<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 23, 1997
REGISTRATION STATEMENT NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ADVANTA BUSINESS SERVICES CORP.
(SPONSOR OF THE SECURTIES DESCRIBED HEREIN)
DELAWARE 1020 LAUREL OAK ROAD 23-2333786
(JURISDICTION) VOORHEES, NEW JERSEY 08043 (I.R.S. EMPLOYER
IDENTIFICATION NO.)
COPY TO:
COLE B. SILVER, ESQ.
ADVANTA BUSINESS SERVICES CORP.
1020 LAUREL OAK ROAD
VOORHEES, NEW JERSEY 08043
609-782-7300
(NAME, ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
CHRIS DIANGELO, ESQ.
DEWEY BALLANTINE, LLP
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this registration statement becomes effective.
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, 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 number of the earlier
effective registration statement for the same offering.[ ]
If this Form is filed as a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, please check the following box and list
the Securities Act registration 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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===============================================================================================================================
PROPOSED MAXIMUM PROPOSED
AMOUNT AGGREGATE PRICE MAXIMUM AMOUNT OF
TO BE PER UNIT(1) AGGREGATE REGISTRATION
TITLE OF SECURITIES BEING REGISTERED REGISTERED OFFERING PRICE(1) FEE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Advanta Equipment Receivables
Asset-Backed Securities $1,000,000 100% $1,000,000 $303.03
===============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
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> 2
CROSS REFERENCE SHEET
TO FORM S-3
<TABLE>
<CAPTION>
CAPTION OR LOCATION
ITEM AND CAPTION IN FORM S-3 IN PROSPECTUS
---------------------------- -------------
<S> <C> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . Forepart of Registration Statement;
Outside Front Cover Page**
2. Inside Front and Outside Back Cover Page of
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . Inside Front Cover Page**; Outside
Back Cover Page
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges . . . . . . . . . . . . . . . . . Summary of Prospectus**; Special
Considerations
4. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . Use of Proceeds
5. Determination of Offering Price . . . . . . . . . . . . . . . . *
6. Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
7. Selling Security Holders . . . . . . . . . . . . . . . . . . . . *
8. Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . Methods of Distribution**
9. Description of Securities to be Registered . . . . . . . . . . . Outside Front Cover Page**;
Summary of Prospectus**;
Description of the Securities**;
Certain Federal Income Tax
Consequences**
10. Interests of Named Experts and Counsel . . . . . . . . . . . . . *
11. Material Changes . . . . . . . . . . . . . . . . . . . . . . . . *
12. Incorporation of Certain Information by Reference . . . . . . . Inside Front Cover Page**;
Incorporation of Certain
Documents by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities . . . . . . . . See page II-3
- ------------------------
</TABLE>
* Not applicable or answer is negative.
** To be completed from time to time by Prospectus Supplement.
<PAGE> 3
PROSPECTUS
ADVANTA EQUIPMENT RECEIVABLES
ASSET-BACKED SECURITIES ISSUABLE IN SERIES
ADVANTA BUSINESS SERVICES CORP.,
SPONSOR
This Prospectus describes certain Advanta Equipment Receivables
Asset-Backed Notes (the "Notes") and Advanta Equipment Receivables Asset-Backed
Certificates (the "Certificates" and, together with the Notes, the "Securities")
that may be sold from time to time in one or more series, in amounts, at prices
and on terms to be determined at the time of sale and to be set forth in a
supplement to this Prospectus (each, a "Prospectus Supplement"). Each series of
Securities may include one or more classes of Notes and one or more classes of
Certificates, which will be issued either by the Sponsor, a Transferor (each as
hereinafter defined), or by a trust to be formed, or caused to be formed, by the
Sponsor for the purpose of issuing one or more series of such Securities (each,
a "Trust"). The Trust issuing Securities as described in this Prospectus and the
related Prospectus Supplement shall be referred to herein as the "Issuer."
Each class of Securities of any series will either evidence beneficial
ownership in a segregated pool of assets (each, a "Trust Fund") (such
Securities, "Certificates") or will represent indebtedness of the Issuer
secured by the related Trust Fund (such Securities, "Notes"), as described
herein and in the related Prospectus Supplement. Each Trust Fund may consist of
any combination of leases (including but not limited to, finance leases, true
leases and full payout leases), loan contracts and promissory notes financing
the purchase or lease of a variety of commercial assets, commercial products or
personal property used exclusively for commercial purposes (such leases, loan
contracts and promissory notes are referred to herein as the "Contracts"). Each
Trust Fund may also include a security interest in the underlying commercial
assets, commercial products or personal property relating thereto (the
"Underlying Collateral"), together with the proceeds thereof (together with the
Contracts, the "Receivables"). If and to the extent specified in the related
Prospectus Supplement, credit enhancement with respect to a Trust Fund or any
class of Securities may include any one or more of the following: a financial
guaranty insurance policy (a "Policy") issued by an insurer specified in the
related Prospectus Supplement, a reserve account, letters of credit, credit or
liquidity facilities, third party payments or other support, cash deposits or
other arrangements. In addition to or in lieu of the foregoing, credit
enhancement may be provided by means of subordination, cross-support among the
Receivables or over-collateralization. See "Description of the Trust Agreement
- -- Credit and Cash Flow Enhancement." The assets in the Trust Fund for a series
will have been originated or acquired by the Sponsor from one or more
affiliates of the Sponsor or from one or more entities which are unaffiliated
with the Sponsor (any entity from which the Sponsor acquires Receivables being,
an "Originator"). Each Originator will be an entity, including various
manufacturers or dealers of the Underlying Collateral (each, a "Vendor"),
generally in the business of originating or acquiring Receivables. The Sponsor
will cause each Trust to acquire the Receivables from the Sponsor and/or the
related Originator(s) on or prior to the date of issuance of the related
Securities, as described herein and in the related Prospectus Supplement. The
Receivables included in a Trust Fund will be serviced by Advanta Business
Services Corp. as the Servicer (the "Servicer") described in the related
Prospectus Supplement.
Each series of Securities will include one or more classes (each, a
"Class"). A series may include one or more Classes of Securities entitled to
principal distributions, with disproportionate, nominal or no interest
distributions, or to interest distributions, with disproportionate, nominal or
no principal distributions. The rights of one or more Classes of Securities of
any series may be senior or subordinate to the rights of one or more of the
other Classes of Securities. A series may include two or more Classes of
Securities which differ as to the timing, sequential order, priority of payment,
interest rate or amount of distributions of principal or interest or both.
Information regarding each Class of Securities of a series, together with
certain characteristics of the related assets in the Trust Fund, will be set
forth in the related Prospectus Supplement. The rate of payment in respect of
principal of the Securities of any Class will depend on the priority of payment
of such a Class and the rate and timing of payments (including prepayments,
defaults, liquidations or repurchases) on the related Receivables. A rate of
payment lower or higher than that anticipated may affect the weighted average
life of each Class of Securities in the manner described herein and in the
related Prospectus Supplement. See "Description of the Securities."
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" SET FORTH ON PAGE ___HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT.
THE NOTES OF A GIVEN SERIES REPRESENT OBLIGATIONS OF THE ISSUER ONLY AND DO NOT
REPRESENT INTERESTS OF THE SPONSOR, ANY TRANSFEROR, ANY SERVICER, ANY ORIGINATOR
OR ANY OF THEIR RESPECTIVE AFFILIATES. THE CERTIFICATES OF A GIVEN SERIES
REPRESENT BENEFICIAL INTERESTS IN THE RELATED TRUST ONLY AND DO NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF THE SPONSOR, ANY TRANSFEROR, ANY SERVICER, ANY
ORIGINATOR OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE SECURITIES NOR THE
UNDERLYING RECEIVABLES WILL BE GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY
OR INSTRUMENTALITY OR BY THE SPONSOR, ANY TRANSFEROR, ANY SERVICER, ANY
ORIGINATOR, ANY TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS SET
FORTH IN THE RELATED PROSPECTUS SUPPLEMENT. SEE ALSO "RISK FACTORS. "
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
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.
Offers of the Securities may be made through one or more different
methods, including offerings through underwriters as more fully described under
"Method of Distribution" herein and in the related Prospectus Supplement. Prior
to issuance, there will have been no market for the Securities
<PAGE> 4
of any series, and there can be no assurance that a secondary market for the
Securities will develop, or if it does develop, that it will continue.
RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE. THIS PROSPECTUS MAY NOT BE
USED TO CONSUMMATE SALES OF SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS
SUPPLEMENT.
The date of this Prospectus is _____________, 1997
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PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a series of Securities to be
offered hereunder, among other things, will set forth with respect to such
series of Securities: (i) a description of the Class or Classes of such
Securities, (ii) the rate of interest, the "Pass-Through Rate" or "Interest
Rate" or other applicable rate (or the manner of determining such rate) and
authorized denominations of such Class of such Securities; (iii) certain
information concerning the related Receivables in the Trust Fund and insurance
polices, cash accounts, letters of credit, financial guaranty insurance
policies, third party guarantees or other forms of credit enhancement, if any,
relating to one or more pools or all or part of the related Securities; (iv) the
specified interest, if any, of each Class of Securities in, and the manner and
priority of, distributions from, the Trust Fund; (v) information as to the
nature and extent of subordination with respect to each series of Securities, if
any; (vi) the payment dates to Securityholders; (vii) information regarding the
Servicer(s) for the related Receivables in the Trust Fund; (viii) the
circumstances, if any, under which each Trust Fund may be subject to early
termination; (ix) information regarding tax considerations; and (x) additional
information with respect to the method of distribution of such Securities.
AVAILABLE INFORMATION
The Sponsor has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (together with all amendments and
exhibits thereto, referred to herein as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement which may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; and at the Commission's regional
offices at 500 West Madison, 14th Floor, Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of the Registration
Statement may be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission also maintains a Web site at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission.
No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus and any Prospectus
Supplement with respect hereto and, if given or made, such information or
representations must not be relied upon. This Prospectus and any Prospectus
Supplement with respect hereto do not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the Securities offered
hereby and thereby, nor an offer of the Securities to any person in any state or
other jurisdiction in which such offer would be unlawful. The delivery of this
Prospectus at any time does not imply that information herein is correct as of
any time subsequent to its date.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents subsequently filed by the Sponsor with respect to the
Registration Statement, either on its own behalf or on behalf of a Transferor or
a Trust, relating to any series of Securities referred to in the accompanying
Prospectus Supplement, with the Commission pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), after the date of this Prospectus and prior to the termination of any
offering of the Securities issued by the Issuer, shall be deemed to be
incorporated by reference in this Prospectus and to be a part of this Prospectus
from the date of the filing of such documents. Any statement contained herein or
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 herein (or in the accompanying Prospectus
Supplement) or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein, modifies or replaces 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.
3
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REPORTS TO SECURITYHOLDERS
Unaudited periodic and annual reports concerning any Security and the
related Trust Fund will be provided to the Securityholders. See "Description of
the Securities -- Reports to Securityholders." If the Securities of a series are
to be issued in book-entry form, such reports will be provided to the
Securityholder of record and beneficial owners of such Securities will have to
rely on the procedures described herein under "Description of Securities -
Book-Entry Registration."
The Sponsor will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents referred to above that have been or may be
incorporated by reference in this Prospectus (not including exhibits to the
information that is incorporated by reference unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates). Such requests should be directed to: Advanta Business Services
Corp., 1020 Laurel Oak Road, Voorhees, New Jersey, 08043-7228, Telephone
Number: 609-782-7300, Attention: Treasury.
TABLE OF CONTENTS
Page
PROSPECTUS SUPPLEMENT........................................................3
AVAILABLE INFORMATION........................................................3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..............................3
REPORTS TO SECURITYHOLDERS...................................................4
SUMMARY OF TERMS.............................................................5
RISK FACTORS................................................................14
THE TRUST FUNDS.............................................................17
ADVANTA BUSINESS SERVICES CORP. UNDERWRITING, ORIGINATING AND SERVICING
PRACTICES...............................................................18
THE ISSUERS.................................................................20
THE RECEIVABLES.............................................................21
POOL FACTORS................................................................21
USE OF PROCEEDS.............................................................21
THE TRUSTEE.................................................................22
DESCRIPTION OF THE SECURITIES...............................................22
DESCRIPTION OF THE TRUST DOCUMENTS..........................................27
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES....................................33
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS...................................35
STATE AND LOCAL TAXATION....................................................47
ERISA CONSIDERATIONS........................................................47
METHODS OF DISTRIBUTION.....................................................47
LEGAL OPINIONS..............................................................48
FINANCIAL INFORMATION.......................................................48
ADDITIONAL INFORMATION......................................................48
INDEX OF TERMS..............................................................49
4
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SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference to
the information with respect to the Securities of any series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Securities. Certain capitalized terms used in the summary
are defined elsewhere in the Prospectus on the pages indicated in the "Index of
Terms."
Issuer.................... With respect to each series of Securities,
either the Sponsor, one or more
special-purpose finance subsidiaries of the
Sponsor (which may be organized and
established by the Sponsor with respect to
one or more Trust Funds) (each such
special-purpose finance subsidiary, a
"Transferor") or a trust formed, or caused
to be formed, by the Sponsor or by one or
more Transferors (each, a "Trust"). For
purposes of this Prospectus (unless the
context otherwise requires) the term
"Sponsor" includes the term "Transferor".
The Sponsor, Transferor or the Trust
issuing Securities pursuant to this
Prospectus and the related Prospectus
Supplement shall be referred to herein as
the "Issuer" with respect to the related
Securities. See "The Issuers."
Each series of Securities will be issued
pursuant to either (i) a pooling and
servicing agreement (each, a "Pooling
Agreement") to be entered into between the
Sponsor and/or the related Transferor(s),
the Servicer and the Trustee named therein
and in the related Prospectus Supplement,
(ii) a trust or depository agreement (each,
a "Trust Agreement") to be entered into
between the Sponsor and/or the related
Transferor(s), the Trustee named therein
and in the related Prospectus Supplement
and certain other parties as specified
therein and in the related Prospectus
Supplement, or (iii) with respect to
Securities which represent Notes, an
indenture or depository agreement (each, an
"Indenture") between the Issuer and the
Indenture Trustee named in such Indenture
and in the related Prospectus Supplement.
If a Trust is formed pursuant to a Trust
Agreement, a sale and servicing agreement
(the "Sale and Servicing Agreement") will
be entered into between the Sponsor, the
Transferor and such Trust.
Sponsor................... Advanta Business Services Corp. will cause
the issuance of each series of Securities
(Advanta Business Services Corp., in such
capacity, the "Sponsor"). The Sponsor is a
wholly-owned subsidiary of Advanta Leasing
Holding Corp., which in turn is a
wholly-owned subsidiary of Advanta Corp., a
publicly-traded corporation.
Servicer.................. Advanta Business Services Corp. will act as
Servicer for each Trust Fund. The Servicer
will service the assets comprising each
Trust Fund and administer each Trust Fund
pursuant to the related Servicing Agreement.
The Servicer may subcontract all or any
portion of its obligations as Servicer under
each Servicing Agreement to qualified
subservicers (each, a "Sub-Servicer") but
the Servicer will not be relieved thereby of
its liability with respect thereto. See
"Servicing of the Trust Property."
Trustee................... The Trustee for each Trust Fund will be
specified in the related Prospectus
Supplement. In addition, a Trust may
separately enter into an Indenture and may
issue Notes pursuant to such Indenture; in
any such case the Trust and the Indenture
will be administered by separate,
independent trustees as required by the
rules and regulations under the Trust
Indenture Act of 1939, as amended, and the
Investment Company
5
<PAGE> 8
Act of 1940, as amended.
Indenture Trustee ........ With respect to any series of Securities
which include one or more classes of Notes,
the Indenture Trustee will be specified in
the related Prospectus Supplement.
The Securities ........... Each Class of Securities of any series will
either evidence beneficial ownership in a
segregated pool of assets (each, a "Trust
Fund") (such Securities, "Certificates") or
will represent indebtedness of the Issuer
secured by the Trust Fund (such Securities,
"Notes"), as described herein and in the
related Prospectus Supplement. Each Trust
Fund may consist of any combination of
leases (including, but not limited to,
finance leases, true leases, and full
payout leases), loan contracts and
promissory notes (such leases, loan
contracts and promissory notes are referred
to herein as the "Contracts"), which in
all cases will be secured by commercial
assets, commercial products or personal
property used primarily for commercial
purposes (the "Underlying Collateral").
Each Trust Fund also may include a security
interest in the Underlying Collateral
relating thereto, together with the
proceeds thereof (together with the
Contracts, the "Receivables"). The
Contracts are either "instruments",
"chattel paper" (each as defined in the
Uniform Commercial Code) or would be
"chattel paper" but for a technical
definitional matter, but in any event are
not treated materially differently from
"chattel paper" for purposes of title
transfer, security interests or remedies
on default.
Each series of Securities issued as
Certificates will include one or more
classes of Certificates which will be issued
pursuant to the related Trust Documents.
Each series of Securities issued as Notes
which include one or more classes of Notes,
such Notes will be issued pursuant to an
Indenture.
If and to the extent specified in the
related Prospectus Supplement, credit
enhancement with respect to a Trust Fund or
any class of Securities may include any one
or more of the following: a financial
guaranty insurance policy (a "Policy")
issued by an insurer specified in the
related Prospectus Supplement, a reserve
account, letters of credit, credit or
liquidity facilities, third party payments
or other support, cash deposits or other
arrangements. In addition to or in lieu of
the foregoing, credit enhancement may be
provided by means of subordination,
cross-support among the assets in Trust
Funds or over-collateralization. The Sponsor
will cause each Trust to acquire the assets
in the Trust Fund from the related
Originator(s) on or prior to the date of
issuance of the related Securities, as
described herein and in the related
Prospectus Supplement, or prior to the
expiration of any related Pre-Funding
Period.
The assets comprising each Trust Fund will
be described in the related Trust Documents
and the related Prospectus Supplement and
will be serviced by the Servicer pursuant to
such Trust Documents.
In the case of any individual Trust Fund,
the contractual arrangements relating to the
establishment of a Trust, if any, the
servicing of the related assets and the
issuance of the related Securities may be
6
<PAGE> 9
contained in a single agreement, or in
several agreements which combine certain
aspects of the Pooling Agreement, the Trust
Agreement, the Sale and Servicing Agreement
and the Indenture described above (for
example, a pooling and servicing agreement,
a master financing agreement, or a servicing
and collateral management agreement). For
purposes of this Prospectus, the term "Trust
Documents" as used with respect to a Trust
Fund means, collectively, and except as
otherwise described in the related
Prospectus Supplement, any and all
agreements relating to the establishment of
a Trust, if any, the servicing of the
related Receivables and the issuance of the
related Securities, including, without
limitation, Pooling Agreements, Trust
Agreements and Indentures. The term
"Trustee" means any and all persons acting
as a trustee pursuant to a Trust Document
and the term "Indenture Trustee" means any
and all persons acting as a trustee
pursuant to an Indenture. A Prospectus
Supplement relating to an owner trust that
issues debt securities will refer to the
Trustee as the "Owner Trustee" in order to
distinguish the Owner Trustee and the
Indenture Trustee for such series of
Securities.
Securities Will Be Non-Recourse.
The Securities will not be obligations,
either recourse or non-recourse (except for
certain non-recourse debt described under
"Certain Federal Income Tax
Considerations"), of the Sponsor, the
related Transferor, the related Servicer,
any related Sub-Servicer, the related
Originator(s) or any person other than the
related Issuer. The Notes of a given series
represent obligations of the Issuer, and
the Certificates of a given series
represent beneficial interests in the
related Trust Fund only and do not represent
interests in or obligations of the Sponsor,
the related Transferor, the related
Servicer, any related Sub-Servicer, the
related Originator(s) or any of their
respective affiliates. In the case of
Securities that represent beneficial
ownership interest in the related Trust
Fund, such Securities will represent the
beneficial ownership interests in such Trust
Fund and the sole source of payment will be
the assets of such Trust Fund. In the case
of Securities that represent debt issued by
the related Issuer, such Securities will be
secured by assets in the related Trust Fund.
Notwithstanding the foregoing, and as to be
described in the related Prospectus
Supplement, certain types of credit
enhancement, such as a letter of credit,
financial guaranty insurance policy or
reserve fund may constitute a full recourse
obligation of the issuer of such credit
enhancement.
General Nature of the Securities as Investments.
All of the Securities offered pursuant to
this Prospectus and the related Prospectus
Supplement will be rated in one of the four
highest rating categories by one or more
Rating Agencies (as defined herein).
Additionally, all of the Securities offered
pursuant to this Prospectus and the related
Prospectus Supplement will be of the
fixed-income type ("Fixed Income
Securities"). Fixed Income Securities will
generally be styled as debt instruments,
having a principal balance and a specified
interest rate ("Interest Rate"). Fixed
Income Securities may either represent
beneficial ownership interests in the
related Trust Fund or debt secured by
certain assets, including the related
Receivables of the related Issuer.
7
<PAGE> 10
Each series or Class of Fixed Income
Securities offered pursuant to this
Prospectus may have a different Interest
Rate, which may be a fixed or adjustable
Interest Rate. The related Prospectus
Supplement will specify the Interest Rate
for each series or Class of Fixed Income
Securities described therein, or the initial
Interest Rate and the method for determining
subsequent changes to the Interest Rate.
A series may include one or more Classes of
Fixed Income Securities ("Strip Securities")
entitled (i) to principal distributions,
with disproportionate, nominal or no
interest distributions, or (ii) to interest
distributions, with disproportionate,
nominal or no principal distributions. In
addition, a series of Securities may include
two or more Classes of Fixed Income
Securities that differ as to timing,
sequential order, priority of payment,
Interest Rate or amount of distribution of
principal or interest or both, or as to
which distributions of principal or interest
or both on any Class may be made upon the
occurrence of specified events, in
accordance with a schedule or formula, or on
the basis of collections from designated
portions of the related assets constituting
the Trust Fund. Any such series may include
one or more Classes of Fixed Income
Securities ("Accrual Securities"), as to
which certain accrued interest will not be
distributed but rather will be added to the
principal balance (or nominal balance, in
the case of Accrual Securities which are
also Strip Securities) thereof on each
Payment Date, as hereinafter defined, or in
the manner described in the related
Prospectus Supplement.
If so provided in the related Prospectus
Supplement, a series may include one or more
other Classes of Fixed Income Securities
(collectively, the "Senior Securities") that
are senior to one or more other Classes of
Fixed Income Securities (collectively, the
"Subordinate Securities") in respect of
certain distributions of principal and
interest and allocations of losses on
Receivables.
In addition, certain Classes of Senior (or
Subordinate) Securities may be senior to
other Classes of Senior (or Subordinate)
Securities in respect of such distributions
or losses.
General Payment Terms of Securities.
As provided in the related Trust Document
and as described in the related Prospectus
Supplement, the holders of the Securities
("Securityholders") will be entitled to
receive payments on their Securities on
specified dates (each, a "Payment Date").
Payment Dates with respect to Fixed Income
Securities will occur monthly, quarterly or
semi-annually, as described in the related
Prospectus Supplement.
The related Prospectus Supplement will
describe a date (the "Record Date")
preceding such Payment Date, as of which the
Trustee or the Indenture Trustee or its
paying agent will fix the identity of the
Securityholders for the purpose of receiving
payments on the next succeeding Payment
Date. As described in the related Prospectus
Supplement, the Payment Date will be a
specified day of each month, commonly the
fifteenth or twenty-fifth day of each month
(or, in the case of quarterly-pay
Securities, the fifteenth or twenty-fifth
day of every third month; and in the case of
semi-annual pay Securities, the
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<PAGE> 11
fifteenth or twenty-fifth day of every sixth
month) and the Record Date will be the close
of business as of the last day of the
calendar month that precedes the calendar
month in which such Payment Date occurs.
Each Trust Document will describe a period
(each, a "Monthly Period") preceding each
Payment Date (for example, in the case of
monthly-pay Securities, the calendar month
preceding the month in which a Payment Date
occurs). As more fully described in the
related Prospectus Supplement, collections
received on or with respect to the related
Receivables constituting a Trust Fund during
a Monthly Period will be required to be
remitted by the Servicer to the related
Trustee or Indenture Trustee prior to the
related Payment Date and will be used to
fund payments to Securityholders on such
Payment Date. As may be described in the
related Prospectus Supplement, the related
Trust Document may provide that all or a
portion of the payments collected on or with
respect to the related Trust Property may be
applied by the related Trustee or Indenture
Trustee to the acquisition of additional
Receivables during a specified period
(rather than be used to fund payments of
principal to Securityholders during such
period), with the result that the related
Securities will possess an interest-only
period, also commonly referred to as a
revolving period, which will be followed by
an amortization period. Any such interest
only or revolving period may, upon the
occurrence of certain events to be described
in the related Prospectus Supplement,
terminate prior to the end of the specified
period and result in the earlier than
expected amortization of the related
Securities.
In addition, as may be described in the
related Prospectus Supplement, the related
Trust Document may provide that all or a
portion of collected payments may be
retained by the Trustee or Indenture Trustee
(and held in certain temporary investments,
including Receivables) for a specified
period prior to being used to fund payments
of principal and/or interest to
Securityholders.
Such retention and temporary investment by
the Trustee or Indenture Trustee of such
collected payments may be required by the
related Trust Document for the purpose of
(a) slowing the amortization rate of the
related Securities relative to the payment
schedule of the related Receivables, or (b)
attempting to match the amortization rate of
the related Securities to an amortization
schedule established at the time such
Securities are issued. Any such feature
applicable to any Securities may terminate
upon the occurrence of events to be
described in the related Prospectus
Supplement, resulting in distributions to
the specified Securityholders and an
acceleration of the amortization of such
Securities.
As more fully specified in the related
Prospectus Supplement, neither the
Securities nor the underlying Receivables
will be guaranteed or insured by any
governmental agency or instrumentality or
the Sponsor, any Transferor, the related
Servicer or any related Sub-Servicer, the
related Originator, any Trustee, any
Indenture Trustee or any of their
affiliates.
No Investment Companies......... Neither the Sponsor, any Transferor, any
Issuer nor any Trust will register as an
"investment company" under the Investment
Company
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<PAGE> 12
Act of 1940, as amended (the "Investment
Company Act").
Cross-Collateralization ........ As described in the related Trust Document
and the related Prospectus Supplement, the
source of payment for Securities of each
series will be the assets of the related
Trust Fund only.
However, as may be described in the related
Prospectus Supplement, a series or class of
Securities may include the right to receive
moneys from a common pool of credit
enhancement which may be available for more
than one series of Securities, such as a
master reserve account, master insurance
policy or a master collateral pool
consisting of similar Receivables.
Notwithstanding the foregoing, and as
described in the related Prospectus
Supplement, no payment received on any
Receivable held by any Trust Fund may be
applied to the payment of Securities issued
by any other Trust Fund (except to the
limited extent that certain collections in
excess of the amounts needed to pay the
related Securities may be deposited in a
common master reserve account or an
overcollateralization account that provides
credit enhancement for more than one series
of Securities issued pursuant to the related
Trust Document).
Trust Fund...................... As specified in the related Prospectus
Supplement, each Trust Fund will consist of
the related Contracts, and a security
interest in the Underlying Collateral
related thereto. If and to the extent
specified in the related Prospectus
Supplement, credit enhancement with respect
to a Trust Fund or any class of Securities
may include any one or more of the
following: a Policy issued by an insurer
specified in the related Prospectus
Supplement, a reserve account, letters of
credit, credit or liquidity facilities,
repurchase obligations, third party payments
or other support, cash deposits or other
arrangements. In addition to or in lieu of
the foregoing, credit enhancement may be
provided by means of subordination,
cross-support among the Receivables or
over-collateralization. See "Description of
the Trust Document -- Credit and Cash Flow
Enhancement." The Contracts are obligations
for the lease or purchase of commercial
property, commercial assets or personal
property used primarily for commercial
purposes, or evidence borrowings used to
acquire such Underlying Collateral and
entitling the payee thereunder to a stream
of payments thereon from the party obligated
thereunder (the "Obligor").
The Receivables comprising a Trust Fund will
be originated by the Sponsor or purchased
by the Sponsor pursuant to an agreement with
the seller of such Receivables (each, a
"Receivables Transfer Agreement").
The Sponsor will transfer such Receivables
to the related Issuer pursuant to a Trust
Document and, in the case of Notes, the
Issuer will pledge its right, title and
interest in and to such Receivables to an
Indenture Trustee on behalf of
Securityholders pursuant to an Indenture.
The Receivables transferred to an Issuer
and, in the case of Notes, pledged to an
Indenture Trustee shall have a Contract
Balance (as defined below) specified in the
related Prospectus Supplement. The rights
and benefits of the Sponsor or Transferor
under the related Receivables Transfer
Agreement will be assigned to the related
Trustee on behalf of the related
Securityholders.
The "Contract Balance" of a Contract as of
the date of determination is the outstanding
principal balance with respect to such
Contract or, in the case of a Contract which
is in the form of a lease, the present
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<PAGE> 13
value of the remaining scheduled rental
payments due thereunder discounted at a rate
specified in the related Prospectus
Supplement and the related Trust Documents,
in each case as of such date.
In addition, if so specified in the related
Prospectus Supplement, the Trust Fund will
include monies on deposit in a Pre-Funding
Account (the "Pre-Funding Account") to be
established with the Trustee, which will be
used to acquire Additional Receivables from
time to time during the "Pre-Funding Period"
as specified in the related Prospectus
Supplement.
If and to the extent provided in the related
Prospectus Supplement, the Sponsor will be
obligated (subject only to the availability
thereof) to transfer to the related Issuer
(and in the case of Notes, the related
Issuer will pledge to an Indenture Trustee
on behalf of Securityholders), additional
Receivables (the "Additional Receivables")
from time to time during any Pre-Funding
Period specified in the related Prospectus
Supplement.
Registration of Securities...... Securities may be represented by global
securities registered in the name of Cede &
Co. ("Cede"), as nominee of The Depository
Trust Company ("DTC"), or another nominee.
In such case, Securityholders will not be
entitled to receive definitive securities
representing such Securityholders'
interests, except in certain circumstances
described in the related Prospectus
Supplement. See "Description of the
Securities -- Book Entry Registration"
herein.
Credit and Cash Flow
Enhancement ................... If and to the extent specified in the
related Prospectus Supplement, credit
enhancement with respect to a Trust Fund or
any class of Securities may include any one
or more of the following: a Policy issued by
an insurer specified in the related
Prospectus Supplement (a "Security
Insurer"), a reserve account, letters of
credit, credit or liquidity facilities,
third party payments or other support, cash
deposits or other arrangements. In addition
to or in lieu of the foregoing, credit
enhancement may be provided by means of
subordination, cross-support among the
Receivables, or over-collateralization. Any
form of credit enhancement will have certain
limitations and exclusions from coverage
thereunder, which will be described in the
related Prospectus Supplement. See
"Description of the Trust Documents --
Credit and Cash Flow Enhancement."
Receivables Transfer
Agreement....................... As more fully described in the related
Prospectus Supplement, the Sponsor will be
obligated to acquire from the related Trust
Fund any Receivable transferred pursuant to
a Trust Document or pledged pursuant to an
Indenture if the interest of the
Securityholders therein is materially
adversely affected by a breach of any
representation or warranty made by the
Sponsor with respect to such Receivable,
which breach has not been cured. In
addition, if so specified in the related
Prospectus Supplement, the Sponsor may from
time to time reacquire certain Receivables
or substitute other Receivables for
Receivables held by a Trust Fund, subject to
specified conditions set forth in the
related Trust Document and Receivables
Transfer Agreement.
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<PAGE> 14
Servicer's Compensation......... The Servicer shall be entitled to receive a
fee for servicing the Contracts of each
Trust Fund equal to a specified percentage
of the value of the assets held in the
related Trust Fund, as set forth in the
related Prospectus Supplement. See
"Description of the Trust Documents --
Servicing Compensation" herein and in the
related Prospectus Supplement.
Certain Legal Aspects
of the Contracts................ With respect to the transfer of the
Contracts to the related Trust pursuant to a
Trust Document or the pledge of the related
Issuer's right, title and interest in and to
such Contracts on behalf of Securityholders
pursuant to an Indenture, the Sponsor will
warrant, in each case, that such transfer is
either a valid transfer and assignment of
the Contracts to the Trust or the grant of a
security interest in the Contracts. Each
Prospectus Supplement will specify what
actions will be taken by which parties as
will be required to perfect either the
Issuer's or the Securityholders' security
interest in the Contracts. The Sponsor may
also warrant that, if the transfer or pledge
to the Trust or to the Securityholders is
deemed to be a grant to the Trust or to the
Securityholders of a security interest in
the Contracts, then the related Issuer or
the Securityholders will have a first
priority perfected security interest
therein, except for certain liens which have
priority over previously perfected security
interests by operation of law, and, with
certain exceptions, in the proceeds thereof.
Similar representations and warranties, as
described in the related Prospectus
Supplement, may also be made by the Sponsor
with respect to the Underlying Collateral.
Optional Termination............ The related Servicer, the Sponsor, or, if
specified in the related Prospectus
Supplement, certain other entities may, at
their respective options, effect early
retirement of a series of Securities under
the circumstances and in the manner set
forth herein under "Description of The Trust
Documents - Termination" and in the related
Prospectus Supplement.
Mandatory Termination........... The Trustee or the Indenture Trustee, the
related Servicer or certain other entities
specified in the related Prospectus
Supplement may be required to effect early
retirement of all or any portion of a series
of Securities by soliciting competitive bids
for the purchase of the related Trust Fund
or otherwise, under other circumstances and
in the manner specified in "The Trust
Document - Termination; Retirement of
Securities" and in the related Prospectus
Supplement.
Tax Considerations.............. Securities of each series offered hereby
will, for federal income tax purposes,
constitute either (i) interests in a Trust
treated as a grantor trust and not as an
association which is taxable as a
corporation under applicable provisions of
the Code ("Grantor Trust Securities"), (ii)
debt issued by a Trust ("Debt Securities"),
(iii) interests in a Trust which is treated
as a partnership ("Partnership Interests")
or (iv) interests issued by a Financial
Asset Securitization Investment Trust
("FASIT").
The Prospectus Supplement for each series of
Securities will summarize, subject to the
limitations stated therein, federal income
tax considerations relevant to the purchase,
ownership and disposition of such
Securities.
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<PAGE> 15
Investors are advised to consult their tax
advisors and to review "Certain Federal and
State Income Tax Consequences" in the
related Prospectus Supplement.
ERISA Considerations............ The Prospectus Supplement for each series of
Securities will summarize, subject to the
limitations discussed therein,
considerations under the Employee Retirement
Income Security Act of 1974, as amended
("ERISA"), relevant to the purchase of such
Securities by employee benefit plans and
individual retirement accounts. See "ERISA
Considerations" in the related Prospectus
Supplement.
Ratings......................... Each Class of Securities offered pursuant to
this Prospectus and the related Prospectus
Supplement will be rated in one of the four
highest rating categories by one or more
"national statistical rating organizations",
as defined in the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and
commonly referred to as "Rating Agencies".
Such ratings will neither address any
prepayment or yield considerations
applicable to any Securities nor constitute
a recommendation to buy, sell or hold any
Securities.
The ratings expected to be received with
respect to any Securities will be set forth
in the related Prospectus Supplement.
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<PAGE> 16
RISK FACTORS
Prospective Securityholders should consider, among other things, the
following factors in connection with the purchase of the Securities:
LIMITED LIQUIDITY. There can be no assurance that a secondary market
for the Securities of any series or Class will develop or, if it does develop,
that it will provide Securityholders with liquidity of investment or that it
will continue for the life of such Securities. The Prospectus Supplement for any
series of Securities may indicate that an underwriter specified therein intends
to establish and maintain a secondary market in such Securities; however, no
underwriter will be obligated to do so.
POSSESSION OF CONTRACTS. In connection with the issuance of any series
of Securities, the Sponsor will warrant in a Trust Document that the transfer of
the Contracts to the Issuer is a valid assignment, transfer and conveyance of
the Contracts to such Trust and if the Trust pledges the Contract to an
Indenture Trustee, that the Indenture Trustee on behalf of the Securityholders
will have a valid security interest in such Contracts. The related Trust
Document will provide that the Servicer will retain possession of the related
Contracts. The related Prospectus Supplement may describe specific trigger
events that will require delivery of such contracts to the Trustee or the
Indenture Trustee. If the Sponsor, the Servicer, the Trustee, an Originator or
other third party, while in possession of the Contracts, sells or pledges and
delivers such Contracts to another party, in violation of the Receivables
Transfer Agreement or the Trust Documents, there is a risk that such other party
could acquire an interest in such Contracts having a priority over the Issuer's
interest. Furthermore, if the Sponsor, the Servicer, an Originator or a third
party, while in possession of the Contracts, is rendered insolvent, such event
of insolvency may result in competing claims to ownership or security interests
in the Contracts. Such an attempt, even if unsuccessful, could result in delays
in payments on the Securities. If successful, such attempt could result in
losses to the Securityholders or an acceleration of the repayment of the
Securities. The related Originator(s) and the Sponsor will make certain
representations and warranties with respect to the ownership of the Contracts.
The Sponsor and/or the related Originator will be obligated to acquire any
Contract from the related Trust Fund if there is a breach of such
representations and warranties that materially adversely affects the interests
of the Sponsor, the Trust or the Indenture Trustee on behalf of the
Securityholders in such Contract and such breach has not been cured.
SECURITY INTEREST IN THE UNDERLYING COLLATERAL. The Sponsor and/or the
related Originator may have underwriting guidelines with respect to their
programs which do not require that UCC financing statements be filed with
respect to particular items of Underlying Collateral with a value below a
certain level, such as $25,000. In such instances, the related Issuer will have
a security interest in such item of Underlying Collateral, although such
security interest will not be perfected. The Sponsor and/or the related
Originator will also contribute all of its right, title and interest in and to
the related Underlying Collateral to the related Issuer. Each Receivables
Transfer Agreement shall require the Sponsor and/or the Originator to make
certain representations and warranties with respect to the transfer of title and
perfection and priority of a security interest in such Underlying Collateral.
The related Issuer may pledge all of its right, title and interest in and to
such Underlying Collateral to the Indenture Trustee. The manner in which the
Issuer's or the Indenture Trustee's security interest in the Underlying
Collateral will be perfected will vary based on the type of assets constituting
the Underlying Collateral in the related Trust Fund. For example, a security
interest in certain assets comprising the Underlying Collateral may only be
perfected in accordance with the provisions of the Uniform Commercial Code while
a security interest in certain assets comprising the Underlying Collateral may
only be perfected in accordance with Federal law or state certificate of title
statutes.
As specified herein and related Prospectus Supplement, because of the
administrative burden and expense that would be entailed in so doing, neither
the Originators nor the Sponsor will, as the case may be (x) file, or
necessarily will be required to file, UCC financing statements identifying such
Underlying Collateral transferred and pledged in favor of the related Trust and
Indenture Trustee on behalf of the Securityholders, (y) make a notation of the
lien of the related Trust or Indenture Trustee on behalf of the Securityholders
on, or take possession of, the certificate of title with respect to such
Underlying Collateral, or (z) make a notation of the lien of the related Trust
or Indenture Trustee on behalf of the Securityholders on the appropriate
Federal registry in respect of such Underlying Collateral. In the absence of
such filings, notation or possession any security interest in such Underlying
Collateral may not be perfected in favor of the related Trust or Indenture
Trustee. As a result, the related Indenture Trustee or Trust Fund could lose
priority of its security interest in such Underlying Collateral. Neither the
Originators nor the Sponsor will have any obligation to reacquire collateral as
to which such
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<PAGE> 17
aforementioned occurrence results in the loss of lien priority after the date
such Trust Fund receives an interest in such property unless otherwise described
in the related Prospectus Supplement. See "Certain Legal Aspects of the
Receivables."
RESTRICTIONS ON RECOVERIES. Unless specific limitations are described
in the related Prospectus Supplement with respect to specific Contracts, all
Contracts will provide that the obligations of the Obligors thereunder are
absolute and unconditional, regardless of any defense, set-off or abatement
which the Obligors may have against the related Originator or any other person
or entity whatsoever. The Originators will warrant that no claims or defenses
have been asserted or threatened with respect to the Contracts and that all
requirements of applicable law with respect to the Contracts have been
satisfied.
In the event that the Sponsor, the Trustee or the Indenture Trustee
must rely on repossession and disposition of the property to recover scheduled
payments due on defaulted Contracts, the Issuer may not realize the full amount
due on a Contract (or may not realize the full amount on a timely basis). Other
factors that may affect the ability of the Issuer to realize the full amount due
on a Contract include whether financing statements to perfect the security
interest in the property had been filed, depreciation, obsolescence, damage or
loss of any item property, and the application of Federal and state bankruptcy
and insolvency laws. As a result, the Securityholders may be subject to delays
in receiving payments and suffer loss of their investment in the Securities.
INSOLVENCY AND BANKRUPTCY MATTERS. The Sponsor will take steps in
structuring the transactions contemplated hereby that are intended to ensure
that the voluntary or involuntary application for relief by the related
Originator or the Sponsor (the Originators and the Sponsors, collectively for
these purposes, "Debtors") under the United States Bankruptcy Code or similar
applicable state laws ("Insolvency Laws") will not result in the assets of the
related Trust Fund becoming property of the estate of a Debtor within the
meaning of such Insolvency Laws. Such steps will generally involve the creation
by the Sponsor of a Transferor as a separate, limited-purpose subsidiary
pursuant to articles of incorporation containing certain limitations (including
restrictions on the nature of such Transferor's business and a restriction on
such Transferor's ability to commence a voluntary case or proceeding under any
Insolvency Law without the prior unanimous affirmative vote of all its
directors). However, there can be no assurance that the activities of any
Transferor would not result in a court's concluding that the assets and
liabilities of such Transferor should be consolidated with those of the Sponsor
in a proceeding under any Insolvency Law.
Each Receivables Transfer Agreement and each Trust Document will
generally require that the Sponsor contribute the related Receivables to a
Transferor, which will then either issue the related Securities or transfer the
Receivables to a Trust which will issue the related Securities. In the case of
Notes, the Issuer will pledge such Receivables to the Indenture Trustee on
behalf of the Securityholders.
The Sponsor believes that the transfer of the Receivables by an
Originator to the Sponsor should be treated as a valid assignment, transfer and
conveyance of such Receivables. However, in the event of an insolvency of such
Originator, a court, among other remedies, could attempt to recharacterize the
transfer of the Receivables by such Originator to the Sponsor as a borrowing by
the Originator from the Sponsor or the related Securityholders, secured by a
pledge of such Receivables. Such an attempt, even if unsuccessful, could result
in delays in payments on the Securities. If such an attempt were successful, a
court, among other remedies, could elect to accelerate payment of the Securities
and liquidate the Receivables, with the Securityholders entitled to the then
outstanding principal amount thereof and interest thereon at the applicable
Security Interest Rate to the date of payment. Thus, the Securityholders could
lose the right to future payments of interest and might incur reinvestment
losses. As more fully described in the related Prospectus Supplement, in the
event the related Issuer is rendered insolvent, the Trustee for a Trust, in
accordance with the related Trust Document, will promptly sell, dispose of or
otherwise liquidate the related Receivables in a commercially reasonable manner
on commercially reasonable terms. The proceeds from any such sale, disposition
or liquidation of such Receivables will be treated as collections on such
Receivables. If the proceeds from the liquidation of the Receivables and any
amount available from any credit enhancement, if any, are not sufficient to pay
Securities of the related series in full, the amount of principal returned to
such Securityholders will be reduced and such Securityholders will incur a
loss.
Obligors may be entitled to assert against the related Originator, the
Sponsor, or Issuer, claims and defenses which they have against the Originator
or the Sponsor with respect to the Receivables. The Originator(s) and the
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<PAGE> 18
Sponsor will warrant that no such claims or defenses have been asserted or
threatened with respect to the Receivables and that all requirements of
applicable law with respect to the Receivables have been satisfied.
DELINQUENCIES. There can be no assurance that the historical levels of
delinquencies and losses experienced by the related Originator on its portfolio
will be indicative of the performance of the Contracts included in any Trust
Fund or that such levels will continue in the future. Delinquencies and losses
could increase significantly for various reasons, including changes in the
federal income tax laws, changes in the local, regional or national economies or
due to other events.
SUBORDINATION; LIMITED ASSETS. To the extent specified in the related
Prospectus Supplement, distributions of interest and principal on one Class of
Securities of a series may be subordinated in priority of payment to interest
and principal due on other Classes of Securities of a related series. Moreover,
no Issuer will have, nor is it permitted or expected to have, any significant
assets or sources of funds other than the related Receivables and, to the extent
provided in the related Prospectus Supplement, a Pre-Funding Account, any
related reserve account and any other credit enhancement. The Securities
represent obligations solely of the related Issuer, and will not represent a
recourse obligation to other assets of the related Originator(s), the Servicer,
or, related Sub-Servicer or of the Sponsor. No Securities of any series will be
insured or guaranteed by any Originator, the Sponsor, any Transferor, the
Servicer, the applicable Trustee or the Indenture Trustee. Consequently, holders
of the Securities of any series must rely for repayment solely upon payments on
the Receivables and, if and to the extent available, amounts on deposit in the
Pre-Funding Account, if any, the reserve account, if any, and any other credit
enhancement, all as specified in the related Prospectus Supplement.
BOOK-ENTRY REGISTRATION. Issuance of the Securities in book-entry form
may reduce the liquidity of such Securities in the secondary trading market
since investors may be unwilling to purchase Securities for which they cannot
obtain definitive physical securities representing such Securityholders'
interests, except in certain circumstances described in the related Prospectus
Supplement.
Since transactions in Securities will, in most cases, be able to be
effected only through DTC, direct or indirect participants in DTC's book-entry
system ("Direct Participants" or "Indirect Participants") or certain banks, the
ability of a Securityholder to pledge a Security to persons or entities that do
not participate in the DTC system, or otherwise to take actions in respect to
such Securities, may be limited due to lack of a physical security representing
the Securities.
Securityholders may experience some delay in their receipt of
distributions of interest on and principal of the Securities since distributions
may be required to be forwarded by the Indenture Trustee to DTC and, in such
case, DTC will be required to credit such distributions to the accounts of its
Participants which thereafter may be required to credit them to the accounts of
the applicable class of Securityholders either directly or indirectly through
Indirect Participants. See "Description of the Securities -- Book Entry
Registration."
SECURITY RATING. The rating of Securities credit enhanced by a letter
of credit, financial guaranty insurance policy, reserve fund, credit or
liquidity facilities, cash deposits or other forms of credit enhancement
(collectively "Credit Enhancement") will depend primarily on the
creditworthiness of the issuer of such external Credit Enhancement device (a
"Credit Enhancer"). Any reduction in the rating assigned to the related Credit
Enhancer regarding its obligations pursuant to any such Credit Enhancement below
the rating initially given to the Securities would likely result in a reduction
in the rating of the Securities.
MATURITY AND PREPAYMENT CONSIDERATIONS. Because the rate of payment of
principal on the Securities will depend, among other things, on the rate of
payment on the related Contracts, the rate of payment of principal on the
Securities cannot be predicted. Payments on the Contracts will include scheduled
payments as well as partial and full prepayments (to the extent not replaced
with substitute Contracts), payments upon the liquidation of defaulted
Contracts, payments upon acquisitions by the related Originator, the related
Servicer or the Sponsor of Contracts from the related Trust Fund on account of a
breach of certain representations and warranties in the related Trust Document,
payments upon an optional acquisition by the related Originator, the related
Servicer or the Sponsor of Contracts from the related Trust Fund (any such
voluntary or involuntary prepayment or other early payment of a Contract, a
"Prepayment"), and residual payments. The rate of early terminations of
Contracts due to Prepayments and defaults may be influenced by a variety of
economic and other factors, including, among others, obsolescence, then current
economic conditions and tax considerations. The risk of reinvesting
distributions of the principal of the
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<PAGE> 19
Securities will be borne by the Securityholders. The yield to maturity on Strip
Securities or Securities purchased at premiums or discounts to par will be
extremely sensitive to the rate of Prepayments on the related Receivables. In
addition, the yield to maturity on certain other types of classes of Securities,
including Strip Securities, Accrual Securities or certain other Classes in a
series including more than one Class of Securities, may be relatively more
sensitive to the rate of prepayment of the related Contracts than other Classes
of Securities.
The rate of Prepayments of Contracts cannot be predicted and is influenced
by a wide variety of economic, social, and other factors, including prevailing
interest rates, the availability of alternate financing and local and regional
economic conditions. Therefore, no assurance can be given as to the level of
Prepayments that a Trust Fund will experience.
Securityholders should consider, in the case of Securities purchased at a
discount, the risk that a slower than anticipated rate of Prepayments on the
Receivables could result in an actual yield that is less than the anticipated
yield and, in the case of any Securities purchased at a premium, the risk that a
faster than anticipated rate of Prepayments on the Receivables could result in
an actual yield that is less than the anticipated yield.
CERTAIN UCC CONSIDERATIONS. Certain states have adopted a version of
Article 2A of the Uniform Commercial Code ("Article 2A"). Article 2A purports to
codify many provisions of existing common law. Although there is little
precedent regarding how Article 2A will be interpreted, it may, among other
things, limit enforceability of any "unconscionable" lease or "unconscionable"
provision in a lease, provide a lessee with remedies, including the right to
cancel the lease contract, for certain lessor breaches or defaults, and may add
to or modify the terms of "consumer leases" and leases where the lessee is a
"merchant lessee". Article 2A, moreover, recognizes typical commercial lease
"hell or high water" rental payment clauses and validates reasonable liquidated
damages provisions in the event of lessor or lessee defaults. Article 2A also
recognizes the concept of freedom of contract and permits the parties in a
commercial context a wide degree of latitude to vary provisions of the law.
