer Defaults. . . . . . . . . . . . . 82
SECTION 10.02. Trustee To Act, Appointment of Successor . 85
SECTION 10.03. Notification to Holders. . . . . . . . . . 86
ARTICLE XI THE TRUSTEE
SECTION 11.01. Duties of Trustee. . . . . . . . . . . . . 86
SECTION 11.02. Certain Matters Affecting the Trustee. . . 88
SECTION 11.03. Trustee Not Liable for Recitals in
Certificates . . . . . . . . . . . . . . . 89
SECTION 11.04. Trustee May Not Own Certificates . . . . . 90
SECTION 11.05. The Servicer To Pay Trustee's Fees
and Expenses . . . . . . . . . . . . . . . 90
SECTION 11.06. Eligibility Requirements for Trustee . . . 90
SECTION 11.07. Resignation or Removal of Trustee. . . . . 91
SECTION 11.08. Successor Trustee. . . . . . . . . . . . . 91
SECTION 11.09. Merger or Consolidation of Trustee . . . . 92
SECTION 11.10. Appointment of Co-Trustee or Separate
Trustee. . . . . . . . . . . . . . . . . . 92
SECTION 11.11. Tax Returns. . . . . . . . . . . . . . . . 94
SECTION 11.12. Trustee May Enforce Claims Without Possession
of Certificates. . . . . . . . . . . . . . 94
SECTION 11.13. Suits for Enforcement. . . . . . . . . . . 94
SECTION 11.14. Rights of Holders To Direct Trustee. . . . 95
SECTION 11.15. Representations and Warranties of Trustee. 96
SECTION 11.16. Maintenance of Office or Agency. . . . . . 96
ARTICLE XII TERMINATION
SECTION 12.01. Termination of Trust . . . . . . . . . . . 96
SECTION 12.02. Final Distribution . . . . . . . . . . . . 97
SECTION 12.03. Transferors' Termination Rights. . . . . . 98
SECTION 12.04. Defeasance . . . . . . . . . . . . . . . . 98
SECTION 12.05. Optional Purchase. . . . . . . . . . . . .100
ARTICLE XIII MISCELLANEOUS PROVISIONS
SECTION 13.01. Amendment; Waiver of Past Defaults . . . .101
SECTION 13.02. Protection of Right, Title and Interest
to Trust . . . . . . . . . . . . . . . . .103
SECTION 13.03. Limitation on Rights of Holders. . . . . .105
SECTION 13.04. GOVERNING LAW. . . . . . . . . . . . . . .106
SECTION 13.05. Notices; Payments. . . . . . . . . . . . .106
SECTION 13.06. Rule 144A Information. . . . . . . . . . .107
SECTION 13.07. Severability of Provisions . . . . . . . .107
SECTION 13.08. Certificates Nonassessable and Fully Paid.107
SECTION 13.09. Nonpetition Covenant . . . . . . . . . . .107
SECTION 13.10. No Waiver; Cumulative Remedies . . . . . .108
SECTION 13.11. Counterparts . . . . . . . . . . . . . . .108
SECTION 13.12. Beneficiaries. . . . . . . . . . . . . . .108
SECTION 13.13. Actions by Holders . . . . . . . . . . . .108
SECTION 13.14. Merger and Integration . . . . . . . . . .108
EXHIBITS
Exhibit A Form of Advanta Certificate
Exhibit B Form of Assignment of Receivables in Additional
Accounts
Exhibit C Form of Reassignment of Receivables in Removed
Accounts
Exhibit D Form of Annual Servicer's Certificate
Exhibit E-1 Private Placement Legend
Exhibit E-2 Representation Letter
Exhibit E-3 ERISA Legend
Exhibit F-1 Form of Certificate of Foreign Clearing Agency
Exhibit F-2 Form of Alternate Certificate to be delivered to
Foreign Clearing Agency
Exhibit F-3 Form of Certificate to be delivered to Foreign
Clearing Agency
Exhibit G-1 Form of Opinion of Counsel with respect to
Amendments
Exhibit G-2 Form of Opinion of Counsel with respect to
Accounts
Exhibit H Corporate Separateness Requirements
SCHEDULES
Schedule 1 Account Schedule [Deemed Incorporated]
<PAGE>
<PAGE>
POOLING AND SERVICING AGREEMENT dated as of ___________, 1996
among (i) ADVANTA NATIONAL BANK, a national banking association, as
Servicer, and as the sole initial Transferor and (ii) THE BANK OF
NEW YORK, a New York banking corporation, as Trustee.
ARTICLE I DEFINITIONS
SECTION 1.01. Definitions. Whenever used in this Agreement,
the following words and phrases shall have the following meanings:
"Account" means each Initial Account and each Additional
Account, but shall exclude any Account all the Receivables in which
are either reassigned or assigned to a Transferor or its designee
or the Servicer in accordance with this Agreement. The term
"Account" includes each account into which an Account is
transferred (a "Transferred Account"); provided that (i) such
transfer is made in accordance with the Credit Card Guidelines and
(ii) such Transferred Account can be traced or identified, by
reference to or by way of the Account Schedules as an account into
which an Account has been transferred. The term "Account" shall be
deemed to refer to (x) any Additional Account only from and after
its Addition Date and (y) any Removed Account only prior to its
Removal Date.
"Account Schedule" means a computer file or microfiche list
delivered to the Trustee pursuant to Section 2.01 or 2.08 and
containing a list of Accounts, identified by account number and
setting forth the Receivable balance for each as of (a) the Trust
Cut-Off Date (for the Account Schedule delivered on the Initial
Closing Date), (b) the related Addition Cut-Off Date (for any
Account Schedule delivered in connection with any designation of
Additional Accounts) or (c) the Removal Cut-Off Date (for any
Account Schedule delivered in connection with any designation of
Removed Accounts).
"Act" means the Securities Act of 1933.
"Addition" means the designation of additional Eligible
Accounts to be included as Accounts or of Participation Interests
to be included as Trust Assets pursuant to subsection 2.08(a), (b)
or (d).
"Additional Account" means each revolving credit card account
or other revolving credit account established pursuant to a
Cardholder Agreement, which account is designated pursuant to
subsection 2.08(a), (b) or (d) to be included as an Account and is
identified in an Account Schedule.
"Additional Transferor" is defined in Section 2.12.
"Addition Cut-Off Date" means, as to any Additional Accounts
or Participation Interests to be included in the Trust, the date
specified in the related Assignment.
"Addition Date" means (i) as to any Additional Account, the
date on which the Receivables in such Additional Account are first
conveyed to the Trust pursuant to subsection 2.08(a), (b) or (d)
and (ii) as to any Participation Interest, the date from and after
which such Participation Interest is to be included as a Trust
Asset pursuant to subsection 2.08(a) or (b).
"Advanta Certificate" means the certificate executed by ANB
and authenticated by or on behalf of the Trustee, substantially in
the form of Exhibit A, as the same may be modified in accordance
with Section 2.12.
"Adverse Effect" means, as to any action, that such action
will (a) result in the occurrence of a Pay Out Event with respect
to any Series or (b) materially adversely affect the amount or
timing of distributions to be made to the Investor Holders of any
Series or Class pursuant to this Agreement and the related
Supplement.
"Affiliate" means, as to any Person, any other Person
controlling, controlled by or under common control with the
specified Person. For this purpose, "control" means the power to
direct the management and policies of a Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled"
have correlative meanings.
"Aggregate Investor Amount" means, as of any date of
determination, the sum on such date of the aggregate Investor
Amounts and the aggregate Enhancement Investor Amounts, if any, for
all outstanding Series.
"Aggregate Series Percentage" means, as to Principal
Receivables, Defaulted Receivables and Finance Charge Receivables
and any date of determination, the sum of the Series Percentages
for such categories of Receivables for all outstanding Series on
such date of determination.
"Agreement" means this Pooling and Servicing Agreement and all
amendments hereof and supplements hereto, including, as to any
Series or Class, the related Supplement.
"Amortization Period" means, as to any Series or Class, any
period specified in the related Supplement (which may be designated
as a controlled amortization period, a controlled accumulation
period, a limited amortization period, an optional amortization
period, a principal amortization period, a rapid amortization
period, a rapid accumulation period or any other accumulation or
amortization period) during which principal collections are set
aside to repay the principal investment in that Series or Class.
"ANB" means Advanta National Bank, a national banking
association.
"Applicants" is defined in Section 6.08.
"Assignment" is defined in subsection 2.08(c)(vii).
"AUS" means Advanta National Bank USA, a national banking
association.
"Authorized Newspaper" means any newspaper or newspapers of
general circulation in the Borough of Manhattan, The City of New
York, or Philadelphia, Pennsylvania, printed in the English
language (and, with respect to any Series or Class, in such other
cities and languages as may be specified in the related Supplement)
and customarily published on each business day at such place,
whether or not published on Saturdays, Sundays or holidays.
"Automatic Additional Account" is defined in subsection
2.08(d).
"Bearer Certificates" is defined in Section 6.01.
"Benefit Plan" is defined in subsection 6.04(c).
"Book-Entry Certificates" means beneficial interests in the
Investor Certificates, ownership and transfers of which shall be
made through book entries by a Clearing Agency as described in
Section 6.10.
"Business Day" means any day other than (a) a Saturday or
Sunday or (b) any other day on which banks in New York, New York,
Philadelphia, Pennsylvania, or Wilmington, Delaware (or, with
respect to any Series, any additional city specified in the related
Supplement) or any other State in which the principal executive
offices of AUS or any Transferor are located, are authorized or
obligated by law, executive order or governmental decree to be
closed.
"Cardholder Agreement" means, with respect to an Account, the
agreements between the applicable Credit Card Originator and the
related Obligor governing the terms and conditions of such Account,
as such agreements may be amended, modified or otherwise changed
from time to time and as distributed (including any amendments and
revisions thereto) to holders of such Account.
"Cash Advance Fees" means amounts referred to as "cash advance
fees," "cash access/cash advance fees," "cash access fees,"
"transaction fees for cash advances," or "cash advance charges" (or
similar terms) in the Credit Card Agreement applicable to any
Account.
"Certificate" means any Investor Certificate or Transferor
Certificate.
"Certificate Owner" means the owner of a Book-Entry
Certificate, as reflected on the books of the Clearing Agency, or
on the books of a Person maintaining an account with such Clearing
Agency (directly or as an indirect participant, in accordance with
the rules of such Clearing Agency).
"Certificate Register" is defined in Section 6.04.
"Class" means, as to any Series, any one of the classes of
Investor Certificates of that Series.
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a Person for whom from
time to time a Clearing Agency effects book entry transfers and
pledges of securities deposited with the Clearing Agency.
"Closing Date" means, as to any Series, the closing date
specified in the related Supplement.
"Code" means the Internal Revenue Code of 1986.
"Collection Account" is defined in Section 4.02.
"Collections" means all payments by or on behalf of Obligors
(including Insurance Proceeds) received in respect of the
Receivables, in the form of cash, checks (to the extent collected),
wire transfers, electronic transfers, ATM transfers or other form
of payment in accordance with the Cardholder Agreement in effect
from time to time. All Insurance Proceeds will be treated as
Collections of Finance Charge Receivables. Collections with
respect to any Monthly Period shall include a portion, calculated
pursuant to subsection 2.07(i), of Interchange paid to the Trust
with respect to such Monthly Period, to be applied as if such
amount were Collections of Finance Charge Receivables for all
purposes. As specified in any Participation Interest Supplement or
Supplement, Collections shall include amounts received with respect
to Participation Interests.
"Commission" means the Securities and Exchange Commission.
"Contractually Delinquent" means, when used in reference to an
Account, that a required minimum payment for that Account set forth
on the related billing statement has not been received by its due
date.
"Corporate Trust Office" means the principal office of the
Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date of the
execution of this Agreement is located at 101 Barclay Street, New
York, New York, 10286; Attention: ______________________.
"Coupon" is defined in Section 6.01.
"Credit Card Guidelines" means the written policies and
procedures of the applicable Credit Card Originator relating to the
operation of its revolving lending business, including the written
policies and procedures for determining the creditworthiness of
credit card account customers, the extension of credit to such
customers and the maintenance of credit card accounts and
collection of receivables with respect thereto, as such policies
and procedures may be amended, modified, or otherwise changed from
time to time.
"Credit Card Originator" means (a) initially, ANB and (b) in
addition, any other Person that owns revolving credit card accounts
or other revolving credit accounts that are designated as Accounts
and either is a Transferor or enters into a Receivables Purchase
Agreement with a Transferor (or any Person that in turn enters into
a Receivables Purchase Agreement with a Transferor). A Credit Card
Originator is "related" to a Transferor if Receivables arising in
Accounts owned by that Credit Card Originator are sold, directly or
indirectly, to that Transferor for purposes of transfer to the
Trust.
"Date of Processing" means, as to any transaction or receipt
of Collections, the Business Day such transaction or receipt of
Collections is first recorded on the Servicer's computer file of
revolving credit accounts (without regard to the effective date of
such recordation).
"Defaulted Amount" means, for any Monthly Period, an amount
(which shall not be less than zero) equal to (a) the amount of
Principal Receivables which became Defaulted Receivables in such
Monthly Period, minus (b) the amount of any Defaulted Receivables
included in any Account the Receivables in which a Transferor or
the Servicer became obligated to accept reassignment or assignment
in accordance with this Agreement during such Monthly Period;
provided that, if an Insolvency Event occurs with respect to any
Transferor, the amount of such Defaulted Receivables which are
subject to reassignment to such Transferor in accordance with this
Agreement shall not be so subtracted and, if any of the events
described in subsection 10.01(d) occur with respect to the
Servicer, the amount of such Defaulted Receivables which are
subject to reassignment or assignment to the Servicer in accordance
with this Agreement shall not be so subtracted.
"Defaulted Receivables" means, for any Monthly Period, all
Principal Receivables which are charged off as uncollectible in
such Monthly Period in accordance with the Credit Card Guidelines
and the Servicer's customary and usual servicing procedures for
servicing revolving credit account receivables comparable to the
Receivables. A Principal Receivable shall become a Defaulted
Receivable on the day on which such Principal Receivable is
recorded as charged off on the Servicer's computer master file of
accounts.
"Defeased Series" is defined in subsection 12.04(a).
"Definitive Certificates" is defined in Section 6.10.
"Definitive Euro-Certificates" is defined in Section 6.13.
"Depositaries" means the Person specified in the applicable
Supplement, in its capacity as depositary for the respective
accounts of any Clearing Agency or any Foreign Clearing Agencies.
"Depository Agreement" means, if applicable with respect to
any Series or Class, the agreement among the Transferors, the
Trustee and a Clearing Agency, or as otherwise provided in the
related Supplement.
"Designated Credit Card Originator" means each Credit Card
Originator other than any Credit Card Originator for which the
Rating Agency Condition is satisfied as to such Credit Card
Originator not being a Designated Credit Card Originator.
"Designated Transferor" means each Transferor other than any
Transferor for which the Rating Agency Condition is satisfied as to
such Transferor not being a Designated Transferor.
"Determination Date" means, unless otherwise specified in the
related Supplement, with respect to any Distribution Date, the
third Business Day preceding such Distribution Date.
"Discount Option Date" means each date on which a Discount
Percentage designated by one or more Transferors pursuant to
Section 2.11 takes effect.
"Discount Option Receivables" is defined in Section 2.11. The
aggregate amount of Discount Option Receivables outstanding on any
Date of Processing occurring on or after the Discount Option Date
shall equal the sum of (a) the aggregate Discount Option
Receivables at the end of the prior Date of Processing (which
amount, prior to the initial Discount Option Date, shall be zero)
plus (b) any new Discount Option Receivables created on such Date
of Processing minus (c) any Discount Option Receivables Collections
received on such Date of Processing. Discount Option Receivables
created on any Date of Processing means the product of the amount
of any Principal Receivables created on such Date of Processing
(without giving effect to the proviso in the definition of
Principal Receivables) and the Discount Percentage.
"Discount Option Receivable Collections" means on any Date of
Processing occurring in any Monthly Period succeeding the Monthly
Period in which the Discount Option Date occurs, the product of (a)
a fraction the numerator of which is the Discount Option
Receivables and the denominator of which is the sum of the
Principal Receivables and the Discount Option Receivables in each
case (for both the numerator and the denominator) at the end of the
preceding Monthly Period and (b) Collections of Principal
Receivables on such Date of Processing (without giving effect to
the proviso in the definition of Principal Receivables).
"Discount Percentage" means the percentages, if any,
designated by the Transferors pursuant to Section 2.11.
"Distribution Date" means, unless otherwise defined in a
Supplement with respect to the related Series, the fifteenth day of
each calendar month or, if such fifteenth day is not a Business
Day, the next succeeding Business Day.
"Dollars" or "$" means United States Dollars.
"Eligible Account" means a revolving credit card account or
other revolving credit account owned by ANB, in the case of the
Initial Accounts, or any Credit Card Originator, in the case of
Additional Accounts, which account, as of the Trust Cut-Off Date
with respect to an Initial Account or the related Addition Cut-Off
Date with respect to an Additional Account:
(a) is in existence and maintained by ANB, in the case of the
Initial Accounts, or any Credit Card Originator, in the case of
Additional Accounts;
(b) is payable in Dollars;
(c) except as provided below, has not been identified as an
account the credit card or cards with respect to which have been
reported to the applicable Credit Card Originator as having been
lost or stolen;
(d) has, as its billing address, an address located in the
United States or a United States military address; provided that an
Account having as its most recent billing address an address that
does not comply with the foregoing shall not be deemed to be
ineligible pursuant to this clause (d) if, on the determination
date, the aggregate number of all such Accounts is less than 2% of
the aggregate number of all Accounts at such time;
(e) has an Obligor who has not been identified by the
applicable Credit Card Originator as an employee of such Credit
Card Originator or any of its Affiliates;
(f) except as provided below, does not have any Receivables
which are Defaulted Receivables; and
(g) except as provided below, does not have any Receivables
which have been identified by the applicable Credit Card Originator
as having been incurred as a result of fraudulent use of any
related credit card.
Eligible Accounts may include Accounts, the Receivables of
which have been written off, or with respect to which the related
Transferor believes the related Obligor is bankrupt, or as to which
certain Receivables have been identified by the Obligor as having
been incurred as a result of fraudulent use of any credit cards, or
as to which any credit cards have been reported to such Transferor
as lost or stolen, in each case as of the Trust Cut-Off Date, with
respect to the Initial Accounts, and as of the related Addition
Cut-Off Date, with respect to Additional Accounts; provided that
(x) the balance of all Receivables included in such Accounts is
reflected on the books and records of such Transferor (and is
treated for purposes of this Agreement) as zero, and (y) charging
privileges with respect to all such Accounts have been canceled in
accordance with the relevant Credit Card Guidelines.
"Eligible Deposit Account" means an account that is not
evidenced by a certificate of deposit and that is either (a) a
segregated account with an Eligible Institution or (b) a segregated
trust account with the corporate trust department of a depository
institution organized under the laws of the United States or any
one of the states thereof, including the District of Columbia (or
any domestic branch of a foreign bank), and acting as a trustee for
funds deposited in such account, so long as any of the securities
of such depository institution shall have a credit rating from each
Rating Agency in one of its generic credit rating categories which
signifies investment grade.
"Eligible Institution" means (a) a depository institution
organized under the laws of the United States or any one of the
states thereof, including the District of Columbia (or any domestic
branch of a foreign bank) which at all times (i) has either (A) a
long-term unsecured debt rating of A1 or better by Moody's or (B)
a certificate of deposit rating of P-1 by Moody's, (ii) has either
(A) a long-term unsecured debt rating of AAA by Standard & Poor's
or (B) a certificate of deposit rating of A-1+ by Standard & Poor's
and (iii) is a member of the FDIC or (b) any other institution that
is acceptable to each Rating Agency (as evidenced in writing in the
case of Standard & Poor's). If so qualified, the Trustee or the
Servicer may be considered an Eligible Institution for the purposes
of this definition.
"Eligible Investments" means book-entry securities, negotiable
instruments or securities represented by instruments in bearer or
registered form which evidence:
(a) direct obligations of, and obligations fully guaranteed
as to timely payment of principal and interest by, the United
States of America;
(b) demand deposits, time deposits or certificates of deposit
(having original maturities of no more than 365 days) of depository
institutions or trust companies incorporated under the laws of the
United States of America or any state thereof (or domestic branches
of foreign banks) and subject to supervision and examination by
federal or state banking or depository institution authorities;
provided that at the time of the Trust's investment or contractual
commitment to invest therein, the short-term debt rating of such
depository institution or trust company shall be in the highest
investment category of each Rating Agency;
(c) commercial paper or other short-term obligations having,
at the time of the Trust's investment or contractual commitment to
invest therein, a rating from each Rating Agency in its highest
investment category;
(d) notes or bankers' acceptances (having original maturities
of no more than 365 days) issued by any depository institution or
trust company referred to in clause (b) above;
(e) investments in money market funds rated in the highest
investment category by each Rating Agency or otherwise approved in
writing by each Rating Agency;
(f) time deposits, other than as referred to in clause (b)
above, with a Person the commercial paper of which has a credit
rating from each Rating Agency in its highest investment category;
or
(g) any other investments approved in writing by each Rating
Agency.
"Eligible Receivable" means each Receivable:
(a) which has arisen under an Eligible Account;
(b) which was created in compliance with all Requirements of
Law applicable to the related Credit Card Originator, the failure
to comply with which would have a material adverse effect on
Investor Holders, and pursuant to a Cardholder Agreement which
complies with all Requirements of Law applicable to such Credit
Card Originator, the failure to comply with which would have a
material adverse effect on Investor Holders;
(c) with respect to which all material consents, licenses,
approvals or authorizations of, or registrations or declarations
with, any Governmental Authority required to be obtained or given
by such Credit Card Originator in connection with the creation of
such Receivable or the execution, delivery and performance by such
Credit Card Originator of its obligations, if any, under the
related Cardholder Agreement have been duly obtained or given and
are in full force and effect as of such date of creation of such
Receivable;
(d) as to which, at the time of its transfer to the Trust,
the related Transferor or the Trust will have good and marketable
title thereto, free and clear of all Liens (other than any Lien for
municipal or other local taxes if such taxes are not then due and
payable or if such Transferor or the related Credit Card Originator
is then contesting the validity thereof in good faith by
appropriate proceedings and has set aside on its books adequate
reserves with respect thereto);
(e) which has been the subject of either a valid transfer and
assignment from such Transferor to the Trust of all such
Transferor's right, title and interest therein or the grant of a
first priority perfected security interest therein (and in the
proceeds thereof);
(f) which at and after the time of transfer to the Trust is
the legal, valid and binding payment obligation of the Obligor
thereon, legally enforceable against such Obligor in accordance
with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, affecting the
enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity);
(g) which constitutes either an account or a general
intangible;
(h) which, at the time of its transfer to the Trust, has not
been waived or modified except as permitted in accordance with the
Credit Card Guidelines and which waiver or modification is
reflected in the Servicer's computer file of revolving credit
accounts;
(i) which, at the time of its transfer to the Trust, is not
subject to any right of rescission, setoff, counterclaim or any
other defense of the Obligor (including the defense of usury),
other than defenses arising out of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights in general and
except as such enforceability may be limited by general principles
of equity (whether considered in a suit at law or equity) or as to
which the Servicer is required by Section 3.09 to make an
adjustment;
(j) as to which, at the time of its transfer to the Trust,
the related Credit Card Originator has satisfied all obligations to
be fulfilled by such Credit Card Originator at such time; and
(k) as to which, at the time of its transfer to the Trust,
neither such Credit Card Originator nor the related Transferor has
taken any action which, or failed to take any action the omission
of which, would, at the time of its transfer to the Trust, impair
the rights of the Trust or the Holders therein.
"Eligible Servicer" means the Trustee, or if the Trustee is
not acting as Servicer, an entity which, at the time of its
appointment as Servicer, (a) is servicing a portfolio of revolving
credit accounts, (b) is legally qualified and has the capacity to
service the Accounts, (c) is qualified to use the software that is
then being used to service the Accounts or obtains the right to
use, or has its own software, which is adequate to perform its
duties under this Agreement, (d) has demonstrated the ability to
professionally and competently service a portfolio of similar
accounts in accordance with high standards of skill and care, and
(e) has a net worth of at least $50,000,000 as of the end of its
most recent fiscal quarter.
"Enhancement Agreement" means any agreement, instrument or
document governing the terms of any Series Enhancement or pursuant
to which any Series Enhancement is issued or outstanding.
"Enhancement Investor Amount" is defined, if applicable to any
Series, in the related Supplement.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"Excess Finance Charge Collections" means, for any Group, all
amounts that the related Supplements for all outstanding Series in
that Group specify are to be treated as "Excess Finance Charge
Collections."
"Excess Funding Account" is defined in Section 4.02.
"Excess Funding Amount" means the amount on deposit in the
Excess Funding Account (excluding investment earnings).
"Exchange Act" means the Securities Exchange Act of 1934.
"Exchange Date" means, with respect to any Series or Class
initially evidenced by a Global Certificate, a date determined as
provided in the related Supplement.
"FDIC" means the Federal Deposit Insurance Corporation.
"Finance Charge Receivables" means all amounts billed to the
Obligors on any Account in respect of (i) Periodic Finance Charges,
(ii) annual membership fees and annual service charges, (iii) Late
Fees, (iv) Overlimit Fees, (v) Cash Advance Fees, (vi) Discount
Option Receivables, if any, (vii) all other fees and charges with
respect to the Accounts designated by the Transferor to be included
as Finance Charge Receivables. All Insurance Proceeds will be
treated as Collections of Finance Charge Receivables. Collections
of Finance Charge Receivables with respect to any Monthly Period
shall be deemed to include Interchange as calculated pursuant to
the related Supplement for any Series, any applicable Trust Yield
Supplement Amount and any other amounts specified to be treated as
collections of Finance Charge Receivables in this Agreement or any
Supplement. Finance Charge Receivables shall also include the
interest portion of Participation Interests as shall be determined
pursuant to the applicable Participation Interest Supplement or
Supplement.
"Finance Charge Shortfalls" is defined, as to any Series, in
the related Supplement.
"FIRREA" means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989.
"Foreign Clearing Agency" means Cedel Bank, societe anonyme
and Morgan Guaranty Trust Company of New York, Brussels, Belgium
office, as operator of the Euroclear System or any other foreign
clearing agency identified in the related Supplement.
"GAAP" means generally accepted accounting principles.
"Global Certificate" is defined in subsection 6.13(a).
"Governmental Authority" means the United States of America,
any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Group" means, as to any Series, the group of Series, if any,
in which the related Supplement specifies such Series is to be
included.
"Holder" means an Investor Holder or a Person in whose name
any one of the Transferor Certificates is registered.
"Ineligible Receivables" is defined in subsection 2.05(a).
"Initial Account" means each MasterCard(R) and VISA(R) 1<F?>
account established pursuant to a Cardholder Agreement identified in
the Account Schedule delivered to the Trustee on or prior to the
Initial Closing Date.
_______________
<F?>
1 MasterCard and VISA are registered trademarks of MasterCard
International Incorporated and of VISA USA, Inc., respectively.
</F?>
"Initial Closing Date" means __________, 1996.
"Insolvency Event" means, with respect to any Person: such
Person shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or
relating to such Person or of or relating to all or substantially
all of its property, or a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against such
Person; or such Person shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute,
make any assignment for the benefit of its creditors or voluntarily
suspend payment of its obligations.
"Insolvency Proceeds" is defined in subsection 9.02(b).
"Insurance Proceeds" means any amounts recovered by the
Servicer pursuant to any credit insurance policies covering any
Obligor with respect to Receivables under such Obligor's Account.
"Interchange" means interchange fees payable to any Credit
Card Originator, in its capacity as credit card issuer, through
VISA or MasterCard in connection with cardholder charges for goods,
services, and cash advances, as calculated pursuant to the related
Supplement for any Series.
"Investment Company Act" means the Investment Company Act of
1940.
"Investor Amount" is defined, as to any Series and for any
date, in the related Supplement.
"Investor Certificates" means any certificated or
uncertificated interest in the Trust designated as, or deemed to
be, an "Investor Certificate" in the related Supplement.
"Investor Holder" means the Person in whose name a Registered
Certificate is registered in the Certificate Register or the bearer
of any Bearer Certificate (or the Global Certificate, as the case
may be) or Coupon.
"Investor Interest" is defined in Section 4.01.
"Late Fees" means amounts referred to as "late fees," "late
charges" or "late payment fees" (or similar terms) in the Credit
Card Agreement applicable to any Account.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, participation or equity interest,
deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, including any
conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC
(other than any such financing statement filed for informational
purposes only) or comparable law of any jurisdiction to evidence
any of the foregoing, excluding any lien or filing pursuant to this
Agreement; provided that any assignment or transfer pursuant to
subsection 6.03(c) or (d) or Section 7.02 shall not be deemed to
constitute a Lien.
"Manager" means the lead manager, manager or co-manager or
Person performing a similar function with respect to an offering of
Definitive Euro-Certificates.
"MasterCard" means MasterCard International Incorporated.
"Monthly Period" means, with respect to each Distribution
Date, unless otherwise provided in a Supplement, the period from
and including the first day of the preceding calendar month to and
including the last day of such calendar month.
"Moody's" means Moody's Investors Service, Inc.
"Notices" is defined in subsection 13.05(a).
"Obligor" means, as to any Account, each Person obligated to
make payments on such Account, including any guarantor thereof.
"Officer's Certificate" means, unless otherwise specified in
this Agreement, a certificate delivered to the Trustee signed by
the Chairman of the Board, President, any Vice President or the
Treasurer of a Transferor or the Servicer, as the case may be.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for, or an employee of, the Person providing the
opinion and who shall be reasonably acceptable to the Trustee.
"Overlimit Fees" means amounts referred to as "overlimit
fees," "overlimit charges," or "exceeding the credit limit fees"
(or similar terms) in the Credit Card Agreement applicable to any
Account.
"Participating Transferor" is defined in subsection
2.08(c)(i).
"Participation Interests" is defined in subsection
2.08(a)(ii).
"Participation Interest Supplement" means a Supplement entered
into pursuant to subsections 2.08(a)(ii) and 13.01(a) in connection
with the conveyance of Participation Interests to the Trust.
"Paying Agent" means any paying agent and co-paying agent
appointed pursuant to Section 6.07 and shall initially be the
Trustee; provided that if the Supplement for a Series so provides,
a Paying Agent may be appointed with respect to such Series.
"Pay Out Event" means, for each Series, a Trust Pay Out Event
or a Series Pay Out Event.
"Periodic Finance Charges" means amounts referred to as
"finance charges" (or similar terms) in the Credit Card Agreement
applicable to any Account.
"Person" means any legal person, including any individual,
corporation, limited liability company, partnership, joint venture,
association, joint-stock company, trust, unincorporated
organization, governmental entity or other entity of similar
nature.
"Principal Receivable" means all amounts charged by Obligors
for merchandise, services and cash advances, but shall not include
Finance Charge Receivables or Defaulted Receivables; provided that
after the Discount Option Date, Principal Receivables on any Date
of Processing thereafter means Principal Receivables as otherwise
determined pursuant to this definition minus the amount of any
Discount Option Receivables. Principal Receivables shall also
include the principal portion of Participation Interests as shall
be determined pursuant to the applicable Participation Interest
Supplement or Supplement. In calculating the aggregate amount of
Principal Receivables on any day, the amount of Principal
Receivables shall be reduced by the aggregate amount of credit
balances in the Accounts on such day. Any Receivables that the
related Transferor is unable to transfer to the Trust shall not be
included in calculating the aggregate amount of Principal
Receivables, except as provided in Section 2.10.
"Principal Shortfalls" is defined, as to any Series, in the
related Supplement.
"Principal Terms" means, as to any Series: (i) the name or
designation; (ii) the initial Investor Amount, the Series Investor
Amount and the Series Invested Amount (or method for calculating
such amounts); (iii) the certificate rate (or method for the
determination thereof); (iv) the payment date or dates and the date
or dates from which interest shall accrue; (v) the method for
allocating Collections to Holders of such Series; (vi) the
designation of any Series Accounts and the terms governing the
operation of any such Series Accounts; (vii) the method of
calculating the servicing fee with respect thereto; (viii) the
terms of any form of Series Enhancement with respect thereto; (ix)
the terms on which the Investor Certificates of such Series may be
exchanged for Investor Certificates of another Series, repurchased
by the Transferors or remarketed to other investors; (x) the Series
Termination Date; (xi) the number of Classes of Investor
Certificates of such Series and, if such Series consists of more
than one Class, the rights and priorities of each such Class; (xii)
the extent to which the Investor Certificates of such Series will
be issuable in temporary or permanent global form (and, in such
case, the depositary for such Global Certificate or Certificates,
the terms and conditions, if any, upon which such Global
Certificate may be exchanged, in whole or in part, for Definitive
Certificates, and the manner in which any interest payable on a
temporary or Global Certificate will be paid); (xiii) whether the
Investor Certificates of such Series may be issued as Bearer
Certificates and any limitations imposed thereon; (xiv) the
priority of such Series with respect to any other Series; (xv) the
Group, if any, to which such Series belongs; and (xvi) any other
terms of such Series.
"Private Holder" means each holder of a right to receive
interest or principal in respect of any direct or indirect interest
in the Trust including any financial instrument or contract the
value of which is determined in whole or in part by reference to
the Trust (including the Trust's assets, income of the Trust or
distributions made by the Trust), excluding any interest in the
Trust represented by any Series or Class of Investor Certificates
or any other interest as to which the Transferor has provided to
the Trustee an Opinion of Counsel to the effect that such Series,
Class or other interest will be treated as debt or otherwise not as
an equity interest in either the Trust or the Receivables for
federal income tax purposes, in each case, provided such interest
is not convertible or exchangeable into an interest in the Trust or
the Trust's income or equivalent value. Notwithstanding the
immediately preceding sentence, "Private Holder" shall also include
any other Person that the Transferor determines is (or may be) a
"partner" within the meaning of Treasury Regulation section 1.7704-
1(h)(1)(ii) (including by reason of Section 1.7704-1(h)(3)).
Initially, the Private Holders include the holders of the
Transferor Certificate or any interest therein, of any Enhancement
Investor Amount, and of any similar interests in the Trust
represented by any other Class of any Series of Certificates, and
the Servicer. Any Person holding more than one interest in the
Trust each of which separately would cause such Person to be a
Private Holder shall be treated as a single Private Holder. Each
holder of an interest in a Private Holder which is a partnership,
S corporation or grantor trust under the Internal Revenue Code
shall be treated as a Private Holder unless excepted with the
consent of the Transferor (which consent shall be based on an
Opinion of Counsel generally to the effect that the action taken
pursuant to the consent will not cause the Trust to become a
publicly traded partnership treated as a corporation for federal
income tax purposes).
"Rating Agency" means, as to any outstanding Series or Class,
each statistical rating agency selected by the Transferors to rate
the Investor Certificates of such Series or Class, as specified in
the related Supplement.
"Rating Agency Condition" means, as to any action, that each
Rating Agency shall have notified the Transferors in writing that
such action will not result in a reduction or withdrawal of the
then current rating of any outstanding Series or Class with respect
to which it is a Rating Agency.
"Reassignment" is defined in Section 2.09.
"Receivable" means any amount owing by the Obligor under an
Account from time to time, including amounts owing for Principal
Receivables and Finance Charge Receivables. A Receivable shall be
deemed to have been created at the end of the day on the Date of
Processing of such Receivable. Receivables which become Defaulted
Receivables shall not be shown on the Servicer's records as amounts
payable (and shall cease to be included as Receivables) on the day
on which they become Defaulted Receivables.
"Receivables Purchase Agreement" means any agreement entered
into between a Credit Card Originator and a Transferor (or between
either a Credit Card Originator or a Transferor and another Person
that acts as an intermediate transferee of receivables originated
by a Credit Card Originator) relating to receivables arising in
revolving credit card accounts or other revolving credit accounts
that are ultimately purchased by a Transferor and transferred to
the Trust, as each may be amended, supplemented or otherwise
modified from time to time.
"Record Date" means, for any Distribution Date, the last
Business Day of the preceding Monthly Period, except as otherwise
provided with respect to a Series in the related Supplement.
"Registered Certificates" is defined in Section 6.01.
"Registered Holder" means the Holder of a Registered
Certificate.
"Removal Cut-Off Date" is defined in subsection 2.09(b).
"Removal Date" is defined in subsection 2.09(a).
"Removal Notice Date" is defined in subsection 2.09(a).
"Removed Accounts" is defined in Section 2.09.
"Required Designation Date" is defined in subsection 2.08(a).
"Required Principal Balance" means, as of any date of
determination, (a) the sum of the Series Invested Amounts for each
Series outstanding on such date, minus (b) the Excess Funding
Amount.
"Required Transferor Amount" means, as to any date, an amount
equal to the result of (a) the product of the Required Transferor
Percentage and the aggregate amount of Principal Receivables plus
(or minus) (b) any amount specified in any Supplement.
"Required Transferor Percentage" means [5]% (or, if different,
the highest percentage specified in the Supplement for any
outstanding Series); provided that the Transferors may increase or
reduce the Required Transferor Percentage upon 30 days' prior
notice to the Trustee and each Rating Agency, and in the case of a
reduction, (x) satisfaction of the Rating Agency Condition with
respect thereto and (y) delivery to the Trustee of a certificate of
a Vice President or more senior officer of each Transferor stating
that such Transferor reasonably believes that such reduction will
not, based on the facts known to such officer at the time of such
certification, then or thereafter have an Adverse Effect; provided
further that the Required Transferor Percentage shall not at any
time be reduced below 2% unless a Tax Opinion is delivered as to
such reduction. For purposes of the foregoing, any Supplement that
does not specify a different Required Transferor Percentage shall
be deemed to specify a Required Transferor Percentage of [5]%. The
Rating Agency Condition shall be deemed to have been satisfied with
respect to a proposed decrease in the Required Transferor
percentage if (i) the Transferors give each Rating Agency written
notice of the contemplated decrease, and (ii) for a period of ten
days after such notice is given, no Rating Agency shall have
notified the Transferors in writing that such decrease will result
in a reduction or withdrawal of the then current rating of any
outstanding Series or Class with respect to which it is a Rating
Agency.
"Requirements of Law" with respect to any Person means the
certificate of incorporation or articles of association and by-laws
or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation, or determination of an
arbitrator or Governmental Authority, in each case applicable to or
binding upon such Person or to which such Person is subject,
whether Federal, state or local (including usury laws, the Federal
Truth in Lending Act and Regulation Z and Regulation B of the Board
of Governors of the Federal Reserve System).
"Responsible Officer" means any officer within the Corporate
Trust Office (or any successor group of the Trustee) including any
Vice President, any Assistant Secretary, any Assistant Treasurer,
or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above-designated
officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"RTC" means the Resolution Trust Corporation.
"Series" means any series of Investor Certificates issued
pursuant to a Supplement.
"Series Account" means any deposit, trust, escrow or similar
account maintained for the benefit of any Series or Class, as
specified in any Supplement.
"Series Enhancement" means the rights and benefits provided to
the Investor Holders of any Series or Class pursuant to any letter
of credit, surety bond, cash collateral account, cash collateral
guaranty, spread account, guaranteed rate agreement, maturity
liquidity facility, tax protection agreement, interest rate swap
agreement, interest rate cap agreement, currency swap agreement or
other similar arrangement. The subordination of any Series or Class
to another Series or Class shall be deemed to be a Series
Enhancement.
"Series Enhancer" means the Person or Persons providing any
Series Enhancement, other than the Investor Holders of any Series
or Class which is subordinated to another Series or Class.
"Series Invested Amount" is defined, as to any Series, in the
related Supplement.
"Series Investor Amount" is defined, as to any Series, in the
related Supplement.
"Series Pay Out Event" is defined, as to any Series, in the
related Supplement.
"Series Percentage" is defined, as to Principal Receivables,
Finance Charge Receivables and Defaulted Receivables, and any
Series, in the related Supplement.
"Series Termination Date" means, as to any Series, the
termination date for such Series specified in the related
Supplement.
"Servicer" means initially ANB, in its capacity as Servicer
pursuant to this Agreement, and thereafter any Person appointed
Successor Servicer as herein provided.
"Servicer Default" is defined in Section 10.01.
"Servicing Fee" is defined in Section 3.02.
"Servicing Fee Rate" means, for any Series, the servicing fee
rate specified in the related Supplement.
"Servicing Officer" means any officer of the Servicer, or any
attorney-in-fact of the Servicer, involved in, or responsible for,
the administration and servicing of the Receivables whose name
appears on a list of servicing officers furnished to the Trustee by
the Servicer from time to time.
"Shared Principal Collections" means, for any Group, all
amounts that the related Supplements for all outstanding Series in
that Group specify are to be treated as "Shared Principal
Collections."
"Specified Servicing Requirements" is defined in Section 3.06.
"Standard & Poor's" means Standard and Poor's Ratings
Services, a division of The McGraw Hill Companies, Inc.
"Successor Servicer" is defined in subsection 10.02(a).
"Supplement" means a supplement to this Agreement, executed
and delivered in connection with (a) the original issuance of the
Investor Certificates of any Series pursuant to Section 6.03 or (b)
the addition of a Participation Interest to the Trust Assets
pursuant to subsections 2.08(a)(ii) and 13.01(a), in each case as
amended, supplemented or otherwise modified from time to time.
"Supplemental Certificate" is defined in subsection 6.03(c).
"Tax Opinion" means, with respect to any action, an Opinion of
Counsel to the effect that, (a) for Federal income tax purposes,
such action will not adversely affect the tax characterization as
debt of Investor Certificates of any outstanding Series or Class
that were characterized as debt at the time of their issuance, (b)
following such action the Trust will not be deemed to be an
association (or publicly traded partnership) taxable as a
corporation and (c) such action will not cause or constitute an
event in which gain or loss would be recognized by any holder of
Investor Certificates of any outstanding Series or Class that were
characterized as debt at the time of their issuance.
"Termination Notice" is defined in Section 10.01.
"Transfer Agent and Registrar" is defined in Section 6.04.
"Transfer Date" means the Business Day immediately preceding
each Distribution Date.
"Transferor" means, initially, ANB and also includes any
Additional Transferor.
"Transferor Amount" means, at any time on any date of
determination, an amount equal to (a) the Trust Principal Balance,
minus (b) the sum of the Series Invested Amounts for each
outstanding Series at the end of such date of determination.
"Transferor Certificates" means, collectively, the Advanta
Certificate and any outstanding Supplemental Certificates.
"Transferors' Interest" is defined in Section 4.01.
"Transferor Percentage" means, on any date of determination,
when used with respect to Principal Receivables, Finance Charge
Receivables and Defaulted Receivables, a percentage equal to 100%
minus the Aggregate Series Percentage with respect to such
categories of Receivables.
"Transfer Restriction Event" is defined in Section 2.10.
"Transferred Account" is defined in the definition of
"Account."
"Trust" means the Advanta Gold Master Trust created by this
Agreement.
"Trust Assets" is defined in Section 2.01.
"Trust Cut-Off Date" means _________ __, 1996.
"Trust Documents" mean, as to any Transferor, this Agreement,
the Supplements and any Receivables Purchase Agreement to which it
is a party.
"Trustee" means The Bank of New York, in its capacity as
trustee on behalf of the Trust, or its successor in interest, or
any successor trustee appointed as herein provided.
"Trust Pay Out Event" means each event specified in subsection
9.01(a).
"Trust Principal Balance" means, at any time on any date of
determination, the sum of (a) the aggregate amount of Principal
Receivables at the end of the day immediately prior to such date of
determination, and (b) the Excess Funding Amount at such time on
such date of determination.
"Trust Yield Supplement Amount" means any amount designated as
such by the Transferors in writing to the Servicer which amount
does not otherwise constitute a Trust Asset and is deposited into
the Collection Account.
"UCC" means the Uniform Commercial Code as in effect in the
State of Delaware or any other state or states where the filing of
a financing statement is required to perfect the Trust's interest
in the Receivables and the proceeds thereof or in any other
specified jurisdiction.
"United States" means the United States of America (including
the States and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.
"Variable Interest" means either of (a) any Investor
Certificate that is designated as a variable funding certificate in
the related Supplement and (b) any purchased interest sold as
permitted by subsection 6.03(b).
"Vice President" when used with respect to the Transferors or
the Servicer means any vice president thereof whether or not
designated by a number or word or words added before or after the
title "vice president".
"VISA" means VISA USA, Inc.
"Zero Balance Account" means, as of any date of determination,
an Account with a Receivable balance of zero and in which there has
been no activity for the twelve calendar months preceding such date
of determination.
SECTION 1.02. Other Definitional Provisions. With respect to
any Series, all terms used and not defined herein are used as
defined in the related Supplement. All terms defined in this
Agreement shall have the defined meanings when used in any
certificate or other document (including any Supplement) delivered
pursuant hereto unless otherwise defined therein. For purposes of
this Agreement and all such certificates and other documents,
unless the context otherwise requires: (a) accounting terms not
otherwise defined in this Agreement, and accounting terms partly
defined in this Agreement to the extent not defined, shall have the
respective meanings given to them under GAAP; (b) terms defined in
Article 9 of the UCC as in effect in the State of New York are used
as defined in that Article; (c) any reference to each Rating Agency
shall only apply to any specific rating agency if such rating
agency is then rating any outstanding Series; (d) references to any
amount as on deposit or outstanding on any particular date means
such amount at the close of business on such day; (e) the words
"hereof," "herein" and "hereunder" and words of similar import
refer to this Agreement (or the certificate or other document in
which they are used) as a whole and not to any particular provision
of this Agreement (or such certificate or document); (f) references
to any Section, Schedule or Exhibit are references to Sections,
Schedules and Exhibits in or to this Agreement (or the certificate
or other document in which the reference is made), and references
to any paragraph, subsection, clause or other subdivision within
any Section or definition refer to such paragraph, subsection,
clause or other subdivision of such Section or definition; (g) the
term "including" means "including without limitation"; (h)
references to any law or regulation refer to that law or regulation
as amended from time to time and include any successor law or
regulation; (i) references to any Person include that Person's
successors and assigns; (j) headings are for purposes of reference
only and shall not otherwise affect the meaning or interpretation
of any provision hereof; and (k) the definitions of terms 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. The agreements, representations and
warranties in this Agreement of (x) each Transferor, in its
capacity as a Transferor and (y) ANB, in its capacity as Servicer,
shall be deemed to be such Persons's agreements, representations
and warranties only so long as it remains a party to this Agreement
in such capacity.
ARTICLE II CONVEYANCE OF RECEIVABLES
SECTION 2.01. Conveyance of Receivables. (a) Each Transferor
hereby transfers, assigns, sets over and otherwise conveys to the
Trustee, on behalf of the Trust, for the benefit of the Holders,
all its right, title and interest in, to and under (i) the
Receivables existing at the close of business on the Initial
Closing Date, in the case of Receivables arising in the Initial
Accounts, and on each Addition Date, in the case of Receivables
arising in the Additional Accounts, and in each case thereafter
created from time to time, (ii) all Interchange and Trust Yield
Supplement Amounts allocable to the Trust as provided herein, in
any Supplement or in any other document delivered pursuant to or in
connection with this Agreement and (iii) all moneys due or to
become due and amounts received with respect to, and all proceeds
of, all of the foregoing. In addition, each Transferor that is a
party to one or more Receivables Purchase Agreements grants to the
Trustee, for the benefit of the Holders, a security interest in the
remedies of such Transferor under each such Receivables Purchase
Agreement. All of the foregoing property, together with all moneys
on deposit in the Collection Account, the Excess Funding Account,
the Series Accounts and any Series Enhancement shall constitute the
assets of the Trust (the "Trust Assets"). The foregoing does not
constitute and is not intended to result in the creation or
assumption by the Trust, the Trustee, any Investor Holder or any
Series Enhancer of any obligation of the Servicer or any
Transferor, Credit Card Originator or other Person in connection
with the Accounts or the Receivables or under any agreement or
instrument relating thereto, including any obligation to Obligors,
merchant banks, merchant clearance systems, VISA, MasterCard or
insurers. The foregoing conveyance to the Trust shall be made to
the Trustee, for the benefit of the Holders, and each reference in
this Agreement to such conveyance shall be construed accordingly.
If the conveyance made in the first sentence of this subsection
2.1(a) is not deemed to be an absolute assignment of the subject
property to the Trustee, for the benefit of the Holders, then it
shall be deemed to constitute a grant of a security interest in
such property to the Trustee, for the benefit of the Investor
Holders, and the Transferors' Interest shall be deemed to represent
the Transferors' equity in the collateral granted.
(b) The Transferors agree to record and file, at their own
expense, financing statements (and continuation statements when
applicable) with respect to the Receivables now existing and
hereafter created meeting the requirements of applicable state law
in such manner and in such jurisdictions as are necessary to
perfect, and maintain the perfection of, the conveyance of the
Receivables to the Trust, and to deliver a file stamped copy of
each such financing statement or other evidence of such filing
(which may, for purposes of this Section 2.01, consist of telephone
confirmation of such filing) to the Trustee on or prior to the
Initial Closing Date, in the case of Receivables arising in the
Initial Accounts, and (if any additional filing is so necessary)
the applicable Addition Date, in the case of Receivables arising in
Additional Accounts. The Trustee shall be under no obligation
whatsoever to file such financing or continuation statements or to
make any other filing under the UCC in connection with such sale
and assignment.
(c) The Transferors further agree, at their own expense, (i)
on or prior to (A) the Initial Closing Date, in the case of the
Initial Accounts, (B) the applicable Addition Date, in the case of
Additional Accounts, and (C) the applicable Removal Date, in the
case of Removed Accounts, to indicate in the appropriate computer
files that Receivables created in connection with the Accounts
(other than Removed Accounts) have been conveyed to the Trust
pursuant to this Agreement for the benefit of the Holders (or
conveyed to the Transferors or their designees in the case of
Removed Accounts) by including (or deleting in the case of Removed
Accounts) in such computer files the code "25," "26," "27" or "28"
(or any other code specified in an Assignment) in the PORTF_CD
field of such computer files, and (ii) on or prior to the Initial
Closing Date, each Addition Date and each Removal Date, as
applicable, to deliver to the Trustee an Account Schedule
containing a true and complete list of all such Accounts. Each
Account Schedule shall be marked as Schedule 1 to this Agreement
and is hereby incorporated into and made a part of this Agreement.
Account Schedules may also be delivered to the Trustee from time to
time to trace Transferred Accounts. Each Transferor agrees not to
alter the codes or field referenced in clause (i) with respect to
any Account during the term of this Agreement unless and until such
Accounts become Removed Accounts or unless and until (x) the
Transferors shall give written notice of any such alteration to the
Trustee, such written notice to be as of the date of its receipt by
the Trustee incorporated into and made part of this Agreement, and
(y) the Trustee and the Transferors shall execute and file any UCC
financing statement or amendment thereof necessitated by such
alteration.
SECTION 2.02. Acceptance by Trustee. (a) The Trustee hereby
acknowledges its acceptance on behalf of the Trust of all right,
title and interest to the property, now existing and hereafter
created, conveyed to the Trust pursuant to Section 2.01 and
declares that it shall maintain such right, title and interest,
upon the trust herein set forth, for the benefit of all Holders.
The Trustee further acknowledges that, prior to or simultaneously
with the execution and delivery of this Agreement, the Transferor
delivered to the Trustee the Account Schedule relating to the
Initial Accounts.
(b) The Trustee hereby agrees not to disclose to any Person
(or to any other department or operating division of the Trustee,
other than the corporate trust department of the Trustee or, if the
Trustee shall be appointed the Successor Servicer, such other
departments or operating divisions of the Trustee as shall be
necessary to fulfill its duties as Servicer), any of the account
numbers or other information contained in the Account Schedules,
except (i) to a Successor Servicer or as required by a Requirement
of Law applicable to the Trustee, (ii) in connection with the
performance of the Trustee's duties hereunder, (iii) in enforcing
the rights of Holders or (iv) after consultation with the
Transferors, as requested by any Person in connection with the
financing statements filed pursuant to this Agreement. The Trustee
also agrees not to use any of the foregoing information for any
purpose other than for the purposes provided for in this Agreement.
The Trustee agrees to take such measures as shall be reasonably
requested by the Transferors to protect and maintain the security
and confidentiality of such information and, in connection
therewith, will allow the Transferors to inspect the Trustee's
security and confidentiality arrangements from time to time during
normal business hours. The Trustee shall provide the Transferors
with notice five Business Days prior to any disclosure pursuant to
this subsection 2.02(b).
(c) The Trustee shall have no power to create, assume or
incur indebtedness or other liabilities in the name of the Trust
other than as contemplated in this Agreement or any Supplement.
SECTION 2.03. Representations and Warranties of the
Transferors Relating to the Transferors. Each Transferor represents
and warrants to the Trust as of each Closing Date that:
(a) Organization and Good Standing. Such Transferor is a
national banking association or corporation duly organized and
validly existing in good standing under the laws of the
jurisdiction of its organization or incorporation, and has full
corporate power, authority and legal right to own its properties
and conduct its business as such properties are presently owned and
such business is presently conducted, to execute, deliver and
perform its obligations under its Trust Documents and, in the case
of ANB, to execute and deliver to the Trustee the Certificates
pursuant hereto.
(b) Due Qualification. Such Transferor is duly qualified to
do business and is in good standing as a foreign corporation (or is
exempt from such requirements), and has obtained all necessary
licenses and approvals with respect to such Transferor, in each
jurisdiction in which failure to so qualify or to obtain such
licenses and approvals would render any Cardholder Agreement
relating to an Account owned by such Transferor or any Receivable
transferred to the Trust by such Transferor unenforceable by such
Transferor, the Servicer or the Trustee or would have a material
adverse effect on the interests of the Holders hereunder or under
any Supplement; provided that no representation or warranty is made
with respect to any qualification, licenses or approvals which the
Trustee has or may be required at any time to obtain, if any, in
connection with the transactions contemplated hereby.
(c) Due Authorization. The execution, delivery and
performance by such Transferor of its Trust Documents and, in the
case of ANB, the execution and delivery to the Trustee of the
Certificates and the consummation by such Transferor of the
transactions provided for in its Trust Documents have been duly
authorized by such Transferor by all necessary corporate action on
the part of such Transferor, and each of its Trust Documents will
remain, from the time of its execution, an official record of such
Transferor.
(d) No Conflict. The execution and delivery by such
Transferor of its Trust Documents and, in the case of ANB, the
Certificates, the performance by such Transferor of the
transactions contemplated by its Trust Documents and the
fulfillment by such Transferor of the terms hereof and thereof will
not conflict with, result in any breach of any of the material
terms of, or constitute (with or without notice or lapse of time or
both) a material default under, any indenture, contract, agreement,
mortgage, deed of trust, or other material instrument to which such
Transferor is a party or by which it or any of its properties are
bound.
(e) No Violation. The execution and delivery by such
Transferor of its Trust Documents and, in the case of ANB, the
Certificates, the performance by such Transferor of the
transactions contemplated by its Trust Documents and the
fulfillment by such Transferor of the terms hereof and thereof will
not conflict with or violate any Requirements of Law applicable to
such Transferor.
(f) No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of such
Transferor, threatened against such Transferor, before any
Governmental Authority (i) asserting the invalidity of its Trust
Documents or the Certificates, (ii) seeking to prevent the issuance
of the Certificates or the consummation of any of the transactions
contemplated by its Trust Documents or the Certificates, (iii)
seeking any determination or ruling that, in the reasonable
judgment of such Transferor, would materially and adversely affect
the performance by such Transferor of its obligations under its
Trust Documents, (iv) seeking any determination or ruling that
would materially and adversely affect the validity or
enforceability of its Trust Documents or the Certificates or (v)
seeking to affect adversely the income tax attributes of the Trust
under the Federal or Delaware income or franchise tax systems.
(g) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Governmental Authority or
other Person required in connection with the execution and delivery
by such Transferor of its Trust Documents and, in the case of ANB,
the Certificates, the performance by such Transferor of the
transactions contemplated by its Trust Documents and the
fulfillment by such Transferor of the terms hereof and thereof,
have been obtained; provided that such Transferor makes no
representation or warranty regarding state securities or "blue sky"
laws in connection with the distribution of the Certificates.
(h) Insolvency. No Insolvency Event with respect to such
Transferor has occurred and the transfer of the Receivables by such
Transferor to the Trust has not been made in contemplation of the
occurrence thereof.
(i) FDIC Insurance. Such Transferor either is an insured
institution for purposes of the Federal Deposit Insurance Act or is
in compliance with the terms of Exhibit H.
The representations and warranties of each Transferor set
forth in this Section 2.03 shall survive the transfer and
assignment by such Transferor of its Receivables to the Trust. Upon
discovery by such Transferor, the Servicer or the Trustee of a
breach of any of the representations and warranties by such
Transferor set forth in this Section 2.03, the party discovering
such breach shall give prompt written notice to the others. Such
Transferor agrees to cooperate with the Servicer and the Trustee in
attempting to cure any such breach. For purposes of the
representations and warranties set forth in this Section 2.03, each
reference to a Supplement shall be deemed to refer only to those
Supplements in effect as of the relevant Closing Date.
SECTION 2.04. Representations and Warranties of the
Transferors Relating to this Agreement and the Receivables. (a)
Representations and Warranties. Each Transferor represents and
warrants to the Trust as of each Closing Date and, with respect to
Additional Accounts the Receivables in which are being transferred
by such Transferor to the Trust, as of the related Addition Date
that:
(i) its Trust Documents and, in the case of Additional
Accounts the Receivables in which are being transferred by
such Transferor to the Trust, the related Assignment, each
constitutes a legal, valid and binding obligation of such
Transferor enforceable against such Transferor in accordance
with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general and,
if applicable, the rights of creditors of national banking
associations and except as such enforceability may be limited
by general principles of equity (whether considered in a suit
at law or in equity);
(ii) as of the Initial Closing Date and as of the related
Addition Date with respect to Additional Accounts the
Receivables in which are being transferred by such Transferor
to the Trust, Schedule 1 to this Agreement, as supplemented on
such date, is an accurate and complete listing in all material
respects of all the Accounts owned by such Transferor as of
the Trust Cut-Off Date or such Addition Cut-Off Date, as the
case may be, and the information contained therein with
respect to the identity of such Accounts and the Receivables
existing in such Accounts is true and correct in all material
respects as of the Trust Cut-Off Date or such Addition Cut-Off
Date, as the case may be;
(iii) each Receivable conveyed to the Trust by such
Transferor has been conveyed to the Trust free and clear of
any Lien of any Person claiming through or under such
Transferor or any of its Affiliates (other than Liens
permitted under subsection 2.07(b));
(iv) all authorizations, consents, orders or approvals of
or registrations or declarations with any Governmental
Authority required to be obtained, effected or given by such
Transferor in connection with the conveyance by such
Transferor of Receivables to the Trust have been duly
obtained, effected or given and are in full force and effect;
and each Receivable conveyed to the Trust by such Transferor
has been conveyed in compliance, in all material respects,
with all Requirements of Law applicable to such Transferor;
(v) either this Agreement or, in the case of Additional
Accounts, the related Assignment constitutes a valid sale,
transfer and assignment to the Trust of all right, title and
interest of such Transferor in the Receivables conveyed to the
Trust by such Transferor and the proceeds thereof or, if this
Agreement or, in the case of Additional Accounts, the related
Assignment does not constitute a sale of such property, it
constitutes a grant of a security interest in such property to
the Trustee, for the benefit of the Investor Holders, which,
in the case of existing Receivables and the proceeds thereof,
is enforceable upon execution and delivery of this Agreement
or, with respect to then existing Receivables in Additional
Accounts, as of the applicable Addition Date, and which will
be enforceable with respect to such Receivables hereafter and
thereafter created and the proceeds thereof upon such
creation. Upon the filing of the financing statements pursuant
to Sections 2.01 and 2.08 and, in the case of Receivables
hereafter created and the proceeds thereof, upon the creation
thereof, the Trustee, for the benefit of the Investor Holders,
shall have a first priority perfected security or ownership
interest in such property and (subject to Section 9-306 of the
UCC) proceeds except for (x) Liens permitted under subsection
2.07(b), (y) the interests of the Transferors as Holders of
the Advanta Certificate and the interests of the Holder of any
Supplemental Certificate, and (z) the Transferors' right, if
any, to interest accruing on and investment earnings, if any,
in respect of the Collection Account or any Series Account, as
provided in this Agreement or the related Supplement;
(vi) except as expressly provided in this Agreement or
any Supplement, neither such Transferor nor any Person
claiming through or under such Transferor has any claim to or
interest in the Collection Account, the Excess Funding
Account, any Series Account or any Series Enhancement;
(vii) on the Trust Cut-Off Date, each Initial Account
owned by such Transferor is an Eligible Account; and, on the
applicable Addition Cut-Off Date, each related Additional
Account owned by such Transferor or a related Credit Card
Originator is an Eligible Account;
(viii) on the Trust Cut-Off Date, each Receivable then
existing in an Account owned by such Transferor is an Eligible
Receivable; and, on the applicable Addition Cut-Off Date, each
Receivable contained in any related Additional Accounts owned
by such Transferor or a related Credit Card Originator is an
Eligible Receivable;
(ix) as of the date of the creation of any new Receivable
in an Account owned by such Transferor or a related Credit
Card Originator, such Receivable is an Eligible Receivable;
and
(x) no selection procedure has been used by such
Transferor (or, based upon representations and warranties in
the applicable Receivables Purchase Agreement, by any related
Credit Card Originator) which such Transferor reasonably
believes would result in a selection of Initial Accounts or
Additional Accounts (from among the available Eligible
Accounts owned by such Transferor or a related Credit Card
Originator on the Trust Cut-Off Date or the applicable
Addition Cut-Off Date, as the case may be) that would be
materially adverse to the interests of the Investor Holders.
On each day on which any new Receivable is created and conveyed to
the Trust, the related Transferor shall be deemed to represent and
warrant as to the matters specified in clauses (iii), (iv), (v) and
(ix) with respect to that Receivable.
(b) Notice of Breach. The representations and warranties of
each Transferor set forth in this Section 2.04 shall survive the
transfer and assignment by such Transferor of Receivables to the
Trust. Upon discovery by such Transferor, the Servicer or the
Trustee of a breach of any of the representations and warranties by
such Transferor set forth in this Section 2.04, the party
discovering such breach shall give prompt written notice to the
others. Each Transferor agrees to cooperate with the Servicer and
the Trustee in attempting to cure any such breach by such
Transferor. For purposes of the representations and warranties set
forth in this Section 2.04, each reference to a Supplement shall be
deemed to refer only to those Supplements in effect as of the date
of the relevant representations or warranties.
SECTION 2.05. Reassignment of Ineligible Receivables. (a)
Reassignment. If (i) any representation or warranty of a Transferor
contained in subsection 2.04(a)(ii), (iv), (vii), (viii), (ix) or
(x) is not true and correct in any material respect as of the date
specified therein (or in the final sentence of subsection 2.04(a))
with respect to any Receivable transferred to the Trust by such
Transferor or an Account owned by such Transferor and as a result
of such breach any Receivables in the related Account become
Defaulted Receivables or the Trust's rights in, to or under such
Receivables or the proceeds of such Receivables are impaired or
such proceeds are not available for any reason to the Trust free
and clear of any Lien, unless cured within 60 days (or such longer
period, not in excess of 150 days, as may be agreed to by the
Trustee) after the earlier to occur of the discovery thereof by
such Transferor or receipt by such Transferor of notice thereof
given by the Trustee, (ii) any representation or warranty of a
Transferor contained in subsection 2.04(a)(iii) is not true and
correct in any material respect as of the date specified therein
(or in the final sentence of subsection 2.04(a)) with respect to
any Receivable transferred to the Trust by such Transferor or an
Account owned by such Transferor and as a result of such breach any
Receivables in the related Account become Defaulted Receivables or
the Trust's rights in, to or under such Receivables or the proceeds
of such Receivables are impaired or such proceeds are not available
for any reason to the Trust free and clear of any Lien, upon the
earlier to occur of the discovery of such breach or event by the
relevant Transferor or the Servicer or receipt by that Transferor
of written notice of such breach or event given by the Trustee, or
(iii) it is so provided in subsection 2.07(a) with respect to any
Receivables transferred to the Trust by such Transferor, then such
Transferor shall accept reassignment of all Receivables in the
related Account ("Ineligible Receivables") on the terms and
conditions set forth in paragraph (b); provided that, in the case
of clauses (i) and (iii) such Receivables will not be deemed to be
Ineligible Receivables and will not be reassigned to such
Transferor if, on any day prior to the end of such 60-day or longer
period, (x) either (A) in the case of an event described in clause
(i) the relevant representation and warranty shall be true and
correct in all material respects as if made on such day or (B) in
the case of an event described in clause (iii) the circumstances
causing such Receivable to become an Ineligible Receivable shall no
longer exist and (y) such Transferor shall have delivered to the
Trustee an Officer's Certificate describing the nature of such
breach and the manner in which the relevant representation and
warranty became true and correct.
(b) Price of Reassignment. The Servicer shall deduct the
portion of the Ineligible Receivables reassigned to a Transferor
which are Principal Receivables from the aggregate amount of
Principal Receivables used to calculate the Transferor Amount, the
Series Percentages and any other percentage used to allocate within
or among Series that is applicable to any Series. If, following the
exclusion of such Principal Receivables from the calculation of the
Transferor Amount, the Transferor Amount would be less than the
Required Transferor Amount, not later than 12:00 noon, New York
City time, on the first Distribution Date following the Monthly
Period in which such reassignment obligation arises, the relevant
Transferor shall make a deposit into the Excess Funding Account in
immediately available funds in an amount equal to the amount by
which the Transferor Amount would be reduced below the Required
Transferor Amount (up to the amount of such Principal Receivables).
Upon the deposit, if any, required to be made to the Excess
Funding Account as provided in this Section and the reassignment of
Ineligible Receivables, the Trustee, on behalf of the Trust, shall
automatically and without further action be deemed to sell,
transfer, assign, set over and otherwise convey to the relevant
Transferor or its designee, without recourse, representation or
warranty, all the right, title and interest of the Trust in and to
such Ineligible Receivables, all moneys due or to become due and
all amounts received with respect thereto and all proceeds thereof.
The Trustee shall execute such documents and instruments of
transfer or assignment and take such other actions as shall
reasonably be requested by the relevant Transferor to effect the
conveyance of Ineligible Receivables pursuant to this Section. The
obligation of a Transferor to accept reassignment of any Ineligible
Receivables, and to make the deposits, if any, required to be made
to the Excess Funding Account as provided in this Section, shall
constitute the sole remedy respecting the event giving rise to such
obligation available to Holders (or the Trustee on behalf of the
Holders).
SECTION 2.06. Reassignment of Receivables in Trust Portfolio.
If any representation or warranty of a Transferor set forth in
subsection 2.03(a) or (c) or subsection 2.04(a)(i), (v) or (vi) is
not true and correct in any material respect and such breach has a
material adverse effect on the Investor Interest in the Receivables
transferred to the Trust by such Transferor, then either the
Trustee or the Holders of Investor Certificates evidencing more
than 50% of the Aggregate Investor Amount, by notice then given to
such Transferor and the Servicer (and to the Trustee if given by
the Investor Holders), may direct each Transferor to accept a
reassignment of the Receivables transferred to the Trust by such
Transferor if such breach and any material adverse effect caused by
such breach is not cured within 60 days of such notice (or within
such longer period, not in excess of 150 days, as may be specified
in such notice), and upon those conditions each Transferor shall be
obligated to accept such reassignment on the terms set forth below;
provided that such Receivables will not be reassigned to the
Transferors if, on any day prior to the end of such 60-day or
longer period (i) the relevant representation and warranty shall be
true and correct in all material respects as if made on such day
and (ii) the relevant Transferor shall have delivered to the
Trustee a certificate of an authorized officer describing the
nature of such breach and the manner in which the relevant
representation and warranty became true and correct.
Each Transferor shall deposit in the Collection Account in
immediately available funds not later than 12:00 noon, New York
City time, on the first Distribution Date following the Monthly
Period in which such reassignment obligation arises, in payment for
such reassignment, an amount equal to the sum of the amounts
specified therefor with respect to each outstanding Series in the
related Supplement. Notwithstanding anything to the contrary in
this Agreement, such amounts shall be distributed on such
Distribution Date in accordance with Article IV and each
Supplement.
Upon the deposit, if any, required to be made to the
Collection Account as provided in this Section and the reassignment
of the Receivables, the Trustee, on behalf of the Trust, shall
automatically and without further action be deemed to sell,
transfer, assign, set over and otherwise convey to the relevant
Transferor or its designee, without recourse, representation or
warranty, all the right, title and interest of the Trust in and to
such Receivables, all moneys due or to become due and all amounts
received with respect thereto and all proceeds thereof. The Trustee
shall execute such documents and instruments of transfer or
assignment and take such other actions as shall reasonably be
requested by the relevant Transferor to effect the conveyance of
such Receivables pursuant to this Section. The obligation of a
Transferor to accept reassignment of any Receivables, and to make
the deposits, if any, required to be made to the Collection Account
as provided in this section, shall constitute the sole remedy
respecting the event giving rise to such obligation available to
Holders (or the Trustee on behalf of the Holders) or any Series
Enhancer.
SECTION 2.07. Covenants of the Transferors. Each Transferor
covenants as follows:
(a) Receivables to be Accounts or General Intangibles. Except
in connection with the enforcement or collection of a Receivable,
such Transferor will take no action to cause any Receivable
transferred by it to the Trust to be evidenced by any instrument or
chattel paper and, if any such Receivable is so evidenced, it shall
be deemed to be an Ineligible Receivable in accordance with
subsection 2.05(a) and shall be reassigned to such Transferor in
accordance with subsection 2.05(b); provided that Receivables
evidenced by notes taken from Obligors in the ordinary course of
business of the Servicer's collection efforts shall not be deemed
Ineligible Receivables solely as a result thereof.
(b) Security Interests. Except for the conveyances hereunder,
such Transferor will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist
any Lien on, any Receivable transferred by it to the Trust, whether
now existing or hereafter created, or any interest therein; and
such Transferor shall defend the right, title and interest of the
Trust in, to and under such Receivables, whether now existing or
hereafter created, against all claims of third parties claiming
through or under such Transferor; provided that nothing in this
subsection 2.07(b) shall prevent or be deemed to prohibit such
Transferor from suffering to exist upon any of the Receivables
transferred by it to the Trust any Liens for municipal or other
local taxes if such taxes shall not at the time be due and payable
or if such Transferor or the related Credit Card Originator shall
currently be contesting the validity thereof in good faith by
appropriate proceedings and shall have set aside on its books
adequate reserves with respect thereto.
(c) Transferors' Interest. Except for the conveyances
hereunder, in connection with any transaction permitted by Section
7.02 and as provided in Sections 2.12 and 6.03, such Transferor
agrees not to transfer, assign, exchange or otherwise convey or
pledge, hypothecate or otherwise grant a security interest in the
Transferors' Interest represented by the Advanta Certificate or any
Supplemental Certificate, and any such attempted transfer,
assignment, exchange, conveyance, pledge, hypothecation or grant
shall be void.
Notwithstanding the foregoing paragraph, the Transferors may
pledge, hypothecate or otherwise grant a security interest in any
(or any portion of) the Transferor Certificates to the Federal
Reserve Bank of Philadelphia and the Federal Home Loan Bank of
Pittsburgh; provided that such pledge, hypothecation, or grant may
not be used as an artifice or device to avoid or limit the
foregoing prohibition on transfer; provided further that under no
circumstances may the Transferors pledge, hypothecate, or otherwise
grant a security interest in any of their rights in the Transferor
Certificates other than the right to receive cash payments in
respect of such Transferor Certificates as provided in this
Agreement or any Supplement.
(d) Delivery of Collections. If such Transferor receives
Collections, such Transferor agrees to pay the Servicer all such
Collections as soon as practicable after receipt thereof but in no
event later than two Business Days after the Date of Processing by
the Servicer.
(e) Notice of Liens. Such Transferor shall notify the Trustee
promptly after becoming aware of any Lien on any Receivable other
than the conveyances hereunder or Liens permitted under subsection
2.07(b).
(f) Periodic Finance Charges and Other Fees. Such Transferor
hereby agrees that it shall not (or shall enforce covenants in any
applicable Receivables Purchase Agreements restricting the right of
any related Credit Card Originator to), except as otherwise
required by any Requirement of Law, or as is deemed by such
Transferor or the related Credit Card Originator in its sole
discretion to be necessary in order for such Transferor or the
related Credit Card Originator to maintain its lending business on
a competitive basis based on a good faith assessment by such
Transferor or the related Credit Card Originator of the nature of
its competition in the lending business, at any time reduce the
annual percentage rate of the Periodic Finance Charges assessed on
the Receivables transferred by such Transferor to the Trust or
other fees charged on any of the Accounts owned by it if, as a
result of any such reduction, either (i) such Transferor's or the
related Credit Card Originator's reasonable expectation is that
such reduction will cause a Series Pay Out Event to occur or (ii)
such reduction is not also applied to any comparable segments of
revolving credit accounts owned by such Transferor or the related
Credit Card Originator which have characteristics the same as, or
substantially similar to, such Accounts (except as otherwise
restricted by an affinity, endorsement, sponsorship or other
agreement between such Transferor or the related Credit Card
Originator and an unrelated third party or by the applicable credit
card agreements).
(g) Cardholder Agreements and Credit Card Guidelines. Such
Transferor shall (or shall enforce covenants in any applicable
Receivables Purchase Agreement restricting the right of any related
Credit Card Originator to) comply with and perform its obligations
under the Cardholder Agreements relating to the Accounts owned by
it and its Credit Card Guidelines and all applicable rules and
regulations of MasterCard and VISA or their respective substantial
equivalents except insofar as any failure so to comply or perform
would not materially and adversely affect the rights of the Trust
or the Holders hereunder. Subject to compliance with all
Requirements of Law, such Transferor may change (or permit the
related Credit Card Originator to change) the terms of the
Cardholder Agreements or the Credit Card Guidelines with respect to
any of the Accounts owned by it in any respect (including the
calculation of the amount, or the timing, of charge-offs and the
Periodic Finance Charges and other fees to be assessed thereon)
only if in the reasonable judgment of such Transferor (or the
related Credit Card Originator) such change is made applicable to
any comparable segment of the revolving credit accounts owned by
such Transferor (or the related Credit Card Originator) which have
characteristics the same as, or substantially similar to, such
Accounts (except as otherwise restricted by an affinity,
endorsement, sponsorship or other agreement between such Transferor
or the related Credit Card Originator and an unrelated third party
or by the applicable credit card agreements).
(h) MasterCard and VISA. Such Transferor, to the extent
applicable to Accounts owned or serviced by such Transferor, shall
use its best efforts to remain, either directly or indirectly, a
member in good standing of the MasterCard system, the VISA system
and any other similar entity's or organization's system relating to
any other type of revolving credit accounts included as Accounts.
(i) Interchange. With respect to any Distribution Date, on or
prior to the last day of the preceding Monthly Period, the
Transferor shall notify the Servicer of the amount of Interchange
on its Accounts required to be included as Collections of Finance
Charge Receivables with respect to such Monthly Period, which
amount for any Series shall be specified in the related Supplement.
Not later than 12:00 noon, New York City time, on each Transfer
Date, the Transferor shall deposit into the Collection Account, if
necessary, in immediately available funds, the amount of
Interchange to be so included as Collections of Finance Charge
Receivables with respect to such Monthly Period.
(j) Corporate Separateness. Each Transferor that is not a
national banking association, a bank or other entity which is not
subject to Title 11 of the United States Code shall comply with the
requirements set forth in Exhibit H.
SECTION 2.08. Addition of Accounts. (a) Required Additions.
(i) If on any Determination Date, as of the close of business on
the last day of the preceding Monthly Period, either (A) the
Transferor Amount is less than the Required Transferor Amount or
(B) the aggregate amount of Principal Receivables is less than the
Required Principal Balance, the Transferors shall on or prior to
the close of business on the 10th Business Day following such
Determination Date (the "Required Designation Date"), unless the
Transferor Amount is at least equal to the Required Transferor
Amount or the aggregate amount of Principal Receivables is at least
equal to the Required Principal Balance, as the case may be, in
either case as of the close of business on any day after the last
day of such Monthly Period and prior to the Required Designation
Date, designate additional Eligible Accounts to be included as
Accounts as of the Required Designation Date or any earlier date in
a sufficient amount such that, after giving effect to such
addition, the Transferor Amount as of the close of business on the
applicable Addition Date is at least equal to the Required
Transferor Amount on such date and the aggregate amount of
Principal Receivables is at least equal to the Required Principal
Balance on such date. The failure of any condition set forth in
paragraph (c), as the case may be, shall not relieve the
Transferors of their obligation pursuant to this paragraph. The
failure of the Transferors to transfer Receivables to the Trust as
provided in this clause (i) solely as a result of the
unavailability of a sufficient amount of Eligible Receivables shall
not constitute a breach of this Agreement, but any such failure
which has not been timely cured may nevertheless result in the
occurrence of a Pay Out Event.
(ii) In lieu of, or in addition to, designating Additional
Accounts pursuant to clause (i), the Transferors may, subject to
the conditions specified in paragraph (c), convey to the Trust
participations (including 100% participations) representing
undivided interests in a pool of assets primarily consisting of
revolving credit card receivables, other revolving credit account
receivables, loan receivables (secured and unsecured), and any
interests in any of the foregoing, including securities
representing or backed by such receivables, and other self-
liquidating financial assets (including any "eligible assets" as
such term is defined in Rule 3a-7 under the Investment Company Act)
owned by a Transferor or any Affiliate of any Transferor and
collections thereon ("Participation Interests"). The addition of
Participation Interests in the Trust pursuant to this paragraph (a)
or paragraph (b) shall be effected by a Participation Interest
Supplement, dated the applicable Addition Date and entered into
pursuant to subsection 13.01(a).
(b) Restricted Additions. Each Transferor may from time to
time, at its sole discretion, subject to the conditions specified
below, designate additional Eligible Accounts to be included as
Accounts or Participation Interests to be included as Trust Assets,
in either case as of the applicable Addition Date.
(c) Conditions to Required and Restricted Additions. On the
Addition Date with respect to any Additional Accounts or
Participation Interests designated pursuant to subsection 2.08(a),
(b) or (d), the Receivables in such Additional Accounts shall be
transferred to the Trust (and such Additional Accounts shall be
deemed to be Accounts for purposes of this Agreement) or such
Participation Interests shall be transferred to the Trust, in each
case as of the close of business on the applicable Addition Date,
subject to the satisfaction of the following conditions:
(i) except in the case of an Addition of Automatic
Additional Accounts (as to which no prior notice is required),
on or before the tenth Business Day immediately preceding the
Addition Date, each Transferor which owns (or directly or
indirectly purchases Receivables from a Credit Card Originator
that owns) any such Additional Account or is transferring any
such Participation Interest to the Trust (a "Participating
Transferor") shall have given the Trustee, the Servicer and
each Rating Agency written notice that the Additional Accounts
or Participation Interests will be included and specifying the
applicable Addition Date, the Addition Cut-Off Date, and the
approximate number of accounts expected to be added and the
approximate aggregate balances expected to be outstanding in
the accounts to be added (in the case of Additional Accounts);
(ii) in the case of Additional Accounts, the
Participating Transferors shall have delivered to the Trustee
copies of UCC-1 financing statements covering such Additional
Accounts, if necessary to perfect the Trust's interest in the
Receivables arising therein;
(iii) as of each of the Addition Cut-Off Date and the
Addition Date, no Insolvency Event with respect to the
Participating Transferor shall have occurred nor shall the
transfer of the Receivables arising in the Additional Accounts
or of the Participation Interests to the Trust have been made
in contemplation of the occurrence thereof;
(iv) except in the case of an Addition pursuant to
subsection 2.08(a)(i) or (d), the Rating Agency Condition
shall have been satisfied;
(v) each Participating Transferor shall have delivered
to the Trustee an Officer's Certificate, dated the Addition
Date, stating that (A) in the case of Additional Accounts, as
of the applicable Addition Cut-Off Date, the Additional
Accounts are all Eligible Accounts, (B) to the extent
applicable, the conditions set forth in clauses (ii) through
(iv) above have been satisfied and (C) such Participating
Transferor reasonably believes that (1) the addition by such
Participating Transferor of the Receivables arising in the
Additional Accounts or of the Participation Interests to the
Trust will not, based on the facts known to such officer at
the time of such addition, then or thereafter cause a Pay Out
Event to occur with respect to any Series and (2) in the case
of Additional Accounts, no selection procedure was used by
such Participating Transferor or a related Credit Card
Originator which would result in a selection of Additional
Accounts (from among the available Eligible Accounts owned by
such Participating Transferor or the related Credit Card
Originator) that would be materially adverse to the interests
of the Investor Holders of any Series as of the Addition Date
(it being understood that the selection of Accounts based upon
the fact that they are subject to a low introductory interest
rate shall be deemed not to be materially adverse to the
interests of Investor Holders of any Series);
(vi) except in the case of an Addition of Automatic
Additional Accounts (as to which the final paragraph of
subsection 2.08(d) will apply), the Participating Transferors
shall have delivered to the Trustee and each Rating Agency an
Opinion of Counsel, which counsel shall be outside counsel,
dated the Addition Date, in accordance with subsection
13.02(d);
(vii) in the case of designation of Additional Accounts,
the Participating Transferors shall have delivered to the
Trustee (A) an Account Schedule with respect to such
Additional Accounts and (B) a duly executed, written
assignment (including an acceptance by the Trustee for the
benefit of the Holders), substantially in the form of Exhibit
B (an "Assignment"); and
(viii) unless the Rating Agency Condition is satisfied,
the number of Additional Accounts designated pursuant to
subsection 2.08(a) with respect to any of the three
consecutive Monthly Periods commencing in January, April, July
and October of each calendar year, commencing in October 1,
1996, shall not exceed 15% of the number of Accounts as of the
first day of the calendar year during which such Monthly
Periods commence (or, if later, the Trust Cut-off Date) and
the number of Additional Accounts designated pursuant to
subsection 2.08(a) during any calendar year shall not exceed
20% of the number of Accounts as of the first day of such
calendar year (or, if later, the Trust Cut-Off Date).
(d) Automatic Account Additions. Each Transferor may from
time to time, at its sole discretion, subject to and in compliance
with the limitations and applicable conditions specified in
subsection 2.08(c) and below, designate Eligible Accounts
("Automatic Additional Accounts") to be included as Accounts as of
the applicable Addition Date. Unless the Rating Agency Condition
is satisfied, (i) no Automatic Additional Account owned by a Credit
Card Originator which is not ANB or an Affiliate of ANB may be
designated to the Trust if, after giving effect to such
designation, the aggregate amount of Principal Receivables which
arose from Accounts owned by Credit Card Originators which are
not ANB and its Affiliates represents more than 50% of the
aggregate Principal Receivables at such time, and (ii) the number
of Automatic Additional Accounts designated with respect to any
of the three consecutive Monthly Periods commencing in
January, April, July and October of each calendar year,
commencing in October 1, 1996, shall not exceed 15% of the
number of Accounts as of the first day of the calendar year (or, if
later, the Trust Cut-Off Date) during which such Monthly Periods
commence and the number of Automatic Additional Accounts designated
during any such calendar year shall not exceed 20% of the number of
Accounts as of the first day of such calendar year (or, if later,
the Trust Cut-Off Date).
Within 30 days after the Addition Date for any Automatic
Additional Accounts, the Transferors shall deliver to the Trustee
and each Rating Agency an Opinion of Counsel (which counsel shall
be outside counsel) in accordance with subsection 13.02(d) as to
the Automatic Additional Accounts included as Accounts on such
Addition Date, confirming the validity and perfection of the
transfer of Receivables in such Automatic Additional Accounts. If
such Opinion of Counsel with respect to any Automatic Additional
Accounts is not so received, the right of the Transferors to
designate Automatic Additional Accounts will be suspended until
such time as the Rating Agency Condition is satisfied as to the
resumed designation of Automatic Additional Accounts. If the
Transferors are unable to deliver an Opinion of Counsel with
respect to any Automatic Additional Account, such inability shall
be deemed to be a breach of the representation in subsection
2.04(a)(viii) with respect to the Receivables in such Automatic
Additional Account for purposes of Section 2.05; provided that the
cure period for such breach shall not exceed 30 days.
(e) In each circumstance in which any action permitted by this
Section 2.08 is contingent upon the satisfaction of the Rating
Agency Condition, the Rating Agency Condition shall be deemed to
have been satisfied if (i) the Transferors give each Rating Agency
written notice of the contemplated action, and (ii) for a period of
ten days after such notice is given, no Rating Agency shall have
notified the Transferors in writing that such action will result in
a reduction or withdrawal of the then current rating of any
outstanding Series or Class with respect to which it is a Rating
Agency.
SECTION 2.09. Removal of Accounts and Participation Interests.
On any day of any Monthly Period each Transferor shall have the
right to require the reassignment to it or its designee of all the
Trust's right, title and interest in, to and under the Receivables
then existing and thereafter created, all moneys due or to become
due and all amounts received with respect thereto and all proceeds
thereof in or with respect to Accounts owned and designated by such
Transferor (the "Removed Accounts") or Participation Interests
designated by the Transferor, upon satisfaction of the following
conditions:
(a) on or before the fifth Business Day immediately preceding
the Removal Date (the "Removal Notice Date"), such Transferor shall
have given the Trustee, the Servicer, each Rating Agency and any
Series Enhancer written notice of such removal, specifying the date
for removal of the Removed Accounts or Participation Interests (the
"Removal Date");
(b) with respect to Removed Accounts, on or prior to the date
that is ten Business Days after the Removal Date, such Transferor
shall have amended Schedule 1 by delivering to the Trustee an
Account Schedule containing a true and complete list of the Removed
Accounts and related information, as of the last day of the Monthly
Period preceding the Removal Notice Date (the "Removal Cut-Off
Date");
(c) with respect to Removed Accounts, such Transferor shall
have represented and warranted as of the Removal Date that the list
of Removed Accounts delivered pursuant to paragraph (b), as of the
Removal Cut-Off Date, is true and complete in all material
respects;
(d) the Rating Agency Condition shall have been satisfied
with respect to such removal;
(e) such Transferor shall have delivered to the Trustee an
Officer's Certificate, dated the Removal Date, to the effect that
such Transferor reasonably believes that (i) such removal will not,
based on the facts known to such officer at the time of such
certification, then or thereafter cause a Pay Out Event to occur
with respect to any Series, (ii) no selection procedure was used by
such Transferor which would result in a selection of Removed
Accounts or Participation Interests that would be materially
adverse to the interests of the Investor Holders of any Series as
of the Removal Date (it being understood that the selection of
Accounts based upon the fact that they no longer are subject to a
low introductory interest rate shall be deemed not to be materially
adverse to the interests of Investor Holders of any Series) and
(iii) after giving effect to such removal, the Transferor Amount
will not be less than the Required Transferor Amount and the
aggregate outstanding balance of Principal Receivables will not be
less than the Required Principal Balance; and
(f) as of the Removal Cut-Off Date, no more than 10% of the
Receivables outstanding are more than thirty days Contractually
Delinquent.
Notwithstanding the foregoing, any Transferor may designate
Removed Accounts which are Zero Balance Accounts on a Removal Date
without satisfying any of the conditions set forth in clauses (a),
(d), (e), or (f).
Upon satisfaction of the above conditions, the Trustee shall
execute and deliver to the relevant Transferor or its designee a
written reassignment in substantially the form of Exhibit C (the
"Reassignment") and shall, without further action, be deemed to
sell, transfer, assign, set over and otherwise convey to such
Transferor or its designee, effective as of the Removal Date,
without recourse, representation or warranty, all the right, title
and interest of the Trust in and to the Participation Interests or
Receivables arising in the Removed Accounts, all moneys due and to
become due and all amounts received with respect thereto and all
proceeds thereof. In addition, the Trustee shall execute such other
documents and instruments of transfer or assignment and take such
other actions as shall reasonably be requested by the relevant
Transferor to effect the conveyance of Participation Interests or
Receivables pursuant to this Section 2.09.
SECTION 2.10. Account Allocations. If any Transferor is unable
for any reason to transfer Receivables to the Trust in accordance
with the provisions of this Agreement, including by reason of the
application of the provisions of Section 9.02 or any order of any
Governmental Authority (a "Transfer Restriction Event"), then, in
any such event, (a) such Transferor and the Servicer agree (except
as prohibited by any such order) to allocate and pay to the Trust,
after the date of such inability, all Collections of Receivables
transferred to the Trust by such Transferor, including Collections
of Receivables transferred to the Trust by such Transferor prior
to the occurrence of such event, and all amounts which would have
constituted Collections but for such Transferor's inability to
transfer Receivables (up to an aggregate amount equal to the amount
of Receivables transferred to the Trust by such Transferor in the
Trust on such date), (b) such Transferor and the Servicer agree
that such amounts will be applied as Collections in accordance with
Article IV and each Supplement and (c) for so long as the
allocation and application of all Collections and all amounts that
would have constituted Collections are made in accordance with
clauses (a) and (b), Principal Receivables and Discount Option
Receivables and all amounts which would have constituted Principal
Receivables or Discount Option Receivables but for such
Transferor's inability to transfer Receivables to the Trust which
are written off as uncollectible in accordance with this Agreement
shall continue to be allocated in accordance with Article IV and
each Supplement. For the purpose of the immediately preceding
sentence, such Transferor and the Servicer shall treat the first
received Collections with respect to the Accounts owned by such
Transferor as allocable to the Trust until the Trust shall have
been allocated and paid Collections in an amount equal to the
aggregate amount of Principal Receivables and Discount Option
Receivables in such Accounts as of the date of the occurrence of
such event. If such Transferor or the Servicer is unable pursuant
to any Requirements of Law to allocate Collections as described
above, such Transferor and the Servicer agree that, after the
occurrence of such event, payments on each Account owned by such
Transferor with respect to the principal balance of such Account
shall be allocated first to the oldest principal balance of such
Account and shall have such payments applied as Collections in
accordance with Article IV and each Supplement. The parties hereto
agree that Finance Charge Receivables, whenever created, accrued in
respect of Principal Receivables and Discount Option Receivables
which have been conveyed to the Trust shall continue to be a part
of the Trust notwithstanding any cessation of the transfer of
additional Principal Receivables and Discount Option Receivables to
the Trust and Collections with respect thereto shall continue to be
allocated and paid in accordance with Article IV and each
Supplement.
SECTION 2.11. Discount Option. (a) The Transferors shall have
the option to designate at any time and from time to time a
percentage or percentages, which may be a fixed percentage or a
variable percentage based on a formula (the "Discount Percentage"),
of all or any specified portion of Principal Receivables (which may
be limited to Principal Receivables created after the Discount
Option Date) to be treated as Finance Charge Receivables ("Discount
Option Receivables"). The Transferors shall also have the option of
reducing or withdrawing the Discount Percentage, at any time and
from time to time, on and after such Discount Option Date. The
Transferors shall provide to the Servicer, the Trustee and any
Rating Agency 30 days prior written notice of the Discount Option
Date, and such designation shall become effective on the Discount
Option Date (i) unless such designation in the reasonable belief of
the Transferors would cause a Pay Out Event with respect to any
Series to occur, or an event which, with notice or lapse of time or
both, would constitute a Pay Out Event with respect to any Series
and (ii) only if the Rating Agency Condition shall have been
satisfied with respect to such designation.
(b) After the Discount Option Date, the Transferors shall
treat Discount Option Receivable Collections as Collections of
Finance Charge Receivables.
SECTION 2.12. Additional Transferors. ANB may designate
Affiliates of ANB to be included as Transferors ("Additional
Transferors") under this Agreement by an amendment hereto pursuant
to subsection 13.01(a) and, in connection with such designation,
the Transferors shall surrender the Advanta Certificate to the
Trustee in exchange for a newly issued Advanta Certificate modified
to reflect such Additional Transferor's interest in the
Transferors' Interest; provided that prior to any such designation
and exchange the applicable conditions set forth in subsection
6.03(c) or 6.03(d), as applicable, shall have been satisfied. Each
Additional Transferor may itself be a Credit Card Originator or may
obtain Receivables, directly or indirectly, from one or more other
Credit Card Originators pursuant to one or more Receivables
Purchase Agreements (which may be entered into directly between the
Additional Transferor and a Credit Card Originator or may be
entered into by the Additional Transferor with an intermediate
purchaser that, in turn, enters into a Receivables Purchase
Agreement with a Credit Card Originator). In addition, an existing
Transferor may, by an amendment hereto pursuant to subsection
13.01(a) (and subject to delivery of an opinion of counsel of the
type referred to in subsection 6.03(c)(ii)), cease to be a direct
Transferor and instead sell Receivables to another Transferor
(directly or indirectly as described above) pursuant to one or more
Receivables Purchase Agreements for transfer to the Trust.
ARTICLE III ADMINISTRATION AND SERVICING
SECTION 3.01. Acceptance of Appointment and Other Matters
Relating to the Servicer. (a) ANB agrees to act as the Servicer
under this Agreement, and the Holders by their acceptance of
Certificates consent to ANB acting as Servicer.
(b) The Servicer shall service and administer the
Receivables, shall collect payments due under the Receivables and
shall charge off as uncollectible Receivables, all in accordance
with its customary and usual servicing procedures for servicing
credit card receivables comparable to the Receivables and in
accordance with the Credit Card Guidelines. The Servicer shall have
full power and authority, acting alone or through any party
properly designated by it hereunder, to do any and all things in
connection with such servicing and administration which it may deem
necessary or desirable. Without limiting the generality of the
foregoing, subject to Section 10.01 and provided ANB is the
Servicer, the Servicer or its designee is hereby authorized and
empowered (i) to make withdrawals and payments or to instruct the
Trustee to make withdrawals and payments from the Collection
Account, the Excess Funding Account and any Series Account, as set
forth in this Agreement or any Supplement, and (ii) to take any
action required or permitted under any Series Enhancement, as set
forth in this Agreement or any Supplement. Without limiting the
generality of the foregoing and subject to Section 10.01, the
Servicer or its designee is hereby authorized and empowered to make
any filings, reports, notices, applications and registrations with,
and to seek any consents or authorizations from, the Commission and
any state securities authority on behalf of the Trust as may be
necessary or advisable to comply with any Federal or state
securities laws or reporting requirements. The Trustee shall
furnish the Servicer with any powers of attorney or other documents
necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder.
(c) The Servicer shall not be obligated to use separate
servicing procedures, offices, employees or accounts for servicing
the Receivables from the procedures, offices, employees and
accounts used by the Servicer in connection with servicing other
credit card receivables.
(d) The Servicer shall comply with and perform its servicing
obligations with respect to the Accounts and Receivables in
accordance with the Cardholder Agreements relating to the Accounts
and the Credit Card Guidelines and all applicable rules and
regulations of VISA, MasterCard and any other similar entity or
organization relating to any other type of revolving credit
accounts included as Accounts, except insofar as any failure to so
comply or perform would not materially and adversely affect the
Trust or the Investor Holders.
(e) The Servicer shall pay out of its own funds, without
reimbursement, all expenses incurred in connection with the Trust
and the servicing activities hereunder including expenses related
to enforcement of the Receivables, fees and disbursements of the
Trustee, any Paying Agent and any Transfer Agent and Registrar
(including the reasonable fees and expenses of its counsel) and
independent accountants and all other fees and expenses, including
the costs of filing UCC financing and continuation statements and
the costs and expenses relating to obtaining and maintaining the
listing of any Investor Certificates on any stock exchange, that
are not expressly stated in this Agreement to be payable by the
Trust or the Transferors (other than Federal, state, local and
foreign income, franchise and other taxes, if any, or any interest
or penalties with respect thereto, assessed on the Trust).
(f) The Servicer agrees that upon a request by the
Transferors it will use its reasonable best efforts to obtain and
maintain the listing of the Investor Certificates of any Series or
Class on any specified security exchange. If any such request is
made, the Servicer shall give notice to the Transferors and the
Trustee on the date on which such Investor Certificates are
approved for such listing and within three Business Days following
receipt of notice by the Servicer of any actual, proposed or
contemplated delisting of such Investor Certificates by any such
securities exchange. The Trustee or the Servicer, each in its sole
discretion, may terminate any listing on any such securities
exchange at any time subject to the notice requirements set forth
in the preceding sentence.
SECTION 3.02. Servicing Compensation. As full compensation for
its servicing activities hereunder and as reimbursement for any
expense incurred by it in connection therewith, the Servicer shall
be entitled to receive a servicing fee (the "Servicing Fee") with
respect to each Monthly Period, payable monthly no later than the
related Distribution Date, in an amount equal to one-twelfth of the
product of (a) the weighted average of the Servicing Fee Rates with
respect to each outstanding Series (based upon the Servicing Fee
Rate for each Series and the Invested Amount (or such other amount
as specified in the related Supplement) of such Series, in each
case as of the last day of the prior Monthly Period) and (b) the
amount of Principal Receivables on the last day of the prior
Monthly Period. The share of the Servicing Fee allocable to (i) the
Investor Interest of a particular Series with respect to any
Monthly Period and (ii) the Enhancement Investor Amount, if any, of
a particular Series with respect to any Monthly Period will each be
determined in accordance with the relevant Supplement. The portion
of the Servicing Fee with respect to any Monthly Period not so
allocated to the Investor Interest or the Enhancement Investor
Amount, if any, of a particular Series shall be paid by the Holders
of the Transferor Certificates no later than the related
Distribution Date and in no event shall the Trust, the Trustee, the
Investor Holders of any Series or any Series Enhancer be liable for
the share of the Servicing Fee with respect to any Monthly Period
to be paid by the Holders of the Transferor Certificates.
SECTION 3.03. Representations, Warranties and Covenants of the
Servicer. ANB, as initial Servicer, hereby makes, and any Successor
Servicer by its appointment hereunder shall make, on each Closing
Date (and on the date of any such appointment), the following
representations, warranties and covenants:
(a) Organization and Good Standing. The Servicer is a
national banking association duly organized, validly existing and
in good standing under the laws of the United States of America or
a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation, and has full
corporate power, authority and legal right to execute, deliver and
perform its obligations under this Agreement and each Supplement
and, in all material respects, to own its properties and conduct
its business as such properties are presently owned and as such
business is presently conducted.
(b) Due Qualification. The Servicer is duly qualified to do
business and is in good standing as a foreign corporation (or is
exempt from such requirements), and has obtained all necessary
licenses and approvals in each jurisdiction in which failure to so
qualify or to obtain such licenses and approvals would have a
material adverse effect on the interests of the Investor Holders
hereunder or under any Supplement.
(c) Due Authorization. The execution, delivery, and
performance of this Agreement and each Supplement have been duly
authorized by the Servicer by all necessary corporate action on the
part of the Servicer and this Agreement and each Supplement will
remain, from the time of its execution, an official record of the
Servicer.
(d) Binding Obligation. This Agreement and each Supplement
constitutes a legal, valid and binding obligation of the Servicer,
enforceable in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect, affecting the enforcement of creditors' rights in
general and the rights of creditors of national banking
associations and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law
or in equity).
(e) No Violation. The execution and delivery of this
Agreement and each Supplement by the Servicer, the performance of
the transactions contemplated by this Agreement and each Supplement
and the fulfillment of the terms hereof and thereof applicable to
the Servicer will not conflict with, violate, result in any breach
of any of the material terms of, or constitute (with or without
notice or lapse of time or both) a default under, any Requirement
of Law applicable to the Servicer or any indenture, contract,
agreement, mortgage, deed of trust or other instrument to which the
Servicer is a party or by which it or any of its properties are
bound.
(f) No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of the Servicer,
threatened against the Servicer before any Governmental Authority
seeking to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by this
Agreement or any Supplement, seeking any determination or ruling
that, in the reasonable judgment of the Servicer, would materially
and adversely affect the performance by the Servicer of its
obligations under this Agreement or any Supplement, or seeking any
determination or ruling that would materially and adversely affect
the validity or enforceability of this Agreement or any Supplement.
(g) Compliance with Requirements of Law. The Servicer shall
duly satisfy all obligations on its part to be fulfilled under or
in connection with the Receivables and the related Accounts, will
maintain in effect all qualifications required under Requirements
of Law in order to service the Receivables and the related Accounts
properly and will comply in all material respects with all other
Requirements of Law in connection with servicing the Receivables
and the related Accounts, the failure to comply with which would
have a material adverse effect on the interests of the Holders.
(h) No Rescission or Cancellation. Subject to Section 3.09,
the Servicer shall not permit any rescission or cancellation of a
Receivable except as ordered by a court of competent jurisdiction
or other Governmental Authority or in the ordinary course of its
business and in accordance with the Credit Card Guidelines.
(i) Protection of Holders' Rights. The Servicer shall take no
action which, nor omit to take any action the omission of which,
would substantially impair the rights of Holders in any Receivable
or Account, nor shall it, except in the ordinary course of its
business and in accordance with the Credit Card Guidelines,
reschedule, revise or defer Collections due on the Receivables.
(j) Receivables Not To Be Evidenced by Promissory Notes.
Except in connection with its enforcement or collection of a
Receivable, the Servicer will take no action to cause any
Receivable to be evidenced by any instrument and, if any Receivable
is so evidenced, it shall be reassigned or assigned to the Servicer
as provided in this Section; provided that Receivables evidenced by
notes taken from Obligors in the ordinary course of business of the
Servicer's collection efforts shall not be deemed Ineligible
Receivables solely as a result thereof.
(k) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any
Governmental Authority required in connection with the execution
and delivery by the Servicer of this Agreement and each Supplement,
the performance by the Servicer of the transactions contemplated by
this Agreement and each Supplement and the fulfillment by the
Servicer of the terms hereof and thereof, have been obtained;
provided that the Servicer makes no representation or warranty
regarding state securities or "blue sky" laws in connection with
the distribution of the Certificates.
For purposes of the representations and warranties set forth
in this Section 3.03, each reference to a Supplement shall be
deemed to refer only to those Supplements in effect as of the
relevant Closing Date or the date of appointment of a Successor
Servicer, as applicable.
If any of the representations, warranties or covenants of the
Servicer contained in paragraph (g), (h), (i) or (j) with respect
to any Receivable or the related Account is breached, and as a
result of such breach the Trust's rights in, to or under any
Receivable in the related Account or the proceeds of such
Receivable are impaired or such proceeds are not available for any
reason to the Trust free and clear of any Lien, then no later than
the expiration of 60 days (or such longer period, not in excess of
150 days, as may be agreed to by the Trustee) from the earlier to
occur of the discovery of such event by the Servicer, or receipt by
the Servicer of notice of such event given by the Trustee, all
Receivables in the Account or Accounts to which such event relates
shall be reassigned or assigned to the Servicer on the terms and
conditions set forth below; provided that such Receivables will not
be reassigned or assigned to the Servicer if, on any day prior to
the end of such 60-day or longer period, (i) the relevant
representation and warranty shall be true and correct, or the
relevant covenant shall have been complied with, in all material
respects and (ii) the Servicer shall have delivered to the Trustee
a certificate of an authorized officer describing the nature of
such breach and the manner in which such breach was cured.
If ANB is the Servicer, such reassignment or assignment shall
be accomplished in the manner set forth in subsection 2.05(b) as if
the reassigned or assigned Receivables were Ineligible Receivables
(including the requirement, if applicable, to reduce the aggregate
amount of Principal Receivables used to calculate the Transferor
Amount, the Series Percentages and any other percentage used to
allocate within or among Series applicable to any Series and to
make deposits into the Excess Funding Account). If ANB is not the
Servicer, the Servicer shall effect such assignment by making a
deposit into the Collection Account in immediately available funds
on the Transfer Date following the Monthly Period in which such
assignment obligation arises in an amount equal to the amount of
such Receivables, which deposit shall be considered a Collection of
Principal Receivables and shall be applied in accordance with
Article IV and each Supplement.
Upon each such reassignment or assignment to the Servicer, the
Trustee, on behalf of the Trust, shall automatically and without
further action be deemed to sell, transfer, assign, set over and
otherwise convey to the Servicer, without recourse, representation
or warranty, all right, title and interest of the Trust in and to
such Receivables, all moneys due or to become due and all amounts
received with respect thereto and all proceeds thereof. The Trustee
shall execute such documents and instruments of transfer or
assignment and take such other actions as shall be reasonably
requested by the Servicer to effect the conveyance of any such
Receivables pursuant to this Section. The obligation of the
Servicer to accept reassignment or assignment of such Receivables,
and to make the deposits, if any, required to be made to the
Collection Account or the Excess Funding Account as provided in the
preceding paragraph, shall constitute the sole remedy respecting
the event giving rise to such obligation available to Holders (or
the Trustee on behalf of Holders) or any Series Enhancer.
SECTION 3.04. Reports and Records for the Trustee. (a) Daily
Records. On each Business Day, the Servicer, with prior written
notice by the Trustee shall make or cause to be made available at
the office of the Servicer on any Business Day during normal
business hours for inspection by the Trustee a record setting forth
(i) the Collections in respect of Principal Receivables and in
respect of Finance Charge Receivables processed by the Servicer on
the second preceding Business Day in respect of the Accounts and
(ii) the amount of Receivables as of the close of business on the
second preceding Business Day. The Servicer shall, at all times,
maintain its computer files with respect to the Accounts in such a
manner so that the Accounts may be specifically identified.
(b) Monthly Servicer's Certificate. Not later than the
Determination Date immediately preceding each Distribution Date,
the Servicer shall, with respect to each outstanding Series,
deliver to the Trustee, the Paying Agent and each Rating Agency a
certificate of a Servicing Officer in substantially the form set
forth in the related Supplement.
SECTION 3.05. Annual Certificate of Servicer. The Servicer
shall deliver to the Trustee and each Rating Agency, on or before
November 30 of each calendar year, beginning with November 30,
1997, an Officer's Certificate (with appropriate insertions)
substantially in the form of Exhibit D.
SECTION 3.06. Annual Servicing Report of Independent Public
Accountants; Copies of Reports Available. (a) On or before
November 30 of each calendar year, beginning with November 30,
1997, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services
to the Servicer or the Transferors) to furnish a report (addressed
to the Servicer) to the Trustee, the Servicer and each Rating
Agency to the effect that they have examined management's assertion
about the Servicer's compliance with Articles III and IV and
Section 8.08 of this Agreement and the applicable provisions of
each Supplement (the "Specified Servicing Requirements") and that
on the basis of such examination, in such firm's opinion,
management's assertion that the Servicer complied with the
Specified Servicing Requirements is fairly stated except for such
exceptions as they believe to be immaterial and such other
exceptions as shall be set forth in such report.
(b) On or before November 30 of each calendar year, beginning
with November 30, 1997, the Servicer shall cause a firm of
nationally recognized independent public accountants (who may also
render other services to the Servicer or the Transferors) to
furnish a report (addressed to the Trustee) to the Trustee, the
Servicer and each Rating Agency to the effect that they have
applied certain procedures agreed upon with the Servicer to compare
the mathematical calculations of certain amounts set forth in the
Servicer's certificates delivered pursuant to subsection 3.04(b)
during the period covered by such report with the Servicer's
computer reports which were the source of such amounts. Such report
shall set forth the agreed-upon procedures performed and the
results of such procedures, including any exceptions as they
believe to be significant.
(c) A copy of each certificate and report provided pursuant
to Section 3.04(b), 3.05 or 3.06 may be obtained by any Investor
Holder or Certificate Owner by a request to the Trustee addressed
to the Corporate Trust Office.
SECTION 3.07. Tax Treatment. Unless otherwise specified in a
Supplement with respect to a particular Series, the Transferors
have entered into this Agreement, and the Certificates will be
issued, with the intention that, for Federal, state and local
income and franchise tax purposes only, the Investor Certificates
of each Series which are characterized as indebtedness at the time
of their issuance will qualify as indebtedness secured by the
Receivables. The Transferors, by entering into this Agreement, and
each Holder, by the acceptance of any such Certificate (and each
Certificate Owner, by its acceptance of an interest in the
applicable Certificate), agree to treat such Investor Certificates
for Federal, state and local income and franchise tax purposes as
indebtedness. Each Holder of such Investor Certificate agrees that
it will cause any Certificate Owner acquiring an interest in a
Certificate through it to comply with this Agreement as to
treatment as indebtedness under applicable tax law, as described in
this Section 3.07. Nothing contained herein shall, however,
preclude the Transferors from taking (and the Transferors are
hereby permitted to take) any action that they may elect to take to
qualify any interest in the Trust as a partnership interest for
Federal, state or local income tax purposes (excluding any such
interest as to which an Opinion of Counsel was delivered at
issuance stating that such interest would be treated as
indebtedness for Federal income tax purposes) so long as (a) a Tax
Opinion is delivered to the Trustee in connection with any such
action and (b) any consents required by any Supplement or loans or
purchase agreement relating to any affected interest in the Trust
is obtained.
SECTION 3.08. Notices to ANB. If ANB is no longer acting as
Servicer, any Successor Servicer shall deliver to ANB each
certificate and report required to be provided thereafter pursuant
to Section 3.04(b), 3.05 or 3.06.
SECTION 3.09. Adjustments. (a) If the Servicer adjusts
downward the amount of any Receivable because of a rebate, refund,
unauthorized charge or billing error to an account holder, or
because such Receivable was created in respect of merchandise which
was refused or returned by an account holder, or if the Servicer
otherwise adjusts downward the amount of any Receivable without
receiving Collections therefor or charging off such amount as
uncollectible, then, in any such case, the amount of Principal
Receivables used to calculate the Transferor Amount, the Series
Percentages and any other percentage used to allocate within or
among Series applicable to any Series will be reduced by the amount
of the adjustment. Similarly, the amount of Principal Receivables
used to calculate the Transferor Amount, the Series Percentages and
any other percentage used to allocate within or among Series
applicable to any Series will be reduced by the amount of any
Receivable which was discovered as having been created through a
fraudulent or counterfeit charge. Any adjustment required pursuant
to either of the two preceding sentences shall be made on or prior
to the end of the Monthly Period in which such adjustment
obligation arises. If, following the exclusion of such Principal
Receivables from the calculation of the Transferor Amount, the
Transferor Amount would be less than the Required Transferor
Amount, not later than 12:00 noon, New York City time, on the
Distribution Date following the Monthly Period in which such
adjustment obligation arises, the Transferor which transferred such
Principal Receivables to the Trust shall make a deposit into the
Excess Funding Account in immediately available funds in an amount
equal to the amount by which the Transferor Amount would be below
the Required Transferor Amount (up to the amount of such Principal
Receivables).
(b) If (i) the Servicer makes a deposit into the Collection
Account in respect of a Collection of a Receivable and such
Collection was received by the Servicer in the form of a check
which is not honored for any reason or (ii) the Servicer makes a
mistake with respect to the amount of any Collection and deposits
an amount that is less than or more than the actual amount of such
Collection, the Servicer shall appropriately adjust the amount
subsequently deposited into the Collection Account to reflect such
dishonored check or mistake. Any Receivable in respect of which a
dishonored check is received shall be deemed not to have been paid.