CONTRACTS RELATED TO SOFTWARE AND SERVICES. Certain Contracts, as
described in the related Prospectus Supplement, may relate to software and
services that are not owned by the related Originator and in which no related
interest will be transferred to the Issuer. Accordingly, if any such Contract
becomes a defaulted Contract, the Issuer will not realize any proceeds from the
related software and services from which to satisfy any unpaid payments under
such Contracts.
THE TRUST FUNDS
The property of each Trust Fund will include, as specified in the related
Prospectus Supplement, (i) a pool of Receivables, (ii) all moneys (including
accrued interest) due thereunder on or after the applicable cut-off date set
forth in the related Trust Documents (the related "Cut-Off Date"), (iii) such
amounts as from time to time may be held in one or more accounts established and
maintained by the Servicer or the Trustee pursuant to the related Trust
Document, as described below and in the related Prospectus Supplement, (iv) the
security interests, if any, in the Underlying Collateral relating to such pool
of Receivables, (v) the right to proceeds from claims on physical damage
policies, if any, covering such Underlying Collateral or the related Obligors,
as the case may be, (vi) the proceeds of any repossessed collateral related to
such pool of Receivables, (vii) the rights of the Sponsor under the related
Receivables Transfer Agreement and (viii) interest earned on certain short-term
investments held by such Trust Fund, unless the related Prospectus Supplement
specifies that such earnings may be paid to the related Servicer or
Originator(s). The Trust Fund will also include, if so specified in the related
Prospectus Supplement, monies on deposit in a Pre-Funding Account, which will be
used by the Trustee to acquire or receive a security interest in Additional
Receivables from time to time during the Pre-Funding Period specified in the
related Prospectus Supplement. In addition, to the extent specified in the
related Prospectus Supplement, some combination of Credit Enhancement may be
issued to or held by the Trustee or Indenture Trustee on behalf of the related
Trust Fund for the benefit of the holders of one or more classes of Securities.
The Receivables comprising a Trust Fund will, as specifically described
in the related Prospectus Supplement, be either (i) originated by the Sponsor,
(ii) originated by the related Originator and acquired by the Sponsor pursuant
to a Receivables Transfer Agreement, (iii) originated by various Vendors and
acquired by the Sponsor or (iv) acquired by the Sponsor from other owners of
Receivables. The underwriting criteria applicable to the Receivables included in
any Trust Fund will be described in all material respects in the related
Prospectus Supplement.
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The Contracts are either "instruments", "chattel paper" (each as defined
in the Uniform Commercial Code) or would be "chattel paper" but for a technical
definitional matter, but in any event are not treated materially differently
from "chattel paper" for purposes of title transfer, security interests or
remedies on default.
The commercial products sold, leased under or financed by the Contracts
and expected to comprise the Underlying Collateral of a Trust Fund consists
primarily of commercial property used for a variety of business purposes and
commercial enterprises. The Underlying Collateral included in each Trust Fund
will be limited to personal property for use by the related Obligor in the
ordinary course of business.
With respect to each series of Securities, on or prior to the Closing Date
on which the Securities are delivered to Securityholders, the Sponsor will form
a Trust Fund by either (i) transferring the related Receivables into a Trust
pursuant to a Receivables Transfer Agreement or a pooling and servicing
agreement between the Sponsor and the Trustee or (ii) transferring the related
Receivables by entering into a Sale and Servicing Agreement with an Issuer
formed pursuant to a Trust Agreement with the Owner Trustee and the Transferor
specified in the related Prospectus Supplement. If the Receivables are
transferred to an Issuer pursuant to Sale and Servicing Agreement, such Issuer
will enter into an Indenture with an Indenture Trustee, relating to the issuance
of such Securities, secured by the related Receivables.
ADVANTA BUSINESS SERVICES CORP. UNDERWRITING, ORIGINATING AND SERVICING
PRACTICES
GENERAL:
Advanta Business Services Corp. ("ABS") is a wholly-owned subsidiary of
Advanta Leasing Holding Corp., a Delaware corporation ("ALHC"). ALHC is a
wholly-owned subsidiary of Advanta Corp. (a publicly-traded company based in
Spring House, PA and is listed on the NASDAQ as ADVNA and ADVNB). ABS's
primary business is convenience lending which consists of originating and
servicing primarily commercial leases and loans (the "Contracts") to
businesses and business owners in the United States. Advanta Business
Services Corp. is headquartered at 1020 Laurel Oak Road, Voorhees, NJ
08043-7228 and its phone number is (609) 782-7300.
ABS leases and finances a wide variety of small-ticket equipment,
including, but not limited to, office equipment, telecommunications equipment,
automotive repair equipment, surveillance equipment, and furniture, to
businesses and business owners throughout the United States. ABS underwrites and
services its equipment leasing and financing business from its headquarters in
Voorhees, New Jersey.
CONTRACT ORIGINATION:
ABS originates Contracts primarily through its sales and marketing
programs at its New Jersey headquarters. Transactions are originated as a result
of ABS's relationships with its various brokers and vendors. From time to time,
vendors who are familiar with the ABS's leasing and financing services as a
result of previous transactions may recommend prospective customers make a
credit application to ABS for financing. Other transactions may be submitted to
ABS as a result of a more formal program between ABS and a vendor where the
vendor's marketing representatives may offer prospective customers financing at
pre-arranged rates, based upon the vendor's equipment, and certain terms and
conditions approved by ABS.
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In a majority of these vendor programs, ABS owns the equipment subject to
each contract and bills and collects payments directly with the obligor. For
some select vendor programs, ABS will bill and collect payments using a
non-descriptive name, so that the obligor does not recognize ABS as a party to
the transaction. Under this program, once a contract becomes 60-90 days past
due, ABS is then immediately identified to the obligor. Vendors may choose to
originate the contracts on ABS's standard contract documentation or they may
use their own internally generated contract documentation which is reviewed and
approved by ABS's legal staff. In instances where ABS does not own the
equipment, they will, under certain circumstances, obtain a perfected security
interest in the equipment.
On occasion, ABS will purchase contracts or other financing transactions
which were originated by unaffiliated lessors/lenders; provided, however, that
the creditworthiness and origination procedures of such originator meet the
approval of ABS; and provided further, that ABS approves the creditworthiness
of the obligor and all of the related documentation in such transaction.
Another program through which ABS originates contracts is through the use
of brokers. In a typical broker transaction, ABS originates contracts referred
to it by a given broker and pays the broker a referral fee. Contracts originated
under this program are reviewed in a manner consistent with ABS's then existing
credit polices and procedures. Contracts may also be purchased by ABS on a bulk
or portfolio basis. These contracts may be originated by a variety of
Originators under several different underwriting guidelines. When reviewing
potential bulk or portfolio acquisitions, the existing Originator's contracts
will be reviewed by the ABS credit staff. Using predetermined guidelines, an
acceptance or rejection decision will be made. For each potential bulk or
portfolio purchase, ABS has the ability to accept or reject individual
contracts.
RESIDUAL VALUES:
ABS has realized residual values which, on average, exceeded the booked
residual values in respect of such contracts. For contracts in which there is a
pre-determined buy-out price, the buy-out price is the residual value recorded
on ABS's books. In the event the equipment is returned, ABS utilizes the
services of its vendors and brokers and also participates in an active secondary
market for the sale of this returned, used equipment.
ABS'S CREDIT REVIEW:
ABS performs a thorough credit review of all prospective obligors.
Typically, the credit review process begins when the prospective obligor
completes a credit application. The completed credit application is entered into
the company's computerized processing system. A standardized credit scoring
model is employed and the credit decision is based on several criteria which may
include verification of a credit bureau report for the principal(s) of the
company, verification of a Dun & Bradstreet listing for the company, and a
review of the total exposure for all contracts currently outstanding with ABS,
which may not exceed a certain dollar limit. Credit applications can be
automatically approved and/or rejected based on the dollar amount of the
application and a score falling within a certain range in the model. For those
credit applications not falling within a specified dollar amount and/or credit,
the decision is then based on an analysis by the credit staff. Authority to make
credit decisions is based on seniority and lending experience. In general,
transactions in excess of $500,000 must be approved by the senior management of
ABS.
ABS's senior credit committee provides a forum for making credit decisions
on transactions which exceed the authority of individual or paired credit
approvers either in size or complexity. The senior credit committee also
identifies strategic credit issues and the credit polices and procedures
throughout the company.
In addition, the credit department has a staff dedicated to perform
reviews of potential new vendors and brokers to ensure compliance with the
company's overall credit policies and procedures. In reviewing new relationships
with vendors and brokers, ABS considers, among other things, length of time in
business, bank, credit and trade references, Dun & Bradstreet reports, and
credit bureau reports on all of the officers.
COLLECTION/SERVICING:
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Collection activities with respect to delinquent contracts are performed
by ABS's servicing staff in Voorhees, New Jersey. Each contract has a provision
for assessing late charges in the event that an obligor fails to make a payment
on the contract on the related due date. Telephone contact is normally initiated
when an account is one to fifteen days past due. All collection activity is
entered into the computerized collection system. Activity notes are input
directly into the collection system in order for company personnel to monitor
the status of the account and take any necessary actions. Collectors have
available at their computer terminals the latest status and collection history
on each account.
If a payment has not been received by the 11th day after the due date, the
system automatically generates a computerized late notice which is sent directly
to the obligor. If a payment has not been received by the 31st day after the due
date, a default letter is sent out to the obligor. If a payment has not been
received by the 61st day after the due date, a demand letter is sent out
directly to the obligor. Telephone contact is continued throughout the
delinquency period. If the transaction continues to be delinquent, ABS may
exercise any remedies available to it under the terms of the contract, including
termination, acceleration and/or repossession. Each contract is evaluated on the
merits of the individual situation, with the equipment value being considered as
well as the current financial strength of the obligor. If collection activities
do not rectify the account, ABS typically charges off the account at 121 days
past due.
At the time of charge-off the account is turned over to ABS's in-house
litigation department. In general, a decision is made to either pursue the
obligor and /or personal guarantor through litigation or send to a third-party
collection agency to enforce the original terms of the contract. Prior to
litigation, the legal recovery department will attempt to obtain resolution of
the account. The litigation decision is dependent on a review of the account
including credit bureau reports, obligor payment history, and/or Dun &
Bradstreet reports. In cases where the obligor has filed for bankruptcy, the
ABS legal recovery department follows up with the debtor to determine whether
it intends to assume or reject the contract. In addition, the department pursues
the non-bankrupt debtors while reviewing the fair market value of the
equipment, the remaining balance of the contract, and the credit of the
non-bankrupt obligors. If the Bankruptcy area cannot settle with the
non-bankrupt obligors, the file may be passed to the litigators for suit. In
many cases, although the obligor has filed for bankruptcy protection from their
creditors, they continue to make regular payments on their contract to ABS.
THE ISSUERS
With respect to each series of Securities, the Issuer shall be either the
Sponsor, one or more special-purpose finance subsidiaries of the Sponsor (which
may be organized and established by the Sponsor with respect to one or more
Trust Funds) (each such special-purpose finance subsidiary, a "Transferor") or
a trust formed by the Sponsor or by one or more Transferors (each, a "Trust").
For purposes of this Prospectus, the term "Sponsor" includes the term
"Transferor". The Trust issuing Securities pursuant to this Prospectus and the
related Prospectus Supplement shall be referred to herein as the "Issuer" with
respect to the related Securities.
Upon the issuance of the Securities of a given series, the proceeds from
such issuance will be used by the Issuer to acquire the related Receivables from
the Sponsor or the related Transferor. The Servicer will service the related
Receivables pursuant to the applicable Trust Document, and will be compensated
for acting as the Servicer. To facilitate servicing and to minimize
administrative burden and expense, the Servicer may be appointed custodian for
the related Receivables by each Trustee, Indenture Trustee and the Sponsor, as
set forth in the related Prospectus Supplement.
If the protection provided to the Securityholders of a given class by the
subordination of another Class of Securities of such series and by the
availability of the funds in a reserve account, if any, or any other Credit
Enhancement for such series is insufficient, the Securityholders must rely
solely on the payments from the related Contracts, and the proceeds from the
sale of the property which secures or is leased under the defaulted Contracts
for repayment of the related security. In such event, certain factors may affect
such Issuer's ability to realize on the collateral securing such Contracts, and
thus may reduce the proceeds to be distributed to the Securityholders of such
series.
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THE RECEIVABLES
RECEIVABLES POOLS
Information with respect to the Receivables in each Trust Fund will be set
forth in the related Prospectus Supplement, including the distribution of such
Receivables by type, payment frequency and outstanding principal balance as of
the applicable Cut-off Date. The commercial products sold, leased under or
financed by the Contracts expected to be included in a Trust Fund consist
primarily of commercial property used for a variety of business purposes and
commercial enterprises.
DELINQUENCIES, REPOSSESSIONS, AND NET LOSSES
Certain information relating to the Sponsor's delinquency, repossession
and net loss experience with respect to contracts it has originated or acquired
will be set forth in each Prospectus Supplement. This information may include,
among other things, the experience with respect to all contracts in the
Sponsor's portfolio during certain specified periods, including Contracts which
may not meet the criteria for selection as a Receivable for any particular Trust
Fund. There can be no assurance that the delinquency, repossession and net loss
experience on any Trust Fund will be comparable to the Sponsor's prior
experience.
MATURITY AND PREPAYMENT CONSIDERATIONS
As more fully described in the related Prospectus Supplement, if a
Contract permits a Prepayment, such payment, together with accelerated payments
resulting from defaults, will shorten the weighted average life of the related
pool of Receivables and the weighted average life of the related Securities. The
rate of Prepayments on the Receivables may be influenced by a variety of
economic, financial and other factors. In addition, under certain circumstances,
the Sponsor or the related Originator will be obligated to acquire Receivables
from the related Trust Fund pursuant to the applicable Trust Document or
Receivables Transfer Agreement as a result of breaches of representations and
warranties. Any reinvestment risks resulting from a faster or slower
amortization of the related Securities which results from Prepayments will be
borne entirely by the related Securityholders.
The related Prospectus Supplement will set forth certain additional
information with respect to the maturity and prepayment considerations
applicable to a particular pool of Receivables and the related series of
Securities, together with a description of any applicable prepayment penalties.
POOL FACTORS
The "Pool Factor" for each Class of Securities will be a seven-digit
decimal, which the Servicer will compute prior to each distribution with respect
to such Class of Securities, indicating the remaining outstanding principal
balance of such Class of Securities as of the applicable Payment Date, as a
fraction of the initial outstanding principal balance of such Class of
Securities. Each Pool Factor will be initially 1.0000000, and thereafter will
decline to reflect reductions in the outstanding principal balance of the
applicable Class of Securities. A Securityholder's portion of the aggregate
outstanding principal balance of the related Class of Securities is the product
of (i) the original aggregate purchase price of such Securityholder's Securities
and (ii) the applicable Pool Factor.
As more specifically described in the related Prospectus Supplement with
respect to each series of Securities, the related Securityholders of record will
receive reports on or about each Payment Date concerning the payments received
on the Receivables, the Pool Balance (as such term is defined in the related
Prospectus Supplement, the "Pool Balance"), each Pool Factor and various other
items of information. In addition, Securityholders of record during any calendar
year will be furnished information for tax reporting purposes not later than the
latest date permitted by law.
USE OF PROCEEDS
The proceeds from the sale of the Securities of a given series will be
applied by the Sponsor to the acquisition of the related Receivables from the
related Originator. The Sponsor expects that it will make additional
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sales of securities similar to the Securities from time to time, but the timing
and amount of any such additional offering will be dependent upon a number of
factors, including the volume of Contracts acquired by the Sponsor, prevailing
interest rates, availability of funds and general market conditions.
THE TRUSTEE
The Trustee for each series of Securities will be specified in the related
Prospectus Supplement. The Trustee's liability in connection with the issuance
and sale of the related Securities is limited solely to the express obligations
of such Trustee set forth in the related Trust Document.
With respect to each series of Securities, no resignation or removal of
the Trustee and no appointment of a successor Trustee shall become effective
until the acceptance of appointment by the successor Trustee. The Trustee may
resign for cause at any time by giving written notice thereof to the Servicer
(if the related Trust is structured as a grantor trust) or to the related
Transferor (if the related Trust is structured as an owner trust) and by mailing
notice of resignation by first-class mail, postage prepaid, to the
Securityholders of such series at their addresses appearing on the Security
Register. The Trustee may be removed at any time by written notice of the
holders of Securities evidencing more than 50% of the voting rights with respect
to such series, delivered to the Trustee and the Servicer (if the related Trust
is structured as a grantor trust) or to the related Transferor (if the related
Trust is structured as an owner trust), unless an alternate method is described
in the related Prospectus Supplement. If the Trustee shall resign, be removed,
or become incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, the Servicer (if the related Trust is structured as a
grantor trust) or to the related Transferor (if the related Trust is structured
as an owner trust) shall promptly appoint a successor Trustee. If no successor
Trustee shall have been so appointed by the Servicer (if the related Trust is
structured as a grantor trust) or to the related Transferor (if the related
Trust is structured as an owner trust) or the Securityholders, or if no
successor Trustee shall have accepted appointment within 30 days after any such
resignation or removal, existence of incapability, or occurrence of such
vacancy, the Trustee or any Securityholder may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
DESCRIPTION OF THE SECURITIES
GENERAL
The Securities will be issued in series. Each series of Securities (or, in
certain instances, two or more series of Securities) will be issued pursuant to
a Trust Document or a supplement thereto. The following summaries (together
with additional summaries under "The Trust Document" below) describe all
material terms and provisions relating to the Securities common to each Trust
Document. The summaries do not purport to be complete and are subject to, and
are qualified in their entirety by reference to, all of the provisions of the
Trust Documents for the related Securities and the related Prospectus
Supplement.
All of the Securities offered pursuant to this Prospectus and the related
Prospectus Supplement will be rated in one of the four highest rating categories
by one or more Rating Agencies.
The Securities will generally be styled as debt instruments, having a
principal balance and a specified Interest Rate. The Securities may either
represent beneficial ownership interests in the related Receivables held by the
related Trust or debt secured by certain assets of the related Issuer.
Each series or Class of Securities offered pursuant to this Prospectus may
have a different Interest Rate, which may be a fixed or adjustable interest
rate. The related Prospectus Supplement will specify the Interest Rate for each
series or Class of Securities described therein, or the initial interest rate
and the method for determining subsequent changes to the Interest Rate.
A series may include one or more Classes of Strip Securities entitled (i)
to principal distributions, with disproportionate, nominal or no interest
distributions, or (ii) to interest distributions, with disproportionate, nominal
or no principal distributions. In addition, a series of Securities may include
two or more Classes of Securities that differ as to timing, sequential order,
priority of payment, Interest Rate or amount of distribution of principal or
interest or both, or as to which distributions of principal or interest or both
on any Class shall or may be made upon
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the occurrence of specified events, in accordance with a schedule or formula, or
on the basis of collections from designated portions of the related pool of
Receivables. Any such series may include one or more Classes of Accrual
Securities, as to which certain accrued interest will not be distributed but
rather will be added to the principal balance (or nominal balance, in the case
of Accrual Securities which are also Strip Securities) thereof on each Payment
Date, as hereinafter defined, or in the manner described in the related
Prospectus Supplement.
If so provided in the related Prospectus Supplement, a series may include
one or more other Classes of Senior Securities that are senior to one or more
other Classes of Subordinate Securities in respect of certain distributions of
principal and interest and allocations of losses on Receivables.
In addition, certain Classes of Senior (or Subordinate) Securities may be
senior to other Classes of Senior (or Subordinate) Securities in respect of such
distributions or losses.
GENERAL PAYMENT TERMS OF SECURITIES
As provided in the related Trust Document and as described in the related
Prospectus Supplement, Securityholders will be entitled to receive payments on
their Securities on the specified Payment Dates. Payment Dates with respect to
the Securities will occur monthly, quarterly or semi-annually, as described in
the related Prospectus Supplement.
The related Prospectus Supplement will describe the Record Date preceding
such Payment Date, as of which the Trustee, the Indenture Trustee or its paying
agent will fix the identity of the Securityholders for the purpose of receiving
payments on the next succeeding Payment Date. As more fully described in the
related Prospectus Supplement, the Payment Date may be the fifteenth or
twenty-fifth day of each month (or, in the case of quarterly-pay Securities, the
fifteenth or twenty-fifth day of every third month; and in the case of
semi-annual pay Securities, the fifteenth or twenty-fifth day of every sixth
month) and the Record Date will be the close of business as of the last day of
the calendar month that precedes the calendar month in which such Payment Date
occurs.
Each Trust Document will describe a Monthly Period preceding each Payment
Date (for example, in the case of monthly-pay Securities, the calendar month
preceding the month in which a Payment Date occurs). As more fully provided in
the related Prospectus Supplement, collections received on or with respect to
the related Receivables held by or pledged to a Trust during a Monthly Period
will be required to be remitted by the related Servicer to the related Trustee
or Indenture Trustee prior to the related Payment Date and will be used to fund
payments to Securityholders on such Payment Date. As may be described in the
related Prospectus Supplement, the related Trust Document may provide that all
or a portion of the payments collected on or with respect to the related
Receivables may be applied by the related Trustee or Indenture Trustee to the
acquisition of additional Receivables during a specified period (rather than be
used to fund payments of principal to Securityholders during such period) with
the result that the related Securities will possess an interest-only period,
also commonly referred to as a revolving period, which will be followed by an
amortization period. Any such interest only or revolving period may, upon the
occurrence of certain events to be described in the related Prospectus
Supplement, terminate prior to the end of the specified period and result in
the earlier than expected amortization of the related Securities.
In addition, and as may be described in the related Prospectus Supplement,
the related Trust Document may provide that all or a portion of such collected
payments may be retained by the Trustee (and held in certain temporary
investments, including Receivables) for a specified period prior to being used
to fund payments of principal and/or interest to Securityholders.
Such retention and temporary investment by the Trustee or Indenture
Trustee of such collected payments may be required by the related Trust Document
for the purposes of (a) slowing the amortization rate of the related Securities
relative to the rent payment schedule of the related Receivables, or (b)
attempting to match the amortization rate of the related Securities to an
amortization schedule established at the time such Securities are issued. Any
such feature applicable to any Securities may terminate upon the occurrence of
events to be described in the related Prospectus Supplement, resulting in
distributions to the specified Securityholders and an acceleration of the
amortization of such Securities.
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Neither the Securities nor the underlying Receivables will be guaranteed
or insured by any governmental agency or instrumentality or the Sponsor, any
Transferor, the related Servicer, the related Originator, any Trustee, any
Indenture Trustee or any of their respective affiliates unless specifically set
forth in the related Prospectus Supplement.
As may be described in the related Prospectus Supplement, Securities of
each series covered by a particular Trust Document or Indenture will either
evidence specified beneficial ownership interest in a separate Trust Fund
created pursuant to such Trust Document or represent debt secured by the related
Trust Fund. To the extent that any Trust Fund includes certificates of interest
or participations in Receivables, the related Prospectus Supplement will
describe the material terms and conditions of such certificates or
participations.
BOOK-ENTRY REGISTRATION
As may be described in the related Prospectus Supplement, Securityholders
of a given series may hold their Securities 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 Securities in respect of a
given series. CEDEL and Euroclear will hold omnibus positions on behalf of the
CEDEL Participants (as defined below) and the Euroclear Participants (as defined
below) (collectively, the "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.
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 Section 17A of the Exchange Act. DTC was created to hold
securities for DTC Participants and to facilitate the clearance and settlement
of securities transactions between DTC Participants through electronic
book-entries, thereby eliminating the need for physical movement of notes or
certificates. DTC Participants include securities brokers and dealers, banks,
trust companies and clearing corporations. Indirect access to the DTC system
also is available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly ("Indirect Participants").
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, 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.
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The Securityholders of a given series that are not Participants or
Indirect Participants but desire to purchase, sell or otherwise transfer
ownership of, or other interests in, Securities of such series may do so only
through Participants and Indirect Participants. In addition, Securityholders of
a given series will receive all distributions of principal and interest through
the Participants who in turn will receive them from DTC. Under a book-entry
format, Securityholders of a given series may experience some delay in their
receipt of payments, since such payments will be forwarded by the applicable
Trustee to Cede, as nominee for DTC. DTC will forward such payments to the
related DTC Participants, which thereafter will forward them to Indirect
Participants or such Securityholders. It is anticipated that the only
"Securityholder" in respect of any series will be Cede, as nominee of DTC.
Securityholder of a given series will not be recognized as Securityholders of
such series, and such Securityholders will be permitted to exercise the rights
of Securityholders of such series only indirectly through DTC and its
Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Securities of a given series among Participants on whose behalf it acts with
respect to such Securities and to receive and transmit distributions of
principal of, and interest on, such Securities. Participants and Indirect
Participants with which the Securityholders of a given series have accounts with
respect to such Securities similarly are required to make book-entry transfers
and receive and transmit such payments on behalf of their respective
Securityholders of such series. Accordingly, although such Securityholders will
not possess Securities, the Rules provide a mechanism by which Participants will
receive payments and will be able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Securityholder of a given series to pledge Securities of such series to persons
or entities that do not participate in the DTC system, or to otherwise act with
respect to such Securities, may be limited due to the lack of a physical
certificate for such Securities.
DTC will advise the Trustee in respect of each Series that it will take
any action permitted to be taken by a Securityholder of the related series only
at the direction of one or more Participants to whose accounts with DTC the
Securities of such series are credited. 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 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 28
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. 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.
Euroclear 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 28 currencies, including United
States dollars. The Euroclear System includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries generally similar to the arrangements for cross-market transfers with
DTC described above. Euroclear is operated by Morgan Guaranty Trust Company of
New York, Brussels, Belgium office, under contract with Euroclear Clearance
System, S.C., a Belgian cooperative corporation (the "Cooperative"). All
operations are conducted by the "Euroclear Operator" (as defined below), 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 on behalf of Euroclear Participants. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
Underwriters. Indirect access to the Euroclear
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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 relationship with persons holding through Euroclear Participants.
Except as required by law, the Trustee or Indenture Trustee in respect of
a series will not have any liability for any aspect of the records relating to
or payments made or account of beneficial ownership interests of the related
Securities held by Cede, as nominee for DTC, or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
DEFINITIVE NOTES
As may be described in the related Prospectus Supplement, the Securities
will be issued in fully registered, certificated form ("Definitive Securities")
to the Securityholders of a given series or their nominees, rather than to DTC
or its nominee, only if (i) the Trustee in respect of the related series advises
in writing that DTC is no longer willing or able to discharge properly its
responsibilities as depository with respect to such Securities and such Trustee
is unable to locate a qualified successor, (ii) such Trustee or Indenture
Trustee, at its option, elects to terminate the book-entry-system through DTC or
(iii) after the occurrence of an "Event of Default" under the related Indenture
or a default by the Servicer under the related Trust Documents Securityholders
representing at least a majority of the outstanding principal amount of such
Securities advise the applicable Trustee through DTC in writing that the
continuation of a book-entry system through DTC (or a successor thereto) is no
longer in such Securityholders' best interest.
Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable Trustee or Indenture Trustee will be required to
notify all such Securityholders through Participants of the availability of
Definitive Securities. Upon surrender by DTC of the definitive certificates
representing such Securities and receipt of instructions for re-registration,
the applicable Trustee or Indenture Trustee will reissue such Securities as
Definitive Securities to such Securityholders.
Distributions of principal of, and interest on, such Securities will
thereafter be made by the applicable Trustee or Indenture Trustee in accordance
with the procedures set forth in the related Trust Document directly to holders
of Definitive Securities in whose names the Definitive Securities were
registered at the close of business on the applicable Record Date specified for
such Securities in the related Prospectus Supplement. Such distributions will
be made by check mailed to the address of such holder as it appears on the
register maintained by the applicable Trustee. The final payment on any such
Security, however, will be made only upon presentation and surrender of such
Security at the office or agency specified in the notice of final distribution
to the applicable Securityholders.
Definitive Securities in respect of a given series of Securities will be
transferable and exchangeable at the offices of the applicable Trustee or
Indenture Trustee or of a certificate registrar named in a notice delivered to
holders of such Definitive Securities. No service charge will be imposed for any
registration of transfer or exchange, but the applicable Trustee or Indenture
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith.
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DESCRIPTION OF THE TRUST DOCUMENTS
The following summary describes certain terms of each Trust Document
pursuant to which a Trust Fund will be created and the related Securities in
respect of such Trust Fund will be issued. For purposes of this Prospectus, the
term "Trust Document" as used with respect to a Trust means, collectively, and
except as otherwise specified, any and all agreements relating to the
establishment of the related Trust, the servicing of the related Receivables and
the issuance of the related Securities, including, without limitation, Pooling
Agreements, Trust Agreements and Indentures, (i.e., pursuant to which any
Notes shall be issued). Forms of the Trust Documents have been filed as
exhibits to the Registration Statement of which this Prospectus forms a part.
The summary does not purport to be complete. It is qualified in its entirety by
reference to the provisions of the Trust Documents.
ACQUISITION OF THE RECEIVABLES PURSUANT TO A RECEIVABLES TRANSFER AGREEMENT
On the Closing Date specified with respect to any given series of
Securities, the Sponsor will cause each Issuer to acquire the related
Receivables from the Sponsor or related Transferor pursuant to a Receivables
Transfer Agreement, and, in the case of Notes, the Issuer will pledge its right,
title and interests in and to such Receivables to an Indenture Trustee on behalf
of Securityholders pursuant to an Indenture. The rights and benefits of the
Sponsor under such Receivables Transfer Agreement will be assigned to the
related Trustee or Indenture Trustee on behalf of Securityholders as collateral
for the Securities of the related series issued by a Trust or pursuant to an
Indenture. The obligations of the Sponsor and the related Servicer under such
Trust Documents include those specified below and in the related Prospectus
Supplement.
As more fully described in the related Prospectus Supplement, the Sponsor
will be obligated to acquire from the related Trust Fund its interest in any
Receivable transferred to a Trust or pledged to a Trustee on behalf of
Securityholders if the interest of the Securityholders therein is materially
adversely affected by a breach of any representation or warranty made by the
Sponsor with respect to such Receivable, which breach has not been cured
following the discovery by or notice to the Sponsor of the breach. In addition,
if so specified in the related Prospectus Supplement, the Sponsor may from time
to time reacquire certain Receivables or substitute other Receivables for the
Receivables held by a Trust Fund subject to specified conditions set forth in
the related Trust Document and Receivables Transfer Agreement.
ACCOUNTS
With respect to each series of Securities, the Servicer will establish and
maintain with the applicable Trustee one or more accounts, in the name of such
Trustee on behalf of the related Securityholders, into which all payments made
on or with respect to the related Receivables will be deposited (the "Collection
Account"). The Servicer will also establish and maintain with such Trustee
separate accounts, in the name of such Trustee on behalf of such
Securityholders, in which amounts released from the Collection Account and the
reserve account or other Credit Enhancement, if any, for distribution to such
Securityholders will be deposited and from which distributions to such
Securityholders will be made (the "Distribution Account").
Any other accounts to be established with respect to a Trust, including
any reserve account, will be described in the related Prospectus Supplement.
For any series of Securities, funds in the Collection Account, the
Distribution Account, any reserve account and other accounts identified as such
in the related Prospectus Supplement (collectively, the "Trust Accounts") shall
be invested as provided in the related Trust Document in Eligible Investments.
"Eligible Investments" are generally limited to investments acceptable to the
Rating Agencies as being consistent with the rating of such Securities. Subject
to certain conditions, Eligible Investments may include securities issued by the
Sponsor, the related Originator, the related Servicer or their respective
affiliates or other trusts created by the Sponsor or its affiliates. Except as
described below or in the related Prospectus Supplement, Eligible Investments
are limited to obligations or securities that mature not later than the business
day immediately preceding the related Payment Date. However, subject to certain
conditions, funds in the reserve account may be invested in securities that will
not mature prior to the date of the next distribution and will not be sold to
meet any shortfalls. Thus, the amount of cash in any reserve account at any time
may be less than the balance of such reserve account. If the amount required to
be withdrawn from any reserve account to cover shortfalls in collections on the
related Receivables exceeds the amount of cash in such reserve account a
temporary shortfall in the amounts distributed to the related Securityholders
could result,
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which could, in turn, increase the average life of the Securities of such
series. Except as otherwise specified in the related Prospectus Supplement,
investment earnings on funds deposited in the applicable Trust Accounts, net of
losses and investment expenses (collectively, "Investment Earnings"), shall be
deposited in the applicable Collection Account, Distribution Account on each
Payment Date and shall be treated as collections of interest on the related
Receivables.
The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means 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 of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution has a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment grade.
"Eligible Institution" means, with respect to a Trust, (a) the corporate trust
department of the related Indenture Trustee or the related Trustee, as
applicable, or (b) a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), which (i) (A) has either
(w) a long-term unsecured debt rating acceptable to the Rating Agencies or (x) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies or (B) the parent corporation of which has either (y) a
long-term unsecured debt rating acceptable to the Rating Agencies or (z) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies and (ii) whose deposits are insured by the FDIC.
To the extent that the Servicer's unsecured debt ratings are acceptable to
the Rating Agencies, amounts deposited to any Trust Account may be commingled
with the Servicer's general account moneys. Any rights to so commingle moneys
will be described in the related Prospectus Supplement.
The material aspects of any particular Servicer's collections procedures
will be set forth in the related Prospectus Supplement.
PAYMENTS ON RECEIVABLES
SERVICING COMPENSATION
The Servicer will be entitled to receive a servicing fee for each Monthly
Period (the "Servicing Fee") in an amount equal to a specified percentage per
annum (as set forth in the related Prospectus Supplement, the "Servicing Fee
Rate") of the value of the assets held in the related Trust Fund, generally as
of the first day of such Monthly Period. Each Prospectus Supplement and
Servicing Agreement will specify the priority of distributions with respect to
the Servicing Fee (together with any portion of the Servicing Fee that remains
unpaid from prior Payment Dates), and whether and to what extent such Servicing
Fee may be paid prior to any distribution to the related Securityholders.
The Servicer will also collect and retain any late fees, the penalty
portion of interest paid on past due amounts and other administrative fees or
similar charges allowed by applicable law with respect to the Receivables, and
will be entitled to reimbursement from each Trust for certain liabilities.
Payments by or on behalf of obligors will be allocated to scheduled payments and
late fees and other charges in accordance with such Servicer's normal practices
and procedures.
The Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of similar types of receivables as an agent
for their beneficial owner, including collecting and posting all payments,
responding to inquiries of obligors on the related Receivables, investigating
delinquencies, sending payment coupons to obligors, reporting tax information to
obligors, paying costs of collection and disposition of defaults, and policing
the collateral. The Servicing Fee also will compensate the related Servicer for
administering the related Receivables, accounting for collections and furnishing
statements to the applicable Trustee and the applicable Indenture Trustee, if
any, with respect to distributions. The Servicing Fee also will reimburse the
related Servicer for certain taxes, accounting fees, outside auditor fees, data
processing costs and other costs incurred in connection with administering the
Receivables.
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DISTRIBUTIONS
With respect to each series of Securities, beginning on the Payment Date
specified in the related Prospectus Supplement, distributions of principal and
interest (or, where applicable, of principal or interest only) on each Class of
such Securities entitled thereto will be made by the applicable Indenture
Trustee to the Noteholders and by the applicable Trustee to the
Certificateholders of such series. The timing, calculation, allocation, order,
source, priorities of and requirements for each class of Noteholders and all
distributions to each class of Certificateholders of such series will be set
forth in the related Prospectus Supplement.
With respect to each series of Securities, on each Payment Date
collections on the related Receivables will be transferred from the Collection
Account to the Distribution Account for distribution to Securityholders,
respectively, to the extent provided in the related Prospectus Supplement.
Credit Enhancement, such as a reserve account, may be available to cover any
shortfalls in the amount available for distribution on such date, to the extent
specified in the related Prospectus Supplement. As more fully described in the
related Prospectus Supplement, and unless otherwise specified therein,
distributions in respect of principal of a Class of Securities of a given series
will be subordinate to distributions in respect of interest on such Class, and
distributions in respect of the Certificates of such series may be subordinate
to payments in respect of the Notes of such series.
CREDIT AND CASH FLOW ENHANCEMENTS
The amounts and types of Credit Enhancement arrangements, if any, and the
provider thereof, if applicable, with respect to each class of Securities of a
given series will be set forth in the related Prospectus Supplement. If and to
the extent provided in the related Prospectus Supplement, credit enhancement may
be in the form of a Policy, subordination of one or more Classes of Securities,
reserve accounts, overcollateralization, letters of credit, credit or liquidity
facilities, third party payments or other support, surety bonds, guaranteed cash
deposits or such other arrangements as may be described in the related
Prospectus Supplement or any combination of two or more of the foregoing. If
specified in the applicable Prospectus Supplement, Credit Enhancement for a
Class of Securities may cover one or more other Classes of Securities of the
same series, and Credit Enhancement for a series of Securities may cover one or
more other series of Securities.
The presence of Credit Enhancement for the benefit of any Class or series
of Securities is intended to enhance the likelihood of receipt by the
Securityholders or such Class or series of the full amount of principal and
interest due thereon and to decrease the likelihood that such Securityholders
will experience losses. As more specifically provided in the related Prospectus
Supplement, the Credit Enhancement for a Class or series of Securities will not
provide protection against all risks of loss and will not guarantee repayment of
the entire principal balance and interest thereon. If losses occur which exceed
the amount covered by any Credit Enhancement or which are not covered by any
Credit Enhancement, Securityholders of any Class or series will bear their
allocable share of deficiencies, as described in the related Prospectus
Supplement. In addition, if a form of Credit Enhancement covers more than one
series of Securities, Securityholders of any such series will be subject to the
risk that such Credit Enhancement will be exhausted by the claims of
Securityholders of other series.
STATEMENTS TO INDENTURE TRUSTEES AND TRUSTEES
Prior to each Payment Date with respect to each series of Securities, the
related Servicer will provide to the applicable Indenture Trustee and/or the
applicable Trustee and Credit Enhancer as of the close of business on the last
day of the preceding related Monthly Period a statement setting forth
substantially the same information as is required to be provided in the periodic
reports provided to Securityholders of such series described under "Description
of the Securities -- Reports to Securityholders".
EVIDENCE AS TO COMPLIANCE
Each Trust Document will provide that a firm of independent public
accountants will furnish to the related Trust and/or the applicable Indenture
Trustee and Credit Enhancer, annually, a statement as to compliance by the
related Servicer during the preceding twelve months (or, in the case of the
first such certificate, the period from the applicable Closing Date) with
certain standards relating to the servicing of the Receivables.
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Each Trust Document will also provide for delivery to the related Trust
and/or the applicable Indenture Trustee of a certificate signed by an officer of
the related Servicer stating that such Servicer either has fulfilled its
obligations under such Trust Document in all material respects throughout the
preceding 12 months (or, in the case of the first such certificate, the period
from the applicable Closing Date) or, if there has been a default in the
fulfillment of any such obligation in any material respect, describing each such
default. Each Servicer also will agree to give each Indenture Trustee and each
Trustee notice of certain "Servicer Defaults" (as defined below) under the
related Trust Document.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the applicable Indenture
Trustee or the applicable Trustee.
CERTAIN MATTERS REGARDING THE SERVICER
Each Trust Document will provide that the Servicer may not resign from its
obligations and duties as Servicer thereunder, except upon determination that
the performance by such Servicer of such duties is no longer permissible under
applicable law. No such resignation will become effective until the related
Trustee or a successor servicer has assumed the Servicer's servicing obligations
and duties under the Trust Document.
Except as otherwise provided in the related Prospectus Supplement, each
Trust Document will further provide that neither the related Servicer nor any of
its respective directors, officers, employees, or agents shall be under any
liability to the related Issuer or the related Securityholders for taking any
action or for refraining from taking any action pursuant to such Trust Document,
or for errors in judgment; provided, however, that neither such Servicer nor any
such person will be protected against any liability that 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 thereunder. In addition, such Trust Document will provide that the
Servicer is under no obligation to appear in, prosecute, or defend any legal
action that is not incidental to its servicing responsibilities under such Trust
Document and that, in its opinion, may cause it to incur any expense or
liability.
Under the circumstances specified in any such Trust Document, any entity
into which the Servicer may be merged or consolidated, or any entity resulting
from any merger or consolidation to which the Servicer is a party, or any entity
succeeding to the business of the Servicer or, with respect to its obligations
as Servicer, which corporation or other entity in each of the foregoing cases
assumes the obligations of the Servicer, will be the successor to such Servicer
under such Trust Document.
SERVICER DEFAULT
"Servicer Default" under a Trust Document will include (i) any failure by
the Servicer to deliver to the applicable Trustee for deposit in any of the
related Trust Accounts any required payment or to direct such Trustee or
Indenture Trustee to make any required distributions therefrom, which failure
continues unremedied for greater than the number of days specified in the
related Trust Document after written notice from such Trustee or Indenture
Trustee is received by such Servicer or after discovery by such Servicer; (ii)
any failure by the Servicer duly to observe or perform in any material respect
any other covenant or agreement in such Trust Document, which failure materially
and adversely affects the rights of the related Securityholders and which
continues unremedied for greater than the number of days specified in the
related Trust Document after the giving of written notice of such failure (1) to
the Servicer by the applicable Trustee or Indenture Trustee or (2) to the
Servicer and to the applicable Trustee by holders of the related Securities, as
applicable, evidencing not less than 25% of the voting rights of such
outstanding Securities; and (iii) any Insolvency Event. An "Insolvency Event"
shall mean financial insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings with respect to the Servicer and certain
actions by the Servicer indicating its insolvency, reorganization pursuant to
bankruptcy proceedings, or inability to pay its obligations.
RIGHTS UPON SERVICER DEFAULT
As more fully described in the related Prospectus Supplement, as long as a
Servicer Default under a Trust Document remains unremedied, the applicable
Trustee, Indenture Trustee, Credit Enhancer or holders of Securities of the
related series evidencing not less than 25% of the voting rights of such then
outstanding Securities may terminate all the rights and obligations of the
Servicer, if any, under such Trust Document, whereupon a successor
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servicer appointed by such Trustee or Indenture Trustee or such Trustee or
Indenture Trustee will succeed to all the responsibilities, duties and
liabilities of the Servicer under such Trust Document and will be entitled to
similar compensation arrangements. If, however, a bankruptcy trustee or similar
official has been appointed for the Servicer, and no Servicer Default other than
such appointment has occurred, such bankruptcy trustee or official may have the
power to prevent the applicable Trustee or Indenture Trustee or such
Securityholders from effecting a transfer of servicing. In the event that the
Trustee or Indenture Trustee is unwilling or unable to so act, it may appoint,
or petition a court of competent jurisdiction for the appointment of, a
successor with a net worth of at least $25,000,000 and whose regular business
includes the servicing of a similar type of receivables. Such Trustee or
Indenture Trustee may make such arrangements for compensation to be paid, which
in no event may be greater than the servicing compensation payable to the
Servicer under the related Trust Document.
WAIVER OF PAST DEFAULTS
With respect to each Trust Fund, unless otherwise provided in the related
Prospectus Supplement and subject to the approval of any Credit Enhancer, the
holders of Securities evidencing at least a majority of the voting rights of
such then outstanding Securities may, on behalf of all Securityholders of the
related Securities, waive any default by the Servicer, or by the Sponsor, in
the performance of its obligations under the related Trust Document and its
consequences, except a default in making any required deposits to or payments
from any of the Trust Accounts in accordance with such Trust Document. No such
waiver shall impair the Securityholders' rights with respect to subsequent
defaults.
AMENDMENT
As more fully described in the related Prospectus Supplement, each of the
Trust Documents may be amended by the parties thereto, without the consent of
the related Securityholders, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of such Trust
Documents or of modifying in any manner the rights of such Securityholders;
provided that such action will not, in the opinion of counsel satisfactory to
the applicable Trustee or Indenture Trustee, materially and adversely affect the
interests of any such Securityholder and subject to the approval of any Credit
Enhancer. As may be describe in the related Prospectus Supplement, the Trust
Documents may also be amended by the Sponsor, the Servicer, and the applicable
Trustee or Indenture Trustee with the consent of the holders of Securities
evidencing at least a majority of the voting rights of such then outstanding
Securities for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of such Trust Documents or of modifying in
any manner the rights of such Securityholders; provided, however, that no such
amendment may (i) increase or reduce in any manner the amount of, or accelerate
or delay the timing of, collections of payments on the related Receivables or
distributions that are required to be made for the benefit of such
Securityholders or (ii) reduce the aforesaid percentage of the Securities of
such series which are required to consent to any such amendment, without the
consent of the Securityholders of such series.
EVENTS OF DEFAULT
With respect to each series of Securities which are Notes, "Events of
Default" under the Trust Documents will consist of: (i) a default for the number
of days specified in the related Trust Document in the payment of any interest
on any Security; (ii) a default in the payment of the principal of or any
installment of the principal of any Security when the same becomes due and
payable; (iii) a default in the observance or performance in any material
respect of any covenant or agreement of the related Issuer made in the Trust
Documents, or any representation or warranty made by the related Issuer in the
Trust Documents or in any certificate delivered pursuant thereto or in
connection therewith having been incorrect as of the time made, and the
continuation of any such default or the failure to cure such breach of a
representation or warranty for a period of 30 days after notice thereof is given
to the related Issuer by the Trustee or the Indenture Trustee or the Trust and
the Indenture Trustee by the holders of at least 25% in principal amount of the
Securities then outstanding; or (iv) certain events of bankruptcy, insolvency,
receivership or liquidation of the related Issuer.
If an Event of Default should occur and be continuing with respect to the
Securities of any series, if such Securities are Notes, the related Indenture
Trustee or a majority of the securityholders may declare the principal of the
Securities to be immediately due and payable. Such declaration may, under
certain circumstances, be rescinded by a majority of the securityholders.
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INSOLVENCY EVENT
As described in the related Prospectus Supplement, if an Insolvency Event
occurs with respect to a Debtor relating to the applicable Trust Fund, such
Trust Fund will terminate, and the Receivables held in the related Trust Fund
will be liquidated and each such Trust will be terminated 90 days after the date
of such Insolvency Event, unless, before the end of such 90-day period, the
Trustee of such Trust shall have received written instructions from each of the
related Securityholders (other than the Sponsor) and/or the Credit Enhancer to
the effect that such party disapproves of the liquidation of such Receivables.
Promptly after the occurrence of any Insolvency Event with respect to a Debtor,
notice thereof is required to be given to such Securityholders and/or Credit
Enhancer; provided, however, that any failure to give such required notice will
not prevent or delay termination of any Trust. Upon termination of any Trust,
the applicable Trustee or Indenture Trustee shall direct that the assets of such
Trust be promptly sold (other than the related Trust Accounts) in a commercially
reasonable manner and on commercially reasonable terms. The proceeds from any
such sale, disposition or liquidation of such Receivables will be treated as
collections on such Receivables and deposited in the related Collection Account.
If the proceeds from the liquidation of such Receivables and any amounts on
deposit in any reserve account, and the related Distribution Account are not
sufficient to pay the Securities of the related series in full, and no
additional Credit Enhancement is available, the amount of principal returned to
Securityholders will be reduced and some or all of such Securityholders will
incur a loss.
Each Trust Document will provide that the applicable Trustee or Indenture
Trustee does not have the power to commence a voluntary proceeding in bankruptcy
with respect to any related Issuer without the unanimous prior approval of all
Securityholders (including the Sponsor, if applicable) of such Issuer and the
delivery to such Trustee or Indenture Trustee by each such Securityholder of a
certificate certifying that such Securityholder reasonably believes that such
Trust is insolvent.
TERMINATION
With respect to each Trust Fund, the obligations of the related Servicer,
the related Originator(s), the Sponsor and the applicable Trustee or Indenture
Trustee pursuant to the related Trust Document will terminate upon the earlier
to occur of (i) the maturity or other liquidation of the last related Receivable
and the disposition of any amounts received upon liquidation of any such
remaining Receivables and (ii) the payment to Securityholders of the related
series of all amounts required to be paid to them pursuant to such Trust
Document. As more fully described in the related Prospectus Supplement, in order
to avoid excessive administrative expense, the related Servicer will be
permitted in respect of the applicable Trust Fund, unless otherwise specified in
the related Prospectus Supplement, at its option to purchase from such Trust
Fund, as of the end of any Monthly Period immediately preceding a Payment Date,
if the Contract Balance of the related Contracts is less than a specified
percentage (set forth in the related Prospectus Supplement) of the initial Pool
Balance in respect of such Trust Fund, all such remaining Receivables at a price
at least equal to the amount necessary to pay in full all outstanding Securities
of such series. The related Securities will be redeemed following such purchase.
If and to the extent provided in the related Prospectus Supplement with
respect to a Trust Fund, the applicable Trustee will, within ten days following
a Payment Date as of which the Pool Balance is equal to or less than the
percentage of the initial Pool Balance specified in the related Prospectus
Supplement, solicit bids for the purchase of the Receivables remaining in such
Trust, in the manner and subject to the terms and conditions set forth in such
Prospectus Supplement. If such Trustee receives satisfactory bids as described
in such Prospectus Supplement, then the Receivables remaining in such Trust Fund
will be sold to the highest bidder.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either of the events specified above and the subsequent distribution to the
related Securityholder of all amounts required to be distributed to them
pursuant to the applicable Trust Document may effect the prepayment of the
Securities of such series.