SECTION 3.10. Reports to the Commission. The Servicer shall,
on behalf of the Trust, cause to be filed with the Commission any
periodic reports required to be filed under the provisions of the
Exchange Act, and the rules and regulations of the Commission
thereunder. The Transferors shall, at the expense of the Servicer,
cooperate in any reasonable request of the Servicer in connection
with such filings.
ARTICLE IV RIGHTS OF HOLDERS; ALLOCATION AND APPLICATION OF
COLLECTIONS
SECTION 4.01. Rights of Holders. The Investor Certificates
shall represent fractional interests in the Trust, which, with
respect to each Series, shall consist of the right to receive, to
the extent necessary to make the required payments with respect to
the Investor Certificates of such Series at the times and in the
amounts specified in the related Supplement, the portion of
Collections allocable to Investor Holders of such Series pursuant
to this Agreement and such Supplement, funds on deposit in the
Collection Account and the Excess Funding Account allocable to
Holders of such Series pursuant to this Agreement and such
Supplement, funds on deposit in any related Series Account and
funds available pursuant to any related Series Enhancement
(collectively, with respect to all Series, the "Investor
Interest"), it being understood that the Investor Certificates of
any Series or Class shall not represent any interest in any Series
Account or Series Enhancement for the benefit of any other Series
or Class. The Transferor Certificates shall represent the ownership
interest in the remainder of the Trust Assets not allocated
pursuant to this Agreement or any Supplement to the Investor
Interest, including the right to receive Collections with respect
to the Receivables and other amounts at the times and in the
amounts specified in this Agreement or any Supplement to be paid to
the Holders of the Transferor Certificates (the "Transferors'
Interest"); provided that the Transferor Certificates shall not
represent any interest in the Collection Account, the Excess
Funding Account, any Series Account or any Series Enhancement,
except as specifically provided in this Agreement or any
Supplement; provided further that the foregoing shall not be
construed to limit the Trustee's obligations to make payments to
the Holders of the Transferor Certificates, the Transferors and the
Servicer as and when required under this Agreement and any
Supplement.
SECTION 4.02. Establishment of Collection Account and Excess
Funding Account. (a) The Servicer, for the benefit of the Holders,
shall establish and maintain in the name of the Trustee, on behalf
of the Trust, (i) an Eligible Deposit Account (or Eligible Deposit
Accounts) to function as the collection account for the Trust (the
"Collection Account") and (ii) an Eligible Deposit Account to
function as the excess funding account for the Trust (the "Excess
Funding Account"), each of which shall bear a designation clearly
indicating that the funds deposited therein are held for the
benefit of the Holders. The Trustee shall possess all right, title
and interest in all funds on deposit from time to time in the
Collection Account and the Excess Funding Account and in all
proceeds thereof. The Collection Account and the Excess Funding
Account shall be under the sole dominion and control of the Trustee
for the benefit of the Holders. Except as expressly provided in
this Agreement, the Servicer and each Transferor agrees that it
shall have no right of setoff or banker's lien against, and no
right to otherwise deduct from, any funds held in the Collection
Account or the Excess Funding Account for any amount owed to it by
the Trustee, the Trust, any Holder or any Series Enhancer. If, at
any time, the Collection Account or the Excess Funding Account
ceases to be an Eligible Deposit Account, the Trustee (or the
Servicer on its behalf) shall within ten Business Days (or such
longer period, not to exceed 30 calendar days, as to which the
Rating Agency Condition is satisfied) establish a new Collection
Account or Excess Funding Account, as the case may be, meeting the
conditions specified above, transfer any cash or any investments to
such new Collection Account or Excess Funding Account and from the
date such new Collection Account or Excess Funding Account is
established, it shall be the "Collection Account" or "Excess
Funding Account," as the case may be. If at any time neither ANB
nor any Affiliate of ANB is the Servicer, the Collection Account
and the Excess Funding Account will be moved from ANB if then
maintained there, unless the Rating Agency Condition is satisfied
as to the continued maintenance of the applicable account at ANB.
(b) Funds on deposit in the Collection Account (other than
amounts deposited pursuant to Section 2.06, 9.02, 10.01 or 12.02)
or in the Excess Funding Account shall at the direction of the
Servicer be invested by the Trustee in Eligible Investments
selected by the Servicer. All such Eligible Investments shall be
held by the Trustee for the benefit of the Holders. The Trustee
shall maintain for the benefit of the Holders possession of the
negotiable instruments or securities, if any, evidencing such
Eligible Investments. Funds on deposit in the Collection Account
representing Collections collected during any Monthly Period shall
be invested and reinvested in Eligible Investments that will mature
so that funds will be available not later than the close of
business on the Transfer Date following such Monthly Period. Funds
on deposit in (and not withdrawn from) the Excess Funding Account
on any date will be invested and reinvested in Eligible Investments
that will mature so that funds will be available not later than the
close of business on the Transfer Date following such date. Unless
directed by the Servicer, funds deposited in the Collection Account
or the Excess Funding Account on a Transfer Date with respect to
the next following Distribution Date are not required to be
invested overnight.
(c) Interest (including reinvested interest) and other
investment income and earnings on funds on deposit in the
Collection Account or the Excess Funding Account shall be deemed
not to be available or on deposit in such accounts and, in the case
of the Excess Funding Account, shall not be considered part of the
Excess Funding Amount. Such interest and other investment earnings
(net of investment expenses and losses) on balances in the
Collection Account shall from time to time, at the request of the
Transferors, be transferred to the Transferors or their order.
(d) On each Transfer Date, the Servicer shall instruct the
Trustee to withdraw on the related Distribution Date from the
Excess Funding Account and deposit in the Collection Account all
interest and other investment earnings (net of losses and
investment expenses) on funds on deposit in the Excess Funding
Account, for application as Collections of Finance Charge
Receivables with respect to the prior Monthly Period.
SECTION 4.03. Collections and Allocations. (a) Deposit of
Collections. Except as otherwise provided below or in any
Supplement with respect to Collections allocated to the related
Series, the Servicer shall deposit Collections into the Collection
Account no later than the second Business Day following the Date of
Processing of such Collections. Subject to the express terms of any
Supplement, but notwithstanding anything else in this Agreement to
the contrary, for so long as ANB remains the Servicer and (x)
maintains a certificate of deposit rating of A-1 or better by
Standard & Poor's and P-1 by Moody's (or such other rating below A-
1 or P-1, as the case may be, which is satisfactory to each Rating
Agency), or (y) ANB provides to the Trustee a letter of credit
covering collection risk of the Servicer acceptable to each Rating
Agency (as evidenced by a letter from each Rating Agency), the
Servicer need not make the daily deposits of Collections into the
Collection Account as provided in the preceding sentence, but may
make a single deposit in the Collection Account in immediately
available funds not later than 12:00 noon, New York City time, on
the Transfer Date following the Monthly Period with respect to
which such deposit was made. Subject to the express terms of any
Supplement, but notwithstanding anything else in this Agreement to
the contrary, with respect to any Monthly Period, whether the
Servicer is required to make deposits of Collections pursuant to
the first or the second preceding sentence, (i) the Servicer will
only be required to deposit Collections into the Collection Account
up to the aggregate amount of Collections required to be deposited
into any Series Account or, without duplication, distributed on or
prior to the related Distribution Date to Investor Holders pursuant
to any Supplement and (ii) if at any time prior to such
Distribution Date the amount of Collections deposited in the
Collection Account exceeds the amount required to be deposited
pursuant to clause (i), the Servicer will be permitted to withdraw
the excess from the Collection Account.
(b) Allocations of Collections. Throughout the existence of
the Trust, unless otherwise stated in any Supplement, the Servicer
shall, on or prior to the close of business on the second Business
Day following any Date of Processing allocate (i) to the Investor
Interest of each Series, the applicable Series Percentage for such
Date of Processing of Collections of Principal Receivables and
Finance Charge Receivables on such Date of Processing and (ii) to
the Holders of the Transferor Certificates, the applicable
Transferor Percentage for such Date of Processing of Collections of
Principal Receivables and Finance Charge Receivables on such Date
of Processing. Notwithstanding subsection 4.03(a), unless otherwise
stated in any Supplement, the Servicer need not deposit this amount
or any other amounts so allocated to the Transferor Certificates
pursuant to any Supplement into the Collection Account and shall
pay, or be deemed to pay, such amounts as collected to the Holders
of the Transferor Certificates.
The payments to be made to the Holders of the Transferor
Certificates pursuant to this subsection 4.03(b) do not apply to
deposits to the Collection Account or other amounts that do not
represent Collections, including payment of the purchase price for
Receivables pursuant to Section 2.06 or 10.01, proceeds from the
sale, disposition or liquidation of Receivables pursuant to Section
9.02 or 12.02 or payment of the purchase price for the Investor
Interest of a specific Series pursuant to the related Supplement.
SECTION 4.04. Shared Principal Collections; Excess Funding
Account. On each Business Day, Shared Principal Collections within
a Group may, so long as either (x) no Series in such Group is in an
Amortization Period or (y) no Series in such Group that is in an
Amortization Period will have a Series Principal Shortfall on the
related Transfer Date, at the option of the Transferors, be applied
(or held in the Collection Account for later application) as
principal with respect to any Variable Interest in that Group or be
withdrawn from the Collection Account and paid to the Holders of
the Transferor Certificates; and on each Distribution Date, (a) the
Servicer shall allocate Shared Principal Collections for each Group
not previously so applied or paid to each Series within that Group,
pro rata, in proportion to their respective Principal Shortfalls,
and any remainder may, at the option of the Transferors, be applied
as principal with respect to any Variable Interest in that Group
and (b) the Servicer shall withdraw from the Collection Account or
applicable Series Account and pay to the Holders of the Transferor
Certificates any amounts representing Shared Principal Collections
remaining after the allocations and applications referred to in
clause (a); provided that, if, on any day the Transferor Amount
(determined after giving effect to any transfer of Principal
Receivables to the Trust on such day), is less than the Required
Transferor Amount, Servicer shall not distribute to the Holders of
the Transferor Certificates any Shared Principal Collections that
otherwise would be distributed to the Holders of the Transferor
Certificates, but shall deposit such funds in the Excess Funding
Account to the extent required so that the Transferor Amount equals
the Required Transferor Amount.
On each Business Day on which there are funds on deposit in
the Excess Funding Account, the Servicer shall determine the amount
by which the Transferor Amount exceeds the Required Transferor
Amount on such date and shall instruct the Trustee to withdraw such
amount from the Excess Funding Account and pay it to the Holders of
the Transferor Certificates. In addition, on any Transfer Date on
which one or more Series is in an Amortization Period, the Servicer
shall determine the aggregate amount of Principal Shortfalls, if
any, for each such Series (after giving effect to the allocation
and payment provisions in the Supplement with respect to each such
Series), and the Servicer shall instruct the Trustee to withdraw
such amount (up to the Excess Funding Amount after giving effect to
any withdrawal required by the preceding sentence) from the Excess
Funding Account on the succeeding Distribution Date and allocate
such amount among each such Series as if such amount were Shared
Principal Collections and all outstanding Series were included in
a single Group.
SECTION 4.05 Excess Finance Charge Collections. On each
Distribution Date, for each Group, Servicer shall apply the
aggregate amount of Excess Finance Charge Collections available
from all Series in that Group to the Finance Charge Shortfalls, if
any, for each Series in that Group. If the total amount of such
Excess Finance Charge Collections is less than the total amount of
such Finance Charge Shortfalls, then such Excess Finance Charge
Collections shall be applied to the Finance Charge Shortfalls of
each Series in the Group, pro rata, in proportion to the respective
Finance Charge Shortfalls of each. Any Excess Finance Charge
Collections for any Group remaining after such application shall be
applied as Excess Finance Charge Collections with respect to Series
in other Groups to the extent of any remaining Finance Charge
Shortfalls for those Series (pro rata, in proportion to the
respective Finance Charge Shortfalls of each), and any Excess
Finance Charge Collections for any Group remaining after that
application shall be paid to the Holders of the Transferor
Certificate.
SECTION 4.06. Allocation of Trust Assets to Series or Groups.
To the extent so provided in the Supplement for any Series or in an
amendment to the Pooling and Servicing Agreement executed pursuant
to subsection 13.01(a), Receivables conveyed to the Trust pursuant
to Section 2.01 and Receivables or Participation Interests conveyed
to the Trust pursuant to Section 2.08 or any Participation Interest
Supplement, and all Collections received with respect to such
Receivables or Participation Interests, may be allocated in whole
or in part to one or more Series or Groups as may be provided in
such Supplement or amendment, provided that any such allocation
shall be effective only upon satisfaction of the following
conditions:
(a) on or before the fifth Business Day immediately preceding
such allocation, the Servicer shall have given the Trustee and each
Rating Agency written notice of such allocation;
(b) the Rating Agency Condition shall have been satisfied
with respect to such allocation; and
(c) the Servicer shall have delivered to the Trustee an
Officer's Certificate, dated the date of such allocation, to the
effect that the Servicer reasonably believes that such allocation
will not have an Adverse Effect.
Any such Supplement or amendment may provide that (i) such
allocation to one or more particular Series or Groups may terminate
upon the occurrence of certain events specified therein and (ii)
that upon the occurrence of any such event, such assets and any
Collections with respect thereto, shall be reallocated to other
Series or Groups or to all Series, all as shall be provided in such
Supplement or amendment.
ARTICLE V DISTRIBUTIONS AND REPORTS TO HOLDERS
Distributions shall be made to, and reports shall be provided
to, Holders as set forth in the applicable Supplement.
ARTICLE VI THE CERTIFICATES
SECTION 6.01. The Certificates. The Investor Certificates of
any Series or Class may be issued in bearer form ("Bearer
Certificates") with attached interest coupons and any other
applicable coupon (collectively, the "Coupons") or in fully
registered form ("Registered Certificates") and shall be
substantially in the form of the exhibits with respect thereto
attached to the applicable Supplement. The Advanta Certificate will
be issued in registered form, substantially in the form of Exhibit
A, and shall upon issue be executed and delivered by ANB to the
Trustee for authentication and redelivery as provided in Section
6.02. Except as otherwise provided in Section 6.03 or in any
Supplement, Bearer Certificates shall be issued in minimum
denominations of $100,000 and Registered Certificates shall be
issued in minimum denominations of $1,000 and in integral multiples
of $1,000 in excess thereof. If specified in any Supplement, the
Investor Certificates of any Series or Class shall be issued upon
initial issuance as a single certificate evidencing the aggregate
original principal amount of such Series or Class as described in
Section 6.13. The Advanta Certificate shall be a single certificate
and shall initially represent the entire Transferors' Interest.
Each Certificate shall be executed by manual or facsimile signature
on behalf of ANB by its respective President or any Vice President.
Certificates bearing the manual or facsimile signature of an
individual who was, at the time when such signature was affixed,
authorized to sign on behalf of ANB shall not be rendered invalid,
notwithstanding that such individual ceased to be so authorized
prior to the authentication and delivery of such Certificates or
does not hold such office at the date of such Certificates. No
Certificates shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the
form provided for herein executed by or on behalf of the Trustee by
the manual signature of a duly authorized signatory, and such
certificate upon any Certificate shall be conclusive evidence, and
the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. Bearer Certificates shall be
dated the related Closing Date. All Registered Certificates and
Transferor Certificates shall be dated the date of their
authentication.
SECTION 6.02. Authentication of Certificates. The Trustee
shall authenticate and deliver the Investor Certificates of each
Series and Class that are issued upon original issuance to or upon
the order of the Transferors against payment to the Transferors of
the purchase price therefor. The Trustee shall authenticate and
deliver the Advanta Certificate to ANB simultaneously with its
delivery of the Investor Certificates of the first Series to be
issued hereunder. If specified in the related Supplement for any
Series or Class, the Trustee shall authenticate and deliver
outside the United States the Global Certificate that is issued
upon original issuance thereof.
SECTION 6.03. New Issuances. (a) The Transferors may from
time to time direct the Trustee, on behalf of the Trust, to
authenticate one or more new Series of Investor Certificates. The
Investor Certificates of all outstanding Series shall be equally
and ratably entitled as provided herein to the benefits of this
Agreement without preference, priority or distinction, all in
accordance with this Agreement and the applicable Supplement
except, with respect to any Series or Class, as provided in the
related Supplement.
(b) On or before the Closing Date relating to any new Series,
the parties hereto will execute and deliver a Supplement which will
specify the Principal Terms of such new Series. Such Supplement may
modify or amend the terms of this Agreement solely as applied to
such new Series. The obligation of the Trustee to authenticate the
Investor Certificates of such new Series and to execute and deliver
the related Supplement is subject to the satisfaction of the
following conditions:
(i) on or before the fifth day immediately preceding the
Closing Date, the Transferors shall have given the Trustee and
the Servicer notice of such issuance and the Closing Date; and
on or before the tenth day immediately preceding the Closing
Date, the Transferors shall have given each Rating Agency
notice of such issuance;
(ii) the Transferors shall have delivered to the Trustee
the related Supplement, in form satisfactory to the Trustee,
executed by each party thereto;
(iii) the Transferors shall have delivered to the
Trustee any related Enhancement Agreement executed by each of
the parties thereto, other than the Trustee;
(iv) the Rating Agency Condition shall have been
satisfied with respect to such issuance; provided that for
this purpose the Rating Agency Condition shall be deemed to
have been satisfied if the Transferors shall have delivered to
the Trustee written confirmation that (A) the Transferors give
each Rating Agency written notice of the contemplated
issuance, and (B) for a period of ten days after such notice
is given, no Rating Agency shall have notified the Transferors
in writing that such issuance will result in a reduction or
withdrawal of the then current rating of any outstanding
Series or Class with respect to which it is a Rating Agency;
(v) each Transferor shall have delivered to the Trustee
an Officer's Certificate, dated the Closing Date, to the
effect that such Transferor reasonably believes that such
issuance will not, based on the facts known to such officer at
the time of such certification, then or thereafter cause a
Pay Out Event to occur with respect to any Series; and
(vi) if any Series of Investor Certificates are
outstanding that were characterized as debt at the time of
their issuance, the Transferors shall have delivered to the
Trustee and each Rating Agency a Tax Opinion, dated the
Closing Date, with respect to such issuance.
Upon satisfaction of the above conditions, the Trustee shall
execute the Supplement and authenticate the Investor Certificates
of such Series upon execution thereof by ANB. Upon satisfaction of
the above conditions (mutatis mutandis), the Transferors may also
cause the Trustee to enter into one or more agreements pursuant to
which the Trustee shall sell purchased interests in the Receivables
and certain other Trust Assets to one or more purchasers. Such
agreement(s) shall specify terms similar to Principal Terms for any
such purchased interests and may grant the purchaser(s) of such
interests, or an agent or other representative of such
purchaser(s), notice and consultation rights with respect to any
rights or actions of Trustee. Any such purchased interest shall be
treated as a Series of Certificates for purposes of all
calculations under this Agreement.
(c) The Transferors may surrender the Advanta Certificate to
the Trustee in exchange for a newly issued Advanta Certificate and
one or more additional certificates (each a "Supplemental
Certificate"), the terms of which shall be defined in a supplement
to this Agreement (which supplement shall be subject to subsection
13.01(a) only to the extent that it amends any of the terms of this
Agreement), to be delivered to or upon the order of the Transferors
(or the Holder of a Supplemental Certificate, in the case of the
transfer or exchange thereof, as provided below), upon satisfaction
of the following conditions:
(i) the Transferors shall have given written notice to
each Rating Agency of such exchange;
(ii) the Transferor Amount (excluding the interest
represented by any Supplemental Certificate) shall not be less
than 2% of the total amount of Principal Receivables as of the
date of, and after giving effect to, such exchange unless the
Transferors shall have delivered to the Trustee and each
Rating Agency an opinion of counsel, dated the date of such
issuance, to the effect that such issuance does not adversely
affect the conclusions reached in any of the Tax Opinions
delivered in connection with the issuance of any applicable
Series of Certificates; and
(iii) if any Series of Investor Certificates are
outstanding that were characterized as debt at the time of
their issuance, the Transferors shall have delivered to the
Trustee and each Rating Agency an opinion of counsel, dated
the date of such issuance, to the effect that such issuance
does not adversely affect the conclusions reached in any of
the Tax Opinions delivered in connection with the issuance of
any applicable Series of Certificates.
Any Supplemental Certificate may be transferred or exchanged only
upon satisfaction of the conditions set forth in clause (ii).
(d) The Advanta Certificate (or any interest therein) may be
transferred to any Person; provided that (i) if any Series of
Investor Certificates are outstanding that were characterized as
debt at the time of their issuance, the Transferors shall have
delivered to the Trustee and each Rating Agency a Tax Opinion,
dated the date of such transfer, with respect thereto, and (ii) any
such transferee shall be deemed to be a "Transferor" for purposes
of Sections 7.04 and 9.02.
SECTION 6.04. Registration of Transfer and Exchange of
Certificates. (a) The Trustee shall cause to be kept at the office
or agency to be maintained in accordance with the provisions of
Section 11.16 a register (the "Certificate Register") in which,
subject to such reasonable regulations as it may prescribe, a
transfer agent and registrar (which may be the Trustee) (the
"Transfer Agent and Registrar") shall provide for the registration
of the Registered Certificates and of transfers and exchanges of
the Registered Certificates as herein provided. The Transfer Agent
and Registrar shall initially be the Trustee and any co-transfer
agent and co-registrar chosen by the Transferors and acceptable to
the Trustee, including, if and so long as any Series or Class is
listed on the Luxembourg Stock Exchange and such exchange shall so
require, a co-transfer agent and co-registrar in Luxembourg. Any
reference in this Agreement to the Transfer Agent and Registrar
shall include any co-transfer agent and co-registrar unless the
context requires otherwise.
The Trustee may revoke such appointment and remove any
Transfer Agent and Registrar if the Trustee determines in its sole
discretion that such Transfer Agent and Registrar failed to perform
its obligations under this Agreement in any material respect. Any
Transfer Agent and Registrar shall be permitted to resign as
Transfer Agent and Registrar upon 30 days' notice to the
Transferors, the Trustee and the Servicer; provided that such
resignation shall not be effective and such Transfer Agent and
Registrar shall continue to perform its duties as Transfer Agent
and Registrar until the Trustee has appointed a successor Transfer
Agent and Registrar reasonably acceptable to the Transferors.
Subject to paragraph (c) below, upon surrender for
registration of transfer of any Registered Certificate at any
office or agency of the Transfer Agent and Registrar maintained for
such purpose, one or more new Registered Certificates (of the same
Series and Class) in authorized denominations of like aggregate
interests in the Investor Interest shall be executed, authenticated
and delivered, in the name of the designated transferee or
transferees.
At the option of a Registered Holder, Registered Certificates
(of the same Series and Class) may be exchanged for other
Registered Certificates of authorized denominations of like
aggregate interests in the Investor Interest, upon surrender of the
Registered Certificates to be exchanged at any such office or
agency; Registered Certificates, including Registered Certificates
received in exchange for Bearer Certificates, may not be exchanged
for Bearer Certificates. At the option of the bearer of a Bearer
Certificate, subject to applicable laws and regulations, Bearer
Certificates may be exchanged for other Bearer Certificates or
Registered Certificates (of the same Series and Class) of
authorized denominations of like aggregate interests in the
Investor Interest, upon surrender of the Bearer Certificates to be
exchanged at an office or agency of the Transfer Agent and
Registrar located outside the United States. Each Bearer
Certificate surrendered pursuant to this Section shall have
attached thereto all unmatured Coupons; provided that any Bearer
Certificate, so surrendered after the close of business on the
Record Date preceding the relevant payment date after the expected
final payment date need not have attached the Coupon relating to
such payment date (in each case, as specified in the applicable
Supplement).
Whenever any Investor Certificates are so surrendered for
exchange, ANB shall execute, the Trustee shall authenticate and the
Transfer Agent and Registrar shall deliver (in the case of Bearer
Certificates, outside the United States) the Investor Certificates
which the Investor Holder making the exchange is entitled to
receive. Every Investor Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a
written instrument of transfer in a form satisfactory to the
Trustee or the Transfer Agent and Registrar duly executed by the
Investor Holder or the attorney-in-fact thereof duly authorized in
writing.
No service charge shall be made for any registration of
transfer or exchange of Investor Certificates, but the Transfer
Agent and Registrar may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in
connection with any such transfer or exchange.
All Investor Certificates (together with any Coupons)
surrendered for registration of transfer and exchange or for
payment shall be canceled and disposed of in a manner satisfactory
to the Trustee. The Trustee shall cancel and destroy any Global
Certificate upon its exchange in full for Definitive Euro-
Certificates and shall deliver a certificate of destruction to the
Transferors. Such certificate shall also state that a certificate
or certificates of a Foreign Clearing Agency to the effect referred
to in Section 6.13 was received with respect to each portion of the
Global Certificate exchanged for Definitive Euro-Certificates.
ANB shall execute and deliver to the Trustee Bearer
Certificates and Registered Certificates in such amounts and at
such times as are necessary to enable the Trustee to fulfill its
responsibilities under this Agreement, each Supplement and the
Certificates.
(b) The Transfer Agent and Registrar will maintain at its
expense in each of the Borough of Manhattan, The City of New York,
and, if and so long as any Series or Class is listed on the
Luxembourg Stock Exchange, Luxembourg, an office or agency where
Investor Certificates may be surrendered for registration of
transfer or exchange (except that Bearer Certificates may not be
surrendered for exchange at any such office or agency in the United
States).
(c) (i) Registration of transfer of Investor
Certificates containing a legend substantially to the effect
set forth on Exhibit E-1 shall be effected only if such
transfer (A) is made pursuant to an effective registration
statement under the Act, or is exempt from the registration
requirements under the Act, and (B) is made to a Person which
is not an employee benefit plan, trust or account, including
an individual retirement account, that is subject to ERISA or
that is described in Section 4975(e)(1) of the Code or an
entity whose underlying assets include plan assets by reason
of a plan's investment in such entity (a "Benefit Plan"). In
the event that registration of a transfer is to be made in
reliance upon an exemption from the registration requirements
under the Act, the transferor or the transferee shall deliver,
at its expense, to the Transferors, the Servicer and the
Trustee, an investment letter from the transferee,
substantially in the form of the investment and ERISA
representation letter attached hereto as Exhibit E-2, and no
registration of transfer shall be made until such letter is so
delivered.
Investor Certificates issued upon registration or
transfer of, or Investor Certificates issued in exchange for,
Investor Certificates bearing the legend referred to above
shall also bear such legend unless the Transferors, the
Servicer, the Trustee and the Transfer Agent and Registrar
receive an Opinion of Counsel, satisfactory to each of them,
to the effect that such legend may be removed.
Whenever an Investor Certificate containing the legend
referred to above is presented to the Transfer Agent and
Registrar for registration of transfer, the Transfer Agent and
Registrar shall promptly seek instructions from the Servicer
regarding such transfer and shall be entitled to receive
instructions signed by a Servicing Officer prior to
registering any such transfer. The Transferors hereby agree to
indemnify the Transfer Agent and Registrar and the Trustee and
to hold each of them harmless against any loss, liability or
expense incurred without negligence or bad faith on their part
arising out of or in connection with actions taken or omitted
by them in relation to any such instructions furnished
pursuant to this clause (i).
(ii) Registration of transfer of Investor Certificates
containing a legend to the effect set forth on Exhibit E-3
shall be effected only if such transfer is made to a Person
which is not a Benefit Plan. By accepting and holding any such
Investor Certificate, an Investor Holder shall be deemed to
have represented and warranted that it is not a Benefit Plan.
By acquiring any interest in a Book-Entry Certificate which
contains such legend, a Certificate Owner shall be deemed to
have represented and warranted that it is not a Benefit Plan.
(iii) If so requested by the Transferors, the Trustee
will make available to any prospective purchaser of Investor
Certificates who so requests, a copy of a letter provided to
the Trustee by or on behalf of the Transferors relating to the
transferability of any Series or Class to a Benefit Plan.
SECTION 6.05. Mutilated, Destroyed, Lost or Stolen
Certificates. Any mutilated Certificate (together, in the case of
Bearer Certificates, with all unmatured Coupons (if any)
appertaining thereto) is surrendered to the Transfer Agent and
Registrar, or the Transfer Agent and Registrar receives evidence to
its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Transfer Agent and
Registrar and the Trustee such security or indemnity as may be
required by them to save each of them harmless, then, in the
absence of notice to the Trustee that such Certificate has been
acquired by a bona fide purchaser, ANB shall execute, the Trustee
shall authenticate and the Transfer Agent and Registrar shall
deliver (in the case of Bearer Certificates, outside the United
States), in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like
tenor and aggregate interest. In connection with the issuance of
any new Certificate under this Section, the Trustee or the Transfer
Agent and Registrar may require the payment by the Holder of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee and Transfer Agent and
Registrar) connected therewith. Any duplicate Certificate issued
pursuant to this Section shall constitute complete and indefeasible
evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be
found at any time.
SECTION 6.06. Persons Deemed Owners. The Trustee, the Paying
Agent, the Transfer Agent and Registrar and any agent of any of
them may (a) prior to due presentation of a Registered Certificate
for registration of transfer, treat the Person in whose name any
Registered Certificate is registered as the owner of such
Registered Certificate for the purpose of receiving distributions
pursuant to the applicable Supplement and for all other purposes
whatsoever, and (b) treat the bearer of a Bearer Certificate or
Coupon as the owner of such Bearer Certificate or Coupon for the
purpose of receiving distributions pursuant to the applicable
Supplement and for all other purposes whatsoever; and, in any such
case, neither the Trustee, the Paying Agent, the Transfer Agent and
Registrar nor any agent of any of them shall be affected by any
notice to the contrary. Notwithstanding the foregoing, in
determining whether the Holders of the requisite Investor
Certificates have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Certificates owned
by any of the Transferors, the Servicer, any other Holder of a
Transferor Certificate, the Trustee or any Affiliate thereof, shall
be disregarded and deemed not to be outstanding, except that, in
determining whether the Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent
or waiver, only Certificates which the Trustee actually knows to be
so owned shall be so disregarded. Certificates so owned which have
been pledged in good faith shall not be disregarded and may be
regarded as outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with
respect to such Certificates and that the pledgee is not any
Transferor, the Servicer, any other Holder of a Transferor
Certificate or any Affiliate thereof.
SECTION 6.07. Appointment of Paying Agent. The Paying Agent
shall make distributions to Investor Holders from the Collection
Account or any applicable Series Account pursuant to the provisions
of the applicable Supplement and shall report the amounts of such
distributions to the Trustee. Any Paying Agent shall have the
revocable power to withdraw funds from the Collection Account or
any applicable Series Account for the purpose of making the
distributions referred to above. The Trustee may revoke such power
and remove the Paying Agent if the Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its
obligations under this Agreement or any Supplement in any material
respect. The Paying Agent shall initially be the Trustee and any
co-paying agent chosen by the Transferors and acceptable to the
Trustee, including, if and so long as any Series or Class is listed
on the Luxembourg Stock Exchange and such exchange so requires, a
co-paying agent in Luxembourg or another western European city. Any
Paying Agent shall be permitted to resign as Paying Agent upon 30
days' notice to the Trustee. In the event that any Paying Agent
shall resign, the Trustee shall appoint a successor to act as
Paying Agent. The Trustee shall cause each successor or additional
Paying Agent to execute and deliver to the Trustee an instrument in
which such successor or additional Paying Agent shall agree with
the Trustee that it will hold all sums, if any, held by it for
payment to the Investor Holders in trust for the benefit of the
Investor Holders entitled thereto until such sums shall be paid to
such Investor Holders. The Paying Agent shall return all unclaimed
funds to the Trustee and upon removal shall also return all funds
in its possession to the Trustee. The provisions of Sections 11.01,
11.02, 11.03 and 11.05 shall apply to the Trustee also in its role
as Paying Agent, for so long as the Trustee shall act as Paying
Agent. Any reference in this Agreement to the Paying Agent shall
include any co-paying agent unless the context requires otherwise.
SECTION 6.08. Access to List of Registered Holders' Names and
Addresses. The Trustee will furnish or cause to be furnished by the
Transfer Agent and Registrar to the Servicer or the Paying Agent,
within five Business Days after receipt by the Trustee of a request
therefor, a list in such form as the Servicer or the Paying Agent
may reasonably require, of the names and addresses of the
Registered Holders. If any Holder or group of Holders of Investor
Certificates of any Series or all outstanding Series, as the case
may be, evidencing not less than 10% of the aggregate unpaid
principal amount of such Series or all outstanding Series, as
applicable (the "Applicants"), apply to the Trustee, and such
application states that the Applicants desire to communicate with
other Investor Holders with respect to their rights under this
Agreement or any Supplement or under the Investor Certificates and
is accompanied by a copy of the communication which such Applicants
propose to transmit, then the Trustee, after having been adequately
indemnified by such Applicants for its costs and expenses, shall
afford or shall cause the Transfer Agent and Registrar to afford
such Applicants access during normal business hours to the most
recent list of Registered Holders of such Series or all outstanding
Series, as applicable, held by the Trustee, within five Business
Days after the receipt of such application. Such list shall be as
of a date no more than 45 days prior to the date of receipt of such
Applicants' request.
Every Registered Holder, by receiving and holding a Registered
Certificate, agrees with the Trustee that neither the Trustee, the
Transfer Agent and Registrar, nor any of their respective agents,
shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Registered Holders
hereunder, regardless of the sources from which such information
was derived.
SECTION 6.09. Authenticating Agent. (a) The Trustee may
appoint one or more authenticating agents with respect to the
Certificates which shall be authorized to act on behalf of the
Trustee in authenticating the Certificates in connection with the
issuance, delivery, registration of transfer, exchange or
repayment of the Certificates. Whenever reference is made in this
Agreement to the authentication of Certificates by the Trustee or
the Trustee's certificate of authentication, such reference shall
be deemed to include authentication on behalf of the Trustee by an
authenticating agent and certificate of authentication executed on
behalf of the Trustee by an authenticating agent. Each
authenticating agent must be acceptable to the Transferors and the
Servicer.
(b) Any institution succeeding to the corporate agency
business of an authenticating agent shall continue to be an
authenticating agent without the execution or filing of any power
or any further act on the part of the Trustee or such
authenticating agent. An authenticating agent may at any time
resign by giving notice of resignation to the Trustee and to the
Transferors. The Trustee may at any time terminate the agency of an
authenticating agent by giving notice of termination to such
authenticating agent and to the Transferors. Upon receiving such a
notice of resignation or upon such a termination, or in case at any
time an authenticating agent shall cease to be acceptable to the
Trustee or the Transferors, the Trustee promptly may appoint a
successor authenticating agent. Any successor authenticating agent
upon acceptance of its appointment hereunder shall become vested
with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an
authenticating agent. No successor authenticating agent shall be
appointed unless acceptable to the Trustee and the Transferors. The
Transferors agree to pay to each authenticating agent from time to
time reasonable compensation for its services under this Section.
The provisions of Sections 11.01, 11.02 and 11.03 shall be
applicable to any authenticating agent.
(c) Pursuant to an appointment made under this Section, the
Certificates may have endorsed thereon, in lieu of the Trustee's
certificate of authentication, an alternate certificate of
authentication in substantially the following form:
This is one of the Certificates described in the Pooling
and Servicing Agreement.
______________________
______________________
as Authenticating Agent
for the Trustee,
by____________________________
Authorized Officer
SECTION 6.10. Book-Entry Certificates. Unless otherwise
specified in the related Supplement for any Series or Class, the
Investor Certificates, upon original issuance, shall be issued in
the form of one or more typewritten Investor Certificates
representing the Book-Entry Certificates, to be delivered to the
Clearing Agency, by, or on behalf of, the Transferors. The Investor
Certificates shall initially be registered on the Certificate
Register in the name of the Clearing Agency or its nominee, and no
Certificate Owner will receive a definitive certificate
representing such Certificate Owner's interest in the Investor
Certificates, except as provided in Section 6.12. Unless and until
definitive, fully registered Investor Certificates ("Definitive
Certificates") have been issued to the applicable Certificate
Owners pursuant to Section 6.12 or as otherwise specified in any
such Supplement:
(a) the provisions of this Section shall be in full force and
effect;
(b) the Transferors, the Servicer and the Trustee may deal
with the Clearing Agency and the Clearing Agency Participants for
all purposes (including the making of distributions) as the
authorized representatives of the respective Certificate Owners;
(c) to the extent that the provisions of this Section
conflict with any other provisions of this Agreement, the
provisions of this Section shall control; and
(d) the rights of the respective Certificate Owners shall be
exercised only through the Clearing Agency and the Clearing Agency
Participants and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency
or the Clearing Agency Participants. Pursuant to the Depository
Agreement, unless and until Definitive Certificates are issued
pursuant to Section 6.12, the Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and
transmit distributions of principal and interest on the related
Investor Certificates to such Clearing Agency Participants.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of,
Investor Holders evidencing a specified percentage of the aggregate
unpaid principal amount of Investor Certificates, such direction or
consent may be given by Certificate Owners (acting through the
Clearing Agency and the Clearing Agency Participants) owning
Investor Certificates evidencing the requisite percentage of
principal amount of Investor Certificates.
SECTION 6.11. Notices to Clearing Agency. Whenever any notice
or other communication is required to be given to Investor Holders
of any Series or Class with respect to which Book-Entry
Certificates have been issued, unless and until Definitive
Certificates shall have been issued to the related Certificate
Owners, the Trustee shall give all such notices and communications
to the applicable Clearing Agency.
SECTION 6.12. Definitive Certificates. If Book-Entry
Certificates have been issued with respect to any Series or Class
and (a) the Transferors advise the Trustee that the Clearing Agency
is no longer willing or able to discharge properly its
responsibilities under the Depository Agreement with respect to
such Series or Class and the Trustee or the Transferors are unable
to locate a qualified successor, (b) the Transferors, at their
option, advise the Trustee that they elect to terminate the book-
entry system with respect to such Series or Class through the
Clearing Agency or (c) after the occurrence of a Servicer Default,
Certificate Owners of such Series or Class evidencing more than 50%
of the aggregate unpaid principal amount of such Series or Class
advise the Trustee and the Clearing Agency through the Clearing
Agency Participants that the continuation of a book-entry system
with respect to the Investor Certificates of such Series or Class
through the Clearing Agency is no longer in the best interests of
the Certificate Owners with respect to such Certificates, then the
Trustee shall notify all Certificate Owners of such Certificates,
through the Clearing Agency, of the occurrence of any such event
and of the availability of Definitive Certificates to Certificate
Owners requesting the same. Upon surrender to the Trustee of any
such Certificates by the Clearing Agency, accompanied by
registration instructions from the Clearing Agency for
registration, ANB shall execute and the Trustee shall authenticate
and deliver such Definitive Certificates. Neither the Transferors
nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected
in relying on, such instructions. Upon the issuance of such
Definitive Certificates, all references herein to obligations
imposed upon or to be performed by the Clearing Agency shall be
deemed to be imposed upon and performed by the Trustee, to the
extent applicable with respect to such Definitive Certificates, and
the Trustee shall recognize the Holders of such Definitive
Certificates as Investor Holders hereunder.
SECTION 6.13. Global Certificate; Exchange Date. (a) If
specified in the related Supplement for any Series or Class, the
Investor Certificates for such Series or Class will initially be
issued in the form of a single temporary global Certificate (the
"Global Certificate") in bearer form, without interest coupons, in
the denomination of the entire aggregate principal amount of such
Series or Class and substantially in the form set forth in the
exhibit with respect thereto attached to the related Supplement.
The Global Certificate will be executed by ANB and authenticated by
the Trustee upon the same conditions, in substantially the same
manner and with the same effect as the Definitive Certificates. The
Global Certificate may be exchanged as described below for Bearer
or Registered Certificates in definitive form (the "Definitive
Euro-Certificates").
(b) The Manager shall, upon its determination of the date of
completion of the distribution of the Investor Certificates of such
Series or Class, so advise the Trustee, the Transferors, the
Depositaries, and each Foreign Clearing Agency forthwith. Without
unnecessary delay, but in any event not prior to the Exchange Date,
ANB will execute and deliver to the Trustee at its London office or
its designated agent outside the United States definitive Bearer
Certificates in an aggregate principal amount equal to the entire
aggregate principal amount of such Series or Class. All Bearer
Certificates so issued and delivered will have Coupons attached.
The Global Certificate may be exchanged for an equal aggregate
principal amount of Definitive Euro-Certificates only on or after
the Exchange Date. An institutional investor that is a U.S. Person
may exchange the portion of the Global Certificate beneficially
owned by it only for an equal aggregate principal amount of
Registered Certificates bearing the applicable legend set forth in
the form of Registered Certificates attached to the related
Supplement and having a minimum denomination of $500,000, which may
be in temporary form if the Transferors so elect. The Transferors
may waive the $500,000 minimum denomination requirement if they so
elect. Upon any demand for exchange for Definitive Euro-
Certificates in accordance with this paragraph, the Transferors
shall cause the Trustee to authenticate and deliver the Definitive
Euro-Certificates to the Holder (x) outside the United States, in
the case of Bearer Certificates, and (y) according to the
instructions of the Holder, in the case of Registered Certificates,
but in either case only upon presentation to the Trustee of a
written statement substantially in the form of Exhibit F-1 with
respect to the Global Certificate or portion thereof being
exchanged, signed by a Foreign Clearing Agency and dated on the
Exchange Date or a subsequent date, to the effect that it has
received in writing or by tested telex a certification
substantially in the form of (i) in the case of beneficial
ownership of the Global Certificate or a portion thereof being
exchanged by a United States institutional investor pursuant to the
second preceding sentence, the certificate in the form of Exhibit
F-2 signed by the Manager which sold the relevant Certificates or
(ii) in all other cases, the certificate in the form of Exhibit F-
3, the certificate referred to in this clause (ii) being dated on
the earlier of the first actual payment of interest in respect of
such Certificates and the date of the delivery of such Certificate
in definitive form. Upon receipt of such certification, the Trustee
shall cause the Global Certificate to be endorsed in accordance
with paragraph (d). Any exchange as provided in this Section shall
be made free of charge to the Holders and the beneficial owners of
the Global Certificate and to the beneficial owners of the
Definitive Euro-Certificates issued in exchange, except that a
person receiving Definitive Euro-Certificates must bear the cost of
insurance, postage, transportation and the like in the event that
such person does not receive such Definitive Euro-Certificates in
person at the offices of a Foreign Clearing Agency.
(c) The delivery to the Trustee by a Foreign Clearing Agency
of any written statement referred to above may be relied upon by
the Transferors and the Trustee as conclusive evidence that a
corresponding certification or certifications has or have been
delivered to such Foreign Clearing Agency pursuant to this
Agreement.
(d) Upon any such exchange of all or a portion of the Global
Certificate for a Definitive Euro-Certificate or Certificates, such
Global Certificate shall be endorsed by or on behalf of the Trustee
to reflect the reduction of its principal amount by an amount equal
to the aggregate principal amount of such Definitive Euro-
Certificate or Certificates. Until so exchanged in full, such
Global Certificate shall in all respects be entitled to the same
benefits under this Agreement as Definitive Euro-Certificates
authenticated and delivered hereunder except that the beneficial
owners of such Global Certificate shall not be entitled to receive
payments of interest on the Certificates until they have exchanged
their beneficial interests in such Global Certificate for
Definitive Euro-Certificates.
SECTION 6.14. Meetings of Holders. (a) If at the time any
Bearer Certificates are issued and outstanding with respect to any
Series or Class to which any meeting described below relates, the
Servicer or the Trustee may at any time call a meeting of Investor
Holders of any Series or Class or of all Series, to be held at such
time and at such place as the Servicer or the Trustee, as the case
may be, shall determine, for the purpose of approving a
modification of or amendment to, or obtaining a waiver of any
covenant or condition set forth in, this Agreement, any Supplement
or the Investor Certificates or of taking any other action
permitted to be taken by Investor Holders hereunder or under any
Supplement. Notice of any meeting of Investor Holders, setting
forth the time and place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be given in
accordance with Section 13.05, the first mailing and publication to
be not less than 20 nor more than 180 days prior to the date fixed
for the meeting. To be entitled to vote at any meeting of Investor
Holders a person shall be (i) a Holder of one or more Investor
Certificates of the applicable Series or Class or (ii) a person
appointed by an instrument in writing as proxy by the Holder of one
or more such Investor Certificates. The only persons who shall be
entitled to be present or to speak at any meeting of Investor
Holders shall be the persons entitled to vote at such meeting and
their counsel and any representatives of the Transferors, the
Servicer and the Trustee and their respective counsel.
(b) At a meeting of Investor Holders, persons entitled to
vote Investor Certificates evidencing a majority of the aggregate
unpaid principal amount of the applicable Series or Class or all
outstanding Series, as the case may be, shall constitute a quorum.
No business shall be transacted in the absence of a quorum, unless
a quorum is present when the meeting is called to order. In the
absence of a quorum at any such meeting, the meeting may be
adjourned for a period of not less than 10 days; in the absence of
a quorum at any such meeting, such adjourned meeting may be
further adjourned for a period of not less than 10 days; at the
reconvening of any meeting further adjourned for lack of a quorum,
the persons entitled to vote Investor Certificates evidencing at
least 25% of the aggregate unpaid principal amount of the
applicable Series or Class or all outstanding Series, as the case
may be, shall constitute a quorum for the taking of any action set
forth in the notice of the original meeting. Notice of the
reconvening of any adjourned meeting shall be given as provided
above except that such notice must be given not less than five days
prior to the date on which the meeting is scheduled to be
reconvened. Notice of the reconvening of an adjourned meeting shall
state expressly the percentage of the aggregate principal amount of
the outstanding applicable Investor Certificates which shall
constitute a quorum.
(c) Any Investor Holder who has executed an instrument in
writing appointing a person as proxy shall be deemed to be present
for the purposes of determining a quorum and be deemed to have
voted; provided that such Investor Holder shall be considered as
present or voting only with respect to the matters covered by such
instrument in writing. Subject to the provisions of Section 13.01,
any resolution passed or decision taken at any meeting of Investor
Holders duly held in accordance with this Section shall be binding
on all Investor Holders whether or not present or represented at
the meeting.
(d) The holding of Bearer Certificates shall be proved by the
production of such Bearer Certificates or by a certificate,
satisfactory to the Servicer, executed by any bank, trust company
or recognized securities dealer, wherever situated, satisfactory to
the Servicer. Each such certificate shall be dated and shall state
that on the date thereof a Bearer Certificate bearing a specified
serial number was deposited with or exhibited to such bank, trust
company or recognized securities dealer by the Person named in such
certificate. Any such certificate may be issued in respect of one
or more Bearer Certificates specified therein. The holding by the
Person named in any such certificate of any Bearer Certificate
specified therein shall be presumed to continue for a period of one
year from the date of such certificate unless at the time of any
determination of such holding (i) another certificate bearing a
later date issued in respect of the same Bearer Certificate shall
be produced, (ii) the Bearer Certificate specified in such
certificate shall be produced by some other Person or (iii) the
Bearer Certificate specified in such certificate shall have ceased
to be outstanding. The appointment of any proxy shall be proved by
having the signature of the Person executing the proxy guaranteed
by any bank, trust company or recognized securities dealer
satisfactory to the Trustee.
(e) The Trustee shall appoint a temporary chairman of the
meeting. A permanent chairman and a permanent secretary of the
meeting shall be elected by vote of the Holders of Investor
Certificates evidencing a majority of the aggregate unpaid
principal amount of Investor Certificates of the applicable Series
or Class or all outstanding Series, as the case may be, represented
at the meeting. No vote shall be cast or counted at any meeting in
respect of any Investor Certificate challenged as not outstanding
and ruled by the chairman of the meeting to be not outstanding. The
chairman of the meeting shall have no right to vote except as an
Investor Holder or proxy. Any meeting of Investor Holders duly
called at which a quorum is present may be adjourned from time to
time, and the meeting may be held as so adjourned without further
notice.
(f) The vote upon any resolution submitted to any meeting of
Investor Holders shall be by written ballot on which shall be
subscribed the signatures of Investor Holders or proxies and on
which shall be inscribed the serial number or numbers of the
Investor Certificates held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any
resolution and who shall make and file with the secretary of the
meeting their verified written reports in duplicate of all votes
cast at the meeting. A record in duplicate of the proceedings of
each meeting of Investor Holders shall be prepared by the secretary
of the meeting and there shall be attached to said record the
original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the
meeting and showing that said notice was published as provided
above. The record shall be signed and verified by the permanent
chairman and secretary of the meeting and one of the duplicates
shall be delivered to the Servicer and the other to the Trustee to
be preserved by the Trustee, the latter to have attached thereto
the ballots voted at the meeting. Any record so signed and verified
shall be conclusive evidence of the matters therein stated.
SECTION 6.15. Uncertificated Classes. Notwithstanding anything
to the contrary contained in this Article VI or in Article XII,
unless otherwise specified in any Supplement, any provisions
contained in this Article VI and in Article XII relating to the
registration, form, execution, authentication, delivery,
presentation, cancellation and surrender of Certificates shall not
be applicable to any uncertificated Certificates.
ARTICLE VII OTHER MATTERS RELATING TO THE TRANSFERORS
SECTION 7.01. Liability of the Transferors. Each Transferor
(including any Additional Transferors) shall be jointly liable in
all respects for the obligations, covenants, representations and
warranties of the Transferors arising under or related to this
Agreement or any Supplement. A Transferor shall be liable only to
the extent of the obligations specifically undertaken by it in its
capacity as Transferor. Each other Transferor hereby authorizes and
empowers ANB to execute and deliver, on behalf of such Transferor,
as attorney-in-fact or otherwise, all documents and other
instruments required or permitted to be delivered by such
Transferor under this Agreement or any Supplement, and to do and
accomplish all other acts and things required or permitted to be
done or accomplished by such Transferor hereunder or thereunder.
SECTION 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Transferors. (a) No Transferor shall
consolidate with or merge into any other corporation or convey or
transfer its properties and assets substantially as an entirety to
any Person unless:
(i) (A) the corporation formed by such consolidation or
into which such Transferor is merged or the Person which
acquires by conveyance or transfer the properties and assets
of such Transferor substantially as an entirety shall be, if
such Transferor is not the surviving entity, a corporation
organized and existing under the laws of the United States of
America or any State or the District of Columbia, and shall be
a savings and loan association, a national banking
association, a bank or other entity which is not subject to
Title 11 of the United States Code or a bankruptcy remote
corporation and, if such Transferor is not the surviving
entity, such corporation shall expressly assume, by an
agreement supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the performance
of every covenant and obligation of such Transferor hereunder,
including its obligations under Section 7.04; and (B) such
Transferor has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance or transfer and such
supplemental agreement comply with this Section, that such
supplemental agreement is a valid and binding obligation of
such surviving entity enforceable against such surviving
entity in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally from time to time in
effect and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at
law or in equity), and that all conditions precedent herein
provided for relating to such transaction have been complied
with;
(ii) each Rating Agency receives prior notice of such
consolidation, merger, conveyance or transfer; and
(iii) if any Series of Investor Certificates are
outstanding that were characterized as debt at the time of
their issuance, the relevant Transferor shall have delivered
to the Trustee and each Rating Agency a Tax Opinion, dated the
date of such consolidation, merger, conveyance or transfer,
with respect thereto.
(b) The obligations of the Transferors hereunder shall not be
assignable nor shall any Person succeed to the obligations of the
Transferors hereunder except in each case in accordance with the
provisions of the foregoing paragraph.
SECTION 7.03. Limitations on Liability of the Transferors.
Subject to Sections 7.01 and 7.04, none of the Transferors nor any
of the directors, officers, employees or agents of any of the
Transferors acting in their capacities as Transferors shall be
under any liability to the Trust, the Trustee, the Holders, the
Certificate Owners, any Series Enhancer or any other Person for any
action taken or for refraining from the taking of any action in
good faith in their capacities as Transferors pursuant to this
Agreement, it being expressly understood that such liability is
expressly waived and released as a condition of, and consideration
for, the execution of this Agreement and any Supplement and the
issuance of the Certificates; provided that this provision shall
not protect any Transferor or any such Person against any liability
which would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder.
The Transferors and any director, officer, employee or agent of any
of the Transferors may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person
(other than the Transferors) respecting any matters arising
hereunder.
SECTION 7.04. Liabilities. Notwithstanding any other
provisions of this Agreement, each Transferor (excluding any
Additional Transferor, if the Rating Agency Condition has been
satisfied and a Tax Opinion has been delivered with respect to such
exclusion) agrees, without duplication, to be liable, directly to
the injured party, for the entire amount of any loss, liability,
expense, damage or injury suffered or sustained by reason of any
acts, omissions or alleged acts or omissions or otherwise arising
out of or based upon the arrangement created by this Agreement or
any Supplement (to the extent any property of the Trust remaining
after the Investor Holders and Series Enhancers have been paid in
full is insufficient to pay such losses, claims, damages or
liabilities), as though this Agreement or such Supplement created
a general partnership under the Delaware Uniform Partnership Law in
which the Transferors are general partners; provided that (a) the
Transferors shall not indemnify the Trustee if such acts, omissions
or alleged acts or omissions constitute or are caused by fraud,
negligence, or willful misconduct by the Trustee, (b) without
limiting the claims of third parties pursuant to the last sentence
hereof, the Transferors shall not indemnify the Trust, the Investor
Holders or the Certificate Owners for any liabilities, costs or
expenses of the Trust with respect to any action taken by the
Trustee at the request of the Investor Holders, (c) the Transferors
shall not indemnify the Trust, the Investor Holders or the
Certificate Owners as to any losses, claims or damages incurred by
any of them in their capacities as investors, including losses
incurred as a result of Defaulted Receivables, and (d) the
Transferors shall not indemnify the Investor Holders or the
Certificate Owners for any liabilities, costs or expenses of the
Investor Holders or the Certificate Owners arising under any tax
law relating to any Federal, state, local or foreign income or
franchise taxes or any other tax imposed on or measured by income
(or any interest or penalties with respect thereto or arising from
a failure to comply therewith) required to be paid by or for the
account of the Investor Holders or the Certificate Owners in
connection herewith to any taxing authority. Any such
indemnification shall not be payable from the Trust Assets. The
provisions of this indemnity shall run directly to and be
enforceable by an injured party subject to the limitations hereof.
ARTICLE VIII OTHER MATTERS RELATING TO THE SERVICER
SECTION 8.01. Liability of the Servicer. The Servicer shall be
liable under this Agreement only to the extent of the obligations
specifically undertaken by the Servicer in its capacity as
Servicer.
SECTION 8.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. The Servicer shall not consolidate
with or merge into any other corporation or convey or transfer its
properties and assets substantially as an entirety to any Person,
unless:
(a) (i) the corporation formed by such consolidation or into
which the Servicer is merged or the Person which acquires by
conveyance or transfer the properties and assets of the Servicer
substantially as an entirety shall be, if the Servicer is not the
surviving entity, a corporation organized and existing under the
laws of the United States of America or any State or the District
of Columbia and, if the Servicer is not the surviving entity, such
corporation shall expressly assume, by an agreement supplemental
hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the performance of every covenant and
obligation of the Servicer hereunder;
(ii) the Servicer has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance or transfer and such supplemental
agreement comply with this Section, that such supplemental
agreement is a valid and binding obligation of such surviving
entity enforceable against such surviving entity in accordance with
its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally from time
to time in effect and except as such enforceability may be limited
by general principles of equity (whether considered in a suit at
law or in equity), and that all conditions precedent herein
provided for relating to such transaction have been complied with;
(iii) each Rating Agency shall have received prior notice of
such assignment and succession; and
(iv) the corporation formed by such consolidation or into
which the Servicer is merged or the Person which acquires by
conveyance or transfer the properties and assets of the Servicer
substantially as an entirety shall be an Eligible Servicer.
(b) Except as provided in this Section 8.02, this Agreement
may not be assigned by the Servicer without the prior consent of
Holders of Investor Certificates evidencing not less than 66-2/3%
of the Aggregate Investor Amount.
SECTION 8.03. Limitation on Liability of the Servicer and
Others. Except as provided in Section 8.04, neither the Servicer
nor any of the directors, officers, employees or agents of the
Servicer in its capacity as Servicer shall be under any liability
to the Trust, the Trustee, the Holders, any Series Enhancer or any
other Person for any action taken or for refraining from the taking
of any action in good faith in its capacity as Servicer pursuant to
this Agreement; provided that this provision shall not protect the
Servicer or any such Person against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties or by reason of
reckless disregard of obligations and duties hereunder. The
Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person (other than the
Servicer) respecting any matters arising hereunder. The Servicer
shall not be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its duties as Servicer
in accordance with this Agreement and which in its reasonable
judgment may involve it in any expense or liability. The Servicer
may, in its sole discretion, undertake any such legal action which
it may deem necessary or desirable for the benefit of the Holders
with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Holders hereunder.
SECTION 8.04. Servicer Indemnification of the Trust and the
Trustee. The Servicer shall indemnify and hold harmless the Trust
and the Trustee from and against any loss, liability, expense,
damage or injury suffered or sustained by reason of any acts or
omissions of the Servicer with respect to the Trust pursuant to
this Agreement, including any judgment, award, settlement,
reasonable attorneys' fees and other costs or expenses incurred in
connection with the defense of any action, proceeding or claim;
provided that (a) the Servicer shall not indemnify the Trustee if
such acts, omissions or alleged acts or omissions constitute or are
caused by fraud, negligence, or willful misconduct by the Trustee,
(b) the Servicer shall not indemnify the Trust, the Investor
Holders or the Certificate Owners for any liabilities, costs or
expenses of the Trust with respect to any action taken by the
Trustee at the request of the Investor Holders, (c) the Servicer
shall not indemnify the Trust, the Investor Holders or the
Certificate Owners as to any losses, claims or damages incurred by
any of them in their capacities as investors, including losses
incurred as a result of Defaulted Receivables and (d) the Servicer
shall not indemnify the Trust, the Investor Holders or the
Certificate Owners for any liabilities, costs or expenses of the
Trust, the Investor Holders or the Certificate Owners arising under
any tax law, including any Federal, state, local or foreign income
or franchise taxes or any other tax imposed on or measured by
income (or any interest or penalties with respect thereto or
arising from a failure to comply therewith) required to be paid by
the Trust, the Investor Holders or the Certificate Owners in
connection herewith to any taxing authority. Indemnification
pursuant to this Section shall not be payable from the Trust
Assets. The provisions of this indemnity shall run directly to and
be enforceable by an injured party subject to the limitations
hereof.
SECTION 8.05. The Servicer Not To Resign. The Servicer shall
not resign from the obligations and duties hereby imposed on it
except upon determination that (a) the performance of its duties
hereunder is no longer permissible under any Requirement of Law and
(b) there is no reasonable action which the Servicer could take to
make the performance of its duties hereunder permissible under any
such Requirements of Law. Any determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee. No resignation
shall become effective until the Trustee or a Successor Servicer
shall have assumed the responsibilities and obligations of the
Servicer in accordance with Section 10.02. If within 120 days of
the date of the determination that the Servicer may no longer act
as Servicer the Trustee is unable to appoint a Successor Servicer,
the Trustee shall serve as Successor Servicer. Notwithstanding the
foregoing, the Trustee shall, if it is legally unable so to act,
petition a court of competent jurisdiction to appoint any
established institution that is an Eligible Servicer as the
Successor Servicer hereunder. The Trustee shall give prompt notice
to each Rating Agency upon the appointment of a Successor Servicer.
SECTION 8.06. Access to Certain Documentation and Information
Regarding the Receivables. The Servicer shall provide to the
Trustee access to the documentation regarding the Accounts and the
Receivables in such cases where the Trustee is required in
connection with the enforcement of the rights of Holders or by
applicable statutes or regulations to review such documentation,
such access being afforded without charge but only (a) upon
reasonable request, (b) during normal business hours, (c) subject
to the Servicer's normal security and confidentiality procedures
and (d) at reasonably accessible offices in the continental United
States designated by the Servicer. Nothing in this Section shall
derogate from the obligation of the Transferors, the Trustee and
the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Obligors and the failure of the
Servicer to provide access as provided in this Section as a result
of such obligation shall not constitute a breach of this Section.
SECTION 8.07. Delegation of Duties. In the ordinary course of
business, the Servicer may at any time delegate any duties
hereunder to any Person who agrees to conduct such duties in
accordance with the Credit Card Guidelines and this Agreement. The
Servicer shall notify the Rating Agencies of any significant
delegation to a Person other than Advanta Corp., a Transferor, any
Affiliate of a Transferor or First Data Corporation (or any of its
Affiliates). Any delegation permitted by this Section 8.07 shall
not relieve the Servicer of its liability and responsibility with
respect to such duties, and shall not constitute a resignation
within the meaning of Section 8.05.
SECTION 8.08. Examination of Records. The Servicer shall
clearly and unambiguously indicate in its computer files or other
records that the Receivables arising in the Accounts have been
conveyed to the Trustee, on behalf of the Trust, pursuant to this
Agreement for the benefit of the Holders. The Servicer shall, prior
to the sale or transfer to a third party of any receivable held in
its custody, examine its computer and other records to determine
that such receivable is not a Receivable.
ARTICLE IX PAY OUT EVENTS
SECTION 9.01. Trust Pay Out Events. If any one of the
following events shall occur with respect to the Trust ("Trust Pay
Out Events"):
(a) an Insolvency Event shall occur with respect to any
Designated Transferor or Designated Credit Card Originator;
(b) the Trust shall become subject to regulation by the
Commission as an "investment company" within the meaning of the
Investment Company Act; or
(c) a Transfer Restriction Event shall occur with respect to
any Designated Transferor;
then, a Pay Out Event shall occur with respect to each Series
without any notice or other action on the part of the Trustee or
the Investor Holders, immediately upon the occurrence of such
event.
SECTION 9.02. Additional Rights Upon the Occurrence of Certain
Events. (a) If an Insolvency Event occurs with respect to any
Transferor, that Transferor and (unless the Rating Agency Condition
has been satisfied and a Tax Opinion has been delivered as to the
failure to take the following actions with respect to an Insolvency
Event with respect to any other Transferor) each other Transferor
shall on the day any such Insolvency Event occurs, immediately
cease to transfer Principal Receivables and Discount Option
Receivables to the Trust and shall promptly give notice to the
Trustee thereof. Notwithstanding any cessation of the transfer to
the Trust of additional Principal Receivables and Discount Option
Receivables, Principal Receivables and Discount Option Receivables
transferred to the Trust prior to the occurrence of such Insolvency
Event and Collections in respect of such Principal Receivables and
Discount Option Receivables and Finance Charge Receivables whenever
created, accrued in respect of such Principal Receivables or
Discount Option Receivables, shall continue to be a part of the
Trust. Within 15 days after receipt of such notice by the Trustee
of the occurrence of such Insolvency Event (unless the Rating
Agency Condition has been satisfied and a Tax Opinion has been
delivered as to the failure to take the following actions with
respect to that Transferor), the Trustee shall (i) publish a notice
in an Authorized Newspaper that an Insolvency Event has occurred
and that the Trustee intends to sell, dispose of or otherwise
liquidate the Receivables on commercially reasonable terms and in
a commercially reasonable manner and (ii) give notice to the
Investor Holders describing the provisions of this Section and
requesting instructions from such Holders. Unless the Trustee shall
have received instructions within 90 days from the date notice
pursuant to clause (i) above is first published from (x) Holders of
Investor Certificates evidencing more than 50% of the Investor
Amount of each Series or, with respect to any Series with two or
more Classes, of each Class, to the effect that such Investor
Holders disapprove of the liquidation of the Receivables and wish
to continue having Principal Receivables and Discount Option
Receivables transferred to the Trust as before such Insolvency
Event, and (y) each of the Transferors (other than the Transferor
that is the subject of such Insolvency Event), including any
Additional Transferor, any Holder of a Supplemental Certificate and
any permitted assignee or successor under Section 7.02, to such
effect, the Trustee shall promptly sell, dispose of or otherwise
liquidate the Receivables in a commercially reasonable manner and
on commercially reasonable terms, which shall include the
solicitation of competitive bids. The Trustee may obtain a prior
determination from any such conservator, receiver or liquidator
that the terms and manner of any proposed sale, disposition or
liquidation are commercially reasonable. The provisions of Sections
9.01 and 9.02 shall not be deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of
the Receivables pursuant to paragraph (a) ("Insolvency Proceeds")
shall be immediately deposited in the Collection Account. The
Trustee shall determine conclusively the amount of the Insolvency
Proceeds which are deemed to be Finance Charge Receivables and
Principal Receivables. The Insolvency Proceeds shall be allocated
and distributed to Investor Holders in accordance with Article IV
and each Supplement and the Trust shall terminate immediately
thereafter.
(c) The Trustee may appoint an agent or agents to assist with
its responsibilities pursuant to this Article IX with respect to
competitive bids.
ARTICLE X SERVICER DEFAULTS
SECTION 10.01. Servicer Defaults. If any one of the following
events (a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer
or deposit or to give instructions or notice to the Trustee
pursuant to this Agreement or any Supplement on or before the date
occurring five Business Days after the date such payment, transfer
or deposit or such instruction or notice is required to be made or
given, as the case may be, under this Agreement or any Supplement;
(b) failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements
of the Servicer set forth in this Agreement or any Supplement which
has a material adverse effect on the interests hereunder of the
Investor Holders of any Series or Class and which continues
unremedied for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Trustee, or to the Servicer
and the Trustee by Holders of Investor Certificates evidencing more
than 50% of the Aggregate Investor Amount (or, with respect to any
such failure that does not relate to all Series, 50% of the
aggregate Investor Amount of all Series to which such failure
relates); or the Servicer shall delegate its duties under this
Agreement, except as permitted by Section 8.02 or 8.07, a
Responsible Officer of the Trustee has actual knowledge of such
delegation and such delegation continues unremedied for 15 days
after the date on which written notice thereof, requiring the same
to be remedied, shall have been given to the Servicer by the
Trustee, or to the Servicer and the Trustee by Holders of Investor
Certificates evidencing more than 50% of the Aggregate Investor
Amount;
(c) any representation, warranty or certification made by the
Servicer in this Agreement or any Supplement or in any certificate
delivered pursuant to this Agreement or any Supplement shall prove
to have been incorrect when made, which has a material adverse
effect on the rights of the Investor Holders of any Series or Class
and which continues to be incorrect in any material respect for a
period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given
to the Servicer by the Trustee, or to the Servicer and the Trustee
by the Holders of Investor Certificates evidencing more than 50% of
the Aggregate Investor Amount (or, with respect to any such
representation, warranty or certification that does not relate to
all Series, 50% of the aggregate Investor Amount of all Series to
which such representation, warranty or certification relates); or
(d) an Insolvency Event shall occur with respect to the
Servicer;
then, in the event of any Servicer Default, so long as the Servicer
Default shall not have been remedied, either the Trustee or the
Holders of Investor Certificates evidencing more than 50% of the
Aggregate Investor Amount, by notice then given to the Servicer
(and to the Trustee if given by the Investor Holders) (a
"Termination Notice"), may terminate all but not less than all the
rights and obligations of the Servicer as Servicer under this
Agreement and in and to the Receivables and the proceeds thereof;
provided if within 60 days of receipt of a Termination Notice the
Trustee does not receive any bids from Eligible Servicers in
accordance with subsection 10.02(c) to act as a Successor Servicer
and receives an Officer's Certificate of the Servicer to the effect
that the Servicer cannot in good faith cure the Servicer Default
which gave rise to the Termination Notice, the Trustee shall offer
the Transferors the right at their option to purchase the Investor
Interest on the Distribution Date next succeeding 60 days after the
receipt by the Servicer of a Termination Notice. The purchase price
for the Investor Interest shall be equal to the sum of the amounts
specified therefor with respect to each outstanding Series in the
related Supplement. The Transferors shall notify the Trustee prior
to the Record Date for the Distribution Date of the purchase if
they are exercising such option. If any of the Transferors exercise
such option, such Transferors shall (x) if such Transferors' short-
term deposits or long-term unsecured debt obligations are not rated
at the time at least P-3 or Baa3, respectively, by Moody's, deliver
to the Trustee an Opinion of Counsel (which must be an independent
outside counsel) to the effect that, in reliance on certain
certificates to the effect that the Receivables constitute fair
value for consideration paid therefor and as to the solvency of
such Transferors, the purchase would not be considered a fraudulent
conveyance or fraudulent transfer and (y) deposit the purchase
price into the Collection Account not later than 12:00 noon, New
York City time, on such Distribution Date in immediately available
funds. The purchase price shall be allocated and distributed to
Investor Holders in accordance with Article IV and each Supplement.
After receipt by the Servicer of such Termination Notice, and
on the date that a Successor Servicer shall have been appointed by
the Trustee pursuant to Section 10.02, all authority and power of
the Servicer under this Agreement shall pass to and be vested in a
Successor Servicer; and, without limitation, the Trustee is hereby
authorized and empowered (upon the failure of the Servicer to
cooperate) to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, all documents and other instruments
upon the failure of the Servicer to execute or deliver such
documents or instruments, and to do and accomplish all other acts
or things necessary or appropriate to effect the purposes of such
transfer of servicing rights. The Servicer agrees to cooperate with
the Trustee and such Successor Servicer in effecting the
termination of the responsibilities and rights of the Servicer to
conduct servicing hereunder, including the transfer to such
Successor Servicer of all authority of the Servicer to service the
Receivables provided for under this Agreement, including all
authority over all Collections which shall on the date of transfer
be held by the Servicer for deposit, or which have been deposited
by the Servicer, in the Collection Account, or which shall
thereafter be received with respect to the Receivables, and in
assisting the Successor Servicer and in enforcing all rights to
Insurance Proceeds. The Servicer shall promptly transfer its
electronic records relating to the Receivables to the Successor
Servicer in such electronic form as the Successor Servicer may
reasonably request and shall promptly, at the Servicer's expense,
transfer to the Successor Servicer all other records,
correspondence and documents necessary for the continued servicing
of the Receivables in the manner and at such times as the Successor
Servicer shall reasonably request. To the extent that compliance
with this Section 10.01 shall require the Servicer to disclose to
the Successor Servicer information of any kind which the Servicer
reasonably deems to be confidential, the Successor Servicer shall
be required to enter into such customary licensing and
confidentiality agreements as the Servicer shall deem necessary to
protect its interests.
Notwithstanding the foregoing, any delay in or failure of
performance under subsection 10.01(a) for a period of 5 Business
Days or under subsection 10.01(b) or (c) for a period of 60 days
(in addition to any period provided in subsection 10.01(a), (b) or
(c)) shall not constitute a Servicer Default until the expiration
of such additional 5 Business Days or 60 days, respectively, if
such delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was
caused by an act of God or the public enemy, acts of declared or
undeclared war, terrorism, public disorder, rebellion or sabotage,
epidemics, landslides, lightning, fire, hurricanes, earthquakes,
floods or similar causes. The preceding sentence shall not relieve
the Servicer from using its best efforts to perform its respective
obligations in a timely manner in accordance with this Agreement
and any Supplement, and the Servicer shall provide the Trustee,
each Rating Agency, the Holders of the Transferor Certificates and
the Investor Holders with an Officer's Certificate giving prompt
notice of such failure or delay by it, together with a description
of its efforts to so perform its obligations.
SECTION 10.02. Trustee To Act, Appointment of Successor. (a)
On and after the receipt by the Servicer of a Termination Notice
pursuant to Section 10.01, the Servicer shall continue to perform
all servicing functions under this Agreement until the date
specified in the Termination Notice or otherwise specified by the
Trustee or until a date mutually agreed upon by the Servicer and
Trustee. The Trustee shall as promptly as possible after the giving
of a Termination Notice appoint an Eligible Servicer as a successor
servicer (the "Successor Servicer"), and such Successor Servicer
shall accept its appointment by a written assumption in a form
acceptable to the Trustee. If a Successor Servicer has not been
appointed or has not accepted its appointment at the time when the
Servicer ceases to act as Servicer, the Trustee without further
action shall automatically be appointed the Successor Servicer. The
Trustee may delegate any of its servicing obligations to an
Affiliate of the Trustee or agent in accordance with Section
3.01(b) and 8.07. Notwithstanding the foregoing, the Trustee shall,
if it is legally unable so to act, petition a court of competent
jurisdiction to appoint any established institution qualifying as
an Eligible Servicer as the Successor Servicer hereunder. The
Trustee shall give prompt notice to each Rating Agency upon the
appointment of a Successor Servicer.
(b) Upon its appointment, the Successor Servicer shall be the
successor to the Servicer with respect to servicing functions under
this Agreement and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Servicer by
the terms hereof, and all references in this Agreement to the
Servicer shall be deemed to refer to the Successor Servicer.
(c) In connection with any Termination Notice, the Trustee
will review any bids which it obtains from Eligible Servicers and
shall be permitted to appoint any Eligible Servicer submitting such
a bid as a Successor Servicer for servicing compensation not in
excess of the aggregate Servicing Fees for all Series; provided
that the Holders of the Transferor Certificates shall be
responsible for payment of the Transferors' portion of such
aggregate Servicing Fees and that no such monthly compensation paid
out of Collections shall be in excess of such aggregate Servicing
Fees. Each Holder of a Transferor Certificate agrees that, if ANB
(or any Successor Servicer) is terminated as Servicer hereunder,
the portion of the Collections in respect of Finance Charge
Receivables that such Holders are entitled to receive pursuant to
this Agreement or any Supplement shall be reduced by an amount
sufficient to pay such Holders' share (determined by reference to
the Supplements with respect to any outstanding Series) of the
compensation of the Successor Servicer.
(d) All authority and power granted to the Successor Servicer
under this Agreement shall automatically cease and terminate upon
termination of the Trust pursuant to Section 12.01 and shall pass
to and be vested in the Transferors and, without limitation, the
Transferors are hereby authorized and empowered to execute and
deliver, on behalf of the Successor Servicer, as attorney-in-fact
or otherwise, all documents and other instruments, and to do and
accomplish all other acts or things necessary or appropriate to
effect the purposes of such transfer of servicing rights. The
Successor Servicer agrees to cooperate with the Transferors in
effecting the termination of the responsibilities and rights of the
Successor Servicer to conduct servicing on the Receivables. The
Successor Servicer shall transfer its electronic records relating
to the Receivables to the Transferors in such electronic form as
the Transferors may reasonably request and shall transfer all other
records, correspondence and documents to the Transferors in the
manner and at such times as the Transferors shall reasonably
request. To the extent that compliance with this Section 10.02
shall require the Successor Servicer to disclose to the Transferors
information of any kind which the Successor Servicer deems to be
confidential, the Transferors shall be required to enter into such
customary licensing and confidentiality agreements as the Successor
Servicer shall deem necessary to protect its interests.
SECTION 10.03. Notification to Holders. Within two Business
Days after the Servicer becomes aware of any Servicer Default, the
Servicer shall give notice thereof to the Trustee and each Rating
Agency and the Trustee shall give notice to the Investor Holders.
Upon any termination or appointment of a Successor Servicer
pursuant to this Article, the Trustee shall give prompt notice
thereof to the Investor Holders.
ARTICLE XI THE TRUSTEE
SECTION 11.01. Duties of Trustee. (a) The Trustee, prior to
the occurrence of a Servicer Default and after the curing of all
Servicer Defaults which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in
this Agreement. If a Responsible Officer has received written
notice that a Servicer Default has occurred (which has not been
cured or waived) the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of
care and skill in its exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
(b) The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or
other instruments furnished to the Trustee that are specifically
required to be furnished pursuant to any provision of this
Agreement, shall examine them to determine whether they
substantially conform to the requirements of this Agreement.
(c) Subject to subsection 11.01(a), no provision of this
Agreement shall be construed to relieve the Trustee from liability
for its own negligent action, its own negligent failure to act or
its own misconduct; provided that:
(i) the Trustee shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer
or Responsible Officers of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the
pertinent facts;
(ii) the Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken
by it in good faith in accordance with the direction of the
Holders of Investor Certificates evidencing more than 50% of
the Investor Amount of any Series relating to the time, method
and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power
conferred upon the Trustee in relation to such Series, under
this Agreement; and
(iii) the Trustee shall not be charged with knowledge of
any failure by the Servicer referred to in clauses (a) and (b)
of Section 10.01 unless a Responsible Officer of the Trustee
obtains actual knowledge of such failure or the Trustee
receives written notice of such failure from the Servicer or
any Holders of Investor Certificates evidencing not less than
10% of the Investor Amount of any Series adversely affected
thereby.
(d) The Trustee shall not be required to expend or risk its
own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its
rights or powers, if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it, and none of the
provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this
Agreement except during such time, if any, as the Trustee shall be
the successor to, and be vested with the rights, duties, powers and
privileges of, the Servicer in accordance with this Agreement.
(e) Except for actions expressly authorized by this
Agreement, the Trustee shall take no action reasonably likely to
(i) impair the interests of the Trust in any Receivable now
existing or hereafter created or (ii) impair the value of any
Receivable now existing or hereafter created.
(f) The Trustee shall have no power to vary the corpus of the
Trust, except as expressly provided in this Agreement.
(g) In the event that the Paying Agent or the Transfer Agent
and Registrar shall fail to perform any obligation, duty or
agreement in the manner or on the day required to be performed by
the Paying Agent or the Transfer Agent and Registrar, as the case
may be, under this Agreement, the Trustee shall be obligated as
soon as possible upon knowledge of a Responsible Officer thereof
and receipt of appropriate records, if any, to perform such
obligation, duty or agreement in the manner so required.
(h) If any of the Transferors has agreed to transfer any of
its revolving credit card receivables or other revolving credit
account receivables (other than the Receivables) to another Person,
upon the written request of such Transferor, the Trustee will enter
into such intercreditor agreements with the transferee of such
receivables as are customary and necessary to separately identify
the rights, if any, of the Trust and such other Person in such
Transferor's revolving credit card receivables or other revolving
credit account receivables, as the case may be; provided that the
Trustee shall not be required to enter into any intercreditor
agreement which could adversely affect the interests of the Holders
and, upon the request of the Trustee, such Transferor will deliver
an Opinion of Counsel on any matters relating to such intercreditor
agreement reasonably requested by the Trustee.
SECTION 11.02. Certain Matters Affecting the Trustee. Except
as otherwise provided in Section 11.01:
(a) the Trustee may rely on and shall be protected in acting
on, or in refraining from acting in accordance with, any
Assignment, the initial report, the annual Servicer's certificate,
the monthly payment instructions and notification to the Trustee,
the monthly Servicer's certificate, any resolution, Officer's
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document believed by it to
be genuine and to have been signed or presented to it pursuant to
this Agreement by the proper party or parties;
(b) the Trustee may consult with counsel, and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder
in good faith and in accordance with such Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement or any
Enhancement Agreement, or to institute, conduct or defend any
litigation hereunder or in relation hereto, at the request, order
or direction of any of the Holders, or any Enhancement Provider,
pursuant to the provisions of this Agreement or any Enhancement
Agreement, unless such Holders or any Enhancement Provider shall
have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred
therein or thereby; nothing contained herein shall, however,
relieve the Trustee of the obligations, upon the occurrence of any
Servicer Default (which has not been cured), to exercise such of
the rights and powers vested in it by this Agreement and any Series
Enhancement, and to use the same degree of care and skill in its
exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
(d) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it
to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(e) the Trustee shall not be bound to make any investigation
into the facts of matters stated in any Assignment, the initial
report, the annual Servicer's certificate, the monthly payment
instructions and notification to the Trustee, the monthly
Servicer's certificate, any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in
writing so to do by Holders of Investor Certificates evidencing
more than 50% of the Investor Amount of any Series which could be
adversely affected if the Trustee does not perform such acts;
(f) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian, and the Trustee shall
not be responsible for any misconduct or negligence on the part of
any such agent, attorney or custodian appointed with due care by it
hereunder; and
(g) except as may be required by subsection 11.01(a), the
Trustee shall not be required to make any initial or periodic
examination of any documents or records related to the Receivables
or the Accounts for the purpose of establishing the presence or
absence of defects, the compliance by the Transferor with its
representations and warranties or for any other purpose.
SECTION 11.03. Trustee Not Liable for Recitals in
Certificates. The Trustee assumes no responsibility for the
correctness of the recitals contained herein and in the
certificates (other than the certificate of authentication on the
Certificates). Except as set forth in Section 11.15, the Trustee
makes no representations as to the validity or sufficiency of this
Agreement or any Supplement or of the Certificates (other than the
certificate of authentication on the Certificates) or of any
Receivable or related document. The Trustee shall not be
accountable for the use or application by the Transferors of any of
the Certificates or of the proceeds of such Certificates, or for
the use or application of any funds paid to the Transferors or the
Holders of the Transferor Certificates in respect of the
Receivables or deposited in or withdrawn from the Collection
Account, the Excess Funding Account or any Series Account by the
Servicer.
SECTION 11.04. Trustee May Not Own Certificates. The Trustee
in its individual capacity shall not, but in a fiduciary or any
other capacity may, become the owner of Investor Certificates or
Supplemental Certificates. In connection with such ownership in
other than its individual capacity, the Trustee shall have the same
rights as it would have if it were not the Trustee.
SECTION 11.05. The Servicer To Pay Trustee's Fees and
Expenses. The Servicer shall pay to the Trustee from time to time,
and the Trustee shall be entitled to receive, reasonable
compensation (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust) for
all services rendered by it in the execution of the trust hereby
created and in the exercise and performance of any of the powers
and duties hereunder of the Trustee, and, subject to Section 7.04,
the Servicer will pay or reimburse the Trustee (without
reimbursement from the Collection Account or otherwise) upon its
request for all reasonable expenses, disbursements and advances (if
any) incurred or made by the Trustee (including the fees and
expenses of Trustee's counsel) in accordance with any of the
provisions of this Agreement except any such expense, disbursement
or advance as may arise from its own negligence or bad faith and
except as provided in the following sentence. If the Trustee is
appointed Successor Servicer pursuant to Section 10.02, the
provisions of this Section 11.05 shall not apply to expenses,
disbursements and advances made or incurred by the Trustee in its
capacity as Successor Servicer. The obligations of the Servicer
under Section 8.04 and this Section 11.05 shall survive the
termination of the Trust and the resignation or removal of the
Trustee.
SECTION 11.06. Eligibility Requirements for Trustee. The
Trustee hereunder shall at all times be a bank or a corporation
organized and doing business under the laws of the United States of
America or any state thereof and subject to supervision or
examination by Federal or state authority and authorized under such
laws to exercise corporate trust powers that either (x) has a long-
term unsecured debt rating of at least Baa3 by Moody's and BBB- by
Standard & Poor's and, in the case of an entity that is subject to
risk-based capital adequacy requirements, risk-based capital of at
least $50,000,000 or, in the case of an entity that is not subject
to risk-based capital adequacy requirements, a combined capital and
surplus of at least $50,000,000 or (y) shall otherwise be
acceptable to each Rating Agency. If such bank or corporation
publishes 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 11.06, the combined
capital and surplus of such bank or 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 Trustee
shall cease to be eligible in accordance with the provisions of
this Section 11.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 11.07.
SECTION 11.07. Resignation or Removal of Trustee. (a) The
Trustee may at any time resign and be discharged from the trust
hereby created by giving written notice thereof to the Servicer.
Upon receiving such notice of resignation, the Servicer shall
promptly appoint a successor trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor trustee. If no
successor trustee shall have been so appointed and have accepted
within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction
for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.06 and shall fail to
resign after written request therefor by the Servicer or the
Transferors, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged a bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation
or liquidation, then the Servicer or Transferors may, but shall not
be required to, remove the Trustee and promptly appoint a successor
trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee.
(c) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to any of the provisions of this
Section 11.07 shall not become effective until acceptance of
appointment by the successor trustee as provided in Section 11.08
and any liability of the Trustee arising hereunder shall survive
such appointment of a successor trustee.
SECTION 11.08. Successor Trustee. (a) Any successor trustee
appointed as provided in Section 11.07 shall execute, acknowledge
and deliver to the Transferors, to the Servicer and to its
predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become
fully vested with all the rights, powers, duties and obligations of
its predecessor hereunder, with the like effect as if originally
named as Trustee herein. The predecessor Trustee shall deliver to
the successor trustee all documents and statements held by it
hereunder, and the Transferors and the predecessor 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 trustee all such rights, powers, duties
and obligations.
(b) No successor trustee shall accept appointment as provided
in this Section 11.08 unless at the time of such acceptance such
successor trustee shall be eligible under the provisions of Section
11.06.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section 11.08, such successor trustee shall
provide notice of such succession hereunder to all Investor Holders
and the Servicer shall provide such notice to each Rating Agency
and any Series Enhancer entitled thereto pursuant to the relevant
Supplement.
SECTION 11.09. Merger or Consolidation of Trustee. Any Person
into which the Trustee may be merged or converted or with which it
may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Trustee shall be a party,
or any Person succeeding to the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided
such corporation shall be eligible under the provisions of Section
11.06, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.
SECTION 11.10. Appointment of Co-Trustee or Separate Trustee.
(a) 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 Trust may at the time be
located, the Trustee shall have the power and may execute and
deliver all instruments to appoint one or more Persons to act as a
co-trustee or co-trustees, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such
Person or Persons, in such capacity and for the benefit of the
Holders, such title to the Trust, or any part thereof, and, subject
to the other provisions of this Section 11.10, such powers, duties,
obligations, rights and trusts as the Trustee may consider
necessary or desirable; provided that the Trustee shall exercise
due care in the appointment of any co-trustee. No co-trustee or
separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 11.06 and no
notice to Holders of the appointment of any co-trustee or separate
trustee shall be required under Section 11.08.
(b) Every separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the
following provisions and conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon the Trustee shall be conferred or imposed upon
and exercised or performed by the Trustee and such separate
trustee or co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to act
separately without the Trustee joining in such act) except to
the extent that under any laws of any jurisdiction in which
any particular act or acts are to be performed (whether as
Trustee hereunder or as successor to the Servicer hereunder)
the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Trust
or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-
trustee, but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder;
and
(iii) the Trustee may at any time accept the resignation
of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate
trustees and co-trustees, as effectively as if given to each of
them. Every instrument appointing any separate trustee or co-
trustee shall refer to this Agreement and the conditions of this
Article XI. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the
estates or property specified in its instrument of appointment,
either jointly with the Trustee or separately, as may be provided
therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating
to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed
with the Trustee and a copy thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time
constitute the Trustee as its agent or attorney-in-fact with full
power and authority, to the extent not prohibited by law, to do any
lawful act under or in respect to 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 Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
SECTION 11.11. Tax Returns. If the Trust shall be required to
file tax returns, the Servicer, as soon as practicable after it is
made aware of such requirement, shall prepare or cause to be
prepared any tax returns required to be filed by the Trust and, to
the extent possible, shall file such returns at least five days
before such returns are due to be filed. The Trustee is hereby
authorized to sign any such return on behalf of the Trust. The
Servicer shall prepare or shall cause to be prepared all tax
information required by law to be distributed to Holders and shall
deliver such information to the Trustee at least five days prior to
the date it is required by law to be distributed to Holders. The
Servicer, upon request, will furnish the Trustee with all such
information known to the Servicer as may be reasonably required in
connection with the preparation of all tax returns of the Trust. In
no event shall the Trustee or the Servicer be liable for any
liabilities, costs or expenses of the Trust, the Investor Holders
or the Certificate Owners arising under any tax law, including
federal, state, local or foreign income or excise taxes or any
other tax imposed on or measured by income (or any interest or
penalty with respect thereto or arising from a failure to comply
therewith).
SECTION 11.12. Trustee May Enforce Claims Without Possession
of Certificates. All rights of action and claims under this
Agreement or any Series of Certificates may be prosecuted and
enforced by the Trustee without the possession of any of the
Certificates or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel, be for the ratable benefit of any Series of Certificates
in respect of which such judgment has been obtained.
SECTION 11.13. Suits for Enforcement. (a) If a Servicer
Default shall occur and be continuing, the Trustee, in its
discretion may, subject to the provisions of Sections 10.01 and
11.14, proceed to protect and enforce its rights and the rights of
any Series of Certificates under this Agreement by a suit, action
or proceeding in equity or at law or otherwise, whether for the
specific performance of any covenant or agreement contained in this
Agreement or in aid of the execution of any power granted in this
Agreement or for the enforcement of any other legal, equitable or
other remedy as the Trustee, being advised by counsel, shall deem
most effectual to protect and enforce any of the rights of the
Trustee or any Series of Certificates.
(b) If the FDIC, the RTC or any equivalent governmental
agency or instrumentality or any designee of any of them shall have
been appointed as receiver, conservator, assignee, trustee in
bankruptcy or reorganization, liquidator, sequestrator or custodian
with respect to any Transferor (the "Receiver"), the Trustee shall,
irrespective of whether the principal of any Series or Class of
Certificates shall then be due and payable;
(i) unless prohibited by applicable law or regulation or
unless under FIRREA the Receiver is required to participate in
the process as a defendant or otherwise, promptly take or
cause to be taken any and all necessary or advisable
commercially reasonable action as a secured creditor on behalf
of the Holders to recover, repossess, collect or liquidate the
Receivables or any other Trust Assets on a "self-help" basis
or otherwise and exercise any rights or remedies of a secured
party under the applicable UCC and take any other appropriate
action to protect and enforce the rights and remedies of the
Trustee and the Holders;
(ii) promptly, and in any case within any applicable
claims bar period specified under FIRREA or otherwise, file
and prove a claim or claims under FIRREA or otherwise, by
filing proofs of claim, protective proofs of claim or
otherwise, for the whole amount of unpaid principal and
interest in respect of the Certificates and to file such other
papers or documents as may be necessary or advisable in order
to have the claims of the Trustee and the Holders allowed in
any judicial, administrative, corporate or other proceedings
relating to such Transferor, its creditors or its property,
including any actions relating to the preservation of
deficiency claims or for the protection against loss of any
claim in the event the Trustee's or the Holders' status as
secured creditors are successfully challenged; and
(iii) collect and receive any moneys or other property
payable or deliverable on any such claims and distribute all
amounts with respect to the claims of the Holders to the
Holders.
(c) Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Certificates or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
SECTION 11.14. Rights of Holders To Direct Trustee. Holders of
Investor Certificates evidencing more than 50% of the Aggregate
Investor Amount (or, with respect to any remedy, trust or power
that does not relate to all Series, 50% of the aggregate Investor
Amount of all Series to which such remedy, trust or power relates)
shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee; provided
that, subject to Section 11.01, the Trustee shall have the right to
decline to follow any such direction if the Trustee being advised
by counsel determines that the action so directed may not lawfully
be taken, or if the Trustee in good faith shall, by a Responsible
Officer or Responsible Officers of the Trustee, determine that the
proceedings so directed would be illegal or involve it in personal
liability or be unduly prejudicial to the rights of Holders not
parties to such direction; and provided further that nothing in
this Agreement shall impair the right of the Trustee to take any
action deemed proper by the Trustee and which is not inconsistent
with such direction of such Holders of Investor Certificates.
SECTION 11.15. Representations and Warranties of Trustee. The
Trustee represents and warrants as of each Closing Date that:
(a) the Trustee is a banking corporation organized, existing
and authorized to engage in the business of banking under the laws
of the State of New York;
(b) the Trustee has full power, authority and right to
execute, deliver and perform this Agreement and each Supplement,
and has taken all necessary action to authorize the execution,
delivery and performance by it of this Agreement and each
Supplement; and
(c) this Agreement and each Supplement has been duly executed
and delivered by the Trustee.
SECTION 11.16. Maintenance of Office or Agency. The Trustee
will maintain at its expense an office or agency where notices and
demands to or upon the Trustee in respect of the Certificates and
this Agreement may be served (a) in the Borough of Manhattan, The
City of New York, in the case of Registered Certificates and
Holders thereof, and (b) in London or Luxembourg, in the case of
Bearer Certificates and Holders thereof, if and for so long as any
Bearer Certificates are outstanding. Such office shall initially be
located at the Corporate Trust Office. The Trustee will give prompt
notice to the Servicer and to Investor Holders of any change in the
location of the Certificate Register or any such office or agency.
ARTICLE XII TERMINATION
SECTION 12.01. Termination of Trust. The Trust and the
respective obligations and responsibilities of the Transferors, the
Servicer and the Trustee created hereby (other than the obligation
of the Trustee to make payments to Investor Holders as hereinafter
set forth) shall terminate, except with respect to the duties
described in Sections 7.04, 8.04 and 12.02(b), upon the earliest of
(i) December 31, 2046, (ii) the day following the payment date on
which the Investor Amount and the Enhancement Investor Amount, if
any, for each Series is zero (provided that the Transferors have
delivered a written notice to the Trustee electing to terminate the
Trust) and (iii) the time provided in subsection 9.02(b).
SECTION 12.02. Final Distribution. (a) The Servicer shall
give the Trustee at least 15 days prior notice of the payment date
on which the Investor Holders of any Series or Class may surrender
their Investor Certificates for payment of the final distribution
on and cancellation of such Investor Certificates (or, in the event
of a final distribution resulting from the application of Section
2.06, 9.02 or 10.01, notice of such payment date promptly after the
Servicer has determined that a final distribution will occur, if
such determination is made less than 30 days prior to such payment
date). Such notice shall be accompanied by an Officer's Certificate
setting forth the information specified in Section 3.05 covering
the period during the then-current calendar year through the date
of such notice. Not later than the fifth day of the month in which
the final distribution in respect of such Series or Class is
payable to Investor Holders, the Trustee shall provide notice to
Investor Holders of such Series or Class specifying (i) the date
upon which final payment of such Series or Class will be made upon
presentation and surrender of Investor Certificates of such Series
or Class at the office or offices therein designated, (ii) the
amount of any such final payment and (iii) that the Record Date
otherwise applicable to such payment date is not applicable,
payments being made only upon presentation and surrender of such
Investor Certificates at the office or offices therein specified
(which, in the case of Bearer Certificates, shall be outside the
United States). The Trustee shall give such notice to the Transfer
Agent and Registrar and the Paying Agent at the time such notice is
given to Investor Holders.
(b) Notwithstanding a final distribution to the Investor
Holders of any Series or Class (or the termination of the Trust),
except as otherwise provided in this paragraph, all funds then on
deposit in the Collection Account and any Series Account allocated
to such Investor Holders shall continue to be held in trust for the
benefit of such Investor Holders and the Paying Agent or the
Trustee shall pay such funds to such Investor Holders upon
surrender of their Investor Certificates (and any excess shall be
paid in accordance with any relevant Enhancement Agreement). If all
such Investor Holders shall not surrender their Investor
Certificates for cancellation within six months after the date
specified in the notice from the Trustee described in paragraph
(a), the Trustee shall give a second notice to the remaining such
Investor Holders to surrender their Investor Certificates for
cancellation and receive the final distribution with respect
thereto (which surrender and payment, in the case of Bearer
Certificates, shall be outside the United States). If within one
year after the second notice all such Investor Certificates shall
not have been surrendered for cancellation, the Trustee may take
appropriate steps, or may appoint an agent to take appropriate
steps, to contact the remaining such Investor Holders concerning
surrender of their Investor Certificates, and the cost thereof
shall be paid out of the funds in the Collection Account or any
Series Account held for the benefit of such Investor Holders. The
Trustee and the Paying Agent shall pay to the Transferors any
moneys held by them for the payment of principal or interest that
remains unclaimed for two years. After payment to the Transferors,
Investor Holders entitled to the money must look to the Transferors
for payment as general creditors unless an applicable abandoned
property law designates another Person.
(c) If the Investor Amount with respect to any Series is
greater than zero on its Series Termination Date or such earlier
date as is specified in the related Supplement (after giving effect
to deposits and distributions otherwise to be made on such date),
the Trustee will sell or cause to be sold on such Series
Termination Date, in accordance with the procedures and subject to
the conditions described in such Supplement, Principal Receivables
and the related Finance Charge Receivables (or interests therein)
in an amount equal to 100% of the Investor Amount and accrued and
unpaid interest thereon with respect to such Series on such date
(after giving effect to such deposits and distributions; provided
that in no event shall such amount exceed such Series' Series
Percentages of Receivables on such Series Termination Date). Any
Transferor shall be permitted to purchase such Receivables in such
case, and the Transferors shall have a right of first refusal with
respect thereto. The proceeds from any such sale shall be allocated
and distributed in accordance with the applicable Supplement.
SECTION 12.03. Transferors' Termination Rights. Upon the
termination of the Trust pursuant to Section 12.01 and the
surrender of the Transferor Certificates, the Trustee shall sell,
assign and convey to the Holders of the Transferor Certificates or
their designee, without recourse, representation or warranty, all
right, title and interest of the Trust in the Receivables, whether
then existing or thereafter created, all moneys due or to become
due and all amounts received with respect thereto and all proceeds
thereof, except for amounts held by the Trustee pursuant to
subsection 12.02(b). The Trustee shall execute and deliver such
instruments of transfer and assignment, in each case without
recourse, as shall be reasonably requested by the Holders of the
Transferor Certificates to vest in the Holders of the Transferor
Certificates or their designee all right, title and interest which
the Trust had in the Receivables and such other related assets.
SECTION 12.04. Defeasance. Notwithstanding anything to the
contrary in this Agreement or any Supplement:
(a) The Transferor may at its option be discharged from its
obligations hereunder with respect to any Series or all outstanding
Series (the "Defeased Series") on the date the applicable
conditions set forth in subsection 12.04(c) are satisfied; provided
that the following rights, obligations, powers, duties and
immunities shall survive with respect to the Defeased Series until
otherwise terminated or discharged hereunder: (i) the rights of the
Holders of Investor Certificates of the Defeased Series to receive,
solely from the trust fund provided for in subsection 12.04(c),
payments in respect of principal of and interest on such Investor
Certificates when such payments are due; (ii) the Transferors'
obligations with respect to such Certificates under Sections 6.04
and 6.05; (iii) the rights, powers, trusts, duties, and immunities
of the Trustee, the Paying Agent and the Registrar hereunder; and
(iv) this Section 12.04.
(b) Subject to subsection 12.04(c), the Transferors at their
option may cause Collections allocated to the Defeased Series and
available to purchase additional Receivables to be applied to
purchase Eligible Investments rather than additional Receivables.
(c) The following shall be the conditions to a defeasance
under subsection 12.04(a):
(i) the Transferors irrevocably shall have deposited or
caused to be deposited with the Trustee, under an irrevocable
trust agreement in form and substance satisfactory to the
Trustee, as trust funds in trust for making the payments
described below, (A) Dollars in an amount, or (B) Eligible
Investments which through the scheduled payment of principal
and interest in respect thereof will provide, not later than
the due date of payment thereon, money in an amount, or (C) a
combination thereof, in each case sufficient to pay and
discharge (without relying on income or gain from reinvestment
of such amount), and which shall be applied by the Trustee to
pay and discharge, all remaining scheduled interest and
principal payments on all outstanding Investor Certificates of
the Defeased Series on the dates scheduled for such payments
in this Agreement and the applicable Supplements and all
amounts owing to the Series Enhancers with respect to the
Defeased Series;
(ii) a statement from a firm of nationally recognized
independent public accountants (who may also render other
services to the Transferors) to the effect that such deposit
is sufficient to pay the amounts specified in clause (i);
(iii) prior to its first exercise of its right pursuant
to this Section 12.04 with respect to a Defeased Series to
substitute money or Eligible Investments for Receivables, an
Opinion of Counsel to the effect that (A) such deposit and
termination of obligations will not result in the Trust being
required to register as an "investment company" within the
meaning of the Investment Company Act, (B) if the Transferors'
short-term deposit or long-term unsecured debt obligations are
not rated at least P-3 or Baa3, respectively, by Moody's, such
deposit and termination of obligations would not be a
fraudulent conveyance or fraudulent transfer (based in
reliance on certain certificates to the effect that the
Receivables and termination of obligations constitute fair
value for consideration paid therefor and as to the solvency
of the Transferors), and (C) an Opinion of Counsel with
respect to such deposit and termination to the effect that it
will not cause the Trust or any portion thereof to be treated
as an association or publicly traded partnership taxable as a
corporation;
(iv) the Transferors shall have delivered to the Trustee
an Officer's Certificate of the Transferors stating that the
Transferors reasonably believe that such deposit and
termination of obligations will not, based on the facts known
to such officer at the time of such certification, then cause
a Pay Out Event with respect to any Series or any event that,
with the giving of notice or the lapse of time, would result
in the occurrence of a Pay Out Event with respect to any
Series; and
(v) the Rating Agency Condition shall have been
satisfied and the Transferors shall have delivered copies of
written confirmation of such satisfaction to the Servicer and
the Trustee.
SECTION 12.05. Optional Purchase. (a) If so provided in any
Supplement, the Transferors may, but shall not be obligated to,
cause a final distribution to be made in respect of the related
Series of Investor Certificates on a specified Distribution Date or
when the Investor Amount reaches a specified level or under any
circumstances specified in such Supplement by depositing into the
Collection Account or the applicable Series Account, not later than
the Transfer Date preceding such Distribution Date, for application
in accordance with Section 12.02, the amount specified in such
Supplement; provided that if the short-term deposits or long-term
unsecured debt obligations of the Transferors are not rated at the
time of such purchase of Receivables at least P-3 or Baa3,
respectively, by Moody's, no such event shall occur unless the
Transferors shall deliver an Opinion of Counsel reasonably
acceptable to the Trustee that such deposit into the Collection
Account or any Series Account as provided in the related Supplement
would not constitute a fraudulent conveyance or fraudulent transfer
of the Transferors (based in reliance on certificates to the effect
that the Receivables constitute fair value for consideration paid
therefor and as to the solvency of the Transferors).
(b) The amount deposited pursuant to subsection 12.05(a)
shall be paid to the Investor Holders of the related Series
pursuant to Section 12.02 on the related Distribution Date
following the date of such deposit. All Certificates of a Series
which are purchased by the Transferors pursuant to subsection
12.05(a) shall be delivered by the Transferors upon such purchase
to, and be cancelled by, the Transfer Agent and Registrar and be
disposed of in a manner satisfactory to the Trustee and the
Transferor. The Series Invested Amount of each Series which is
purchased by the Transferors pursuant to subsection 12.05(a) shall,
for the purpose of the definition of "Transferor Amount," be deemed
to equal zero on the Distribution Date following the making of the
deposit, and the Transferor Amount shall thereupon be deemed to
have been increased by the Series Invested Amount of such Series.
ARTICLE XIII MISCELLANEOUS PROVISIONS
SECTION 13.01. Amendment; Waiver of Past Defaults. (a) Any
Trust Document may be amended from time to time by the Servicer,
the Transferors (including, if applicable, any Additional
Transferor being designated) and the Trustee without the consent of
any of the Holders, provided that (i) each Transferor shall have
delivered to the Trustee an Officer's Certificate to the effect
that such Transferor reasonably believes that such action will not
have an Adverse Effect and (ii) the Rating Agency Condition shall
have been satisfied with respect to any such amendment. Without
limiting the generality of the foregoing sentence, any Trust
Document may be amended pursuant to that sentence in order to (1)
provide additional Series Enhancement for the benefit of the
Holders of any Series (or reduce such Series Enhancement), (2) add
one or more Participation Interests to the Trust, (3) designate one
or more Additional Transferors (provided that the Rating Agency
Condition need not be satisfied in connection with any designation
of AUS as an additional Transferor), (4) provide for an existing
Transferor to discontinue direct transfers of Receivables to the
Trust and instead transfer Receivables indirectly through another
Transferor, (5) cure any ambiguity or correct or supplement any
provision contained in any other Trust Document which may be
defective or inconsistent with any other provisions in such Trust
Document, (6) enable all or a portion of the Trust to qualify as,
and to permit an election to be made to cause the Trust to be
treated as, a "financial asset securitization investment trust," as
described in the provisions of the "Seven Year Balanced Budget Act
of 1995," H.R. 2491, 104th Cong., 1st Sess. (1995), or to enable
the Trust to qualify and an election to be made for similar
treatment under such comparable subsequent Federal income tax
provisions as may ultimately be enacted into law (and, in
connection with any such election, to modify or eliminate existing
provisions of each Trust Document relating to the intended Federal
income tax treatment of the Certificates and the Trust in the
absence of such election, which may include elimination of the sale
of Receivables and termination of the Trust upon the occurrence of
an Insolvency Event pursuant to Section 9.02 and the provisions of
Section 7.04 relating to the liability of the Transferors as
general partners), (7) enable all or a portion of the Trust to
qualify as a partnership for federal income tax purposes under
applicable regulations on the classification of entities as
partnerships or corporations under the Internal Revenue Code
adopted as final regulations after the date hereof, and to the
extent that such regulations eliminate or modify the need therefor,
to modify or eliminate existing provisions of the Transaction
Documents relating to the intended availability of partnership
treatment of the Trust for federal income tax purposes, including
eliminating the provisions of Section 9.02 relating to the sale of
the Receivables and termination of the Trust upon the occurrence of
an Insolvency Event and the provisions of Section 7.04 relating to
the liability of the Transferors as general partners and (8) enable
Receivables transferred to the Trust to be derecognized by the
related Transferors under GAAP and the Trust to not be treated as
a member of any Transferor's consolidated group under GAAP.
(b) Any Trust Document may also be amended from time to time
by the Servicer, the Transferors and the Trustee, with the consent
of the Holders of Investor Certificates evidencing not less than
66-2/3% of the aggregate Investor Amount of the Investor Certificates
of all adversely affected Series, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or any Supplement or of modifying in
any manner the rights of the Holders; provided that no such
amendment shall (i) reduce in any manner the amount of or delay the
timing of any distributions to be made to Investor Holders or
deposits of amounts to be so distributed or the amount available
under any Series Enhancement without the consent of each affected
Holder, (ii) change the definition of or the manner of calculating
the interest of any Investor Holder without the consent of each
affected Investor Holder, (iii) reduce the aforesaid percentage
required to consent to any such amendment without the consent of
each Investor Holder or (iv) adversely affect the rating of any
Series or Class by each Rating Agency without the consent of the
Holders of Investor Certificates of such Series or Class evidencing
not less than 66-2/3% of the aggregate Investor Amount of the Investor
Certificates of such Series or Class. Any amendment to be effected
pursuant to this paragraph shall be deemed not to adversely affect
any outstanding Series with respect to which the Transferors shall
deliver an Opinion of Counsel, addressed and delivered to the
Trustee, that such action will not, in such counsel's reasonable
opinion, have an Adverse Effect with respect to such Series. The
Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's rights, duties or immunities
under this Agreement or otherwise.
(c) Promptly after the execution of any such amendment or
consent (other than an amendment pursuant to paragraph (a)), the
Trustee shall furnish notification of the substance of such
amendment to each Investor Holder, and the Servicer shall furnish
notification of the substance of such amendment to each Rating
Agency.
(d) It shall not be necessary for the consent of Investor
Holders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization of the execution
thereof by Investor Holders shall be subject to such reasonable
requirements as the Trustee may prescribe.
(e) Any Supplement executed in accordance with the provisions
of subsection 6.03(b) shall not be considered an amendment to this
Agreement for the purposes of this Section. Any instrument relating
to the designation of an Additional Transferor or other transaction
contemplated by Section 2.12 or to the addition of a Participation
Interest to the Trust Assets shall be considered an amendment only
to the extent that such instrument actually amends this Agreement.
(f) The Holders of Investor Certificates evidencing more than
66-2/3% of the aggregate Investor Amount of the Investor Certificates
of each Series, or with respect to any Series with two or more
Classes, of each Class (or with respect to any default that does
not relate to all Series, 66-2/3% of the unpaid principal amount of
the Investor Certificates of all Series to which such default
relates or, with respect to any such Series with two or more
Classes, of each Class) may, on behalf of all Holders, waive any
default by the Transferors or the Servicer in the performance of
their obligations hereunder and its consequences, except the
failure to make any distributions required to be made to Investor
Holders or to make any required deposits of any amounts to be so
distributed. Upon any such waiver of a past default, such default
shall cease to exist, and any default arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement.
No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly
so waived.
SECTION 13.02. Protection of Right, Title and Interest to
Trust. (a) The Servicer shall cause this Agreement, all amendments
and supplements hereto and all financing statements and
continuation statements and any other necessary documents covering
the Holders' and the Trustee's right, title and interest to the
Trust to be promptly recorded, registered and filed, and at all
times to be kept recorded, registered and filed, all in such manner
and in such places as may be required by law fully to preserve and
protect the right, title and interest of the Holders and the
Trustee hereunder to all property comprising the Trust. The
Servicer shall deliver to the Trustee file-stamped copies of, or
filing receipts for, any document recorded, registered or filed as
provided above, as soon as available following such recording,
registration or filing. The Transferors shall cooperate fully with
the Servicer in connection with the obligations set forth above,
and the Transferors and the Servicer will execute any and all
documents, and take any and all other acts, reasonably required to
fulfill the intent of this Agreement.
(b) Within 30 days after any of the Transferors makes any
change in its name, identity or corporate structure which would
make any financing statement or continuation statement filed in
accordance with paragraph (a) seriously misleading within the
meaning of Section 9-402(7) (or any comparable provision) of the
UCC, such Transferor shall give the Trustee notice of any such
change and shall file such financing statements or amendments as
may be necessary to continue the perfection of the Trust's security
interest in the Receivables and the proceeds thereof. The Trustee
shall give each Transferor and the Servicer prompt notice of any
change in the name of the Trustee or any change in the Trustee's
address as shown on any financing statement filed in connection
with the transactions contemplated by this Agreement or any
Supplement if the address so shown ceases to be an address from
which information concerning the Trustee's (on behalf of the Trust)
security interest or ownership interest in the Receivables and the
proceeds thereof can be obtained. The Transferors shall file such
financing statements or amendments as may be necessary to continue
the perfection of the Trust's security interest or ownership
interest in the Receivables and the proceeds thereof.
(c) Each Transferor and the Servicer will give the Trustee
prompt notice of any relocation of its principal executive office
and whether, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any
new financing statement and shall file such financing statements or
amendments as may be necessary to perfect or to continue the
perfection of the Trust's security interest in the Receivables and
the proceeds thereof. Each Transferor and the Servicer will at all
times maintain its principal executive office within the United
States.
(d) The Servicer will deliver to the Trustee: (i) upon the
execution and delivery of each amendment of this Agreement or any
Supplement, an Opinion of Counsel to the effect specified in
Exhibit G-1; (ii) on each Addition Date on which any Additional
Accounts (other than Automatic Additional Accounts) are to be
designated as Accounts pursuant to subsection 2.08(a) or (b) and on
each date specified in subsection 2.08(d) with respect to the
designation of Automatic Additional Accounts as Accounts, an
Opinion of Counsel substantially in the form of Exhibit G-2, and on
each Addition Date on which any Participation Interests are to be
included in the Trust pursuant to subsection 2.08(a) or (b), an
Opinion of Counsel covering the same substantive legal issues
addressed by Exhibit G-2 but conformed to the extent appropriate to
relate to Participation Interests; and (iii) on or before March 31
of each year, beginning with March 31, 1998, an Opinion of Counsel
substantially in the form of Exhibit G-2.