ADMINISTRATOR
If an Administrator is specified in the related Prospectus Supplement,
such Administrator will enter into an agreement (the "Administration Agreement")
pursuant to which such Administrator will agree, to the extent
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provided in such Administration Agreement, to provide the notices and to perform
other administrative obligations required by the related Indenture and the Trust
Documents.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
GENERAL
The Contracts will be either "instruments", "chattel paper" (each as
defined in the Uniform Commercial Code), or would be "chattel paper" but for a
technical definitional matter, but in any event are not treated materially
different from "chattel paper" for purposes of title transfer, security
interests or remedies on default. Pursuant to the UCC for most purposes, a sale
of chattel paper is treated in a manner similar to a transaction creating a
security interest in chattel paper. With respect to the Receivables other than
the Underlying Collateral the Sponsor, the related Servicer and/or the related
Originator(s) will cause the filing of appropriate UCC-1 financing statements
to be made with the appropriate governmental authorities. Under the Trust
Documents, the related Servicer will be obligated from time to time to take
such actions as are necessary to protect and perfect the Trust's or the
Trustee's interests in the Contracts and their proceeds.
THE UNDERLYING COLLATERAL
GENERAL. The manner in which a security interest in the Underlying
Collateral may be perfected depends on the type of assets comprising such
Underlying Collateral. Security interests in certain of the Underlying
Collateral must be perfected by notation of the secured party's lien on the
certificate of title or by actual possession of the certificate of title,
depending on the law of the state wherein the purchaser resides. Security
interests in certain other Underlying Collateral must be perfected by the filing
of a UCC financing statement, naming the Obligor as debtor and the Originator or
the Sponsor as secured party.
As specified herein and related Prospectus Supplement, because of the
administrative burden and expense that would be entailed in so doing, neither
the Originators nor the Sponsor will, as the case may be (x) file, or
necessarily will be required to file, UCC financing statements identifying such
Underlying Collateral transferred and pledged in favor of the related Trust
and Indenture Trustee on behalf of the Securityholders, (y) make a notation of
the lien of the related Trust or Indenture Trustee on behalf of the
Securityholders on, or take possession of, the certificate of title with
respect to such Underlying Collateral, or (z) make a notation of the lien of
the related Trust or Indenture Trustee on behalf of the Securityholders on the
appropriate Federal registry in respect of such Underlying Collateral. As
discussed below, in the absence of such filings, notation or possession any
security interest in such Underlying Collateral may not be perfected in favor
of the related Trust or Indenture Trustee. As a result the Indenture Trust or
Trustee could lose priority of its security interest in such Underlying
Collateral. Neither the Originators nor the Sponsor will have any obligation to
reacquire the Underlying Collateral as to which such aforementioned occurrence
results in the loss of lien priority after the date such Trust Fund receives an
interest in such Underlying Collateral unless otherwise obligated in the
related Prospectus Supplement.
SECURITY INTEREST IN THE UNDERLYING COLLATERAL. As discussed above,
security interests in certain of the Underlying Collateral must be perfected by
notation of the secured party's lien on the certificate of title or by actual
possession of the certificate of title, depending on the law of the state
wherein the purchaser resides and security interests in certain other of the
Underlying Collateral must be perfected by the filing of a UCC financing.
Pursuant to the related Trust Document, the Sponsor will assign the
security interests in the property to the related Trust. In most states, an
assignment such as that under the related Trust Documents should be an effective
transfer of a security interest without amendment of any lien noted on the
related certificate of title or financing statement, and the assignee should
succeed to the assignor's status as the secured party. In the absence of fraud
or forgery by the obligor or administrative error by state recording officials,
the notation of the lien of the related Originator on the certificate of title
or the UCC financing statement should be sufficient to protect the related Trust
or Indenture Trustee against the rights of subsequent purchasers of property or
subsequent lenders who take a security interest in the Underlying Collateral.
However, in the absence of such an amendment, the security interest of the
related Trust or Indenture Trustee in the related collateral might be defeated
by, among others, the trustee in bankruptcy of the Sponsor or the related
Originator. However, such failure would obligate the related Originator to
repurchase the affected Contract if the interests of the related Securityholders
or Trust were materially and adversely affected.
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In most states, a perfected security interest in collateral subject to
certificate of title or a financing statement continues for four months after
the property is moved to a different state and thereafter until the owner
re-registers the collateral in the new state, but in no event beyond the
surrender of the certificate of title. A majority of states require surrender of
a certificate of title in order to re-register. Accordingly, the secured party
must surrender possession if it holds the certificate of title to such
Underlying Collateral. In the case of Underlying Collateral registered in states
which provide for notation of a lien but not possession of the certificate of
title by the holder of the security interest in the related collateral, the
secured party should receive notice of surrender if the security interest in the
collateral is noted on the certificate of title. Accordingly, the secured party
should have the opportunity to re-perfect its security interest in the
collateral in the state of relocation. In states that do not require a
certificate of title for registration, re-registration could defeat perfection.
Under the laws of most states, liens for repairs performed on property and
liens for unpaid taxes take priority over even a perfected security interest in
property. The related Originator will represent in the related Trust Documents
or Receivables Transfer Agreement, that, immediately prior to the sale,
assignment and transfer thereof to the related Trust or pledge to the related
Indenture Trustee, each Contract held by such Trust or Indenture Trustee was
secured by a valid, subsisting and enforceable first priority perfected security
interest in favor of the related Originator, as secured party. However, liens
for taxes, judicial liens or liens arising by operation of law could arise at
any time during the term of a Contract. In addition, the laws of certain states
and federal law permit confiscation of motor vehicles and certain other consumer
property by governmental authorities under certain circumstances if used in
unlawful activities, which may result in the loss of a secured party's perfected
security interest in the confiscated property. No notice will be given to the
Trustee, the Indenture Trustee or the Securityholders in the event such a lien
or confiscation arises, and if such lien arises or confiscation occurs after the
date of issuance of any series of Securities, neither the Sponsor nor the
Servicer will be required to repurchase or purchase the related Contract.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material federal income tax consequences
of the purchase, ownership and disposition of the Notes and the Certificates.
Dewey Ballantine LLP, special federal tax counsel ("Federal Tax Counsel"), is of
the opinion that the discussion hereunder fully and fairly discloses all
material federal tax risks associated with the purchase, ownership and
disposition of the Notes and Certificates. The summary does not purport to deal
with federal income tax consequences or special rules that are applicable to
certain categories of holders. Moreover, there are no cases or Internal Revenue
Service ("IRS") rulings on all of the issues discussed below. As a result, the
IRS may disagree with all or a part of the discussion below. Prospective
investors are urged to consult their own tax advisors in determining the
federal, state, local, foreign and any other tax consequences to them of the
purchase, ownership and disposition of the Notes and the Certificates.
Federal Tax Counsel will, in addition to delivering its opinion with
respect to the discussion set forth herein, deliver separate opinions in
connection with each issuance of Securities. Such opinions will be delivered at
pricing, and will be filed on a Current Report within two business days of
pricing (and in any event prior to the issuance of the related Securities).
The following summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. The opinion of Federal Tax
Counsel, however, is not binding on the IRS or the courts. No ruling on any of
the issues discussed below will be sought from the IRS. For purposes of the
following summary, references to the Trust, the Notes, the Certificates and
related terms, parties and documents shall be deemed to refer, unless otherwise
specified herein, to each Trust and the Notes, Certificates and related terms,
parties and documents applicable to such Trust.
The federal income tax consequences to Certificateholders will vary
depending on whether the Trust will be treated as a partnership under the Code,
whether the Trust will be treated as a grantor trust, or whether it is intended
that the Trust serve as a security device for the issuance of Certificates that
are to be treated as indebtedness for federal income tax purposes. The
Prospectus Supplement for each series of Certificates will specify whether the
Trust will be treated as a partnership, a grantor trust, or is intended to serve
as a security device as just described. In addition, if the related Prospectus
Supplement so provides, the Transaction Documents for a Trust may provide that
an election will be made on or after September 1, 1997 to qualify such Trust as
a Financial Asset Securitization Investment Trust ("FASIT") pursuant to new
provisions of the Code which will be effective as of such date.
TRUSTS TREATED AS PARTNERSHIPS
TAX CHARACTERIZATION OF THE TRUST AS A PARTNERSHIP
Federal Tax Counsel will deliver its opinion that a Trust which is
intended to be a partnership, as specified in the related Prospectus Supplement,
will not be an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes. This opinion will be based on the
assumption that the terms of the Trust Agreement and related documents will be
complied with, and on counsel's conclusions that (1) the Trust will not have
certain characteristics necessary for a business trust to be classified as an
association taxable as a corporation and (2) the nature of the income of the
Trust will exempt it from the rule that certain publicly traded partnerships are
taxable as corporations.
If the Trust were taxable as a corporation for federal income tax
purposes, the Trust would be subject to corporate income tax on its taxable
income. The Trust's taxable income would include all its income on the
Receivables, possibly reduced by its interest expense on the Notes. Any such
corporate income tax could materially reduce cash available to make payments on
the Notes and distributions on the Certificates, and Certificateholders could be
liable for any such tax that is unpaid by the Trust.
TAX CONSEQUENCES TO HOLDERS OF THE NOTES ISSUED BY A PARTNERSHIP
Treatment of the Notes as Indebtedness. The Sponsor will agree, and the
Noteholders will agree by their purchase of Notes, to treat the Notes as debt
for federal income tax purposes. Federal Tax Counsel will, except as otherwise
provided in the related Prospectus Supplement, advise the Sponsor that in its
opinion the Notes will be
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classified as debt for federal income tax purposes. The discussion below assumes
this characterization of the Notes is correct.
Treatment of Original Issue Discount. The discussion below assumes that
all payments on the Notes are denominated in U.S. dollars, and that the Notes
are not Strip Securities. Moreover, the discussion assumes that the interest
formula for the Notes 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 Notes (i.e., any excess of the
principal amount of the Notes over their issue price) does not exceed a de
minimis amount (i.e., generally 1/4% of their principal amount multiplied by the
number of full years included in their term), all within the meaning of the OID
regulations. If these conditions are not satisfied with respect to any given
series of Notes, additional tax considerations with respect to such Notes will
be disclosed in the applicable Prospectus Supplement.
OID as Interest Income. Based on the above assumptions the Notes generally
will not be considered issued with OID. The stated interest thereon will be
taxable to a Noteholder as ordinary interest income when received or accrued in
accordance with such Noteholder's method of tax accounting. Under the OID
regulations, a holder of a Note issued with a de minimis amount of OID generally
must include such OID in income, on a pro rata basis, as principal payments are
made on the Note. However, a holder may elect to accrue de minimis OID under a
constant yield method in connection with an election to accrue all interest,
discount, and premium on the Note using the constant yield method. See "Trusts
Treated as Grantor Trusts -- Taxation of Holders if Stripped Bond Rules Do Not
Apply -- Election to Treat All Interest as OID" for a discussion of such
election. A purchaser who buys a Note for more or less than its principal amount
will generally be subject, respectively, to the premium amortization or market
discount rules of the Code.
A holder of a Note that has a fixed maturity date of not more than one
year from the issue date of such Note (a "Short-Term Note") may be subject to
special rules. An accrual basis holder of a Short-Term Note (and certain cash
method holders, including regulated investment companies, as set forth in
Section 1281 of the Code) generally would be required to report interest income
as interest accrues on a straight-line basis over the term of each interest
period. Other cash basis holders of a Short-Term Note would, in general, be
required to report interest income as interest is paid (or, if earlier, upon the
taxable disposition of the Short-Term Note). However, a cash basis holder of a
Short-Term Note reporting interest income as it is paid may be required to defer
a portion of any interest expense otherwise deductible on indebtedness incurred
to purchase or carry the Short-Term Note until the taxable disposition of the
Short-Term Note. A cash basis taxpayer may elect under Section 1281 of the Code
to accrue interest income on all nongovernment debt obligations with a term of
one year or less, in which case the taxpayer would include interest on the
Short-Term Note in income as it accrues, but would not be subject to the
interest expense deferral rule referred to in the preceding sentence. Certain
special rules apply if a Short-Term Note is purchased for more or less than its
principal amount.
OID Treatment Upon Sale or Other Disposition. If a Noteholder sells a
Note, the holder will recognize gain or loss in an amount equal to the
difference between the amount realized on the sale and the holder's adjusted tax
basis in the Note. The adjusted tax basis of a Note to a particular Noteholder
will equal the holder's cost for the Note, increased by any market discount,
acquisition discount, OID, if any, and gain previously included by such
Noteholder in income with respect to the Note and decreased by the amount of
bond premium (if any) previously amortized and by the amount of principal
payments previously received by such Noteholder with respect to such Note. Any
such gain or loss generally will be capital gain or loss if the Note was held as
a capital asset, except for gain representing accrued interest and accrued
market discount not previously included in income. Capital losses generally may
be used only to offset capital gains.
Foreign Holders. Interest payments made (or accrued) to a Noteholder who
is a Foreign Investor, as defined below, generally will be considered "portfolio
interest," and generally will not be subject to United States federal income tax
and withholding tax, if the interest is not effectively connected with the
conduct of a trade or business within the United States by the Foreign Investor
and the Foreign Investor (i) is not actually or constructively a "10 percent
shareholder" of the Trust or the Sponsor (including a holder of 10% of the
outstanding Certificates) or a "controlled foreign corporation" with respect to
which the Trust or the Sponsor is a "related person" within the meaning of the
Code and (ii) provides the Owner Trustee or other person who is otherwise
required to withhold U.S. tax with respect to the Notes with an appropriate
statement (on Form W-8 or a similar form), signed under penalties of perjury,
certifying that the beneficial owner of the Note is a Foreign Investor and
providing the Foreign Investor's name and address. If a Note is held through a
securities clearing organization or certain other financial institutions, the
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organization or institution may provide the relevant signed statement to the
withholding agent; in that case, however, the signed statement must be
accompanied by a Form W-8 or substitute form provided by the Foreign Investor
that owns the Note. If such interest is not portfolio interest, then it will be
subject to United States federal income and withholding tax at a rate of 30
percent, unless reduced or eliminated pursuant to an applicable tax treaty.
Any gain realized on the sale, redemption, retirement or other taxable
disposition of a Note by a foreign person will be exempt from United States
federal income and withholding tax, provided that (i) such gain is not
effectively connected with the conduct of a trade or business in the United
States by the Foreign Investor, (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year, and (iii) in the case of gain representing accrued
interest or OID, the conditions described in the immediately preceding paragraph
are satisfied.
If the interest, gain or income on a Note held by a Foreign Investor is
effectively connected with the conduct of a trade or business in the United
States by the Foreign Investor (although exempt from the withholding tax
previously discussed if the holder provides an appropriate and timely statement
on Form 4224), the holder generally will be subject to United States federal
income tax on the interest, gain or income at regular federal income tax rates.
In addition, if the Foreign Investor is a foreign corporation, it may be subject
to a branch profits tax equal to 30% of its "effectively connected earnings and
profits" within the meaning of the Code for the taxable year, as adjusted for
certain items, unless it qualifies for a lower rate under an applicable tax
treaty (as modified by the branch profits tax rules).
Proposed Treasury regulations which would be effective for payments made
after December 31, 1997 if adopted in their current form would provide
alternative certification requirements and means by which a Foreign Investor
could claim the exemptions from federal income and withholding taxes.
For purposes of this tax discussion, a Foreign Person or Foreign Investor
is any person other than (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, (iii) an estate
whose income is includible in gross income for United States federal income
taxation regardless of source, or (iv) a trust other than a "Foreign Trust," as
such term is defined in Section 7701(a)(31) of the Code.
Backup Withholding. Each holder of a Note (other than an exempt holder
such as a corporation, tax-exempt organization, qualified pension and
profit-sharing trust, individual retirement account or nonresident alien who
provides certification as to status as a nonresident) will be required to
provide, under penalties of perjury, a certificate containing, among other
things, the holder's name, address, correct federal taxpayer identification
number and a statement that the holder is not subject to backup withholding.
Should a nonexempt Noteholder fail to provide the required certification, the
Trust will be required to withhold 31 percent of the amount otherwise payable to
the holder, and remit the withheld amount to the IRS as a credit against the
holder's federal income tax liability.
Possible Alternative Treatments of the Notes. If, contrary to the opinion
of Federal Tax Counsel, the IRS successfully asserted that one or more of the
Notes did not represent debt for federal income tax purposes, the Notes might be
treated as equity interests in the Trust. If so treated, the Trust might be
taxable as a corporation with the adverse consequences described above (and the
taxable corporation would not be able to reduce its taxable income by deductions
for interest expense on Notes recharacterized as equity). Alternatively, the
Trust might be treated as a publicly traded partnership that would not be
taxable as a corporation if it met certain qualifying income tests. Nonetheless,
treatment of the Notes as equity interests in such a publicly traded partnership
could have adverse tax consequences to certain holders. For example, income to
Foreign Investors generally would be subject to U.S. tax and U.S. tax return
filing and withholding requirements, and individual holders might be subject to
certain limitations on their ability to deduct their share of Trust expenses.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES ISSUED BY A PARTNERSHIP
Treatment of the Trust as a Partnership. The Sponsor will agree, and the
Certificateholders will agree by their purchase of Certificates, to treat the
Trust as a partnership for purposes of federal and state income tax, franchise
tax and any other tax measured in whole or in part by income, with the assets of
the partnership being the assets held by the Trust, the partners of the
partnership being the Certificateholders, and the Notes being debt of the
partnership. However, the proper characterization of the arrangement involving
the Trust, the Certificates, the Notes and the Sponsor is not clear because
there is no authority on transactions closely comparable to that contemplated
herein.
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For example, because the Certificates may have certain features
characteristic of debt, the Certificates might be considered debt of the Sponsor
or the Trust. Generally, provided such Certificates are issued at or close to
face value, any characterization would not result in materially adverse tax
consequences to Certificateholders as compared to the consequences from
treatment of the Certificates as equity in a partnership, described below. If
Certificates are issued at a substantial discount, a discussion of the relevant
tax consequences will be set forth in the related Prospectus Supplement. The
following discussion assumes that the Certificates represent equity interests in
a partnership.
Strip Securities, etc. The following discussion assumes that all payments
on the Certificates are denominated in U.S. dollars, none of the Certificates
are Strip Securities, and that a series of Securities includes a single class of
Certificates. If these conditions are not satisfied with respect to any given
series of Certificates, additional tax considerations with respect to such
Certificates will be disclosed in the applicable Prospectus Supplement.
Partnership Taxation. As a partnership, the Trust will not be subject to
federal income tax. Rather, each Certificateholder will be required to
separately take into account such holder's allocated share of income, gains,
losses, deductions and credits of the Trust. In certain instances, however, the
Trust could have an obligation to make payments of withholding tax on behalf of
a Certificateholder. See "Backup Withholding" and "Tax Consequences to Foreign
Certificateholders" below. The Trust's income will consist primarily of interest
and finance charges earned on the Receivables (including appropriate adjustments
for market discount, OID and bond premium) and any gain upon collection or
disposition of Receivables. The Trust's deductions will consist primarily of
interest accruing with respect to the Notes, servicing and other fees, and
losses or deductions upon collection or disposition of Receivables.
The tax items of a partnership are allocable to the partners in accordance
with the Code, Treasury regulations and the partnership agreement (here, the
Trust Agreement and related documents). The Trust Agreement will provide, in
general, that the Certificateholders will be allocated taxable income of the
Trust for each month equal to the sum of (i) the interest that accrues on the
Certificates in accordance with their terms for such month, including interest
accruing at the Interest Rate for such month and interest on amounts previously
due on the Certificates but not yet distributed; (ii) any Trust income
attributable to discount on the Receivables that corresponds to any excess of
the principal amount of the Certificates over their initial issue price; (iii)
prepayment premium payable to the Certificateholders for such month; and (iv)
any other amounts of income payable to the Certificateholders for such month.
Such allocation will be reduced by any amortization by the Trust of premium on
Receivables that corresponds to any excess of the issue price of Certificates
over their principal amount. Based on the economic arrangement of the parties,
this approach for allocating Trust income should be permissible under applicable
Treasury regulations, although Federal Tax Counsel is unable to opine that the
IRS would not require a greater amount of income to be allocated to
Certificateholders. Moreover, even under the foregoing method of allocation,
Certificateholders may be allocated income equal to the entire Interest Rate
plus the other items described above even though the Trust might not have
sufficient cash to make current cash distributions of such amount. Thus, cash
basis holders will in effect be required to report income from the Certificates
on the accrual basis and Certificateholders may become liable for taxes on Trust
income even if they have not received cash from the Trust to pay such taxes. In
addition, because tax allocations and tax reporting will be done on a uniform
basis for all Certificateholders but Certificateholders may be purchasing
Certificates at different times and at different prices, Certificateholders may
be required to report on their tax returns taxable income that is greater or
less than the amount reported to them by the Trust.
All of some of the taxable income allocated to a Certificateholder that is
a pension, profit sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) may constitute "unrelated business
taxable income" generally taxable to such a holder under the Code.
An individual taxpayer's share of expenses of the Trust (including fees to
the Servicer but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in whole or in
part and might result in such holder being taxed on an amount of income that
exceeds the amount of cash actually distributed to such holder over the life of
the Trust. Such deductions may also be subject to reduction under Section 68 of
the Code if the individual's adjusted gross income exceeds certain limits.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Receivable, the Trust
might be required to incur additional expense but it is believed that there
would not be a material adverse effect on Certificateholders.
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Discount and Premium. It is believed that the Receivables will not be
issued with OID, and, therefore, the Trust should not have OID income. However,
the purchase price paid by the Trust for the Receivables may be greater or less
than the remaining principal balance of the Receivables at the time of purchase.
If so, the Receivables will have been acquired at a premium or discount, as the
case may be. (As indicated above, the Trust will make this calculation on an
aggregate basis, but might be required to recompute it on a
Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or premium, the
Trust will elect to include any such discount in income currently as it accrues
over the life of the Receivables or to offset any such premium against interest
income on the Receivables. As indicated above, a portion of such market discount
income or premium deduction will be allocated to Certificateholders if the
related Trust Agreement so provides. Any such allocation will be disclosed in
the related Prospectus Supplement.
Section 708 Termination. Under Section 708 of the Code, the Trust will be
deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a
12-month period. If such a termination occurs, the Trust will be considered to
distribute its assets to the partners, who would then be treated as
recontributing those assets to the Trust, as a new partnership. Proposed
regulations would provide that if a termination occurs the partnership will be
considered to transfer its assets and liabilities to a new partnership in
exchange for interests in that new partnership which it would then be treated as
transferring to its partners. The Trust will not comply with certain technical
requirements that might apply when such a constructive termination occurs. As a
result, the Trust may be subject to certain tax penalties and may incur
additional expenses if it is required to comply with those requirements.
Furthermore, the Trust might not be able to comply due to lack of data.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates sold.
A Certificateholder's tax basis in a Certificate will generally equal the
holder's cost increased by the holder's share of Trust income (includible in
income) and decreased by any distributions received with respect to such
Certificate. In addition, both the tax basis in the Certificates and the amount
realized on a sale of a Certificate would include the holder's share of the
Notes and other liabilities of the Trust. A holder acquiring Certificates at
different prices may be required to maintain a single aggregate adjusted tax
basis in such Certificates, and, upon sale or other disposition of some of the
Certificates, allocate a portion of such aggregate tax basis to the Certificates
sold (rather than maintaining a separate tax basis in each Certificate for
purposes of computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's share
of unrecognized accrued market discount on the Receivables would generally be
treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The Trust does not expect to have any other assets that
would give rise to such special reporting requirements. Thus, to avoid those
special reporting requirements, the Trust will elect to include market discount
in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise to
a capital loss upon the retirement of the Certificates.
Allocations Between Transferors and Transferees. In general, the Trust's
taxable income and losses will be determined monthly and the tax items for a
particular calendar month will be apportioned among the Certificateholders in
proportion to the principal amount of Certificates owned by them as of the close
of the last day of such month. As a result, a holder purchasing Certificates may
be allocated tax items (which will affect its tax liability and tax basis)
attributable to periods before the actual purchase takes place.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the Trust might be reallocated among the Certificateholders. The Affiliated
Purchaser is authorized to revise the Trust's method of allocation between
transferors and transferees to conform to a method permitted by future
regulations.
Section 754 Election. In the event that a Certificateholder sells its
Certificates at a profit (or loss), the purchasing Certificateholder will have a
higher (or lower) basis in the Certificates than the selling Certificateholder
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had. The tax basis of the Trust's assets will not be adjusted to reflect that
higher (or lower) basis unless the Trust were to file an election under Section
754 of the Code. In order to avoid the administrative complexities that would be
involved in keeping accurate accounting records, as well as potentially onerous
information reporting requirements, the Trust will not make such election. As a
result, Certificateholders might be allocated a greater or lesser amount of
Trust income than would be appropriate based on their own purchase price for
Certificates.
Administrative Matters. The Owner Trustee, or the Administrator, if any,
is required to keep or have kept complete and accurate books of the Trust. Such
books will be maintained for financial reporting and tax purposes on an accrual
basis and the fiscal year of the Trust will be the calendar year. The Owner
Trustee will file a partnership information return ("IRS Form 1065") with the
IRS for each taxable year of the Trust and will report each Certificateholder's
allocable share of items of Trust income and expense to holders and the IRS on
Schedule K-l. The Trust will provide the Schedule K-l information to nominees
that fail to provide the Trust with the information statement described below
and such nominees will be required to forward such information to the beneficial
owners of the Certificates. Generally, holders must file tax returns that are
consistent with the information return filed by the Trust or be subject to
penalties unless the holder notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust with
a statement containing certain information on the nominee, the beneficial owners
and the Certificates so held. Such information includes (i) the name, address
and taxpayer identification number of the nominee and (ii) as to each beneficial
owner (x) the name, address and taxpayer identification number of such person,
(y) whether such person is a United States person, a tax-exempt entity or a
foreign government, an international organization, or any wholly owned agency or
instrumentality of either of the foregoing, and (z) certain information on
Certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold Certificates
through a nominee are required to furnish directly to the Trust information as
to themselves and their ownership of Certificates. A clearing agency registered
under Section 17A of the Exchange Act is not required to furnish any such
information statement to the Trust. The information referred to above for any
calendar year must be furnished to the Trust on or before the following January
31. Nominees, brokers and financial institutions that fail to provide the Trust
with the information described above may be subject to penalties.
The Sponsor will be designated as the tax matters partner in the related
Trust Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the IRS with respect to partnership
items. The Code provides for administrative examination of a partnership as if
the partnership were a separate and distinct taxpayer. Generally, the statute of
limitations for partnership items does not expire before three years after the
date on which the partnership information return is filed. Any adverse
determination following an audit of the return of the Trust by the appropriate
taxing authorities could result in an adjustment of the returns of the
Certificateholders, and a Certificateholder may be precluded from separately
litigating a proposed adjustment to the items of the Trust. An adjustment could
also result in an audit of a Certificateholder's returns and adjustments of
items not related to the income and losses of the Trust.
Tax Consequences to Foreign Certificateholders. As discussed below, an
investment in a Certificate is not suitable for any Foreign Person, as defined
above, which is not eligible for a complete exemption from U.S. withholding tax
on interest under a tax treaty with the United States. Accordingly, no interest
in a Certificate should be acquired by or on behalf of any such Foreign Person.
No regulations, published rulings or judicial decisions exist that would
discuss the characterization for Federal withholding tax purposes with respect
to a Foreign Person of a partnership with activities substantially the same as
the Trust. Depending upon the particular terms of the related Trust Agreement
and Sale and Servicing Agreement, a trust may be considered to be engaged in a
trade or business in the United States for purposes of Federal withholding taxes
with respect to non-U.S. persons. If the Trust is considered to be engaged in a
trade or business in the United States for such purposes, the income of the
Trust distributable to a non-U.S. person would be subject to Federal withholding
tax at a rate of 35% for persons taxable as a corporation and 39.6% for all
other Foreign Persons. Also, in such cases, a Foreign Person that is a
corporation may be subject to the branch profits tax. If the Trust is notified
that a Certificateholder is a Foreign Person, the Trust may withhold as if it
were engaged in a trade or business in the United States in order to protect the
Trust from possible adverse consequences of a failure to withhold. Subsequent
adoption of Treasury regulations or the issuance of other administrative
pronouncements may require the Trust to change its withholding procedures.
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If a Trust is engaged in a trade or business, each foreign
Certificateholder will be required to file a United States federal individual or
corporate income tax return (including in the case of a corporation, the branch
profits tax) on its share of the Trust's income. A foreign holder generally
would be entitled to file with the IRS a claim for refund with respect to
withheld taxes, taking the position that no taxes were due because the Trust was
not engaged in a United States trade or business. However, interest payments
made to (or accrued by) a Certificateholder who is a Foreign Person may be
considered guaranteed payments to the extent such payments are determined
without regard to the income of the Trust and for that reason or because of the
nature of the Receivables, the interest will likely not be considered "portfolio
interest." See " -- Tax Consequences to Holders of the Notes Issued by a
Partnership-Foreign Holders" for a discussion of portfolio interests. As a
result, even if the Trust is not considered to be engaged in a U.S. trade or
business, Certificateholders would be subject to United States Federal income
tax which must be withheld at a rate of 30% on their share of the Trust's income
(without reduction for interest expense), unless reduced or eliminated pursuant
to an applicable income tax treaty. If the Trust is notified that a
Certificateholder is a Foreign Person, the Trust may be required to withhold and
pay over such tax, which can exceed the amounts otherwise available for
distribution to such a Certificateholder. A Foreign Person would generally be
entitled to file with the IRS a refund claim for such withheld taxes, taking the
position that the interest was portfolio interest and therefore not subject to
U.S. tax. However, the IRS may disagree and no assurance can be given as to the
appropriate amount of tax liability. As a result, each potential foreign
Certificateholder should consult its tax advisor as to whether the tax
consequences of holding an interest in a Certificate make it an unsuitable
investment.
Backup Withholding. Distributions made on the Certificates and proceeds
from the sale of the Certificates will be subject to a "backup" withholding tax
of 31% if, in general, the Certificateholder fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code.
TRUSTS TREATED AS GRANTOR TRUSTS
TAX CHARACTERIZATION OF THE TRUST AS A GRANTOR TRUST
As specified in the related Prospectus Supplement, if a partnership
election is not made and the Certificates are not treated as debt for federal
income tax purposes as discussed below, Federal Tax Counsel will deliver its
opinion that the Trust will not be classified as an association taxable as a
corporation and that such Trust will be classified as a grantor trust under
subpart E, Part I of subchapter J of the Code. In this case, owners of
Certificates (referred to herein as "Grantor Trust Securityholders") will be
treated for federal income tax purposes as owners of a portion of the Trust's
assets as described below. The Certificates issued by a Trust that is treated as
a grantor trust are referred to herein as "Grantor Trust Certificates. "
Characterization. Each Grantor Trust Securityholder will be treated as the
owner of a pro rata undivided interest in the interest and principal portions of
the Trust represented by the Grantor Trust Certificates and will be considered
the equitable owner of a pro rata undivided interest in each of the Receivables
in the Trust. Any amounts received by a Grantor Trust Securityholder in lieu of
amounts due with respect to any Receivable because of a default or delinquency
in payment will be treated for federal income tax purposes as having the same
character as the payments they replace.
Each Grantor Trust Securityholder will be required to report on its
federal income tax return in accordance with such Grantor Trust Securityholder's
method of accounting its pro rata share of the entire income from the
Receivables in the Trust represented by Grantor Trust Certificates, including
interest, OID, if any, prepayment fees, assumption fees, any gain recognized
upon an assumption and late payment charges received by the Servicer. Under
Sections 162 or 212 each Grantor Trust Securityholder will be entitled to deduct
its pro rata share of servicing fees, prepayment fees, assumption fees, any loss
recognized upon an assumption and late payment charges retained by the Servicer,
provided that such amounts are reasonable compensation for services rendered to
the Trust. Grantor Trust Securityholders that are individuals, estates or trusts
will be entitled to deduct their share of expenses only to the extent such
expenses plus such holder's other miscellaneous itemized deductions exceed two
percent of such holder's adjusted gross income. Such deductions may also be
limited by Code Section 68 for an individual whose adjusted gross income exceeds
certain limits. A Grantor Trust Securityholder using the cash method of
accounting must take into account its pro rata share of income and deductions as
and when collected by or paid to the Servicer. A Grantor Trust Securityholder
using an accrual method of accounting must take into account its pro rata share
of income and deductions as they become due or are paid to the Servicer,
whichever is earlier. If the servicing fees or other amounts paid to the
Servicer exceed reasonable servicing compensation, the amount of such excess
would be considered as an
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ownership interest retained by the Servicer (or any person to whom the Servicer
assigned all or a portion of the servicing fees) in a portion of the interest
payments on the Receivables. The Receivables would then be subject to the
stripped bond rules of the Code discussed below.
TAXATION OF HOLDERS IF STRIPPED BOND RULES APPLY
In the absence of comprehensive regulations, Federal Tax Counsel is unable
to opine as to the tax treatment of stripped bonds. The preamble to certain
stripped bond regulations suggests that each purchaser of a Grantor Trust
Certificate will be treated with respect to each Receivable as the purchaser of
a single stripped bond consisting of all of the stripped portions of the
applicable Receivable (such portions with respect to a Receivable are referred
to herein as a "Stripped Bond") which generally should be treated as a single
debt instrument issued on the day it is purchased for purposes of calculating
any original issue discount. Generally, under Treasury regulations relating to
Stripped Bonds (the "Section 1286 Treasury Regulations"), if the discount on a
Stripped Bond is larger than a de minimis amount (as calculated for purposes of
the OID rules of the Code) such Stripped Bond will be considered to have been
issued with OID. See " -- Original Issue Discount" herein. Based on the preamble
to the Section 1286 Treasury regulations, although the matter is not entirely
clear, the interest income on the Certificates at the sum of the Pass-Through
Rate and the portion of the Servicing Fee Rate that does not constitute excess
servicing should be treated as "qualified stated interest" within the meaning of
the Section 1286 Treasury regulations, assuming all other requirements for
treatment as qualified stated interest are satisfied, and such income will be so
treated in the Trustee's tax information reporting.
Original Issue Discount. When Stripped Bonds have more than a de minimis
amount of OID, the special rules of the Code relating to "original issue
discount" (currently Sections 1271 through 1275) will be applicable to a Grantor
Trust Securityholder's interest in those Stripped Bonds. Generally, a Grantor
Trust Securityholder that acquires an interest in a Stripped Bond issued or
acquired with OID must include in gross income the sum of the "daily portions,"
as defined below, of the OID on such Stripped Bond for each day on which it owns
a Certificate, including the date of purchase but excluding the date of
disposition. Although the proper method is not entirely clear, the Trust intends
to calculate the daily portions of OID with respect to a Stripped Bond generally
as follows. A calculation will be made of the portion of OID that accrues on the
Stripped Bond during each successive monthly accrual period (or shorter period
in respect of the date of original issue or the final Distribution Date). This
will be done, in the case of each full monthly accrual period, by adding (i) the
present value of all remaining payments to be received on the Stripped Bond
under the prepayment assumption, if any, used in respect of the Stripped Bonds
and (ii) any payments received during such accrual period, and subtracting from
that total the "adjusted issue price" of the Stripped Bond at the beginning of
such accrual period. No representation is made that the Stripped Bonds will
prepay at any prepayment assumption. The "adjusted issue price" of a Stripped
Bond at the beginning of the first accrual period is its issue price (as
determined for purposes of the OID rules of the Code) and the "adjusted issue
price" of a Stripped Bond at the beginning of a subsequent accrual period is the
"adjusted issue price" at the beginning of the immediately preceding accrual
period plus the amount of OID allocable to that accrual period and reduced by
the amount of any payment (other than "qualified stated interest") made at the
end of or during that accrual period. The OID accruing during such accrual
period will then be divided by the number of days in the period to determine the
daily portion of OID for each day in the period. With respect to an initial
accrual period shorter than a full monthly accrual period, the daily portions of
OID must be determined according to an appropriate allocation under either an
exact or approximate method set forth in the OID Regulations, or some other
reasonable method, provided that such method is consistent with the method used
to determine the yield to maturity of the Receivables.
With respect to the Stripped Bonds, the method of calculating OID as
described above will cause the accrual of OID to either increase or decrease
(but never below zero) in any given accrual period to reflect the fact that
prepayments are occurring at a faster or slower rate than the prepayment
assumption used in respect of the Stripped Bonds.
TAXATION OF HOLDERS IF STRIPPED BOND RULES DO NOT APPLY
Premium. The price paid for a Grantor Trust Certificate by a holder will
be allocated to such holder's undivided interest in each Receivable based on
each Receivable's relative fair market value, so that such holder's undivided
interest in each Receivable will have its own tax basis. A Grantor Trust
Securityholder that acquires an interest in Receivables at a premium may elect
to amortize such premium under a constant interest method. Amortizable bond
premium will be treated as an offset to interest income on such Grantor Trust
Certificate. The basis for such Grantor Trust Certificate will be reduced to the
extent that amortizable premium is applied to offset interest
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payments. It is unclear whether a reasonable prepayment assumption should be
used in computing amortization of premium allowable under Section 171. A Grantor
Trust Securityholder that makes this election for Receivables that are construed
to be acquired at a premium will be deemed to have made an election to amortize
bond premium with respect to all debt instruments having amortizable bond
premium that such Grantor Trust Securityholder acquires during the year of the
election or thereafter.
If a premium is not subject to amortization using a reasonable prepayment
assumption or it prepays faster than the prepayment assumption, the holder of a
Grantor Trust Certificate acquired at a premium should recognize a loss if a
Receivable prepays in full, equal to the difference between the portion of the
prepaid principal amount of such Receivable that is allocable to the Grantor
Trust Certificate and the portion of the adjusted basis of the Grantor Trust
Certificate that is allocable to such Receivable.
Market Discount. A Grantor Trust Securityholder that acquires an undivided
interest in Receivables may be subject to the market discount rules of Sections
1276 through 1278 to the extent an undivided interest in a Receivable is
considered to have been purchased at a "market discount." Generally, the amount
of market discount is equal to the excess of the portion of the principal amount
of such Receivable allocable to such holder's undivided interest over such
holder's tax basis in such interest. Market discount with respect to a
Receivable will be considered to be zero if the amount allocable to the
Receivable is less than 0.25% of the Receivable's stated redemption price at
maturity multiplied by the weighted average maturity remaining after the date of
purchase. Treasury regulations implementing the market discount rules have not
yet been issued; therefore, investors should consult their own tax advisors
regarding the application of these rules and the advisability of making any of
the elections allowed under Code Sections 1276 through 1278.
The Code provides that any principal payment (whether a scheduled payment
or a prepayment) or any gain on disposition of a market discount bond shall be
treated as ordinary income to the extent that it does not exceed the accrued
market discount at the time of such payment. The amount of accrued market
discount for purposes of determining the tax treatment of subsequent principal
payments or dispositions of the market discount bond is to be reduced by the
amount so treated as ordinary income.
The Code also grants the Treasury Department authority to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
Because the regulations described above have not been issued, Federal Tax
Counsel is unable to opine as to what effect those regulations might have on the
tax treatment of a Grantor Trust Certificate purchased at a discount.
A holder who acquired a Grantor Trust Certificate at a market discount
also may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or continued to purchase
or carry such Grantor Trust Certificate purchased with market discount. For
these purposes, the de minimis rule referred to above applies. Any such deferred
interest expense would not exceed the market discount that accrues during such
taxable year and is, in general, allowed as a deduction not later than the year
in which such market discount is includible in income. If such holder elects to
include market discount in income currently as it accrues on all market discount
instruments acquired by such holder in that taxable year or thereafter, the
interest deferral rule described above will not apply.
Election to Treat All Interest as OID. The OID regulations permit a
Grantor Trust Securityholder to elect to accrue all interest, discount
(including de minimis market or original issue discount) and premium in income
as interest, based on a constant yield method. If such an election were to be
made with respect to a Grantor Trust Certificate with market discount, the
Certificateholder would be deemed to have made an election to include in income
currently market discount with respect to all other debt instruments having
market discount that such Grantor Trust Securityholder acquires during the year
of the election or thereafter. Similarly, a Grantor Trust Securityholder that
makes this election for a Grantor Trust Certificate that is acquired at a
premium will be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that such
Grantor Trust Securityholder owns or acquires. See " -- Premium" herein. The
election to accrue interest, discount and premium on a constant yield method
with respect to a Grantor Trust Certificate is irrevocable.
TAXATION OF HOLDERS REGARDLESS OF WHETHER STRIPPED BOND RULES APPLY
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Sale or Exchange of a Grantor Trust Certificate. Sale or exchange of a
Grantor Trust Certificate prior to its maturity will result in gain or loss
equal to the difference, if any, between the amount received and the owner's
adjusted basis in the Grantor Trust Certificate. Such adjusted basis generally
will equal the seller's purchase price for the Grantor Trust Certificate,
increased by the OID included in the seller's gross income with respect to the
Grantor Trust Certificate, and reduced by principal payments on the Grantor
Trust Certificate previously received by the seller. Subject to the discussion
of market discount above, such gain or loss generally will be capital gain or
loss to an owner for which a Grantor Trust Certificate is a "capital asset"
within the meaning of Section 1221, and will be long-term or short-term
depending on whether the Grantor Trust Certificate has been owned for the
long-term capital gain holding period (currently more than one year).
Grantor Trust Certificates will be "evidences of indebtedness" within the
meaning of Section 582(c)(1), so that gain or loss recognized from the sale of a
Grantor Trust Certificate by a bank or a thrift institution to which such
section applies will be treated as ordinary income or loss.
Non-U.S. Persons. To the extent that a Grantor Trust Certificate evidences
ownership in underlying Receivables that were issued on or before July 18, 1984,
interest or OID paid by the person required to withhold tax under Section 1441
or 1442 to (i) an owner that is a Foreign Person or (ii) a Grantor Trust
Securityholder holding on behalf of an owner that is a Foreign Person will be
subject to federal income tax, collected by withholding, at a rate of 30% or
such lower rate as may be provided for interest by an applicable tax treaty.
Accrued OID recognized by the owner on the sale or exchange of such a Grantor
Trust Certificate also will be subject to federal income tax at the same rate.
Generally, such payments would be considered portfolio interest and would not be
subject to withholding to the extent that a Grantor Trust Certificate evidences
ownership in Receivables issued after July 18, 1984, if such Grantor Trust
Securityholder complies with certain identification requirements (including
delivery of a statement, signed by the Grantor Trust Securityholder under
penalties of perjury, certifying that such Grantor Trust Securityholder is the
beneficial owner, is not a U.S. Person and providing the name and address of
such Grantor Trust Securityholder). Additional restrictions apply to Receivables
where the Obligor is not a natural person in order to qualify for the exemption
from withholding. See " -- Tax Consequences to Holders of the Notes Issued by a
Partnership -- Foreign Holders" for a discussion of when interest will
constitute portfolio interest.
Information Reporting and Backup Withholding. The Servicer will furnish or
make available, within a reasonable time after the end of each calendar year, to
each person who was a Grantor Trust Securityholder at any time during such year,
such information as may be deemed necessary or desirable to assist Grantor Trust
Securityholders in preparing their federal income tax returns, or to enable
holders to make such information available to beneficial owners or financial
intermediaries that hold Grantor Trust Certificates as nominees on behalf of
beneficial owners. If a holder, beneficial owner, financial intermediary or
other recipient of a payment on behalf of a beneficial owner fails to supply a
certified taxpayer identification number or if the Secretary of the Treasury
determines that such person has not reported all interest and dividend income
required to be shown on its federal income tax return, 31% backup withholding
may be required with respect to any payments. Any amounts deducted and withheld
from a distribution to a recipient would be allowed as a credit against such
recipient's federal income tax liability.
CERTAIN SECURITIES TREATED AS INDEBTEDNESS
Upon the issuance of Notes that are intended to be treated as indebtedness
for federal income tax purposes, Federal Tax Counsel will opine that based upon
its analysis of the factors discussed below and certain assumptions and
qualifications the Notes will be treated as indebtedness for federal income tax
purposes. However, opinions of counsel are not binding on the IRS and there can
be no assurance that the IRS could not successfully challenge this conclusion.
The Sponsor will express in the Trust Documents its intent that for
federal, state and local income and franchise tax purposes, the Notes will be
indebtedness secured by the Receivables. The Sponsor agrees and each Noteholder,
by acquiring an interest in a Note, agrees or will be deemed to agree to treat
the Notes as indebtedness for federal state and local income or franchise tax
purposes. However, because different criteria are used to determine the non-tax
accounting characterization of the transactions contemplated by the Trust
Documents, the Sponsor expects to treat such transactions, for regulatory and
financial accounting purposes, as a sale of ownership interests in the
Receivables and not as debt obligations.
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In general, whether for federal income tax purposes a transaction
constitutes a sale of property or a loan the repayment of which is secured by
the property, is a question of fact, the resolution of which is based upon the
economic substance of the transaction. The form of a transaction, while a
relevant factor, is not conclusive evidence of its economic substance. In
appropriate circumstances, the courts have allowed taxpayers, as well as the IRS
to treat a transaction in accordance with its economic substance, as determined
under federal income tax laws, notwithstanding that the participants
characterize the transaction differently for non-tax purposes. In some
instances, however, courts have held that a taxpayer is bound by a particular
form it has chosen for a transaction, even if the substance of the transaction
does not accord with its form. It is expected that Federal Tax Counsel will
advise that the rationale of those cases will not apply to the transactions
evidenced by a series of Notes.
While the IRS and the courts have set forth several factors to be taken
into account in determining whether the substance of a transaction is a sale of
property or a secured indebtedness for federal income tax purposes, the primary
factor in making this determination is whether the transferee has assumed the
risk of loss or other economic burdens relating to the property and has obtained
the economic benefits of ownership thereof. Federal Tax Counsel will analyze and
rely on several factors in reaching its opinion that the weight of the benefits
and burdens of ownership of the Receivables has not been transferred to the
Noteholders and that the Notes are properly characterized as indebtedness for
federal income tax purposes. Contrary characterizations that could be asserted
by the IRS are described below under " -- Possible Characterization of the
Transaction as a Partnership or as an Association Taxable as a Corporation."
TAXATION OF INCOME OF NOTEHOLDERS
As set forth above, it is expected that Federal Tax Counsel will advise
the Sponsor that the Notes will constitute indebtedness for Federal income tax
purposes, and accordingly, holders of Notes generally will be taxed in the
manner described above in "Trusts Treated as Partnerships -- Tax Consequences to
Holders of Notes Issued by a Partnership. "
If the Notes are issued with OID that is more than a de minimis amount as
defined in the Code and Treasury regulations (see "Trusts Treated as
Partnerships -- Tax Consequences to Holders of Notes Issued by a Partnership") a
United States holder of a Note (including a cash basis holder) generally would
be required to accrue the OID on its interest in a Note in income for federal
income tax purposes on a constant yield basis, resulting in the inclusion of OID
in income in advance of the receipt of cash attributable to that income. 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 Notes is unclear. Additionally, the IRS could take the position
based on Treasury regulations that none of the interest payable on a Note is
"unconditionally payable" and hence that all of such interest should be included
in the Note's stated redemption price at maturity. Accordingly, Federal Tax
Counsel is unable to opine as to whether interest payable on a Note constitutes
"qualified stated interest" that is not included in a Note's stated redemption
price at maturity. Consequently, prospective investors in Notes should consult
their own tax advisors concerning the impact to them in their particular
circumstances. The Prospectus Supplement will indicate whether the Trust intends
to treat the interest on the Notes as "qualified stated interest".
TAX CHARACTERIZATION OF TRUST
Consistent with the treatment of the Notes as indebtedness, the Trust will
be treated as a security device to hold Receivables securing the repayment of
the Notes. In connection with the issuance of Notes of any series, Federal Tax
Counsel will render an opinion that, based on the assumptions and qualifications
set forth therein, under then current law, the issuance of the Notes of such
series will not cause the applicable Trust to be characterized for Federal
income tax purposes as an association (or publicly traded partnership) taxable
as a corporation.
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POSSIBLE CLASSIFICATION OF THE TRANSACTION AS A PARTNERSHIP OR AS AN
ASSOCIATION TAXABLE AS A CORPORATION
The opinion of Federal Tax Counsel with respect to Notes will not be
binding on the courts or the IRS. It is possible that the IRS could assert that,
for federal income tax purposes, the transactions contemplated constitute a sale
of the Receivables (or an interest therein) to the Noteholders and that the
proper classification of the legal relationship between the Sponsor and some or
all of the Noteholders resulting from the transactions is that of a partnership
(including a publicly traded partnership), a publicly traded partnership taxable
as a corporation, or an association taxable as a corporation. The Sponsor
currently does not intend to comply with the federal income tax reporting
requirements that would apply if any Classes of Securities were treated as
interests in a partnership or corporation.
If a transaction were treated as creating a partnership between the
Sponsor and the Noteholders, the partnership itself would not be subject to
federal income tax (unless it were characterized as a publicly traded
partnership taxable as a corporation); rather, the partners of such partnership,
including the Noteholders, would be taxed individually on their respective
distributive shares of the partnership's income, gain, loss, deductions and
credits. The amount and timing of items of income and deductions of a Note could
differ if the Notes were held to constitute partnership interests, rather than
indebtedness. Moreover, unless the partnership were treated as engaged in a
trade or business, an individual's share of expenses of the partnership would be
miscellaneous itemized deductions that, in the aggregate, are allowed as
deductions only to the extent they exceed two percent of the individual's
adjusted gross income, and would be subject to reduction under Section 68 of the
Code if the individual's adjusted gross income exceeded certain limits. As a
result, the individual might be taxed on a greater amount of income than the
stated rate on the Notes. Finally, all or a portion of any taxable income
allocated to a Noteholder that is a pension, profit-sharing or employee benefit
plan or other tax-exempt entity (including an individual retirement account)
may, under certain circumstances, constitute "unrelated business taxable income"
which generally would be taxable to the holder under the Code.