SECTION 13.03. Limitation on Rights of Holders. (a) The death
or incapacity of any Holder shall not operate to terminate this
Agreement or the Trust, nor shall such death or incapacity entitle
such Holders' legal representatives or heirs to claim an accounting
or to take any action or commence any proceeding in any court for
a partition or winding up of the Trust, nor otherwise affect the
rights, obligations and liabilities of the parties hereto or any of
them.
(b) No Investor Holder shall have any right to vote (except
as expressly provided in this Agreement) or in any manner otherwise
control the operation and management of the Trust, or the
obligations of the parties hereto, nor shall anything herein set
forth, or contained in the Certificates, be construed so as to
constitute the Investor Holders from time to time as partners or
members of an association, nor shall any Investor Holder be under
any liability to any third person by reason of any action taken by
the parties to this Agreement pursuant to any provision hereof.
(c) No Investor Holder shall have any right by virtue 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, unless such Investor Holder previously shall have
made, and unless the Holders of Investor Certificates evidencing
more than 50% of the Aggregate Investor Amount (or, with respect to
any such action, suit or proceeding that does not relate to all
Series, 50% of the Aggregate Investor Amount of all Series to which
such action, suit or proceeding relates) shall have made, a request
to the Trustee to institute such action, suit or proceeding in its
own name as Trustee hereunder and shall have offered to the Trustee
such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after such request and offer of indemnity,
shall have neglected or refused to institute any such action, suit
or proceeding; it being understood and intended, and being
expressly covenanted by each Investor Holder with every other
Investor Holder and the Trustee, that no one or more Investor
Holders 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 Investor Certificates, or to obtain or seek to obtain
priority over or preference to any other such Investor Holder, or
to enforce any right under this Agreement, except in the manner
herein provided and for the equal, ratable and common benefit of
all Investor Holders except as otherwise expressly provided in this
Agreement. For the protection and enforcement of the provisions of
this Section, each and every Investor Holder and the Trustee shall
be entitled to such relief as can be given either at law or in
equity.
SECTION 13.04. GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 13.05. Notices; Payments. (a) All demands, notices,
instructions, directions and communications (collectively,
"Notices") under this Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered at, mailed
by registered mail, return receipt requested, or sent by facsimile
transmission (i) in the case of the Transferors or the Servicer, to
Advanta National Bank USA, Five Horsham Business Center, 300 Welsh
Road, Horsham, Pennsylvania 19044, Attn: General Counsel (facsimile
no. (215) 657-3610), (ii) in the case of the Trustee, to the
Corporate Trust Office (facsimile no. (212) 815-5999), (iii) in the
case of Moody's, to 99 Church Street, New York, New York 10007,
Attn: ABS Monitoring Department, 4th Floor (facsimile no. 212-553-
4600), (iv) in the case of Standard & Poor's, to 26 Broadway, New
York, New York 10004, Attn: Asset Backed Group, 15th Floor
(facsimile no. 212-412-0323), (v) in the case of the Paying Agent
or the Transfer Agent and Registrar, to the Corporate Trust Office,
New York, New York 10006, Attn:_________________________________
(facsimile no. (212) ________) and (vi) to any other Person as
specified in any Supplement; or, as to each party, at such other
address or facsimile number 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 Holder
of Registered Certificates shall be given by first-class mail,
postage prepaid, at the address of such Holder as shown in the
Certificate Register. No Notice shall be required to be mailed to
a Holder of Bearer Certificates or Coupons but shall be given as
provided below. Any Notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly
given, whether or not the Investor Holder receives such Notice. In
addition, (i) if and so long as any Series or Class is listed on
the Luxembourg Stock Exchange and such Exchange shall so require,
any Notice to Investor Holders shall be published in an Authorized
Newspaper of general circulation in Luxembourg within the time
period prescribed in this Agreement and (ii) in the case of any
Series or Class with respect to which any Bearer Certificates are
outstanding, any Notice required or permitted to be given to
Investor Holders of such Series or Class shall be published in an
Authorized Newspaper within the time period prescribed in this
Agreement.
(c) All Notices to be made to the Transferors shall be deemed
given if one Notice is provided to the address of ANB. All payments
hereunder to any Transferor or Servicer shall be made to such
account as such Transferor or Servicer may specify in writing. All
payments hereunder to the Transferors shall be deemed made if made
to the account of ANB as provided above.
SECTION 13.06. Rule 144A Information. For so long as any of
the Investor Certificates of any Series or Class are "restricted
securities" within the meaning of Rule 144(a)(3) under the Act,
each of the Transferors, the Trustee, the Servicer and any Series
Enhancer agree to cooperate with each other to provide to any
Investor Holders of such Series or Class and to any prospective
purchaser of Certificates designated by such an Investor Holder,
upon the request of such Investor Holder or prospective purchaser,
any information required to be provided to such holder or
prospective purchaser to satisfy the condition set forth in Rule
144A(d)(4) under the Act.
SECTION 13.07. Severability of Provisions. If any provisions
of this Agreement shall be held invalid, then such provisions shall
be deemed severable from the remaining provisions of this Agreement
and shall in no way affect the validity or enforceability of the
remaining provisions or of the Certificates or the rights of the
Holders.
SECTION 13.08. Certificates Nonassessable and Fully Paid. It
is the intention of the parties to this Agreement that the Holders
shall not be personally liable for obligations of the Trust, that
the interests in the Trust represented by the Certificates shall be
nonassessable for any losses or expenses of the Trust or for any
reason whatsoever and that Certificates upon authentication thereof
by the Trustee pursuant to Section 6.02 are and shall be deemed
fully paid.
SECTION 13.09. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, the Servicer, the Trustee, each
Transferor, each Series Enhancer and each Holder of a Transferor
Certificate shall not, prior to the date which is one year and one
day after the termination of this Agreement with respect to the
Trust, acquiesce, petition or otherwise invoke or cause the Trust
to invoke the process of any Governmental Authority for the purpose
of commencing or sustaining a case against the Trust under any
Federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Trust or any
substantial part of its property or ordering the winding-up or
liquidation of the affairs of the Trust.
SECTION 13.10. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Trustee or
the Holders, any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege under
this Agreement preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges provided under this
Agreement are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by law.
SECTION 13.11. Counterparts. This Agreement may be executed in
two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which
together shall constitute one and the same instrument.
SECTION 13.12. Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Holders,
any Series Enhancer (to the extent provided in this Agreement and
the related Supplement) and their respective successors and
permitted assigns. Except as otherwise expressly provided in this
Agreement, no other Person will have any right or obligation
hereunder.
SECTION 13.13. Actions by Holders. (a) Wherever in this
Agreement a provision is made that an action may be taken or a
Notice given by Holders, such action or Notice may be taken or
given by any Holder, unless such provision requires a specific
percentage of Holders.
(b) Any Notice, request, authorization, direction, consent,
waiver or other act by the Holder of a Certificate shall bind such
Holder and every subsequent Holder of such Certificate and of any
Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done or
omitted to be done by the Trustee or the Servicer in reliance
thereon, whether or not notation of such action is made upon such
Certificate.
SECTION 13.14. Merger and Integration. Except as specifically
stated otherwise herein, this Agreement sets forth the entire
understanding of the parties relating to the subject matter hereof,
and all prior understandings, written or oral, are superseded by
this Agreement.
IN WITNESS WHEREOF, the Transferors, the Servicer and the
Trustee have caused this Agreement to be duly executed by their
respective officers as of the day and year first above written.
ADVANTA NATIONAL BANK, as
Servicer and Transferor
by ____________________________
Name: _________________
Title: ________________
THE BANK OF NEW YORK,
Trustee
by _____________________________
Name:
Title:
<PAGE>
Exhibit 4.2
ADVANTA NATIONAL BANK
Transferor and Servicer
and
THE BANK OF NEW YORK
Trustee
on behalf of the Series 1996-X Holders
SERIES 1996-X SUPPLEMENT
Dated as of __________, 1996
to
POOLING AND SERVICING AGREEMENT
Dated as of __________, 1996,
___________________________________
SERIES 1996-X
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
CREATION OF THE SERIES 1996-X CERTIFICATES
SECTION 1.1. Designation......................................... 1
SECTION 1.2. Book-Entry Certificates............................. 2
ARTICLE II
DEFINITIONS
SECTION 2.1. Definitions......................................... 2
ARTICLE III
SERVICING COMPENSATION
SECTION 3.1. Servicing Compensation.............................. 12
ARTICLE IV
RIGHTS OF SERIES 1996-X HOLDERS;
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.1. Collections and Allocations......................... 13
SECTION 4.2. Determination of Monthly Interest and Accretions.... 15
SECTION 4.3. Determination of Monthly Principal.................. 17
SECTION 4.4. Required Amount..................................... 18
SECTION 4.5. Monthly Application of Collections.................. 18
SECTION 4.6. Default Amounts; Investor Charge-Offs............... 20
SECTION 4.7. Excess Spread and Certain Other Amounts............. 21
SECTION 4.8. Cash Collateral Account............................. 22
SECTION 4.9. Shared Principal Collections........................ 24
SECTION 4.10. Principal Funding Account........................... 25
SECTION 4.11. Controlled Accumulation Period...................... 26
ARTICLE V
DISTRIBUTIONS AND REPORTS TO SERIES 1996-X HOLDERS
SECTION 5.1. Distributions....................................... 27
SECTION 5.2. Certificates and Statements......................... 28
ARTICLE VI
SERIES 1996-X PAY OUT EVENTS
SECTION 6.1. Series 1996-X Pay Out Events........................ 29
ARTICLE VII
OPTIONAL REPURCHASE; SERIES TERMINATION
SECTION 7.1. Optional Repurchase................................. 30
SECTION 7.2. Series Termination.................................. 31
ARTICLE VIII
FINAL DISTRIBUTIONS
SECTION 8.1. Sale of Receivables or Investor Interest Pursuant to
Section 2.06 or 12.05 of the Agreement......... 31
SECTION 8.2. Distribution of Proceeds of Sale, Disposition or
Liquidation of the Receivables Pursuant to
Section 9.02 of the Agreement.................. 32
SECTION 8.3. Instructions Pursuant to Subsection 9.02(a) of
the Agreement.................................. 33
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1. Ratification of Agreement........................... 34
SECTION 9.2. Counterparts........................................ 34
SECTION 9.3. Governing Law....................................... 34
SECTION 9.4. Amendments.......................................... 34
SECTION 9.5 Tax Representation and Covenant..................... 34
<PAGE>
<PAGE>
SERIES 1996-X SUPPLEMENT, dated as of ___________, 1996 (this
"Supplement"), between ADVANTA NATIONAL BANK, a national banking
association, as the sole initial Transferor and as Servicer, and THE BANK
OF NEW YORK, a New York banking corporation, as Trustee.
Pursuant to the Pooling and Servicing Agreement dated as of
________, 1996 (as amended and supplemented in accordance with its terms,
the "Agreement"), among the parties to this Supplement, the Transferor
has created the Advanta Gold Master Trust (the "Trust"). Section 6.03 of
the Agreement provides that the Transferor may from time to time direct
the Trustee to authenticate one or more new Series of Investor
Certificates representing interests in the Trust. The Principal Terms of
any new Series are to be set forth in a Supplement to the Agreement.
Pursuant to this Supplement, the Transferor and the Trustee shall
create a new Series of Investor Certificates and specify the Principal
Terms thereof.
ARTICLE I CREATION OF THE SERIES 1996-X CERTIFICATES
SECTION 1.1. Designation. (a) There is hereby created a Series of
Investor Certificates to be issued pursuant to the Agreement and this
Supplement to be known as "Advanta Gold Master Trust, Series 1996-X." The
Series 1996-X Certificates shall be issued with one Class, known as the
"Class A Zero Coupon Asset Backed Certificates, Series 1996-X." In
addition, there is hereby created a second Class which constitutes an
uncertificated interest in the Trust, shall be deemed to be an "Investor
Certificate" for all purposes under the Agreement and this Supplement,
except as expressly provided herein, and shall be known as the "Discount
Collateral Interest, Series 1996-X" and have the rights assigned to the
Discount Collateral Interest in this Series Supplement. Solely for the
purposes of subsection 9.02(a) of the Agreement, the holders of interests
in the Cash Collateral Account shall also be deemed to be a Class. The
institution making the initial deposit to the Cash Collateral Account is
a Series Enhancer for Series 1996-X, but the Discount Collateral Interest
Holders are not.
(b) Series 1996-X shall be included in Group One. Series 1996-X
shall not be subordinated to any other Series. The first Distribution
Date for Series 1996-X shall be the __________ Distribution Date, and
references herein to the Monthly Period relating to that Distribution
Date means the period from the Closing Date through the end of
__________.
(c) If any term of this Supplement shall conflict with or be
inconsistent with any term of the Agreement, the terms of this Supplement
shall govern.
SECTION 1.2. Book-Entry Certificates. The Class A Certificates shall
be delivered as Book-Entry Certificates. The Clearing Agency for the
Class A Certificates shall be The Depository Trust Company, and the Class
A Certificates shall initially be registered in the name of Cede & Co.,
its nominee.
ARTICLE II DEFINITIONS
SECTION 2.1. Definitions. (a) Capitalized terms used and not
otherwise defined herein are used as defined in the Agreement. In
addition, the following words and phrases shall have the following
meanings:
"Accretion Required Amount" is defined in subsection 4.2(c).
"Available Cash Collateral Amount" means, for any Distribution Date,
the least of (a) the amount on deposit in the Cash Collateral Account on
such date (before giving effect to any deposit to, or withdrawal from,
the Cash Collateral Account to be made on such date), (b) the Required
Cash Collateral Amount and (c) the Invested Amount as of such date.
"Available Class A Principal Collections" means, for any
Distribution Date, the sum of (a) the Class A Investor Principal
Collections for that Distribution Date, plus (b) any Reallocated
Principal Collections for that Distribution Date, plus (c) any Shared
Principal Collections that are allocated to Series 1996-X pursuant to
Section 4.04 of the Agreement and Section 4.9 of this Supplement.
"Available DCI Principal Collections" means, for any Distribution
Date, the sum of (a) the DCI Investor Principal Collections for that
Distribution Date, minus (b) any Reallocated Principal Collections for
that Distribution Date, plus (c) any Available Class A Principal
Collections remaining after payment or deposit of the Class A Monthly
Principal for that Distribution Date.
"Cash Collateral Account" is defined in subsection 4.8(a).
"Cash Collateral Surplus" means, for any Distribution Date, the
excess, if any, of (a) the amount on deposit in the Cash Collateral
Account over (b) the Required Cash Collateral Amount.
"Class A Accreted Invested Amount" means, as of any date falling in
any Monthly Period, the sum of (a) the Class A Initial Invested Amount
and (b) the sum of all Class A Monthly Accretion Amounts for the
Distribution Date falling in that Monthly Period and all prior
Distribution Dates.
"Class A Accretion Rate" means __% per annum, calculated on the
basis of a 360-day year of twelve 30-day months.
"Class A Accretion Shortfall" is defined in subsection 4.2(a).
"Class A Accretion Target" is defined in subsection 4.2(a).
"Class A Additional Accretion Amount" is defined in subsection
4.2(a).
"Class A Available Funds" means, for any Monthly Period, the Class A
Floating Percentage of the Collections of Finance Charge Receivables
allocated to the Series 1996-X Certificates for that Monthly Period
(including any other amounts that are to be treated as Collections of
Finance Charge Receivables in accordance with the Agreement).
"Class A Certificate" means a Certificate executed by ANB and
authenticated by or on behalf of the Trustee substantially in the form of
Exhibit A.
"Class A Face Amount" means $_____________. [Expected Class A
Accreted Invested Amount on the Expected Final Distribution Date.]
"Class A Floating Percentage" means, for any Monthly Period, the
percentage equivalent of a fraction, the numerator of which is the Class
A Invested Amount and the denominator of which is the Invested Amount,
in each case as of the opening of business on the first day of that
Monthly Period; provided that for the first Monthly Period, the Class A
Floating Percentage means the percentage equivalent of a fraction, the
numerator of which is the Class A Initial Invested Amount and the
denominator of which is the Initial Invested Amount.
"Class A Initial Invested Amount" means $__________. [To equal the
aggregate purchase price to investors in the initial distribution of the
Class A Certificates, with no deduction for underwriting discounts.]
"Class A Invested Amount" means, on any date of determination, the
result of (a) the Class A Accreted Invested Amount, minus (b) (without
duplication of amounts on deposit in the Principal Funding Account) the
aggregate amount of principal payments made to the Holders on or prior to
such date, minus (c) the excess, if any, of the aggregate amount of Class
A Investor Charge-Offs for all prior Distribution Dates over the
aggregate amount of Class A Investor Charge-Offs reimbursed pursuant to
subsection 4.6(a) prior to such date, minus (d) the Principal Funding
Account Balance.
"Class A Investor Amount" means, on any date of determination, an
amount equal to the Class A Invested Amount plus the Principal Funding
Account Balance on such date of determination.
"Class A Investor Charge-Off" is defined in subsection 4.6(a).
"Class A Investor Default Amount" means, for each Distribution Date,
the product of (a) the Investor Default Amount for that Distribution Date
and (b) the Class A Floating Percentage for the related Monthly Period.
"Class A Investor Principal Collections" means, for any Distribution
Date, the sum of (a) the aggregate amounts allocated pursuant to Section
4.1(a)(ii)(x) or deposited and retained in the Collection Account
pursuant to Section 4.1(b)(ii) or (c)(ii), as applicable, with respect to
the related Monthly Period, plus (b) any amounts that pursuant to
subsections 4.5(a)(ii), 4.7(b) and 4.7(g) are to be treated as Class A
Investor Principal Collections for that Distribution Date.
"Class A Monthly Accretion Amount" means, for any Distribution Date,
an amount equal to the Class A Accretion Target for that Distribution
Date, minus the amount, if any, by which any Accretion Required Amount
for that Distribution Date exceeded the Discount Collateral Interest at
the beginning of that Distribution Date.
"Class A Monthly Interest" is defined in subsection 4.2(a).
"Class A Monthly Principal" is defined in subsection 4.3(a).
"Class A Principal Percentage" means, for any Monthly Period, (the
"subject Monthly Period") and the related Distribution Date, (a) during
the Revolving Period, the Class A Floating Percentage and (b) during the
Rapid Amortization Period or the Controlled Accumulation Period, the
percentage equivalent of a fraction, (i) the numerator of which is the
Class A Invested Amount as of the last day of the Revolving Period plus
the aggregate amount of decreases in the Discount Collateral Interest
occurring after that date pursuant to subsection 4.2(c) (including any
such decrease occurring on the Distribution Date in the Monthly Period
for which the Class A Principal Percentage is being determined) and (ii)
the denominator of which is the Invested Amount as of the last day of the
Revolving Period; provided that if Series 1996-X is paired with another
Series and a Pay Out Event (as defined in the related Supplement) occurs
with respect to such other Series, Transferor may, by written notice
delivered to Trustee and Servicer, designate a different numerator
(provided that such numerator is not less than the Class A Invested
Amount (less the amount of Class A Investor Principal Collections on
deposit in the Collection Account) as of the last day of the revolving
period for such other Series).
"Class A Required Amount" is defined in subsection 4.4(a).
"Class A Servicing Fee" is defined in Section 3.1.
"Closing Date" means __________ ____, ____.
"Controlled Accumulation Amount" means, for each Distribution Date
with respect to the Controlled Accumulation Period, the Class A Face
Amount divided by twelve; provided that if the length of the Controlled
Accumulation Period is modified pursuant to Section 4.11, (a) the
Controlled Accumulation Amount for each Distribution Date with respect to
the Controlled Accumulation Period shall mean the amount determined in
accordance with Section 4.11 on the date on which the Controlled
Accumulation Period has most recently been modified and (b) the sum of
the Controlled Accumulation Amounts for all Distribution Dates with
respect to the modified Controlled Accumulation Period shall not be less
than the Class A Face Amount.
"Controlled Accumulation Period" means the period beginning on
__________ __, ____ or such later date as is determined in accordance
with Section 4.11 and ending on the first to occur of (a) the beginning
of the Rapid Amortization Period, (b) the payment in full of the Invested
Amount and (c) the Series Termination Date; provided that if the Rapid
Amortization Period begins before the scheduled beginning of the
Controlled Accumulation Period, then there will be no Controlled
Accumulation Period.
"Controlled Deposit Amount" means, for each Distribution Date in the
Controlled Accumulation Period (beginning with the one relating to the
first Monthly Period in the Controlled Accumulation Period), the sum of
(a) the Controlled Accumulation Amount for that Distribution Date plus
(b) the excess, if any, of the Controlled Deposit Amount for the prior
Distribution Date over the amount deposited in the Principal Funding
Account on that prior Distribution Date.
"DCI Accreted Amount" means, as of any date falling in any Monthly
Period, the sum of (a) the DCI Initial Amount and (b) the sum of all DCI
Monthly Accretion Amounts for the Distribution Date falling in that
Monthly Period and all prior Distribution Dates.
"DCI Accretion Shortfall" is defined in subsection 4.2(b).
"DCI Accretion Target" is defined in subsection 4.2(b).
"DCI Additional Accretion Amount" is defined in subsection 4.2(b).
"DCI Available Funds" means, for any Monthly Period, the DCI
Floating Percentage of the Collections of Finance Charge Receivables
allocated to the Series 1996-X Certificates for that Monthly Period
(including any other amounts that are to be treated as Collections of
Finance Charge Receivables in accordance with the Agreement).
"DCI Floating Percentage" means, for any Monthly Period, 100% minus
the Class A Floating Percentage for that Monthly Period.
"DCI Initial Amount" means $__________.
"DCI Investor Charge-Off" is defined in subsection 4.6(b).
"DCI Investor Default Amount" means, for each Distribution Date, the
product of (a) the Investor Default Amount for that Distribution Date and
(b) the DCI Floating Percentage for such Monthly Period.
"DCI Investor Principal Collections" means, for any Distribution
Date, the sum of (a) the aggregate amounts allocated pursuant to Section
4.1(a)(ii)(y) or deposited and retained in the Collection Account
pursuant to Section 4.1(b)(iii) or (c)(iii), as applicable, with respect
to the related Monthly Period, plus (b) any amounts that pursuant to
subsections 4.5(b)(ii), 4.7(d), 4.7(h) and 4.7(i) are to be treated as
DCI Investor Principal Collections for that Distribution Date.
"DCI Monthly Accretion Amount" is defined in subsection 4.2(d).
"DCI Monthly Interest" is defined in subsection 4.2(b).
"DCI Monthly Principal" is defined in subsection 4.3(b).
"DCI Principal Percentage" means, for any Monthly Period and the
related Distribution Date, 100% minus the Class A Principal Percentage
for that Monthly Period and Distribution Date.
"DCI Rate" means ___% per annum, calculated on the basis of a
360-day year of twelve 30-day months.
"DCI Required Amount" is defined in subsection 4.4(b).
"DCI Servicing Fee" is defined in Section 3.1.
"Discount Collateral Interest" (or "DCI") means an interest in the
Trust consisting of the right to receive, to the extent necessary to make
the required payments to the Discount Collateral Interest Holders under
this Supplement, the portion of Collections allocable thereto under the
Agreement and this Supplement, and funds on deposit in the Collection
Account allocable thereto pursuant to the Agreement and this Supplement.
On any date, for purposes of all calculations in the Agreement and this
Supplement, the amount of the Discount Collateral Interest shall equal
(a) the DCI Accreted Amount, minus (b) the aggregate amount of principal
payments made to the Discount Collateral Interest Holders prior to such
date, minus (c) the aggregate amount of DCI Investor Charge-Offs for all
prior Distribution Dates pursuant to subsection 4.6(b), minus (d) the
amount of reductions to the Discount Collateral Interest pursuant to
subsection 4.2(c) on all prior Distribution Dates, and plus (e) the
aggregate amount of Excess Spread and Excess Finance Charge Collections
allocated and available on all prior Distribution Dates pursuant to
subsection 4.7(d) or (i) for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (c) and (d); provided that the Discount
Collateral Interest may not be reduced below zero.
"Discount Collateral Interest Holder" means any Person in whose name
all or any part of the Discount Collateral Interest is registered in the
Certificate Register.
"Excess Discount Collateral Interest" means, as of any Distribution
Date, the excess, if any, of (a) the Discount Collateral Interest on that
Distribution Date (after giving effect to any reductions thereof pursuant
to subsection 4.2(c) but before giving effect to the payment of any DCI
Monthly Principal on that Distribution Date) over (b) the Required
Discount Collateral Interest on that Distribution Date (after giving
effect to any payment of Class A Monthly Principal on that Distribution
Date).
"Excess Spread" means, with respect to any Distribution Date, the
sum of the amounts, if any, specified pursuant to subsections 4.5(a)(iii)
and 4.5(b)(iii) with respect to such Distribution Date.
"Expected Final Distribution Date" means the __________ Distribution
Date.
"Finance Charge Shortfall" is defined, for purposes of Series
1996-X, in Section 4.7.
"Floating Allocation Percentage" means, for any Monthly Period, the
percentage equivalent of a fraction, the numerator of which is the
Invested Amount as of the opening of business on the first day of that
Monthly Period (or for the first Monthly Period, the Initial Invested
Amount) and the denominator of which is the greater of (a) the Trust
Principal Balance at the end of the prior day (or for the first Monthly
Period, at the end of the day on the Closing Date) and (b) the sum of the
numerators used to calculate the Series Percentages with respect to
Finance Charge Receivables, Defaulted Receivables or Principal
Receivables, as applicable, for all Series of Certificates then
outstanding; provided that if one or more Reset Dates occur in a Monthly
Period, then (x) the Floating Allocation Percentage for the portion of
the Monthly Period falling after each such Reset Date (the "subject Reset
Date") and on or prior to the earlier of the last day of the current
Monthly Period and any subsequent Reset Date shall be determined using a
denominator equal to the greater of the amounts specified in clause (a)
and clause (b) above determined as of the subject Reset Date and (y) if
the Servicer need not make daily deposits of Collections into the
Collection Account (or, in any case, for purposes of determining the
related Investor Default Amount), the Floating Allocation Percentage
shall be the Weighted Average Floating Allocation Percentage.
"Group One" means Series 1996-X and each other Series hereafter
specified in the related Supplement to be included in Group One.
"Holder" means a Person in whose name a Class A Certificate is
registered in the Certificate Register.
"Initial Invested Amount" means the sum of the Class A Initial
Invested Amount and the DCI Initial Amount.
"Interchange" means, for each Distribution Date, an amount of
Interchange (as defined in the Agreement) equal to one-twelfth of [1.25%]
of the Principal Allocation Percentage for the related Monthly Period of
the outstanding balance of the Principal Receivables on the last day of
that Monthly Period.
"Invested Amount" means, on any date of determination, an amount
equal to the sum of (a) the Class A Invested Amount and (b) the Discount
Collateral Interest.
"Investor Amount" means, as of any date of determination, the sum on
that date of (a) the Class A Investor Amount and (b) the Discount
Collateral Interest.
"Investor Default Amount" means, for any Distribution Date, the
product of the Defaulted Amount and the Floating Allocation Percentage
for the related Monthly Period.
"Investor Principal Collections" means, for any Distribution Date,
the collective reference to the Class A Investor Principal Collections
and the DCI Investor Principal Collections for that Distribution Date.
"Loan Agreement" means the Loan Agreement among the Transferors, the
Servicer, the Trustee and the financial institution(s) identified
therein, dated the date hereof, as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Monthly Servicing Fee" is defined in Section 3.1.
"Net Servicing Fee Rate" means (a) if ANB is the Servicer, 0.5% per
annum, (b) if the Trustee is the Servicer, [1]% per annum and (c)
otherwise, 2.0% per annum.
"Outstanding Principal Amount" means, on any date of determination,
with respect to the Class A Certificates, the Class A Accreted Invested
Amount minus the aggregate amount of principal payments made to the
Holders on or prior to such date.
"Pay Out Event" means a Trust Pay Out Event or a Series 1996-X Pay
Out Event.
"Principal Allocation Percentage" means, as to any Monthly Period:
(a) during the Revolving Period, the Floating Allocation Percentage;
and
(b) during the Controlled Accumulation Period or the Rapid
Amortization Period, the percentage equivalent of a fraction, the
numerator of which is the Invested Amount as of the last day of the
Revolving Period and the denominator of which is the greater of (i) the
Trust Principal Balance at the end of the last day of the preceding
Monthly Period and (ii) the sum of the numerators used to calculate the
Series Percentages with respect to Principal Receivables for all Series
of Certificates then outstanding; provided that (1) if one or more Reset
Dates occur in a Monthly Period, then (x) the Principal Allocation
Percentage for the portion of the Monthly Period falling after each such
Reset Date (the "subject Reset Date") and on or prior to the earlier of
the last day of the current Monthly Period and any subsequent Reset Date
shall be determined using a denominator equal to the greater of the
amounts specified in clause (i) and clause (ii), determined as of the
subject Reset Date and (y) if the Servicer need not make daily deposits
of Collections into the Collection Account, the Principal Allocation
Percentage shall be the Weighted Average Principal Allocation Percentage
and (2) if Series 1996-X is paired with another Series and a Pay Out
Event (as defined in the related Supplement) occurs with respect to such
other Series during the Controlled Accumulation Period or the Rapid
Amortization Period, Transferor may, by written notice delivered to
Trustee and Servicer, designate a different numerator (provided that such
numerator is not less than the Invested Amount (less the amount of Class
A Investor Principal Collections on deposit in the Collection Account) as
of the last day of the revolving period for such other Series).
"Principal Funding Account" is defined in Section 4.10.
"Principal Funding Account Balance" means, as to any date of
determination, the principal amount, if any, on deposit in the Principal
Funding Account on such date of determination.
"Principal Funding Investment Proceeds" is defined in Section 4.10.
"Principal Shortfall" is defined in Section 4.9.
"Rapid Amortization Period" means, (a) if on the day on which a Pay
Out Event is deemed to have occurred the Servicer need not make daily
deposits into or withdrawals from the Collection Account pursuant to
subsection 4.03(a) of the Agreement, the period commencing at the close
of business on the Business Day immediately preceding the first day of
the Monthly Period in which such Pay Out Event is deemed to have occurred
or (b) otherwise, the period commencing at the close of business on the
Business Day immediately preceding the day on which a Pay Out Event is
deemed to have occurred, and ending on the first to occur of (i) the
payment in full to the Holders and the Discount Collateral Interest
Holders of the Class A Invested Amount and the Discount Collateral
Interest, respectively, or (ii) the Series Termination Date.
"Reallocated Principal Collections" is defined in subsection 4.2(c).
"Reassignment Amount" means, with respect to any Distribution Date,
after giving effect to any deposits and distributions otherwise to be
made on such Distribution Date, the sum of (a) the Invested Amount, (b)
the Class A Accretion Shortfall and (c) the DCI Accretion Shortfall on
such Distribution Date.
"Required Cash Collateral Amount" means, as to any Distribution
Date, (a) initially, $__________ and (b) on any Distribution Date
thereafter, __% of the Invested Amount on such Distribution Date, in each
case after taking into account payments to be made on that Distribution
Date; provided that (x) if either (i) there is a Required Draw Amount on
any Distribution Date or (ii) a Pay Out Event with respect to the
Investor Certificates has occurred, the Required Cash Collateral Amount
for any Transfer Date shall (subject to clauses (y) and (z)) equal the
Required Cash Collateral Amount for the Transfer Date immediately
preceding such Required Draw Amount or Pay Out Event, (y) in no event
shall the Required Cash Collateral Amount exceed the Invested Amount and
(z) the Required Cash Collateral Amount may be reduced at the
Transferor's option at any time to a lesser amount if the Transferor, the
Servicer and the Trustee have been provided evidence that the Rating
Agency Condition has been satisfied.
"Required Discount Collateral Interest" means, as of any day, __% of
the Outstanding Principal Amount of the Class A Certificates; provided
that the Required Discount Collateral Interest may be reduced at the
Transferor's option at any time to a lesser amount if the Transferor, the
Servicer and the Trustee have been provided evidence that the Rating
Agency Condition has been satisfied.
"Required Draw Amount" is defined in subsection 4.8(c).
"Reset Date" means each of (a) an Addition Date, (b) a Removal Date
and (c) a date on which there is an increase in the Investor Interest
under any Variable Interest issued by the Trust.
"Revolving Period" means the period beginning on the Closing Date
and ending at the end of the day preceding the beginning of the
Controlled Accumulation Period or the Rapid Amortization Period
(whichever begins first).
"Series Invested Amount" means the Invested Amount.
"Series Investor Amount" means, as of any date of determination, the
numerator of the Principal Allocation Percentage on such date.
"Series 1996-X" means the Series of Certificates, the terms of which
are specified in this Supplement.
"Series 1996-X Certificate" means a Class A Certificate.
"Series 1996-X Holder" means a Holder or a Discount Collateral
Interest Holder.
"Series 1996-X Pay Out Event" is defined in Section 6.1.
"Series Percentage" means as to Finance Charge Receivables and
Defaulted Receivables, the Floating Allocation Percentage, and as to
Principal Receivables, the Principal Allocation Percentage.
"Series Termination Date" means the earlier to occur of (i) ____ __,
____ and (ii) the termination of the Trust pursuant to Section 12.01 of
the Agreement.
"Servicing Base Amount" is defined in Section 3.1.
"Servicing Fee Rate" means 2.0%.
"Weighted Average Floating Allocation Percentage" means, for any
Monthly Period, the quotient of (a) the summation of the Floating
Allocation Percentage applicable on each day of the Monthly Period
(determined without reference to clause (y) of the proviso to the
definition of "Floating Allocation Percentage"), divided by (b) the
number of days in the Monthly Period.
"Weighted Average Principal Allocation Percentage" means, for any
Monthly Period, the quotient of (a) the summation of the Principal
Allocation Percentage applicable on each day of the Monthly Period
(determined without reference to clause (y) of the proviso to paragraph
(b) of the definition of "Principal Allocation Percentage"), divided by
(b) the number of days in the Monthly Period.
(b) Notwithstanding anything to the contrary in this Supplement or
the Agreement, the term "Rating Agency" means, whenever used in this
Supplement or the Agreement with respect to Series 1996-X, Moody's and
Standard & Poor's.
ARTICLE III SERVICING COMPENSATION
SECTION 3.1. Servicing Compensation. The share of the Servicing Fee
allocable to the Series 1996-X Holders for any Distribution Date (the
"Monthly Servicing Fee"), shall equal one-twelfth of the product of (i)
the Servicing Fee Rate and (ii) the Invested Amount as of the last day of
the Monthly Period preceding such Distribution Date (the "Servicing Base
Amount"); provided that the Monthly Servicing Fee for the initial
Distribution Date shall be $__________.
On each Transfer Date for which ANB or the Trustee is the Servicer,
a portion of Interchange with respect to the related Monthly Period that
is on deposit in the Collection Account in an amount equal to one-twelfth
of the product of 1.0% and the Servicing Base Amount ("Servicer
Interchange") shall be withdrawn from the Collection Account and paid to
Servicer in payment of a portion of the Monthly Servicing Fee with
respect to such Monthly Period. Should the Interchange on deposit in the
Collection Account on any Transfer Date with respect to the related
Monthly Period be less than one-twelfth of 1% of the Servicing Base
Amount, the Monthly Servicing Fee with respect to such Monthly Period
will not be paid to the extent of such insufficiency of Interchange on
deposit in the Collection Account. The Servicer Interchange with respect
to the first Transfer Date shall equal $__________.
The share of the Monthly Servicing Fee for any Distribution Date
allocable to the Holders (the "Class A Servicing Fee") and the Discount
Collateral Interest Holders (the "DCI Servicing Fee"), respectively,
shall equal one-twelfth of the product of (a) the Class A Floating
Percentage or the DCI Floating Percentage, respectively, (b) the Net
Servicing Fee Rate and (c) the Servicing Base Amount; provided that the
Class A Servicing Fee and DCI Servicing Fee for the initial Distribution
Date shall be $__________ and $__________, respectively. The remainder of
the Servicing Fee shall be paid by the Holders of the Transferor
Certificates or the Holders of other Series (as provided in the related
Supplements) and in no event shall the Trust, the Trustee, the Series
1996-X Holders or the Series Enhancer be liable for the share of the
Servicing Fee to be paid by the Holders of the Transferor Certificates or
the Holders of any other Series. The Class A Servicing Fee shall be
payable to the Servicer solely to the extent amounts are available for
distribution in respect thereof pursuant to subsections 4.5(a)(i), 4.7(a)
and 4.8(c); and the DCI Servicing Fee shall be payable solely to the
extent amounts are available for distribution in respect thereof pursuant
to subsections 4.5(b)(i), 4.7(c) and 4.8(c).
ARTICLE IV RIGHTS OF SERIES 1996-X HOLDERS; ALLOCATION AND
APPLICATION OF COLLECTIONS
SECTION 4.1. Collections and Allocations. On each Business Day, the
applicable Series Percentage of Collections of Finance Charge Receivables
and Principal Receivables shall be allocated to the Series 1996-X
Certificates pursuant to subsection 4.03(b) of the Agreement. The
Servicer will apply, or will instruct the Trustee to apply, all
Collections so allocated and other funds on deposit in the Collection
Account that are allocated to the Series 1996-X Certificates as follows:
(a) Allocations During the Revolving Period. Collections allocated
to Series 1996-X on each Business Day during the Revolving Period shall
be allocated as follows:
(i) Collections of Finance Charge Receivables that are so
allocated shall be deposited and retained in the Collection Account
until such time as the aggregate amount of such deposits for the
related Monthly Period equals (A) if ANB is the Servicer, zero, and
(B) if ANB is not the Servicer, the sum of the Class A Servicing Fee
and DCI Servicing Fee for the related Distribution Date; and
(ii) (x) the Class A Principal Percentage of Collections of
Principal Receivables shall be allocated as Class A Investor
Principal Collections and (y) the DCI Principal Percentage of
Collections of Principal Receivables shall be allocated as DCI
Investor Principal Collections and the aggregate amount so allocated
shall not exceed an amount selected by the Servicer.
(b) Allocations During the Controlled Accumulation Period.
Collections allocated to Series 1996-X on each Business Day during the
Controlled Accumulation Period shall be deposited or transferred as
follows:
(i) Collections of Finance Charge Receivables that are so
allocated shall be deposited and retained in the Collection Account
until such time as the aggregate amount of such deposits for the
related Monthly Period equals (A) if ANB is the Servicer, zero, and
(B) if ANB is not the Servicer, the sum of the Class A Servicing Fee
and DCI Servicing Fee for the related Distribution Date; and an
amount equal to the balance of the Collections of Finance Charge
Receivables that are so allocated shall be deposited into the
Collection Account on the related Transfer Date to the extent
necessary to make any applications pursuant to Section 4.7 on the
related Distribution Date;
(ii) (A) the Class A Principal Percentage of Collections of
Principal Receivables that are so allocated shall be deposited and
retained in the Collection Account until such time as the aggregate
amount of such deposits for the related Monthly Period equals the
Controlled Deposit Amount for the related Distribution Date; and (B)
the remainder of such Collections shall be applied as provided in
clause (iii); and
(iii) the DCI Principal Percentage of Collections of Principal
Receivables that are so allocated, together with Collections
referred to in clause (ii)(B), shall be deposited into the
Collection Account, but the aggregate amount so deposited shall not
exceed the Class A Accretion Target for the related Distribution
Date (except that on the related Transfer Date an additional portion
of such allocated Collections shall be so deposited in an amount
equal to the least of (A) the Excess Discount Collateral Interest,
(B) the remaining amount of such allocated Collections and (C) prior
to the date on which the Class A Investor Amount is reduced to zero,
an amount selected by the Servicer).
(c) Allocations During the Rapid Amortization Period. Collections
allocated to Series 1996-X on each Business Day during the Rapid
Amortization Period shall be deposited or transferred as follows:
(i) Collections of Finance Charge Receivables that are so
allocated shall be deposited and retained in the Collection Account;
(ii) (A) the Class A Principal Percentage of Collections of
Principal Receivables that are so allocated shall be deposited and
retained in the Collection Account until such time as the aggregate
amount of such deposits for the related Monthly Period equals the
Class A Invested Amount; and (B) the remainder of such Collections
shall be applied as provided in clause (iii); and
(iii) the DCI Principal Percentage of Collections of Principal
Receivables that are so allocated, together with Collections
referred to in clause (ii)(B), shall be deposited into the
Collection Account, but the aggregate amount so deposited shall not
exceed the Class A Accretion Target for the related Distribution
Date (except that on the related Transfer Date an additional portion
of such allocated Collections shall be so deposited in an amount
equal to the least of (A) the Excess Discount Collateral Interest
for the related Distribution Date, (B) the remaining amount of such
allocated Collections and (C) prior to the date on which the Class A
Investor Amount is reduced to zero, an amount selected by the
Servicer).
(d) Monthly Allocations. Notwithstanding the foregoing, the Servicer
need not make daily deposits of Collections into the Collection Account
at any time when the requirements of subsection 4.03 of the Agreement
relating to net monthly deposits are satisfied.
SECTION 4.2. Determination of Monthly Interest and Accretions. (a)
The amount of monthly interest ("Class A Monthly Interest") on the Class
A Certificates on each Distribution Date shall equal one-twelfth of the
product of (i) the Class A Accretion Rate and (ii) the Outstanding
Principal Amount of the Class A Certificates as of the close of business
on the preceding Distribution Date; provided that Class A Monthly
Interest for the initial Distribution Date shall equal $__________.
On each Distribution Date, the Servicer shall determine the excess,
if any (the "Class A Accretion Shortfall"), of (x) the sum of Class A
Monthly Interest for such Distribution Date, any Class A Accretion
Shortfall from the prior Distribution Date and any related Class A
Additional Accretion Amount over (y) the Class A Monthly Accretion Amount
for that Distribution Date. If there is a Class A Accretion Shortfall on
any Distribution Date, an additional amount (a "Class A Additional
Accretion Amount") shall accrete on such shortfall in an amount equal to
one-twelfth of the product of (i) the Class A Accretion Rate and (ii)
such Class A Accretion Shortfall. The sum for any Distribution Date of
the Class A Monthly Interest for that Distribution Date, any Class A
Accretion Shortfall from the prior Distribution Date and any related
Class A Additional Accretion Amount is called the "Class A Accretion
Target" for that Distribution Date.
(b) The amount of monthly interest ("DCI Monthly Interest") on the
Discount Collateral Interest on each Distribution Date shall equal
one-twelfth of the product of (i) the DCI Rate and (ii) the Discount
Collateral Interest as of the close of business on the preceding
Distribution Date; provided that DCI Monthly Interest for the initial
Distribution Date shall equal $__________.
On each Distribution Date, the Servicer shall determine the excess,
if any (the "DCI Accretion Shortfall"), of (x) the sum of DCI Monthly
Interest for such Distribution Date, any DCI Accretion Shortfall from the
prior Distribution Date and any related DCI Additional Accretion Amount
over (y) the DCI Monthly Accretion Amount for that Distribution Date. If
there is a DCI Accretion Shortfall on any Distribution Date, an
additional amount (a "DCI Additional Accretion Amount") shall accrete on
such shortfall in an amount equal to one-twelfth of the product of (i)
the DCI Rate and (ii) such DCI Accretion Shortfall. The sum for any
Distribution Date of the DCI Monthly Interest for that Distribution Date,
any DCI Accretion Shortfall from the prior Distribution Date and any
related DCI Additional Accretion Amount is called the "DCI Accretion
Target" for that Distribution Date.
(c) On each Distribution Date, the Servicer shall determine the
amount (the "Accretion Required Amount"), if any, by which (i) the Class
A Accretion Target for that Distribution Date exceeds (ii) the amount of
Excess Spread, Principal Funding Investment Proceeds and Excess Finance
Charge Collections allocable to Series 1996-X, in each case that is
available for distribution under subsection 4.7(g) on that Distribution
Date. If the Accretion Required Amount for such Distribution Date is
greater than zero, then: (i) on any Distribution Date falling in the
Controlled Accumulation Period or the Rapid Amortization Period, a
portion of the DCI Investor Principal Collections in an amount equal to
the Accretion Required Amount, or, if less, the total amount of DCI
Investor Principal Collections on that Distribution Date (the
"Reallocated Principal Collections"), shall be applied to cover the
Accretion Required Amount pursuant to Section 4.7; and (ii) on any
Distribution Date, the Discount Collateral Interest shall be reduced by
an amount equal to the lesser of (A) the Accretion Required Amount and
(B) the Discount Collateral Interest (after giving effect to any DCI
Investor Charge-Offs on that Distribution Date) whether or not the
Accretion Required Amount is covered, in full or in part, by Reallocated
Principal Collections.
(d) In addition, on each Distribution Date, DCI Accreted Amount
shall be increased by an amount (the "DCI Monthly Accretion Amount")
equal to the lesser of (i) the DCI Accretion Target and (ii) the amount
of Excess Spread and Excess Finance Charge Collections allocable to
Series 1996-X, in each case that is available for distribution under
subsection 4.7(h) on that Distribution Date.
SECTION 4.3. Determination of Monthly Principal. (a) The amount of
principal ("Class A Monthly Principal") to be withdrawn from the
Collection Account with respect to the Class A Certificates on each
Distribution Date, beginning with the Distribution Date in the second
Monthly Period falling in the Controlled Accumulation Period or the Rapid
Amortization Period (whichever begins first), shall equal the least of
(i) the Available Class A Principal Collections for that Distribution
Date, (ii) for each Distribution Date in the Controlled Accumulation
Period, the Controlled Deposit Amount for such Distribution Date and
(iii) the Class A Invested Amount on such Distribution Date. The Class A
Monthly Principal for each Distribution Date relating to the Revolving
Period is zero.
(b) The amount of principal ("DCI Monthly Principal") distributable
from the Collection Account with respect to the Discount Collateral
Interest on each Distribution Date shall equal the least of (i) the
Available DCI Principal Collections for that Distribution Date, (ii) the
Excess Discount Collateral Interest on that Distribution Date and (iii)
an amount selected by the Servicer.
SECTION 4.4. Required Amount. (a) On each Determination Date, the
Servicer shall determine the amount (the "Class A Required Amount"), if
any, by which (i) the sum of (A) the Class A Servicing Fee for the
related Distribution Date, (B) any Class A Servicing Fee previously due
but not paid to the Servicer and (C) the Class A Investor Default Amount
for such Distribution Date exceeds (ii) the Class A Available Funds. If
the Class A Required Amount for such Distribution Date is greater than
zero, all or a portion of the Excess Spread and Excess Finance Charge
Collections allocated to Series 1996-X from other Series in Group One for
such Distribution Date (and not including Principal Funding Investment
Proceeds) in an amount equal to the Class A Required Amount for such
Distribution Date shall be distributed from the Collection Account on
such Distribution Date pursuant to subsection 4.7(a). If the Class A
Required Amount for such Distribution Date exceeds the amount of Excess
Spread and Excess Finance Charge Collections allocated to Series 1996-X
from other Series in Group One for such Distribution Date, all or a
portion of the Available Cash Collateral Amount with respect to such
Distribution Date in an amount equal to such excess shall be applied to
fund the Class A Required Amount.
(b) On each Determination Date, the Servicer shall determine the
amount (the "DCI Required Amount"), if any, by which (i) the sum of (A)
the DCI Servicing Fee for the related Distribution Date, (B) any DCI
Servicing Fee previously due but not paid to the Servicer and (C) the DCI
Investor Default Amount for such Distribution Date exceeds (ii) the DCI
Available Funds. If the DCI Required Amount for such Distribution Date is
greater than zero, all or a portion of Excess Spread and Excess Finance
Charge Collections allocated to Series 1996-X from other Series in Group
One for such Distribution Date available pursuant to subsection 4.7(c)
shall be applied to fund the DCI Required Amount. If the DCI Required
Amount for such Distribution Date exceeds the amount of Excess Spread and
Excess Finance Charge Collections allocated to Series 1996-X from other
Series in Group One for such Distribution Date available pursuant to
subsection 4.7(c), all or a portion of the Available Cash Collateral
Amount (after any portion of the Available Cash Collateral Amount has
been applied to fund the Class A Required Amount with respect to such
Distribution Date) in an amount equal to such excess shall be applied to
fund the DCI Required Amount.
SECTION 4.5. Monthly Application of Collections. On each
Distribution Date, the Servicer shall apply, or cause the Trustee to
apply, Class A Available Funds, DCI Available Funds and Investor
Principal Collections for the related Monthly Period as follows:
(a) On each Distribution Date, an amount equal to the Class A
Available Funds for the related Monthly Period will be distributed in the
following priority:
(i) the Class A Servicing Fee for such Distribution Date,
plus any Class A Servicing Fee previously due but not distributed to
the Servicer on a prior Distribution Date, shall be distributed to
the Servicer;
(ii) an amount equal to the Class A Investor Default Amount
for such Distribution Date shall be treated as a portion of Class A
Investor Principal Collections for such Distribution Date; and
(iii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.7.
(b) On each Distribution Date, an amount equal to the DCI Available
Funds for the related Monthly Period will be distributed in the following
priority:
(i) the DCI Servicing Fee for such Distribution Date, plus
any DCI Servicing Fee previously due but not distributed to the
Servicer on a prior Distribution Date, shall be distributed to the
Servicer;
(ii) an amount equal to the DCI Investor Default Amount for
such Distribution Date shall be treated as a portion of DCI Investor
Principal Collections for such Distribution Date; and
(iii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.7.
(c) On each Distribution Date with respect to the Revolving Period,
(i) an amount equal to the DCI Monthly Principal for such Distribution
Date shall be distributed to the Discount Collateral Interest Holders and
(ii) an amount equal to the Available Class A Principal Collections
allocated pursuant to Section 4.1(a)(ii)(x) shall be treated as Shared
Principal Collections and applied in accordance with Section 4.04 of the
Agreement.
(d) On each Distribution Date with respect to the Controlled
Accumulation Period or the Rapid Amortization Period, an amount equal to
the Investor Principal Collections deposited in the Collection Account
for the related Monthly Period will be distributed in the following
priority:
(i) Available Class A Principal Collections in an amount
equal to the Class A Monthly Principal for such Distribution Date
shall be (A) during the Controlled Accumulation Period, deposited
into the Principal Funding Account and (B) during the Rapid
Amortization Period, distributed to the Paying Agent for payment to
the Holders;
(ii) Available DCI Principal Collections in an amount equal
to the DCI Monthly Principal for such Distribution Date shall be
distributed to the Discount Collateral Interest Holders; and
(iii) after giving effect to clauses (i) and (ii), an amount
equal to the balance, if any, of such Investor Principal Collections
then on deposit in the Collection Account shall be (A) in the case
of Available Class A Principal Collections, treated as Shared
Principal Collections and applied in accordance with Section 4.04 of
the Agreement and (B) in the case of Available DCI Principal
Collections, transferred to the Transferor.
(e) On the earlier to occur of (i) the first Distribution Date with
respect to the Rapid Amortization Period and (ii) the Expected Final
Distribution Date, the Trustee, acting in accordance with instructions
from the Servicer, shall withdraw the balance on deposit in the Principal
Funding Account and distribute it to the Paying Agent for payment to the
Holders.
SECTION 4.6. Default Amounts; Investor Charge-Offs. (a) On each
Determination Date, the Servicer shall calculate the Class A Required
Amount, if any, for the related Distribution Date. If, on any
Distribution Date, the Class A Required Amount exceeds the sum of (i) the
amount of Excess Spread and Excess Finance Charges from other Series in
Group One allocable to Series 1996-X for such Distribution Date and (ii)
the Available Cash Collateral Amount for such Distribution Date, the
Class A Invested Amount shall be reduced by the amount of such excess,
but not by more than the excess, if any, of the Class A Investor Default
Amount for such Distribution Date over the amount of Excess Spread,
Excess Finance Charge Collections and funds withdrawn from the Cash
Collateral Account used to fund the Class A Investor Default Amount for
such Distribution Date (a "Class A Investor Charge-Off"). Class A
Investor Charge-Offs shall thereafter be reimbursed and the Class A
Invested Amount increased (but not by an amount in excess of the
aggregate unreimbursed Class A Investor Charge-Offs) on any Distribution
Date by the amount of Excess Spread and Excess Finance Charge Collections
allocated and available for that purpose pursuant to subsection 4.7(b).
(b) On each Determination Date, the Servicer shall calculate the DCI
Required Amount, if any, for the related Distribution Date. If, on any
Distribution Date, the DCI Required Amount for such Distribution Date
exceeds the sum of (i) the amount of Excess Spread for such Distribution
Date and Excess Finance Charges from other Series in Group One allocated
and available pursuant to subsection 4.7(c), and (ii) the portion, if
any, of the Available Cash Collateral Amount to be withdrawn from the
Cash Collateral Account pursuant to subsection 4.8(c) which is remaining
after applying such amounts to fund any deficiency of amounts payable
pursuant to subsection 4.7(a) with respect to such Distribution Date,
then the Discount Collateral Interest shall be reduced by the amount of
such excess, but not by more than the excess, if any, of the DCI Investor
Default Amount for such Distribution Date over the amount of Excess
Spread, Excess Finance Charge Collections and funds withdrawn from the
Cash Collateral Account used to fund the DCI Investor Default Amount for
such Distribution Date (a "DCI Investor Charge-Off"). DCI Investor
Charge-Offs shall thereafter be reimbursed and the Discount Collateral
Interest increased (but not by an amount in excess of the aggregate
unreimbursed DCI Investor Charge-Offs) on any Distribution Date by the
amount of Excess Spread and Excess Finance Charge Collections allocated
and available for that purpose pursuant to subsection 4.7(d).
SECTION 4.7. Excess Spread and Certain Other Amounts. On each
Distribution Date, the Servicer shall apply, or cause the Trustee to
apply, Excess Spread (plus, in the case of subsection 4.7(g), Principal
Funding Investment Proceeds and Reallocated Principal Collections, when
applicable) for such Distribution Date as follows:
(a) an amount equal to the Class A Required Amount, if any,
for such Distribution Date shall be distributed by the Trustee to
fund any deficiency pursuant to subsections 4.5(a)(i) and (ii) in
that order of priority;
(b) an amount equal to the aggregate amount of Class A
Investor Charge-Offs which have not been previously reimbursed as
provided in subsection 4.6(a) shall be treated as a portion of Class
A Investor Principal Collections for such Distribution Date;
(c) an amount equal to the DCI Required Amount, if any, for
such Distribution Date shall be distributed by the Trustee to fund
any deficiency pursuant to subsections 4.5(b)(i) and (ii) in that
order of priority;
(d) an amount equal to the aggregate amount by which the
Discount Collateral Interest has been reduced by DCI Investor
Charge-Offs (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) shall be
treated as a portion of DCI Investor Principal Collections for such
Distribution Date;
(e) an amount up to the excess, if any, of the Required Cash
Collateral Amount over the remaining Available Cash Collateral
Amount shall be deposited into the Cash Collateral Account;
(f) (i) an amount equal to the aggregate of any other amounts
then owed pursuant to the Loan Agreement (including the principal
amount of and interest on any loan made under the Loan Agreement to
fund the Cash Collateral Account, but excluding amounts required to
be deposited in the Spread Account under and as defined in the Loan
Agreement) shall be applied in accordance with the Loan Agreement
and (ii) amounts required to be deposited in the Spread Account
under and as defined in the Loan Agreement shall be so deposited;
(g) an amount equal to the Class A Accretion Target for such
Distribution Date shall be treated as a portion of Class A Investor
Principal Collections for such Distribution Date.
(h) an amount equal to the DCI Accretion Target for such
Distribution Date shall be treated as a portion of DCI Investor
Principal Collections for such Distribution Date;
(i) an amount equal to the aggregate amount by which the
Discount Collateral Interest has been reduced pursuant to clause (d)
of the definition of "Discount Collateral Interest" (but not in
excess of the aggregate amount of such reductions which have not
been previously reimbursed) shall be treated as a portion of DCI
Investor Principal Collections for such Distribution Date; and
(j) the balance, if any, shall constitute "Excess Finance
Charge Collections" available for allocation to other Series or to
the Holders of the Transferor Certificates for such Distribution
Date as described in Section 4.05 of the Agreement.
If the amount of Excess Spread and, in the case of subsection
4.7(g), Principal Funding Investment Proceeds on any Distribution Date is
less than the sum of the amounts specified in subsections 4.7(a) through
(i), then the amount of the deficit shall constitute the "Finance Charge
Shortfall" for Series 1996-X; and any Excess Finance Charge Collections
allocated to Series 1996-X from other Series in Group One shall be
applied to such amounts remaining after the application of Excess Spread
(and, in the case of subsection 4.7(g), Principal Funding Investment
Proceeds) in the same priority as specified above for the application of
Excess Spread.
SECTION 4.8. Cash Collateral Account. (a) The Servicer shall
establish and maintain, in the name of the Trustee, on behalf of the
Trust, for the benefit of the Series 1996-X Holders and the Series
Enhancer, as their interests appear herein, an Eligible Deposit Account
(the "Cash Collateral Account") bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Series
1996-X Holders and the Series Enhancer. The Cash Collateral Account shall
initially be established with the Trustee. The Trustee shall possess all
right, title and interest in all funds on deposit from time to time in
the Cash Collateral Account and in all proceeds thereof. The Cash
Collateral Account shall be under the sole dominion and control of the
Trustee for the benefit of the Series 1996-X Holders and the Series
Enhancer. The interest of the Series Enhancer shall be subordinated to
the interests of the Series 1996-X Holders as provided herein and in the
Loan Agreement. If at any time the Cash Collateral Account ceases to be
an Eligible Deposit Account, the Trustee (or the Servicer on its behalf)
shall within 10 Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency may consent) establish a
new Cash Collateral Account meeting the conditions specified above as an
Eligible Deposit Account, and shall transfer any cash and/or any
investments to such new Cash Collateral Account. The Trustee, at the
direction of the Servicer, shall make deposits to and withdrawals from
the Cash Collateral Account in the amounts and at the times set forth in
this Supplement and the Loan Agreement. All withdrawals from the Cash
Collateral Account shall be made in the priority set forth below. The
Series Enhancer shall not be entitled to reimbursement from the Trust
Assets for any withdrawals from the Cash Collateral Account except as
specifically provided in this Supplement and the Loan Agreement.
(b) On the Closing Date, the Trustee shall deposit $__________
received by it in immediately available funds pursuant to the Loan
Agreement into the Cash Collateral Account. Funds on deposit in the Cash
Collateral Account shall be invested at the direction of the Servicer (or
the Series Enhancer, as provided in the Loan Agreement) by the Trustee in
Eligible Investments. Funds on deposit in the Cash Collateral Account on
any Transfer Date, after giving effect to any withdrawals from the Cash
Collateral Account on such Transfer Date, shall be invested in such
investments that will mature so that such funds will be available for
withdrawal on or prior to the following Transfer Date. No Eligible
Investment shall be disposed of prior to its maturity; provided that the
Trustee may sell, liquidate or dispose of an Eligible Investment before
its maturity, if so directed by the Servicer, the Servicer having
reasonably determined that the interest of the 1996-X Holders may be
adversely affected if such Eligible Investment is held to its maturity.
The proceeds of any such investments shall be invested in such
investments that will mature so that such funds will be available for
withdrawal on or prior to the Transfer Date immediately following the
date of such investment. The Trustee shall maintain for the benefit of
the Series 1996-X Holders and the Series Enhancer possession of the
negotiable instruments or securities, if any, evidencing such Eligible
Investments. On each Transfer Date, all interest and earnings (net of
losses and investment expenses) accrued since the preceding Transfer Date
on funds on deposit in the Cash Collateral Account shall be applied in
accordance with the Loan Agreement. For purposes of determining the
availability of funds or the balances in the Cash Collateral Account for
any reason under this Supplement, all investment earnings on such funds
shall be deemed not to be available or on deposit.
(c) On each Determination Date, the Servicer shall calculate the
amount (the "Required Draw Amount") by which the amounts specified in
clauses (a) and (c) of Section 4.7 for the related Distribution Date
exceed the amount of Excess Spread and Excess Finance Charge Collections
to be allocated to Series 1996-X from other Series in Group One on such
Distribution Date and available to fund the Class A Required Amount and
the DCI Required Amount pursuant to subsections 4.7(a) and (c). If for
any Distribution Date the Required Draw Amount is greater than zero, the
Servicer shall give written notice to the Trustee and the Series Enhancer
of such positive Required Draw Amount on the related Determination Date.
On the related Distribution Date, the Required Draw Amount, if any, up to
the Available Cash Collateral Amount, shall be withdrawn from the Cash
Collateral Account and distributed to fund any deficiency pursuant to
subsections 4.7(a) and (c) (in the order of priority set forth in Section
4.7).
(d) If there is a Cash Collateral Surplus on any Distribution Date
falling in the Rapid Amortization Period (or during the Revolving Period
or the Controlled Accumulation Period if and to the extent requested by
the Servicer), after giving effect to all deposits to and withdrawals
from the Cash Collateral Account on such Distribution Date, the Trustee,
acting in accordance with the instructions of the Servicer, shall
withdraw from the Cash Collateral Account, and apply in accordance with
the Loan Agreement, an amount equal to such Cash Collateral Surplus (or
such lesser amount requested by the Servicer if during the Revolving
Period or the Controlled Accumulation Period).
SECTION 4.9. Shared Principal Collections. Pursuant to Section 4.04
of the Agreement, Shared Principal Collections for any Distribution Date
will be allocated to Series 1996-X in an amount equal to the product of
(a) the aggregate amounts that the Supplements for all Series in Group
One specify are to be treated as Shared Principal Collections for such
Distribution Date and (b) a fraction, the numerator of which is the
Principal Shortfall for Series 1996-X for such Distribution Date and the
denominator of which is the aggregate amount of Principal Shortfalls for
all the Series in Group One for such Distribution Date. The "Principal
Shortfall" for Series 1996-X shall be equal to (a) for any Distribution
Date with respect to the Revolving Period, zero, (b) for any Distribution
Date with respect to the Controlled Accumulation Period, the sum of (i)
the excess, if any, of the Controlled Deposit Amount over the Available
Class A Principal Collections for such Distribution Date (excluding any
portion thereof attributable to Shared Principal Collections) and (ii)
the excess, if any of the Excess Discount Collateral Interest for such
Distribution Date over the Available DCI Principal Collections for such
Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections) and (c) for each Distribution Date with respect to
the Rapid Amortization Period, the sum of (i) the excess, if any, of the
Class A Invested Amount over the Available Class A Principal Collections
for such Distribution Date (excluding any portion thereof attributable to
Shared Principal Collections) and (ii) the excess, if any of the Excess
Discount Collateral Interest for such Distribution Date over the
Available DCI Principal Collections for such Distribution Date (excluding
any portion thereof attributable to Shared Principal Collections).
SECTION 4.10. Principal Funding Account. (a) The Servicer shall
establish and maintain, in the name of the Trustee, on behalf of the
Trust, for the benefit of the Series 1996-X Holders, an Eligible Deposit
Account (the "Principal Funding Account") bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of
the Series 1996-X Holders. The Principal Funding Account shall initially
be established with the Trustee. The Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the
Principal Funding Account and in all proceeds thereof. On each
Distribution Date all interest and other investment income (net of losses
and investment expenses) ("Principal Funding Investment Proceeds") on
funds on deposit therein shall be applied as set forth in subsection
4.10(c). The Principal Funding Account shall be under the sole dominion
and control of the Trustee for the benefit of the Series 1996-X Holders.
If at any time the Principal Funding Account ceases to be an Eligible
Deposit Account, the Trustee (or the Servicer on its behalf) shall within
10 Business Days (or such longer period, not to exceed 30 calendar days,
as to which each Rating Agency may consent) establish a new Principal
Funding Account meeting the conditions specified above as an Eligible
Deposit Account, and shall transfer any cash and/or any investments to
such new Principal Funding Account. The Trustee, at the direction of the
Servicer, shall make deposits to and withdrawals from the Principal
Funding Account in the amounts and at the times set forth in this
Supplement.
(b) Funds on deposit in the Principal Funding Account shall be
invested at the direction of Servicer by Trustee in Eligible Investments.
Funds on deposit in the Principal Funding Account on any Transfer Date,
after giving effect to any withdrawals from the Principal Funding Account
on such Transfer Date, shall be invested in such investments that will
mature so that such funds will be available for withdrawal on or prior to
the following Transfer Date. The Trustee shall maintain for the benefit
of the Investor Holders possession of the negotiable instruments or
securities, if any, evidencing such Eligible Investments. No Eligible
Investment shall be disposed of prior to its maturity; provided that the
Trustee may sell, liquidate or otherwise dispose of an Eligible
Investment before its maturity, if so directed in writing by the
Servicer, the Servicer having reasonably determined that the interest of
the Series 1996-X Holders may be adversely affected if such Eligible
Investment is held to its maturity. Unless the Servicer directs
otherwise, funds deposited in the Principal Funding Account on a Transfer
Date upon the maturity of Eligible Investments are not required to be
invested overnight.
(c) On each Distribution Date with respect to the Controlled
Accumulation Period, the Trustee, acting at the Servicer's direction,
shall transfer from the Principal Funding Account to the Collection
Account the Principal Funding Investment Proceeds on deposit in the
Principal Funding Account, and such Principal Funding Investment Proceeds
shall be applied as provided in subsection 4.7(g) on such Distribution
Date.
(d) Reinvested interest and other investment income on funds
deposited in the Principal Funding Account shall not be considered to be
principal amounts on deposit therein for purposes of this Supplement.
(e) Pursuant to the authority granted to the Servicer in subsection
3.01(b) of the Agreement, the Servicer shall have the power, revocable by
the Trustee, to make withdrawals and payments or to instruct the Trustee
to make withdrawals and payments from the Principal Funding Account for
the purposes of carrying out the Servicer's or Trustee's duties
hereunder. Pursuant to the authority granted to the Paying Agent in
Section 5.01 of this Supplement and Section 6.07 of the Agreement, the
Paying Agent shall have the power, revocable by the Trustee, to withdraw
funds from the Principal Funding Account for the purpose of making
distributions to the Series 1996-X Holders.
SECTION 4.11. Controlled Accumulation Period. The Controlled
Accumulation Period is scheduled to commence at the close of business on
__________; provided that if the required length of the Controlled
Accumulation Period (determined as described below) on any Determination
Date on or after the ___________ Determination Date is less than twelve
months, upon written notice to the Trustee, the Transferor and each
Rating Agency, the Servicer, at its option, may elect to modify the date
on which the Controlled Accumulation Period actually commences to the
first day of the month that is a number of months prior to the month in
which the Expected Final Distribution Date occurs at least equal to the
required Controlled Accumulation Period length (so that, as a result of
such election, the number of Monthly Periods in the Controlled
Accumulation Period will at least equal the required Controlled
Accumulation Period length); provided that (i) the length of the
Controlled Accumulation Period will not be less than one month; and (ii)
notwithstanding any other provision of this Series Supplement to the
contrary, no election to postpone the commencement of the Controlled
Accumulation Period shall be made after a Pay Out Event (as defined in
the related Supplement) shall have occurred and be continuing with
respect to any other Series. The required Controlled Accumulation Period
length will mean a number of months such that the amount available for
distribution of principal on the Certificates on the Expected Final
Distribution Date is expected to equal or exceed the Class A Face Amount,
assuming for this purpose that (1) the payment rate with respect to
Collections of Principal Receivables remains constant at the lowest level
of such payment rate during the twelve preceding Monthly Periods (or such
lower payment rate as the Servicer may select), (2) the total amount of
Principal Receivables in the Trust (and the principal amount on deposit
in the Excess Funding Account, if any) remains constant at the level on
such date of determination, (3) no Pay Out Event with respect to any
Series will subsequently occur and (4) no additional Series (other than
any Series being issued on such date of determination) will be
subsequently issued. Any notice by the Servicer electing to modify the
commencement of the Controlled Accumulation Period pursuant to this
Section 4.11 shall specify (i) the Controlled Accumulation Period length,
(ii) the commencement date of the Controlled Accumulation Period and
(iii) the Controlled Accumulation Amount for each Monthly Period during
the Controlled Accumulation Period.
ARTICLE V DISTRIBUTIONS AND REPORTS TO SERIES 1996-X HOLDERS
SECTION 5.1. Distributions. (a) On each Distribution Date, the
Paying Agent shall distribute to each Holder of record on the related
Record Date (other than as provided in Section 12.02 of the Agreement)
such Holder's pro rata share of the amounts that are allocated and
available on such date to pay principal of the Class A Certificates
pursuant to this Supplement up to a maximum amount on any such date equal
to the Class A Invested Amount on such date (unless there has been an
optional repurchase of the Investor Interest pursuant to Section 9.01 of
the Agreement, in which event the foregoing limitation will not apply).
(b) On each Distribution Date, the Paying Agent shall distribute to
each Discount Collateral Interest Holder of record on the related Record
Date (other than as provided in Section 12.02 of the Agreement) such
Discount Collateral Interest Holder's pro rata share of the amounts that
are allocated and available on such Distribution Date to pay interest on
the Discount Collateral Interest pursuant to this Supplement.
(c) On each Distribution Date, the Paying Agent shall distribute to
each Discount Collateral Interest Holder of record on the related Record
Date (other than as provided in Section 12.02 of the Agreement) such
Discount Collateral Interest Holder's pro rata share of the amounts that
are allocated and available on such date to pay principal of the Discount
Collateral Interest pursuant to this Supplement up to a maximum amount on
any such date equal to the Discount Collateral Interest on such date
(unless there has been an optional repurchase of the Investor Interest
pursuant to Section 9.01 of the Agreement, in which event the foregoing
limitation will not apply).
(d) The distributions to be made pursuant to this Section 5.1 are
subject to the provisions of Sections 2.06, 9.02, 9.01 and 12.02 of the
Agreement and Sections 8.1 and 8.2 of this Supplement.
(e) Except as provided in Section 12.02 of the Agreement with
respect to a final distribution, distributions to Series 1996-X Holders
hereunder shall be made by check mailed to each Series 1996-X Holder at
such Series 1996-X Holder's address appearing in the Certificate Register
without presentation or surrender of any Series 1996-X Certificate or the
making of any notation thereon; provided that with respect to Series
1996-X Certificates registered in the name of a Clearing Agency, such
distributions shall be made to such Clearing Agency in immediately
available funds.
SECTION 5.2. Certificates and Statements. (a) Not later than each
Determination Date, the Servicer shall deliver to the Trustee, the Paying
Agent, each Rating Agency and the Series Enhancer, a certificate
substantially in the form of Exhibit B prepared by the Servicer.
(b) On each Distribution Date, the Paying Agent, on behalf of the
Trustee, shall forward to each Series 1996-X Holder a statement
substantially in the form of Exhibit C prepared by the Servicer.
(c) A copy of each statement or certificate provided pursuant to
paragraph (a) or (b) may be obtained by any Series 1996-X Holder or any
Certificate Owner thereof by a request in writing to the Servicer.
(d) On or before January 31 of each calendar year, beginning with
calendar year 1997, the Paying Agent, on behalf of the Trustee, shall
furnish or cause to be furnished to each Person who at any time during
the preceding calendar year was a Series 1996-X Holder, a statement
prepared by the Servicer containing the information which is required to
be contained in the statement to Series 1996-X Holders, as set forth in
paragraph (b) above, aggregated for such calendar year or the applicable
portion thereof during which such Person was a Series 1996-X Holder,
together with other information as is required to be provided by an
issuer of indebtedness under the Internal Revenue Code. Such obligation
of the Servicer shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Paying
Agent pursuant to any requirements of the Internal Revenue Code as from
time to time in effect.
ARTICLE VI SERIES 1996-X PAY OUT EVENTS
SECTION 6.1. Series 1996-X Pay Out Events. If any one of the
following events (each, a "Series Pay Out Event") shall occur with
respect to the Series 1996-X Certificates:
(a) failure on the part of the Transferors (i) to make any
payment or deposit required by the terms of the Agreement on or
before the date occurring five Business Days after the date such
payment or deposit is required to be made herein or (ii) duly to
observe or perform in any material respect any other covenants or
agreements of the Transferors set forth in the Agreement which has a
material adverse effect on the Holders and continues unremedied for
a period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Transferors by the Trustee, or to the Transferors and the
Trustee by Holders of Class A Certificates aggregating not less
than 50% of the Outstanding Principal Amount of the Class A
Certificates;
(b) any representation or warranty made by the Transferors in
the Agreement or any information contained in an Account Schedule
delivered pursuant to the Agreement (i) shall prove to have been
incorrect in any material respect when made or when delivered, which
continues to be incorrect in any material respect for a period of 60
days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the
Transferors by the Trustee, or to the Transferors and the Trustee by
Holders of the Class A Certificates aggregating not less than 50% of
the Outstanding Principal Amount of the Class A Certificates and
(ii) as a result of which the interests of the Holders are
materially and adversely affected; provided that a Series Pay Out
Event pursuant to this paragraph (b) shall not be deemed to occur
hereunder if the Transferors have accepted reassignment of the
related Receivable, or all of such Receivables, if applicable,
during such period (or such longer period as the Trustee may
specify) in accordance with the provisions hereof and of the
Agreement;
(c) (1) with respect to the last day of any prior Monthly
Period during which the Transferor Amount is less than the Required
Transferor Amount, the failure of the Transferors to convey on or
prior to the Required Designation Date Additional Accounts to the
Trust (or reduce the aggregate Series Invested Amounts) such that
the Transferor Amount shall be at least equal to the Required
Transferor Amount; or (2) with respect to the last day of any prior
Monthly Period during which the aggregate amount of Principal
Receivables is less than the Required Principal Balance as of such
day, the failure of the Transferors to convey on or prior to the
Required Designation Date Additional Accounts to the Trust (or
reduce the aggregate Series Invested Amounts) such that the
aggregate amount of the Principal Receivables shall be at least
equal to the Required Principal Balance as of the end of such
preceding Monthly Period;
[(d) on any Determination Date, the Available Cash Collateral
Amount on the related Distribution Date shall be reduced to less
than the Required Cash Collateral Amount;]
(e) any Servicer Default shall occur which would have a
material adverse effect on the Holders;
(f) the Class A Invested Amount shall not be repaid in full
on the Expected Final Distribution Date; or
(g) the amount of the Discount Collateral Interest shall be
less than the Required Discount Collateral Interest.
then, in the case of any event described in paragraph (a), (b) or (e),
after the applicable grace period, if any, set forth in such paragraphs,
either the Trustee or the holders of Class A Certificates evidencing more
than 50% of the aggregate Outstanding Principal Amount of the Class A
Certificates by notice then given in writing to the Transferors and the
Servicer (and to the Trustee if given by the Holders of Class A
Certificates) may declare that a Pay Out Event has occurred with respect
to Series 1996-X as of the date of such notice, and, in the case of any
event described in paragraph (c), (d), (f) or (g) a Pay Out Event shall
occur with respect to Series 1996-X without any notice or other action on
the part of the Trustee or Holders of Series 1996-X Certificates
immediately upon the occurrence of such event.
ARTICLE VII OPTIONAL REPURCHASE; SERIES TERMINATION
SECTION 7.1. Optional Repurchase. On any day occurring on or after
the date on which the Investor Amount is reduced to 5% of the sum of the
Class A Accreted Invested Amount and the DCI Accreted Amount or less, the
Transferors shall have the option to purchase the interest of the holders
of Investor Certificates, at a purchase price equal to (i) if such day is
a Distribution Date, the Reassignment Amount for such Distribution Date
or (ii) if such day is not a Distribution Date, the Reassignment Amount
for the Distribution Date following such day.
SECTION 7.2. Series Termination. (a) If, on the __________ ____
Distribution Date, the Investor Amount (after giving effect to all
changes therein on such date) would be greater than zero, the Servicer,
on behalf of the Trustee, shall, within the 40-day period which begins on
such Distribution Date, solicit bids for the sale of Principal
Receivables and the related Finance Charge Receivables (or interests
therein) in an amount equal to the Invested Amount and accrued and unpaid
interest thereon at the close of business on the last day of the Monthly
Period preceding the Series Termination Date (after giving effect to all
distributions required to be made on the Series Termination Date, except
pursuant to this Section 7.2; provided that in no event shall such amount
exceed the Series Percentage of Receivables on the Series Termination
Date). Such bids shall require that such sale shall (subject to
subsection 7.2(b)) occur on the Series Termination Date. The Transferors
and the Series Enhancer shall be entitled to participate in, and to
receive from the Trustee a copy of each other bid submitted in connection
with, such bidding process.
(b) The Servicer, on behalf of the Trustee, shall sell such
Receivables (or interests therein) on the Series Termination Date to the
bidder who made the highest cash purchase offer. The proceeds of any
such sale shall be treated as Collections on the Receivables allocated to
the Series 1996-X Holders pursuant to the Agreement and this Supplement;
provided that the Servicer shall determine conclusively the amount of
such proceeds which are allocable to Finance Charge Receivables and the
amount of such proceeds which are allocable to Principal Receivables.
During the period from the __________ ____ Distribution Date to the
Series Termination Date, the Servicer shall continue to collect payments
on the Receivables and allocate and deposit such collections in
accordance with the provisions of the Agreement and the Supplements.
ARTICLE VIII FINAL DISTRIBUTIONS
SECTION 8.1. Sale of Receivables or Investor Interest Pursuant to
Section 2.06 or 12.05 of the Agreement. (a) Purchase Price. The amount
to be paid with respect to Series 1996-X in connection with (i) a
reassignment of Receivables to the Transferors pursuant to Section 2.06
of the Agreement or (ii) a repurchase of the Investor Interest pursuant
to Section 12.05 of the Agreement shall equal the Reassignment Amount for
the first Distribution Date following the Monthly Period in which the
reassignment obligation arises under the Agreement.
(b) Distributions Pursuant to Section 7.1 or 7.2 of this Supplement
and Section 12.05 of the Agreement. With respect to the Reassignment
Amount deposited into the Collection Account pursuant to Section 7.1 or
subsection 8.1(a) or any amounts allocable to Series 1996-X deposited
into the Collection Account pursuant to Section 7.2, the Trustee shall,
not later than 3:00 p.m. New York City time, on the related Distribution
Date, make deposits or distributions of the following amounts (in the
priority set forth below and, in each case, after giving effect to any
deposits and distributions otherwise to be made on such date) in
immediately available funds: (i) an amount equal to the sum of the Class
A Invested Amount and any Class A Accretion Shortfall for such
Distribution Date, together with all funds on deposit in the Principal
Funding Account on such Distribution Date, will be distributed to the
Paying Agent for payment to the Holders and (ii) an amount equal to the
sum of the Discount Collateral Interest and any DCI Accretion Shortfall
on such Distribution Date will be distributed to the Discount Collateral
Interest Holders.
(c) Notwithstanding anything to the contrary in this Supplement or
the Agreement, all amounts distributed to the Paying Agent pursuant to
subsection 8.1(b) for payment to the Series 1996-X Holders shall be
deemed distributed in full to the Series 1996-X Holders on the date on
which such funds are distributed to the Paying Agent pursuant to this
Section and shall be deemed to be a final distribution pursuant to
Section 12.02 of the Agreement.
SECTION 8.2. Distribution of Proceeds of Sale, Disposition or
Liquidation of the Receivables Pursuant to Section 9.02 of the Agreement.
(a) Not later than 12:00 noon, New York City time, on the Distribution
Date following the date on which the Insolvency Proceeds are deposited
into the Collection Account pursuant to subsection 9.02(b) of the
Agreement, the Trustee shall (in the following priority and, in each
case, after giving effect to any deposits and distributions otherwise to
be made on such Distribution Date) (i) allocate an amount equal to the
product of (x) the Floating Allocation Percentage, (y) the Class A
Floating Percentage and (z) the portion of the Insolvency Proceeds
allocated to Collections of Finance Charge Receivables, and apply such
amount as provided in subsection 4.5(a)(ii), with the balance to be
applied as "Excess Spread" to the extent provided in clause (iii) below;
(ii) allocate an amount equal to the product of (x) the Floating
Allocation Percentage, (y) the DCI Floating Percentage and (z) the
portion of the Insolvency Proceeds allocated to Collections of Finance
Charge Receivables, and apply such amount as provided in subsection
4.5(b)(ii), with the balance to be applied as "Excess Spread" to the
extent provided in clause (iii) below; and (iii) apply the amount
designated as "Excess Spread" in clauses (i) and (ii) above as provided
(and subject to the priorities set forth) in subsections 4.7(b) and
4.7(d) through (i).
(b) Not later than 12:00 noon, New York City time, on such
Distribution Date the Trustee shall (in the following priority and, in
each case, after giving effect to any deposits and distributions
otherwise to be made on such Distribution Date and after giving effect to
any reductions in the Discount Collateral Interest pursuant to subsection
4.2(c) on such Distribution Date) (i) allocate an amount equal to (A) the
product of (x) the Principal Allocation Percentage, (y) the Class A
Principal Percentage, and (z) the portion of the Insolvency Proceeds
allocated to Collections of Principal Receivables, plus (B) any amount to
be treated as Class A Investor Principal Collections pursuant to the
allocations provided in subsections 4.7(b) and (g) (as a result of the
application of funds designated as "Excess Spread" in subsection
8.2(a)(iii) above), and distribute such amount (up to an amount equal to
the Class A Invested Amount) to the Paying Agent for payment to the
Holders, with the balance to be included in the amount allocated pursuant
to clause (ii)(D) below; (ii) allocate an amount equal to (A) the product
of (x) the Principal Allocation Percentage, (y) the DCI Principal
Percentage and (z) the portion of the Insolvency Proceeds allocated to
Collections of Principal Receivables, minus (B) the amount of Reallocated
Principal Collections for such Distribution Date, plus (C) any amounts to
be treated as DCI Investor Principal Collections pursuant to the
allocations provided in subsections 4.7(d), (h) or (i) (as a result of
the application of funds designated as "Excess Spread" in subsection
8.2(a)(iii) above), plus (D) any amount to be included in this allocation
pursuant to clause (i) above, and distribute such amount (up to the
amount of the Discount Collateral Interest) to the Discount Collateral
Interest Holders. Any amounts allocated pursuant to clause (i) or (ii)
above and remaining after all applications provided above shall be
treated as Shared Principal Collections (up to the amount described in
clause (ii)(D) above), and any balance shall be distributed to the
holders of the Transferor Certificates.
(c) Notwithstanding anything to the contrary in this Supplement or
the Agreement, all amounts distributed to the Paying Agent pursuant to
this Section for payment to the Series 1996-X Holders shall be
distributed in full to the Series 1996-X Holders on the date on which
funds are distributed to the Paying Agent pursuant to this Section and
shall be deemed to be a final distribution pursuant to Section 12.02 of
the Agreement.
SECTION 8.3. Instructions Pursuant to Subsection 9.02(a) of the
Agreement. The Holders of Investor Certificates of Series 1996-X
evidencing more than 50% of the Investor Amount of each Class shall not
be considered as having disapproved of any liquidation of the Receivables
pursuant to subsection 9.02(a) of the Agreement unless Holders of more
than 50% of the Investor Amount of each of the Class A Certificates and
the Discount Collateral Interest and the Series Enhancer instruct the
Trustee to such effect in the manner required pursuant to subsection
9.02(a) of the Agreement.
ARTICLE IX MISCELLANEOUS PROVISIONS
SECTION 9.1. Ratification of Agreement. As supplemented by this
Supplement, the Agreement is in all respects ratified and confirmed and
the Agreement as so supplemented by this Supplement shall be read, taken
and construed as one and the same instrument.
SECTION 9.2. Counterparts. This Supplement may be executed in two or
more counterparts, and by different parties on separate counterparts,
each of which shall be an original, but all of which shall constitute one
and the same instrument.
SECTION 9.3. Governing Law. THIS SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 9.4. Amendments. This Supplement may be amended by the
Transferors without the consent of the Servicer, the Trustee or any
Investor Holder if the Transferors provide the Trustee with (i) an
Opinion of Counsel to the effect that such amendment or modification
would reduce the risk that the Trust would be treated as taxable as a
publicly traded partnership pursuant to Code section 7704 and (ii) an
Officer's Certificate that such amendment or modification would not
materially and adversely affect any Investor Holder, provided that no
such amendment shall be deemed effective without (i) the Trustee's
consent, if the Trustee's rights, duties and obligations hereunder are
thereby modified and (ii) the Trustee having obtained written assurance
that such amendment or modification will not, by itself, lower the
then-current ratings on the Series 1996-X Certificates. The Transferors
shall provide the Rating Agencies with prior written notice of any such
amendment or modification.
SECTION 9.5 Tax Representation and Covenant. Any holder of an
interest in the Trust acquired pursuant to Section 12.01(b) of the
Agreement in respect of the Series 1996-X Certificates shall be required
to represent and covenant in connection with such acquisition that (x) it
has neither acquired, nor will it sell, trade or transfer any interest in
the Trust or cause any interest in the Trust to be marketed on or through
either (i) an "established securities market" within the meaning of Code
section 7704(b)(1), including an interdealer quotation system that
regularly disseminates firm buy or sell quotations by identified brokers
or dealers by electronic means or otherwise or (ii) a "secondary market
(or the substantial equivalent thereof)" within the meaning of Code
section 7704(b)(2), including a market wherein a market in such interests
and a market wherein any person regularly makes available bid or offer
quotes with respect to transactions at the quoted prices for itself or on
behalf of others, (y) unless the Transferor consents otherwise, such
holder is a "corporation" as described in Code section 7701(a)(3) and
(ii) is not, and will not become, an S corporation as described in Code
section 1361, and (z) it will (i) cause any participant with respect to
such interest otherwise permitted hereunder to make similar
representations and covenants for the benefit of the Transferor and the
Trust and (ii) forward a copy of such representations and covenants to
the Trustee. Each such holder shall further agree in connection with its
acquisition of such interest that, in the event of any breach of its (or
its participant's) representation and covenant that it (or its
participant) is and shall remain classified as a corporation other than
an S corporation, the Transferor shall have the right to procure a
replacement investor to replace such holder (or its participant), and
further that such holder shall take all actions necessary to permit such
replacement investor to succeed to its rights and obligations as a holder
(or to the rights of its participant).
IN WITNESS WHEREOF, the undersigned have caused this Supplement to
be duly executed and delivered by their respective duly authorized
officers on the day and year first above written.
ADVANTA NATIONAL BANK,
Transferor and Servicer,
By:
--------------------------
Name: Michael Coco
Title: Vice President
THE BANK OF NEW YORK,
Trustee
By:
--------------------------
Name:
Title:
<PAGE>
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE
-------------------
CLASS A
--------
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Advanta
National Bank or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co.
or in such other name as requested by an authorized representative of DTC
(and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
No. ___ $ __________
CUSIP No. __________
ADVANTA GOLD MASTER TRUST
CLASS A ZERO COUPON
ASSET BACKED CERTIFICATE, SERIES 1996-X
Evidencing an interest in a trust, the corpus of which consists of
receivables generated or to be generated from time to time in the ordinary
course of business in a portfolio of revolving credit card accounts and
other revolving credit accounts and other assets and interests constituting
the Trust under the Pooling and Servicing Agreement described below.
(Not an interest in or obligation of
Advanta National Bank
or any Affiliate thereof.)
This certifies that CEDE & CO. (the "Holder") is the registered owner
of an interest in a trust (the "Trust"), the corpus of which consists of a
portfolio of receivables (the "Receivables") now existing or hereafter
created and arising in connection with revolving credit card accounts and
other revolving credit accounts (the "Accounts") identified under the
Pooling and Servicing Agreement (as defined below), all monies due or to
become due in payment of the Receivables (including all Finance Charge
Receivables), the right to certain amounts received as Interchange with
respect to the Accounts, the benefits of the Cash Collateral Account and
the Discount Collateral Interest (each as defined in the Series 1996-X
Supplement referred to below) and the other assets and interests
constituting the Trust pursuant to a Pooling and Servicing Agreement dated
as of ______________, 1996 as supplemented by the Series 1996-X Supplement
dated as of ____________, 1996 (collectively, the "Pooling and Servicing
Agreement"), by and between Advanta National Bank, as Transferor (the
"Transferor") and as Servicer (the "Servicer"), and The Bank of New York,
as Trustee (the "Trustee").
The Transferor has structured the Pooling and Servicing Agreement and
the Series 1996-X Certificates with the intention that the Series 1996-X
Certificates will qualify under applicable tax law as indebtedness, and
each of the Transferor, the Servicer and each Series 1996-X Holder (or
Series 1996-X Certificate Owner) by acceptance of its Series 1996-X
Certificate (or in the case of a Series 1996-X Certificate Owner, by virtue
of such Series 1996-X Certificate Owner's acquisition of a beneficial
interest therein), agrees to treat and to take no action inconsistent with
the treatment of the Series 1996-X Certificates (or any beneficial interest
therein) as indebtedness for purposes of federal, state, local and foreign
income or franchise taxes and any other tax imposed on or measured by
income. Each Series 1996-X Holder agrees that it will cause any Series
1996-X Certificate Owner acquiring an interest in a Series 1996-X
Certificate through it to comply with the Pooling and Servicing Agreement
as to treatment of the Series 1996-X Certificates as indebtedness for tax
purposes.
To the extent not defined herein, capitalized terms used herein have
the respective meanings assigned to them in the Pooling and Servicing
Agreement. This Class A Certificate is issued under and is subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement, to
which Pooling and Servicing Agreement, as amended from time to time, the
Holder by virtue of the acceptance hereof assents and by which the Holder
is bound.
This Class A Certificate represents an interest in only the Advanta
Gold Master Trust. This Class A Certificate does not represent an
obligation of, or an interest in, the Transferor or the Servicer, and
neither the Series 1996-X Certificates nor the Accounts or Receivables are
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other governmental agency. This Series 1996-X Certificate is limited in
right of payment to certain collections respecting the Receivables and
other assets of the Trust allocable to the Series 1996-X Certificates, all
as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
<PAGE>
Unless the certificate of authentication hereon has been executed by
or on behalf of Trustee, by manual signature, this Class A Certificate
shall not be entitled to any benefit under the Pooling and Servicing
Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, Advanta National Bank has caused this Class
A Certificate to be duly executed.
By: _________________________
Authorized Officer
Date: ______________________
<PAGE>
Form of Trustee's Certificate of Authentication
-----------------------------------------------
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A Certificates, Series 1996-X, of the
Advanta Gold Master Trust referred to in the within-mentioned Pooling and
Servicing Agreement.
THE BANK OF NEW YORK,
Trustee
By: ________________________
Authorized Signatory
Exhibit 4.3
Prospectus Supplement
(To Prospectus Dated ___________, 1996)
Advanta Gold Master Trust
$___________ Class A Zero Coupon Asset Backed Certificates, Series 1996-X
Advanta National Bank
Transferor and Servicer
Each Class A Zero Coupon Asset Backed Certificate, Series 1996-X
(collectively, the "Certificates") will represent an undivided interest in
the Advanta Gold Master Trust (the "Trust") to be formed pursuant to a
Pooling and Servicing Agreement between Advanta National Bank ("ANB") and
The Bank of New York, as trustee. The property of the Trust includes a
portfolio of VISA(c) and MasterCard(c)
(Continued on next page)
There currently is no secondary market for the Certificates, and there is
no assurance that one will develop. The Underwriters expect, but are not
obligated, to make a market in the Certificates. There is no assurance
that any such market will develop or continue. Potential investors should
consider, among other things, the information set forth in "Risk Factors"
commencing on page [S-19] herein and on page [23] in the Prospectus.
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST AND DO NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF ADVANTA CORP., ADVANTA NATIONAL BANK OR ANY
AFFILIATE THEREOF, EXCEPT TO THE LIMITED EXTENT DESCRIBED HEREIN. A
CERTIFICATE IS NOT A DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (THE "FDIC"). THE RECEIVABLES ARE NOT INSURED OR
GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
<TABLE>
<CAPTION>
Expected
Amount Initial
Payable Price Underwriting Proceeds to
at Maturity(1) Public(2) Discount ANB (2)(3)
<S> <C> <C> <C> <C>
Per Certificate 100.000000% % % %
Total $ $ $ $
_______________________
<FN>
(1) Payment of this expected amount at maturity assumes, among other things,
that (a) no Pay Out Event occurs and (b) the monthly accretion amount
with respect to the Certificates is funded each month prior to the
Expected Final Distribution Date.
(2) Plus accretion of original issue discount, if any, at the Class A
Accretion Rate from __________, 1996.
(3) Before deduction of expenses payable by ANB estimated at $_______.
</TABLE>
The Certificates are offered by the Underwriters when, as and if issued by
the Trust and accepted by the Underwriters and subject to the Underwriters'
right to reject orders in whole or in part. It is expected that the
Certificates will be offered globally and delivered in book-entry form on
or about ___________, 1996, through the facilities of The Depository Trust
Company, Cedel Bank, societe anonyme and the Euroclear System.
<PAGE>
Underwriters
___________, 1996
(Continued from previous page)
credit card receivables (the "Receivables") generated or to be generated
from time to time in the ordinary course of business in a portfolio of
revolving credit card accounts and other revolving credit accounts (the
"Accounts"), all monies due in payment of the Receivables and certain other
property, as described more fully herein, including the benefits of certain
funds on deposit in the Cash Collateral Account as described herein. In
addition, the Discount Collateral Interest (as defined herein) will be
issued in the initial amount of $__________ and will be subordinate to the
Certificates to the extent, and for the purposes, described herein (but is
not offered hereby). The Holders will be entitled to certain assets of the
Trust, including the right to receive a varying percentage of each month's
collections with respect to the Receivables at the times and in the manner
described herein. ANB owns the remaining undivided interest in the Trust
not represented by the Certificates, the Discount Collateral Interest or
the certificates of any other Series and any uncertificated interests in
the Trust issued as Series Enhancement, and ANB will service the
Receivables. ANB expects from time to time to offer other Series of
certificates that represent interests in certain assets of the Trust, which
may have terms significantly different from the Certificates.
The issue price to investors per $1,000 expected amount scheduled to be
payable on the __________ Distribution Date (the "Expected Final
Distribution Date") will be $___._____ (__._____% of its $1,000 expected
amount payable at maturity), which represents an expected yield to maturity
to initial investors of _.____% per annum (computed on a semi-annual bond
equivalent basis) calculated from ________, 1996 to the Expected Final
Distribution Date. See "Summary of Terms -- Expected Yield to Maturity" in
this Prospectus Supplement.
There will not be any periodic payments of interest with respect to the
Certificates. During the period from ___________, 1996 (the "Closing Date")
until the Expected Final Distribution Date, the Class A Invested Amount is
expected to increase monthly by the Class A Accretion Target (which will be
determined as described herein on the basis of the Class A Accretion Rate).
Principal with respect to the Certificates is scheduled to be distributed
to the Holders on the Expected Final Distribution Date, or earlier in
certain circumstances described herein. The Certificates will have the
benefit of the Discount Collateral Interest and certain funds on deposit in
the Cash Collateral Account as described herein.
The Certificates initially will be represented by certificates which will
be registered in the name of Cede & Co., the nominee of The Depository
Trust Company. The interests of holders of beneficial interests in the
Certificates ("Certificate Owners") will be represented by book-entries on
the records of The Depository Trust Company and participating members
thereof. Definitive Certificates will be available to Certificate Owners
only under the limited circumstances described in the Prospectus. See
"Description of the Certificates--Definitive Certificates" in the
Prospectus.
[Application will be made to list the Certificates on the Luxembourg Stock
Exchange.]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
The Certificates offered hereby constitute a separate Series of
Certificates being offered by ANB from time to time pursuant to its
Prospectus dated ___________, 1996. This Prospectus Supplement does not
contain complete information about the offering of the Certificates.
Additional information is contained in the Prospectus, and investors are
urged to read both this Prospectus Supplement and the Prospectus in full.
Sales of the Certificates may not be consummated unless the purchaser has
received both this Prospectus Supplement and the Prospectus.
<PAGE>
SUMMARY OF TERMS
The following is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and
the accompanying Prospectus. Certain capitalized terms used herein are
defined elsewhere in this Prospectus Supplement and the accompanying
Prospectus. A listing of the pages on which some of such terms are defined
is found in the "Index of Principal Terms" in this Prospectus Supplement
and the accompanying Prospectus.
Trust The Advanta Gold Master Trust (the "Trust").
Title of Securities Class A Zero Coupon Asset Backed Certificates,
Offered Series 1996-X (the "Certificates").
Face Amount $_______________, which is the expected
Outstanding Principal Amount of the Certificates
on the Expected Final Distribution Date.
Class A Invested Amount The aggregate amount of Principal Receivables
and amounts, if any, on deposit in the Excess
Funding Account, allocated to the holders of the
Certificates (as more fully described herein,
the "Class A Invested Amount") will be
$___________ (the "Class A Initial Invested
Amount") on the Closing Date. There will not be
any periodic payments of interest with respect
to the Certificates. During the Revolving
Period, the Class A Invested Amount is expected
to increase by the Class A Accretion Target
commencing on ____________, 1996 and on the
fifteenth day of each calendar month thereafter
(or, if such fifteenth day is not a Business
Day, on the next business day) (each, a
"Distribution Date"). During the Controlled
Accumulation Period, the Class A Investor Amount
(which represents the sum of the Class A
Invested Amount plus the balance on deposit in
the Principal Funding Account) is expected to
continue to increase by the Class A Accretion
Target on each Distribution Date. The Class A
Accretion Target for each Distribution Date will
be determined as described herein on the basis
of the Class A Accretion Rate. The increase in
the Class A Invested Amount on each Distribution
Date will be given effect from the beginning of
the Monthly Period in which such Distribution
Date falls.
Class A Accretion Rate _______% per annum, calculated on the basis of a
360-day year of twelve 30-day months. Original
issue discount will accrete during the period
from each Distribution Date (or, prior to the
first Distribution Date, from the Closing Date)
to the next Distribution Date on the basis of
the Outstanding Principal Amount of the
Certificates as of the previous Distribution
Date (or, if applicable, the Closing Date). The
"Outstanding Principal Amount" of the Class A
Certificates on any date of determination means
the Class A Accreted Invested Amount minus the
aggregate amount of principal payments made to
the Holders on or prior to such date. The
"Class A Accreted Invested Amount" on any date
means the sum of the Class A Initial Invested
Amount and the aggregate Class A Monthly
Accretion Amounts for all Distribution Dates on
or prior to such date.
Expected Yield to Maturity The issue price to investors per $1,000 of Face
Amount will be $___._____ (__.______% of such
$1,000 Face Amount), which represents an
expected yield to maturity for initial investors
of _.____% per annum (computed on a semi-annual
bond equivalent basis) calculated from the
Closing Date to the Expected Final Distribution
Date. This expected yield to maturity for
initial investors has been calculated based on
various assumptions, including that (a) no Pay
Out Event occurs, (b) the Class A Accretion
Target is met each month prior to the Expected
Final Payment Date such that the Outstanding
Principal Amount of the Certificates on any
Distribution Date is as set forth in the table
on pages S-__ and S-__ and (c) the Face Amount
is paid to investors on the Expected Final
Distribution Date. No assurances can be given
that such assumptions will prove to be correct.
See "Maturity Assumptions" in this Prospectus
Supplement.
Expected Final
Distribution Date The ___________ Distribution Date.
The Investor Interest Each Certificate represents an interest in the
assets of the Trust allocated to the
Certificates (the "Investor Interest"). The
Certificates will be issued pursuant to the
Pooling and Servicing Agreement referred to in
the Prospectus and a supplement thereto (the
"Supplement"). The Certificates will represent
the right to receive from the assets of the
Trust allocated to the Investor Interest funds
up to (but not in excess of) the amounts
required to fund Class A Accretion Targets and
make deposits into the Principal Funding Account
(for distribution to the Holders on the Expected
Final Distribution Date or earlier if a Pay Out
Event occurs) and/or payments of Class A Monthly
Principal on each Distribution Date relating to
the Rapid Amortization Period. See "Description
of the Certificates--General," "--Accretion of
Discount" and "--Principal Payments." In
addition, an interest in the Trust (the
"Discount Collateral Interest") will be issued
concurrently with the issuance of the
Certificates as part of Series 1996-X in an
initial amount of $____________ (the "DCI
Initial Amount") and will, together with the
Available Cash Collateral Amount, constitute the
Series Enhancement for the Certificates. As
used herein, the term "Holders" refers to
holders of the Certificates, and the term
"Series" refers to any series of certificates
issued by the Trust, including the series
("Series 1996-X") of which the Certificates form
a part. The term "Discount Collateral Interest
Holder" refers to the holder of the Discount
Collateral Interest. The Discount Collateral
Interest is not offered hereby.
The Certificates will be available for purchase
in minimum denominations of $1,000 and in
integral multiples of $1,000 in excess thereof.
Except in certain limited circumstances as
described in the Prospectus under "Description
of the Certificates--Definitive Certificates,"
the Certificates will only be available in
book-entry form.
The Trust's assets will be allocated among the
Investor Interest, the Discount Collateral
Interest, the interests of the holders of other
Series and the Transferor Interest as described
below. The aggregate amount of Principal
Receivables and amounts, if any, on deposit in
the Excess Funding Account from time to time
allocated to the Holders and the Discount
Collateral Interest Holder is called the
"Invested Amount" and will be $___________ (the
sum of the Class A Initial Invested Amount and
the DCI Initial Amount) on the Closing Date (the
"Initial Invested Amount"). The Invested Amount
will increase during the Revolving Period as
Class A Monthly Accretion Amounts are added to
the Class A Accreted Invested Amount (which
equals the sum of the Class A Initial Invested
Amount and all Class A Monthly Accretion Amounts
for Distribution Dates up to and including the
date of determination) and any DCI Monthly
Accretion Amounts are added to the DCI Accreted
Amount, except that Class A Monthly Accretion
Amounts may be offset fully or in part by
reductions to the Discount Collateral Interest.
During the Controlled Accumulation Period, the
Investor Amount (which represents the sum of the
Invested Amount plus the balance on deposit in
the Principal Funding Account) is expected to
continue to increase by the Class A Accretion
Target on each Distribution Date. However, the
Invested Amount (and the Class A Invested
Amount) is expected to decline during the
Controlled Accumulation Period as collections of
Principal Receivables and certain other amounts
allocable to the Certificates are deposited into
the Principal Funding Account for ultimate
distribution to the Holders. The Investor Amount
and the Invested Amount will decline during any
Rapid Amortization Period as principal is paid
on the Certificates and the Discount Collateral
Interest and will also be reduced by any
unreimbursed Class A Investor Charge-Offs (which
reduce the Class A Invested Amount) and DCI
Investor Charge-Offs (which reduce the Discount
Collateral Interest). Any reductions in the
Class A Invested Amount or the Discount
Collateral Interest as a result of such
charge-offs will be reimbursed on subsequent
Distribution Dates to the extent of Excess
Spread and Excess Finance Charge Collections
allocable to Series 1996-X that are available
for that purpose.
The Certificates represent beneficial interests
in the Trust only and do not represent interests
in or obligations of Advanta Corp., ANB or any
affiliate thereof except to the limited extent
provided herein. None of the Certificates, the
Accounts or the Receivables are insured or
guaranteed by the FDIC or any other governmental
agency or instrumentality.
Receivables The aggregate amount of Principal Receivables
and Finance Charge Receivables in the Accounts
as of ___________, 1996 equaled $___________ and
$___________, respectively. The aggregate
interest in the Principal Receivables and
amounts on deposit in the Excess Funding
Account, if any, evidenced by the Certificates
and the Discount Collateral Interest will never
exceed the Invested Amount, regardless of the
total amount of Principal Receivables in the
Trust and amounts on deposit in the Excess
Funding Account, if any, at any time. See "The
Receivables."
Registration of The Certificates initially will be represented
Certificates by certificates registered in the name of Cede &
Co. ("Cede"), as the nominee of The Depository
Trust Company ("DTC"). No Certificate Owner
will be entitled to receive a definitive
certificate representing such person's interest
(a "Definitive Certificate"), except in the
event that Definitive Certificates are issued
under the limited circumstances described
herein. Certificate Owners may elect to hold
their Certificates through DTC (in the United
States) or Cedel or Euroclear (in Europe). See
"Description of the Certificates--Definitive
Certificates" in the Prospectus.
Transferor Advanta National Bank, a national banking
association and an indirect wholly-owned
subsidiary of Advanta Corp., is the initial
Transferor of the Receivables and the initial
Credit Card Originator. See "Summary of Terms
-- Transferor" and "The Bank and Advanta Corp."
in the Prospectus.
Servicer Advanta National Bank. The principal executive
offices of ANB are located at 501 Carr Road,
Wilmington, Delaware 19809. See "ANB and
Advanta Corp." in the Prospectus.
Collections All collections of Receivables will be allocated
by the Servicer between amounts collected on
Principal Receivables and amounts collected on
Finance Charge Receivables. All such amounts
will then be allocated in accordance with the
respective interests of the Holders, the
Discount Collateral Interest Holder, the holders
of the Transferor Certificates and the holders
of certificates and uncertificated interests of
other Series, if any, in the Principal
Receivables and Finance Charge Receivables.
Subject to certain exceptions, the Servicer will
deposit all collections of Receivables
distributable to Holders, the Discount
Collateral Interest Holder and to holders of
certificates and uncertificated interests of
other Series, if any, in the Collection Account
no later than the day prior to the applicable
Distribution Date. See "Description of the
Certificates--Allocation Percentages."
Monthly Accretions For purposes of determining the Class A Monthly
Accretion Amount for each Distribution Date, the
Servicer will calculate an amount (with respect
to each Distribution Date, the "Class A Monthly
Interest") equal to one-twelfth of the product
of (i) the Class A Accretion Rate and (ii) the
Outstanding Principal Amount of the Certificates
as of the close of business on the preceding
Distribution Date, except that Class A Monthly
Interest for the initial Distribution Date will
be $__________. The Servicer will also
determine the excess, if any (the "Class A
Accretion Shortfall"), of (x) the sum of Class A
Monthly Interest for such Distribution Date, any
Class A Accretion Shortfall from the prior
Distribution Date and any related Class A
Additional Accretion Amount over (y) the Class A
Monthly Accretion Amount for that Distribution
Date. If there is a Class A Accretion Shortfall
on any Distribution Date, an additional amount
(a "Class A Additional Accretion Amount") will
accrete on such shortfall in an amount equal to
one-twelfth of the product of (i) the Class A
Accretion Rate and (ii) such Class A Accretion
Shortfall. The sum for any Distribution Date of
the Class A Monthly Interest for that
Distribution Date, any Class A Accretion
Shortfall from the prior Distribution Date and
any related Class A Additional Accretion Amount
is called the "Class A Accretion Target" for
that Distribution Date.
On each Distribution Date, the Class A Accreted
Invested Amount will be increased by an amount
(the "Class A Monthly Accretion Amount") equal
to the Class A Accretion Target, minus the
amount, if any, by which any Accretion Required
Amount for that Distribution Date exceeded the
Discount Collateral Interest on that
Distribution Date. The "Accretion Required
Amount" for any Distribution Date will equal the
excess, if any, of the Class A Accretion Target
over the aggregate amount of Excess Spread,
Excess Finance Charge Collections allocated to
Series 1996-X and, during the Controlled
Accumulation Period, Principal Funding
Investment Proceeds available to cover the Class
A Accretion Target (after covering certain other
amounts, in the case of Excess Spread and Excess
Finance Charge Collections; see "Description of
the Certificates -- Application of Collections
-- Excess Spread and Certain Other Amounts"
below). If the Accretion Required Amount on any
Distribution Date is greater than zero, then the
Discount Collateral Interest will be reduced by
an amount equal to the lesser of (x) the
Accretion Required Amount and (y) the Discount
Collateral Interest on that Distribution Date.
In addition, if the Distribution Date falls in
the Controlled Accumulation Period or the Rapid
Amortization Period, a portion of the DCI
Investor Principal Collections in an amount
equal to the Accretion Required Amount, or, if
less, the total amount of DCI Investor Principal
Collections on that Distribution Date (the
"Reallocated Principal Collections"), will be
applied to cover the Accretion Required Amount.
Additional Amounts
Available to Holders The Discount Collateral Interest will be
available to cover certain shortfalls that might
otherwise give rise to Class A Accretion
Shortfalls, as described in "Monthly Accretions"
above. In addition, if Class A Available Funds
are less than the sum of (i) current and overdue
Class A Servicing Fee and (ii) the Class A
Investor Default Amount, with respect to the
related Distribution Date, Excess Spread and
Excess Finance Charge Collections allocable to
Series 1996-X will be applied to fund the
deficiency (the "Class A Required Amount").
"Excess Spread" for any Distribution Date will
equal the sum of (a) the excess of Class A
Available Funds over the sum of the amounts
referred to in clauses (i) and (ii) above, and
(b) the excess of DCI Available Funds over the
sum of (i) current and overdue DCI Servicing Fee
and (ii) the DCI Investor Default Amount. If
Excess Spread and Excess Finance Charge
Collections allocable to Series 1996-X with
respect to such Distribution Date are less than
the Class A Required Amount, any Available Cash
Collateral Amount will then be withdrawn to fund
the remaining Class A Required Amount. If
Excess Spread and Excess Finance Charge
Collections allocable to Series 1996-X with
respect to such Distribution Date and any
Available Cash Collateral Amount are less than
the Class A Required Amount, the Class A
Invested Amount will be reduced by the amount by
which the Class A Required Amount for any
Distribution Date exceeds the sum of (i) Excess
Spread and Excess Finance Charge Collections
allocated to Series 1996-X, and (ii) any
Available Cash Collateral Amount, but not by
more than the Class A Investor Default Amount
for such Monthly Period, and the Holders will
bear directly the credit and other risks
associated with their undivided interest in the
Trust. See "Description of the
Certificates--Allocation of Investor Default
Amount." The Discount Collateral Interest is
not available to cover the Class A Required
Amount. The "Monthly Period," with respect to
any Distribution Date will be the period from
and including the first day of the preceding
calendar month to and including the last day of
such calendar month (other than the initial
Monthly Period, which will commence on the
Closing Date and end on ___________, 1996). Any
Available Cash Collateral Amount after covering
any Class A Required Amount may also be drawn to
cover the DCI Required Amount, which will be
calculated in a manner similar to the Class A
Required Amount. See "Description of the
Certificates--Required Amounts."
Excess Finance Charge
Collections Series 1996-X will be the first Series issued by
the Trust and will be included in a group of
Series ("Group One"), which group may in the
future include other Series which are expected
to be issued by the Trust from time to time.
"Excess Finance Charge Collections" means
amounts designated by another Series for
allocation to Series within Group One (or
amounts so designated by Series in other Groups
that are not required to cover shortfalls
affecting other Series within those Groups) and
which, pursuant to the Pooling and Servicing
Agreement (including the related Supplements),
are allocable to Series 1996-X.
The Cash Collateral A cash collateral account (the "Cash Collateral
Account Account") will be held in the name of the
Trustee for the benefit of the Holders and the
Discount Collateral Interest Holder. To the
extent described herein, withdrawals will be
made from the Cash Collateral Account to pay
first the Class A Required Amount and then the
DCI Required Amount on each Distribution Date.