If it were determined that a transaction created an entity classified as
an association or as a publicly traded partnership taxable as a corporation, the
Trust would be subject to federal income tax at corporate income tax rates on
the income it derives from the Receivables, which would reduce the amounts
available for distribution to the Noteholders. Such classification may also have
adverse state and local tax consequences that would reduce amounts available for
distribution to Noteholders. Moreover, distributions on Notes that are
recharacterized as equity in an entity taxable as a corporation would not be
deductible in computing the entity's taxable income, and cash distributions on
such Notes generally would be treated as dividends for tax purposes to the
extent of such deemed corporation's earnings and profits.
FOREIGN INVESTORS
If the IRS were to contend successfully that the Notes are interest in a
partnership and if such partnership were considered to be engaged in a trade or
business in the United States, the partnership would be subject to a withholding
tax on income of the Trust that is allocable to a Foreign Investor and such
Foreign Investor would be credited for his or her share of the withholding tax
paid by the partnership. In such case, the holder generally would be subject to
United States federal income tax at regular income tax rates, and possibly a
branch profits tax in the case of a corporate holder.
Alternatively, although there may be arguments to the contrary, if such
partnership is not considered to be engaged in a trade or business within the
United States and if income with respect to the Notes is not otherwise
effectively connected with the conduct of a trade or business in the United
States by the Foreign Investor, the Foreign Investor would be subject to United
States income tax and withholding at a rate of 30% (unless reduced by an
applicable tax treaty) on the holder's distributive share of the partnership's
interest income. See "Trusts Treated as Partnerships -- Tax Consequences to
Holders of the Certificates Issued by the Partnership -- Tax Consequences to
Foreign Noteholders" for a more detailed discussion of the consequences of an
equity investment by a Foreign Investor in an entity characterized as a
partnership.
If the Trust were taxable as a corporation, distribution to foreign
investors, to the extent treated as dividends, would generally be subject to
withholding at the rate of 30% unless such rate were reduced or eliminated by an
applicable income tax treaty.
46
<PAGE> 49
STATE AND LOCAL TAXATION
The discussion above does not address the tax treatment of a Trust, the
Certificates, the Notes or the holders of Certificates or Notes of any series
under state and local tax laws. Prospective investors are urged to consult their
own tax advisors regarding state and local tax treatment of the Trust, the
Certificates, the Notes and the consequences of purchase, ownership or
disposition of the Certificates and Notes under any state or local tax law.
ERISA CONSIDERATIONS
The Prospectus Supplement for each series of Securities will summarize,
subject to the limitations discussed therein, considerations under ERISA
relevant to the purchase of such Securities by employee benefit plans and
individual retirement accounts.
METHODS OF DISTRIBUTION
The Securities offered hereby and by the related Prospectus Supplement
will be offered in series through one or more of the methods described below.
The Prospectus Supplement prepared for each series will describe the method of
offering being utilized for that series and will state the public offering or
purchase price of such series and the net proceeds to the Sponsor from such
sale.
The Sponsor intends that Securities will be offered through the following
methods from time to time and that offerings may be made concurrently through
more than one of these methods or that an offering of a particular series of
Securities may be made through a combination of two or more of these methods.
Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting and public
re-offering by underwriters;
2. By placements by the Sponsor with institutional investors through
dealers;
3. By direct placements by the Sponsor with institutional investors; and
4. By competitive bid.
In addition, if specified in the related Prospectus Supplement, a series
of Securities may be offered in whole or in part in exchange for the Receivables
(and other assets, if applicable) that would comprise the Trust Fund in respect
of such Securities.
If underwriters are used in a sale of any Securities (other than in
connection with an underwriting on a best efforts basis), such Securities will
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
fixed public offering prices or at varying prices to be determined at the time
of sale or at the time of commitment therefor. The Securities will be set forth
on the cover of the Prospectus Supplement relating to such series and the
members of the underwriting syndicate, if any, will be named in such Prospectus
Supplement.
In connection with the sale of the Securities, underwriters may receive
compensation from the Sponsor or from purchasers of the Securities in the form
of discounts, concessions or commissions. Underwriters and dealers participating
in the distribution of the Securities may be deemed to be underwriters in
connection with such Securities, and any discounts or commissions received by
them from the Sponsor and any profit on the resale of Securities by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
The Prospectus Supplement will describe any such compensation paid by the
Sponsor.
It is anticipated that the underwriting agreement pertaining to the sale
of any series of Securities will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Securities if any are
purchased (other than in connection with an underwriting
47
<PAGE> 50
on a best efforts basis) and that, in limited circumstances, the Sponsor will
indemnify the several underwriters and the underwriters will indemnify the
Sponsor against certain civil liabilities, including liabilities under the
Securities Act or will contribute to payments required to be made in respect
thereof.
The Prospectus Supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of such offering
and any agreements to be entered into between the Sponsor and purchasers of
Securities of such series.
Purchasers of Securities, including dealers, may, depending on the facts
and circumstances of such purchases, be deemed to be "underwriters" within the
meaning of the Securities Act in connection with reoffers and sales by them of
Securities. Holders of Securities should consult with their legal advisors in
this regard prior to any such reoffer or sale.
LEGAL OPINIONS
Certain legal matters relating to the issuance of the Securities of any
series, including certain federal and state income tax consequences with respect
thereto, will be passed upon by Dewey Ballantine LLP, New York, New York, Dewey
Ballantine LLP, Washington, D.C., or other counsel specified in the related
Prospectus Supplement.
FINANCIAL INFORMATION
A Trust Fund will be formed with respect to each Series of Securities and
no Trust Fund will engage in any business activities or have any assets or
obligations prior to the issuance of the related Series of Securities, except
for serial issuances by a Master Trust. The Sponsor's activities will be limited
solely to the activities of Trust Funds to be formed with respect to each Series
of Securities. Accordingly, no financial statements with respect to any Trust
Fund will be included in this Prospectus or in the related Prospectus
Supplement.
A Prospectus Supplement may contain the financial statements of the
related Credit Enhancer, if any.
ADDITIONAL INFORMATION
This Prospectus, together with the Prospectus Supplement for each series
of Securities, contains a summary of the material terms of the applicable
exhibits to the Registration Statement and the documents referred to herein and
therein. Copies of such exhibits are on file at the offices of the Securities
and Exchange Commission in Washington, D.C., and may be obtained at rates
prescribed by the Commission upon request to the Commission and may be
inspected, without charge, at the Commission's offices.
48
<PAGE> 51
INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus and
the pages on which the definitions of such terms may be found herein.
ABS.........................................................................18
Accrual Securities...........................................................8
Additional Receivables......................................................11
Administration Agreement....................................................32
ALHC........................................................................18
Article 2A..................................................................17
Cede........................................................................11
CEDEL Participants..........................................................25
Certificates..............................................................1, 6
Class........................................................................1
Code........................................................................35
Collection Account..........................................................27
Commission...................................................................3
Contract Balance............................................................10
Contracts.............................................................1, 6, 18
Cooperative.................................................................25
Credit Enhancement..........................................................16
Credit Enhancer.............................................................16
Cut-Off Date................................................................17
Debt Securities.............................................................12
Debtors.....................................................................15
Definitive Securities.......................................................26
Depositaries................................................................24
Direct Participants.........................................................16
Distribution Account........................................................27
DTC.........................................................................11
Eligible Deposit Account....................................................28
Eligible Institution........................................................28
Eligible Investments........................................................27
ERISA.......................................................................13
Euroclear Operator..........................................................26
Euroclear Participants......................................................25
Events of Default...........................................................31
Exchange Act.............................................................3, 13
FASIT...................................................................12, 35
Federal Tax Counsel.........................................................35
Fixed Income Securities......................................................7
Grantor Trust Certificates..................................................41
Grantor Trust Securities....................................................12
Grantor Trust Securityholders...............................................41
Indenture....................................................................5
Indenture Trustee............................................................7
Indirect Participants...................................................16, 24
Insolvency Event............................................................30
Insolvency Laws.............................................................15
Interest Rate.............................................................3, 7
Investment Company Act......................................................10
Investment Earnings.........................................................28
IRS.........................................................................35
IRS Form 1065...............................................................40
Issuer.......................................................................1
Monthly Period..............................................................9
49
<PAGE> 52
Notes.....................................................................1, 6
Obligor.....................................................................10
OID.........................................................................36
OID regulations.............................................................36
Originator...................................................................1
Owner Trustee................................................................7
Participants................................................................24
Partnership Interests.......................................................12
Payment Date.................................................................8
Pass-Through Rate............................................................3
Policy....................................................................1, 6
Pool Balance................................................................21
Pool Factor.................................................................21
Pooling Agreement............................................................5
Pre-Funding Account.........................................................11
Prepayment..................................................................16
Prospectus Supplement........................................................1
Receivables...............................................................1, 6
Receivables Transfer Agreement..............................................10
Record Date..................................................................8
Registration Statement.......................................................3
Rules.......................................................................25
Sale and Servicing Agreement.................................................5
Section 1286 Treasury Regulations...........................................42
Securities...................................................................1
Securities Act...............................................................3
Security Insurer............................................................11
Securityholders..............................................................8
Senior Securities............................................................8
Servicer.....................................................................1
Servicer Default............................................................30
Servicing Fee...............................................................28
Servicing Fee Rate..........................................................28
Short-Term Note.............................................................36
Sponsor......................................................................5
Strip Securities.............................................................8
Stripped Bond...............................................................42
Subordinate Securities.......................................................8
Sub-Servicer.................................................................5
Terms and Conditions........................................................26
Transferor...............................................................5, 20
Trust.................................................................1, 5, 20
Trust Accounts..............................................................27
Trust Agreement..............................................................5
Trust Documents..............................................................7
Trust Fund................................................................1, 6
Trustee......................................................................7
Underlying Collateral.....................................................1, 6
Vendor.......................................................................1
50
<PAGE> 53
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the amount of fees and expenses
(other than underwriting discounts and commissions) to be incurred in
connection with the issuance and distribution of the Offered Certificates.
<TABLE>
<S> <C>
SEC Filing Fee ...................................................... $ 303
Trustee's Fees and Expenses* ........................................ *
Legal Fees and Expenses* ............................................ 212,500
Accounting Fees and Expenses* ....................................... 30,000
Printing and Engraving Expenses* .................................... 35,000
Blue Sky Qualification and Legal
Investment Fees and Expenses* ..................................... 10,000
Rating Agency Fees* ................................................. 40,000
Miscellaneous* ...................................................... 200,000
--------
TOTAL.......................................................... $ *
========
</TABLE>
____________
* To be completed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Indemnification. Under the laws which govern the organization
of the registrant, the registrant has the power and in some instances may be
required to provide an agent, including an officer or director, who was or is a
party or is threatened to be made a party to certain proceedings, with
indemnification against certain expenses, judgments, fines, settlements and
other amounts under certain circumstances.
Article VII of the By-laws of Advanta Business Services Corp.
provides that all officers and directors of the corporation shall be
indemnified by the corporation from and against all expenses, liabilities or
other matters arising out of their status as an officer or director for their
acts, omissions or services rendered in such capacities.
The forms of the Underwriting Agreement, filed as Exhibits 1.1
and 1.2 to this Registration Statement, provide that Advanta Business Services
Corp. will indemnify and reimburse the underwriter(s) and each controlling
person of the underwriter(s) with respect to certain expenses and liabilities,
including liabilities under the Securities Act of 1933 or other federal or state
regulations or under the common law, which arise out of or are based on certain
material misstatements or omissions in the Registration Statement. In
addition, the Underwriting Agreements provide that the underwriter(s) will
similarly indemnify and reimburse Advanta Business Services Corp. with respect
to certain material misstatements or omissions in the Registration Statement
which are based on certain written information furnished by the underwriter(s)
for use in connection with the preparation of the Registration Statement.
Insurance. As permitted under the laws which govern the
organization of the registrant, the registrant's By-laws permit the board of
directors to purchase and maintain insurance on behalf of the registrant's
agents, including its officers and directors, against any liability asserted
against them in such capacity or arising out of such agents' status as such,
whether or not such registrant would have the power to indemnify them against
such liability under applicable law.
<PAGE> 54
ITEM 16. EXHIBITS.
1.1 -- Form of Underwriting Agreement.
3.1 -- Certificate of Incorporation of Advanta Business Services
Corp.
3.2 -- By-Laws of Advanta Business Services Corp.
4.1 -- Master Business Receivables Asset-Backed Financing
Facility Agreement.
4.2 -- Form of Supplement to Master Facility Agreement.
4.3 -- Master Contribution Agreement.
4.4 -- Form of Supplement to Master Contribution Agreement.
5.1 -- Opinion of Dewey Ballantine with respect to validity.
8.1 -- Opinion of Dewey Ballantine with respect to tax matters.
23.1 -- Consents of Dewey Ballantine are included in its opinions
filed as Exhibits 5.1 and 8.1 hereto.
99.1* -- Form of Prospectus Supplement.
* To be filed by Amendment.
Item 17. Undertakings.
A. Undertaking in respect of indemnification
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 provisions described above in Item
15, 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 Securities Act of 1933 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 a 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 their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by them
is against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
B. Undertaking pursuant to Rule 415.
The Registrant hereby undertakes:
(1) 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 of such information in
the Registration Statement; provided, however, that paragraphs (i) and
(ii) do not apply if the information required to be included in the
post-effective amendment is contained in periodic reports filed by the
Issuer pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) 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
II-2
<PAGE> 55
deemed to be the initial bona fide offering thereof.
(3) 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.
C. Undertaking pursuant to Rule 430A.
The Registrant hereby undertakes:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of a registration statement in Reliance upon Rule 430A and
contained in the form of 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.
(2) 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.
II-3
<PAGE> 56
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 Town of Voorhees, State of New
Jersey, on October 13, 1997.
Advanta Business Services Corp.
as Registrant
By: /s/ Charles H. Podowski
-------------------------------------
Chairman of the Board
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Charles H. Podowski, Michael
Rehling, Cole Silver, Michael Coco and Edward E. Millman, and each of them, his
true and lawful attorney-in-fact and agent, with full power and substitution
and resubstitution, for and in his name, place and stead, in any and all
capacities to sign any or all amendments (including posteffective 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 attorneys-in-fact and agents, and
each of them, 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 peson, 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.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed on October 13, 1997 below
by the following persons in the capacities and on the dates indicated.
Signature Title
/s/ Dennis Alter Director
----------------------------
Dennis Alter
/s/ Alex W. Hart Director
----------------------------
Alex W. Hart
/s/ David D. Wesselink Director
----------------------------
David D. Wesselink
/s/ Charles H. Podowski Director and Chairman
---------------------------- of the Board
Charles H. Podowski
/s/ Edward E. Millman Senior Vice President and
---------------------------- Chief Financial Officer
Edward E. Millman
II-4
<PAGE> 57
EXHIBIT INDEX
- --------------------------------------------------------------------------------
Exhibit Description of Documents
- --------------------------------------------------------------------------------
1.1 Form of Underwriting Agreement.
- --------------------------------------------------------------------------------
3.1 Certificate of Incorporation of Advanta Business Services Corp.
- --------------------------------------------------------------------------------
3.2 By-Laws of Advanta Business Services Corp.
- --------------------------------------------------------------------------------
4.1 Master Business Receivables Asset-Backed Financing Facility
Agreement.
- --------------------------------------------------------------------------------
4.2 Form of Supplement to Master Facility Agreement.
- --------------------------------------------------------------------------------
4.3 Master Contribution Agreement.
- --------------------------------------------------------------------------------
4.4 Form of Supplement to Master Contribution Agreement.
- --------------------------------------------------------------------------------
5.1 Opinion of Dewey Ballantine with respect to validity.
- --------------------------------------------------------------------------------
8.1 Opinion of Dewey Ballantine with respect to tax matters.
- --------------------------------------------------------------------------------
23.1 Consents of Dewey Ballantine are included in its opinions filed as
Exhibits 5.1 and 8.1 hereto.
- --------------------------------------------------------------------------------
*99.1 Form of Prospectus Supplement.
- --------------------------------------------------------------------------------
* To be filed by Amendment.
II-5
<PAGE> 1
EXHIBIT 1.1
Advanta Business Services Cop.
$___________ Class A Asset Backed
Notes, Series 199_-
Advanta Business Services Cop.
(as Servicer)
Advanta Leasing Receivables Corp III
(as Obligor's Agent
UNDERWRITING AGREEMENT
as Representative of the
Underwriters set forth herein
Ladies and Gentlemen:
1. Introductory. Advanta Business Services ("ABS") proposes to cause the
$___________ aggregate principal amount of Class A Asset Backed Notes, [Series
199-] (the "Class A Notes") and the $__________ aggregate principal amount of
Class B Asset Backed Notes, Series [1996- ] (the "Class B Notes", and together
with the Class A Notes, the "Notes") to be issued under a Master Business
Receivables Asset-Backed Financing Facility Agreement, amoung ABS, as Servicer,
Advanta Leasing Receivables Corp. III ("ALRCIII") as the Obligor's Agent and The
Chase Manhattan Bank, as Trustee (the "Trustee"), dated as of May 1, 1997
ABS hereby agrees with [underwriter names] as follows:
2. Representations and Warranties of ABS. ABS represents and warrants
to, and agrees with, the Underwriters that:
(a) ABS has all requisite 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 this Agreement, the Class B
Underwriting Agreement, the Notes and each of the [list of additional deal
documents]([ ], together, the "Transaction Documents").
<PAGE> 2
(b) The execution and delivery of this Agreement, the Class B
Underwriting Agreement, the Notes 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 ABS by all necessary action on the part of ABS.
(c) This Agreement and the Class B Underwriting Agreement have
been duly authorized and validly executed and delivered by ABS.
(d) Each of the Transaction Documents will be executed and
delivered by ABS on or before the Closing Date, and when executed and delivered
by the other parties thereto, will constitute a valid and binding agreement of
ABS, enforceable against ABS 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 hereafter
in effect relating to creditors' or other obligees' 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 Master Facility 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 Master Facility Agreement invalid and, notwithstanding that such
provisions may be unenforceable in whole or in part, the Trustee, on behalf of
the Holders of the Notes, will be able to enforce the remedies of a secured
party under the UCC.
(e) The Notes will be issued pursuant to the terms of the
Indenture Agreement and, when executed by ABS and authenticated by the Trustee
in accordance with the Master Facility Agreement and delivered pursuant to this
Agreement and the Class B Underwriting Agreement, will be validly issued and
outstanding and entitled to the benefits of the Indenture Agreement. The Notes
will be in all material respects in the form contemplated by the Indenture
Agreement and will conform to the description thereof contained in the
Prospectus and Registration Statement, as amended or supplemented.
2
<PAGE> 3
(f) ABS 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,
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 ABS or the Trust.
(g) Neither the issuance and sale of the Notes, nor the execution
and delivery by ABS of this Agreement, the Class B Underwriting Agreement, the
Notes or the Transaction Documents, nor the incurrence by ABS of the obligations
herein and 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 Master
Facility 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 ABS of this Agreement, the Class B
Underwriting Agreement, the Notes or the Transaction Documents, or to the
consummation of the transactions contemplated hereunder and thereunder, or to
the fulfillment of the terms hereof and thereof have been or will have been
obtained on or before the Closing Date.
(i) All actions required to be taken by ABS as a condition to the
offer and sale of the Notes as described herein or in the Class B Underwriting
Agreement or the consummation of any of the transactions described in the
Prospectus and Registration Statement have been or, prior to the Closing Date,
will be taken.
3
<PAGE> 4
(j) The Master Facility Agreement is not required to be qualified
under the Trust Indenture Act of 1939.
(k) The representations and warranties made by ABS in the Master
Facility Agreement and made in any Officer's Certificate of ABS delivered
pursuant to the Master Facility Agreement will be true and correct at the time
made and on and as of the Closing Date as if set forth herein.
(l) ABS 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 Master Facility Agreement, and agrees to take all
action required by the Master Facility Agreement in order to maintain the
security interest in the Receivables granted pursuant to the Master Facility
Agreement.
(m) A registration statement on Form S-3 (No. ), including a form
of prospectus and such amendments thereto as may have been required to the date
hereof, relating to the Notes 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." ABS propose 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 Notes and the method of distribution thereof. The Base Prospectus and the
Prospectus Supplement, together with
4
<PAGE> 5
any amendment thereof or supplement thereto, are hereinafter referred to as the
"Prospectus".
(n) 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,
and 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 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 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 ABS by the Underwriters
specifically for use therein.
(o) 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 ABS or its
subsidiaries, taken as a whole, from ____________.
3. Purchase, Sale, Payment and Delivery of the Notes.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, ABS agree to sell to the Underwriters, and the Underwriters agree to
purchase from ABS, at a purchase price of ________% of the principal amount
thereof, $___________ aggregate principal amount of the Class A Notes, each
Underwriter to purchase the amounts shown on Schedule A hereto.
(b) ABS will deliver the Class A Notes to you against payment of
the purchase price in immediately available funds, drawn to the order of ABS, at
the office of [law firm address], in New York, New York 10103 at 10:00 A.M., New
York City time, on 1997, or at such other time not later than seven full
business
5
<PAGE> 6
days thereafter as you and ABS determine, such time being herein referred to as
the "Closing Date". Each of the Class A Notes so to be delivered shall be
represented by one or more definitive Notes registered in the name of Cede &
Co., as nominee for The Depository Trust Company. ABS shall make such definitive
Notes representing the Class A Notes available for inspection by the
Underwriters at the office at which the Class A Notes 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 Effective
Date, the Underwriters propose to offer the Class A Notes for sale to the public
(which may include selected dealers) as set forth in the Prospectus.
5. Certain Agreements of ABS. ABS agrees with the Underwriters that:
(a) Immediately following the execution of this Agreement, ABS
will prepare a Prospectus Supplement setting forth the amount of Notes covered
thereby and the terms thereof not otherwise specified in the Base Prospectus,
the price at which such Notes are to be purchased by the Underwriters and the
Class B Underwriter, the initial public offering price, the selling concessions
and allowances, and such other information as ABS deem appropriate. ABS 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). ABS will not file any amendment of
the Registration Statement with respect to the Class A Notes or supplement to
the Prospectus unless a copy has been furnished to you for your review a
reasonable time prior to the proposed filing thereof or to which you shall
reasonably object to in writing. ABS will advise you 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 ABS of any notification with
respect to the suspension of qualification of the Notes 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 their best efforts to
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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 Notes 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, ABS 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 your 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, ABS will cause the Trust to make
generally available to the Noteholders 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) ABS will furnish to you copies of the Registration Statement
(one of which will be signed and will include all exhibits), the Prospectus and
all amendments and supplements to such documents, in each case as soon as
available and in such quantities as you reasonably request.
(e) ABS will endeavor to qualify the Class A Notes for sale under
the securities or Blue Sky laws of such jurisdictions as you shall reasonably
request and the determination of the eligibility for investment of the Class A
Notes under the laws of such jurisdictions as you may designate and will
continue such qualifications in effect so long as required for the distribution
of the Class A Notes; provided, however, that neither ABS nor ALRCIII shall be
obligated to qualify to do business in any jurisdiction where such qualification
would subject ABS, as the case may be, to general or unlimited service of
process in any jurisdiction where it is not now so subject.
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(f) For a period from the date of this Agreement until the
retirement of the Class A Notes, ABS, as Servicer, will furnish to you copies of
each certificate and the annual statements of compliance delivered to the
Trustee pursuant to Article III of the Master Facility Agreement and the annual
independent certified public accountant's servicing reports furnished to the
Trustee pursuant to Article III of the Master Facility Agreement, by first class
mail as soon as practicable after such Notes, statements and reports are
furnished to the Trustee.
(g) So long as any Class A Certificate is outstanding, ABS will
furnish to you, by first-class mail as soon as practicable (i) all documents
concerning the Notes distributed by ABS to Noteholders, 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 ABS as originators of the Trust, or pursuant
to a "no-action" letter obtained from the staff of the Commission by ABS and
affecting the Trust or ABS as originators of the Trust and (iii) from time to
time, such other information concerning the Trust as you may reasonably request.
(h) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated for any reason, except
a default by you hereunder, ABS will pay all expenses incident to the
performance of their obligations under this Agreement and will reimburse the
Underwriters for any expenses provided that if ABS shall pay such fees and
disbursements of counsel or such printing costs and expenses, incurred by them
in connection with qualification of the Class A Notes for sale and determination
of the eligibility of the Class A Notes for investment under the laws of such
jurisdictions as you designate (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 Notes, for any filing fee of the National
Association of Securities Dealers, Inc. relating to the Class A Notes, and for
expenses incurred in distributing the Prospectus (including any amendments and
supplements thereto).
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(i) To the extent, if any, that any of the ratings provided with
respect to the Notes 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 ABS, ABS 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 Notes will be subject to
the accuracy of the representations and warranties on the part of ABS herein, to
the accuracy of the statements of officers of ABS made pursuant to the
provisions hereof, to the performance by ABS of its obligations hereunder and to
the following additional conditions precedent:
(a) On or prior to the date of this Agreement, you 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 you and your 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 ABS or you, shall be
contemplated by the Commission.
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(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
ABS or Advanta Corp. which, in your judgment, materially impairs the investment
quality of the Notes; (ii) any downgrading in the rating of any debt securities
of ABS 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 ABS 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 your
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 Notes.
(d) You shall have received an opinion, dated the Closing Date,
of Cole Silver, General Counsel for ABS, to the effect that:
(i) ABS (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 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 effect upon the
Certificateholders; and (z) has the power, authority and legal right to
acquire, own and service the Accounts and the Receivables;
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(ii) ABS has the power and authority to execute and
deliver this Agreement, the Class B Underwriting Agreement, the Master
Facility Agreement and the Notes and to consummate the transactions
contemplated herein and therein;
(iii) Each of the Class B Underwriting Agreement, the
Master Facility Agreement and the Notes has been duly authorized,
executed and delivered by ABS;
(iv) This Agreement has been duly authorized, executed and
delivered by ABS;
(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 such 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;
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(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 ABS is required for the consummation of
the transactions contemplated by this Agreement, the Class B
Underwriting Agreement, the Master Facility Agreement except for (x)
filing of UCC financing statements with respect to the transactions
contemplated in the Master Facility 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 ABS of
this Agreement, the Class B Underwriting Agreement, the Master Facility
Agreement, the transfer of the Receivables to the Trust, the issuance
and sale of the Notes and the consummation of any other of the
transactions contemplated herein or in the Master Facility 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 ABS or (y) any rule, order, statute or
regulation known to such counsel to be currently applicable to ABS, or
(z) any agreement or other instrument, known to such counsel, to which
ABS is a party or by which it is bound; and
(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 Underwriting Agreement, the Master Facility Agreement or the
Notes, (x) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this Agreement,
the Class B Underwriting Agreement, the Master Facility Agreement (y)
which might materially and adversely affect the performance by ABS of
its obligations under, or the validity or enforceability of, this
Agreement, the Class B Underwriting Agreement, the Master Facility
Agreement or the Notes or (z) seeking adversely to affect the federal
income tax attributes of the Notes as described in the Prospectus under
the headings "Summary of Terms -- Tax Status" and "Certain Federal
Income Tax Consequences."
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(f) You shall have received a letter of [ ], special counsel for
ABS, to the effect that you 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.
(g) You shall have received an opinion dated the closing date, of
[ ]special counsel to ABS, to the effect that
(i) Each of this Agreement and the Class B Underwriting
Agreement constitutes the legal, valid and binding obligation of ABS
under the laws of the State of New York, enforceable against ABS in
accordance with its terms.
(ii) The Notes, when executed and authenticated in
accordance with the terms of the Master Facility Agreement and delivered
to and paid for by the Underwriters in accordance with this Agreement,
will be duly and validly issued and outstanding and will be entitled to
the benefits of the Master Facility Agreement.
(iii) The statements in the Base Prospectus under the
headings "Certain Legal Aspects of the Receivables," "ERISA
Considerations" and "Certain Federal Income Tax Consequences" and the
summaries thereof under the headings "Summary of Terms -- Tax Status" in
the Base Prospectus and "Summary of Terms -- Tax Status" and "Certain
Federal Income Tax Consequences" in the Prospectus Supplement, to the
extent they constitute matters of law or legal conclusions with respect
thereto, have been reviewed by us and are correct in all material
respects.
(iv) This Agreement, the Master Facility Agreement and the
Notes conform in all material respects to the descriptions thereof
contained in the Prospectus.
(vii) For federal income tax purposes the Notes will
properly be characterized as indebtedness and for purposes of Section
6.03(b)(vi) of the Master Facility
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Agreement (a) the issuance of the Notes will not adversely affect the
tax characterization as debt of Investor Notes of any outstanding Series
or Class that were characterized as debt at the time of their issuance,
(b) following the issuance of the Notes, the Trust will not be an
association (or publicly traded partnership) taxable as a corporation
and (c) the issuance of the Notes will not cause or constitute an event
in which gain or loss would be recognized by any Noteholder or the
Trust. Although the foregoing represents our views regarding the
characteristics of the Trust and the Notes for federal income tax
purposes, we call your attention to the discussion of alternative
characterizations and risks discussed in the Base Prospectus under the
heading "Certain Federal Income Tax Consequences."
(h) You shall have received from [ ] special counsel for the
Underwriter, such opinion or opinions, dated the Closing Date, with respect to
such matters relating to this transaction as you may require, and ABS shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(i) You shall have received a certificate from ABS, dated the
Closing Date, of two Vice Presidents or more senior officers in which such
officers, to the best of their knowledge after reasonable investigation, shall
state that (u) the representations and warranties of ABS in this Agreement are
true and correct in all material respects on and as of the Closing Date, (v) ABS
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 ABS, as Servicer, and ALRCIII, as Obligor's
Agent, in the Master Facility Agreement are true and correct as of the dates
specified in the Master Facility 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
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the Prospectus, there has been no material adverse change in the financial
position or results of operation of ABS or ALRCIII business except as set forth
in or contemplated by the Prospectus or as described in such certificate.
(j) You shall have received an opinion of [ ], counsel to the
Trustee, addressed to you, dated the Closing Date, satisfactory in form and
substance to you and your 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 Master Facility Agreement;
(ii) Each of the Master Facility 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 Notes have been duly authenticated and delivered
by the Trustee;
(iv) The execution and delivery of the Master Facility
Agreement by the Trustee and the performance by the Trustee of their
terms does 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 trust powers of the Trustee, or (z) the Certificate of
Incorporation or By-Laws of the Trustee; and
(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
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jurisdiction over ABSing or trust powers of the Trustee is required in
connection with the execution and delivery by the Trustee of the Master
Facility Agreement or the performance by the Trustee thereunder.
(k) You shall have received evidence satisfactory to you that the
Class A Notes shall be rated Aaa by Moody's Investors Service, Inc. and AAA by
Standard & Poor's Ratings Services and that the Class B Notes shall be rated no
lower that A3 by Moody's Investors Service, Inc. and no lower than A- by
Standard & Poor's Ratings Services.
ABS will furnish you with such conformed copies of such opinions,
Notes, letters and documents as you reasonably request.
7. Indemnification and Contribution. (a) ABS 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 arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and 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 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 Notes if such untrue statement or omission or
alleged untrue statement or omission made in the Preliminary Prospectus is
eliminated or remedied in the Prospectus (as amended or supplemented if ABS
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 Notes to such person; provided further, however, that ABS
will not be liable in any such case to the extent that any such loss, claim,
damage or
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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 ABS by the
Underwriters specifically for use therein.
(b) The Underwriters agree ,severally and not jointly, to
indemnify and hold harmless ABS against any losses, claims, damages or
liabilities to which ABS may become subject, under the Act or otherwise and will
reimburse any legal or other expenses reasonably incurred by ABS in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred, 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 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 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 ABS by the Underwriters specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
ABS 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
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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
ABS on the one hand and the Underwriters on the other from the offering of the
Class A Notes, 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 ABS 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 ABS 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 Notes received by
ABS bear to the total underwriting discounts and commissions received by the
Underwriters with respect to the Class A Notes. 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 ABS 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 Notes. 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 subdivision (d), the Underwriters shall not be
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required to contribute any amount in excess of the amount by which the total
price at which the Class A Notes 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 Notes. 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 ABS under this Section shall be in
addition to any liability which ABS 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 ABS, to each officer of ABS who has signed the
Registration Statement and to each person, if any, who controls either Bank
within the meaning of the Act.
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8. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of ABS
or their 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, ABS or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Class A Notes. If this Agreement is terminated or if for any reason
other than default by the Underwriters the purchase of the Class A Notes by the
Underwriters is not consummated, ABS shall remain responsible for the expenses
to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of ABS and the Underwriters pursuant to Section 7 shall remain in
effect. If for any reason the purchase of the Class A Notes 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), ABS 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 Notes.
9. Computational Materials and ABS Term Sheets. (a) Each Underwriter
agrees to provide to ABS, not less than two Business Days prior to the date on
which ABS are 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 ABS) with respect to the offering of the Class A Notes 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 the Preliminary Prospectus (without taking into account information
incorporated therein by reference).
(b) Each Underwriter agrees to provide to ABS, not less than two
Business Days prior to the date on which ABS is
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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 ABS)
with respect to the offering of the Class A Notes 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 the Preliminary Prospectus (without taking into account
information incorporated therein by reference).
(c) Each Underwriter severally agrees, assuming all information
provided by ABS is accurate and complete in all material respects, to indemnify
and hold harmless ABS, each of the officers and directors of ABS and each person
who controls ABS 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 the 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 the
Underwriter under this Section 9(c) shall be in addition to any liability that
the 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:[undrewriter]
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.
21
<PAGE> 22
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, ABS that (w) it has complied and shall comply with all
applicable provisions of the Financial Services Act 1986 and the Public Offers
of Securities Regulations 1995 (the "Regulations") with respect to anything done
by it in relation to the Class A Notes 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 Notes to a person who is of a kind described in Article
9(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) it has not offered or sold and, during the period of
six months from the date hereof, will not offer or sell any Class A Certificate
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.
22
<PAGE> 23
If you are in agreement with the foregoing, please sign two counterparts
hereof and return one to ABS whereupon this letter and your acceptance shall
become a binding agreement among ABS and the Underwriters.
Very truly yours,
ADVANTA BUSINESS SERVICES CORP.
By____________________
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date hereof
as Representative of the
Underwriters set forth herein
By__________________________
Name:
Title:
23
<PAGE> 24
SCHEDULE A
Class A Notes
<TABLE>
<CAPTION>
<S> <C>
Underwriters Principal Amount of
- ------------
Class A Notes
-------------
$-----------
$-----------
$-----------
$-----------
$-----------
</TABLE>
24
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
COLONIAL NATIONAL LEASING, INC.
FIRST: The name of this Corporation is: COLONIAL NATIONAL LEASING, INC.
SECOND: The address of the Registered Office in the state of Delaware is:
Clayton Building, Suite 200, Concord Plaza, 3515 Silverside Road, in the City
of Wilmington, in the County of New Castle, 19810. The Registered Agent in
charge thereof is Robert R. Galbusera, Jr.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity of which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares which the corporation shall have authority
to issue is: ten thousand (10,000) shares with no par value with an authorized
capital of $200,000.
FIFTH: The names and addresses of each of the first directors who shall serve
until the first annual meeting are:
Dennis Alter 612 Mann Road
Horsham, PA 19044
James T. Dimond 725 Spring Avenue
Fort Washington, PA 19034
Carl E. Smith 691 Claire Drive
Warminster, PA 18974
Michael J. Sexton 725 Aldrin Drive
Lansdale, PA 19446
Robert Purring 718 Norristown Road
Horsham, PA 19044
SIXTH: The name and address of the incorporator is as follows:
Robert Purring
Maryland and Computer Roads
Willow Grove, PA 19090
I, THE UNDERSIGNED, for the purpose of forming a corporation under the laws of
the State of Delaware, do make, file and record this certificate, and do
certify that the facts herein stated are true, and I have accordingly hereunto
set my hand this 1st day of February, 1985.
/s/ ROBERT PURRING
---------------------
Robert Purring
<PAGE> 2
BY-LAWS OF
COLONIAL NATIONAL LEASING, INC.
ARTICLE I -- OFFICES
Section 1-1. Registered Office and Registered Agent.
The Corporation shall maintain a registered office and registered agent within
the State of Delaware, which may be changed by the Board of Directors from time
to time.
Section 1-2. Other Offices. The Corporation may also have offices at
such other places, within or without the State of Delaware, as the Board of
Directors may from time to time determine.
ARTICLE II -- STOCKHOLDERS' MEETINGS
Section 2.1 Place of Stockholders' Meetings.
Meetings of stockholders may be held at such place, either within or without
the State of Delaware, as may be designated by the Board of Directors from time
to time. If no such place is designated by the Board of Directors, meetings of
the stockholders shall be held at the registered office of the Corporation in
the State of Delaware.
Section 2-2. Annual Meeting. A meeting of stockholders of the
Corporation shall be held in each calendar year, commencing with the year 1986
on the 3rd Tuesday of March at 10:30 o'clock a.m. if not a legal holiday, and
if such day is a legal holiday, then such meeting shall be held on the next
business day.
At such annual meeting, there shall be held an election for a Board of
Directors to serve for the ensuing year and until their respective successors
are elected and qualified, or until their earlier resignation or removal.
Unless the Board of Directors shall deem it advisable, financial
reports of the Corporation's business need not be sent to the stockholders and
need not be presented at the annual meeting. If any report is deemed advisable
by the Board of Directors, such report may contain such information as the
Board of Directors shall determine and need not be certified by a Certified
Public Accountant unless the Board of Directors shall so direct.
Section 2-3. Special Meetings. Except as otherwise
<PAGE> 3
specifically provided by law, special meetings of the stockholders may be called
at any time:
(a) By the Board of Directors; or
(b) By the President of the Corporation;
or
(c) By the holders of record of not less than a majority of all
the shares outstanding and entitled to vote.
Upon the written request of any person entitled to call a special
meeting, which request shall set forth the purpose for which the meeting is
desired, it shall be the duty of the Secretary to give prompt written notice of
such meeting to be held at such time as the Secretary may fix, subject to the
provisions of Section 2-4 hereof. If the Secretary shall fail to fix such date
and give notice within ten (10) days after receipt of such request, the person
or persons making such request may do so.
Section 2-4. Notice of Meetings and Adjourned Meetings. Written notice
stating the place, date and hour of any meeting shall be given not less than ten
(10) nor more than sixty (60) days before the date of the meeting to each
stockholder entitled to vote at such meeting. If mailed, notice is given when
deposited in the United States Mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation. Such
notice may be given in the name of the Board of Directors, President, Vice
President, Secretary or Assistant Secretary.
When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. If the adjournment is for more
than thirty (30) days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 2-5. Quorum. Unless the Certificate of Incorporation provides
otherwise, the presence, in person or by proxy, of the holders of a majority of
the outstanding shares entitled to vote shall constitute a quorum but in no
event shall a quorum consist of less than one-third (1/3) of the shares entitled
to vote at a meeting. The stockholders present at a duly organized meeting can
continue to do business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum. If a
<PAGE> 4
meeting cannot be organized because of the absence of a quorum, those present
may, except as otherwise provided by law, adjourn the meeting to such time and
place as they may determine. In the case of any meeting for the election of
Directors, those stockholders who attend the second of such adjourned meetings,
although less than a quorum as fixed in this Section, shall nevertheless
constitute a quorum for the purpose of electing Directors.
Section 2-6. Voting List; Proxies. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten (10) days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the name
of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not specified, at the
place where the meeting is to be held. The list shall also be produced and
kept at the time and place of the meeting during the whole time thereof, and
may be inspected by any stockholder who is present.
Upon the willful neglect or refusal of the Directors to produce such a
list at any meeting for the election of Directors, they shall be ineligible to
any office at such meeting.
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy. All proxies shall
be executed in writing and shall be filed with the Secretary of the
Corporation not later than the day on which exercised. No proxy shall be
voted or acted upon after three (3) years from its date, unless the proxy
provides for a longer period.
Except as otherwise specifically provided by law, all matters coming
before the meeting shall be determined by a vote by shares. All elections of
Directors shall be by written ballot unless otherwise provided in the
Certificate of Incorporation. Except as otherwise specifically provided by law,
all other votes may be taken by voice unless a stockholder demands that it be
taken by ballot, in which latter event the vote shall be taken by written
ballot.
Section 2-7. Informal Action by Stockholders. Unless otherwise
provided by the Certificate of Incorporation, any action required to be taken
at an annual or special meeting
<PAGE> 5
of stockholders may be taken without a meeting and without prior notice and
without a vote, if a consent in writing, setting forth the action so taken, is
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to take such action at a meeting at
which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of such action must be given to those
stockholders who have not consented in writing.
ARTICLE III - BOARD OF DIRECTORS
Section 3-1. Number. The business and affairs of the Corporation shall
be managed by a Board of not less than one nor more than five Directors.
Section 3-2. Place of Meeting. Meetings of the Board of Directors may
be held at such place either within or without the State of Delaware, as a
majority of the Directors may from time to time designate or as may be
designated in the notice calling the meeting.
Section 3-3. Regular Meetings. A regular meeting of the Board of
Directors shall be held annually, immediately following the annual meeting of
stockholders, at the place where such meeting of the stockholders is held or at
such other place, date and hour as a majority of the newly elected Directors may
designate. At such meeting the Board of Directors shall elect officers of the
Corporation. In addition to such regular meeting, the Board of Directors shall
have the power to fix, by resolution, the place, date and hour of other regular
meetings of the Board.
Section 3-4. Special Meetings. Special meetings of the Board of
Directors shall be held whenever ordered by the President, by a majority of the
members of the executive committee, if any, or by a majority of the Directors
in office.
Section 3-5. Notices of Meetings of Board of Directors.
(a) Regular Meetings. No notice shall be required to be given
of any regular meeting, unless the same be held at other than the time or place
for holding such meetings as fixed in accordance with Section 3-3 of these
by-laws, in which event one (1) day's notice shall be given of the time and
place of such meeting.
(b) Special Meetings. At least one (1) day's notice shall be
given of the time, place and purpose for which any special meeting of the
Board of Directors is to be
<PAGE> 6
held.
Section 3-6. Quorum. A majority of the total number of Directors shall
constitute a quorum for the transaction of business, and the vote of a majority
of the Directors present at a meeting at which a quorum is present shall be the
act of the Board of Directors. If there be less than a quorum present, a
majority of those present may adjourn the meeting from time to time and place
to place and shall cause notice of each such adjourned meeting to be given to
all absent Directors.
Section 3-7. Informal Action by the Board of Directors. Any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board or Committee, as the case may be, consent thereto in writing, and the
writings are filed with the minutes of proceedings of the Board or committee.
Section 3-8. Powers.
(a) General Powers. The Board of Directors shall have all
powers necessary or appropriate to the management of the business and affairs
of the Corporation, and, in addition to the power and authority conferred by
these by-laws, may exercise all powers of the Corporation and do all such
lawful acts and things that are not by statute, these by-laws or the
Certificate of Incorporation directed or required to be exercised or done by
the stockholders.
(b) Specific Powers. Without limiting the general powers
conferred by the last preceding clause and the powers conferred by the
Certificate of Incorporation and by-laws of the Corporation, it is hereby
expressly declared that the Board of Directors shall have the following powers:
(i) To confer upon any officer or officers of the
Corporation the power to choose, remove or suspend assistant officers, agents
or servants.
(ii) To appoint any person, firm or corporation to
accept and hold in trust for the Corporation any property belonging to the
Corporation or in which it is interested, and to authorize any such person,
firm or corporation to execute any documents and perform any duties that may be
requisite in relation to any such trust.
(iii) To appoint a person or persons to vote shares of
another corporation held and owned by the Corporation.
(iv) By resolution adopted by a majority of the full
Board of Directors, to designate one (1) or more of
<PAGE> 7
its number to constitute an executive committee which, to the extent provided
in such resolution, shall have and may exercise the power of the Board of
Directors in the management of the business and affairs of the Corporation and
may authorize the seal of the Corporation to be affixed.
(v) By resolution passed by a majority of the whole Board of Directors,
to designate one (1) or more additional committees, each to consist of one (1)
or more Directors, to have such duties, powers and authority as the Board of
Directors shall determine. All committees of the Board of Directors, including
the executive committee, shall have the authority to adopt their own rules of
procedure. Absent the adoption of specific procedures, the procedures
applicable to the Board of Directors shall also apply to committees thereof.
(vi) To fix the place, time and purpose of meetings of stockholders.
(vii) To purchase or otherwise acquire for the Corporation any
property, rights or privileges which the Corporation is authorized to acquire,
at such prices, on such terms and conditions and for such consideration as it
shall from time to time see fit, and, at its discretion, to pay any property or
rights acquired by the Corporation, either wholly or partly in money or in
stocks, bonds, debentures or other securities of the Corporation.
(viii) To create, make and issue mortgages, bonds, deeds of trust,
trust agreements and negotiable or transferable instruments and securities,
secured by mortgage or otherwise, and to do every other act and thing necessary
to effectuate the same.
(iv) To appoint and remove or suspend such subordinate officers, agents
or servants, permanently or temporarily, as it may from time to time think fit,
and to determine their duties, and fix, and from time to time change, their
salaries or emoluments, and to require security in such instances and in such
amounts as it thinks fit.
(x) To determine who shall be authorized on the Corporation's behalf to
sign bills, notes, receipts, acceptances, endorsements, checks, releases,
contracts and documents.
Section 3-9. Compensation of Directors. Compensation of Directors and
reimbursement of their expenses incurred in connection with the business of the
Corporation, if any, shall be as determined from time to time by resolution of
the Board of Directors.
Section 3-10. Removal of Directors by Stockholders.
<PAGE> 8
The entire Board of Directors or any individual Director may be removed from
office without assigning any cause by a majority vote of the holders of the
outstanding shares entitled to vote. In case the Board of Directors or any one
(1) or more Directors be so removed, new Directors may be elected at the same
time.
Section 3-11. Resignations. Any Director may resign at any time by
submitting his written resignation to the Corporation. Such resignation shall
take effect at the time of its receipt by the Corporation unless another time
be fixed in the resignation, in which case it shall become effective at the
time so fixed. The acceptance of a resignation shall not be required to make
it effective.
Section 3-12. Vacancies. Vacancies and new created directorships
resulting from any increase in the authorized number of Directors elected by
all of the stockholders having the right to vote as a single class may be
filled by a majority of the Directors then in office, although less than a
quorum, or by a sole remaining Director, and each person so elected shall be a
Director until his successor is elected and qualified or until his earlier
resignation or removal.
Section 3-13. Participation by Conference Telephone.
Directors may participate in regular or special meetings of the Board by
telephone or similar equipment that allows all other persons at the meeting to
hear each other, and such participation shall constitute presence at the
meeting.
ARTICLE IV - OFFICERS
Section 4-1. Election and Office. The Corporation shall have a
President, a Secretary and a Treasurer who shall be elected by the Board of
Directors. The Board of Directors may elect such additional officers as it may
deem proper, including a Chairman and a Vice Chairman of the Board of
Directors, one (1) or more Vice Presidents, and one (1) or more assistant or
honorary officers. Any number of offices may be held by the same person.
Section 4-2. Term. The President, the Secretary and the Treasurer
shall each serve for a term of one (1) year and until their respective
successors are chosen and qualified, unless removed from office by the Board of
Directors during their respective tenures. The term of office of any other
officer shall be as specified by the Board of Directors.
Section 4-3. Powers and Duties of the President.
Unless otherwise determined by the Board of Directors, the
<PAGE> 9
President shall be the chief executive officer of the corporation, shall
preside at all meetings of the shareholders and the directors, shall have
general and active management of the business of the corporation and shall see
that all orders and resolutions of the Board of Directors are carried into
effect, subject to the limitations of statute, these By-laws, and the action of
the Board of Directors. He may appoint, suspend and discharge employees and
agents. He shall be ex-officio a member to all committees, and shall possess
any and all rights and powers incident to the ownership of stock in that
corporation.
Section 4-4. Powers and Duties of the Secretary.
Unless otherwise determined by the Board of Directors, the Secretary shall
record all proceedings of the meetings of the Corporation, the Board of
Directors and all committees, in books to be kept for that purpose, and shall
attend to the giving and serving of all notices for the Corporation. He shall
have charge of the corporate seal, the certificate books, transfer books and
stock ledgers, and such other books and papers as the Board of Directors may
direct. He shall have such other powers and perform such other duties as may be
assigned to him by the Board of Directors.
Section 4-5. Powers and Duties of the Treasurer.
Unless otherwise determined by the Board of Directors, the Treasurer shall have
charge of all the funds and securities of the Corporation which may come into
his hands. When necessary or proper, unless otherwise ordered by the Board of
Directors, he shall endorse for collection on behalf of the Corporation checks,
notes and other obligations, and shall deposit the same to the credit of the
Corporation in such bank or depositories as the Board of Directors may designate
and shall sign all receipts and vouchers for payments made to the Corporation.
He shall sign all checks made by the Corporation, except when the Board of
Directors shall otherwise direct. He shall enter regularly, in books of the
Corporation to be kept by him for that purpose, a full and accurate account of
all moneys received and paid by him on the account of the Corporation. Whenever
required by the Board of Directors, he shall render a statement of the financial
condition of the Corporation. He shall at all reasonable times exhibit his books
and accounts to any Director of the Corporation, upon application at the office
of the Corporation during business hours. He shall have such other powers and
shall perform such other duties as may be assigned to him from time to time by
the Board of Directors.
He shall give such bond, if any, for the faithful performance of his duties as
shall be required by the Board of Directors and any such bond shall remain in
the custody of the President.