The Cash Collateral Account will have an initial
balance of $___________, but the amount
available to be withdrawn from the Cash
Collateral Account on each Distribution Date
will not exceed the Available Cash Collateral
Amount (which will initially be less than the
amount on deposit in that account). See
"Description of the Certificates--The Cash
Collateral Account."
Amounts Available as
Enhancement On each Distribution Date, the amount (the
"Available Cash Collateral Amount") available to
be withdrawn from the Cash Collateral Account to
cover any Class A Required Amount (and
thereafter any DCI Required Amount) will equal
the least of (i) the amount on deposit in the
Cash Collateral Account at the opening of
business on such date, (ii) the Required Cash
Collateral Amount and (iii) the Invested Amount.
The "Required Cash Collateral Amount" means, as
to any Distribution Date, initially $__________
and on any Distribution Date thereafter, __% of
the Invested Amount on such Distribution Date,
after taking into account payments to be made,
and monthly accretions to be given effect, on
such Distribution Date; provided that (x) if
either (i) there is a Required Draw Amount on
any Distribution Date or (ii) a Pay Out Event
has occurred, the Required Cash Collateral
Amount for any Distribution Date will (subject
to clauses (y) and (z) below) never be less than
the Required Cash Collateral Amount for the
Distribution Date immediately preceding such
Required Draw Amount or Pay Out Event, (y) in no
event will the Required Cash Collateral Amount
exceed the Invested Amount and (z) the Required
Cash Collateral Amount may be reduced at the
Transferor's option at any time to a lesser
amount upon satisfaction of the Rating Agency
Condition. On any Distribution Date, if the
Available Cash Collateral Amount is less than
the Required Cash Collateral Amount, certain
Excess Spread and Excess Finance Charge
Collections allocable to Series 1996-X will be
deposited into the Cash Collateral Account to
the extent of such shortfall. See "Description
of the Certificates--Application of
Collections--Excess Spread and Certain Other
Amounts." To the extent that on any
Distribution Date falling in the Rapid
Amortization Period (or during the Controlled
Accumulation Period or the Revolving Period,
to the extent requested by the Servicer) the
amount on deposit in the Cash Collateral
Account exceeds the Required Cash Collateral
Amount (or such lesser amount requested
by the Servicer, if during the Controlled
Accumulation Period or the Revolving Period),
such amount will be applied pursuant to the Loan
Agreement and will not be available to the
Holders. See "Description of the
Certificates--The Cash Collateral Account."
In addition, the Discount Collateral Interest
will be available to cover Accretion Required
Amounts on each Distribution Date. The amount
of the Discount Collateral Interest available on
any Distribution Date will equal the result of
(a) the sum of $_____________ (being the DCI
Initial Amount) plus any DCI Monthly Accretions
occurring on or prior to that Distribution Date
(such sum being the "DCI Accreted Amount"),
minus (b) the aggregate amount of principal
payments made to the Discount Collateral
Interest Holder prior to that date, minus (c)
the aggregate amount of DCI Investor Charge-Offs
for that or any prior Distribution Date, minus
(d) the amount of reductions to the Discount
Collateral Interest to cover Accretion Required
Amounts on all prior Distribution Dates, and
plus (e) the aggregate amount of Excess Spread
and Excess Finance Charge Collections allocated
and available on all prior Distribution Dates to
reimburse amounts deducted as described in the
foregoing clauses (c) and (d). The principal
payments to the Discount Collateral Interest
Holder referred to in clause (b) above may be
made only to the extent that on any Distribution
Date the amount of the Discount Collateral
Interest (calculated as described above) is
greater than the Required Discount Collateral
Interest, which equals __% of the Outstanding
Principal Amount of the Certificates. Until the
Class A Investor Amount has been reduced to
zero, the Servicer may elect not to make
permitted principal payments to the Discount
Collateral Interest Holder, which may have the
effect of maintaining the Discount Collateral
Interest at a level greater than the Required
Discount Collateral Interest (though no
assurance can be given that this will occur).
Revolving Period No principal will be payable to or for the
benefit of Holders during the period (the
"Revolving Period") from and including the
Closing Date to but not including the earlier of
(i) the commencement of the Controlled
Accumulation Period and (ii) the commencement of
the Rapid Amortization Period. The accumulation
period with respect to the Certificates (the
"Controlled Accumulation Period") is scheduled
to begin at the close of business on
_______________. Subject to the conditions set
forth herein under "Description of the
Certificates--Postponement of Controlled
Accumulation Period," the end of the Revolving
Period and the beginning of the Controlled
Accumulation Period may be delayed to no later
than _____________ and ____________,
respectively. During the Revolving Period,
collections of Principal Receivables allocated
to the Certificates will generally be paid from
the Trust to the holders of the Transferor
Certificates, to amortizing or accumulating
Series in Group One or (if the Discount
Collateral Interest is greater than the Required
Discount Collateral Interest and the Servicer so
elects) to the Discount Collateral Interest
Holder or deposited into the Excess Funding
Account. See "Description of the
Certificates--Principal Payments."
Controlled Accumulation
Period; Principal
Payments Unless a Series 1996-X Pay Out Event or a Trust
Pay Out Event (either, a "Pay Out Event")
occurs, (a) the Controlled Accumulation Period
will begin on the day after the last day of the
Revolving Period and will end on the earliest of
(i) the commencement of the Rapid Amortization
Period, (ii) the payment in full of the Investor
Amount and (iii) the Series 1996-X Termination
Date. During the Controlled Accumulation
Period, the Class A Investor Principal
Collections will no longer be paid to the
holders of the Transferor Certificates or to
amortizing or accumulating Series in Group One
or deposited into the Excess Funding Account as
described above. Instead they will be deposited
monthly, along with certain other amounts
constituting Available Class A Principal
Collections, on each Distribution Date beginning
with the Distribution Date in the month
following the commencement of the Controlled
Accumulation Period in a trust account
established by the Servicer for the benefit of
the Holders (the "Principal Funding Account") to
be accumulated for payment to the Holders as
provided herein, which payment is anticipated to
be on the Expected Final Distribution Date.
During the Controlled Accumulation Period and
the Rapid Amortization Period, collections of
Principal Receivables generally will be
allocated to Series 1996-X in a ratio the
numerator of which is the Invested Amount as of
the last day of the Revolving Period and the
denominator of which is the greater of (x) the
sum of the aggregate amount of Principal
Receivables and the principal amount on deposit
in the Excess Funding Account (such sum being
the "Trust Principal Balance") as of the last
day of the prior Monthly Period and (y) the sum
of the numerators used to calculate the Series
Percentages applicable to Principal Receivables
for all Series outstanding. Such ratio is,
however, subject to adjustment to give effect to
additions and removals of Accounts and in
certain other circumstances (which may include
the occurrence of Pay Out Event (as defined in
the related Supplement) with respect to a Paired
Series). See "Description of the
Certificates--Allocation Percentages,"
"--Application of Collections," "--Principal
Payments" and "--Paired Series."
On each Distribution Date relating to the
Controlled Accumulation Period, Available Class
A Principal Collections from the related Monthly
Period will be deposited in the Principal
Funding Account, except that the amount of that
deposit will not exceed an amount (the
"Controlled Deposit Amount") equal to the
Controlled Accumulation Amount for that
Distribution Date, plus any portion of the
Controlled Deposit Amount for the prior
Distribution Date that has not yet been
deposited into the Principal Funding Account.
"Controlled Accumulation Amount" means, for any
Distribution Date with respect to the Controlled
Accumulation Period, the Face Amount divided by
twelve, or such higher amount resulting from an
adjustment in connection with any postponement
of the Controlled Accumulation Period. Any
excess Available Class A Principal Collections
over the Controlled Deposit Amount will be paid
to the holders of the Transferor Certificates,
to the Discount Collateral Interest Holder or to
other amortizing or accumulating Series in Group
One or deposited into the Excess Funding
Account. See "Description of the
Certificates--Application of Collections."
All amounts in the Principal Funding Account
will be invested at the direction of the
Servicer by the Trustee in certain Eligible
Investments. Investment earnings (net of
investment losses and expenses) on funds on
deposit in the Principal Funding Account (the
"Principal Funding Investment Proceeds") during
the Controlled Accumulation Period will be
applied towards the Class A Accretion Target on
each Distribution Date.
Funds on deposit in the Principal Funding
Account will be available to pay the Holders in
respect of the Class A Investor Amount on the
Expected Final Distribution Date. If the
aggregate principal amount of deposits made to
the Principal Funding Account are insufficient
to pay in full the Class A Investor Amount on
the Expected Final Distribution Date, the Rapid
Amortization Period will commence as described
below and on each Distribution Date thereafter
until the Class A Investor Amount is paid in
full the Holders will receive distributions of
Class A Monthly Principal. Although it is
anticipated that during the Controlled
Accumulation Period, funds will be deposited in
the Principal Funding Account in an amount equal
to the applicable Controlled Accumulation Amount
with respect to each Distribution Date and that
scheduled principal will be available for
distribution to the Holders on the Expected
Final Distribution Date, no assurance can be
given in that regard. See "Maturity
Assumptions" herein.
If a Pay Out Event occurs during the Controlled
Accumulation Period, the Rapid Amortization
Period will begin and any amount on deposit in
the Principal Funding Account will be paid to
the Holders on the Distribution Date following
the Monthly Period in which the Rapid
Amortization Period begins.
Rapid Amortization Period;
Principal Payments During the period beginning with the occurrence
of any Pay Out Event and ending on the earlier
of (i) the payment in full of the Investor
Amount and (ii) the Series 1996-X Termination
Date (the "Rapid Amortization Period"),
Available Class A Principal Collections will no
longer be paid from the Trust to the holders of
the Transferor Certificates or to amortizing or
accumulating Series in Group One or deposited
into the Excess Funding Account as described
above but instead will be distributed to the
Holders on each Distribution Date until the
Class A Investor Amount has been paid in full,
beginning with the Distribution Date following
the Monthly Period in which the Rapid
Amortization Period begins. See "Description of
the Certificates--Series 1996-X Pay Out Events
and Trust Pay Out Events" for a discussion of
the events which might lead to the commencement
of the Rapid Amortization Period. See
"Description of the Certificates--Application of
Collections."
Shared Collections of
Principal Receivables To the extent that collections of Principal
Receivables allocated to the Certificates are
not needed to make payments to or for the
benefit of Holders or the Discount Collateral
Interest Holder, such collections may be applied
to cover principal payments due to or for the
benefit of other Series, if any, in Group One.
Any such application of collections will not
result in a reduction of the Class A Invested
Amount or the Discount Collateral Interest. In
addition, during the Controlled Accumulation
Period or a Rapid Amortization Period, certain
collections of Principal Receivables allocated
to other Series in Group One, to the extent such
collections are not needed to make payments in
respect of such other Series, may be applied to
cover principal amounts payable to or for the
benefit of the Holders or the Discount
Collateral Interest Holder. See "Description of
the Certificates--Shared Collections of
Principal Receivables."
Required Transferor
Percentage The Required Transferor Percentage applicable to
Series 1996-X is currently [5%]. The Required
Transferor Percentage may be increased or
reduced if, in the case of any reduction (a) the
Transferor delivers an officer's certificate
stating that such reduction will not have an
Adverse Effect and, in the case of any reduction
below 2%, a Tax Opinion, and (b) the Transferor
gives each Rating Agency not less than ten days
prior written notice of such reduction and
within such ten-day period no Rating Agency
informs the Transferor that such reduction will
result in a reduction or withdrawal of its
rating of any outstanding Class or Series as to
which it is a Rating Agency.
Record Date With respect to any Distribution Date, the last
Business Day of the month preceding such
Distribution Date.
Optional Repurchase The Certificates will be subject to optional
purchase by the Transferor on any Distribution
Date after the Investor Amount is less than or
equal to 5% of the sum of the Class A Accreted
Invested Amount and the DCI Accreted Amount,
unless certain events as specified in the
Pooling and Servicing Agreement have occurred.
The purchase price on the Distribution Date on
which such purchase occurs will be equal to the
Class A Investor Amount plus accrued and unpaid
interest on the Certificates as described
herein. See "Description of the
Certificates--Optional Repurchase."
Final Payment of Principal
and Interest; Termination
of Trust The interest of the Holders in the Trust will
terminate following the earlier of (i) the day
after the Distribution Date on which the
Investor Amount is paid in full and (ii) the
earlier of the ___________ Distribution Date and
the termination of the Trust (the "Series 1996-X
Termination Date"). All principal and accreted
discount will be due and payable no later than
the Series 1996-X Termination Date. See
"Description of the Certificates--Final Payment
of Principal and Interest; Termination" in the
Prospectus.
Trustee The Bank of New York
Tax Status The Certificates will be issued with original
issue discount for Federal income tax purposes.
See "Federal Income Tax Consequences" herein for
a discussion of the material consequences of
general application of this feature for domestic
Certificate Owners.
Subject to the matters discussed under "Federal
Income Tax Consequences" herein and in the
Prospectus, Special Tax Counsel to ANB will
deliver its opinion to the effect that, under
existing law, the Certificates will properly be
characterized as debt for Federal income tax
purposes on the date of issuance. Under the
Pooling and Servicing Agreement, the Certificate
Owners will agree to treat the Certificates as
indebtedness for income tax purposes. See
"Federal Income Tax Consequences" herein and in
the Prospectus for additional information
concerning the application of Federal income tax
laws.
ERISA Considerations Under regulations issued by the Department of
Labor, the Trust's assets would not be deemed
"plan assets" of any employee benefit plan
holding interests in the Certificates if certain
conditions are met, such that the Certificates
would constitute "publicly-offered securities,"
including that interests in the Certificates be
held by at least 100 persons independent of the
Transferor and each other upon completion of the
public offering being made hereby. [The
Underwriters expect, although no assurance can
be given, that interests in the Certificates
will be held by at least 100 such persons, and
it is anticipated that the other conditions of
the "publicly-offered security" exception
contained in the regulations will be met.] If
the Trust's assets were deemed to be "plan
assets" of such a plan, there is uncertainty as
to whether existing exemptions from the
"prohibited transaction" rules of the Employee
Retirement Income Security Act of 1974, as
amended, would apply to all transactions
involving the Trust's assets. Accordingly,
employee benefit plans contemplating purchasing
interests in the Certificates should consult
their counsel before making a purchase. See
"ERISA Considerations" in the Prospectus.
Certificate Ratings It is a condition to the issuance of the
Certificates that they be rated in the highest
rating category by at least one nationally
recognized rating agency.
Each rating agency rating the Certificates at
ANB's request is referred to herein as a "Rating
Agency." The Certificates offered hereby are
investment grade asset-backed securities within
the meaning of the Act and the rules promulgated
thereunder.
[Listing Application will be made to list the
Certificates on the Luxembourg Stock Exchange.]
<PAGE>
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RISK FACTORS
Limited Liquidity. There is currently no market for the
Certificates. The Underwriters expect to make a secondary market in the
Certificates, but are not obligated to do so. There can be no assurance
that a secondary market will develop or, if it does develop, that such
market will provide Holders with liquidity of investment or that it will
continue for the life of the Certificates.
Rating of the Certificates. It is a condition to the issuance of the
Certificates that they be rated in the highest rating category by at least
one nationally recognized rating agency. The rating of the Certificates is
based primarily on the value of the Receivables, the availability of funds
on deposit in the Cash Collateral Account as support for the Certificates
and the availability of the Discount Collateral Interest to cover Class A
Monthly Accretion Amounts. The ratings of the Certificates are not a
recommendation to purchase, hold or sell Certificates, and such ratings do
not comment as to the marketability of the Certificates, any market price
or suitability for a particular investor. There is no assurance that any
rating will remain for any given period of time or that any rating will not
be lowered or withdrawn entirely by any such rating agency, if in its
judgment circumstances so warrant.
Limited Amounts of Credit Enhancement. Although credit enhancement
with respect to the Certificates will be provided by the Available Cash
Collateral Amount and the Discount Collateral Interest, such amounts are
limited and are only available for particular purposes. If the Available
Cash Collateral Amount is reduced to zero, the Holders will bear directly
the credit and other risks (excluding those covered by the Discount
Collateral Interest) associated with their interest in the Trust and the
Class A Invested Amount may be reduced. If the Discount Collateral
Interest is reduced to zero, the Holders will bear directly the risks that
Excess Spread, Excess Finance Charge Collections allocated to Series 1996-X
and, during the Controlled Accumulation Period, Principal Funding
Investment Proceeds available to cover the Class A Accretion Target (after
covering certain other amounts, in the case of Excess Spread and Excess
Finance Charge Collections; see "Description of the Certificates --
Application of Collections--Excess Spread and Certain Other Amounts"
below) will not be sufficient to cover Class A Accretion Targets. See
"Description of the Certificates--Allocation Percentages," "--Monthly
Accretions," "--Allocation of Investor Default Amount" and "--The Cash
Collateral Account."
Discount Option. Pursuant to the Pooling and Servicing Agreement,
the Transferor has the option to designate a fixed percentage or a variable
percentage of any or all of the Receivables that otherwise would be treated
as Principal Receivables to be treated as Finance Charge Receivables. Any
such designation would result in an increase in the amount of Finance
Charge Receivables and a slower rate of payment of collections in respect
of Principal Receivables than otherwise would occur. Pursuant to the
Pooling and Servicing Agreement, the Transferor can make such a designation
without notice to or the consent of Holders. The Transferor must provide
30 days' prior written notice to the Servicer, the Trustee and each Rating
Agency of any such designation, and such designation will become effective
only if (i) in the reasonable belief of the Transferor such designation
would not cause a Pay Out Event, or an event that with notice, the lapse of
time or both would constitute a Pay Out Event, with respect to any Series
and (ii) the Rating Agency Condition is satisfied. See "Description of the
Certificates--Discount Option" in the Prospectus.
Book-Entry Registration. The Certificates initially will be
represented by certificates registered in the name of Cede, the nominee for
DTC, and will not be registered in the names of the Certificate Owners or
their nominees. As a result, unless and until Definitive Certificates are
issued, Certificate Owners will not be recognized by the Trustee as
Holders, as that term is used in the Pooling and Servicing Agreement.
Until such time, Certificate Owners will only be able to exercise the
rights of Holders indirectly through DTC and its participating members (in
the United States) or Cedel or Euroclear (in Europe). See "Description of
the Certificates--Book-Entry Registration" and "--Definitive Certificates"
in the Prospectus.
ANB'S CREDIT CARD ACTIVITIES
Billing and Payment
Nearly all of the accounts in the Advanta Credit Card Portfolio are
subject to finance charges at prime indexed variable rates ranging from
5.9% to 20.3% for purchases and cash advances, or London interbank offered
rate indexed variable rates ranging from 5.9% to 22.0% for purchases,
balance transfers and cash advances. For more information, see "ANB's
Credit Card Activities--Billing and Payments" in the Prospectus.
Delinquencies and Loss Experience
The following tables set forth the delinquency and loss experience
for each of the periods shown for the Advanta Credit Card Portfolio. As of
__________, 1996, the Advanta Credit Card Portfolio includes receivables
from accounts the receivables of which were transferred by ANB or Advanta
National Bank USA ("AUS" and, together with ANB, the "Banks") to trusts
similar to the Trust in an aggregate amount equal to $___ billion ("Prior
Securitizations"). The Accounts in the Trust Portfolio have been selected
from that portion of the accounts in the Advanta Credit Card Portfolio
owned by ANB based on certain eligibility criteria specified in the Pooling
and Servicing Agreement. See "The Receivables." There can be no assurance
that the delinquency and loss experience for the Receivables will be
similar to the historical experience set forth below.
<PAGE>
<TABLE>
<CAPTION>
Delinquency Experience
Advanta Credit Card Portfolio
(dollars in thousands)
As of
________, As of December 31,
1996 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Receivables Outstanding(1)(2) $ $9,984,291 $6,535,664 $3,922,086
Receivables Contractually
Delinquent as a Percentage
of Receivables Outstanding:
30-59 days % 1.12% 0.89% 0.96%
60-89 days 0.57 0.44 0.54
90 or more days 0.95 0.71 0.89
--------- ----------- ----------- ---------
Total % 2.64% 2.04% 2.39%
========= =========== =========== =========
_____________________________________
<FN>
(1) Includes receivables transferred in connection with Prior
Securitizations.
(2) Receivables Outstanding consists of all amounts due from cardholders
as posted to the accounts.
<CAPTION>
Loss Experience
Advanta Credit Card Portfolio
(dollars in thousands)
_____ Months
Ended
________, Year Ended December 31,
1996 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Average Receivables
Outstanding(1)(2) $ $7,677,833 $4,675,005 $3,012,060
Gross Losses(3) 205,715 126,557 115,835
Recoveries 12,874 11,339 9,869
Net Losses 192,841 115,218 105,966
Net Losses as a Percentage
of Average Receivables
Outstanding %(4) 2.51% 2.46% 3.52%
____________________________
<FN>
(1) Includes receivables transferred in connection with Prior
Securitizations.
(2) Average Receivables Outstanding is the sum of receivables outstanding
at the beginning and end of each month during the period indicated,
divided by twice the number of months in the period indicated.
(3) Total Gross Losses are presented net of adjustments made pursuant to
the Banks' normal servicing procedures, including removal of
incorrect or disputed finance charges and reversal of annual
cardholder fees on cardholder accounts which have been closed.
Losses do not include accrued finance charges that have been written
off or fraud losses.
(4) Annualized.
</TABLE>
Interchange
In respect of Interchange attributed to the cardholder charges for
merchandise and services in the Accounts, ANB will be required, pursuant to
the terms of the Pooling and Servicing Agreement, to transfer to the Trust
on the Business Day immediately preceding the Distribution Date an amount
equal to one-twelfth of [1.25]% of the outstanding balance of the Principal
Receivables allocable to Series 1996-X at the end of the last day of the
preceding Monthly Period.
THE RECEIVABLES
The Receivables in the Initial Accounts will be conveyed to the Trust
on [the Closing Date]. The Initial Accounts will be selected from the
portion of the Advanta Credit Card Portfolio owned by ANB satisfying
criteria set forth in the Pooling and Servicing Agreement (the "Criteria")
as applied on ___________, 1996 (the "Initial Cut Off Date"). Receivables
in Additional Accounts may be conveyed to the Trust from time to time after
the Closing Date. Such Receivables may arise in Additional Accounts
selected from the Advanta Credit Card Portfolio satisfying the Criteria as
applied on the relevant cut off date (the "Relevant Cut Off Date"). All
such Accounts and any additional Receivables which arise from those
Accounts conveyed to the Trust are hereinafter referred to as the "Trust
Portfolio." In order to meet the Criteria, each Account must, on the
Relevant Cut Off Date, among other things, have been in existence and
maintained and owned by ANB, an Additional Transferor or a related Credit
Card Originator, have a cardholder with a billing address in the United
States, its territories or possessions or a military address (except that
accounts not satisfying this criterion may be added to the Trust Portfolio
so long as the number of accounts in the Trust Portfolio as of the Relevant
Cut-Off Date that will not satisfy this criterion, after giving effect to
such addition, will not exceed 2% of the number of accounts in the Trust
Portfolio), and, except under certain limited circumstances, not be an
account the credit card or cards with respect to which have been reported
to the Transferor or Credit Card Originator that owns such Account as
having been lost or stolen. See "Description of the Certificates--
Representations, Warranties and Covenants" in the Prospectus.
Cardholders whose accounts are included in the Advanta Credit Card
Portfolio have billing addresses in all 50 states, the District of
Columbia, Puerto Rico, Guam, the Virgin Islands and certain foreign
countries.
Pursuant to the Pooling and Servicing Agreement, the Transferor may
be obligated (subject to certain limitations and conditions) to designate
Additional Accounts to be included as Accounts and to convey to the Trust
all Receivables of such Additional Accounts, or may elect to automatically
designate Additional Accounts and convey the Receivables therein whether
such Receivables are then existing or thereafter created. See "Description
of the Certificates--Addition of Accounts" in the Prospectus. These
accounts must meet the Criteria as of the Relevant Cut Off Date.
Throughout the term of the Trust, the Accounts from which the Receivables
arise will be the same MasterCard and VISA accounts designated by the
Transferor on the Relevant Cut Off Date (plus any Additional Accounts
subsequently designated as described above). In addition, as of the
Relevant Cut Off Date and on the date any new Receivables are created, the
Transferor will represent and warrant to the Trust that the Receivables
meet the eligibility requirements specified in the Pooling and Servicing
Agreement. See "Description of the Certificates--Representations,
Warranties and Covenants" in the Prospectus.
As of ________, 1996, the Receivables totalled $___________ in
___________ Accounts. The Accounts had an average credit limit of
$___________. The percentage of the aggregate total Receivable balance to
the aggregate total credit limit was _____%. The average age of the
Accounts was approximately ______ months.
The following tables summarize the Trust Portfolio by various
criteria as of the close of business on ___________, 1996. Because the
future composition of the Trust Portfolio may change over time, these
tables are not necessarily indicative of future results.
Composition by Account Balance
Trust Portfolio
Percentage
of Total Percentage
Number of Number of of Total
Account Balance Accounts Accounts Receivables Receivables
- --------------- -------- -------- ----------- -----------
Credit balance % $ %
$0.00
$0.01 to $1,000.00
$1,000.01 to $2,500.00
$2,500.01 to $5,000.00
$5,000.01 to $7,500.00
Over $7,500.00
Total 100.0% $ 100.0%
Composition by Credit Limit
Trust Portfolio
Percentage
of Total Percentage
Number of Number of of Total
Credit Limit Balance Accounts Accounts Receivables Receivables
- -------------------- -------- -------- ----------- -----------
$0.00 to $1,000.00 % $ %
$1,000.01 to $2,500.00
$2,500.01 to $5,000.00
$5,000.01 to $7,500.00
Over $7,500.00
Total 100.0% $ 100.0%
Composition by Period of Delinquency
Trust Portfolio
[Percentage]
of Total Percentage
Period of Delinquency Number of Number of of Total
(Days Contractually Delinquent) Accounts Accounts Receivables Receivables
- ------------------------------ -------- -------- ----------- -----------
Not Delinquent % $ %
1 to 29 days
30 to 59 days
60 to 89 days
90 to 119 days
120 to 149 days
150 to 179 days
180 or more
Total 100.0% $ 100.0%
Composition by Account Age
Trust Portfolio
Percentage
of Total Percentage
Age Number of Number of of Total
(in Months) Accounts Accounts Receivables Receivables
- ----------- -------- -------- ----------- -----------
0 to 6 months % $ %
Over 6 to 12 months
Over 12 to 24 months
Over 24 to 36 months
Over 36 to 60 months
Over 60 months 100.0% $ 100.0%
Total
Geographic Distribution of Accounts and Receivables
Trust Portfolio<F*>
Percentage
of Total Percentage
Number of Number of of Total
State Accounts Accounts Receivables Receivables
- ---- --------- -------- ----------- -----------
Alabama % $ %
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
All Others
Total 100.0% $ 100.0%
<F*> Based on billing addresses as of ___________, 1996.</F*>
MATURITY ASSUMPTIONS
The following table shows the expected Outstanding Principal Amount
of the Certificates as a percentage of the Face Amount over the expected
term of the Certificates, assuming that (a) no Pay Out Event occurs and (b)
sufficient amounts are always available over such period to fund in full
the Class A Monthly Accretion Targets. No assurances can be given that such
assumptions will prove to be correct.
Month and Year of Class A Outstanding
Distribution Date Principal Amount(1)<F41>
- ------------------ -------------------
September 1996
October 1996
November 1996
December 1996
January 1997
February 1997
March 1997
April 1997
May 1997
June 1997
July 1997
August 1997
September 1997
October 1997
November 1997
December 1997
January 1998
February 1998
March 1998
April 1998
May 1998
June 1998
July 1998
August 1998
September 1998
October 1998
November 1998
December 1998
January 1999
February 1999
March 1999
April 1999
May 1999
June 1999
July 1999
August 1999
September 1999
October 1999
November 1999
December 1999
...................
________ ____(2)<F42>
___________________
<F41>
(1) As a percentage of the Face Amount.</F41>
<F42>
(2) This Class A Monthly Accretion Amount will not be reinvested in
Principal Receivables but will be distributed directly to
investors.</F42>
The Supplement provides that Holders will not begin to receive
payments of principal until the Expected Final Distribution Date or
following the occurrence of a Pay Out Event which results in the
commencement of the Rapid Amortization Period. Unless and until a Pay Out
Event occurs, on each Distribution Date during the Controlled Accumulation
Period, monthly deposits of principal equal to the least of (a) Available
Class A Principal Collections, (b) the Controlled Deposit Amount and (c)
the Class A Invested Amount will be made into the Principal Funding
Account.
Although it is anticipated that a single principal payment will be
made to Holders in an amount equal to the Class A Investor Amount on the
___________ Distribution Date (the "Expected Final Distribution Date"), no
assurance can be given in that regard.
A "Series 1996-X Pay Out Event" occurs, with respect to Series 1996-X
only, either automatically or after specified notice, upon (a) failure of
the Transferor to make certain payments or transfers of funds for the
benefit of the Holders within the time periods stated in the Pooling and
Servicing Agreement, (b) material breaches of certain representations,
warranties or covenants of the Transferor (with such determination being
made, for so long as the Discount Collateral Interest is greater than zero,
without reference to whether any funds are available pursuant to any Series
Enhancement), (c) (i) with respect to the end of any Monthly Period, as
determined on the third Business Day preceding the related Distribution
Date (the "Determination Date"), with respect to which the Transferor
Amount is less than the Required Transferor Amount as of the last day of
such Monthly Period, the failure of the Transferor to convey Receivables in
Additional Accounts to the Trust such that the Transferor Amount is at
least equal to the Required Transferor Amount on or prior to the tenth
Business Day following such Determination Date or (ii) with respect to the
end of any Monthly Period with respect to which the aggregate Principal
Receivables in the Trust are not at least equal to the Required Principal
Balance as of the last day of such Monthly Period, the failure of the
Transferor to convey Receivables in Additional Accounts to the Trust such
that the aggregate Principal Receivables in the Trust are at least equal to
the Required Principal Balance on or prior to the tenth Business Day
following such Determination Date, (d) the occurrence of a Servicer Default
having a material adverse effect on the Holders (with such determination
being made, for so long as the Discount Collateral Interest is greater than
zero, without reference to whether any funds are available pursuant to any
Series Enhancement), (e) failure to pay in full the Class A Investor Amount
on the Expected Final Distribution Date, (f) on any Determination Date, the
Available Cash Collateral Amount on the related Distribution Date is less
than the Required Cash Collateral Amount or (g) at the end of any
Distribution Date, the Discount Collateral Interest is less than the
Required Discount Collateral Interest. A "Trust Pay Out Event" occurs, with
respect to the Certificates and each other Series automatically upon (h) an
Insolvency Event relating to any Transferor or Credit Card Originator
(unless the Rating Agency Condition has been satisfied as to not treating
an Insolvency Event with respect to such Transferor or Credit Card
Originator as a Trust Pay Out Event) (any Transferor the insolvency of
which would constitute a Trust Pay Out Event is referred to herein as a
"Designated Transferor"), (i) the Trust becoming an "investment company"
within the meaning of the Investment Company Act, or (j) the inability of
any Designated Transferor to transfer Receivables to the Trust in
accordance with the Pooling and Servicing Agreement. Although ANB believes
that the likelihood of a Series 1996-X Pay Out Event or a Trust Pay Out
Event occurring is remote, there can be no assurance that a Series 1996-X
Pay Out Event or a Trust Pay Out Event will not occur. See "Description of
the Certificates--Series 1996-X Pay Out Events and Trust Pay Out Events."
If a Pay Out Event occurs the Rapid Amortization Period will begin.
During the Rapid Amortization Period, the Holders will receive (a) the
principal amount on deposit in the Principal Funding Account plus (b)
monthly payments of principal equal to the Available Class A Principal
Collections for the related Monthly Period, until the Class A Investor
Amount is paid in full. Allocations of collections of Principal
Receivables to Series 1996-X will be based on the Principal Allocation
Percentage, and a portion of collections so allocated will be further
allocated to the Certificates based upon the Class A Principal Percentage.
See "Description of the Certificates--Allocation Percentages." The
remainder of such Collections will be allocated to the Discount Collateral
Interest and will not be available to the Holders of the Certificates
(except as Reallocated Principal Collections).
The following table sets forth the highest and lowest cardholder
monthly payment rates for the Advanta Credit Card Portfolio during any
month in the periods shown and the average of the cardholder monthly
payment rates for all months during the period shown, in each case
calculated as a percentage of total opening monthly account balances during
the periods shown. Payments shown in the table include amounts which would
be deemed payments of Principal Receivables and Finance Charge Receivables
with respect to the Accounts.
Monthly Payment Rates
Advanta Credit Card Portfolio
______ Months
Ended
________, Year Ended December 31,
1996 1995 1994 1993
---- ---- ---- ----
Lowest % 9.29% 11.55% 13.22%
Highest % 12.42% 14.25% 15.57%
Monthly Average % 10.73% 12.98% 14.39%
The amount of collections on Receivables may vary from month to month
due to seasonal variations, general economic conditions, changes in tax law
and payment habits of individual cardholders. There can be no assurance
that collections of Principal Receivables with respect to the Trust
Portfolio, and thus the rate at which Holders could expect to accumulate or
receive payments of principal on their Certificates during the Controlled
Accumulation Period or the Rapid Amortization Period, will be similar to
the historical experience set forth above. In addition, the ability of the
Holders to be paid the applicable Class A Investor Amount on the Expected
Final Distribution Date may be dependent upon the availability of Shared
Principal Collections. Series 1996-X is the first Series issued by the
Trust, but the Trust, as a master trust, may (and is expected to) issue
additional Series from time to time. There can be no assurance that the
issuance of additional Series or the terms of any additional Series might
not have an impact on the timing of payments received by Holders. Further,
if a Pay Out Event occurs, the average life and maturity of the
Certificates could be significantly reduced.
RECEIVABLE YIELD CONSIDERATIONS
The yield on the Advanta Credit Card Portfolio for the ______ months
ended _________, 1996 and for each of the three years in the period ended
December 31, 1995 is set forth in the following table. The historical
yield figures in the table are calculated on an accrual basis. Collections
on the Receivables will be on a cash basis and may not reflect the
historical yield experience in the table. For example, during periods of
increasing delinquencies, accrual yields may exceed cash yields as amounts
collected on credit card receivables lag behind amounts accrued and billed
to cardholders. Conversely, as delinquencies decrease, cash yields may
exceed accrual yields as amounts collected in a current period may include
amounts accrued during prior periods. Yield on both an accrual and a cash
basis will be affected by numerous factors, including the finance charges
on the Receivables, the amount of the annual cardholder fee and other fees
and charges, changes in the delinquency rate on the Receivables and the
percentage of cardholders who pay their balances in full each month and do
not incur finance charges. There can be no assurance that the revenue from
finance charges and fees for the Receivables will be similar to the
historical experience set forth below. See "Risk Factors" in the
Prospectus.
<TABLE>
<CAPTION>
Revenue From Finance Charges and Fees
Advanta Credit Card Portfolio(1)
______ Months
Ended
________, Year Ended December 31,
1996(2) 1995(2) 1994(2) 1993(2)
------- ------- ------- -------
<S> <C> <C> <C> <C>
Average Monthly Accrued Fees
and Charges(3)(4) $ $27.03 $22.98 $21.62
Average Account Balance(5) 2,435 2,044 1,761
Yield From Fees and
Charges(3)(4) %(6) 13.32% 13.49% 14.73%
_________________________
<FN>
(1) The figures shown do not include revenue attributable to Interchange.
(2) Includes receivables transferred in connection with Prior
Securitizations.
(3) Fees and Charges are comprised of finance charges, annual cardholder
fees and certain other service charges.
(4) Average Monthly Accrued Fees and Charges and Yield from Fees and
Charges are presented net of adjustments made pursuant to the Banks'
normal servicing procedures, including removal of incorrect or
disputed finance charges and reversal of finance charges accrued on
charged off accounts.
(5) Average Account Balance includes purchases, balance transfers, cash
advances and billed and unpaid finance and other charges, and is
calculated based on the average of the opening monthly account
balances for accounts with balances during the periods shown.
(6) Annualized.
</TABLE>
The yield for the Advanta Credit Card Portfolio shown in the above
table is comprised of three components: finance charges, annual cardholder
fees and other service charges, such as late charges. The yield related to
annual cardholder fees (on those accounts which assess such fees) and other
service charges varies with the type and volume of activity in, and the
balance of each account. The Banks currently assess annual cardholder fees
of $10 to $50 for certain of their credit card accounts. Most accounts
originated since March 1987 do not carry an annual cardholder fee. See
"ANB's Credit Card Activities" herein and in the Prospectus. As account
balances increase, an annual cardholder fee, which remains constant,
represents a smaller percentage of the aggregate account balance.
The decline in portfolio yield demonstrated in the above table is the
result of ANB's focus on the direct solicitation of low rate, prime rate
and London interbank offered rate based, no annual fee credit card accounts
and the fluctuations in the prime rate during the period shown. Certain of
the most recently originated credit card accounts have a lower introductory
rate which might have the effect of lowering finance charge income on such
accounts below the level indicated in the above table. The Trust Portfolio
contains a greater proportion of receivables arising under such accounts
than does the Advanta Credit Card Portfolio, and this is expected to
continue to be true in the future since ANB expects to designate such
accounts from time to time as Additional Accounts. In addition, ANB has
the right under certain circumstances to remove Accounts from the Trust
Portfolio, and ANB may select Accounts for removal on the basis that they
are no longer subject to a lower introductory rate.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement, which permits the Transferor to execute supplements thereto
among the Transferor, the Servicer and the Trustee in order to issue
additional Series. See "Description of the Certificates--New Issuances" in
the Prospectus. The Trustee will provide a copy of the Pooling and
Servicing Agreement (without exhibits or schedules), including any
Supplements, to Holders without charge upon written request. The following
summary describes certain terms of the Pooling and Servicing Agreement and
is qualified in its entirety by reference to the Pooling and Servicing
Agreement.
General
The Certificates will represent interests in the Trust, including the
right to a floating percentage (in the case of collections of Principal
Receivables during the Revolving Period, which collections will be
allocated to the Certificates and paid to the holders of the Transferor
Certificates, to amortizing or accumulating Series in Group One or, in
certain circumstances described herein, to the Discount Collateral Interest
Holder, or deposited into the Excess Funding Account, and in the case of
collections of Finance Charge Receivables and Defaulted Receivables at all
times) or a resettable fixed/floating percentage (in the case of
collections of Principal Receivables during the Controlled Accumulation
Period or the Rapid Amortization Period) (each, the "Series Percentage") of
all cardholder payments on the Receivables. However, on any Distribution
Date during the Controlled Accumulation Period, the amount to be deposited
in the Principal Funding Account in respect of collections of Principal
Receivables will be limited to the applicable Controlled Deposit Amount.
See "--Allocation Percentages." For any Monthly Period, the portion of the
Principal Receivables and any amounts on deposit in the Excess Funding
Account represented by the Certificates and the Discount Collateral
Interest (the "Invested Amount") will be equal to the Initial Invested
Amount, plus the amount of any increases in the Invested Amount as the
result of the addition of Class A Monthly Accretion Amounts and DCI Monthly
Accretion Amounts to the Class A Accreted Invested Amount and DCI Accreted
Amount, respectively, minus the amount of principal deposits into the
Principal Funding Account, minus (without duplication of the amount of
principal deposits into the Principal Funding Account) the amount of
principal payments paid to the Holders and the Discount Collateral Interest
Holder and minus any unreimbursed Class A Investor Charge-Offs and DCI
Investor Charge-Offs. See "Description of the Certificates--Defaulted
Receivables; Rebates and Fraudulent Charges" in the Prospectus and
"--Allocation of Investor Default Amount" herein.
Each Certificate represents the right to receive the amounts
available in the Principal Funding Account on the Expected Final
Distribution Date (or earlier if a Rapid Amortization Period begins during
the Controlled Accumulation Period) and Class A Monthly Principal during
the Rapid Amortization Period, in each case funded from collections of
Principal Receivables allocated to the Class A Invested Amount (plus
certain other amounts specified herein, including, during the Controlled
Accumulation Period, certain collections of Principal Receivables otherwise
allocable to other Series, to the extent such collections are not needed to
make payments to or for the benefit of such other Series). No periodic
payments of interest will be made on the Certificates, but the Class A
Monthly Accretion Amount (which will be determined based on the Class A
Accretion Rate) will be added to the Class A Investor Amount on each
Distribution Date. The Certificates have the benefit of Series Enhancement
in the form of the Discount Collateral Interest and the Available Cash
Collateral Amount (which also provides enhancement for the Discount
Collateral Interest).
During the Revolving Period and the Controlled Accumulation Period,
the Investor Amount is expected to increase as Class A Monthly Accretion
Amounts and any DCI Monthly Accretion Amounts are added to the Class A
Accreted Invested Amount and DCI Accreted Amount, respectively, but the
Investor Amount may decrease in certain limited circumstances. See
"Description of the Certificates--Defaulted Receivables; Rebates and
Fraudulent Charges" in the Prospectus and "--Allocation of Investor Default
Amounts" herein. The amount of Principal Receivables, however, will vary
each day as new Principal Receivables are created and others are paid. The
Transferor Amount will fluctuate daily, therefore, to reflect the changes
in the amount of the Principal Receivables. During the Controlled
Accumulation Period or the Rapid Amortization Period, the Invested Amount
is expected to decline for each Monthly Period as cardholder payments of
Principal Receivables are collected and deposited in the Principal Funding
Account or paid to the Holders.
Monthly Accretions
Original issue discount will accrete on the Certificates at the Class
A Accretion Rate from the Closing Date through the first Distribution Date
and during each period from one Distribution Date to the next on the
Outstanding Principal Amount of the Certificates as of the end of the day
on the first day of each such period. Original issue discount accreting on
the Certificates will be calculated on the basis of a 360-day year of
twelve 30-day months.
On each Distribution Date, the Class A Accreted Invested Amount will
be increased by an amount (the "Class A Monthly Accretion Amount") equal to
the Class A Accretion Target, minus the amount, if any, by which any
Accretion Required Amount for that Distribution Date exceeded the Discount
Collateral Interest on that Distribution Date. The "Accretion Required
Amount" for any Distribution Date will equal the excess, if any, of the
Class A Accretion Target over the aggregate amount of Excess Spread, Excess
Finance Charge Collections allocated to Series 1996-X and, during the
Controlled Accumulation Period, Principal Funding Investment Proceeds
available to cover the Class A Accretion Target (after covering certain
other amounts, in the case of Excess Spread and Excess Finance Charge
Collections; see "Description of the Certificates -- Application of
Collections -- Excess Spread and Certain Other Amounts" below). If the
Accretion Required Amount on any Distribution Date is greater than zero,
then the Discount Collateral Interest will be reduced by an amount equal to
the lesser of (x) the Accretion Required Amount and (y) the Discount
Collateral Interest on that Distribution Date. In addition, if the
Distribution Date falls in the Controlled Accumulation Period or the Rapid
Amortization Period, a portion of the DCI Investor Principal Collections in
an amount equal to the Accretion Required Amount, or, if less, the total
amount of DCI Investor Principal Collections on that Distribution Date (the
"Reallocated Principal Collections"), will be applied to cover the
Accretion Required Amount.
On each Distribution Date, the DCI Accreted Amount will be increased
by an amount (the "DCI Monthly Accretion Amount") equal to the lesser of
(a) the DCI Accretion Target and (b) the aggregate amount of Excess Spread
and Excess Finance Charge Collections allocated to Series 1996-X available
to cover the DCI Accretion Target (after covering certain other amounts;
see "Description of the Certificates -- Application of Collections --
Excess Spread and Certain Other Amounts" below).
For purposes of determining the DCI Accretion Target for each
Distribution Date, the Servicer will calculate an amount (with respect to
each Distribution Date, the "DCI Monthly Interest") equal to one-twelfth of
the product of (i) ____% (the "DCI Accretion Rate") and (ii) the Discount
Collateral Interest as of the close of business on the preceding
Distribution Date, except that DCI Monthly Interest for the initial
Distribution Date will equal $__________. The Servicer will also determine
the excess, if any (the "DCI Accretion Shortfall"), of (x) the sum of DCI
Monthly Interest for such Distribution Date, any DCI Accretion Shortfall
from the prior Distribution Date and any related DCI Additional Accretion
Amount over (y) the DCI Monthly Accretion Amount for that Distribution
Date. If there is a DCI Accretion Shortfall on any Distribution Date, an
additional amount (a "DCI Additional Accretion Amount") will accrete on
such shortfall in an amount equal to one-twelfth of the product of (i) the
DCI Accretion Rate and (ii) such DCI Accretion Shortfall. The sum for any
Distribution Date of the DCI Monthly Interest for that Distribution Date,
any DCI Accretion Shortfall from the prior Distribution Date and any
related DCI Additional Accretion Amount is called the "DCI Accretion
Target" for that Distribution Date.
Principal Payments
During the Revolving Period (which begins on the Closing Date and
ends on the day before the beginning of the Controlled Accumulation Period
or, if earlier, the Rapid Amortization Period), no principal payments will
be made to the Holders. During the Revolving Period, collections of
Principal Receivables allocable to the Certificates will, subject to
certain limitations (including payments of any DCI Monthly Principal), be
treated as Shared Principal Collections.
The first principal payment will be made to the Holders on the
earlier of the Expected Final Distribution Date or the Distribution Date in
the month following the month in which the Rapid Amortization Period
begins. On each Distribution Date with respect to the Controlled
Accumulation Period, an amount equal to the least of (a) Available Class A
Principal Collections on deposit in the Collection Account with respect to
such Distribution Date, (b) the applicable Controlled Deposit Amount and
(c) the Class A Invested Amount, will be deposited in the Principal Funding
Account for payment to the Holders on the Expected Final Distribution Date
or on the first Distribution Date with respect to the Rapid Amortization
Period.
"Available Class A Principal Collections" means, for any Monthly
Period, the sum of (a) the Class A Investor Principal Collections for that
Distribution Date plus (b) any Reallocated Principal Collections for that
Distribution Date, plus (c) any Shared Principal Collections with respect
to any other Series in Group One that are allocated to Series 1996-X.
"Class A Investor Principal Collections" means, for any Monthly Period, the
sum of (i) the portion of collections of Principal Receivables received
during such Monthly Period that are available in the Collection Account and
have been allocated to Series 1996-X in accordance with the Principal
Allocation Percentage and to the Certificates in accordance with the Class
A Principal Percentage plus (ii) any other amounts that are to be treated
as Class A Investor Principal Collections as described under "--Application
of Collections" below.
On each Distribution Date during the Rapid Amortization Period until
the Class A Investor Amount has been paid in full or the Series 1996-X
Termination Date occurs, the Holders will be entitled to receive Available
Class A Principal Collections in an amount up to the Class A Investor
Amount.
Postponement of Controlled Accumulation Period
Upon written notice to the Trustee, the Servicer may elect to
postpone the commencement of the Controlled Accumulation Period, and extend
the length of the Revolving Period, subject to certain conditions including
those set forth below. The Servicer may make such election only if the
Controlled Accumulation Period Length (determined as described below) is
less than twelve months. On each Determination Date, until the Controlled
Accumulation Period begins, the Servicer will determine the "Controlled
Accumulation Period Length," which is the number of months expected to be
required to fully fund the Principal Funding Account no later than the
Expected Final Distribution Date, based on (a) the expected monthly
collections of Principal Receivables expected to be distributable to the
Holders of all Series, assuming a principal payment rate no greater than
the lowest monthly principal payment rate on the Receivables for the
preceding twelve months and (b) the amount of principal expected to be
distributable to holders of Series which are not expected to be in their
revolving periods during the Controlled Accumulation Period. If the
Controlled Accumulation Period Length is less than twelve months, the
Servicer may, at its option, postpone the commencement of the Controlled
Accumulation Period such that the number of months included in the
Controlled Accumulation Period will be equal to or exceed the Controlled
Accumulation Period Length. The effect of the foregoing calculation is to
permit the reduction of the length of the Controlled Accumulation Period
based on the investor interest of certain other Series which are scheduled
to be in their revolving periods during the Controlled Accumulation Period
and on increases in the principal payment rate occurring after the Closing
Date. The length of the Controlled Accumulation Period will not be less
than one month.
Subordination
The Discount Collateral Interest will be subordinated to the
Certificates to the extent necessary to provide for Class A Monthly
Accretion Amounts in an amount equal to the Class A Accretion Target for
each Distribution Date, and will also be subordinated in its rights with
respect to the Available Cash Collateral Amount.
Allocation Percentages
Pursuant to the Pooling and Servicing Agreement, the Servicer will
allocate among the Certificates and the Discount Collateral Interest, the
investor interest for all other Series issued and outstanding and the
Transferor Interest all collections of Finance Charge Receivables and
Principal Receivables and the Defaulted Amount for each Monthly Period.
Collections of Finance Charge Receivables and the Defaulted Amount with
respect to any Monthly Period will be allocated to Series 1996-X based on
the Floating Allocation Percentage, and amounts so allocated will be
further allocated between the Holders and the Discount Collateral Interest
Holder in accordance with the Class A Floating Percentage and the DCI
Floating Percentage, respectively. Collections of Principal Receivables
will be allocated to Series 1996-X based on the Principal Allocation
Percentage, and amounts so allocated will be further allocated between the
Holders and the Discount Collateral Interest Holder based on the Class A
Principal Percentage and the DCI Principal Percentage, respectively.
The "Floating Allocation Percentage" for any Monthly Period generally
equals the percentage equivalent of a fraction, the numerator of which is
the Invested Amount as of the opening of business on the first day of that
Monthly Period (or for the first Monthly Period, the Initial Invested
Amount) and the denominator of which is the greater of (a) the Trust
Principal Balance at the end of the prior Monthly Period (or for the first
Monthly Period, at the end of the day on the Closing Date) and (b) the sum
of the numerators used to calculate the Series Percentages with respect to
Finance Charge Receivables, Defaulted Receivables or (during the Revolving
Period) Principal Receivables, as applicable, for all Series of
Certificates then outstanding. However, if a Reset Date occurs during a
Monthly Period, then (x) such fraction will be recalculated on the Reset
Date on the basis of the denominator described above determined on the
Reset Date and (y) if the Servicer need not make daily deposits of
Collections into the Collection Account (or, in any case, for purposes of
determining the related Investor Default Amount), the Floating Allocation
Percentage will be the weighted average of the Floating Allocation
Percentage (determined as otherwise described above) for that Monthly
Period. The "Class A Floating Percentage" means, for any Monthly Period,
the percentage equivalent of a fraction, the numerator of which is the
Class A Invested Amount as of the opening of business on the first day of
that Monthly Period (or with respect to the first Monthly Period, the Class
A Initial Invested Amount) and the denominator of which is the Invested
Amount as of the end of the prior Monthly Period (or with respect to the
first Monthly Period, the Initial Invested Amount). The "DCI Floating
Percentage" means, for any Monthly Period, 100% minus the Class A Floating
Percentage for that Monthly Period.
The "Principal Allocation Percentage" for any Monthly Period and the
related Distribution Date generally equals (a) during the Revolving Period,
the Floating Allocation Percentage and (b) during the Controlled
Accumulation Period or the Rapid Amortization Period, the percentage
equivalent of a fraction, the numerator of which is the Invested Amount as
of the last day of the Revolving Period and the denominator of which is the
greater of (i) the Trust Principal Balance at the end of the last day of
the preceding Monthly Period and (ii) the sum of the numerators used to
calculate the Series Percentages with respect to Principal Receivables for
all Series of Certificates then outstanding. However, (x) if Series 1996-X
is paired with a Paired Series and a Pay Out Event (as defined in the
Supplement for that Paired Series) occurs during the Controlled
Accumulation Period or a Rapid Amortization Period, the Transferor may, by
written notice delivered to the Trustee and the Servicer, designate a
different numerator (which may not be less than the Invested Amount (less
the amount of Class A Investor Principal Collections on deposit in the
Collection Account) as of the last day of the revolving period for such
Paired Series), (y) such fraction will be recalculated on any Reset Date
that occurs during a Monthly Period on the basis of the denominator
described above determined on that Reset Date and (z) in either such
circumstances, if the Servicer need not make daily deposits of Collections
into the Collection Account, the Principal Allocation Percentage will be
the weighted average of the Principal Allocation Percentage (determined as
otherwise described above) for that Monthly Period. The "Class A Principal
Percentage" for any Monthly Period and the related Distribution Date
generally equals (a) during the Revolving Period, the Class A Floating
Percentage and (b) during the Controlled Accumulation Period or the Rapid
Amortization Period, the percentage equivalent of a fraction, (i) the
numerator of which is the Class A Invested Amount as of the last day of the
Revolving Period plus the aggregate amount of decreases in the Discount
Collateral Interest made after that date in order to cover Accretion
Required Amounts for any Distribution Date (including the one falling in
the Monthly Period for which the Principal Allocation Percentage is being
calculated) and (ii) the denominator of which is the Invested Amount, as of
the last day of the Revolving Period. However, if Series 1996-X is paired
with a Paired Series and a Pay Out Event (as defined in the Supplement for
that Paired Series) occurs during the Controlled Accumulation Period or a
Rapid Amortization Period, the Transferor may, by written notice delivered
to the Trustee and the Servicer, designate a different numerator (which may
not be less than the Class A Invested Amount (less the amount of Class A
Investor Principal Collections on deposit in the Collection Account) as of
the last day of the revolving period for such Paired Series). The "DCI
Principal Percentage" means, for any Monthly Period and the related
Distribution Date, 100% minus the related Class A Principal Percentage.
As used herein, the following terms have the meanings indicated:
"Class A Invested Amount" for any date means the result of (a) the
Class A Accreted Invested Amount, minus (b) (without duplication of amounts
on deposit in the Principal Funding Account) the aggregate amount of
principal payments made to the Holders on or prior to such date, minus (c)
the aggregate amount of Class A Investor Charge-Offs for all prior
Distribution Dates that have not been reimbursed, minus (d) the principal
amount on deposit in the Principal Funding Account (the "Principal Funding
Account Balance").
"Class A Investor Amount" for any date means an amount equal to the
sum of the Class A Invested Amount plus the Principal Funding Account
Balance.
"Discount Collateral Interest" means an interest in the Trust
consisting of the right to receive, to the extent necessary to make the
required payments to the Discount Collateral Interest Holder described in
this Prospectus Supplement, the portion of Collections allocable thereto as
described herein, and funds on deposit in the Collection Account and the
Cash Collateral Account allocable thereto as described herein. On any
date, the amount of the Discount Collateral Interest will equal (a) the DCI
Accreted Amount, minus (b) the aggregate amount of principal payments made
to the Discount Collateral Interest Holder prior to such date, minus (c)
the aggregate amount of DCI Investor Charge-Offs for all prior Distribution
Dates that have not been reimbursed, minus (d) the amount of reductions to
the Discount Collateral Interest made to cover the Accretion Required
Amount on all prior Distribution Dates, and plus (e) the aggregate amount
of Excess Spread and Excess Finance Charge Collections allocated and
available on all prior Distribution Dates for the purpose of reimbursing
amounts deducted pursuant to the foregoing clauses (c) and (d); provided
that the Discount Collateral Interest may not be reduced below zero. "DCI
Accreted Amount" means, as of any date, the sum of (a) the DCI Initial
Amount and (b) the sum of all DCI Monthly Accretion Amounts for all
Distribution Dates on or prior to such date.
"Invested Amount," for any date means the sum of the Class A Invested
Amount and the Discount Collateral Interest.
"Investor Amount" for any date means the sum of the Class A Investor
Amount and the Discount Collateral Interest.