<PAGE> 10
Section 4-6. Powers and Duties of the Chairman of the Board of
Directors. Unless otherwise determined by the Board of Directors, the Chairman
of the Board of Directors, if any, shall preside at all meetings of Directors
and shall serve ex-officio as a member of every committee of the Board of
Directors. He shall have such other power and perform such further duties as may
be assigned to him by the Board of Directors.
Section 4-7. Powers and Duties of Vice Presidents and Assistant
Officers. Unless otherwise determined by the Board of Directors, each Vice
President and each assistant officer shall have the powers and perform the
duties of his respective superior officer. Vice Presidents and assistant
officers shall have such rank as shall be designated by the Board of Directors
officer in his absence, or upon his disability or when so directed by such
superior officer or by the Board of Directors. Vice Presidents may be
designated as having responsibility for a specific aspect of the Corporation's
affairs, in which event each such Vice President shall be superior to the other
Vice Presidents in relation to matters within his aspect. The President shall
be the superior officer of the Vice Presidents. The Treasurer and the Secretary
shall be the superior officers of the Assistant Treasurers and Assistant
Secretaries, respectively.
Section 4-8. Delegation of Office. The Board of Directors may delegate
the powers or duties of any officer of the Corporation to any other officer or
to any Director from time to time.
Section 4-9. Vacancies. The Board of Directors shall have the power to
fill any vacancies in any office occurring from whatever reason.
Section 4-10. Resignations. Any officer may resign at any time by
submitting his written resignation to the Corporation. Such resignation shall
take effect at the time of its receipt by the Corporation, unless another time
be fixed in the resignation, in which case it shall become effective at the time
so fixed. The acceptance of a resignation shall not be required to make it
effective.
ARTICLE V - CAPITAL STOCK
Section 5-1. Stock Certificates. Shares of the Corporation shall be
represented by certificates signed by or in the name of the Corporation by (a)
the Chairman or Vice Chairman of the Board of Directors, or the President or a
Vice President, and (b) the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary, representing the number of shares
registered in certificate
<PAGE> 11
form. If such certificate is countersigned (i) by a transfer agent other than
the Corporation or its employee, or (ii) by a registrar other than the
Corporation or its employee, the signatures of the officer of the Corporation
may be facsimiles. In case any officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the Corporation
with the same effect as if he were such officer at the date of issue.
Section 5-2. Determination of Stockholders of Record. The Board of
Directors may fix, in advance, a record date to determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of
any other lawful action. Such date shall be not more than sixty (60) nor less
than ten (10) days before the date of any such meeting, nor more than sixty
(60) days prior to any other action.
If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next preceding the day on which
notice is given, or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held.
The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 5-3. Transfer of Shares. Transfer of shares shall be made on
the books of the Corporation only upon surrender of the share certificate, duly
endorsed and otherwise in proper form for transfer, which certificate shall be
cancelled at the time of the transfer. No transfer of shares shall be made on
the books of this Corporation if such transfer is in violation of a lawful
restriction noted conspicuously on the certificate.
Section 5-4. Lost, Stolen or Destroyed Share Certificates. The
Corporation may issue a new certificate of stock or uncertified shares in place
of any certificate therefore issued by it, alleged to have been lost, stolen or
<PAGE> 12
destroyed, and the Corporation may require the owner of the lost, stolen, or
destroyed certificate, or his legal representative to give the Corporation a
bond sufficient to indemnify it against claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or
the issuance of such new certificate or uncertificated shares.
ARTICLE VI - NOTICES
Section 6-1. Contents of Notice. Whenever any notice of a meeting is
required to be given pursuant to these by-laws shall specify the place, day and
hour of the meeting and, in the case of a special meeting or where otherwise
required by law, the general nature of the business to be transacted at such
meeting.
Section 6.2. Method of Notice. All notices shall be given to each
person entitled thereto, either personally or by sending a copy thereof through
the mail or by telegraph, charges prepaid, to his address as it appears on the
records of the Corporation, or supplied by him to the Corporation for purpose
of notice. If notice is sent by mail or telegraph, it shall be deemed to have
been given to the person entitled thereto when deposited in the United States
Mail or with the telegraph office for transmission. If no address for a
stockholder appears on the books of the Corporation and such stockholder has
not supplied the Corporation with an address for the purpose of notice, notice
deposited in the United States Mail addressed to such stockholder care of
General Delivery in the city in which the principal office of the Corporation
is located shall be sufficient.
Section 6-3. Waiver of Notice. Whenever notice is required to be given
under any provision of law or of the Certificate of Incorporation or by-laws of
the Corporation, a written waiver, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of
any business because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the stockholders, directors, or members of a committee of Directors
need by specified in any written waiver of notice unless so required by the
Certificate of Incorporation.
ARTICLE VII - INDEMNIFICATION OF DIRECTORS AND
OFFICERS AND OTHER PERSONS
<PAGE> 13
Section 7-1. Indemnification. The Corporation shall have the power to
indemnify any Director, officer, employee or agent of the Corporation
against expenses (including legal fees), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by him, to the fullest extent now
or hereafter permitted by law in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, brought or threatened to be brought against him by reason of
his performance as a director, officer, employee or agent of the Corporation,
its parent or any of its subsidiaries, or in any other capacity on behalf of
the Corporation, its parent or any of its subsidiaries.
The Board of Directors by resolution adopted in each specific instance
may similarly indemnify any person other than a director, officer, employee or
agent of the Corporation for liabilities incurred by him in connection with
services rendered by him for or at the request of the Corporation, its parent
or any of its subsidiaries.
The provisions of the Section shall be applicable to all actions, suits
or proceedings commenced after its adoption, whether such arise out of acts or
omissions which occurred prior or subsequent to such adoption and shall
continue as to a person who has ceased to be a director, officer, employee or
agent or to render services for or at the request of the Corporation or as the
case maybe, its parent, or subsidiaries and shall inure to the benefit of the
heirs, executors and administrators of such a person. The rights to
indemnification provided for herein shall not be deemed exclusive of any other
rights to which any director, officer, employee or agent of the Corporation may
be entitled under these by-laws, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 7-2. Advances. Expenses incurred by any officer or director in
defending a civil or criminal action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors in the specific case upon
receipt of an undertaking, by or on behalf of such Director or officer, to
repay such amount unless it shall ultimately be determined that he is entitled
to be indemnified by the Corporation as authorized by law. Such expenses
incurred by other employees and agents may be paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
<PAGE> 14
Section 7-3. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a Director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under law.
ARTICLE VIII - SEAL
The form of the seal of the Corporation, called the corporate seal
[Form of Seal] of the Corporation, shall be as impressed adjacent hereto.
ARTICLE IX - FISCAL YEAR
The Board of Directors shall have the power by resolution to fix the
fiscal year of the Corporation. If the Board of Directors shall fail to do so,
the President shall fix the fiscal year.
ARTICLE X - AMENDMENTS
The original or other by-laws may be adopted, amended or repealed by
the stockholders entitled to vote thereon at any regular or special meeting or,
if the Certificate of Incorporation so provides, by the Board of Directors. The
fact that such power has been so conferred upon the Board of Directors shall
not divert the stockholders of the power nor limit their power to adopt, amend
or repeal by-laws.
ARTICLE XI - INTERPRETATION OF BY-LAWS
All words, terms and provisions of these by-laws shall be interpreted
and defined by and in accordance with the General Corporation Law of the State
of Delaware, as amended, and as amended from time to time hereafter.
<PAGE> 1
Exhibit 3.2
ADVANTA BUSINESS SERVICES CORP.
ACTION BY UNANIMOUS CONSENT IN WRITING
OF THE BOARD OF DIRECTORS
DATED AS OF OCTOBER 1, 1997
The undersigned, constituting all the members of the Board of Directors
of Advanta Business Services Corp. (the "Corporation"), by unanimous consent in
writing, without the formality of convening a meeting, do hereby consent to the
following actions, namely the adoption of the following resolutions:
AUTHORIZATION FOR FILING OF A SHELF REGISTRATION AND
FOR THE SALE OF EQUIPMENT LEASING ASSET BACKED
SECURITIES USING A MASTER FINANCING FACILITY
WHEREAS, the Corporation's long-term strategic plans includes the periodic
securitization of equipment leases and loans;
WHEREAS on May 1, 1997, the Corporation created a Master Business Receivables
Asset-Backed Financing Facility (the "Master Financing Facility") authorized to
issue series of asset backed notes or certificates;
WHEREAS, it is in the Corporation's best interest to issue notes or certificates
representing an undivided interest in the Master Financing Facility and thus,
create a new series (each such series, a "Series");
WHEREAS, the Securities and Exchange Commission (the "SEC") has adopted
amendments to the rules promulgated pursuant to the Securities Act of 1933 (the
"Act"), which amendments permit the use of Form S-3 to register investment grade
asset backed securities and permit the registration of investment grade asset
backed securities under Rule 415 of the Act pursuant to which securities can be
offered on a delayed or a continuous basis; and
WHEREAS, the Corporation deems it desirable to file a shelf registration
statement (the "Shelf Registration") to establish up to $1 billion to be the
initial face amount of securities
<PAGE> 2
eligible to be offered and sold from the Master Financing Facility in offerings
registered under the Act;
WHEREAS, the Corporation deems it desirable to file an S-1 Registration in the
amount of up to $500 million of securities eligible to be offered and sold in an
offering registered under the Act from the Master Financing Facility if the SEC
does not approve the Corporation's S-3 Registration for whatever reason;
WHEREAS, the Corporation deems it desirable, at the present time, to effect the
securitization of up to $500 million of equipment lease receivables with certain
of the securities to be offered in a public transaction to be offered and sold
under the Shelf Registration or S-1 Registration, and certain subordinate
classes of the securities to be offered and sold in a transaction which is
expected to be exempt from registration with the Securities and Exchange
Commission (together, the "Transaction");
NOW, THEREFORE, BE IT AND IT IS HEREBY RESOLVED AS FOLLOWS:
That any Senior Vice President, Vice President, Chief Financial Officer, the
Secretary or any Assistant Secretary (individually a "Designated Officer" or
collectively, the "Designated Officers") of the Corporation are hereby
authorized and empowered (either alone or in conjunction with any one or more of
the other Designated Officers of the Corporation)to negotiate, execute and
deliver, for and in the name of the Corporation, agreements relating to filing
of the Shelf Registration or S-1 Registration or any other requested or required
documentation for the Transaction, which may include but is not limited to:
(1) the Shelf Registration or S-1 Registration;
(2) a form of prospectus and the prospectus supplement included in the Shelf
Registration or S-1 Registration; and
(3) any exhibit required to be included in the Shelf Registration or S-1
Registration pursuant to the rules and regulations of the SEC,
(4) the transfer and assignment to the Master Financing Facility of
equipment lease receivables and related assets necessary or convenient
for the completion of the Transaction;
<PAGE> 3
(5) a supplement to the Master Financing Facility, which stipulates the
terms and conditions of the Transaction (the "Supplement") to be entered
into with the Trustee;
(6) an agreement for the provision of a letter of credit, cash collateral
account, insurance wrap, or other form of credit enhancement, or a
collateral/loan agreement related to the private placement of a
subordinate interest in the Master Financing Facility (any such device,
an "Enhancement") to support the Transaction, as may be deemed necessary
and approved by any Designated Officer (the "Enhancement Agreement") ;
(7) the establishment of a reimbursement account or other account for the
benefit of the provider of Enhancement;
(8) an underwriting agreement or agreements entered into with such
underwriter(s) as the Corporation may engage; and
(9) a depository agreement entered into with The Depository Trust Company as
depository for the Transaction;
such documents, where applicable, to be similar in the forms to previous
Commercial Paper Conduit Transactions, and with such modifications as may be
deemed necessary or appropriate to reflect the specific needs of the Corporation
as determined by any of the following; Charles Podowski, Chairman of the Board,
Michael Rehling, Senior Vice President, Cole Silver, Senior Vice President and
Secretary, Edward Millman, Senior Vice President and Chief Financial Officer or
Michael Coco, Vice President, the Designated Officers, such determination and
approval to be conclusively evidenced by the execution of any such agreement by
any Designated Officer.
RESOLVED, that the Board hereby adopts the form of resolution required under any
applicable Blue Sky or securities law to be adopted in connection with any
application for registration or qualification (or exemption therefrom) of any
securities to be sold in connection with the Shelf Registration or S-1
Registration, and the Transaction, or any consent to service of process or other
requisite paper or document required to be filed in connection therewith, if (1)
in the opinion of any of the Designated Officers the adoption of such resolution
is necessary or advisable, and (2) the Secretary of the Corporation evidences
<PAGE> 4
such adoption by inserting in the minutes a copy of such resolution which will
thereupon be deemed to be adopted by the Board with the same force and effect as
if specifically presented to a duly called meeting of the Board.
RESOLVED, that each of the Designated Officers, acting individually, is hereby
authorized to execute any security or collateral interest to be issued pursuant
to a Supplement.
RESOLVED, that the Board hereby authorizes the proper officers of the
Corporation, including but not limited to the Designated Officers, to deliver to
one or more of the nationally recognized statistical rating organizations such
information, certificates or other documents as any of such officers may deem
necessary or appropriate in order to obtain the highest investment grade long
term certificate rating for the most senior class of certificates for the Series
issued in connection with the Transaction.
RESOLVED, that the appropriate officers are hereby authorized to establish such
collection accounts, distribution accounts, cash collateral accounts,
reimbursement accounts, and such other series accounts as may be desirable, at
the Trustee or other eligible institution, for the Master Financing Facility and
for the Series issued in connection with the Transaction.
RESOLVED, that any Designated Officer is hereby authorized to approve the
interest rate on any class of certificates for the Series issued in connection
with the Transaction.
RESOLVED, that any Designated Officer is hereby authorized to approve the
purchase price for any class of certificates for the Series issued in connection
with the Transaction.
RESOLVED, that the officers of the Corporation be, and each of them hereby is,
authorized and directed to cause the Corporation to pay any and all expenses and
fees arising in connection with the filing of the Shelf Registration or the S-1
Registration as applicable, the amendment of the Master Financing Facility, if
necessary, and the Transaction contemplated by the foregoing resolutions.
RESOLVED, that the Board hereby authorizes any Designated Officer to retain such
financial printer, accounting firm or firms, law firm or firms as such officer
deems appropriate to represent the Corporation and/or to serve as special tax
counsel to the
<PAGE> 5
Corporation in connection with the Corporation's participation in the filing of
the Shelf Registration or the S-1 Registration as applicable, the amendment of
the Master Financing Facility, as necessary, and the execution of the
Transaction contemplated by the Supplement.
RESOLVED, that the appropriate officers are hereby authorized to file with the
SEC a preliminary prospectus and prospectus supplement and any supplements
thereto and a final prospectus and prospectus supplement and any supplements
thereto describing the Transaction and the Corporation's equipment leasing and
financing activities and equipment leasing receivables, to be used in connection
with the offer and sale of the Series related to the Transaction and such
prospectuses and prospectus supplements are hereby approved in the form and
containing such matters as may be approved by any of the Designated Officers,
acting individually.
RESOLVED, that the Designated Officers, and such other officers or assistant
officers of the Corporation as may be designated by the Designated Officers, are
hereby authorized and directed to take all such further actions, including but
not limited to the delivery of certificates or other documents, as any of such
officers may deem necessary or appropriate in order to consummate the
transactions contemplated by, or to perform any of the Association's obligations
under, any agreement or document called for or contemplated by any of the
foregoing resolutions.
/s/ Dennis Alter /s/ Alex W. Hart
- ------------------------------- -------------------------------
Dennis Alter Alex W. Hart
/s/ David D. Wesselink /s/ Charles H. Podowski
- ------------------------------- -------------------------------
David D. Wesselink Charles H. Podowski
<PAGE> 1
Exhibit 4.1
================================================================================
MASTER BUSINESS RECEIVABLES
ASSET-BACKED FINANCING FACILITY AGREEMENT
by and among
ADVANTA BUSINESS SERVICES CORP.,
as the Servicer,
ADVANTA LEASING RECEIVABLES CORP. III,
as the Obligors' Agent,
and
THE CHASE MANHATTAN BANK,
as Trustee
Dated as of May 1, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Acts of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 1.03. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 1.04. Alternate Payment and Notice Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 1.05. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 1.06. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 1.07. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 1.08. Benefits of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 1.09. Allocation of Series to Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 1.10 Status of Obligors' Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE II REPRESENTATIONS, WARRANTIES AND OVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.01. Representations, Warranties and Covenants of Obligors . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.02. Representations, Warranties and Covenants of Servicer . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE III PLEDGING THE TRUST ESTATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.01. Series Trust Estates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.02. Preservation of Series Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.03. Waiver of Stay or Extension Laws; Marshalling of Assets . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.04. Noninterference, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.05. Obligor Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.06. Limited Recourse to Obligors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.07. Authorization of Actions to be Taken by the Trustee . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.08. Termination of Security Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.09. Filing; Maintenance of Contract Files . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.10. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE IV NOTE FORMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.01. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.02. Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.03. Securities Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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ARTICLE V THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.01. Amount Limited; Issuable in Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.02. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.03. Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.04. Registration, Registration of Transfer and Exchange, Transfer Restrictions . . . . . . . . . . . . 34
Section 5.05. Mutilated, Destroyed, Lost and Stolen Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.06. Final Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.07. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.08. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.09. Book-Entry Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.10. Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 5.11. Definitive Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VI ADMINISTRATION AND SERVICING OF THE TRUST ESTATE . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.01. Retention of Servicer; Responsibilities of Servicer . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.02. Standard of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.03. Credit and Collection Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.04. Maintenance of Interest in the Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.05. Servicing Compensation; Payment of Certain Expenses by Servicer . . . . . . . . . . . . . . . . . . 42
Section 6.06. Servicer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.07. Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.08. Financial Statements and Independent Accountant's Servicing Certificate Review . . . . . . . . . . 43
Section 6.09. Access to Certain Documentation and Information Regarding the Pledged Property . . . . . . . . . . 44
Section 6.10. Other Necessary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.11. Release of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.12. Removal Related to Upgrades or Trade-Ins, Delinquent Contracts and Ineligibility . . . . . . . . . 46
Section 6.13. Notification to Noteholders of Defaults and Events of Default . . . . . . . . . . . . . . . . . . . 47
Section 6.14. Security Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.15. Removal of Nonconforming Pledged Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VII ACCOUNTS AND ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.01. Establishment of the Master Facility Account; Establishment of the Advance Payment Account . . . . 48
Section 7.02. Collections and Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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Section 7.03. Investment of Funds in the Master Facility Account and the Advance Payment Account . . . . . . . . 49
ARTICLE VIII THE SERVICER AND THE OBLIGORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.01. Liability of Servicer; Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.02. Merger, Consolidation, or Assumption of the Obligations of Servicer . . . . . . . . . . . . . . . . 51
Section 8.03. Limitation on Liability of Servicer and Others . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.04. Servicer Not to Resign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 8.05. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 8.06. Indemnities of the Obligors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 8.07. Limitation on Liability of the Obligors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE IX SERVICER TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.01. Events of Servicer Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.02. Trustee to Act; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 9.03. Notification to Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.04. Waiver of Past Events of Servicer Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.05. Effects of Termination of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE X EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.02. Collection of Indebtedness and Suits for Enforcement by Trustee; Authority of Controlling Party . 57
Section 10.03. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 10.04. Unconditional Right of Holders to Receive Principal and Interest . . . . . . . . . . . . . . . . . 60
Section 10.05. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 10.06. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.07. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.08. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.09. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.10. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 10.11. Action on Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE XI THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 11.01. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 11.02. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 11.03. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
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Section 11.04. Not Responsible for Recitals or Issuance of Notes . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 11.05. May Hold Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 11.06. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 11.07. Disqualification; Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 11.08. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 11.09. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 11.10. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 11.11. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . . . 69
Section 11.12. Preferential Collection of Claims Against Obligors . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 11.13. Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 11.14. Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 11.15. Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE XII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND OBLIGORS' AGENT . . . . . . . . . . . . . . . . . . . . . 73
Section 12.01. Obligors' Agent to Furnish Trustee Names and Addresses of Holders . . . . . . . . . . . . . . . . 73
Section 12.02. Preservation of Information; Communications to Holders . . . . . . . . . . . . . . . . . . . . . . 74
Section 12.03. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 12.04. Reports by Obligors' Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE XIII MASTER AGREEMENT SUPPLEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 13.01. Supplements Affecting All Series, or the Master Agreement Generally . . . . . . . . . . . . . . . 76
Section 13.02. Supplements Authorizing a Series of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 13.03. Execution of Master Agreement Supplements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 13.04. Effect of Master Agreement Supplements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 13.05. Reference in Notes to Master Agreement Supplements . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE XIV COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 14.01. Payment of Principal and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 14.02. Maintenance of Non-U.S. Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 14.03. Consolidation, Merger, Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 14.04. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 14.05. Performance of Obligations; Servicing of each Series Trust Estate . . . . . . . . . . . . . . . . 83
Section 14.06. Money for Note Payments to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 14.07. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
</TABLE>
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<TABLE>
<CAPTION>
Page
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<S> <C>
Section 14.08. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 14.09. Amendment of Organizational Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 14.10. Rule 144A Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 14.11. Further Instruments and Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 14.12. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 14.13. Income Tax Characterization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
ARTICLE XV MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 15.01. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 15.02. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 15.03. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 15.04. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 15.05. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 15.06. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 15.07. Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 15.08. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 15.09. Nonpetition Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Form of Pledge Notice
</TABLE>
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<PAGE> 7
This MASTER BUSINESS RECEIVABLES ASSET-BACKED FINANCING
FACILITY AGREEMENT, dated as of May 1, 1997, with respect to the Advanta
Leasing Receivables Master Facility, by and among Advanta Business Services
Corp., a Delaware corporation, as Servicer, Advanta Leasing Receivables Corp.
III, a Nevada corporation, as the Obligors' Agent, and The Chase Manhattan
Bank, a New York banking corporation, as Trustee.
WITNESSETH:
In consideration of the mutual agreements herein contained,
and of other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this
Agreement, the following words and phrases shall have the following meanings:
(i) the terms defined in this Article have the
meanings assigned to them in this Article and include the plural as
well as the singular;
(ii) all other terms used herein which are defined
in the Trust Master Agreement Act (as hereinafter defined), either
directly or by reference therein, have the meanings assigned to them
therein;
(iii) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with generally
accepted accounting principles, and, except as otherwise herein
expressly provided, the term "generally accepted accounting
principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally
accepted at the date of such computation; and
(iv) the words "therein," "hereof" and "hereunder"
and other words of similar import refer to this Master Agreement as a
whole and not to any particular Article, Section or other subdivision,
"or" is not exclusive and "including" means including without
limitation.
Act. When used with respect to any Holder, has the meaning
specified in Section 1.02.
Actuarial Method. The method of allocating a Scheduled
Payment with respect to any Contract between principal and interest, pursuant
to which the portion of
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<PAGE> 8
such payment that is allocated to interest is the product of (a) the Payment
Interval Adjusted Applicable Discount Rate with respect to such Contract
multiplied by (b) the applicable Contract Principal Balance (before giving
effect to such principal payment).
Advance Payment. Means, with respect to any Contract, any
Scheduled Payment or a portion thereof made by or on behalf of a User which
does not become due until a subsequent Collection Period. Advance Payments
shall be applied as "Collections" with respect to the Collection Period(s) to
which such Advance Payment relates.
Advance Payment Account. Has the meaning ascribed in Section
7.01(c).
Adverse Claim. Means a lien, security interest, charge or
encumbrance, or other right or claim in, of or on any Person's assets or
properties in favor of any other Person.
Affiliate. With respect to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control," when used with respect to any specified Person, means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
Agreement or Master Agreement. This Master Business
Receivables Asset-Backed Financing Facility Agreement, as the same may be
amended, restated or otherwise modified from time to time.
Applicable Discount Rate. With respect to any Contract shall
have the meaning set forth in the related Series Supplement.
Authenticating Agent. Means any Person authorized by the
Trustee to act on behalf of the Trustee to authenticate Notes.
Authorized Officer. Means, with respect to any Obligor or the
Obligors' Agent, any President, Vice President or Director of Securitization of
such Obligor or of the Obligors' Agent.
Bearer Notes. Shall have the meaning specified in Section
4.01.
Book-Entry Notes. Shall mean Notes registered in the name of
a Clearing Agency or its nominee as described in Section 5.09.
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<PAGE> 9
Booked Residual. Means, with respect to any Contract on any
date of determination, the residual value of the Equipment subject to such
Contract, as reflected in Advanta Business Services Corp.'s servicing system.
Broker. The Person (including any broker, vendor or other
Person, but excluding the Contributor) that originally leases an item of
Equipment to a User pursuant to a Contract between the Contributor and the User
of such Equipment, or any Person from whom the Contributor purchased a Contract
in respect of which the Contributor is not a party.
Broker Agreement. Any agreement between the Contributor and a
Broker pursuant to which the Contributor has acquired Contracts.
Business Day. Any day other than a Saturday, a Sunday or a
day on which banking institutions in New York, New York, Philadelphia,
Pennsylvania, Voorhees, New Jersey or Reno, Nevada are authorized or obligated
by law, executive order or governmental decree to be closed.
Calculation Date. The last day of a Collection Period.
Amounts calculated from Calculation Date balances shall be calculated from such
balances as of the close of business on the Calculation Date.
CEDEL. Shall mean Centrale de Livraison de Valeurs Mobilieres
S.A.
Charged-Off Contract. Means a Contract (i) all or any portion
of which has been or should have been, in accordance with the Credit and
Collection Policy, written off the related Obligor's books as uncollectible, or
(ii) as to which any payment, or part thereof, remains unpaid for 121 days or
more from the original due date for such payment.
Class. With respect to any Series, all the Notes of such
Series having the same specified payment terms and priorities in payment.
Clearing Agency. Shall mean The Depository Trust Company, or
any other organization registered as a "clearing agency" pursuant to Section
17A of the Securities Exchange Act of 1934, as amended.
Clearing Agency Participant. Shall mean a broker, dealer,
bank, other financial institution or other Person for whom from time to time a
Clearing Agency effects book entry transfers and pledges of securities
deposited with the Clearing Agency.
Code. Means the Internal Revenue Code of 1986, as amended
from time to time, and Treasury Regulations promulgated thereunder.
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<PAGE> 10
Collection Period. With respect to any Settlement Date, the
immediately preceding calendar month; provided, that if, with respect to any
Contract, the Cut-Off Date applicable thereto is a day other than the first day
of a calendar month, then the initial Collection Period with respect to such
Contract shall be the period commencing on such Cut-Off Date and ending at the
end of the calendar month in which such Cut-Off Date occurs.
Collections. With respect to a Series Trust Estate and any
Collection Period, all cash collections and other cash proceeds of the
Contracts and the Related Security, including without limitation, Scheduled
Payments, Prepayments, Offset Amounts, Residual Receipts, Prepayment Amounts,
Recoveries, Investment Earnings, and Insurance Proceeds received by the
Servicer, the Trustee, the Contributor or the Obligors, in each case, during
such Collection Period (or, if the related Cut-Off Date is later than the first
day of such Collection Period, from such Cut-Off Date through the end of such
Collection Period); provided, that "Collections" shall not include (i) Advance
Payments until (and only to the extent that) such amounts are required to be
deposited in the applicable Series Account for distribution to the related
Noteholders in accordance with Section 7.02(a), and (ii) Servicing Charges; and
provided, further, that any amounts paid under any Series Support in reduction
of the principal amount of any Note, any interest thereon or any other amount
in connection therewith shall not constitute Collections.
Commission. Means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, as amended, or, if at anytime after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
Companion Series. Shall mean (i) each Series which has been
paired with one or more other Series (which Series may be prefunded or
partially prefunded), such that the reduction of the Outstanding Amount of such
Series results in the increase of the Outstanding Amount of such other Series,
as described in the related Series Supplements, and (ii) such other Series.
Computer Tape. Collectively, the computer tapes generated by
the Contributor which provide information relating to the Contracts and which
were, or will be, used by the Contributor in selecting the Contracts
contributed to the Obligors pursuant to a Contribution Agreement Supplement.
Contract. Each of the agreements conveyed by the Contributor
to an Obligor pursuant to the Contribution Agreement and subsequently pledged
by such Obligor to the Trustee pursuant hereto, including, as applicable,
schedules, supplements and amendments thereto, pursuant to which the applicable
originator thereof leases specified Equipment to, or makes loans to, a User and
which are identified on the List of Contracts delivered on the related Pledge
Date.
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<PAGE> 11
Contract Balance Remaining. Means, with respect to any
Contract, as of any date, the aggregate (un-discounted) amount of all unpaid
Scheduled Payments due under such Contract.
Contract File. With respect to each Contract, the following
documents:
(i) The executed original counterparts of the Contract
that constitutes "chattel paper" for purposes of Sections 9-105(1)(b)
and 9-305 of the UCC;
(ii) A copy of any related Broker Agreement;
(iii) Copies of all documents (which may be in
micro-fiche form or on the Servicer's computerized information
system), if any, that the Contributor or the Servicer keeps on file
for benefit of the Contributor in accordance with the Contributor's or
Servicer's customary procedures indicating that the Equipment is owned
by the Contributor and copies of any and all other material documents
that the Contributor or the Servicer keeps on file for the benefit of
the Contributor in accordance with the Contributor's or Servicer's
customary procedures relating to any individual Contract, Broker, User
or Equipment (including, without limitation, any documents providing
or relating to any credit support of or for the User of such
Contract); and
(iv) Copies (together with all amendments, assignments,
and continuations thereof and including evidence of filing with the
appropriate office) of all UCC financing statements filed with respect
to the Contracts, identifying the User as debtor and the Contributor
as secured party, if any.
Contract Principal. With respect to any Contract for any
Collection Period, an amount equal to the excess of (i) the Scheduled Payment
due on such Contract during such Collection Period over (ii) the product of (x)
the Contract Principal Balance as of the opening of business on the first day
of such Collection Period and (y) one-twelfth of the Applicable Discount Rate
or Payment Interval Adjusted Discount Rate, as applicable.
Contract Principal Balance. As of any date in the case of a
Contract, the present value of the Scheduled Payments to become due on and
after the date of calculation (excluding all Scheduled Payments due on or prior
to, but not received as of such date of calculation), discounted monthly at
1/12 of the Applicable Discount Rate.
Contribution Agreement. That certain Master Contribution
Agreement dated as of May 1, 1997 by and between the Contributor and the
Obligors' Agent.
Contribution Agreement Supplement. Means each Contribution
Agreement Supplement executed and delivered pursuant to the Contribution
Agreement.
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<PAGE> 12
Contributor. Advanta Business Services Corp., a Delaware
corporation, in its capacity as the Contributor under the Contribution
Agreement.
Corporate Trust Office. 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 this Agreement is specified in
Section 15.03 hereof.
Coupons. Any interest or other coupons attached to a Note.
Credit and Collection Policy. The credit and collection
policies and practices of the Contributor, as the same may be modified from
time to time in accordance with the terms of this Agreement.
Crossover Amounts. Any amounts designated as "Crossover
Amounts" in a Series Supplement.
Cut-Off Date. With respect to any Contract, the "Cut-Off
Date" as set forth in the related Pledge Notice.
Default. Means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
Definitive Notes. Has the meaning specified in Section 5.09
hereof.
Delinquent Contract. A Contract as to which any payment, or
part thereof, remains unpaid for more than 60 days from the original due date
for such payment.
Depositaries. Shall mean the Person(s), if any, 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. Shall mean, if applicable with respect
to any Series or Tranche, the agreement among the Obligors' Agent, the Trustee
and a Clearing Agency, or as otherwise provided in the related Series
Supplement.
Determination Date. With respect to a Collection Period, the
date which is the tenth day of the calendar month immediately succeeding the
month in which such Collection Period ends, or if such day is not a Business
Day, the immediately preceding Business Day; provided, however, that in no
event shall such Determination Date be later than three Business Days prior to
the Settlement Date relating to such Collection Period.
Dollars or $. The lawful money of the United States.
6
<PAGE> 13
Eligible Investments. Any of the following:
(a) marketable obligations of the United States of
America which are backed by the full faith and credit of the United
States of America;
(b) marketable obligations directly and fully guaranteed
by the full faith and credit of the United States of America;
(c) bankers' acceptances and certificates of deposit and
other interest-bearing obligations denominated in Dollars and issued
by any bank with capital, surplus and undivided profits aggregating at
least $100,000,000, the short-term securities of which are rated "A-1"
by S&P and "P-1" by Moody's;
(d) repurchase obligations for underlying securities of
the types described in clauses (a), (b) and (c) above entered into
with any bank of the type described in clause (c) above;
(e) commercial paper rated at least "A-1" by S&P and
"P-1" by Moody's;
(f) freely redeemable shares in money market funds
(including funds for which the Trustee, any Noteholder or any
affiliates of either of the foregoing may act as sponsor or advisor or
for which any of the foregoing Persons may receive fee income) which
invest solely in obligations, bankers' acceptances, certificates of
deposit, repurchase agreements and commercial paper of the types
described in clauses (a) through (e), bankers' acceptances,
certificates of deposit, repurchase agreements or commercial paper set
forth in such clauses, which money market funds are rated at least
"AAm" or "AAm-g" by S&P and "Aa1" by Moody's; and
(g) 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 any foreign bank) and subject to supervision and
examination by federal or state banking or depository institution
authorities; provided that at the time such investment, or the
commitment to make such investment, is entered into, the short-term
debt rating of such depository institution or trust company shall be
at least "A-1" by S&P and "P-1" by Moody's.
Notwithstanding anything set forth in clauses (a)-(g) above,
any Eligible Investment must mature no later than the Business Day prior to the
next Settlement Date.
Eligible Contract. With respect to any Series, as defined in
the related Series Supplement.
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<PAGE> 14
Equipment. The equipment leased to a User pursuant to any
Contract.
Euroclear Operator. Shall mean Morgan Guaranty Trust Company
of New York, Brussels office, as operator of the Euroclear System.
Event of Default. Has the meaning specified in Section 10.01.
Event of Servicer Termination. An Event described in Section
9.01 hereof.
Exchange Act. Means the Securities Exchange Act of 1934, as
amended.
Final Date. With respect to any Series, the date on which all
amounts due to the related Series Secured Parties have been indefeasibly paid
in full.
Foreign Clearing Agency. Shall mean CEDEL and the Euroclear
Operator.
Governmental Authority. The United States of America, any
State or other political subdivision of either of the foregoing and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
Group. Shall mean, with respect to any Series, the group of
Series, if any, in which the related Series Supplement specifies such Series is
to be included.
Holder or Noteholder. Shall mean, with respect to a
Book-Entry Note, the Person who is the owner of such Book-Entry Note, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly or as an indirect
participant, in accordance with the rules of such Clearing Agency).
Increased Servicer Fee. Shall have the meaning ascribed to
such term in Section 9.02 hereof.
Increased Servicer Fee Differential. Shall have the meaning
ascribed to such term in Section 9.02 hereof.
Indebtedness. Means, with respect to any Person at any time,
(a) indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (excluding trade obligations and accrued
expenses incurred in the ordinary course of business); (b) obligations of such
Person as lessee under leases which should have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases; (c) current liabilities of such Person in respect of unfunded vested
benefits under plans covered by Title IV of ERISA; (d) obligations
8
<PAGE> 15
issued for or liabilities incurred on the account of such Person; (e)
obligations or liabilities of such Person arising under acceptance facilities,
including obligations of such Person under any guarantees, endorsements (other
than for collection or deposit in the ordinary course of business) and other
contingent obligations to purchase, to provide funds for payment, to supply
funds to invest in any Person or otherwise to assure a creditor against loss;
(f) obligations of such Person secured by any lien on property or assets of
such Person, whether or not the obligations have been assumed by such Person;
or (b) obligations of such Person under any interest rate or currency exchange
agreement.
Indemnified Amounts. Has the meaning set forth in Section
8.01(b) hereof.
Indemnified Party. Has the meaning set forth in Section
8.01(b) hereof.
Independent Accountant. A firm of nationally recognized
independent certified public accountants with respect to Advanta Leasing
Holding Corp., Advanta Corp. and/or the Servicer (if other than Advanta
Business Services Corp.), as applicable, within the meaning of the Securities
Act.
Initial Unpaid Amounts. Shall mean with respect to a
Contract, the excess of the aggregate amount of all Scheduled Payments due
prior to the related Cut-Off Date over the aggregate of all Scheduled Payments
made prior to the related Cut-Off Date with respect to such Contract or Loan.
Insolvency Event. Means, with respect to a specified Person,
either of the following events:
(i) the filing of a decree or order for relief by a
court having jurisdiction in the premises in respect of such Person or
any substantial part of such Person's assets in an involuntary case
under any applicable Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of such Person or for any substantial part of such Person's
assets, or ordering the winding-up or liquidation of such Person's
affairs, and such decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or
(ii) the commencement by such Person of a voluntary
case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by such
Person to the entry of an order for relief in an involuntary case
under any such law, or the consent by such Person to the appointment
or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of such Person for any
substantial part of such Person's assets, or the making by such Person
of any general assignment for the benefit of creditors, or the failure
by such Person
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<PAGE> 16
generally to pay its debts as such debts become due, or the taking of
action by such Person in furtherance of any of the foregoing.
Insurance Policy. With respect to an item of Equipment and
the related Contract, any insurance policy or similar agreement required to be
maintained by the User pursuant to such Contract that covers physical damage to
the Equipment (including policies procured by the Contributor or the Servicer
on behalf of the User) or covering any liabilities arising from the Equipment
or the use thereof by the User.
Insurance Proceeds. With respect to an item of Equipment and
the related Contract, any amount received during a Collection Period pursuant
to an Insurance Policy issued with respect to such Equipment and the related
Contract.
Investment Earnings. Any income earned from the investment of
funds from time to time on deposit in the Master Facility Account, the Advance
Payment Account or any Series Account in accordance with Section 7.03 and the
Series Supplements, net of any investment expenses and losses on any such
investments.
Lien. Any security interest, mortgage, deed of trust, lien
(statutory or otherwise), charge, pledge, equity, hypothecation, assignment,
deposit arrangement, encumbrance, preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, 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.
List of Contracts. With respect to any specified group of
Contracts, a printed or electronic list of such Contracts, certified by an
Authorized Officer or the Obligors' Agent. Each List of Contracts shall
include for each Contract listed thereon (a) a number identifying such
Contract, (b) the Contract Principal Balance, (c) the User, (d) the State in
which the User's billing address is located, (e) the scheduled maturity date of
the Contract, (f) the Scheduled Payment amount for such Contract, (g) the
stated amount of the Booked Residual, if any, on such Contract, and (h) the
Applicable Discount Rate or the Payment Interval Adjusted Applicable Discount
Rate, if applicable.
Majority Control Parties. Shall mean those Series Controlling
Parties for the outstanding Series, the Outstanding Amounts of which represent,
in the aggregate, 66-2/3% or more of the aggregate Outstanding Amounts for all
outstanding Series.
Master Facility Account. Shall have the meaning ascribed in
Section 7.01(a).
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<PAGE> 17
Maturity Date. When used with respect to any Note, means the
date on which the principal of such Note or an installment of principal becomes
due and payable as therein or herein provided, whether on the final scheduled
Settlement Date or by declaration of acceleration, prepayment or otherwise.
Moody's. Moody's Investors Service, Inc.
Municipal Contract. Means a Contract of Equipment under which
the User is a state or local government or government agency.
Non-Monthly Payment Contracts. Means any Contract that does
not require the User to make monthly payments.
Note Register and Note Registrar. Have the respective
meanings specified in Section 5.04.
Noteholders' Agent. Means any Person designated by one or
more Noteholders to be their "agent".
Notes. Any Note authenticated and delivered under this Master
Agreement.
Obligors. Means each Person designated as an "Obligor" in a
Series Supplement with respect to the related Series of Notes, or any successor
thereto.
Obligor's Agent. Advanta Leasing Receivables Corp. III.
Obligors' Order or Obligors' Request. Means a written request
or order signed by an Authorized Officer of the Obligors' Agent and delivered
to the Trustee.
Officer's Certificate. Means a certificate signed by an
Authorized Officer of an Obligor or the Obligors' Agent.
Offset Amount. The meaning ascribed to such term in Section
6.14 hereof.
Opinion of Counsel. A written opinion of counsel, who may be
counsel employed by the Servicer or other counsel, in each case acceptable to
the named recipient thereof.
Organizational Documents. With respect to any Obligor, such
Obligor's articles of incorporation, by-laws, partnership agreement, trust
agreement, limited liability company agreement, or other charter-type governing
instrument.
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Original Issue Date. Means, for any Series, Class or Tranche
of Notes, the date of original issue of such Series, Class or Tranche of Notes,
as specified in the related Supplement.
Original Servicer Fee Rate. With respect to any Series, the
rate at which the Servicing Fee is calculated, as specified on the related
Series Supplement.
Outstanding. When used with respect to Notes, means, as of
the date of determination, all Notes theretofore authenticated and delivered
under this Master Agreement except,
(i) Notes theretofore cancelled by the Note Registrar
or delivered to the Note Registrar for cancellation; and
(ii) Notes for whose payment or prepayment money in the
necessary amount has been theretofore deposited with the Trustee or
any Paying Agent for the Holders of such Notes; and
(iii) Lost, destroyed or stolen notes in lieu of which
other Notes have been authenticated and delivered pursuant to Section
5.05 hereof, other than any such Notes in respect of which there shall
have been presented to the Trustee proof satisfactory to it that such
Notes are held by a bona fide purchaser in whose hands such Notes are
valid obligations of the Obligors;
provided, however, that any Notes which have been paid with proceeds of the
related Series Support shall continue to remain Outstanding for purposes of
this Master Agreement until the related Series Support Provider has been paid
as subrogee hereunder or reimbursed as evidenced by a written notice from the
related Series Support Provider delivered to the Trustee, and the related
Series Support Provider shall be deemed to be the Holder thereof to the extent
of any payments thereon made by the related Series Support Provider; provided,
further, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or under any
related document, Notes owned by the Obligors or any other obligor upon the
Notes, the Contributor or any Affiliate of any of the foregoing shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Notes that
the Trustee knows to be so owned shall be so disregarded. Notes so owned that
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Notes and that the pledgee is not an Obligor, any other
obligor upon the Notes, the Contributor or any Affiliate of any Obligor or of
any of the foregoing Persons.
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Outstanding Amount. Means, with respect to any Series the
aggregate principal amount of all Notes of such Series which are Outstanding at
the date of determination after giving effect to all distributions of principal
on such date of determination.
Overdue Payment. Any Scheduled Payment due on a Contract and
not received during the Collection Period in which such Scheduled Payment was
due.
Paying Agent. Means the Paying Agent appointed pursuant to
Section 11.14 hereof.
Payment Interval. With respect to any Contract,
notwithstanding the number of actual periodic payments in any calendar year
(without regard to the actual duration of such Contract or whether such
payments are actually made with respect to such Contract), 12.
Payment Interval Adjusted Applicable Discount Rate. With
respect to any Contract, shall mean the Applicable Discount Rate of such
Contract multiplied by a fraction, the numerator of which is one and the
denominator of which is the Payment Interval of such Contract.
Person. Any legal person, including any individual,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, Governmental Authority or any other entity.
Pledge. Means each Pledge by the related Series Obligors of
all or any portion of the related Series Trust Estate to the Trustee for the
benefit of the related Noteholders in accordance with Section 3.01 hereof.
Pledge Date. Means each Business Day on which a Pledge
occurs.
Pledge Notice. A written notice pursuant to which the
Obligors with respect to a Series Pledge property to the Trustee as part of the
related Series Trust Estate. Each Pledge Notice shall be in substantially the
form of Exhibit A hereto.
Pledged Property. With respect to any Series Trust Estate,
the property described as Pledged Property in the related Series Supplement.
Predecessor Note. If any particular Note means every previous
Note evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 5.05 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Note.
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Prepayment. With respect to a Collection Period and a
Contract (except a Charged-Off Contract), the payment by the related User of
all remaining Scheduled Payments due on such Contract, including, without
limitation, by way of application of any Security Deposit for such Contract, so
long as such amount is designated by the User as a prepayment and the Servicer
has consented to such prepayment. Advance Payments and Residual Receipts are
not "Prepayments."
Prepayment Amount. Means, with respect to any Contract: (a)
the Contract Principal Balance of such Contract (without any deduction for any
security deposit paid by the related User, unless such security deposit has
been applied to the Contract Principal Balance pursuant to the Credit and
Collection Policy and deposited into the Master Facility Account as a
Collection) as of the date of reconveyance of such Contract to the related
Obligor by the Trustee, plus (b) the product of (i) the Contract Principal
Balance as of the date of reconveyance, and (ii) one-twelfth of the Applicable
Discount Rate plus (c) the Booked Residual for such Contract.
Principal Terms. Shall mean, with respect to any Series, (i)
the name or designation; (ii) the initial Outstanding Amount, the maximum
Outstanding Amount (or method for calculating such amounts); (iii) the interest
rate (or method for the determination thereof); (iv) the Settlement Date or
dates and the date or dates from which interest shall accrue; (v) the method
for allocating Collections to Noteholders 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 Support with respect thereto;
(ix) the Series Termination Date; (x) the number of Classes of Notes of such
Series and, if such Series consists of more than one Class, the rights and
priorities of each such Class; (xi) whether the Notes of such Series may be
issued as Bearer Certificates and any limitations imposed thereon; (xii) the
priority of such Series with respect to any other Series; (xiii) the Group, if
any, to which such Series belongs; (xiv) whether such Series is a Companion
Series to one or more other Series; and (xv) any other terms of such Series.
Proceeding. Means any suit in equity, action at law or other
judicial or administrative proceeding.
Property. Shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
Rating Agencies. S&P and Moody's.
Record Date. Means, with respect to any Series, as specified
in the related Series Supplement.
Records. Means, with respect to any Contract, all Contracts
and other documents, books, records and other information (including, without
limitation, Contract
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Files, computer programs, tapes, disks, punch cards, data processing software
and related property and rights) relating to such Contract, any Related
Security therefor and the related User.
Recoveries. Means all amounts received in respect of a
Charged-Off Contract, including, without limitation, amounts received in
connection with the sale or other disposition of the related Equipment,
Insurance Proceeds with respect to the related Equipment, or any other payments
made by or on behalf of the related User, including any amounts paid by the
Contributor relating to a Security Deposit, net of costs of collection, in
connection with such Charged-Off Contract.
Refinance Proceeds. Shall mean with respect to any Collection
Period, (i) any proceeds of the issuance of a new series of notes or the
issuance of certificates in connection with a securitization of leases and
loans, remitted by the Series Obligors to the Trustee on the Settlement Date
following such Collection Period for deposit into the related Series Account
and application in accordance with the related Series Supplement, and (ii) any
amounts remitted to the Trustee by the Series Obligors in accordance with the
related Series Supplement for deposit into the related Series Account and
application in accordance with the related Series Supplement.
Registered Holder. Means the Person in whose name a Note is
registered on the Note Register on the applicable Record Date.
Registered Notes. Has the meaning set forth in Section 4.01
hereof.
Related Security. With respect to any Contract, all of
Obligors's rights, title and interest in, to and under:
(i) the related Contribution Agreement Supplement
(including, without limitation, all rights, remedies, powers and
privileges thereunder), pursuant to which, among other things, the
Contract, the Contract Files and the related Equipment have been
contributed to such Obligors by the Contributor, and the Broker
Agreements, if any, relating to such Contracts;
(ii) such Obligors's interest in the related Equipment,
together with all security interests and/or liens and all property
subject thereto from time to time securing or purporting to secure
payment of such Contract, whether pursuant to such Contract or
otherwise, together with all UCC Financing Statements covering any
such property filed by or otherwise filed in favor of the Contributor
and/or such Obligors (and, in the case of those UCC financing
statements filed in favor of the Obligors, assigned to the Trustee);
(iii) all guarantees, letters of credit, indemnities,
warranties, insurance policies (including, without limitation, the
Insurance Policies), and proceeds and premium refunds thereof and
other agreements or arrangements of
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whatever character from time to time supporting or securing payment of
such Contract whether pursuant to the Contract or otherwise
(including, without limitation, the Security Deposits);
(iv) all of such Obligors's interest in the Equipment,
Residual Receipts and Recoveries related to such Contract, Contract
Files and other instruments, documents, agreements, Computer Tapes,
books, and records relating to such Contract; and
(v) all proceeds of the foregoing.
Release Events. Has the meaning ascribed in Section 6.11
hereof.
Requirements of Law. Any law, treaty, rule or regulation, or
final determination of an arbitrator or Governmental Authority, and, when used
with respect to any Person, the certificate of incorporation and by-laws or
other organizational or governing documents of such Person.
Residual Receipts. All Booked Residuals received by the
Servicer, proceeds of the sale of Equipment received by the Servicer in the
event the related User does not purchase the Equipment at the end of the
related Contract, any amounts collected by the Servicer as judgments against a
User or others related to the failure of such User to pay any required amounts
under the related Contract or to return the Equipment, including any amounts
paid by the Contributor relating to a Security Deposit, plus any amounts not
otherwise described above which are received by the Servicer and applied
against the Booked Residual of such Contract in accordance with the Servicer's
servicing standards in each case as reduced by any reasonably incurred
out-of-pocket expenses incurred by the Servicer in enforcing such Contract or
in liquidating such Equipment.
Responsible Officer. When used with respect to the Trustee,
any officer assigned to the corporate trust division (or any successor
thereto), including any Vice President, Second Vice President, Assistant Vice
President, Senior Trust Officer, Trust Officer, Authorized Signer, Assistant
Trust Officer, any Assistant Secretary, any trust officer or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and having direct responsibility for the
administration of this Agreement, 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.
Rule 144A Information. Has the meaning specified in Section
14.10 hereof.
S&P. Standard & Poor's Ratings Group.
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Scheduled Payments. With respect to a Settlement Date and a
Contract, the stated periodic rental payments (exclusive of any amounts in
respect of insurance or taxes) set forth in such Contract due from the User in
the related Collection Period.
Securities Act. The Securities Act of 1933, as amended, and
the applicable published rules and regulations thereunder.
Security Deposit. Any amount paid to the Contributor by a
User as a security deposit or as a payment in advance of any amounts to become
due on a Contract, which has not previously been refunded to such User or
applied toward such User's obligations under such Contract.
Series. With respect to any Notes means those Notes issued
pursuant to the same Supplement.
Series Accounts. Any deposit, trust, escrow, collateral,
reserve or similar account established and maintained by the Trustee for the
benefit of the Noteholders or any Series or Class as specified in any Series
Supplement.
Series Closing Date. With respect to any Series, the date
designated in the related Series Supplement as the closing date for such
Series.
Series Controlling Party. With respect to any Series on any
date the Person or Persons designated as such in the related Series Supplement.
Series Related Documents. With respect to a Series, has the
meaning specified therefor in the related Supplement.
Series Secured Obligations. Has the meaning specified
therefor in the related Series Supplement.
Series Secured Parties. Has the meaning specified therefor in
the related Series Supplement.
Series Supplement. With respect to any Series, a Series
Supplement to this Agreement, executed and delivered in connection with the
original issuance of the Notes of such Series, and all amendments thereof and
supplements thereto.
Series Support. The rights and benefits provided to the
Trustee or the Noteholders of any Series or Class pursuant to any letter of
credit, surety bond, cash collateral account, spread account, guaranteed rate
agreement, maturity liquidity facility, interest rate swap agreement, tax
protection agreement or other similar arrangement. The subordination of any
Series or Class to another Series or Class shall be deemed to be a Series
Support. Notwithstanding that such Series Support may be held by or in favor
of the Trustee for the benefit of any Series or Class, only those Series or
Classes
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to which such Series Support relates shall have any rights with respect thereto
and all payments thereunder received by the Trustee shall be distributed
exclusively as prescribed in the Series Supplement relating to such Series or
Class.
Series Support Provider. The Person providing any Series
Support, other than the Noteholders of any Series or Class which is
subordinated to another Class or Series.
Series Termination Date. Has the meaning ascribed in the
Series Supplement.
Series Trust Estate. With respect to a Series, has the
meaning specified therefor in the related Series Supplement.
Series Trustee Secured Obligations. With respect to a Series,
has the meaning specified therefor in the related Supplement.
Servicer. The Person performing the duties of the Servicer
hereunder, initially Advanta Business Services Corp.
Servicer Advance. With respect to any Series, any amount
which the Servicer is required to advance with respect to Overdue Payments, in
accordance with the related Series Supplement.
Servicer Fee. With respect to each Series, the fee payable to
the Servicer on each Settlement Date in consideration of the Servicer's
performance of its duties pursuant to Article VI with respect to the Series
Trust Estate related to such Series, payable as provided in the related Series
Supplement.
Servicer Termination Notice. The notice described in Section
9.01(a) hereof.
Servicer's Certificate. With respect to each Series Trust
Estate, a written informational statement, substantially in the form prescribed
by the related Series Supplement, to be provided by the Servicer in accordance
with the related Series Supplement and signed by a Servicing Officer and
furnished to the Trustee by the Servicer.
Servicing Charges. The sum of (i) any late payment charges
paid by a User on a delinquent Contract after application of any such charges
to amounts then due under such Contract and (ii) any other incidental charges
or fees received from a User, including (i) insurance premium payments and (ii)
prepayment charges paid by a User in connection with a Prepayment.
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Servicing Officer. Those officers of the Servicer involved
in, or responsible for, the administration and servicing of the Contracts, as
identified on the list of Servicing Officers furnished by the Servicer to the
Trustee and the Noteholders from time to time.
Settlement Date. With respect to a Series, has the meaning
specified therefor in the related Series Supplement.
State. Any state of the United States of America and, in
addition, its territories and possession and the District of Columbia.
Support Default. Means, with respect to a Series, those
events specified in the related Series Supplement.
Tranche. All the Notes of a Series (or of a Class within a
Series) having the same date of authentication.
Trust Indenture Act. Means the Trust Indenture Act of 1939,
as amended from time to time.
Trustee. Means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Master Agreement, and thereafter
"Trustee" shall mean or include the Person who is then the Trustee hereunder.
UCC. The Uniform Commercial Code as in effect in the
applicable jurisdiction.
Unregistered Note. Any Note which is not a Bearer Note and
which is part of a Series or Class of Notes which has been designated in the
related Series Supplement as being a Series or Class of Unregistered Notes.
User. Any obligor, under any Contract, whose obligations
thereunder constitute the principal source of payments under any Contract,
including any guarantor (excluding the Servicer) of such obligations.
Section 1.02. Acts of Holders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Master Agreement to be given or taken by the Holders of the related Notes
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by agents duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee and, where it is hereby expressly required, to the Obligors' Agent.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such
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instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Master Agreement and (subject to Section 11.01) conclusive in favor of the
Trustee and the Obligors, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved in any manner that the Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction,
notice, consent, waiver or other Act of the Holder of any Note shall bind every
future Holder of the same Note and the Holder of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Obligors' Agent or the Obligors in reliance thereon, whether or not notation of
such action is made upon such Note.
Section 1.03. Notice to Holders; Waiver. Where this Master
Agreement or any Series Supplement provides for notice to the Holders of the
related Notes of any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first class
postage prepaid, to each Holder affected by such event, at such Holder's
address as it appears in the Note Register, or if in writing and by facsimile,
to the facsimile number provided by a Holder to the Person giving such notice,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to Holders
is given by mail, neither the failure to mail such notice, nor any defect in
any notice so mailed, to any particular Holder shall affect the sufficiency of
such notice with respect to other Holders, and any notice that is mailed in the
manner herein provided shall conclusively be presumed to have been duly given.
Where this Master Agreement or any Series Supplement provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
Where any Series Supplement provides for notice to the Rating
Agencies, failure to give such notice shall not affect any rights or
obligations created hereunder, and shall not under any circumstance constitute
a Default or Event of Default.
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Section 1.04. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Master Agreement, any Series Supplement
or any of the Notes to the contrary, the Obligors' Agent may enter into any
agreement with any Holder of a Note providing for a method of payment, or
notice by the Trustee or any Paying Agent to such Holder, that is different
from the methods provided for in this Master Agreement or the related Series
Supplement for such payments or notices. The Obligors' Agent will furnish to
the Trustee a copy of each such agreement and the Trustee will cause payments
to be made and notices to be given in accordance with such agreements provided
the Trustee is not adversely affected thereby.
Section 1.05. Conflict with Trust Indenture Act. If this
Master Agreement is qualified under the Trust Indenture Act and any provision
hereof limits, qualifies or conflicts with another provision hereof that is
deemed to be included in and to govern this Master Agreement by any of the
provisions of the Trust Indenture Act, such provision deemed to be included
herein shall control.
Section 1.06. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 1.07. Successors and Assigns. All covenants and
agreements in this Master Agreement or any Series Supplement by the Obligors or
by the Obligors' Agent, on behalf of the Obligors or in its or their individual
capacity shall bind its or their successors and assigns, whether so expressed
or not.
All agreements by the Trustee in this Master Agreement or any
Series Supplement shall bind its successors and assigns.
Section 1.08. Benefits of Agreement. To the extent
specified in the related Series Supplement, the related Series Support Provider
and its successors and assigns shall be a third-party beneficiary to the
provisions of this Master Agreement and such Series Supplement, insofar as such
provisions apply to the related Notes, and shall be entitled to rely upon and
directly to enforce such provisions of this Master Agreement and such Series
Supplement so long as no Support Default shall have occurred and be continuing
with respect to such Series Support Provider. Except as aforesaid, nothing in
this Master Agreement or any Series Supplement or in the Notes, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and the Holders of the related Notes, and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the related Series Trust Estate, any benefit or any legal or equitable
right, remedy or claim under this Master Agreement. The related Series Support
Provider may disclaim any of its rights and powers under this Master Agreement
(in which case the Trustee may exercise such right or power hereunder), but not
its duties and obligations under the related Series Support, upon delivery of a
written notice to the Trustee and to the Obligors' Agent.
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Section 1.09. Allocation of Series to Groups. To the
extent so provided in the Supplement for any Series or in an amendment to this
Agreement executed pursuant to subsection 13.01(a), specified Series, may be
allocated in whole or in part to one or more Groups as may be provided in such
Series Supplement or amendment for the purpose of receiving Crossover Amounts
with respect to the Series Trust Estate(s) of such other Series in such Group.
Any such Series 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, the related Crossover Amounts may be reallocated
to other Series or Groups or to all Series, all as shall be provided in such
Series Supplement or amendment.
Section 1.10 Status of Obligors' Agent. By its execution
and delivery of a Series Supplement, an Obligor shall be deemed to have
designated and appointed Advanta Leasing Receivables Corp. III to act as its
agent hereunder, under the Master Contribution Agreement and each Contribution
Agreement Supplement and under each other related Series Related Document. The
Obligors' Agent is responsible for executing and fulfilling all other duties
expressly assigned to it in this Master Agreement, the Master Contribution
Agreement and each Contribution Agreement Supplement and the Series Related
Documents. The Obligors may, at any time in their discretion, remove the
Obligors' Agent and appoint a new Obligors' Agent, which shall have duties
described in this Section 1.10.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations, Warranties and Covenants of
Obligors. By its execution and delivery of a Series Supplement, each Obligor
will be deemed to have made each of the following representations, warranties
and covenants to the Trustee and the Noteholders of the related Series on which
representations, warranties and covenants the Trustee relies in accepting the
related Series Trust Estate in trust and on which the Noteholders of the
related Series have relied in agreeing to purchase the related Notes. Such
representations, warranties and covenants are deemed to be made and affirmed on
the Series Closing Date for the related Series, and shall survive the date of
the making or remaking of such representations and warranties. Each of the
Obligor's covenants with respect to a Series shall continue until the Final
Date of such Series.
(a) Each Obligor represents and warrants, as to itself,
that:
(i) Corporate Existence and Power. Such Obligor is a
legal entity duly organized, validly existing and in good standing
under the laws of the State of its formation, and has all corporate
power and all governmental licenses,
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authorizations, consents and approvals required to carry on its
business in each jurisdiction in which its business is conducted.
(ii) No Conflict. The execution, delivery and performance
by such Obligor of this Master Agreement and the other Series Related
Documents to which it is a party, are within its corporate powers,
have been duly authorized by all necessary corporate action, do not
contravene or violate (i) its certificate of incorporation, operating
agreement, partnership agreement or by-laws, (ii) any law, rule or
regulation applicable to it, (iii) any restrictions under any
agreement, contract or instrument to which it is a party or by which
it or any of its property is bound, or (iv) any order, writ, judgment,
award, injunction or decree binding on or affecting it or its
property, and do not result in the creation or imposition of any
Adverse Claim on assets of such Obligor or its Subsidiaries (except
the interest conveyed to the Trustee); and no transaction contemplated
hereby requires compliance with any bulk sales act or similar law.
Each of the Series Related Documents to which such Obligor is a party
has been duly executed and delivered by such Obligor.
(iii) Governmental Authorization. Other than the filing of
the financing statements required hereunder, no authorization or
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for the due
execution, delivery and performance by such Obligor of this Master
Agreement and the other Series Related Documents to which such Obligor
is a party, except for such authorizations, approvals, actions,
notices and filings as have already been obtained, taken or made in
connection with Municipal Contracts.
(iv) Binding Effect. Each of this Master Agreement and
the other Series Related Documents to which such Obligor is a party
constitutes the legal, valid and binding obligation of such Obligor,
enforceable against each Obligor, jointly and severally, in accordance
with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally or general
equitable principles.
(v) Accuracy of Information. All information furnished
in writing by such Obligor to the Trustee on or prior to the related
Series Closing Date for purposes of or in connection with the Series
Related Documents or any Pledge is true, accurate and complete in
every material respect on the date such information is stated or
certified, and all such information hereafter furnished by such
Obligor to the Trustee will be, true, accurate and complete in every
material respect, on the date such information is stated or certified.
(vi) Use of Proceeds. No proceeds of any sale of the
Notes will be used (i) for a purpose which violates, or would be
inconsistent with, Regulation
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G, T, U or X promulgated by the Board of Governors of the Federal
Reserve System from time to time or (ii) to acquire any security in
any transaction which is subject to Section 13 or Section 14 of the
Securities Exchange Act of 1934, as amended.
(vii) Good Title; Perfection. Immediately prior to each
Pledge hereunder, such Obligor shall be the legal and beneficial owner
of the Contracts subject to such Pledge and Advanta Business Services
Corp. is either the owner or has taken or is taking all requisite
steps to obtain on its behalf a first priority perfected security
interest in, all Equipment related thereto and the Related Security
with respect thereto (other than Equipment valued at less than $25,000
in which such Obligor has not reserved a perfected security interest),
free and clear of any Adverse Claim except as created by this
Agreement and the other Series Related Documents, and such Obligor has
the legal right to Pledge the Contracts and the associated Collections
and Related Security to the Trustee.
(viii) Places of Business. Except in accordance
with Section 3.05(b), such Obligor will not move its chief executive
office to another location and/or maintain any Records at any other
locations.
(ix) No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of such Obligor,
threatened before any Governmental Authority (i) asserting the
invalidity of the Series Related Documents, (ii) seeking to prevent
the consummation of any of the transactions contemplated by the Series
Related Documents, (iii) seeking any determination or ruling that, in
the reasonable judgment of such Obligor, would materially and
adversely affect the performance by such Obligor of its obligations
under the Series Related Documents and (iv) seeking any determination
or ruling that would materially and adversely affect the validity or
enforceability of the Series Related Documents.
Section 2.02. Representations, Warranties and Covenants of
Servicer. The Servicer hereby makes the following representations, warranties
and covenants to the Trustee and the Noteholders of the related Series on which
representations, warranties and covenants the Trustee relies in accepting the
related Series Trust Estate in trust and in authenticating the related Notes
and on which the Noteholders of such Series have relied in purchasing their
Notes. Such representations, warranties and covenants shall be deemed to be
made and affirmed on each Series Closing Date and shall survive the date of the
making or remaking of such representations and warranties. Each of the
Servicer's covenants shall continue until the Final Date of the last
outstanding Series.
(a) The Servicer represents and warrants, as to itself
and its responsibilities, that:
(i) Organization and Good Standing. The Servicer
is a corporation duly organized, validly existing in good standing
under the laws of the State of
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Delaware (or, if other than Advanta Business Services Corp., in the
applicable state of its incorporation), has the power to own its
assets and to transact the business in which it is presently engaged,
and had at all relevant times and now has the power, authority and
legal right to service the related Series Trust Estate.
(ii) Power and Authority. The Servicer has the
power, authority and legal right to execute, deliver and perform this
Master Agreement and the other Series Related Documents to which it is
a party and the execution, delivery and performance of this Master
Agreement and the other Series Related Documents to which it is a
party have been duly authorized by the Servicer by all necessary
corporate action.
(iii) Binding Obligation. This Master Agreement
and the other Series Related Documents to which the Servicer is a
party (assuming due authorization, execution and delivery by each of
the other parties hereto and thereto), constitute legal, valid and
binding obligations of the Servicer, enforceable against the Servicer
in accordance with their respective terms, except that (A) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws (whether statutory, regulatory or
decisional) now or hereafter in effect relating to creditors' rights
generally and (B) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, whether in a proceeding at law or
in equity.
(iv) No Violation. The consummation by the
Servicer of the transactions contemplated by this Master Agreement and
the other Series Related Documents to which it is a party and the
fulfillment of the terms hereof and thereof will not conflict with,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice, lapse of time or both) a default
under, the charter documents or by-laws of the Servicer, or any
material indenture, agreement, mortgage, deed of trust or other
instrument to which the Servicer is a party or by which it is bound,
or result in the creation or imposition of any Lien upon any of its
material properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument, other than as
contemplated by the Contribution Agreement (if Advanta Business
Services Corp. is the Servicer making such representation and
warranty) and this Master Agreement, or violate any law or, to the
best of the Servicer's knowledge, any order, rule or regulation
applicable to the Servicer of any court or other Governmental
Authority having jurisdiction over the Servicer or any of its
properties.
(v) No Proceedings. There are no proceedings or
investigations to which the Servicer, or any of the Servicer's
Affiliates, is a party pending or, to the best of the Servicer's
knowledge, threatened before any court or other
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Governmental Authority (A) asserting the invalidity of this Master
Agreement or any of the other Series Related Documents, (B) seeking to
prevent the consummation of any of the transactions contemplated by
this Master Agreement or any of the other Series Related Documents (C)
seeking any determination or ruling that might materially and
adversely affect the performance by the Servicer of its obligations
under, or the validity or enforceability of, this Master Agreement or
any of the other Series Related Documents to which it is a party.
(vi) Approvals. All approvals, authorizations,
consents, orders or other actions of any Governmental Authority or any
other Person required to be obtained or taken by, or on the part of,
the Servicer in connection with the execution and delivery of this
Master Agreement or any of the other Series Related Documents to which
it is a party have been or will be taken or obtained on or prior to
the date so required to be taken or obtained.
(vii) Information. Each certificate, information,
exhibit, financial statement, document, book or record or report
furnished by the Servicer to the Trustee, the Obligors, the Rating
Agencies or any Noteholder in connection with this Master Agreement,
any series Supplement, any Series Related Document or the transactions
contemplated hereby is accurate in all material respects as of its
date, when considered as a whole with other such documents, and no
such document contains any material misstatement of fact or omits to
state a material fact or any fact necessary to make the statements
contained therein, in light of the circumstances under which they were
made, not materially misleading as of its date.
(viii) Place of Business. The chief executive
office of the Servicer is at P.O. Box 1228, 1020 Laurel Oak Road,
Voorhees, New Jersey.
(b) The Servicer, for itself and on behalf of each
related Series Obligor, covenants as to the Pledged Property comprising each
Series Trust Estate:
(i) Lien in Force. The Servicer shall not
release or assign any Lien in favor of the Trustee on any item of
Equipment related to any Contract in whole or in part, except as
expressly permitted hereunder.
(ii) Fulfill Obligation. The Servicer will duly
fulfill and comply, in all material respects, with all obligations on
the part of the "lessor" to be performed and fulfilled under or in
connection with each Contract and all of the Servicer's other
obligations to be fulfilled under or in connection with each Series
Trust Estate. The Servicer will not amend, rescind, cancel or modify
any Contract or any term or provision thereof, except as contemplated
herein, and the Servicer will not do anything that would materially
impair the rights of the Noteholders with respect to any Series Trust
Estate, except as contemplated herein.
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(iii) Books and Records. The Servicer (1) will (A)
maintain its books and records separate from the books and records of
any Obligor, (B) maintain bank accounts separate from those of any
Obligor and (C) conduct its business in an office separate from that
of any Obligor and (2) will not (X) take any action that would cause
the dissolution or liquidation of any Obligor, (Y) guarantee (directly
or indirectly), endorse or otherwise become contingently liable
(directly or indirectly) for the obligations of any Obligor (except as
expressly permitted hereunder) or (Z) institute against any Obligor,
or join any other person in instituting against any Obligor, any case,
proceeding or other action under any existing or future bankruptcy,
insolvency or similar laws.
ARTICLE III
PLEDGING THE TRUST ESTATE
Section 3.01. Series Trust Estates. In order to secure the
due and punctual payment of the principal of and interest on the Notes of the
related Series and all other Series Secured Obligations of the related Series
when and as the same shall become due and payable, whether as scheduled, by
declaration of acceleration, prepayment or otherwise, according to the terms of
this Master Agreement, the related Series Supplement and the related Notes, the
Obligors, pursuant to the related Series Supplement, shall pledge on the
related Series Trust Estate to the Trustee, all for the benefit of the Trustee
for the benefit of the Holders of the related Series and the other Series
Secured Parties.
Section 3.02. Preservation of Series Collateral. Subject
to the rights, powers and authorities granted to the Trustee and the related
Series Controlling Party herein, the Obligors shall take such action as is
necessary and proper with respect to the Series Trust Estate in order to
preserve and maintain such Series Trust Estate. The Obligors will do, execute,
acknowledge and deliver, or cause to be done, executed, acknowledged and
delivered, such instruments of transfer or take such other steps or actions as
may be necessary, or required by the Series Controlling Party, to perfect the
security interests granted hereunder in the Series Trust Estate, to ensure that
such security interests rank prior to all other Liens and to preserve the
priority of such security interests and the validity and enforceability
thereof. Upon any delivery of any portion of any Series Trust Estate, to the
Trustee the Obligors shall be obligated to execute such documents and perform
such actions as are necessary to create in the Trustee for the benefit of the
related Series Secured Parties a valid first Lien on, and valid and perfected
first priority security interest in, such Series Trust Estate so delivered,
free and clear of any other Lien, together with satisfactory assurances
thereof, and to pay any reasonable costs incurred by any of the Series Secured
Parties or otherwise in connection with such delivery.
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Section 3.03. Waiver of Stay or Extension Laws; Marshalling
of Assets. Each Obligor covenants, to the fullest extent permitted by
applicable law, that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension or redemption law wherever enacted, now or at any
time hereafter in force, in order to prevent or hinder the enforcement of this
Master Agreement, any Series Supplement or any part hereof or thereof, to the
fullest extent permitted by applicable law, for itself and all who may claim
under it, hereby waives the benefit of all such laws, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted. Each Obligor, for itself and all who may
claim under it, waives, to the fullest extent permitted by applicable law, all
right to have any Series Trust Estate marshalled upon any foreclosure or other
disposition thereof.
Section 3.04. Noninterference, Etc. No Obligor shall (i)
waive or alter any of its rights under any portion of any Series Trust Estate
(or any agreement or instrument relating thereto) without the prior written
consent of the Series Controlling Party; or (ii) take any action, or fail to
take any action, if such action or failure to take action will interfere with
the enforcement of any rights under the Series Related Documents.
Section 3.05. Obligor Changes. (a) Change in Name,
Structure, Etc. No Obligor shall change its name, identity or corporate
structure unless it shall have given the Trustee at least 30 days' prior
written notice thereof, shall have effected any necessary or appropriate
assignments or amendments thereto and filings of financing statements or
amendments thereto.
(b) Relocation of the Obligors. No Obligor shall change
its principal executive office unless it gives the Trustee at least 30 days'
prior written notice of any relocation of its principal executive office. If
any Obligor so relocates its principal executive office or principal place of
business, such Obligor shall give prior notice thereof to the Trustee and shall
effect whatever appropriate recordations and filings are necessary.
Section 3.06. Limited Recourse to Obligors. (a)
Notwithstanding anything to the contrary contained herein, the Trustee and each
Holder by such Holder's acceptance of a Note hereunder agree that the
obligations of the related Series Obligors hereunder, including, without
limitation, the obligations of the related Series Obligors in respect of the
Notes shall be payable solely from the related Series Trust Estate (including
any Crossover Amounts included in such Series Trust Estate), and that neither
the Trustee nor any Holder shall look to any other Property or assets of such
Obligors, or to the Property or assets of any other Obligor, including,
specifically but without limitation, the Series Trust Estate with respect to
any other Series. No recourse shall be had for the payment of any amount owing
in respect of any Obligors's obligations hereunder or for any payment
obligation or claim arising out of or based on this
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Agreement against any Affiliate, agent, stockholder, employee, officer,
director or incorporator of such Obligor.
(b) The Obligors' obligation to pay certain fees or
expenses under, or claims arising out of, this Master Agreement shall be
limited to moneys available to such Obligors from the related Series Trust
Estate in accordance with the payment priority set forth in the related Series
Supplement, and to the extent such funds are insufficient to pay such fees or
expenses, it shall not constitute a claim against the Obligors.
Section 3.07. Authorization of Actions to be Taken by the
Trustee. (a) The Trustee may take all actions it deems necessary or
appropriate in order to enforce or exercise its rights under each Series
Supplement in accordance with and subject to the provisions thereof. Subject
to the provisions thereof, the Trustee shall have power to institute and to
maintain suits and proceedings to prevent any impairment of the related Series
Trust Estate by any acts which may be unlawful or in violation of the related
Series Supplement or this Master Agreement, and suits and proceedings to
preserve or protect its interests and the interests of the Holders of the
related Notes in the related Series Trust Estate (including power to institute
and maintain suits or proceedings to restrain the enforcement of or compliance
with any legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance
with, such enactment, rule or order would impair the security hereunder or be
prejudicial to the interests of such Holders or of the Trustee).
(b) The Trustee is authorized to receive any funds for
the benefit of the Holders distributed under the related Series Supplement and
to make further distributions of such funds to the Holders of the related Notes
according to the provisions of such Series Supplement.
Section 3.08. Termination of Security Interests. Upon the
payment in full of all Series Secured Obligations, the Trustee shall, at the
request of the related Series Obligors and with the written consent of the
Series Support Provider, if any, deliver such certificates, notices, and
instruments stating that all Series Secured Obligations have been paid in full,
and releasing the Trustee's Lien on the related Series Trust Estate with
respect to such Series Secured Obligations.
Section 3.09. Filing; Maintenance of Contract Files. (a)
On or prior to the initial Pledge Date with respect to a Series, the related
Series Obligors shall, and shall cause the Contributor to, file blanket UCC-1
financing statements with respect to the related Series Trust Estate (which, in
the case of any UCC-1 Financing Statement filed by such Series Obligors against
the Contributor, shall be assigned by such Series Obligors to the Trustee).
Notwithstanding the foregoing, it is expressly agreed that no such UCC-1
Financing Statement shall be filed with respect to any particular piece of
Equipment, except to the extent then required by the Contributor's Credit and
Collection Policy, or as may otherwise be required in the related Contribution
Agreement Supplement. On or prior to each Pledge Date the related Series
Obligors shall, and shall
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cause the Contributor to, make their respective internal records (including, in
the case of the Contractor, its electronic ledger) to reflect (x) the sale and
conveyance of the related Pledged Property from the Contributor to the related
Series Obligors and (y) the Pledge of the related Pledged Property to the
Trustee.
Section 3.10. Costs and Expenses. The related Series
Obligors agree to pay all reasonable costs and disbursements (and in the event
the related Series Obligors are unable to pay such costs and disbursements, the
Servicer shall pay such amounts) in connection with the perfection and the
maintenance of perfection and priority, as against all third parties, of the
Trustee's rights, title and interests in and to each Series Trust Estate (other
than the Equipment, except as otherwise expressly agreed to herein).
ARTICLE IV
NOTE FORMS
Section 4.01. Forms Generally. The Notes of each Series
shall be in substantially the form set forth in the related Series Supplement,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Master Agreement or the related Series
Supplement, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such Notes, as evidenced by their
execution of the Notes.
The Notes of any Series or Class may be issued in bearer form
("Bearer Notes") with attached interest coupons and any other applicable coupon
(collectively, the "Coupons") or in fully registered form (but which may be
uncertificated) ("Registered Notes") and shall, to the extent represented by
physical certificates, be substantially in the form of the exhibits with
respect thereto attached to the applicable Series Supplement.
The Trustee's certificate of authentication shall be in
substantially the form set forth in this Article.
The Notes shall be printed, lithographed or engraved on steel
engraved borders or may be produced in any other manner (provided that if any
Notes are to be listed on any securities exchange, then in any such manner as
may be permitted by the rules of any such securities exchange, all as
determined by the officers executing such Notes, as evidenced by their
execution of such Notes).
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Section 4.02. Form of Trustee's Certificate of
Authentication. This is one of the Notes designated herein referred to in the
within-mentioned Master Agreement and the within-mentioned Series Supplement
thereto.
The Chase Manhattan Bank,
as Trustee
By_________________________
Authorized Signatory
Section 4.03. Securities Legend. Each Unregistered Note
issued hereunder will contain the following legend limiting sales to "Qualified
Institutional Buyers" within the meaning of Rule 144A under the Securities Act:
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR REGULATORY AUTHORITY OF ANY STATE. THIS NOTE HAS BEEN
OFFERED AND SOLD PRIVATELY. THE HOLDER HEREOF ACKNOWLEDGES THAT THESE
SECURITIES ARE "RESTRICTED SECURITIES" THAT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT AND AGREES FOR THE BENEFIT OF THE OBLIGORS AND
ITS AFFILIATES THAT THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT (A) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A OR (B) PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE), IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION.
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ARTICLE V
THE NOTES
Section 5.01. Amount Limited; Issuable in Series. The
aggregate principal amount of Notes which may be authenticated and delivered
and Outstanding at any time under this Master Agreement is not limited;
provided that any Series Supplement may so limit the aggregate principal amount
of Notes of the related Series. The Notes shall be issued in one or more
Series, and may be issued in Classes and/or Tranches within a Series (and
Tranches within a Class).
No Series of Notes shall be issued under this Master Agreement
unless such Notes have been authorized pursuant to a Series Supplement, and all
conditions precedent to the issuance thereof, as specified in the related
Series Supplement, shall have been satisfied.
All Notes of each Series issued under this Master Agreement
shall be in all respects equally and ratably entitled to the benefits hereof
and secured by the related Series Trust Estate without preference, priority or
distinction on account of the actual time or times of authentication and
delivery, all in accordance with the terms and provisions of this Master
Agreement and the related Series Supplement.
Section 5.02. Execution, Authentication, Delivery and
Dating. The Notes shall be executed on behalf of the related Series Obligors
or the Obligors' Agent by any of its Authorized Officers. The signature of any
of these officers on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of
individuals who were at the time of execution of such Notes the proper officers
of the Obligors' Agent shall bind the related Series Obligors, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Notes.
At any time and from time to time after the execution and
delivery of this Master Agreement and the related Series Supplement, and upon
satisfaction of all the conditions set forth in the related Series Supplement,
the Obligors' Agent may deliver Notes of the related Series (including Notes of
any Class or Tranche within such Series) executed by the Obligors' Agent to the
Trustee or Authenticating Agent for authentication, together with an Obligors'
Order for the authentication and delivery of such Notes and an Officer's
Certificate that all conditions precedent for such issuance have been
satisfied, and the Trustee in accordance with the Obligors' Order shall
authenticate and make available for delivery such Notes.
Each Note shall be dated the date of its authentication.
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No Note shall be entitled to any benefit under this Master
Agreement or any Series Supplement or be valid or obligatory for any purpose
unless there appears on such Note a certificate of authentication substantially
in the form provided for herein executed by the Trustee or the Authenticating
Agent by manual signature, and such certificate upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder and is entitled to the benefits of this
Master Agreement and the related Series Supplement. Notwithstanding the
foregoing, if any Note shall have been authenticated and delivered hereunder
but never issued and sold by the Obligors' Agent, and the Obligors' Agent shall
deliver such Note to the Trustee or the Authenticating Agent for cancellation
as provided in Section 5.08 together with a written statement (which need not
comply with Section 1.02 and need not be accompanied by an Opinion of Counsel)
stating that such Note has never been issued and sold by the Obligors' Agent,
for all purposes of this Master Agreement such Note shall be deemed never to
have been authenticated and delivered hereunder and shall never be entitled to
the benefits of this Master Agreement.
Section 5.03. Temporary Notes. Pending the preparation of
definitive Notes of any Series (or of any Class or Tranche within a Series),
the Obligors' Agent may execute, and upon receipt of an Obligors' Order the
Trustee or the Authenticating Agent shall authenticate and deliver, temporary
Notes which are printed, lithographed, typewritten, reproduced or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Notes in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Notes may determine, as evidenced by their execution of such
Notes.
If temporary Notes of any Series (or of any Class or Tranche
within a Series) are issued, the Obligors' Agent will cause definitive Notes of
that Series (or Class or Tranche) to be prepared without unreasonable delay.
After the preparation of definitive Notes of such Series (or Class or Tranche),
such temporary Notes shall be exchangeable for definitive Notes of such Series
(or Class or Tranche) upon surrender of the temporary Notes at the office or
agency of the Obligors to be maintained as provided in Section 14.02. Upon
surrender for cancellation of any one or more temporary Notes the Obligors'
Agent shall execute, and the Trustee or the Authenticating Agent shall
authenticate and make available for delivery, in exchange therefor a like
principal amount of definitive Notes of the same Series (or Class or Tranche)
and tenor of authorized denominations. Until so exchanged, the temporary Notes
of any Series (or Class or Tranche) shall in all respects be entitled to the
same benefits under this Master Agreement and the related Series Supplement as
definitive Notes of such Series (or Class or Tranche).
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Section 5.04. Registration, Registration of Transfer and
Exchange, Transfer Restrictions. The Obligors' Agent shall cause to be kept a
register (the "Note Register") in which, subject to such reasonable regulations
as it may prescribe, the Obligors' Agent shall provide for the registration of
Notes and of transfers of the Notes. The Trustee is hereby initially appointed
"Note Registrar" for the purpose of registering Notes and transfers of the
Notes as herein provided. Upon any resignation of any Note Registrar, the
Obligors' Agent shall promptly appoint a successor or, if it elects not to make
such an appointment, assume the duties of the Note Registrar.
If a Person other than the Trustee is appointed by the
Obligors' Agent as Note Registrar, the Obligors' Agent will give the Trustee
prompt written notice of the appointment of such Note Registrar and of the
location, and any change in the location, of the Note Registrar, and the
Trustee shall have the right to inspect the Note Register at all reasonable
times and to obtain copies thereof, and the Trustee shall have the right to
rely upon a certificate executed on behalf of the Note Registrar by an
Executive Officer thereof as to the names and addresses of the Holders of the
Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the
office or agency of the Obligors to be maintained as provided in Section 14.02,
the Obligors' Agent shall execute, and the Trustee or the Authenticating Agent
shall authenticate and make available for delivery, in the name of the
designated transferee or transferees, one or more new Notes of any authorized
denominations and of a like tenor and aggregate principal amount.
At the option of a Registered Noteholder, Registered Notes (of
the same Series and Class) may be exchanged for other Registered Notes of
authorized denominations upon surrender of the Registered Notes to be exchanged
at any such office or agency; Registered Notes, including Registered Notes
received in exchange for Bearer Notes, may not be exchanged for Bearer Notes.
At the option of the Holder of a Bearer Note, subject to applicable laws and
regulations, Bearer Notes may be exchanged for other Bearer Notes or Registered
Notes (of the same Series and Class) of authorized denominations upon surrender
of the Bearer Notes to be exchanged at an office or agency of the Transfer
Agent and Registrar located outside the United States. Each Bearer Note
surrendered pursuant to this Section shall have attached thereto all unmatured
Coupons; provided that any Bearer Note 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 Notes are so surrendered for exchange, the Obligors' Agent shall
execute, and the Trustee or the Authenticating Agent shall authenticate and
make available for delivery, the Notes which the Holder making the exchange is
entitled to receive.
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the related Series Obligors,
evidencing the same debt,
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and entitled to the same benefits under this Master Agreement and the related
Series Supplement, as the Notes surrendered upon such registration of transfer
or exchange.
Every Note presented or surrendered for registration of
transfer or for exchange shall (if so required by the Obligors' Agent or the
Trustee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Obligors' Agent, the Trustee and the Note
Registrar duly executed by the Holder thereof or his attorney duly authorized
in writing with such signature guaranteed by a commercial bank or trust company
located, or having a correspondent located, in the City of New York or the city
in which the Corporate Trust Office is located, or by a member firm of a
national securities exchange, and such other documents as the Trustee may
require.
No service charge shall be made for any registration of
transfer or exchange of Notes, but the Obligors' Agent or the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 5.03 or 5.05 not
involving any transfer.
No Holder of an Unregistered Note shall transfer its Note,
unless (i) such transfer is made in accordance with Rule 144A of the Securities
Act or (ii) pursuant to an exemption from registration provided by Rule 144
under the Securities Act (if available) and the registration and qualification
requirements under applicable state securities laws.
Section 5.05. Mutilated, Destroyed, Lost and Stolen Notes.
If any mutilated Note (together, in the case of Bearer Notes, with all
unmatured Coupons (if any) appertaining thereto) is surrendered to the Trustee,
the Obligors' Agent shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Note of the same Series and Tranche, of like
tenor and principal amount and bearing a number not contemporaneously
outstanding. If there shall be delivered to the Obligors' Agent and the
Trustee and the related Series Support Provider, if any (unless an Support
Default shall have occurred and be continuing) (i) evidence to their
satisfaction of the destruction, loss or theft of any Note and (ii) such
security or indemnity as may be required by them to hold each of them and any
agent of any of them harmless, then, in the absence of notice to the Obligors'
Agent, the Trustee or the related Series Support Provider that such Note has
been acquired by a bona fide purchaser, the Obligors' Agent shall execute and
upon its request the Trustee shall authenticate and make available for delivery
(in the case of Bearer Notes, outside the United States), in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Note, a new Note (of the
same Series and Class) , in lieu of any such destroyed, lost or stolen Note, a
new Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
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In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, the Obligors' Agent in its
discretion may, instead of issuing a new Note, cause the related Series
Obligors to pay such Note.
Upon the issuance of any new Note under this Section, the
Obligors' Agent or the Trustee may require the payment 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)
connected therewith.
Every new Note of any Series issued pursuant to this Section
in lieu of any destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the related Series Obligors, whether or
not the destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Master Agreement and
the related Series Supplement equally and proportionately with any and all
other Notes of the same Series duly issued hereunder and under the related
Series Supplement.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 5.06. Final Distribution.
(a) The Servicer shall give the Trustee at least 30 days
prior notice of the Settlement Date on which the Noteholders of any Series or
Class may surrender their Notes for payment of the final distribution on and
cancellation of such Notes. Not later than the fifth day of the month in which
the final distribution in respect of such Series or Class is payable to
Noteholders, the Trustee shall provide notice to the Noteholders 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 Notes 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 Notes at the office or offices therein specified (which, in
the case of Bearer Notes, 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 Noteholders.
(b) Notwithstanding a final distribution to the Noteholders of any
Series or Class, except as otherwise provided in this paragraph, all funds then
on deposit in the Master Facility Account and any Series Account allocated to
such Noteholders shall continue to be held in trust for the benefit of such
Noteholders and the Paying Agent or the Trustee shall pay such funds to such
Noteholders upon surrender of their Notes. In the event that all such
Noteholders shall not surrender their Notes 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 Noteholders
to surrender
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their Notes for cancellation and receive the final distribution with respect
thereto (which surrender and payment, in the case of Bearer Notes, shall be
outside the United States). If within one year after the second notice all
such Notes 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 Noteholders concerning surrender of their Notes, and
the cost thereof shall be paid out of the funds in the Series Account held for
the benefit of Noteholders. The Trustee and the Paying Agent shall upon
written request pay to the related Obligors any moneys held by them for the
payment of principal or interest that remains unclaimed for two years. After
payment to the related Obligors, Noteholders entitled to the money must look to
the for payment as general creditors unless an applicable abandoned property
law designates another Person.
(c) Any notice required or permitted to be given to a Holder of
Registered Notes shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Note Register. No Notice shall be
required to be mailed to a Holder of Bearer Notes or Coupons but shall be given
as provided below. Any notice so mailed within the time prescribed in this
Master Agreement shall be conclusively presumed to have been duly given,
whether or not the Investor Noteholder receives such notice. In addition, (a)
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 Noteholders
shall be published in a newspaper of general circulation in Luxembourg within
the time period prescribed in this Agreement and (b) in the case of any Series
or Class with respect to which any Bearer Notes are outstanding, any notice
required or permitted to be given to Investor Noteholders of such Series or
Class shall be published in an Authorized Newspaper within the time period
prescribed in this Agreement.
Section 5.07. Persons Deemed Owners. Prior to due
presentment of a Note for registration of transfer, the related Series
Obligors, the Obligors' Agent, the related Series Support Provider, the Trustee
and any agent of any of them may treat (a) prior to due presentation of a
Registered Note for registration of transfer, treat the Person in whose name
any Registered Note is registered as the owner of such Registered Note for the
purpose of receiving distributions pursuant to the terms of the applicable
Supplement and for all other purposes whatsoever, and (b) treat the bearer of a
Bearer Note or Coupon as the owner of such Bearer Note or Coupon for the
purpose of receiving distributions pursuant to the terms of the applicable
Supplement and for all other purposes whatsoever; and none of the Obligors, the
Obligors' Agent, the related Series Support Provider, the Trustee nor any agent
of any of them, shall be affected by notice to the contrary.
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Section 5.08. Cancellation. All Notes surrendered for
payment, prepayment in whole, registration of transfer or exchange shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by the Trustee. The Obligors' Agent may at any
time deliver to the Trustee for cancellation any Notes previously authenticated
and delivered hereunder which the Obligors' Agent may have acquired in any
manner whatsoever, and may deliver to the Trustee (or to any other Person for
delivery to the Trustee) for cancellation any Notes previously authenticated
hereunder which the Obligors' Agent has not issued and sold, and all Notes so
delivered shall be promptly cancelled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes cancelled as provided in
this Section, except as expressly permitted by this Master Agreement. All
cancelled Notes held by the Trustee shall be held or destroyed by the Trustee
in accordance with its standard retention or disposal policy as in effect at
the time.
Section 5.09. Book-Entry Notes. Unless otherwise specified
in the related Supplement for any Series or Class, the Notes of each Series,
upon original issuance, shall be issued in the form of one or more typewritten
Notes representing the Book-Entry Notes, to be delivered to the Clearing Agency
specified in the applicable Series Supplement, by, or on behalf of, the related
Series Obligors. The Notes shall initially be registered on the Note Register
in the name of the Clearing Agency or its nominee, and no Noteholder will
receive a definitive certificate representing such Noteholder's interest in the
Notes, except as provided in Section 5.11. Unless and until definitive, fully
registered Notes ("Definitive Notes") have been issued to the applicable
Noteholders pursuant to Section 5.11 or as otherwise specified in any such
Series Supplement:
(a) the provisions of this Section shall be in full force
and effect;
(b) the related Series Obligors, 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 Noteholders;
(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 Noteholders shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Noteholders and the Clearing
Agency or the Clearing Agency Participants. Pursuant to the Depository
Agreement, unless and until Definitive Notes are issued pursuant to Section
5.11, 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 Notes 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, Noteholders
evidencing a specified
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percentage of the aggregate Outstanding Amount of Notes, such direction or
consent may be given by Noteholders (acting through the Clearing Agency and the
Clearing Agency Participants) owning Investor Notes evidencing the requisite
percentage of Outstanding Notes.
Section 5.10. Notices to Clearing Agency. Whenever any
notice or other communication is required to be given to Noteholders of any
Series or Class with respect to which Book-Entry Notes have been issued, unless
and until Definitive Notes shall have been issued to the related Noteholders,
the Trustee shall give all such notices and communications to the applicable
Clearing Agency.
Section 5.11. Definitive Notes. If Book-Entry Notes have
been issued with respect to any Series or Class and (a) the Obligors' Agent
advises 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 Obligors' Agent is
unable to locate a qualified successor or (b) the Obligors' Agent, at its
option, advises the Trustee that they elect to terminate the book-entry system
with respect to such Series or Class through the Clearing Agency, then upon
surrender to the Trustee of any such Notes by the Clearing Agency, accompanied
by registration instructions from the Clearing Agency for registration of
Definitive Notes, the Obligors' Agent shall execute and the Trustee shall
authenticate and the Transfer Agent and Registrar shall deliver such Definitive
Notes. Neither the Obligors' Agent 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. The Trustee shall recognize the
Holders of such Definitive Notes as Noteholders hereunder.
The holding of Bearer Notes shall be proved by the production
of such Bearer Notes or by a certificate, satisfactory to the Obligors' Agent,
executed by any bank, trust company or recognized securities dealer, wherever
situated, satisfactory to the Obligors' Agent. Each such certificate shall be
dated and shall state that on the date thereof a Bearer Note 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 Notes specified therein. The holding by the Person named in any such
certificate of any Bearer Note 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 Note shall be produced, (ii) the
Bearer Note specified in such certificate shall be produced by some other
Person or (iii) the Bearer Note 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.
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ARTICLE VI
ADMINISTRATION AND SERVICING
OF THE TRUST ESTATE
Section 6.01. Retention of Servicer; Responsibilities of
Servicer. (a) The Obligors hereby appoint the Servicer, and the Servicer
hereby accepts such appointment, for the purpose of administering and servicing
the Trust Estate; provided, however, that the Servicer shall administer and
service the Trust Estate materially and only in conformance with the terms of
this Agreement and shall take no action to affect adversely the interests of
the Trustee or the Noteholders in the Trust Estate. In consideration of such
retention, the Obligors hereby agree to pay to the Servicer the Servicer Fee,
such Servicer Fee to be paid as provided in Section 7.02 and in each Series
Supplement and neither the Trustee nor any Noteholder shall have any
responsibility for the payment of such fee.
(b) The Servicer, for the benefit of the Trustee and the
Noteholders, shall be responsible for managing, servicing and administering the
Trust Estate, enforcing and making collections on the Contracts, any Insurance
Policies and any Related Security and enforcing any security interest in each
item of Equipment, each in accordance with the standards and procedures set
forth in this Master Agreement. The Servicer's responsibilities shall include
collecting and posting of all payments, responding to inquiries of Users,
investigating delinquencies, applying the Security Deposits, accounting for
collections and furnishing monthly and annual statements to the Trustee, with
respect to each Series Trust Estate and distributions to be made hereunder,
making Servicer Advances to the extent required by a Series Supplement,
providing appropriate Federal income tax information to the Trustee for use in
providing information to the Noteholders, collecting and remitting sales and
property taxes on behalf of taxing authorities and maintaining the perfected
and senior ownership and/or security interest of the Trustee and the
Noteholders in each Series Trust Estate.
Subject to the terms of Section 6.02 of this Agreement, the
Servicer shall have full power and authority, acting at its sole discretion, to
do any and all things in connection with such managing, servicing,
administration, enforcement and collection of the Contracts and the other
property comprising each Series Trust Estate that it may deem necessary or
desirable, including the prudent delegation of such responsibilities. Without
limiting the generality of the foregoing, the Servicer shall, and is hereby
authorized and empowered by the Obligors and the Trustee, subject to Section
6.02 hereof, to execute and deliver (on behalf of itself, the Noteholders, the
Trustee or any of them) any and all instruments of satisfaction or
cancellation, or of release or discharge and all other comparable instruments,
with respect to the Contracts and the other property comprising each Series
Trust Estate in accordance with (and to the extent permitted pursuant to)
Section 6.11. The Servicer may also, for itself and on behalf of the Obligors,
in the Servicer's sole discretion, waive any prepayment charge, late payment
charge or penalty, or any other Servicing Charges that may become due from
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any User in the ordinary course of servicing any Contract. The Trustee shall
execute and deliver any powers of attorney and other documents reasonably
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder as may be prepared by the Servicer, at the
Servicer's expense, and delivered to the Trustee for execution and delivery.
The Trustee is not responsible for any legal insufficiencies in any such powers
of attorney or other documents.
(c) The Servicer shall conduct the management, servicing,
administration, collection or enforcement actions of or in connection with each
Series Trust Estate in the following manner:
(i) The Servicer may sue to enforce or collect
upon Contracts as agent for the Obligors and the Trustee. If the
Servicer elects to commence a legal proceeding to enforce a Contract,
the act of commencement shall be deemed to be an automatic assignment
of the Contract to the Servicer for purposes of collection only. If,
however, in any enforcement suit or legal proceeding, it is held that
the Servicer may not enforce a Contract on the ground that it is not a
real party in interest or a holder entitled to enforce the Contract,
then the related Obligor(s) and/or the Trustee shall, at the
Servicer's written request and upon receipt from the Servicer of
satisfactory indemnity, take such steps as the Servicer deems
necessary to enforce the Contract, including bringing suit in its name
or the names of the related Obligor(s) and/or the Trustee and/or the
related Noteholders;
(ii) The Servicer shall exercise any rights of
recourse against third parties that exist with respect to any Contract
in accordance with the Servicer's usual practice. In exercising
recourse rights, the Servicer is authorized on the Trustee's behalf to
reassign the Contract to the person against whom recourse exists to
the extent necessary, and at the price set forth in the document
creating the recourse. The Servicer will not reduce or diminish such
recourse rights, except to the extent that it exercises such rights;
(iii) The Servicer may grant to the User under any
Contract any rebate, refund or adjustment that the Servicer in good
faith believes is required because of the Prepayment in full of such
Contract; provided, however, that the Servicer will not permit any
rescission or cancellation of any Contract or take any action with
respect to any Contract which would materially impair the rights of
the Trustee in the Contract or the proceeds thereof;
(iv) In the event that the Servicer acquires title
to any item of Equipment in the enforcement of any Contract, the
Servicer shall use its best efforts to sell or otherwise dispose
promptly of such item of Equipment, consistent with the standard of
care set forth in Section 6.02 hereof; and
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(v) The Servicer may not allow an offset of the
amount of any Security Deposit against any Scheduled Payment or Booked
Residual under such Contract, except as expressly permitted in Section
6.14 hereof.
Section 6.02. Standard of Care. In managing, administering
and servicing each Series Trust Estate and enforcing and making collections on
the Contracts and any Related Security and Insurance Policies related to the
Contracts pursuant to this Master Agreement, the Servicer will exercise that
degree of skill and care consistent with that which the Servicer customarily
exercises with respect to similar contracts owned by it; provided, however,
that to the extent that the Trustee shall be acting as Servicer, the Trustee
shall not have any liability for breaching any standard of care in its
performance as Servicer hereunder to the extent the Trustee was not grossly
negligent or wilfully malfeasant. The Servicer shall comply with all
applicable Federal and State laws and regulations; shall maintain all State and
Federal licenses and franchises necessary for it to perform its servicing
responsibilities hereunder and thereunder and shall not materially impair the
rights of the Trustee or the Noteholders in any Contracts or payments
thereunder.