"Reset Date" means each of (a) Date, (b) a Removal Date and (c) a
date on which there is an increase in the Investor Interest under any
variable funding Series issued by the Trust.
"Series Investor Amount" for any date means an amount equal to the
numerator of the Principal Allocation Percentage on such date.
Required Amounts
On each Determination Date, the Servicer will determine the amount
(the "Class A Required Amount"), if any, by which (a) the sum of (i) the
Class A Servicing Fee for the related Distribution Date and any unpaid
Class A Servicing Fee and (ii) the Class A Investor Default Amount, if any,
for such Distribution Date exceeds (b) the Class A Available Funds. If the
Class A Required Amount is greater than zero, Excess Spread and Excess
Finance Charge Collections allocated to Series 1996-X and available for
such purpose will be used to fund the Class A Required Amount on such
Distribution Date. If such Excess Spread and Excess Finance Charge
Collections are less than the Class A Required Amount, any Available Cash
Collateral Amount will then be used to fund the remaining Class A Required
Amount. If such Excess Spread and Excess Finance Charge Collections and
any Available Cash Collateral Amount are insufficient to fund the Class A
Required Amount, the Class A Invested Amount will be reduced by the
remaining Class A Required Amount, but not by more than the Class A
Investor Default Amount for such Distribution Date. Any such reduction in
the Class A Invested Amount will have the effect of slowing or reducing the
return of principal and accreted discount to the Holders. In such case,
the Holders will bear directly the credit and other risks associated with
their interest in the Trust. See "--Allocation of Investor Default
Amount." "Class A Available Funds" means, for any Monthly Period, the sum
of (a) the Class A Floating Percentage of collections of Finance Charge
Receivables allocated to the Series 1996-X Certificates with respect to
such Monthly Period (and certain other amounts that are to be treated as
collections of Finance Charge Receivables in accordance with the Pooling
and Servicing Agreement), less (b) the Class A Floating Percentage of
Servicer Interchange.
On each Distribution Date, the Servicer will also determine the
amount (the "DCI Required Amount"), if any, by which the sum of (i) the DCI
Servicing Fee for such Distribution Date and any unpaid DCI Servicing Fee
and (ii) the DCI Investor Default Amount, if any, for such Distribution
Date exceeds the DCI Available Funds. If the DCI Required Amount is
greater than zero, Excess Spread and Excess Finance Charge Collections
allocated to Series 1996-X not required to pay the Class A Required Amount
will be used to fund the DCI Required Amount on such Distribution Date. If
such Excess Spread and Excess Finance Charge Collections are less than the
DCI Required Amount, any remaining Available Cash Collateral Amount not
required to fund the Class A Required Amount will then be used to fund the
remaining DCI Required Amount. If such Excess Spread and Excess Finance
Charge Collections and Available Cash Collateral Amount are insufficient to
pay the DCI Required Amount, the Discount Collateral Interest will be
reduced by the amount of such insufficiency (but not by more than the DCI
Investor Default Amount for such Distribution Date). See "--Allocation of
Investor Default Amount." "DCI Available Funds" means, for any Monthly
Period, the DCI Floating Percentage of collections of Finance Charge
Receivables allocated to the Series 1996-X Certificates with respect to
such Monthly Period (and certain other amounts that are to be treated as
collections of Finance Charge Receivables in accordance with the Pooling
and Servicing Agreement), less the DCI Floating Percentage of Servicer
Interchange.
Reductions of the Class A Invested Amount or Discount Collateral
Interest as a result of uncovered Class A Required Amounts or DCI Required
Amounts, respectively, will thereafter be reimbursed and the Class A
Invested Amount or Discount Collateral Interest increased to the extent of
Excess Spread and Excess Finance Charge Collections available for such
purposes on each Distribution Date. See "--Application of
Collections--Excess Spread and Certain Other Amounts."
Application of Collections
Covering Fees and Default Amounts. On each Distribution Date, the
Trustee, acting pursuant to the Servicer's instructions, will apply the
Class A Available Funds and DCI Available Funds in the following priority:
(a) On each Distribution Date, an amount equal to the Class A
Available Funds for such Distribution Date will be distributed in the
following priority:
(i) an amount equal to the Class A Servicing Fee for such
Distribution Date, plus the amount of any Class A Servicing Fee
previously due but not distributed to the Servicer on a prior
Distribution Date, will be distributed to the Servicer (unless such
amount has been netted against deposits to the Collection Account);
(ii) an amount equal to the Class A Investor Default Amount for
such Distribution Date will be treated as a portion of Class A
Investor Principal Collections for such Distribution Date; and
(iii) the balance, if any, will constitute Excess Spread and
will be allocated and distributed as described under "--Excess Spread
and Certain Other Amounts" below.
(b) On each Distribution Date, an amount equal to the DCI Available
Funds for such Distribution Date will be distributed in the following
priority:
(i) an amount equal to the DCI Servicing Fee for such
Distribution Date, plus the amount of any DCI Servicing Fee
previously due but not distributed to the Servicer on a prior
Distribution Date, will be distributed to the Servicer (unless such
amount has been netted against deposits to the Collection Account);
(ii) an amount equal to the DCI Investor Default Amount for
such Distribution Date will be treated as a portion of DCI Investor
Principal Collections for such Distribution Date; and
(iii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as described under "--Excess
Spread and Certain Other Amounts" below.
"Excess Spread" means, for any Distribution Date, the sum of the
amounts described in clauses (a)(iii) and (b)(iii) immediately above.
"Investor Principal Collections" means, for any Distribution Date,
the collective reference to the Class A Investor Principal Collections and
the DCI Investor Principal Collections for that Distribution Date.
Excess Spread and Certain Other Amounts. On each Distribution Date,
the Trustee, acting pursuant to the Servicer's instructions, will apply
Excess Spread (and, in the case of clause (g) below, during the Controlled
Accumulation Period, Principal Funding Investment Proceeds) to make the
following distributions in the following priority:
(a) an amount equal to the Class A Required Amount, if any, on
such Distribution Date will be used to fund any deficiency pursuant
to clauses (a)(i) and (ii) above under "--Covering Fees and Default
Amounts" (in that priority);
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed will be treated
as a portion of Class A Investor Principal Collections for that
Distribution Date and applied as described under "--Payments of
Principal" below;
(c) an amount up to the DCI Required Amount, if any, on such
Distribution Date will be used to fund any deficiency pursuant to
clauses (b)(i) and (ii) above under "--Covering Fees and Default
Amounts" (in that priority);
(d) an amount equal to the aggregate amount by which the
Discount Collateral Interest has been reduced by DCI Investor
Charge-Offs that have not been previously reimbursed will be treated
as a portion of DCI Investor Principal Collections for that
Distribution Date;
(e) an amount equal to the excess, if any, of the Required Cash
Collateral Amount over the remaining Available Cash Collateral Amount
(without giving effect to any deposit to the Cash Collateral Account
made on such date) will be deposited into the Cash Collateral
Account;
(f)(i) an amount equal to the aggregate of any other amounts
then owed pursuant to the Loan Agreement [(including the principal
amount of and interest on any loan made under the Loan Agreement to
fund the Cash Collateral Account, but excluding amounts required to
be deposited in the Spread Account under and as defined in the Loan
Agreement)] shall be applied in accordance with the Loan Agreement
and (ii) amounts required to be deposited in the Spread Account under
and as defined in the Loan Agreement shall be so deposited;
(g) an amount equal to the Class A Accretion Target for that
Distribution Date will be treated as a portion of Class A Investor
Principal Collections for that Distribution Date as described under
"--Payments of Principal" below;
(h) an amount equal to the DCI Accretion Target for that
Distribution Date will be treated as a portion of DCI Investor
Principal Collections for that Distribution Date as described under
"--Payments of Principal" below;
(i) an amount equal to the aggregate amount by which the
Discount Collateral Interest has been reduced to cover Accretion
Required Amounts (to the extent of such reductions that have not been
previously reimbursed) will be treated as a portion of DCI Investor
Principal Collections for that Distribution Date; and
(j) the balance, if any, will constitute a portion of Excess
Finance Charge Collection Collections for that Distribution Date and
will be available for allocation to other Series in Group One or to
the holder of the Transferor Certificates as described in
"Description of the Certificates --Sharing of Excess Finance Charge
Collections" in the Prospectus.
If the amount of Excess Spread (and, in the case of clause (g) above,
during the Controlled Accumulation Period, Principal Funding Investment
Proceeds) on any Distribution Date is less than the sum of the amounts
described in clauses (a) through (i) above, then any Excess Finance Charge
Collections allocated to Series 1996-X from other Series in Group One will
be applied to such amounts remaining after the application of Excess Spread
in the same priority as described above for the application of Excess
Spread.
Payments of Principal. On each Distribution Date, the Trustee,
acting pursuant to the Servicer's instructions, will distribute Investor
Principal Collections (see "--Principal Payments" above) in the following
priority:
(a) on each Distribution Date with respect to the Revolving
Period, (i) any DCI Monthly Principal for such Distribution Date will
be distributed to the Discount Collateral Interest Holder and (ii)
any Available Class A Principal Collections will be treated as Shared
Principal Collections and applied as described under "Description of
the Certificates--Shared Principal Collections" in the Prospectus;
(b) on each Distribution Date with respect to the Controlled
Accumulation Period or the Rapid Amortization Period, the Investor
Principal Collections will be distributed or deposited in the
following priority:
(i) an amount of Available Class A Principal Collections
equal to Class A Monthly Principal for such Distribution Date
will be (A) during the Controlled Accumulation Period, deposited
into the Principal Funding Account and (B) during the Rapid
Amortization Period, distributed to the Paying Agent for payment
to the Holders;
(ii) an amount of Available DCI Principal Collections
equal to DCI Monthly Principal for such Distribution Date will
be distributed to the Discount Collateral Interest Holder; and
(iii) the balance, if any, will (A) in the case of
Available Class A Principal Collections, be treated as Shared
Principal Collections and applied as described under
"Description of the Certificates--Shared Principal Collections"
in the Prospectus and (B) in the case of Available DCI Principal
Collections, paid to the Transferor.
On the earlier to occur of (i) the Expected Final Distribution Date
and (ii) the first Distribution Date with respect to the Rapid Amortization
Period, the Trustee, acting in accordance with instructions from the
Servicer, will withdraw the balance on deposit in the Principal Funding
Account and distribute it to the Paying Agent for payment to the Holders.
As used herein, the following terms have the meanings indicated:
"Available DCI Principal Collections" means, for any Distribution
Date, the sum of (a) the DCI Investor Principal Collections for that
Distribution Date, minus (b) any Reallocated Principal Collections for that
Distribution Date, plus (c) any Available Class A Principal Collections
remaining after deposit or payment of the Class A Monthly Principal for
that Distribution Date.
"Class A Monthly Principal" for any Distribution Date relating to the
Revolving Period, zero; and for any Distribution Date relating to the
Controlled Accumulation Period or the Rapid Amortization Period will equal
the least of (i) the Available Class A Principal Collections for that
Distribution Date, (ii) for each Distribution Date with respect to the
Controlled Accumulation Period, the Controlled Deposit Amount for such
Distribution Date and (iii) the Class A Invested Amount on such
Distribution Date.
"Controlled Accumulation Amount" means, for any Distribution Date
with respect to the Controlled Accumulation Period, the Face Amount divided
by twelve, or such higher amount resulting from an adjustment in connection
with any postponement of the Controlled Accumulation Period.
"Controlled Deposit Amount" means, for any Distribution Date in the
Controlled Accumulation Period (beginning with the one relating to the
first Monthly Period in the Controlled Accumulation Period), the sum of (a)
the Controlled Accumulation Amount for that Distribution Date plus (b) the
excess, if any, of any Controlled Deposit Amount for the prior Distribution
Date over the amount deposited in the Principal Funding Account on that
prior Distribution Date.
"DCI Investor Principal Collections" means, for any Monthly Period,
the sum of (i) the portion of collections of Principal Receivables received
during such Monthly Period that are available in the Collection Account and
have been allocated to Series 1996-X in accordance with the Principal
Allocation Percentage and to the Discount Collateral Interest in accordance
with the DCI Principal Percentage plus (ii) any other amounts that are to
be treated as DCI Investor Principal Collections as described under
"--Application of Collections" above.
"DCI Monthly Principal" for any Distribution Date will equal the
least of (i) the Available DCI Principal Collections for such Distribution
Date, (ii) the Excess Discount Collateral Interest on such Distribution
Date and (iii) for any Distribution Date prior to the Distribution Date on
which the Class A Investor Amount is reduced to zero, an amount selected by
the Servicer.
"Excess Discount Collateral Interest" means, as of any Distribution
Date, the amount, if any, by which (a) the Discount Collateral Interest on
that Distribution Date (after giving effect to any reductions thereof to
cover the Class A Monthly Accretion Amount for that Distribution Date but
before giving effect to the payment of any DCI Monthly Principal on that
Distribution Date) exceeds (b) the Required Discount Collateral Interest on
that Distribution Date (after giving effect to any payment of Class A
Monthly Principal on that Distribution Date).
"Required Discount Collateral Interest" means, as of any day, ___% of
the Outstanding Principal Amount of the Class A Certificates; provided that
the Required Discount Collateral Interest may be reduced if the Rating
Agency Condition is satisfied.
Principal Funding Account
Pursuant to the Supplement, the Servicer will establish and maintain
a principal funding account for the Certificates (the "Principal Funding
Account") as a segregated trust account held for the benefit of the
Holders. During the Controlled Accumulation Period, the Trustee at the
direction of the Servicer will transfer Available Class A Principal
Collections to the Principal Funding Account as described under
"--Application of Collections--Payments of Principal."
Funds on deposit in the Principal Funding Account will be invested by
the Trustee at the direction of the Servicer in Eligible Investments.
Investment earnings (net of investment losses and expenses) on funds on
deposit in the Principal Funding Account (the "Principal Funding Investment
Proceeds") will be applied towards the Class A Accretion Target on each
Distribution Date.
Paired Series
The Certificates are subject to being paired with one or more other
Series (each, a "Paired Series") on or after the commencement of the
Controlled Accumulation Period or the Rapid Amortization Period. Each
Paired Series will be pre-funded with an initial deposit to a funding
account or will have a variable principal amount. Any such funding account
will be held for the benefit of such Paired Series and not for the benefit
of the Holders. Upon payment in full of the Certificates, assuming that
there have been no unreimbursed charge-offs with respect to any related
Paired Series, the aggregate investor amount of such Paired Series will
have been increased by an amount up to an aggregate amount equal to the
Investor Amount. The issuance of a Paired Series will be subject to the
conditions described under "Description of the Certificates--New Issuances"
in the Prospectus. There can be no assurance that the terms of any Paired
Series might not have an impact on the calculation of the Series Percentage
or the timing or amount of payments received by a Holder. In particular,
the denominators of the Principal Allocation Percentage and the Class A
Principal Percentage may be reduced upon the occurrence of a pay out event
with respect to a Paired Series resulting in a possible reduction of the
percentage of Collections of Principal Receivables allocated to Series
Holders and possible delays or reductions in payments to the Holders. See
"Risk Factors--Master Trust Considerations" in the Prospectus and "Maturity
Assumptions" herein and in the Prospectus.
Shared Principal Collections
To the extent that collections of Principal Receivables allocated to
the Certificates are not needed to make payments to or for the benefit of
the Holders or the Discount Collateral Interest Holder, such collections
may be applied to cover principal payments due to or for the benefit of
other Series in Group One. Any such application of collections will not
result in a reduction of the Invested Amount.
Similarly, certain collections of Principal Receivables allocated to
other Series in Group One, to the extent such collections are not needed to
make payments to or for the benefit of holders of such other Series
("Shared Principal Collections"), will be applied, if necessary, to cover
payments of principal due to Holders. There can be no assurance that such
Shared Principal Collections will be available to cover payments of
principal or deposits due on any Distribution Date during the Controlled
Accumulation Period or the Rapid Amortization Period. If no such Shared
Principal Collections were available to the Certificates, the Class A
Investor Amount may not be paid in full by the Expected Final Distribution
Date. Such Shared Principal Collections may also be allocated to other
Series either currently outstanding or to be issued by the Trust in the
future. To the extent such Shared Principal Collections are allocated to
other Series, the pro rata share of such Shared Principal Collections
allocated to Holders will be reduced.
The Cash Collateral Account
The Cash Collateral Account will be held for the benefit of the
Holders, and the Cash Collateral Depositor, as their interests appear in
the Supplement, and in the case of the Cash Collateral Depositor, in the
Loan Agreement (with the interest of the Cash Collateral Depositor being
subordinated to the interests of the Holders and the Discount Collateral
Interest Holder, and the interest of the Discount Collateral Interest
Holder being subordinated to the interests of the Holders, as provided in
the Supplement). Funds on deposit in the Cash Collateral Account will be
invested in certain Eligible Investments. On each Distribution Date, all
interest and earnings (net of losses and investment expenses) accrued since
the preceding Distribution Date on funds on deposit in the Cash Collateral
Account will be applied in accordance with the Loan Agreement dated as of
the Closing Date, among the Transferor, the Servicer, the Cash Collateral
Depositor and the Trustee (the "Loan Agreement").
The Cash Collateral Account will be funded on the Closing Date in the
initial amount of $________, which amount will include the proceeds of a
loan to be made by one or more financial institutions to be selected by the
Transferor (such financial institution or institutions, the "Cash
Collateral Depositor"). Such loan will be repaid pursuant to the Loan
Agreement.
On each Distribution Date, the amount available to be withdrawn from
the Cash Collateral Account (the "Available Cash Collateral Amount") will
equal the least of (i) the amount on deposit in the Cash Collateral Account
at the opening of business on such date, (ii) the Required Cash Collateral
Amount and (iii) the Invested Amount. The "Required Cash Collateral
Amount" means, as to any Distribution Date, initially $__________ and on
any Distribution Date thereafter, __% of the Invested Amount on such
Distribution Date, after taking into account deposits and payments to be
made, and monthly accretions to be given effect, on such Distribution Date;
provided that (x) if either (i) there is a Required Draw Amount on any
Distribution Date or (ii) a Pay Out Event has occurred, the Required Cash
Collateral Amount for any Distribution Date will (subject to clauses (y)
and (z) below) never be less than the Required Cash Collateral Amount for
the Distribution Date immediately preceding such Required Draw Amount or
Pay Out Event, (y) in no event will the Required Cash Collateral Amount
exceed the Invested Amount and (z) the Required Cash Collateral Amount may
be reduced at the Transferor's option at any time to a lesser amount upon
satisfaction of the Rating Agency Condition. On any Distribution Date, if
the Available Cash Collateral Amount is less than the Required Cash
Collateral Amount, certain Excess Spread and Excess Finance Charge
Collections allocable to Series 1996-X will be deposited into the Cash
Collateral Account to the extent of such shortfall. See "Description of
the Certificates--Application of Collections--Excess Spread and Certain
Other Amounts." To the extent that on any Distribution Date falling in
the Rapid Amortization Period (or, to the extent requested by the Servicer
during the Controlled Accumulation Period or the Revolving Period) the
amount on deposit in the Cash Collateral Account exceeds the Required Cash
Collateral Amount, such amount (or such lesser amount requested by the
Servicer during the Controlled Accumulation Period or the Revolving Period)
will be applied pursuant to the Loan Agreement and will not be available to
the Holders.
On each Distribution Date, one or more withdrawals may be made from
the Cash Collateral Account in an amount up to the Available Cash
Collateral Amount, to fund the amounts specified in clauses (a) and (c) of
"--Application of Collections--Excess Spread and Certain Other Amounts" in
the order of priority specified therein.
On each Distribution Date, the Servicer or the Trustee, acting
pursuant to the Servicer's instructions, will apply Excess Spread and
Excess Finance Charge Collections (to the extent described above under
"--Application of Collections--Excess Spread and Certain Other Amounts") to
increase the amount on deposit in the Cash Collateral Account to the extent
such amount is less than the Required Enhancement Amount.
Allocation of Investor Default Amount
On each Determination Date, the Servicer will calculate the Investor
Default Amount for the preceding Monthly Period. The "Investor Default
Amount" for any Monthly Period will equal the product of the Floating
Allocation Percentage and the Defaulted Amount for such Monthly Period.
The Investor Default Amount for each Monthly Period will be allocated
between the Holders (the "Class A Investor Default Amount") and the
Discount Collateral Interest Holder (the "DCI Investor Default Amount") in
amounts equal to the product of the Class A Floating Percentage and the DCI
Floating Percentage, respectively, for such Monthly Period and such
Investor Default Amount. An amount equal to the Class A Investor Default
Amount for each Monthly Period will be paid from Class A Available Funds,
Excess Spread and Excess Finance Charge Collections allocated to Series
1996-X or from amounts, if any, on deposit in the Cash Collateral Account
and applied and as described above in "--Application of
Collections--Covering Fees and Default Amounts" and "--Application of
Collections--Excess Spread and Certain Other Amounts." An amount equal to
the DCI Investor Default Amount for each Monthly Period will be paid from
DCI Available Funds, Excess Spread and Excess Finance Charge Collections
allocated to Series 1996-X or from amounts, if any, available under the
Cash Collateral Account and applied as described above in "--Application of
Collections--Covering Fees and Default Amounts" and "--Application of
Collections--Excess Spread and Certain Other Amounts."
On each Distribution Date, if the Class A Required Amount exceeds the
sum of Excess Spread and Excess Finance Charge Collections allocable to
Series 1996-X and any Available Cash Collateral Amount, then the Class A
Invested Amount will be reduced by the amount of such excess, but not by
more than the Class A Investor Default Amount for such Distribution Date (a
"Class A Investor Charge-Off"), which will have the effect of slowing or
reducing the return of principal to the Holders. If the Class A Invested
Amount has been reduced by the amount of any Class A Investor Charge-Offs,
it will thereafter be increased on any Distribution Date (but not by more
than the aggregate Class A Investor Charge-Offs not previously reimbursed)
by the amount of Excess Spread and Excess Finance Charge Collections
allocated to Series 1996-X and available for such purpose as described
under "--Application of Collections--Excess Spread and Certain Other
Amounts."
On each Distribution Date, if the DCI Required Amount exceeds the sum
of Excess Spread and Excess Finance Charge Collections allocable to Series
1996-X and not required to pay the Class A Required Amount, and amounts, if
any, on deposit in the Cash Collateral Account not required to pay the
Class A Required Amount, then the Discount Collateral Interest will be
reduced by the amount of such excess (a "DCI Investor Charge-Off"). If the
Discount Collateral Interest has been reduced by the amount of any DCI
Investor Charge-Offs, it will thereafter be increased on any Distribution
Date (but not by an amount in excess of the aggregate DCI Investor
Charge-Offs) by the amount of Excess Spread and Excess Finance Charge
Collections allocated to Series 1996-X and available for such purpose as
described under "--Application of Collections--Excess Spread and Certain
Other Amounts."
Optional Repurchase
On any Distribution Date occurring on or after the date that the
Investor Amount is reduced to 5% or less of the sum of the Class A Accreted
Invested Amount and the DCI Accreted Amount, the Transferor will have the
option (to be exercised in its sole discretion) to repurchase the
Certificates and the Discount Collateral Interest. The purchase price of
the Certificates and the Discount Collateral Interest will equal the
Investor Amount as of the last day of the Monthly Period preceding the
Distribution Date on which such purchase occurs plus accreted and unpaid
discount on the unpaid principal amount of the Certificates. Following any
such repurchase, the Holders will have no further rights with respect to
the Receivables.
Series 1996-X Pay Out Events and Trust Pay Out Events
The Revolving Period will continue through ___________ (or such later
date as may result from postponement of the Controlled Accumulation
Period), unless a Series 1996-X Pay Out Event or a Trust Pay Out Event
occurs prior to such date. A Series 1996-X Pay Out Event refers to any of
the following events, which are applicable only to Series 1996-X (although
other Series may have similar or identical pay out events):
(a) failure on the part of any Transferor (i) to make any
payment or deposit on the date required under the Pooling and
Servicing Agreement on or before the date occurring five Business
Days after the date such payment or deposit is required to be made;
or (ii) duly to observe or perform in any material respect any other
covenants or agreements of the Transferor in the Pooling and
Servicing Agreement, which failure has a material adverse effect on
the Holders (which determination will be made, for so long as the
Discount Collateral Interest is greater than zero, without reference
to whether any funds are available pursuant to any Series
Enhancement) and continues unremedied for a period of 60 days after
written notice of such failure shall have been given to the
Transferor by the Trustee, or to the Transferor and the Trustee by
the holders of Certificates aggregating not less than 50% of the
outstanding principal balance of the Certificates;
(b) any representation or warranty made by any Transferor in
the Pooling and Servicing Agreement or any information required to be
given by the Servicer on behalf of any Transferor to identify the
Accounts proves to have been incorrect in any material respect when
made or delivered and continues to be incorrect in any material
respect for a period of 60 days after written notice of such failure
shall have been given to the applicable Transferor by the Trustee, or
to the applicable Transferor and the Trustee by the holders of
Certificates aggregating not less than 50% of the outstanding
principal balance of the Certificates and as a result the interests
of the Holders are materially and adversely affected (which
determination shall be made, for so long as the Discount Collateral
Interest is greater than zero, without reference to whether any funds
are available pursuant to any Series Enhancement); provided, however,
that a Series 1996-X Pay Out Event shall not be deemed to have
occurred with respect to this subparagraph (b) if the Transferor has
accepted reassignment of the related Receivable or all such
Receivables, if applicable, during such period (or such longer period
as the Trustee may specify) in accordance with the provisions of the
Pooling and Servicing Agreement;
(c) with respect to the end of any Monthly Period (i) with
respect to which the Transferor Amount is less than the Required
Transferor Amount, the failure of the Transferor to convey on or
prior to the tenth Business Day following the related Determination
Date Receivables in Additional Accounts to the Trust such that the
Transferor Amount is at least equal to the Required Transferor Amount
or (ii) with respect to which the aggregate Principal Receivables are
less than the Required Principal Balance, the failure of the
Transferor to convey on or prior to the tenth Business Day following
the related Determination Date Receivables in Additional Accounts to
the Trust such that the aggregate Principal Receivables are at least
equal to the Required Principal Balance;
(d) any Servicer Default occurs which would have a material
adverse effect on the Holders (which determination shall be made, for
so long as the Discount Collateral Interest is greater than zero,
without reference to whether any funds are available pursuant to any
Series Enhancement);
(e) the Class A Investor Amount shall not be paid in full on
the Expected Final Distribution Date;
(f) on any Determination Date, the Available Cash Collateral
Amount on the related Distribution Date is less than the Required
Cash Collateral Amount; or
(g) the Discount Collateral Interest is less than the Required
Discount Collateral Interest.
A Trust Pay Out Event refers to any of the following events, which
are applicable to the Certificates and other Series:
(h) an Insolvency Event relating to a Designated Transferor or
to any Credit Card Originator (unless the Rating Agency Condition has
been satisfied as to not treating an Insolvency Event with respect to
such Credit Card Originator as a Trust Pay Out Event);
(i) the Trust becomes an "investment company" within the
meaning of the Investment Company Act; or
(j) the inability of a Designated Transferor for any reason to
transfer Receivables to the Trust in accordance with the provisions
of the Pooling and Servicing Agreement.
In the case of any event described in subparagraphs (a), (b) or (d),
a Series 1996-X Pay Out Event or a Trust Pay Out Event will be deemed to
have occurred only if, after any applicable grace period described in such
clauses, the Trustee or Holders evidencing undivided interests aggregating
not less than 50% of the aggregate unpaid principal amount of the
Certificates, by written notice to the Transferor and the Servicer (and to
the Trustee if given by the Holders), declare that a Series 1996-X Pay Out
Event has occurred with respect to the Certificates and is continuing as of
the date of such notice, and in the case of any event described in
subparagraphs (c), (e), (f), (g), (h), (i) or (j), a Series 1996-X Pay Out
Event or a Trust Pay Out Event will be deemed to have occurred without any
notice or other action on the part of the Trustee, or the Holders
immediately upon the occurrence of such event. Upon the occurrence of a
Series 1996-X Pay Out Event or a Trust Pay Out Event, the Rapid
Amortization Period will commence. In such event, distributions of
principal to the Holders in the priority provided for above will begin on
the first Distribution Date following the month in which the Series 1996-X
Pay Out Event or the Trust Pay Out Event occurred.
If an Insolvency Event occurs with respect to any Transferor, the
Discount Collateral Interest and any Cash Collateral Depositor (to the
extent of any outstanding loan amount by such Cash Collateral Depositor
pursuant to the Loan Agreement) will each be deemed to be a Class for
purposes of voting on whether to liquidate the Receivables. See
"Description of the Certificates--Trust Pay Out Events" in the Prospectus.
Servicing Compensation and Payment of Expenses
The share of the Servicing Fee allocable to the Certificates and the
Discount Collateral Interest with respect to any Distribution Date (the
"Monthly Servicing Fee") will be equal to one-twelfth of the product of (a)
2.00% (the "Servicing Fee Rate") and (b) the Invested Amount as of the last
day of the Monthly Period preceding such Distribution Date (the amount
calculated pursuant to this clause (b) is referred to as the "Servicing
Base Amount"), except that the Monthly Servicing Fee for the first
Distribution Date will be $_________. On the Business Day immediately
preceding each Distribution Date (the "Transfer Date") for which ANB or the
Trustee is the Servicer, a portion of Interchange equal to one-twelfth the
product of (i) 1.0% and (ii) the Servicing Base Amount with respect to the
related Monthly Period that is on deposit in the Collection Account will be
withdrawn from the Collection Account and paid to the Servicer in payment
of a portion of the Monthly Servicing Fee with respect to such Monthly
Period ("Servicer Interchange"). If the Servicer Interchange on deposit in
the Collection Account on any Transfer Date with respect to the related
Monthly Period is less than one-twelfth of 1.0% of the Servicing Base
Amount as of the last day of such Monthly Period, the Monthly Servicing Fee
for such Monthly Period will not be paid to the extent of such
insufficiency of Servicer Interchange on deposit in the Collection Account.
The Servicer Interchange with respect to the first Transfer Date will equal
$__________.
The share of the Monthly Servicing Fee allocable to the Holders (the
"Class A Servicing Fee") and the Discount Collateral Interest Holder (the
"DCI Servicing Fee"), respectively, with respect to any Distribution Date
will be equal to one-twelfth of the product of (a) the Class A Floating
Percentage or the DCI Floating Percentage, respectively, (b) the Net
Servicing Fee Rate and (c) the Servicing Base Amount, except that the Class
A Servicing Fee and the DCI Servicing Fee for the first Distribution Date
will be $_________ and $________. "Net Servicing Fee Rate" means (a) so
long as ANB [or any of its affiliates] is the Servicer, 0.5% per annum, (b)
so long as the Trustee is the Servicer, [1.0]% per annum and (c) if ANB or
the Trustee is no longer the Servicer, 2.0% per annum. The Class A
Servicing Fee and the DCI Servicing Fee will be payable to the Servicer
solely to the extent amounts are available for distribution in respect
thereof as described under "--Application of Collections--Covering Fees and
Default Amounts" above.
FEDERAL INCOME TAX CONSEQUENCES
The Certificates will be issued with original issue discount ("OID")
for Federal income tax purposes. Holders of Certificates that are United
States investors will be required to include OID in income prior to the
receipt of cash attributable to such income, regardless of the holder's
method of accounting. The following discussion supplements the discussion
in the Prospectus under the heading "Federal Income Tax Consequences".
Federal Income Tax Consequences-United States Investors
Interest and OID Income to Investor Holders
It is believed, and the following discussion assumes, that prior to a
Pay Out Event, OID on the Certificates should be determined on the
assumption that no such event will occur and that the face amount of each
Certificate will be paid in full on the Expected Final Distribution Date.
Alternative approaches are possible but would not have a material effect on
the calculation of OID on Certificates. Moreover, except as otherwise
provided, the discussion assumes that in fact no Pay Out Event will occur
and that the face amount of each Certificate will be paid in full on the
Expected Final Distribution Date.
The aggregate amount of OID on a Certificate will be the excess of
its stated redemption price at maturity over its "issue price". The issue
price of a Certificate is the first price at which a substantial amount of
Certificates of the same Class are sold (other than to underwriters,
placement agents or wholesalers).
In general, the rate at which the aggregate amount of OID on a
Certificate must be taken into income by a holder is based on the "constant
yield" method. The result is increasing amounts of OID inclusions in
income during each year that the Certificate remains outstanding until the
Expected Final Distribution Date. The annual inclusion of OID during a
taxable period should approximate the increase in the Outstanding Principal
Amount of a Certificate during that period.
The amount of OID includible in gross income by a holder of a
Certificate is the sum of the "daily portions" of OID with respect to the
Certificate for each day during the taxable year or portion of the taxable
year in which the holder holds such Certificate ("accrued OID"). The daily
portion is determined by allocating to each day in any "accrual period" a
pro rata portion of the OID allocable to that accrual period. Accrual
periods with respect to a Certificate may be any set of periods (which may
be of varying lengths) selected by the holder as long as no accrual period
is longer than one year, and as long as each scheduled payment of principal
or interest occurs on the first or last day of an accrual period.
The amount of OID allocable to an accrual period equals the product
of the Certificate's adjusted issue price at the beginning of the accrual
period and its yield to maturity (determined on the basis of compounding at
the close of each accrual period and properly adjusted for the length of
the accrual period). The "adjusted issue price" at the beginning of the
first accrual period is the issue price of the Certificate. Assuming the
issue price of a Certificate is equal to its initial Outstanding Principal
Amount, the yield to maturity should be equal to the Class A Accretion
Rate, adjusted for the length of the accrual period. The adjusted issue
price at the beginning of any accrual period thereafter is the sum of the
issue price and the accrued OID for each prior accrual period (determined
without regard to the amortization of any premium or market discount, which
are discussed below). The amount of OID allocable to the final accrual
period equals the stated redemption price at maturity of the Certificate
over the adjusted issue price as of the beginning of such final accrual
period.
A holder that purchases a Certificate on its original issuance for an
amount in excess of its issue price is permitted to amortize the "premium"
over the term of the Certificate as a reduction in the amount of the OID
otherwise includible in income. A holder that purchases a Certificate on
its original issuance for less than its issue price will be subject to the
market discount rules of the Code with respect to such difference.
Alternatively, an initial purchaser of a Certificate described in this
paragraph may elect to compute OID accruals under the usual rules as
described above, treating the purchase price of the Certificate as its
issue price (which election might cause the same treatment to apply to
other debt instruments held by the holder). Comparable rules apply to
subsequent purchasers of Certificates.
OID included in income by a Holder will increase the tax basis of the
Certificate, reducing the gain (or increasing the loss) on a sale,
disposition, or complete or partial retirement or redemption of the
Certificate.
If a Certificate is not paid in full on the Expected Final
Distribution Date, or if a Pay Out Event occurs, certain payments will be
made with respect to the Certificates. Such payments will not be taxable
as interest when received or accrued. Rather, Holders will continue to
take into income OID under the OID rules described above. In addition, if
such payments constitute "pro rata prepayments" such payments will be
treated as payments in retirement of a portion of the Certificates, which
may result in gain or loss to a holder of Certificates. Generally, such
gain or loss will be calculated by assuming that the original Certificate
consists of two debt instruments, one that is retired and one that remains
outstanding. The adjusted issue price, holder's adjusted basis, and
accrued but unpaid OID of the original debt instrument, determined
immediately before the pro rata prepayment, are allocated between these two
instruments based on the portion of the instrument that is treated as
retired by the pro rata prepayment. For these purposes a "pro rata
prepayment" is defined as a payment on a debt instrument made prior to
maturity that is not made pursuant to the instrument's payment schedule and
results in a substantially pro rata reduction of each payment remaining to
be paid on the instrument. Alternatively, if such payments do not
constitute pro rata prepayments, such payments made will decrease a
Holder's tax basis in its Certificate (but not below zero) and amounts paid
in excess of a Holder's tax basis in its Certificates will be treated as
gain to such Holder. Mayer, Brown & Platt, special counsel to ANB
("Special Tax Counsel") is unable to opine as to whether any such payments
would constitute "pro rata prepayments."
Tax reporting to the IRS and to Holders will include OID reportable
by Holders. However, the tax reporting may only be accurate for original
holders of Certificates who purchased their Certificates on the issue date
for the issue price. Other holders may be required to make adjustments
based on their own purchase date and purchase price for Certificates.
Characterization of the Certificates as Indebtedness
Based on the application of existing law to the facts as set forth in
the Pooling and Servicing Agreement and other relevant documents, Special
Tax Counsel will deliver its opinion to the effect that the Certificates
will properly be treated as indebtedness for Federal income tax purposes.
See "Federal Income Tax Consequences" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting
agreement relating to the Certificates (the "Underwriting Agreement"), ANB
has agreed to sell to the underwriters named below (the "Underwriters"),
and each of the Underwriters has agreed to purchase from ANB, the principal
amount of Certificates set forth opposite its name below.
<PAGE>
Face Amount
Underwriter of Certificates
- ----------- ---------------
Total $
==============
ANB has been advised by the Underwriters that the Underwriters
propose initially to offer the Certificates to the public at the prices set
forth on the cover page of this Prospectus Supplement and to certain
dealers at such price less a concession not in excess of ____% of the
principal amount of the Certificates. The Underwriters may allow and such
dealers may reallow a concession not in excess of ____% of the principal
amount of the Certificates to certain other dealers. After the initial
public offering, the public offering price and such concessions may be
changed.
ANB has agreed that it will indemnify the Underwriters against
certain liabilities, including liabilities under the Act, or contribute to
payments the Underwriters may be required to make in respect thereof. The
Underwriters have agreed to reimburse ANB for certain expenses of the
issuance and distribution of the Certificates.
Each Underwriter has represented and agreed that (a) it has complied
and will comply with all applicable provisions of the Financial Services
Act of 1986 and the Public Offers of Securities Regulations 1995 (the
"Regulations") with respect to anything done by it in relation to the
Certificates in, from or otherwise involving the United Kingdom; (b) it has
only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the
Certificates if that person is of a kind described in Article 11(3) of the
Financial Services Act of 1986 (Investment Advertisements) (Exemptions)
Order 1995 or is a person to whom such document may otherwise lawfully be
issued or passed on; and (c) it has not offered or sold and, during the
period of six months from the date hereof, will not offer or sell any
Certificates to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing, or
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the
meaning of the Regulations.
LEGAL MATTERS
Certain legal matters relating to the issuance of the Certificates
will be passed upon for ANB by Gene S. Schneyer, Esq., General Counsel of
Advanta Corp., the parent company of ANB and in that capacity as counsel to
ANB with respect to the matters described herein, and, with respect to the
Federal tax consequences of such issuance and certain other legal matters,
by special counsel to the Transferor, Mayer, Brown & Platt. Mr. Schneyer
owns or has the right to acquire a number of shares of common stock of
Advanta Corp. well below 1% of the outstanding common stock of Advanta
Corp. Certain legal matters relating to the issuance of the Certificates
[and ERISA matters] will be passed upon for the Underwriters by Mayer,
Brown & Platt.
Index of Principal Terms
Term Page No.
Accounts S-2
Accretion Required Amount S-8, S-29
ANB S-1
AUS S-19
Available Cash Collateral Amount S-10, S-39
Available Class A Principal Collections S-30
Available DCI Principal Collections S-37
Banks S-19
Cash Collateral Account S-10
Cash Collateral Depositor S-39
Cede S-7
Certificate Owners S-2
Certificates S-1, S-4
Class A Accreted Invested Amount S-5
Class A Accretion Rate S-4
Class A Accretion Shortfall S-8
Class A Accretion Target S-8
Class A Additional Accretion Amount S-8
Class A Available Funds S-33
Class A Floating Percentage S-31
Class A Initial Invested Amount S-4
Class A Invested Amount S-4, S-32
Class A Investor Amount S-32
Class A Investor Charge-Off S-40
Class A Investor Default Amount S-40
Class A Investor Principal Collections S-30
Class A Monthly Accretion Amount S-8, S-29
Class A Monthly Interest S-8
Class A Monthly Principal S-37
Class A Principal Percentage S-32
Class A Required Amount S-9, S-33
Class A Servicing Fee S-43
Class B Servicing Fee S-43
Closing Date S-2
Controlled Accumulation Amount S-13, S-37
Controlled Accumulation Period S-12
Controlled Deposit Amount S-13, S-37
Criteria S-20
DCI Accreted Amount S-33
DCI Accretion Rate S-29
DCI Accretion Shortfall S-29
DCI Accretion Target S-30
DCI Additional Accretion Amount S-30
DCI Available Funds S-34
DCI Floating Percentage S-32
DCI Initial Amount S-5
DCI Investor Charge-Off S-40
DCI Investor Default Amount S-40
DCI Investor Principal Collections S-37
DCI Monthly Accretion Amount S-29
DCI Monthly Interest S-29
DCI Monthly Principal S-37
DCI Principal Percentage S-32
DCI Required Amount S-34
DCI Servicing Fee S-43
Definitive Certificate S-7
Designated Transferor S-25
Determination Date S-25
Discount Collateral Interest S-33
Discount Collateral Interest Holder S-5
Distribution Date S-4
DTC S-7
Excess Discount Collateral Interest S-37
Excess Finance Charge Collections S-10
Excess Spread S-35
Expected Final Distribution Date S-2, S-25
Face Amount S-4
FDIC S-1, S-7
Floating Allocation Percentage S-31
Group One S-10
Holders S-5
Initial Cut Off Date S-20
Initial Invested Amount S-6
Invested Amount S-6, S-28, S-33
Investor Amount S-33
Investor Default Amount S-40
Investor Interest S-5
Investor Principal Collections S-35
Loan Agreement S-39
Monthly Period S-9
Monthly Servicing Fee S-43
Net Servicing Fee Rate S-43
OID S-43
Outstanding Principal Amount S-4
Paired Series S-38
Pay Out Event S-12
Principal Allocation Percentage S-32
Principal Funding Account S-12, S-38
Principal Funding Account Balance S-32
Principal Funding Investment Proceeds S-13, S-38
Prior Securitizations S-19
Rapid Amortization Period S-14
Rating Agency S-16
Reallocated Principal Collections S-9, S-29
Receivables S-2
Regulations S-46
Relevant Cut Off Date S-20
Required Cash Collateral Amount S-10, S-39
Required Discount Collateral Interest S-37
Reset Date S-33
Revolving Period S-12
Series S-5
Series 1996-X S-5
Series 1996-X Termination Date S-15
Series Investor Amount S-33
Series Percentage S-28
Servicer Interchange S-43
Servicing Base Amount S-43
Servicing Fee Rate S-43
Shared Principal Collections S-38
Special Tax Counsel S-45
Supplement S-5
Transfer Date S-43
Trust S-1, S-4
Trust Principal Balance S-13
Underwriters S-45
Underwriting Agreement S-45
Accounts 2
Accretion Required Amount 8, 29
ANB 1
AUS 19
Available Cash Collateral Amount 10, 39
Available Class A Principal Collections 30
Available DCI Principal Collections 37
Banks 19
Cash Collateral Account 10
Cash Collateral Depositor 39
Cede 7
Certificate Owners 2
Certificates 1, 4
Class A Accreted Invested Amount 4
Class A Accretion Rate 4
Class A Accretion Shortfall 8
Class A Accretion Target 8
Class A Additional Accretion Amount 8
Class A Available Funds 33
Class A Floating Percentage 31
Class A Initial Invested Amount 4
Class A Invested Amount 4, 32
Class A Investor Amount 32
Class A Investor Charge-Off 40
Class A Investor Default Amount 40
Class A Investor Principal Collections 30
Class A Monthly Accretion Amount 8, 29
Class A Monthly Interest 8
Class A Monthly Principal 37
Class A Principal Percentage 32
Class A Required Amount 9, 33
Class A Servicing Fee 43
Class B Servicing Fee 43
Closing Date 2
Controlled Accumulation Amount 13, 37
Controlled Accumulation Period 12
Controlled Deposit Amount 13, 37
Criteria 20
DCI Accreted Amount 33
DCI Accretion Rate 29
DCI Accretion Shortfall 29
DCI Accretion Target 30
DCI Additional Accretion Amount 30
DCI Available Funds 34
DCI Floating Percentage 32
DCI Initial Amount 5
DCI Investor Charge-Off 40
DCI Investor Default Amount 40
DCI Investor Principal Collections 37
DCI Monthly Accretion Amount 29
DCI Monthly Interest 29
DCI Monthly Principal 37
DCI Principal Percentage 32
DCI Required Amount 34
DCI Servicing Fee 43
Definitive Certificate 7
Designated Transferor 25
Determination Date 25
Discount Collateral Interest 33
Discount Collateral Interest Holder 6
Distribution Date 4
DTC 7
Excess Discount Collateral Interest 37
Excess Finance Charge Collections 10
Excess Spread 35
Expected Final Distribution Date 2, 25
Face Amount 4
FDIC 1, 7
Floating Allocation Percentage 31
Group One 10
Holders 5
Initial Cut Off Date 20
Initial Invested Amount 6
Invested Amount 6, 28, 33
Investor Amount 33
Investor Default Amount 40
Investor Interest 5
Investor Principal Collections 35
Loan Agreement 39
Monthly Period 9
Monthly Servicing Fee 43
Net Servicing Fee Rate 43
OID 43
Outstanding Principal Amount 4
Paired Series 38
Pay Out Event 12
Principal Allocation Percentage 32
Principal Funding Account 12, 38
Principal Funding Account Balance 32
Principal Funding Investment Proceeds 13, 38
Prior Securitizations 19
Rapid Amortization Period 14
Rating Agency 17
Reallocated Principal Collections 9, 29
Receivables 2
Regulations 46
Relevant Cut Off Date 20
Required Cash Collateral Amount 10, 39
Required Discount Collateral Interest 38
Reset Date 33
Revolving Period 12
Series 5
Series 1996-X 5
Series 1996-X Termination Date 15
Series Investor Amount 33
Series Percentage 28
Servicer Interchange 43
Servicing Base Amount 43
Servicing Fee Rate 43
Shared Principal Collections 38
Special Tax Counsel 45
Supplement 5
Transfer Date 43
Trust 1, 4
Trust Principal Balance 13
Underwriters 45
Underwriting Agreement 45
<PAGE>
ANNEX I
[EXCLUDE FROM INITIAL PROSPECTUS SUPPLEMENT]
OTHER SERIES ISSUED
[The Certificates will be the _________ Series issued by the Trust.
The table below sets forth the principal characteristics of the Series
________ Certificates, Series _______ Certificates and the _________
Certificates, the other Series heretofore issued by the Trust and currently
outstanding. Series ________ and Series ________ each were issued in an
offering exempt from the registration requirements of the Act. Solely for
purposes of this Annex I, "LIBOR" shall mean London interbank offered
quotations for United States dollar deposits determined as set forth in the
related Series Supplements.]
ANNEX II
[EXCLUDE FROM INITIAL PROSPECTUS SUPPLEMENT]
[RECEIVABLES IN ADDITIONAL ACCOUNTS
CONVEYED TO THE TRUST BY ANB]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Date
Receivables
Transferred Number of Receivables
Assignment to Relevant Additional in Additional
Number Trust Cut Off Date Accounts(1) Accounts(1)
----- ----- ------------ ---------- -----------
________________________
<FN>
(1) The amounts shown are as of the Relevant Cut Off Date.
</TABLE>
No dealer, salesperson or other person has been authorized to give
any information or to make any representation not contained in this
Prospectus Supplement or the Prospectus and, if given or made, such
information or representation must not be relied upon as having been
authorized by ANB or the Underwriters. Neither this Prospectus Supplement
nor the Prospectus constitutes an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any jurisdiction to
any person to whom it is unlawful to make such offer in such jurisdiction.
Neither the delivery of this Prospectus Supplement or the Prospectus, nor
any sale hereunder or thereunder, shall, under any circumstances, create
any implication that the information herein or therein is correct as of any
time subsequent to their respective dates or that there has been no change
in the affairs of ANB or the Trust since such dates.
Table of Contents
Page
Prospectus Supplement
SUMMARY OF TERMS S-4
RISK FACTORS S-18
ANB'S CREDIT CARD ACTIVITIES S-19
THE RECEIVABLES S-20
MATURITY ASSUMPTIONS S-24
RECEIVABLE YIELD CONSIDERATIONS S-26
DESCRIPTION OF THE CERTIFICATES S-28
FEDERAL INCOME TAX CONSEQUENCES S-43
UNDERWRITING S-45
LEGAL MATTERS S-46
Index of Principal Terms S-47
Summary of Terms 4
Risk Factors 16
ANB's Credit Card Activities 17
The Receivables 18
Maturity Assumptions 22
Receivable Yield Considerations 24
Description of the Certificates 25
Federal Income Tax Consequences 41
Underwriting 43
Legal Matters 44
Index of Principal Terms 45
<PAGE>
Prospectus
Prospectus Supplement
Reports to Holders
Available Information
Incorporation of Certain Documents by Reference
Summary of Terms
Risk Factors
Formation of the Trust
ANB's Credit Card Activities
Use of Proceeds
ANB and Advanta Corp.
Certain Legal Aspects of the Receivables
Description of the Certificates
Enhancement
Federal Income Tax Consequences
ERISA Considerations
Plan of Distribution
Underwriting
Legal Matters
Index of Principal Terms
ADVANTA
Gold Master Trust
$____________
Class A Zero Coupon
Asset Backed Certificates,
Series 1996-X
Advanta National Bank
Transferor and Servicer
Underwriters
Prospectus Supplement
EXHIBIT 5.1
[ADVANTA CORP. LETTERHEAD]
July 29, 1996
Advanta National Bank
501 Carr Road
Wilmington, DE 19809
RE: ADVANTA GOLD MASTER TRUST
ADVANTA NATIONAL BANK
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
I am Vice President, Secretary and General Counsel of Advanta Corp.,
the parent company of Advanta National Bank ("ANB"), a national banking
association, and in that capacity counsel to ANB. I have acted as counsel
to ANB in connection with the above-referenced Registration Statement
(together with the exhibits and any amendments thereto, the "Registration
Statement"), filed by ANB with the Securities and Exchange Commission in
connection with the registration by ANB of Asset Backed Certificates (the
"Certificates") to be sold from time to time in one or more series in
amounts to be determined at the time of sale and to be set forth in one or
more Supplements (each, a "Prospectus Supplement") to the Prospectus (the
"Prospectus") included in the Registration Statement.
As described in the Registration Statement, the Certificates of each
series will be issued by a master trust (the "Advanta Gold Master Trust")
to be created pursuant to a Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement") by and between ANB, as Transferor and Servicer,
and a trustee to be identified (the "Trustee").
I have examined and relied upon the forms of Pooling and Servicing
Agreement, Series Supplement (a "Series Supplement") and underwriting
agreement (an "Underwriting Agreement") incorporated by reference as
exhibits to the Registration Statement. In addition, I have examined and
considered executed originals or counterparts, or copies certified or
otherwise identified to my satisfaction as being true copies, of such
certificates, instruments, documents or other corporate records of ANB and
matters of fact and law as I have deemed necessary for the purposes of the
opinion expressed below.
In my examination, I have assumed the genuineness of all signatures,
the authenticity of all items submitted to me as originals, the conformity
with originals of all items submitted to me as certified or photostatic
copies and the authenticity of the originals of such latter documents.
I am licensed to practice law only in the Commonwealth of
Pennsylvania and I express no opinion as to the laws of any other
jurisdictions except the laws of the United States of America and except to
the extent that matters of Delaware corporate law are involved in the
opinions set forth below. With respect to any opinions concerning Delaware
corporate law, you are aware that I am not admitted to the Bar in the State
of Delaware and I am not an expert in the law of such jurisdiction, and
that any such opinions concerning Delaware corporate law are based upon my
general (although not necessarily complete) familiarity with the Delaware
General Corporation Law as a result of my prior involvement in transactions
involving such law.
Based upon and subject to the foregoing, it is my opinion that when a
particular series of Certificates to be issued pursuant to the Registration
Statement has been duly and validly authorized by ANB and when such
Certificates are executed by the Trustee in accordance with the provisions
of the Pooling and Servicing Agreement and the applicable Series Supplement
and are paid for by the underwriters thereof pursuant to the applicable
Underwriting Agreement, such series of Certificates will be legally issued,
fully paid, and non-assessable.
I consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the caption "Legal
Matters" in the Prospectus and any Prospectus Supplement included in the
Registration Statement.
Very truly yours,
/s/ Gene S. Schneyer
- ---------------------
Gene S. Schneyer
Vice President, Secretary and General Counsel
EXHIBIT 8.1
[MAYER, BROWN & PLATT LETTERHEAD]
August 8, 1996
Advanta National Bank
501 Carr Road
Wilmington, Delaware 19809
RE: ADVANTA GOLD MASTER TRUST
ADVANTA NATIONAL BANK
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have acted as special tax counsel for Advanta National Bank, a
national banking association ("ANB"), in connection with the
above-referenced Registration Statement (together with the exhibits and any
amendments thereto, the "Registration Statement"), filed by ANB with the
Securities and Exchange Commission in connection with the registration by
ANB of Asset Backed Certificates (the "Certificates") to be sold from time
to time in one or more series in amounts to be determined at the time of
sale and to be set forth in one or more Supplements (each, a "Prospectus
Supplement") to the Prospectus (the "Prospectus") included in the
Registration Statement.
We are familiar with the proceedings to date in connection with the
proposed issuance and sale of the Certificates and in order to express our
opinion hereinafter stated, (a) we have examined copies of the form of the
Pooling and Servicing Agreement and the forms of the Certificates filed as
exhibits to the Registration Statement (collectively the "Operative
Documents") and (b) we have examined such other records and documents and
such matters of law, and we have satisfied ourselves as to such matters of
fact, as we have considered relevant for purposes of this opinion.
The opinion set forth in this letter is based upon the applicable
provisions of the Internal Revenue Code of 1986, as amended, Treasury
regulations promulgated and proposed thereunder, current positions of the
Internal Revenue Service (the "IRS") contained in published Revenue Rulings
and Revenue Procedures, current administrative positions of the IRS and
existing judicial decisions. No tax rulings will be sought from the IRS
with respect to any of the matters discussed herein.
Based on the foregoing and assuming that the Operative Documents are
executed and delivered in substantially the form we have examined, we are
of the opinion that the Certificates will be characterized as indebtedness
that is secured by the Receivables, that the Trust will not be
characterized for Federal income tax purposes as an association (or
publicly traded partnership) taxable as a corporation, and the statements
set forth in the Prospectus under the headings "Prospectus Summary -- Tax
Status," "Prospectus Summary -- ERISA Considerations," "Federal Income Tax
Consequences" and "ERISA Considerations" are a fair and accurate summary of
the material tax consequences of the issuance and holding of the
Certificates. There can be no assurance, however, that the tax conclusions
presented therein will not be successfully challenged by the IRS, or
significantly altered by new legislation, changes in IRS positions or
judicial decisions, any of which challenges or alterations may be applied
retroactively with respect to completed transactions.
We note that the Prospectus does not relate to a specific
transaction. Accordingly, the above-referenced description of federal
income tax consequences may, under certain circumstances, require
modification in the context of an actual transaction.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in the Prospectus
under the caption "Prospectus Summary -- Tax Status", "U.S. Federal Income
Tax Consequences" and "Legal Matters". In giving such consent, we do not
admit that we are "experts" within the meaning of the term used in the Act
or the rules and regulations of the Securities and Exchange Commission
issued thereunder, with respect to any part of the Registration Statement,
including this opinion as an exhibit or otherwise.
Very truly yours,
/s/ Mayer, Brown & Platt
-------------------------
MAYER, BROWN & PLATT