The Servicer shall comply with all applicable Requirements of
Law, the noncompliance with which would, individually or in the aggregate,
materially and adversely affect the ability of the Servicer to perform its
obligations under this Master Agreement, the related Series Supplements or the
related Series Related Document.
Section 6.03. Credit and Collection Policy. The Servicer
shall not amend or modify the provisions of the Credit and Collection Policy if
such amendment or modification would, in the reasonable good faith business
judgment of the Servicer, materially and adversely affect the interests of any
Noteholder, the Trustee, or any Series Support Provider, without first
obtaining the prior written consent of the Series Controlling Party of each
affected Series.
Section 6.04. Maintenance of Interest in the Trust Estate.
The Servicer shall, in accordance with customary servicing procedures and at
its own expense, use its best efforts to maintain perfection and priority of
the Trustee's interest in each Series Trust Estate (other than with respect to
the Equipment (unless otherwise required herein) and other than with respect to
the Pledged Property removed from the Trust Estate pursuant to Section 6.11,
6.12 or 6.15 hereof). In connection with enforcing a Charged-Off Contract, the
Servicer shall prepare, the related Obligor shall (and, to the extent:
necessary, shall cause the Contributor to) execute and deliver to the Servicer,
and the Servicer shall file any necessary UCC financing statements and/or
amendments naming the Trustee as secured party with respect to the related
Equipment.
Section 6.05. Servicing Compensation; Payment of Certain
Expenses by Servicer. (a) As compensation for its activities, the Servicer
shall be entitled to receive the Servicer Fee in accordance with Section 7.02
hereof and the Series Supplements. The monthly Servicer Fee shall be payable
to the Servicer, in arrears for each Collection
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Period, on the Settlement Date in respect of such Collection Period. The
Servicer Fees shall be payable to the Servicer solely to the extent amounts are
available for distribution pursuant to Section 7.02 hereof and the Series
Supplements; provided, that in accordance with such provisions, any such
Servicer Fees not paid when due as a result of there not being sufficient
available funds therefor shall be payable on any future Settlement Dates to the
extent amounts are then available for the payment thereof.
(b) The Servicer shall be required to pay all expenses
incurred by the Servicer in connection with its activities hereunder,
including, without limitation, fees and disbursements of the Independent
Accountants, taxes imposed on the Servicer (but excluding any sales taxes or
other taxes imposed on any User, any Broker, the Obligors, the Contributor, the
Trustee, any Noteholder, or any other Person), expenses incurred in connection
with distributions and reports to Noteholders and all other fees and expenses
not expressly stated hereunder to be for the account of the Obligors.
Section 6.06. Servicer's Certificate. Not later than the
time specified in the related Series Supplement, the Servicer shall deliver to
the Obligors' Agent and the Trustee a Servicer's Certificate containing the
information required by the related Series Supplement, with respect to the
related Series Trust Estate, Collection Period and Settlement Date.
Section 6.07. Annual Statement as to Compliance. The
Servicer will deliver to the Obligors' Agent and the Trustee, not later than 90
days after the end of each fiscal year, an Officer's Certificate signed by a
Servicing Officer, dated as of the last day of such fiscal year, stating that
(a) a review of the activities of the Servicer during the preceding 12-month
period and of the Servicer's performance under this Master Agreement has been
made under such Servicing Officer's supervision and (b) nothing has come to
such Servicing Officer's attention to indicate that an Event of Servicer
Termination (or an event which with the giving of notice (other than pursuant
to Section 9.01(iv)) or passage of time, or both, would constitute an Event of
Servicer Termination) hereunder has occurred and is continuing on such last day
of such fiscal year or, if an Event of Servicer Termination or such other event
has so occurred and is continuing, specifying each such Event of Servicer
Termination or such other event known to such Servicing Officer and the nature
and status thereof, and the steps, if any, necessary to remedy such Event of
Servicer Termination or such other event.
Section 6.08. Financial Statements and Independent
Accountant's Servicing Certificate Review. (a) The Servicer shall, not later
than 90 days after the end of each fiscal year, deliver to the Trustee, a copy
of the Servicer's (or, in the case of Advanta Business Services Corp., of
Advanta Leasing Holding Corp.'s) annual audited financial statements for such
fiscal year, audited by a firm of nationally recognized independent certified
public accountants (within the meaning of the Securities Act) (which, in the
case of Advanta Business Services Corp., shall be the Independent Accountant).
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(b) The Servicer shall, within 45 days after the end of
each of the first three calendar quarter of the Servicer's fiscal year, deliver
to the Obligors' Agent and the Trustee, quarterly, unaudited financial
statements of the Servicer (or, in the case of Advanta Business Services Corp.,
of Advanta Leasing Holding Corp.) for such calendar quarter.
(c) The Servicer shall inform the Obligors' Agent and the
Trustee in writing of the Servicer's fiscal year and any change in such fiscal
year.
(d) On or before March 31 of each calendar year,
beginning with March 31, 1998, the Servicer shall cause a firm of nationally
recognized independent public accountants (who may also render other services
to the Servicer) to furnish a report (addressed to the Trustee) to the Trustee
and the Servicer to the effect that they have, for the one-year period ending
on the preceding March 31, applied certain procedures agreed upon with the
Servicer and the Trustee to compare the mathematical calculations of certain
amounts set forth in the Servicer's Certificates delivered pursuant to Section
6.06 hereof during the period covered by such report with the Servicer's
computer reports which were the source of such amounts and that on the basis of
such agreed-upon procedures and comparison, such accountants are of the opinion
that such amounts are in agreement, except for such exceptions as they believe
to be immaterial and such other exceptions as shall be set forth in such
statement.
Section 6.09. Access to Certain Documentation and
Information Regarding the Pledged Property. (a) The Servicer and the Obligors
shall each provide the Trustee, and/or any of the Trustee's duly authorized
representatives, attorneys or accountants access to any and all documentation
regarding each Series Trust Estate (including the List of Contracts) that the
Servicer or the Obligors, as the case may be, may possess, such access being
afforded without charge but only upon reasonable request and during normal
business hours, so as not to interfere unreasonably with the Servicer's or any
Obligor's, as the case may be, normal operations or customer or employee
relations, at such offices of the Servicer or such Obligor, as the case may be,
designated by the Servicer or an Obligor, respectively.
(b) The Servicer shall at all times during the term
hereof either (x) keep available in physical form for inspection by the
Trustee, or any of the Trustee's duly authorized representatives, attorneys or
accountants a list of all Contracts then held as a part of each Series Trust
Estate, together with a reconciliation of such list to the List of Contracts
and each of the Servicer's Certificates, indicating the cumulative removals and
additions of Contracts from such Trust Contracts or (y) maintain electronic
facilities which allow such a list of leases and reconciliation to be
generated.
(c) The Servicer will maintain accounts and records as to
each respective Contract serviced by the Servicer that are accurate and
sufficiently detailed so as to permit (i) the reader thereof to know as of the
most recent Calculation Date the status of such Contract, including payments
and recoveries made and payments owing
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(and the nature of each), and (ii) reconciliation between payments or
recoveries on (or with respect to) each Contract and the amounts from time to
time deposited in the Master Facility Account in respect of such Contract.
(d) The Servicer will maintain its computerized accounts
and records so that (i) from and after the time of Pledge hereunder of each
Contract to the Trustee, the Servicer's accounts and records (including any
back-up computer archives) that refer to any Contract indicate clearly that the
Contract is part of a separate and distinct Series Trust Estate and (ii) the
information relating to such Contracts can be recreated in the event of the
destruction of the originals. Indication of a Contract being part of a Series
Trust Estate will be deleted from or modified on the Servicer's accounts and
records when, and only when, a Release Event has occurred with respect to such
Contract.
(e) Nothing in this Section 6.09 shall derogate from the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Brokers or Users, and the failure, as a result of
such obligation of the Servicer, to provide access as provided in this Section
6.09 shall not constitute a breach of this Section 6.09.
(f) No person entitled to receive copies of such reports
or tapes shall disclose the information therein to any Person, except such
disclosures as are required upon appointment of a successor Servicer or by law
and except that the Servicer consents to the disclosure of any material
nonpublic information with respect to it (i) to any other such party, (ii) to
any prospective or actual assignee or participant of any of them, (iii) by the
Trustee to any Rating Agency, commercial paper dealer or Support Provider, or
any entity organized for the purpose of purchasing, or making loans secured by,
financial assets for which any Noteholders' Agent provides managerial services
or acts as the administrative agent and (iv) to any officers, directors,
employees, outside accountants and attorneys of any of the foregoing.
Section 6.10. Other Necessary Data. The Servicer shall, on
request of the Trustee, furnish the Trustee such data necessary for the Trustee
to discharge its obligations with respect to each Series Trust Estate and the
related Notes as can be generated by the Servicer's existing data processing
systems; provided, that to the extent that the Servicer's existing data
processing systems cannot generate such data, the Servicer will cooperate with
the Trustee in finding a method of furnishing such data. The Servicer will
cooperate in generating additional data reasonably requested by the Trustee.
Section 6.11. Release of Contracts. (a) Upon (i) payment
in full of any Contract by the User or by any Person on behalf of such User,
(ii) any removal of a Contract by the Contributor pursuant to Section 6.15
hereof, (iii) the Servicer's reasonable determination that all Residual
Receipts with respect to any Charged-Off Contract have been received, (iv) any
removal of a Contract by the Servicer pursuant to Section 6 12(b) hereof, or
(v) any removal of a Contract by the Obligors pursuant to
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Section 6.12(a) (the events described in clauses (i) through (v) being "Release
Events"), the Servicer will so notify the Trustee of the occurrence thereof on
the next succeeding Determination Date by certification to the Trustee from a
Servicing Officer, which certification shall include a statement to the effect
that all amounts received in connection with such Release Event have been
remitted to the Master Facility Account and may request delivery of the
Contract to the Servicer or other Person designated by the Servicer.
Upon the Trustee's receipt of such certification and request
(subject to its confirmation of the receipt of the required funds in the Master
Facility Account), such Contract and the related Pledged Property appurtenant
thereto shall be deemed to be released from the related Series Trust Estate.
Upon release of such Contract, the Servicer is authorized to execute an
instrument in satisfaction of such Contract and to do such other acts and
execute such other documents as it deems necessary to discharge the User
thereunder and release the related Equipment (v) to the related User in the
event of a Release Event described in clause (i) of the immediately preceding
paragraph, (w) to the Contributor in the event of a Release Event described in
clause (ii) of the immediately preceding paragraph, (x) to the Person, if any,
purchasing the related Equipment in the event of a Release Event described in
clause (iii) of the immediately preceding paragraph, or, if no person is
purchasing such Equipment, to the related Obligor, (y) to itself in the event
of a Release Event described in clause (iv) of the immediately preceding
paragraph, and (z) to the related Obligor in the event of a Release Event
described in clause (v) of the immediately preceding paragraph.
(b) With respect to all Contracts so released from the
Trust Estate, the Trustee shall assign, without recourse, representation or
warranty, to the appropriate Person as directed by the Servicer, all of the
Trustee's right, title and interest in and to such Contract and Pledged
Property appurtenant thereto, such assignment being an assignment outright and
not for security. Such Person will thereupon own such Contract and related
Pledged Property appurtenant thereto free of any further obligation to the
Trustee or the Noteholders with respect thereto. The Trustee shall also
execute and deliver all such other instruments or documents as shall be
reasonably requested by any such Person to be required or appropriate to effect
a valid transfer of title to a Contract and the Pledged Property appurtenant
thereto. Any instrument or documents required to be executed by the Trustee
pursuant to this Section 6.11(b) shall be prepared by the Servicer (or such
Person) at the Servicer's (or such Person's) expense; provided, that if the
Servicer is not Advanta Business Services Corp. or any of its Affiliates, then
any such expenses to be paid by the Servicer pursuant to this Section 6.11(b)
shall be paid by the Obligors.
Section 6.12. Removal Related to Upgrades or Trade-Ins,
Delinquent Contracts and Ineligibility. (a) In the event that a User requests
an upgrade or trade-in of Equipment then the related Obligor may remove the
Equipment and the related Contract from the related Series Trust Estate during
any Collection Period by remitting
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to the Trustee the applicable Prepayment Amount in the Master Facility Account
on or prior to the Determination Date relating to such Collection Period.
(b) The Servicer may during any Collection Period remove
any Delinquent Contract and the Related Security from the related Series Trust
Estate with respect to which Contract the User is in default or such default
is, in the Servicer's judgment, imminent, by deposit by the Servicer of the
applicable Prepayment Amount in the Master Facility Account on or prior to the
Determination Date relating to such Collection Period.
Section 6.13. Notification to Noteholders of Defaults and
Events of Default. The Servicer shall promptly notify the Trustee of any
Default or any Event of Default upon the receipt of actual knowledge thereof by
a Servicing Officer, and the Trustee shall promptly thereupon give written
notice thereof to each of the Control Parties and each of the Series Support
Providers.
Section 6.14. Security Deposits. The Servicer acknowledges
that the Security Deposits are held by the Contributor on behalf of the Users
and the Trustee. In the event that (i) any User requests that a Security
Deposit be applied as an offset against such User's payment obligations or
Booked Residual under a Contract or (ii) any Contract becomes a Charged-Off
Contract, the Servicer shall deliver to the Contributor written demand that the
Contributor remit to the Servicer, on the next Business Day, out of the
applicable User's Security Deposit an amount (the "Offset Amount") equal to the
lesser of (a) the amount of such Security Deposit and (b) the amount of all
unpaid and remaining Scheduled Payments and Booked Residuals as payment in
respect of, first, any unpaid Scheduled Payments under the related Contract,
and second, any unpaid Booked Residual under the related Contract. The Servicer
shall deposit any Offset Amount so delivered to it into the Master Facility
Account within two Business Days after its receipt thereof.
The Servicer shall notify the Contributor in writing, of any
demand it receives from a User for refund of such User's Security Deposit at
the end of the term of the related Contract.
In no event shall the Trustee, the Obligors, or any Noteholder
be liable to any User with respect to the Security Deposits. The Servicer
shall indemnify and hold harmless the Trustee and the Noteholders for any loss,
cost and expense (including legal fees and expenses incurred by such parties in
connection with the prosecution of claims made in connection therewith)
suffered as a result of the Servicer's misappropriation or misapplication of
any Security Deposit. This right of indemnification shall survive the
termination of this Agreement.
Section 6.15. Removal of Nonconforming Pledged Property.
Upon discovery by an Obligor, the Trustee or the Servicer of a breach of any of
the representations or warranties of the Contributor set forth in the related
Contribution
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Agreement Supplement with respect to any Contract, the related Equipment or the
related Contract File, as the case may be, the party discovering such breach
shall give prompt written notice to the other parties. Except as specifically
provided herein, the Trustee has no obligation to review or monitor the Pledged
Property for compliance with such representations and warranties. As of the
last day of the calendar month in which such breach was discovered or, if
later, the last day of the calendar month in which the Servicer received the
notice thereof (or, at the Servicer's and such Obligor's election, any earlier
date), the Servicer, unless such breach shall have been waived or cured in all
material respects prior to such time, shall cause the Contributor to remove
such Contract and the related Pledged Property from the related Series Trust
Estate. In consideration for the removal of such Pledged Property, the
Contributor shall, no later than the Determination Date prior to the Settlement
Date next following such date, pay the Prepayment Amount to the Servicer for
deposit into the Master Facility Account. Without limiting the foregoing in
any way, in the event of a breach of any representation or warranty of the
Contributor contained in any Contribution Agreement Supplement that materially
and adversely affects any Contract or the related Contract File, unless the
breach shall have been cured on or before the last day of the calendar month in
which such breach was discovered or, if later, the last day of the calendar
month in which the Servicer received the notice thereof, the Servicer shall
enforce the obligation of the Contributor under the Contribution Agreement to
repurchase such Contract.
ARTICLE VII
ACCOUNTS AND ALLOCATIONS
Section 7.01. Establishment of the Master Facility Account;
Establishment of the Advance Payment Account. (a) On or prior to the Closing
Date, the Servicer, for the benefit of the Trustee, shall establish and
maintain or cause to be established and maintained in the name of the Trustee,
a segregated trust account in the Trustee's corporate trust department,
identified as the "Master Facility Account for Advanta Business Receivables
Master Facility, in trust for the registered Holders of Notes" (the "Master
Facility Account"). The Trustee shall make or permit withdrawals from the
Master Facility Account only as provided in this Master Agreement. The Trustee
shall possess all right, title and interest in and to all funds from time to
time on deposit in the Master Facility Account and in all proceeds thereof
(other than any Investment Earnings on amounts from time to time on deposit
therein).
(b) The Servicer, each Obligor, and the Contributor shall
deposit to the Master Facility Account any Collections received by any of them
as soon as practicable (and, in any event, within two Business Days) after
their respective receipt thereof.
(c) The Trustee, for the benefit of the Noteholders,
shall establish and maintain an account (the "Advance Payment Account") as a
non-interest bearing, segregated trust account in the Trustee's corporate trust
department, identified as the
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"Advance Payment Account for the Advanta Business Receivables Master Facility,
in trust for the registered Holders of the Notes." The Trustee shall make or
permit withdrawals from the Advance Payment Account only as provided in this
Master Agreement. The Trustee shall possess all right, title and interest in
and to all funds from time to time on deposit in the Advance Payment Account
and in all proceeds thereof (other than any Investment Earnings on amounts from
time to time on deposit therein).
(d) All Advance Payments received by the Servicer, the
Trustee, any Obligor, or the Contributor shall be deposited to the Advance
Payment Account in the same manner as Collections are deposited to the Master
Facility Account.
(e) Notwithstanding the foregoing, the Trustee and/or the
Servicer may deduct from amounts otherwise specified for deposit to the Master
Facility Account or the Advance Payment Account, as applicable, any amounts
previously deposited by the Trustee or the Servicer into the Master Facility
Account or the Advance Payment Account, as the case may be, but which are (i)
subsequently uncollectible as a result of dishonor of the instrument of payment
for or on behalf of the User or (ii) later determined to have resulted from
mistaken deposits.
(f) The Master Facility Account and the Advance Payment
Account shall each be under the sole dominion and control of the Trustee for
the benefit of the related Series Secured Parties; provided, however, that the
Trustee may rely on the information and instructions provided by the Servicer
in determining the amount of any withdrawals or payments to be made from either
such account for the purposes of carrying out the Trustee's or the Servicer's
duties hereunder or under any Series Supplement. Neither the Trustee nor the
Servicer shall have any right of setoff or banker's lien against, and no right
to otherwise deduct from, any funds held in the Master Facility Account or the
Advance Payment Account for any amount owed to it by the Servicer, the Trustee,
or any Noteholder.
Section 7.02. Collections and Allocations. (a) On each
Settlement Date, the Trustee shall transfer to the related Series Accounts from
the Master Facility Account the amounts described in the Servicer's
Certificates relating to such Settlement Date, for further application as set
forth in such Servicer's Certificates.
Section 7.03. Investment of Funds in the Master Facility
Account and the Advance Payment Account. The Trustee, at the Obligor's Agent's
written instruction, shall or, if the Obligor's Agent fails to so give such
instruction, may, at the Trustee's sole discretion, invest the amounts from
time to time on deposit in the Master Facility Account and the Advance Payment
Account in Eligible Investments. Any funds in the Advance Payment Account
which are not so invested must be insured by the Federal Deposit Insurance
Corporation to the limits established by such corporation.
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ARTICLE VIII
THE SERVICER AND THE OBLIGORS
Section 8.01. Liability of Servicer; Indemnities. (a) The
Servicer shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Servicer herein and in the Series
Supplements.
(b) Without in any way limiting the foregoing, the
Servicer shall indemnify and hold harmless the Trustee, the Obligors, the
Noteholders, any Series Support Provider and any permitted assignee of any of
the foregoing (each an "Indemnified Party" and collectively, the "Indemnified
Parties") from and against any claims, expenses, losses or liabilities
(including, without limitation, attorneys' fees and court costs) suffered or
incurred by any Indemnified Party (collectively, "Indemnified Amounts") arising
out of or resulting in connection with (i) any breach by the Servicer of its
representations and warranties or of its obligations under this Master
Agreement or under any Series Supplement or (ii) from the use, repossession or
operation of the Equipment by the Servicer or any of its Affiliates; provided,
however, that the foregoing indemnity described in the immediately preceding
clause (ii) shall not include any Indemnified Amounts to the extent resulting
from willful misconduct or gross negligence of such Indemnified Party in the
performance of any of his, her or its obligations and duties. Indemnification
pursuant to this Section shall not be payable from any Series Trust Estate.
(c) The Servicer shall pay any amounts owing pursuant to
Section 8.01(b) hereof directly to the applicable Indemnified Parties entitled
to the receipt thereof, and such amounts shall not be deposited in the Master
Facility Account, the Advance Payment Account or the Series Accounts. Any
request by any Indemnified Party for indemnity pursuant to this Section 8.01
shall be made in writing delivered to the Servicer and the Trustee describing
in reasonable detail the amount thereof and the circumstances giving rise
thereto. The Servicer shall pay any such Indemnified Amounts within 30 days
after its receipt of any such request therefor, it being understood and agreed,
however, that payment of such amount shall not constitute a waiver of the
Servicer's right to contest the basis for such indemnity so long as the
Servicer provides written notice to the applicable Indemnified Party at the
time of the Servicer's payment of the respective Indemnified Amounts, which
written notice shall state the basis, in reasonable detail, for the Servicer's
dispute of the requested Indemnified Amount.
(d) Indemnification under this Section 8.01 shall
include, without limitation, reasonable fees and expenses of counsel and
expenses of litigation reasonably incurred. If the Servicer has made any
indemnity payments to any of the Indemnified Parties pursuant to this Section
8.01 and such party thereafter collects any of such amounts from others, such
party will promptly repay such amounts collected to the Servicer, without
interest.
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(e) Notwithstanding anything contained herein to the
contrary, if and to the extent that the Servicer is the Trustee or any
successor Servicer appointed by the Trustee then such Servicer shall only be
responsible pursuant to this Section 8.01 for any such amounts suffered or
incurred by any such indemnified party hereunder as a result of the Trustee's
or such other successor Servicer's gross negligence or willful misconduct.
(f) The agreements contained in this Section 8.01 shall
survive the Final Date of the last outstanding Series and the termination of
this Master Agreement and any applicable Series Supplement.
Section 8.02. Merger, Consolidation, or Assumption of the
Obligations of Servicer. Any corporation (i) into which the Servicer may be
merged or consolidated, (ii) resulting from any merger or consolidation to
which the Servicer shall be a party or (iii) succeeding to the business of the
Servicer, shall be the successor to the Servicer hereunder 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, and such
corporation in any of the foregoing cases shall execute an agreement of
assumption, in a form reasonably satisfactory to the Trustee, agreeing to
perform every obligation of the Servicer hereunder and under each Series
Supplement. Any corporation succeeding to the business of the Servicer by
merger, consolidation or otherwise shall be a corporation organized and
existing under the laws of the United States or any State and have a tangible
net worth of at least $20,000,000. The Servicer shall provide prompt written
notice of the effectiveness of any such event to the Obligors' Agent and the
Trustee.
Section 8.03. Limitation on Liability of Servicer and
Others. No directors, officers, employees or agents of the Servicer shall be
under any liability to the Trustee, the Obligors or any of the Noteholders,
except as provided in this Master Agreement, for any action taken or for
refraining from the taking of any action pursuant to this Master Agreement or
for errors in judgment. The Servicer and any director or officer or 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 respecting any
matters arising hereunder. Except as provided herein, the Servicer shall not
be under any obligation to appear in, prosecute or defend any legal action that
is not incidental to its duties to service each Series Trust Estate in
accordance with this Master Agreement and each Series Supplement and that in
its opinion may involve it in any expense or liability; provided, however, that
the Servicer may take any such action that is reasonable and that may be
necessary or desirable in respect of this Master Agreement and each Series
Supplement and the rights and duties of the parties hereto and thereto and the
interests of the Trustee hereunder and thereunder. In the event the Servicer
takes such action, the reasonably incurred legal expenses and costs of such
action and any liabilities resulting therefrom shall be expenses, costs and
liabilities of the related Series Trust Estate, and the Servicer shall be
entitled to be reimbursed therefor in accordance with the terms hereof.
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Section 8.04. Servicer Not to Resign. Subject to the
provisions of Section 8.02 hereof, the Servicer shall not resign from the
obligations and duties hereby imposed on it as Servicer except upon
determination that the performance of its duties hereunder is no longer
permissible under applicable law. No such resignation shall become effective
until a successor Servicer shall have assumed the responsibilities and
obligations of the Servicer in accordance with Section 9.02 hereof.
Section 8.05. Reserved.
Section 8.06. Indemnities of the Obligors. Without limiting
any other rights which any of the Indemnified Parties may have hereunder, under
any Series Supplement or under applicable law, each Obligor hereby agrees to
indemnify each Indemnified Party from and against any and all Indemnified
Amounts arising out of (i) reliance on any representation or warranty or
statement of such Obligor made or deemed made by such Obligor under or in
connection with this Master Agreement or in any of the other Series Related
Documents to which such Person is a party or in any certificate or report
delivered in connection with any of the foregoing which shall have been
incorrect in any material respect when made;
(ii) the failure by such Obligor to comply with
this Agreement or any of the other Series Related Documents to which
any such Person is a party, or the failure by such Obligor or the
Contributor, to comply with any applicable law, rule or regulation
with respect to any Contract, or the nonconformity of any Contract
with any such applicable law, rule or regulation;
(iii) the failure to vest in the Trustee the
property pledged by such Obligor with respect to the related Series
Trust Estate, free and clear of any Lien;
(iv) the failure of such Obligor to pay when due
any taxes, including without limitation, sales, excise or personal
property taxes payable in connection with any of the Contracts or any
of the Equipment, to the extent required by Section 14.10 hereof.
(a) Any request by any Indemnified Party for indemnity
pursuant to this Section 8.06 shall be made in writing delivered to the
Obligors' Agent and the Trustee describing in reasonable detail the amount
thereof and the circumstances giving rise thereto. The Obligors' Agent on
behalf of the related Obligor(s) shall pay any such Indemnified Amounts within
30 days after its receipt of any such request therefor; it being understood and
agreed, however, that payment of such amount shall not constitute a waiver of
the Obligors' Agent right to contest the basis for such indemnity so long as
the Obligors' Agent provides written notice to the applicable Indemnified Party
at the time of the Obligors' Agent payment of the respective Indemnified
Amounts, which written notice shall state the basis, in reasonable detail, for
the Obligors' Agent's dispute of the requested Indemnified Amount.
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(b) The agreement contained in this Section 9.06 shall
survive the Final Date of the last outstanding Series and the termination of
this Master Agreement and any applicable Series Supplement.
Section 8.07. Limitation on Liability of the Obligors. The
directors, officers, employees or agents of any Obligor shall not be under any
liability to the Trustee, the Noteholders, the Contributor, the Servicer, any
Series Support Party or any other Person hereunder or pursuant to any document
delivered hereunder, it being expressly understood that all such liability is
expressly waived and released as a condition of, and as consideration for, the
Obligor's execution and delivery of this Agreement and the issuance of the
Notes. The Obligors may rely in good faith on any document of any kind prima
facie properly executed and submitted by any other Person respecting any
matters arising hereunder.
ARTICLE IX
SERVICER TERMINATION
Section 9.01. Events of Servicer Termination. (a) If any
of the following events (each an "Event of Servicer Termination") shall occur
and be continuing:
(i) any failure by the Servicer to make any payment, transfer
or deposit, or, if applicable, to give instructions or notice to the
Trustee to make such payment, transfer or deposit, relating to the
payment of the interest or principal balance of any Note, in either
case, on or before the fifth calendar day following 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 the terms of this
Master Agreement or any applicable Series Supplement; or
(ii) the Servicer shall fail to perform or observe any other
term, covenant or agreement hereunder or in any Series Related
Document (other than as described in clause (i) above), with the
result that the interests of the Trustee, the Noteholders or any
Series Support Provider have been materially and adversely affected,
and such failure shall remain unremedied for 30 calendar days after
the receipt by the Servicer of written notice of such failure from the
Trustee;
(iii) any representation, warranty, certification or
statement made by the Servicer in this Master Agreement, in any Series
Related Document or in any other document delivered pursuant hereto or
thereto shall prove to have been incorrect in any material respect
when made (or deemed made), with the result that the interests of the
Trustee, the Noteholders or any Series Support Provider have been
materially and adversely affected, and such situation is not remedied
within 30 calendar days after receipt by the Servicer of written
notice of such situation from the Trustee;
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(iv) an Insolvency Event shall occur with respect to the
Servicer;
then, and in each and every case, so long as an Event of Servicer Termination
shall be continuing, the Trustee may, and, at the direction of the Majority
Control Parties, shall, by notice (the "Servicer Termination Notice") then
given in writing to the Servicer, terminate all, but not less than all, of the
rights and obligations of the Servicer under this Master Agreement and each
Series Related Document.
(b) On and after the time the Servicer receives a
Servicer Termination Notice pursuant to this Section 9.01, all authority and
power of the Servicer under this Master Agreement and each Series Related
Document, whether with respect to the Notes or each Series Trust Estate or
otherwise, shall pass to and be vested in the successor Servicer appointed
pursuant to Section 9.02 hereof and, without limitation, such successor
Servicer is hereby authorized and empowered to execute and deliver, on behalf
of the Servicer, as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary
or appropriate to effect the purposes of such Servicer Termination Notice,
whether to complete the transfer of each Series Trust Estate and related
documents or otherwise.
The Servicer agrees to cooperate with the Trustee and the
successor Servicer in effecting the termination of the responsibilities and
rights of the Servicer hereunder, including, without limitation, the transfer
to the successor Servicer for administration by it of all cash amounts that
shall at the time be held by the Servicer for deposit, or have been deposited
by the Servicer, in the Advance Payment Account or the Master Facility Account
or thereafter received with respect to the related Series Trust Estate. To
assist the successor Servicer in enforcing all rights with respect to any
Related Security or under Broker Agreements and Insurance Policies to the
extent that they relate to the Contracts, the Servicer, at its own expense,
shall transfer its electronic records relating to such Contracts to the
successor Servicer in such electronic form as the successor Servicer may
reasonably request and shall transfer the related Contract Files and all other
records, correspondence and documents relating to the Contracts that it may
possess to the successor Servicer in the manner and at such times as the
successor Servicer shall reasonably request. In addition to any other amounts
that are then payable to the Servicer under this Master Agreement or any Series
Related Document, the Servicer shall be entitled to receive reimbursement for
any unreimbursed Servicer Advances made during the period prior to the delivery
of a Servicer Termination Notice pursuant to this Section 9.01.
Section 9.02. Trustee to Act; Appointment of Successor. On
and after the time the Servicer receives a Servicer Termination Notice pursuant
to Section 9.01, the Trustee shall without further action be the successor in
all respects to the terminated Servicer in its capacity as Servicer under this
Master Agreement and each Series Related Document and the transactions set
forth or provided for herein and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof; provided, however, that (a) the Trustee shall not assume
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any obligations of the Contributor pursuant to the Contribution Agreement, (b)
the Trustee shall be permitted in its sole discretion, but shall have no
obligation, to make any Servicer Advances and (c) the Trustee shall not be
liable for any acts or omissions of the terminated Servicer or for any breach
by either the terminated Servicer or the Contributor of any of their respective
representations and warranties contained herein, in the Contribution Agreement,
in any other Series Related Document or in any related document or agreement.
As compensation for acting as Servicer hereunder, the Trustee shall be entitled
to the payment of the Servicer Fee and other compensation (whether payable out
of the Master Facility Account or otherwise) as the terminated Servicer would
have been entitled to hereunder if no such Servicer Termination Notice had been
given.
Notwithstanding the foregoing, the Trustee may or, upon the
direction of the Majority Control Parties, shall appoint any servicing entity
acceptable to or designated by the Majority Control Parties to act as the
successor to the Servicer hereunder and to assume (prospectively) all
responsibilities, duties or liabilities of the Servicer hereunder, provided
that any such servicing entity has a net worth of, or is a member of a
consolidated group of entities which has a net worth of, not less than
$20,000,000 and whose regular business includes the servicing of receivables of
a similar nature to the Contracts. In connection with such appointment and
assumption, the Trustee may make such arrangements for the payment of a
Servicer Fee to such successor Servicer in such an amount as the Trustee and
such successor Servicer shall agree; provided, however, that except as set
forth in the immediately succeeding paragraph no such agreed upon Servicer Fee
shall be in excess of the Servicer Fee then being received by the Servicer; and
provided, further, that in no event shall the Trustee be liable to any
successor Servicer for the Servicer Fee or any additional amounts payable to
such successor Servicer, either pursuant to this Master Agreement, any Series
Related Document or otherwise. The Trustee and such successor Servicer shall
take such action, consistent with this Master Agreement, as shall be necessary
to effectuate any such succession.
Notwithstanding the foregoing, if the Trustee is not legally
permitted to act as Servicer under any applicable law and the Trustee is unable
to engage a successor Servicer willing to act as Servicer for a fee equal to or
less than the Servicer Fee then being received by the Servicer then the Trustee
may solicit bids from not less than three entities currently engaged in
businesses similar to that of Advanta Business Services Corp. (at the time of
the origination of the Contracts) or providing servicing services similar to
that of the Servicer to businesses currently engaged in businesses similar to
that of Advanta Business Services Corp. (at the time of the origination of the
Contracts) which, in either case, are qualified to act as successor Servicer
pursuant to this Section 9.02 and appoint the qualified entity submitting the
proposal to act as successor Servicer for the lowest fee, even if such fee
exceeds the Servicer Fee as calculated by reference to the Original Servicer
Fee Rate (such higher fee being an "Increased Servicer Fee" and the difference
between such Increased Servicer Fee and the Servicer Fee as would have been due
in respect of any period if such fee were to be calculated by reference to the
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Original Servicer Fee being the "Increased Servicer Fee Differential"). Any
Increased Servicer Fee Differential shall be payable in the manner and with the
priority set forth in each of the Series Supplements solely out of funds
available for such purpose; provided, that any such Increased Servicer Fee
Differential not paid when due as a result of there not being sufficient
available funds therefor on any Settlement Date shall be payable on any future
Settlement Date to the extent amounts are then available for the payment
thereof.
Section 9.03. Notification to Noteholders. The Servicer
shall promptly notify the Trustee and the Obligors' Agent of any Event of
Servicer Termination upon the receipt of actual knowledge thereof by a
Servicing Officer, and the Trustee shall promptly thereupon give written notice
thereof to each of the Control Parties and each of the Series Support
Providers. Upon any termination of, or appointment of a successor to, the
Servicer pursuant to this Article IX, the Trustee shall give prompt written
notice thereof to each the Noteholders, each of the Series Support Providers
and the Contributor.
Section 9.04. Waiver of Past Events of Servicer
Termination. The Majority Control Parties, on behalf of all Noteholders may
waive any default by the Servicer in the performance of its obligations
hereunder and its consequences. Any such waiver must be in writing and be
signed by the Majority Control Parties or the Trustee acting on behalf (and at
the direction) of the Majority Control Parties. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Servicer
Termination arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent
similar or dissimilar default or impair any right consequent thereon except to
the extent expressly waived in accordance with this Section 9.04.
Section 9.05. Effects of Termination of Servicer. (a) Upon
the appointment of the successor Servicer, the terminated Servicer shall hold
in trust for the Trustee and immediately remit any Scheduled Payments, Residual
Receipts, Overdue Payments, Security Deposit, Insurance Proceeds, Total Payoff
amounts, Advance Payments, Prepayment Amounts, and proceeds of any Related
Security that it may receive pursuant to any Contract, any Broker Agreement,
Insurance Policy or otherwise to the successor Servicer for the benefit of the
Trustee; provided, that amounts representing Security Deposits shall be
remitted as required by paragraph (b) below.
(b) After the delivery of a Servicer Termination Notice,
the terminated Servicer shall have no further obligations with respect to the
management, administration or servicing of any Series Trust Estate or the
enforcement, custody or collection of the Contracts, and the successor Servicer
shall have all of such obligations, except that the terminated Servicer will
transmit or cause to be transmitted directly to the successor Servicer for the
benefit of the Trustee (i) promptly upon receipt and in the same form in which
received, any amounts held or received by the former Servicer (properly
endorsed where required for the successor Servicer to collect them) as payments
upon
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or otherwise in connection with Contracts or any Series Trust Estate and (ii)
when and as required by Section 6.14 hereof, amounts representing Security
Deposits. The terminated Servicer's indemnification obligations pursuant to
Section 8.01 hereof will survive its termination as the Servicer hereunder but
will not extend to any acts or omissions of any successor Servicer.
(c) Notwithstanding Section 9.05(b) hereof, it is hereby
agreed by the parties hereto that in the event that Advanta Business Services
Corp. or any of its Affiliates no longer continues to perform as Servicer
hereunder, the Obligors, upon the request of the Trustee, shall instruct the
Contributor pursuant to the Contribution Agreement to exercise any rights under
any Contract or guaranty thereof, Insurance Policy for the benefit of the
Trustee and the related Series Secured Parties.
(d) An Event of Servicer Termination shall not affect the
rights and duties of the parties hereunder other than those relating to the
management, administration, servicing, custody or collection of the Contracts
or the payment of certain expenses by the successor Servicer, in each case, as
expressly set forth herein.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.01. Events of Default. The "Event of Default,"
with respect to a Series, shall be set forth in the related Series Supplement.
Section 10.02. Collection of Indebtedness and Suits for
Enforcement by Trustee; Authority of Controlling Party. (a) Subject to the
provisions of the related Supplement, if the Notes of any Series are
accelerated following the occurrence of an Event of Default with respect to
such Series, there shall be due and payable (but only from the funds available
from the related Series Trust Estate), the whole amount then due and payable on
such Notes for principal and interest, with interest upon the overdue
principal, and, to the extent payment at such rate of interest shall be legally
enforceable, upon overdue installments of interest, at the interest rate
applicable to the Notes of such Series and in addition thereto such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee and its agents and counsel.
(b) If an Event of Default occurs and is continuing with
respect to a Series, the Trustee shall at the discretion of the related
Controlling Party, proceed to protect and enforce its rights and the rights of
the Noteholders of such Series by such appropriate Proceedings as the Trustee
shall deem most effective to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Master Agreement
or the related Series Supplement or in aid of the exercise of any power granted
herein or therein, or to enforce any other proper remedy or legal or
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equitable right vested in the Trustee by this Master Agreement, the related
Series Supplement, or by law.
(c) In case there shall be pending, relative to any
Obligor or any other obligor upon the Notes or any Person having or claiming an
ownership interest in the related Series Trust Estate, Proceedings under Title
11 of the United States Code or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or in case a receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, sequestrator or similar
official shall have been appointed for or taken possession of any related
Series Obligor or its property or such other obligor or Person, or in case of
any other comparable judicial Proceedings relative to such Obligor or other
obligor upon the Notes of such Series, or to the creditors or property of such
Obligor or such other obligor, the Trustee, irrespective of whether the
principal of any Notes of such Series shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand pursuant to the provisions of this Section,
shall be entitled and empowered, by intervention in such Proceedings or
otherwise:
(i) to file and prove a claim or claims for the
whole amount of principal and interest owing and unpaid in respect of
such Notes and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
against the related Series Trust Estate (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee,
and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee, except as
a result of negligence or bad faith) and of the Noteholders of such
Series allowed in such Proceedings;
(ii) unless prohibited by applicable law and
regulations, to vote on behalf of the Holders of Notes of such Series
in any election of a trustee, a standby trustee or person performing
similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other
property payable or deliverable on such claims and received with
respect to the related Series Trust Estate and to distribute all
amounts received with respect to the claims of the Noteholders of such
Series and of the Trustee on their behalf; and
(iv) to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the
claims of the Trustee or the Holders of Notes of such Series, in each
case against the related Series Trust Estate, allowed in any judicial
proceedings relative to the Obligors, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the
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Trustee, and, in the event that the Trustee shall consent to the making of
payments directly to such Noteholders, to pay to the Trustee such amounts as
shall be sufficient to cover reasonable compensation to the Trustee, each
predecessor Trustee and their respective agents, attorneys and counsel, and all
other expenses and liabilities incurred, and all advances made, by the Trustee
and each predecessor Trustee except as a result of negligence or bad faith.
(d) Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or vote for or accept or adopt on behalf
of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Noteholder in any
such proceeding except, as aforesaid, to vote for the election of a trustee in
bankruptcy or similar Person.
(e) All rights of action and of asserting claims under
this Master Agreement, the related Series Supplement, or under any of the
Notes, may be enforced by the Trustee without the possession of any of the
Notes or the production thereof in any trial or other Proceedings relative
thereto, and any such action or Proceedings instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of the
related Notes.
(f) In any Proceedings brought by the Trustee (including
any Proceedings involving the interpretation of any provision of this Master
Agreement or the related Series Supplement), the Trustee shall be held to
represent all the Holders of the related Notes, and it shall not be necessary
to make any Noteholder a party to any such Proceedings.
Section 10.03. Limitation on Suits. No Holder of any Note
shall have any right to institute any Proceeding, judicial or otherwise, with
respect to this Master Agreement or the related Supplement, or for the
appointment of a receiver or trustee, or for any other remedy hereunder,
unless:
(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default with respect to the Notes
of the related Series;
(2) the Holders of not less than 50% of the Outstanding
Amount of the Notes of the related Series shall have made written
request to the Trustee to institute such Proceeding in respect of such
Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
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(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such Proceeding;
(5) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the Holders
of a majority of the Outstanding Amount of the Notes of the related
Series; and
(6) if any Series Support secures such Series, a Support
Default shall have occurred and be continuing.
It is understood and intended that no one or more of the
Holders shall have any right in any manner whatever hereunder or under the
Notes to (i) affect, disturb or prejudice the rights of the Holders of any
other Notes, (ii) obtain or seek to obtain priority or preference over any
other such Holder or (iii) enforce any right under this Master Agreement,
except in the manner herein provided and for the equal, ratable and common
benefit of all such Holders.
Section 10.04. Unconditional Right of Holders to Receive
Principal and Interest. Subject to the provisions of Section 3.06 hereof, the
Holder of any Note shall have the right, which is absolute and unconditional,
to receive payment of the principal of and interest on such Note on or after
the respective due dates thereof expressed in such Note, in this Master
Agreement or the related Series Supplement and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder; provided, however, that (x) if such Series is
secured by any Series Support, then, so long as no Support Default shall have
occurred and be continuing, no such suit shall be instituted and (y) in no
event shall such right entitle any Holder to a payment from a source of funds
other than the related Series Trust Estate.
Section 10.05. Restoration of Rights and Remedies. If any of
the Trustee, the related Series Support Provider or any Holder has instituted
any Proceeding to enforce any right or remedy under this Master Agreement (or
the related Supplement) and such Proceeding has been discontinued or abandoned
for any reason, or has been determined adversely to the Trustee, the related
Series Support Provider or to such Holder, then and in every such case, subject
to any determination in such Proceeding, the Obligors, the Trustee, the related
Series Support Provider and the related Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee, the related Series Support Provider and the related
Holders shall continue as though no such Proceeding had been instituted.
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Section 10.06. Rights and Remedies Cumulative. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen securities in the last paragraph of section 5.05, no
right or remedy herein conferred upon or reserved to any of the Trustee, the
related Controlling Party or to the related Holders is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 10.07. Delay or Omission Not Waiver. No delay or
omission of any of the Trustee, the related Controlling Party or any Holder of
any related Note to exercise any right or remedy accruing upon any related
Default or related Event of Default shall impair any such right or remedy or
constitute a waiver of any such related Default or related Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by
law to the Trustee or to the related Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the related
Holders, as the case may be.
Section 10.08. Control by Holders. If the Trustee is the
Controlling Party with respect to a Series, the Holders of a majority of the
Outstanding Amount of the Notes with respect to such Series 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, with respect to the Notes; provided, that
(1) such direction shall not be in conflict with any rule
of law, with this Master Agreement or with the related Series
Supplement, and
(2) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction.
Section 10.09. Waiver of Past Defaults. The Series
Controlling Party with respect to a Series may, on behalf of the Holders of all
the Notes of the related Series waive any past Default relating to such Series
or Event of Default relating to such Series hereunder and its consequences,
except a Default relating to such Series:
(1) in the payment of the principal of or interest, if
any, on any Note of the related Series, or
(2) in respect of a covenant or provision hereof which
cannot be modified or amended without the consent of the Holder of
each Outstanding Note of the related Series affected.
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The Trustee may, but shall not be obligated to, fix a record
date for the purpose of determining the Persons entitled to waive any past
Default or Event of Default of the related Series. If a record date is fixed,
the Holders of the related Series on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to waive any such Default or
Event of Default, whether or not such Holders remain Holders after such record
date; and unless such majority in principal amount shall have been obtained
prior to the date which is 90 days after such record date, any such waiver
previously given shall automatically and without further action by any Holder
be cancelled and of no further effect.
Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Master Agreement and each applicable Series Supplements;
but no such waiver shall extend to any subsequent or other Default or Event of
Default or impair any right consequent thereon.
Section 10.10. Undertaking for Costs. All parties to this
Master Agreement and the related Series Supplement agree, and each Holder of
any Note by such Holder's acceptance thereof shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the enforcement
of any right or remedy under this Master Agreement or the related Series
Supplement, or in any suit against the Trustee for any action taken, suffered
or omitted by it as Trustee, the filing by any party litigant in such suit of
an undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Obligors, to any suit instituted by the Trustee or any Series Support Provider,
to any suit instituted by any Holder, or group of Holders, holding in the
aggregate more than 10% of the Outstanding Amount of the Notes of the related
Series, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of or interest on any Note on or after the respective
due dates expressed in such Note and the related Series Supplement.
Section 10.11. Action on Notes. The Trustee's right to seek
and recover judgment on the Notes or under this Master Agreement or any Series
Supplement shall not be affected by the seeking, obtaining or application for
any other relief under or with respect to this Master Agreement or such Series
Supplement. Neither the lien hereof, the related Series Supplement nor any
rights or remedies of the Trustee or the Noteholders shall be impaired by the
recovery of any judgment by the Trustee against the Obligors or by the levy of
any execution under such judgment upon any portion of the related Series Trust
Estate or upon any of the assets of the Obligors.
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ARTICLE XI
THE TRUSTEE
Section 11.01. Certain Duties and Responsibilities. (a)
Except during the continuance of an Event of Default with respect to a Series:
(1) the Trustee undertakes to perform with respect to
such Series such duties and only such duties as are specifically set
forth in this Master Agreement and/or the related Series Supplement,
and no implied covenants or obligations shall be read into this Master
Agreement or the related Series Supplement against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Master Agreement and/or the related Series Supplement; but in
the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Master Agreement
and/or the related Series Supplement.
(b) If an Event of Default with respect to a Series has
occurred and is continuing, the Trustee shall exercise such of the rights and
powers with respect to such Series vested in it by this Master Agreement and/or
the related Series Supplement, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(c) No provision of this Master Agreement or any Series
Supplement shall be construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act, or its own wilful
misconduct; provided, that
(1) this subsection shall not be construed to limit the
effect of subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall
be proved that the Trustee was negligent in ascertaining the pertinent
facts;
(3) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the related Series Support Provider or, if the
related Series Support Provider is not a Controlling Party or if there
is no Series Support Provider for such Series, the Holders of a
majority of the Outstanding Amount of the Notes of the related
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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, under this Master
Agreement, the related Series Supplement or the related Series Support
with respect to the Notes of the related Series; and
(4) no provision of this Master Agreement or the related
Series Supplement shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of
any of its duties hereunder or thereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(d) Whether or not herein or therein expressly so
provided, every provision of this Master Agreement and the related Series
Supplement relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of paragraphs (a),
(b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any
money received by it.
(f) Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law or the terms
of this Master Agreement or the related Series Supplement.
(g) The Trustee shall, upon one Business Day's prior
notice received by the Trustee, permit any representative of the related Series
Controlling Party or any representative of the related Series Support Provider,
if any, during the Trustee's normal business hours, to examine all books of
account, records, reports and other papers of the Trustee relating to the Notes
of the related Series, to make copies and extracts therefrom and to discuss the
Trustee's affairs and actions, as such affairs and actions relate to the
Trustee's duties with respect to such Notes, with the Trustee's officers and
employees responsible for carrying out the Trustee's duties with respect to
such Notes.
(h) In no event shall the Trustee be required to perform,
or be responsible for the manner of performance of, any of the obligations of
any Servicer, with respect to any Series except during such time, if any, as
the Trustee, in its capacity as Successor Servicer for such Series shall be the
successor to, and be vested with the rights, powers, duties and privileges of
the Servicer in accordance with the provisions of Section 9.02 hereof.
(i) The Trustee shall maintain or cause to be maintained,
in the Borough of Manhattan in the City of New York, an office or agency where
Notes may be surrendered for registration of transfer or exchange (except that
Bearer Notes may not be surrendered for exchange at any such office or agency
in the United States) and where
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notices and demands to or upon the Obligors in respect of the Notes, this
Master Agreement and the related Series Supplement may be served.
Section 11.02. Notice of Defaults. If a Default or Event of
Default occurs and is continuing with respect to a Series and if it is known to
a Responsible Officer of the Trustee, the Trustee shall mail to each Noteholder
of the related Series notice of such Default or Event of Default promptly after
it occurs and shall notify the Obligors, the Obligors' Agent, the Contributor,
the Servicer and the related Series Support Provider, if any, of any such
Default or Event of Default promptly after it occurs. Except in the case of a
Default in payment of principal of or interest on any Note, the Trustee may
withhold the notice (but not to the related Series Support Provider, if any, or
the Obligors if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interest of the
Noteholders of the related Series.
Section 11.03. Certain Rights of Trustee. Subject to the
provisions of Section 11.01:
(a) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Obligors mentioned
herein shall be sufficiently evidenced by an Obligors' Order;
(c) whenever in the administration of this Master
Agreement and/or any Series Supplement the Trustee shall deem it desirable that
a matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, request and rely upon
an Officer's Certificate;
(d) the Trustee may consult with counsel and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Master Agreement and/or any
Series Supplement at the request or direction of any of the related Series
Support Provider, if any, or the Holders of the related Series pursuant to this
Master Agreement, unless such Series Support Provider or such Holders shall
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
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(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the related Obligors,
personally or by agent or attorney; and
(g) 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 and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by
it hereunder.
Section 11.04. Not Responsible for Recitals or Issuance of
Notes. The recitals contained herein, in any Series Supplement and in the
Notes, except the Trustee's certificates of authentication, shall be taken as
the statements of the Obligors, and the Trustee or any Authenticating Agent
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Master Agreement, any
Series Supplement or of the Notes, or any Series Trust Estate. The Trustee or
any Authenticating Agent shall not be accountable for the use or application by
the Obligors of Notes or the proceeds thereof.
Section 11.05. May Hold Notes. The Trustee, any
Authenticating Agent, any Paying Agent, any Note Registrar or any other agent
of the Obligors, in its individual or any other capacity, may become the owner
or pledgee of Notes and, subject to Sections 11.07 and 11.12, may otherwise
deal with the Obligors with the same rights it would have if it were not
Trustee, Authenticating Agent, Paying Agent, Note Registrar or such other
agent.
Section 11.06. Compensation and Indemnity. (a) As payable in
each Series Supplement, the Trustee will be paid, and the Trustee shall be
entitled to, certain annual fees with respect to its administration of the
related Notes and the related Series Trust Estate, which shall not be limited
by any law on compensation of a Trustee of an express trust, and certain
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services as more further
set forth in the related Series Supplement. The Obligors' Agent also agrees to
cause to be provided to the Trustee indemnity against any and all loss,
liability or expense (including attorneys' fees) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder.
(b) When the Trustee incurs expenses after the occurrence
of an Insolvency Event with respect to any Obligor, the expenses are intended
to constitute expenses of administration under Title 11 of the United States
Code or any other applicable Federal or state bankruptcy, insolvency or similar
law. Notwithstanding
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anything else set forth in this Master Agreement, any Series Supplement or any
Series Related Documents, the Trustee agrees that the obligations of the
Obligors to the Trustee hereunder and under the related Series Related
Documents shall be recourse to the related Series Trust Estate only. In
addition, the Trustee agrees that its recourse to the Obligors and the related
Series Trust Estate shall be limited to the right to receive the distributions
as provided for in the payment priority provisions of the related Series
Supplement.
Section 11.07. Disqualification; Conflicting Interests. If
this Master Agreement is qualified under the Trust Indenture Act and if the
Trustee has or shall acquire a conflicting interest within the meaning of the
Trust Indenture Act, the Trustee shall either eliminate such interest or
resign, to the extent and in the manner provided by, and subject to the
provisions of, the Trust Indenture Act and this Master Agreement.
Section 11.08. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder, which (a) shall be a
commercial bank or trust company organized and doing business under the laws of
the United States of America or any State thereof, (b) shall have a combined
capital and surplus of at least $50,000,000, (c) a long-term deposit rating of
at least A3 from Moody's or otherwise be acceptable to Moody's and a long-term
deposit rating of at least A- from S&P or otherwise be acceptable to S&P and
(d) shall be authorized to exercise corporate trust powers and be subject to
supervision or examination by Federal or State authority. If such commercial
bank or trust company publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such commercial bank or trust company shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.
Section 11.09. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 11.08.
(b) The Trustee may resign at any time with respect to
the Notes by giving written notice thereof to the Obligors' Agent. If the
instrument of acceptance by a successor Trustee required by Section 11.10 shall
not have been delivered to the Trustee 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 with respect
to the Notes.
(c) The Trustee may be removed at any time with respect
to the Notes by Act of the Majority Control Parties, delivered to the Trustee
and to the Obligors' Agent.
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(d) If at any time:
(1) The Trustee shall fail to comply with Section
11.07 after written request therefor by the
Obligors or by any Holder who has been a bona
fide Holder of a Note for at least six
months, or
(2) the Trustee shall cease to be eligible under
Section 11.08 and shall fail to resign after
written request therefor by the Obligors or
by any such Holder, or
(3) the Trustee shall become incapable of acting
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, in any such case, the Obligors' Agent (with the consent of each Series
Support Provider as to which a Support Default has not occurred and is
continuing) may remove the Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, with respect to the Notes, the Obligors' Agent (with the consent of
each Series Support Provider as to which a Support Default has not occurred and
is continuing) shall promptly appoint a successor Trustee and shall comply with
the applicable requirements of Section 11.10.
(f) The Obligors' Agent shall give notice of each
resignation and each removal of the Trustee with respect to the Notes and each
appointment of a successor Trustee with respect to the Notes by mailing written
notice of such event by first-class mail, postage prepaid, to all holders of
Notes as their names and addresses appear in the Note Register. Each notice
shall include the name of the successor Trustee with respect to the Notes and
the address of its Corporate Trust Office.
Section 11.10. Acceptance of Appointment by Successor. (a)
In case of the appointment hereunder of a successor Trustee with respect to the
Notes, every such successor Trustee so appointed shall execute, acknowledge and
deliver to the Obligors' Agent, each Series Support Provider, if any and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Obligors' Agent, the related Series Support
Provider, if any, or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all
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the rights, powers and trusts of the Trustee and shall duly assign, transfer
and deliver to such successor Trustee all property and money held by such
retiring Trustee hereunder.
(b) Upon request of any such successor Trustee, the
Obligors' Agent and each Obligor shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts referred to in paragraph (a) of this Section.
Section 11.11. Merger, Conversion, Consolidation or
Succession to Business. Any corporation or other entity into which the Trustee
may be merged or converted or with which it may be consolidated, or any
corporation or other entity resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation or
other entity succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation or other entity shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or
any further act on the part of any of the parties hereto. The Trustee shall
provide the Obligors' Agent and each Series Support Provider prompt notice of
any such transaction after the completion thereof. In case any Notes shall
have been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Notes so authenticated with the
same effect as if such successor Trustee had itself authenticated such Notes.
Section 11.12. Preferential Collection of Claims Against
Obligors. If this Master Agreement is ever qualified under the Trust Indenture
Act, then the provisions of Section 311 of the Trust Indenture Act shall
govern.
Section 11.13. Appointment of Authenticating Agent. As of
the date of the Master Agreement and at any time when any of the Notes remain
Outstanding the Trustee may appoint an Authenticating Agent or agents with
respect to one or more Series, Classes or Tranches of Notes which shall be
authorized to act on behalf of the Trustee to authenticate Notes of such
Series, Class or Tranche issued upon exchange, registration of transfer or
partial prepayment thereof, or pursuant to Section 5.05, and Notes so
authenticated shall be entitled to the benefits of this Master Agreement and
shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Master Agreement or any
Series Supplement to the authentication and delivery of Notes by the Trustee
upon exchange, registration of transfer or partial prepayment thereof or the
Trustee's certificate of authentication in connection therewith, such reference
shall be deemed to include authentication and delivery on behalf of the Trustee
by an Authenticating Agent and a certificate of authentication executed on
behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent
shall be acceptable to the Obligors' Agent, shall be authorized under law and
shall meet the eligibility criteria established for the Trustee, as set forth
in Section 11.08 hereof. If such Authenticating Agent publishes reports of
condition at
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least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating
Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Obligors' Agent. The Trustee
may at any time terminate the agency of an Authenticating Agent by giving
written notice thereof to such Authenticating Agent and to the Obligors' Agent.
Upon receiving such a notice of resignation or upon such a termination, or in
case at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to the Obligors' Agent
and shall mail written notice of such appointment by first-class mail, postage
prepaid, to all Holders of the related Notes, as their names and addresses
appear in the Note Register. 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 eligible under the provisions of this Section. No
resignation or termination of an Authenticating Agent shall become effective
until a successor Authenticating Agent shall be appointed and qualified
hereunder or the Trustee assumes the duties of Authenticating Agent hereunder.
The Obligors' Agent agrees to pay to each Authenticating Agent
from time to time reasonable compensation for its services under this Section.
In the event an Authenticating Agent is appointed under this
Master Agreement, the Trustee shall incur no liability for such appointment or
for any misconduct or negligence of such Authenticating Agent, including
without limitation, its authentication of the Notes upon original issuance or
pursuant to Sections 5.03, 5.04 or 5.05. In the event the Trustee does incur
liability for any such misconduct or negligence of the Authenticating Agent,
the Obligors' Agent agrees to indemnify the Trustee for, and hold it harmless
against, any such liability, including the costs and expenses of defending
itself against any liability in connection with such misconduct or negligence
of the Authenticating Agent.
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If an appointment with respect to one or more Series, Classes
or Tranches is made pursuant to this Section, the Notes of such Series, Classes
or Tranches may have endorsed thereon, in addition to the Trustee's certificate
of authentication, an alternate certificate of authentication in the following
form:
This is one of the Notes referred to in the within-mentioned
Master Agreement and the within-mentioned Supplement thereto.
The Chase Manhattan Bank,
As Trustee
By:________________________________
As Authenticating Agent
By:________________________________
Authorized Officer
Section 11.14. Paying Agent. (a) The payment
responsibilities for the Notes shall be performed by a Paying Agent, appointed
by the Obligors' Agent which shall be authorized to exercise corporate trust
powers and shall meet the eligibility criteria established for the Trustee, as
set forth in Section 11.08 hereof. The Trustee is hereby initially appointed
Paying Agent for the purpose of making payments on the Notes as herein
provided.
(b) Each Paying Agent shall be acceptable to the
Obligors' Agent, shall be authorized under law and shall meet the eligibility
criteria established for the Trustee, as set forth in Section 11.08 hereof. If
such Paying Agent publishes reports of condition at least annually, pursuant to
law or to the requirements of said supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such Paying
Agent shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time a Paying
Agent shall cease to be eligible in accordance with the provisions of this
Section, such Paying Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any corporation into which a Paying Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Paying Agent shall
be a party, or any corporation succeeding to the corporate agency or corporate
trust business of a Paying Agent, shall continue to be a Paying Agent, provided
such corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the Trustee
or the Paying Agent.
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A Paying Agent may resign at any time by giving written notice
thereof to the Trustee and to the Obligors' Agent. The Trustee may at any time
terminate the agency of a Paying Agent by giving written notice thereof to such
Paying Agent and to the Obligors' Agent. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such Paying
Agent shall cease to be eligible in accordance with the provisions of this
Section, the Trustee may appoint a successor Paying Agent which shall be
acceptable to the Obligors' Agent and shall mail written notice of such
appointment by first-class mail, postage prepaid, to all Holders of the related
Notes, as their names and addresses appear in the Note Register. Any successor
Paying 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 a Paying Agent. No successor Paying Agent
shall be appointed unless eligible under the provisions of this Section. No
resignation or termination of a Paying Agent shall become effective until a
successor Paying Agent shall be appointed and qualified hereunder or the
Trustee assumes the duties of Paying Agent hereunder.
The Obligors' Agent agrees to pay to each Paying Agent from
time to time reasonable compensation for its services under this Section.
In the event a Paying Agent is appointed under this Master
Agreement, the Trustee shall incur no liability for such appointment or for any
misconduct or negligence of such Paying Agent. In the event the Trustee does
incur liability for any such misconduct or negligence of the Paying Agent, the
Obligors' Agent agrees to indemnify the Trustee for, and hold it harmless
against, any such liability, including the costs and expenses of defending
itself against any liability in connection with such misconduct or negligence
of the Paying Agent.
Section 11.15. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Master Agreement, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Trust may at the time be located, the Trustee, 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 related Series Trust Estate, and to vest in
such Person or Persons, in such capacity and for the benefit of the related
Noteholders, such title to the related Series Trust Estate, or any part hereof,
and subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor Trustee under Section 11.08 and no
notice to Noteholders of the appointment of any co-trustee or separate trustee
shall be required under Section 11.09 hereof.
(b) Every separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
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(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder, 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. Each
instrument appointing any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of this Master Agreement and the related Series
Supplement(s), specifically including every provision of this Master Agreement
and the related Series Supplement(s) relating to the conduct of, affecting the
liability of, or affording protection to, the Trustee. Every such instrument
shall be filed with the Trustee.
(d) 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
successor trustee.
ARTICLE XII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND OBLIGORS' AGENT
Section 12.01. Obligors' Agent to Furnish Trustee Names and
Addresses of Holders. The Obligors' Agent will furnish or cause to be
furnished to the Trustee with respect to each Series of Notes (a) not more than
five days after the earlier of (i) each Record Date with respect to such Series
and (ii) three months after the last Record Date with respect to such Series, a
list, in such form as the Trustee may reasonably
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require, of the names and addresses of the Holders of Notes of such Series as
of such Record Date, (b) at such other times as the Trustee may request in
writing, within 30 days after receipt by the Obligors of any such request, a
list of similar form and content as of a date not more than 10 days prior to
the time such list is furnished; provided, however, that so long as the Trustee
is the Note Registrar, no such list shall be required to be furnished. The
Trustee or, if the Trustee is not the Note Registrar, the Obligors' Agent shall
furnish or cause to be furnished to the related Series Support Provider, if
any, in writing on an annual basis and at such other times as such Series
Support Provider may request a copy of such list with respect to the related
Series.
Section 12.02. Preservation of Information; Communications to
Holders. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the
most recent list furnished to the Trustee as provided in Section 12.01 and the
names and addresses of Holders received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 12.01 upon receipt of a new list so furnished.
(b) If three or more Holders of Notes of any particular
Series (herein referred to as "applicants") apply in writing to the Trustee,
and furnish to the Trustee reasonable proof that each such applicant has owned
a Note for a period of at least six months preceding the date of such
application, and such application states that the applicants desire to
communicate with other Holders of Notes of such Series with respect to their
rights under this Master Agreement, the related Series Supplement or under such
Notes and is accompanied by a copy of the form of proxy or other communication
which such applicants propose to transmit, then the Trustee shall, within five
business days after the receipt of such application, at its election, either
(i) afford such applicants access to the information
preserved at the time by the Trustee in accordance with Section
12.02(a), or
(ii) inform such applicants as to the approximate number of
Holders whose names and addresses appear in the information preserved
at the time by the Trustee in accordance with Section 12.02(a), and as
to the approximate cost of mailing to such Holders the form of proxy
or other communication, if any, specified in such application.
(iii) Every Holder of Notes, by receiving and holding the
same, agrees with the Obligors and the Trustee that neither the Obligors nor
the Trustee nor any agent of either of them shall be held accountable by reason
of the disclosure of any such information as to the names and addresses of the
Holders in accordance with Section 12.01 or 12.02(b), regardless of the source
from which such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
Section 12.01 or 12.02(b).
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Section 12.03. Reports by Trustee. If this Master Agreement
is ever qualified under the Trust Indenture Act, then the Trustee shall comply
with the provisions of Section 313 of the Trust Indenture Act.
Section 12.04. Reports by Obligors' Agent. If this Master
Agreement is qualified under the Trust Indenture Act, the Obligors' Agent on
behalf of the Obligors shall:
(1) file or cause to be filed with the Trustee, within 15
days after the Obligors are required to file the same with the
Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Obligors may be required to file with
the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or, if the Obligors are not required
to file information, documents or reports pursuant to either of said
Sections, then it shall file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by
the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of
the Securities Exchange Act of 1934 in respect of a security listed
and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations;
(2) file or cause to be filed with the Trustee and the
Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such additional information, documents
and reports with respect to compliance by the Obligors with the
conditions and covenants of this Master Agreement as may be required
from time to time by such rules and regulations;
(3) transmit or cause to be transmitted by mail to all
Holders, as their names and addresses appear in the Note Register and
each Series Support Provider within 30 days after the filing thereof
with the Trustee, such summaries of any information, documents and
reports required to be filed by the Obligors pursuant to paragraphs
(1) and (2) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission; and
(4) furnish any other periodic reports as required by the
Trust Indenture Act.
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ARTICLE XIII
MASTER AGREEMENT SUPPLEMENTS
Section 13.01. Supplements Affecting All Series, or the
Master Agreement Generally. (a) Without the consent of any Holders, the
Obligors, the Trustee when authorized by an Obligors Order, the Servicer and
each Series Support Provider, at any time and from time to time, may enter into
one or more Master Agreement Supplements, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to authorize the issuance of one or more series of
Notes;
(2) to evidence the succession, in compliance with the
applicable provisions hereof, of another corporation to any Obligors
or to the Obligors' Agent and the assumption by any such successor of
the covenants of the Obligors or the Obligors' Agent herein, in any
Series Supplement and in the Notes; or
(3) to add to the covenants of the Obligors or the
Obligors' Agent for the benefit the Holders of the Notes or to
surrender any right or power herein conferred upon the Obligors or the
Obligors' Agent; or
(4) to add to or change any of the provisions of this
Master Agreement to such extent as shall be necessary to permit or
facilitate the issuance of Notes in bearer form, registrable or not
registrable as to principal, and with or without interest coupons, or
to permit or facilitate the issuance of Notes in uncertificated form,
or to facilitate the issuance of Notes in global form through the
facilities of a Depository; or
(5) to modify the restrictions on and procedures for
resale and other transfers of the Notes to reflect any change in
applicable law or regulation (or the interpretation thereof) or in
practices relating to the resale or transfer of restricted securities
generally; or
(6) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the Notes
and to add to or change any of the provisions of this Master Agreement
as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, pursuant to the
requirements of Section 11.15; or
(7) to modify, eliminate or add to the provisions of this
Master Agreement to such extent as shall be necessary to qualify,
requalify or continue the qualification of this Master Agreement
(including any supplemental indenture) under the Trust Indenture Act,
or under any similar Federal statute hereafter enacted, and to add to
this Master Agreement such other provisions as may be
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expressly permitted by the Trust Master Agreement Act, excluding,
however, the provisions referred to in Section 316(a)(2) of the Trust
Indenture Act as in effect at the date as of which this instrument was
executed or any corresponding provision in any similar Federal statute
hereinafter enacted; or
(8) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Master Agreement, as long as such action
shall not adversely affect the interests of the Holders of Notes of
any Series affected thereby in any material respect.
(b) The Obligors' Agent on behalf of the Obligors, the
Servicer and the Trustee, when authorized by an Obligors Order, may, also
without the consent of any of the Holders of the Notes and with prior written
notice to each Series Support Provider, enter into an Master Agreement
Supplement or Supplements for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Master
Agreement or of modifying in any manner the rights of the Holders of the Notes
under this Master Agreement; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect
the interests of any Noteholder.
(c) The Obligors' Agent on behalf of the Obligors, the
Servicer and the Trustee, when authorized by an Obligors Order, also may, with
prior notice to each Series Support Provider, and with the consent of the
Holders of not less than a majority of the Outstanding Amount of the Notes of
each affected Series, by Act of said Holders delivered to the Obligors' Agent
and the Trustee, enter into a Master Agreement Supplement or Supplements hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Master Agreement or of modifying in
any manner the rights of the Holders of Notes under this Master Agreement;
provided, that, subject to the express rights of the related Series Support
Provider under the related Series Related Documents, no such Master Agreement
Supplement shall, without the consent of the Holder of each Outstanding Note of
each affected Series affected thereby,
(1) change the date of payment of any installment of
principal of or interest on any Note, or reduce the principal amount
thereof or the rate of, or method of computation of the rate of,
interest thereon or any prepayment or redemption price with respect
thereto, change the provision of this Master Agreement relating to the
application or collections on, or the proceeds of the sale of, the
related Series Trust Estate to payment of principal of or interest on
the Notes, or change any place of payment where, or the coin or
currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such
payment on or after the respective due dates thereof, or
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(2) reduce the percentage of the Outstanding Amount of
the Notes, the consent of whose Holders is required for any such
Master Agreement Supplement, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Master Agreement or certain defaults hereunder and their consequences)
provided for in this Master Agreement, or
(3) permit the creation of any lien prior to the lien
created by the related Supplement with respect to any part of the
related Series Trust Estate, or terminate the lien created by the
related Supplement on any Pledged Property subject hereto or deprive
any related Holder of the security afforded by the lien of the related
Series Supplement, except to the extent expressly permitted by this
Master Agreement, the related Series Supplement or any other related
Series Related Document, or
(4) modify any of the provisions of this Section except
to increase any such percentage or to provide that certain other
provisions of this Master Agreement, the related Supplement or the
related Series Related Documents cannot be modified or waived without
the consent of the Holder of each Outstanding Note affected thereby,
or
(5) modify or alter the provisions of the second proviso
to the definition of the term "Outstanding."
The Trustee may, but shall not be obligated to, fix a record
date for the purpose of determining the Persons entitled to consent to any
Master Agreement Supplement described in this Section 13.01. If a record date
is fixed, the applicable Holders on such record date or their duly designated
proxies, and only such Persons, shall be entitled to consent to such Master
Agreement Supplement, whether or not such Holders remain Holders after such
record date; provided, that, unless such consent shall have become effective by
virtue of the requisite percentage having been obtained prior to the date which
is 90 days after such record date, any such consent previously given shall
automatically and without further action by any Holder be cancelled and of no
further effect.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed Master Agreement
Supplement, but it shall be sufficient if such Act shall approve the substance
thereof.
The Obligors' Agent shall in its discretion (which may be
based on an Opinion of Counsel) determine whether or not any Notes would be
affected by any Master Agreement Supplement and any such determination shall be
conclusive upon the Holders of all Notes, whether theretofore or thereafter
authenticated and delivered hereunder. The Trustee shall not be liable for any
such determination made in good faith.
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Promptly after the execution by the parties hereto of any
Supplemental Master Agreement pursuant to this Section, the Trustee shall mail
to the Holders of the Notes of the affected Series a notice setting forth in
general terms the substance of such Supplemental Master Agreement. Any failure
of the Trustee to mail such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such Supplemental Master
Agreement.
Section 13.02. Supplements Authorizing a Series of Notes.
(a) Each Series of Notes issued hereunder shall be issued pursuant to a Series
Supplement, which shall set forth the terms and provisions of such Series.
(b) Amendments to Supplements shall be governed by the
provisions of Section 13.01, which for such purpose shall be deemed to refer
only to the related Supplement. The Trustee may conclusively rely on an
Opinion of Counsel as to which Series Supplements relate to which Series, or to
this Master Agreement (and thus all Series) as a whole.
Section 13.03. Execution of Master Agreement Supplements.
In executing, or accepting the additional trusts created by,
any Master Agreement Supplement permitted by this Article or the modifications
thereby of the trusts created by this Master Agreement, the Trustee may
receive, and (subject to Section 11.01) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such Master Agreement
Supplement is authorized or permitted by this Master Agreement. The Trustee
may, but shall not be obligated to, enter into any such Supplemental Master
Agreement which affects the Trustee's own rights, duties or immunities under
this Master Agreement or otherwise.
Section 13.04. Effect of Master Agreement Supplements. Upon
the execution of any Master Agreement Supplement under this Article, this
Master Agreement shall be modified in accordance therewith, and such Master
Agreement Supplement shall form a part of this Master Agreement for all
purposes, and every Holder of Notes theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
Section 13.05. Reference in Notes to Master Agreement
Supplements. Notes authenticated and delivered after the execution of any
Master Agreement Supplement pursuant to this Article may, and shall if required
by the Obligors, bear a notation as to any matter provided for in such Master
Agreement Supplement. If the Obligor's Agent shall so determine, new Notes so
modified as to conform, in the opinion of the Obligor's Agent, to any such
Master Agreement Supplement may be prepared and executed by the Obligor's Agent
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
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ARTICLE XIV
COVENANTS
The Obligors hereby covenants and agrees that so long as this
Master Agreement is in effect and any Notes remain Outstanding:
Section 14.01. Payment of Principal and Interest. The
related Series Obligors will duly and punctually pay or cause to be paid, on a
nonrecourse basis and solely from the funds available from the related Series
Trust Estate, the principal of and interest on the Notes of the related Series
in accordance with the terms of such Notes, this Master Agreement and the
related Series Supplement. Amounts on deposit in the related Series Account
(other than amounts representing payments under any related Series Support) in
respect of principal and interest on a Settlement Date shall constitute full
satisfaction of the related Series Obligors' obligation with respect to the
payment of such principal and interest on the related Notes. Amounts properly
withheld under the Code by any Person from a payment to any Noteholder of
interest or principal shall be considered as having been paid by the related
Obligors to such Noteholder for all purposes of this Master Agreement.
Section 14.02. Maintenance of Non-U.S. Office or Agency. The
Obligors will maintain or cause to be maintained (a) if and so long as any
Series or Class is listed on the Luxembourg Stock Exchange, Luxembourg, and (b)
in London, in the case of Bearer Notes and Holders thereof, if any for so long
as any Bearer Notes are outstanding, an office or agency where Notes may be
surrendered for registration of transfer or exchange (except that Bearer Notes
may not be surrendered for exchange at any such office or agency in the United
States) and where notices and demands to or upon the Obligors in respect of the
Notes, this Master Agreement and the related Series Supplement may be served.
The Obligors will give or cause to be given prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Obligors shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office of the Trustee, and the Obligors hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
Section 14.03. Consolidation, Merger, Sale of Assets. (a) No
Obligor shall consolidate or merge with or into any other Person, unless
(i) the Person (if other than such Obligor)
formed by or surviving such consolidation or merger shall be a Person
organized and existing under the laws of the United States of America
or any State and shall expressly assume, by a Master Agreement
Supplement, executed and delivered to the Trustee, the Obligors' Agent
and the Servicer the due and punctual payment of the principal of and
interest on all Notes previously issued and having such Obligor as a
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"Series Obligor" with respect thereto and the performance or
observance of every agreement and covenant of this Master Agreement
and the related Series Supplement and each other related Series
Related Document on the part of such Obligor to be performed or
observed, all as provided herein;
(ii) immediately after giving effect to such
transaction, no Default with respect to any Series or Event of Default
with respect to any Series previously issued and having such Obligor
as a "Series Obligor" with respect thereto shall have occurred and be
continuing;
(iii) each Series Support Provider relating to such
Series previously issued and having such Obligor as a "Series Obligor"
with respect thereto, if any, shall have consented in writing to such
transaction; and
(iv) any action as is necessary to maintain the
lien and security interest created in favor of the Trustee by the
related Series Supplement shall have been taken.
(b) No Obligor shall convey or transfer all or
substantially all of its properties or assets or any Series Trust Estate to any
Person (except as expressly permitted by this Master Agreement, the related
Series Supplement or the related Series Related Documents), unless
(i) the Person that acquires by conveyance or
transfer such Series Trust Estate shall (A) be a United States citizen
or a Person organized and existing under the laws of the United States
of America or any State, (B) expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee the due and
punctual payment of the principal of and interest on all Notes
previously issued and having such Obligor as a "Series Obligor" with
respect thereto and the performance or observance of every agreement
and covenant of this Master Agreement, the related Series Supplement
or the related Series Related Documents on the part of such Obligor to
be performed or observed, all as provided herein or therein, (C)
expressly agree by means of such supplemental indenture that all
right, title and interest so conveyed or transferred shall be subject
and subordinate to the rights of Holders of the related Notes, (D)
unless otherwise provided in such supplemental indenture, expressly
agree to indemnify, defend and hold harmless such Obligor against and
from any loss, liability or expense arising under or related to this
Master Agreement, the related Series Supplement and the Notes
previously issued and having such Obligor as a "Series Obligor" with
respect thereto and (E) expressly agree by means of such supplemental
indenture that such Person (or if a group of Persons, then one
specified Person) shall make all filings with the Commission (and any
other appropriate Person) required by the Exchange Act in connection
with the related Notes;
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(ii) immediately after giving effect to such
transaction, no Default with respect to the affected Series or Event
of Default with respect to any Series previously issued and having
such Obligor as a "Series Obligor" with respect thereto shall have
occurred and be continuing;
(iii) each Series Support Provider relating to such
Series previously issued and having such Obligor as a "Series Obligor"
with respect thereto, if any, shall have consented in writing to such
transaction;
(iv) any action as is necessary to maintain the
lien and security interest created in favor of the related Trustee(s)
by the related Series Supplement(s) shall have been taken; and
Section 14.04. Negative Covenants. Until the Termination
Date, no Obligor shall:
(i) except as expressly permitted by this Master
Agreement, each related Series Supplement and each related Series
Related Document, sell, transfer, exchange or otherwise dispose of any
of the properties or assets constituting any Series Trust Estate,
unless directed to do so by the related Controlling Party;
(ii) claim any credit on, or make any deduction
from the principal or interest in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of any Series
Trust Estate; or
(iii) (A) except as permitted by this Master
Agreement, any related Series Supplement or any related Series Related
Documents, permit the validity or effectiveness of the related Series
Supplement to be impaired, or permit the lien in favor of the Trustee
created by the related Supplement to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be
released from any covenants or obligations with respect to any Notes
under this Master Agreement or any Series Supplement except as may be
expressly permitted hereby, (B) permit any lien, charge, excise,
claim, security interest, mortgage or other encumbrance (other than
the lien in favor of the Trustee created by the related Series
Supplement) to be created on or extend to or otherwise arise upon or
burden any Series Trust Estate or any part thereof or any interest
therein or the proceeds thereof (other than tax liens, mechanics'
liens, storage liens and other liens that arise by operation of law,
in each case on any Pledged Property and arising solely as a result of
an action or omission of the related underlying obligors), (C) permit
the lien in favor of the Trustee created by the related Series
Supplement not to constitute a valid first priority (other than with
respect to any such tax, mechanics', storage or other lien) security
interest
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<PAGE> 89
in the related Series Trust Estate (provided that no notation or
filing of the transfer of the Liens on the title documents of any
Pledged Property is required as of the date of this Master Agreement),
or (D) amend, modify or fail to comply with the provisions of the
related Series Related Documents without the prior written consent of
the related Controlling Party.
Section 14.05. Performance of Obligations; Servicing of each
Series Trust Estate. (a) No Obligor will take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in any Series Trust Estate or that would
result in the amendment, hypothecation, subordination, termination or discharge
of, or impair the validity or effectiveness of, any such instrument or
agreement, except as expressly provided in this Master Agreement, the related
Series Supplement or related Series Related Document or such other instrument
or agreement.
(b) Any Obligor may contract with other Persons
(including the Obligors' Agent) to assist it in performing its duties under
this Master Agreement, and any performance of such duties by a Person
identified to the Trustee and each related Series Support Provider in an
Officer's Certificate of such Obligor shall be deemed to be action taken by
such Obligor.
(c) Each Obligor will punctually perform and observe or
cause to be performed and observed all of its obligations and agreements
contained in this Master Agreement, each related Series Supplement and each
related Series Related Document and in the instruments and agreements included
in each Series Trust Estate, including but not limited to filing or causing to
be filed all UCC financing statements and continuation statements required to
be filed by the terms of this Master Agreement, each related Series Supplement
and each related Series Related Document in accordance with and within the time
periods provided for herein and therein.
(d) If any Obligor or the Obligors' Agent shall have
knowledge of the occurrence of a "Servicer Termination Event" under any Series
Related Document, the Obligors shall promptly notify the Trustee and the
related Series Support Provider, if any, and shall specify in such notice the
action, if any, such Obligor and the Obligors' Agent is taking with respect of
such default. If such Servicer Termination Event shall arise from the failure
of the Servicer to perform any of its duties or obligations hereunder with
respect to the related Series Trust Estate, the Obligors and the Obligors'
Agent shall take all reasonable steps available to it to remedy such failure.
(e) Upon any termination of any Servicer's rights and
powers pursuant to any Series Related Document, the Obligors' Agent shall
promptly notify the Trustee. As soon as a successor Servicer is appointed, the
Obligors' Agent shall notify the Trustee of such appointment, specifying in
such notice the name and address of such successor Servicer.
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Section 14.06. Money for Note Payments to Be Held in Trust.
All payments of amounts due and payable with respect to any Notes that are to
be made from amounts withdrawn from the related Series Account shall be made on
behalf of the related Series Obligors by the Trustee or by another Paying
Agent, and no amounts so withdrawn from any Series Account for payments of
Notes shall be paid over to any Obligor, except as provided in the related
Series Supplement.
The related Series Obligors will cause each Paying Agent other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will, with respect to each related Series
of Notes:
(1) hold all sums held by it for the payment of the
principal of or interest on the related Notes in trust for the benefit
of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the related
Series Obligors (or any other obligor upon the related Notes) in the
making of any payment of principal or interest on such Notes;
(3) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent;
(4) immediately resign as a Paying Agent and forthwith
pay to the Trustee all sums held by it in trust for the payment of the
related Notes if at any time it ceases to meet the standards required
to be met by a Paying Agent at the time of its appointment; and
(5) comply with all requirements of the Code with respect
to the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The related Series Obligors may at any time, for the purpose
of obtaining the satisfaction and discharge of any Series Supplement or for any
other purpose, pay, or by Obligors' Order direct any Paying Agent to pay, to
the Trustee all sums held in trust by such Paying Agent, such sums to be held
by the Trustee upon the same trusts as those upon which such sums were held by
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, in
trust for the payment of the principal of or interest on any Note and remaining
unclaimed for two
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<PAGE> 91
years after such principal or interest has become due and payable shall be paid
to the Obligors' Agent, as specified in an Obligors' Order; and the Holder of
such Note shall thereafter, as an unsecured general creditor, look only to the
Obligors' Agent for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Obligors' Agent cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Obligors' Agent.
Section 14.07. Corporate Existence. Except as provided in
Section 14.03, each Obligor will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence and material
rights (charter and statutory) and material franchises of such Obligor;
provided, however, that the Obligors with the prior written consent of any
Series Support Provider shall not be required to preserve any such right or
franchise if such Obligor shall determine that the preservation thereof is no
longer desirable in the conduct of the business of such Obligor, and that the
loss thereof is not disadvantageous in any material respect to the Holders of
the related Notes.
Section 14.08. Payment of Taxes and Other Claims. Each
Obligor will pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (1) all taxes, assessments and governmental
charges levied or imposed upon such Obligor on any portion of any Series Trust
Estate, or upon the income, profits or property of such Obligor, and (2) all
lawful claims for labor, materials and supplies which, if unpaid, might by law
become a Lien upon the Property of such Obligor; provided, however, that such
Obligor shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and such Obligor shall have set aside on its books adequate
reserves with respect thereto.
Section 14.09. Amendment of Organizational Documents. No
Obligor will amend its Organizational Documents without the prior written
consent of the related Series Control Parties, and shall not amend its
Organizational Documents in any manner that materially and adversely affects
the Holders of the related Notes or any related Series Support Provider.
(b) No Obligor shall take any action which would adversely
impact the corporate separateness of such Obligor with Advanta Business
Services Corp., or which would adversely impact its status as a "bankruptcy
remote" entity. Each Obligor shall strictly abide by the restrictive
provisions of its Organizational Documents in further of the foregoing.
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<PAGE> 92
Section 14.10. Rule 144A Information. With respect to the
Holder of any Unregistered Note, the Obligors shall promptly furnish or cause
to be furnished to such Holder or to a prospective purchaser of such an
Unregistered Note designated by such Holder, as the case may be, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act ("Rule 144A Information") in order to permit compliance by such
Holder with Rule 144A in connection with the resale of such Unregistered Note
by such Holder; provided, however, that the Obligors shall not be required to
furnish Rule 144A Information in connection with any request made on or after
the date which is three years from the later of (i) the date such Note (or any
predecessor Note) was acquired from the Obligors or (ii) the date such Note (or
any predecessor Note) was last acquired from an "affiliate" of the Obligors
within the meaning of Rule 144 under the Securities Act; and provided, further,
that the Obligors shall not be required to furnish such information at any time
to a prospective purchaser located outside the United States who is not a
"United States Person" within the meaning of Regulation S under the Securities
Act if such Note may then be sold to such prospective purchaser in accordance
with Rule 904 under the Securities Act (or any successor provision thereto).
Section 14.11. Further Instruments and Acts. Upon request of
the Trustee or any Series Support Provider, each Obligor and the Obligors'
Agent will execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purpose of this Master Agreement, any related Series Supplement and any related
Series Related Document.
Section 14.12. Compliance with Laws. Each Obligor shall
comply with all applicable Requirements of Law, the noncompliance with which
would, individually or in the aggregate, materially and adversely affect the
ability of such Obligor to perform its obligations under the related Notes,
this Master Agreement, the related Series Supplements or the related Series
Related Document.
Section 14.13. Income Tax Characterization. For purposes of
Federal income, state and local income and franchise and any other income
taxes, each Obligor will treat the related Notes as debt of such Obligor.
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 15.01. Counterparts. For the purpose of facilitating
the execution of this Master Agreement and for other purposes, this Master
Agreement may be executed simultaneously in any number of counterparts, each of
which counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.
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<PAGE> 93
Section 15.02. Governing Law. This Master Agreement, each
Series Supplement and each Note shall be governed by, and construed in
accordance with, the laws of the State of New York and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws, without regard to the conflict of laws provisions of any State.
Section 15.03. Notices. All demands, notices and
communications (other than periodic communications of a routine nature made in
connection with the dissemination of information regarding the Pledged Property
and the Servicer required to be delivered hereunder, which shall be delivered
or mailed by first class mail) hereunder shall be in writing, personally
delivered or mailed by overnight courier, and shall be deemed to have been duly
given upon receipt (a) in the case of Contributor and the Servicer, at the
following address: Advanta Business Services Corp., 1020 Laurel Oak Road,
Voorhees, New Jersey 08043, Attention: Treasurer, (b) in the case of the
Trustee, at the following address: The Chase Manhattan Bank, 450 West 33rd
Street- 15th Floor, New York, New York 10001, Attention: Corporate Trust
Department, (c) in the case of the Obligors' Agent, at the following address:
Advanta Leasing Receivables Corp. III, 1325 Airmotive Way, Reno, Nevada 89502,
Attention: Treasurer, and (d) in the case of any Series Support Party, at the
address specified for such notice in the applicable Series Supplement, or, in
each of the foregoing cases (a)-(d), at such other address as shall be
designated by such party in a written notice to the other parties. Any notice
required or permitted to be mailed to a Noteholder shall be given by first
class mail, postage prepaid, at the address of such Holder as shown in the Note
Register or the related Series Supplement, respectively. Any notice to a
Noteholder which is so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given on the fifth Business
Day following mailing, whether or not the Noteholder receives such notice.
Section 15.04. Severability of Provisions. If any one or
more of the covenants, agreements, provisions, or terms of this Master
Agreement shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no
way affect the validity or enforceability of the other provisions of this
Master Agreement or of the Notes or the rights of the Holders thereof.
Section 15.05. Binding Effect. This Master Agreement shall
inure to the benefit of, and shall be binding upon, (i) the Servicer, (ii) the
Obligors' Agent and each Obligor, (iii) the Trustee, (iv) the Noteholders, (v)
the Series Support Providers, if any, (vi) to the extent expressly provided
hereunder, the Affiliates of the Trustee, the Noteholders and the Series
Support Providers, if any, and (vii) the respective successors and permitted
assigns of each of the foregoing, subject, in each of the foregoing cases, to
the limitations contained in this Agreement.
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Section 15.06. Exhibits. The exhibits to this Master
Agreement are hereby incorporated herein and made a part hereof and are an
integral part of this Master Agreement.
Section 15.07. Calculations. All interest rate calculations
under this Agreement will be carried out to at least seven decimal places. All
payments on the Contracts shall be calculated on the Actuarial Method.
Section 15.08. Further Assurances. The Obligors, the
Obligors' Agent and the Servicer agree to do and perform, from time to time,
any and all acts and to execute any and all further instruments and documents
required or reasonably requested by the Trustee to effect more fully the
purposes of this Master Agreement, including, without limitation, the execution
of any financing statements or continuation statements relating to the Trust
Estate for filing under the provisions of the UCC of any applicable
jurisdiction.
Section 15.09. Nonpetition Covenant. Notwithstanding any
prior termination of this Master Agreement, none of the parties hereto, any
Noteholder, any Series Support Provider, the Contributor, the Obligors' Agent
nor any Obligor shall, prior to the date which is one year and one day after
the payment in full of the Notes of all Series, acquiesce, petition or
otherwise invoke or cause any Obligor to invoke the process of any Governmental
Authority for the purpose of commencing or sustaining a case against any
Obligor under any Federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of or for any Obligor or any substantial part of its
property or ordering the winding-up or liquidation of the affairs of any
Obligor.
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IN WITNESS WHEREOF, the Servicer, the Obligors' Agent and the
Trustee have caused this Agreement to be duly executed by their respective
officers, all as of the day and year first above written.
ADVANTA BUSINESS SERVICES
CORP., as Servicer
By:________________________________
Title:
ADVANTA LEASING RECEIVABLES
CORP. III, as Obligors'
Agent
By:________________________________
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By:________________________________
Title:
89
<PAGE> 1
Exhibit 4.2
_______________________________________________________________________________
ADVANTA BUSINESS SERVICES CORP.,
Individually, and as the Servicer,
_______________________________________
as the Obligor's Agent and as a Series Obligor
together with
_______________________________________
as a Series Obligor,
and
_______________________________________
as Trustee,
_______________________________________________________________________________
SERIES ________ SUPPLEMENT
Dated as of ________________
to the
MASTER BUSINESS RECEIVABLES ASSET-BACKED FINANCING FACILITY AGREEMENT
Dated as of ________________
_______________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I CREATION OF THE SERIES NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---------
SECTION 1.01. Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Pledge of Series Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.03. Pledges of Additional Pledged Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.04. Assignment to a Group; Crossover Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III DISTRIBUTIONS AND STATEMENTS TO
SERIES NOTEHOLDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.01. Series Facility Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.02. Notice of Amounts Due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.03. Distributions from Series Facility Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.04. Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.05. Compliance With Withholding Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.06. Servicer Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.07. Special Covenants and Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.01. Increasing the Series Note Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE V SERIES EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.01. Series Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI PREPAYMENT AND REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 6.01. Mandatory Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 6.02. Optional "Clean-Up" Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6.03. Tender of Series Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 7.01. Agent Authorized to Act for the Purchasers; Notices . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 7.02. Ratification of Master Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 7.03. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 7.04. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 7.05. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 7.06. Non-petition Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 7.07. Certain Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
Exhibit A Form of Series ________ Note
Exhibit B Form of Agent's Monthly Statement of Amounts Due
Exhibit C Wire Instructions for Agent
Exhibit D Form of Servicer's Certificate
Exhibit E Forms of Contracts
Exhibit F Certain Information
Exhibit G Closing Checklist
ii
<PAGE> 4
This Series Supplement, dated as of _____________ is by and
among Advanta Business Services Corp., a Delaware corporation, individually,
"ABS" and as initial servicer (in such capacity, the "Servicer"),
___________________________, a _________ corporation and _______
___________________, a ______________ banking corporation as trustee (in such
capacity, the "Trustee") for the Noteholders.
RECITALS
This Series ____________ Supplement is being executed and
delivered by the parties hereto pursuant to Section 13.02 of the Master
Business Receivables Asset-Backed Financing Facility Agreement dated as of
_________________ (the "Master Agreement") among such parties. In the event
that any term or provision contained herein shall conflict with or be
inconsistent with any term or provision contained in the Master Agreement, the
terms and provisions of this Series _____________ Supplement shall govern with
respect to Series ___________.
ARTICLE I
CREATION OF THE SERIES _________ NOTES
SECTION 1.01. Designation. There is hereby created a
Series of Notes to be issued pursuant to the Master Agreement and this Series
____________ Supplement to be known as "Advanta Business Receivables Master
Asset-Backed Financing Facility, Series __________ Notes."
SECTION 1.02. Pledge of Series _____________ Trust Estate.
The Series Obligors hereby pledge to the Trustee for the benefit of the Series
__________ Noteholders, and the Trustee hereby accepts the pledge of, all of
the Series Obligors' now owned and existing and hereafter acquired or arising
right, title and interest in and to (1) each and every Contract now or
hereafter listed as a Series ____________ Contract on each Pledge Notice
delivered to the Trustee, (2) all Collections and Related Security associated
therewith, (3) all balances, instruments, monies and other securities and
investments from time to time in the Series __________ Facility Account, to the
extent the same represent Collections or proceeds of Series _________ Contracts
or earnings with respect thereto, (4) each Series ____________ Contribution
Agreement Supplement and all of their rights (directly or through the Obligors'
Agent) to enforce the provisions of, and to benefit from the representations,
warranties and covenants made in each Series _________ Contribution Agreement
Supplement and in the Master Contribution Agreement, but only insofar as such
rights relate to the Series ______________ Trust Estate, (5) all of the Series
Obligors' rights, but none of their obligations under any Hedging Agreement,
(6) all security interests in the Equipment not owned by the Series Obligors,
and all Equipment owned by the Series Obligors, in each case associated with
the Series __________ Contracts, (7) any Crossover Amounts allocated to the
Series _____________ Trust Estate from another Series and (8) all proceeds of
each of the foregoing, but excluding any obligations of the Series Obligors, if
any, under each Series ___________ Contribution Agreement Supplement and the
Hedging Agreement and excluding any Insurance Premiums, taxes, late charge
<PAGE> 5
fees, Initial Unpaid Amounts and Security Deposits, all in accordance with, and
for the purposes set forth in, this Series ___________ Supplement (such
property, the "Series__________ Trust Estate").
SECTION 1.03. Pledges of Additional Pledged Property. (a)
During the Revolving Period, the Series Obligors may, upon not less than three
(3) Business Days' prior written notice (a "Pledge Notice"), pledge additional
property to the Trustee to be held in trust as part of the Series ________
Trust Estate. Each Pledge Notice shall specify:
(i) the proposed Pledge Date (which, except in the
case of the initial Pledge and any Pledge pursuant to Section 1.03(b),
shall be a Settlement Date),
(ii) the related List of Contracts, which shall also
include for each Series ________ Contract, the related Discounted
Booked Residual, and
(iii) the requested Additional Principal Amount (which
shall not be less than $___________ except as provided in Section
1.03(b) and Section 1.03(c)).
On the applicable Pledge Date, upon satisfaction of the applicable conditions
precedent set forth in Article IV of the Note Purchase Agreement, the Series
________ Noteholders shall deposit to the Series __________ Facility Account or
to such other account as the Obligors' Agent may specify in writing, in
immediately available funds, no later than 12:00 noon (New York City time), an
amount equal to the related Additional Principal Amount.
(b) In addition to the foregoing, the Series Obligors,
upon satisfaction of the applicable conditions set forth in Article IV of the
____________ Agreement, may Pledge Pledged Property to the Trustee to be held
in trust as part of the Series ________ Trust Estate without receiving any
Additional Principal Amount, by delivering a Pledge Notice to the Trustee not
less than five (5) Business Days prior to the proposed Pledge Date (which shall
be a Business Day, but need not be a Settlement Date);
(c) On each Settlement Date during the Revolving Period,
the Series Obligors, upon satisfaction of the applicable conditions set forth
in Article IV of the Note Purchase Agreement, shall Pledge additional Pledged
Property to the Trustee, to be held as part of the Series ________ Trust
Estate, provided that the Obligors' Agent shall have delivered by facsimile to
the Trustee on the Business Day preceding such Settlement Date a Pledge Notice
with respect to the Additional Contracts included in such additional Pledged
Property, together with a properly completed Contribution Agreement Supplement,
duly executed by Advanta Business Services Corp., the Obligors' Agent and the
Series Obligors. No Additional Principal Amount shall be due with respect to
any Pledged Property transferred pursuant to this Section 1.03(c), it being
understood that in connection with any such Pledge, the Series Obligors shall
be entitled to receive on
2
<PAGE> 6
such Settlement Date the distribution of Collections required by clause eighth
and part (a) of clause ninth of Section 3.03(a).
ABS will use its reasonable best efforts to originate, and
each Series Obligor will use its reasonable best efforts to acquire from ABS,
in each case during the Revolving Period, a sufficient volume of Eligible
Contracts such that a Required Amortization Event of the type described in
paragraph (a) of the definition thereof does not occur. If a Required
Amortization Event occurs, then no further Pledges of Pledged Property pursuant
to this Section 1.03(c) shall occur, and all amounts that would otherwise have
been disbursed in consideration of such Pledges shall be retained in the Series
____________ Facility Account and shall be distributed as set out in Section
3.03(a). The Series Obligors shall Pledge Pledged Property pursuant to
Sections 1.03(a), (b) and (c) only to the extent that one or more Hedging
Agreements are in full force and effect with respect thereto.
SECTION 1.04. Assignment to a Group; Crossover Amounts.
There is hereby established a Group for purposes of the Master Agreement, which
shall be known as "Group A"; the Series ________ Note is hereby assigned to
Group A. The amounts described in clause thirteenth of Section 3.03(a) are
hereby designated as the "Crossover Amounts" for the Series ________ Note for
purposes of the Master Agreement.
ARTICLE II
DEFINITIONS
SECTION 2.01. Definitions. (a) Whenever used in this
Series ____________ Supplement and when used in the Master Agreement with
respect to the Series ____________________, the following words and phrases
shall have the following meanings, and the definitions of such 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. Unless
otherwise defined in this Series ________ Supplement, terms defined in the
Master Agreement are used herein as therein defined. For purposes of the
Master Agreement, certain definitions are set forth in Section 7.07 hereof.
"Additional Principal Amount" means, (i) with respect to any
Pledge under Section 1.03(a), the aggregate Contract Principal Balance of the
related Series ________ Contracts which are the subject of such Pledge divided
by one plus the Reserve Percentage, and (ii) with respect to any Pledge under
Section 1.03(b) or (c), $0.
"Aggregate Notional Balance" means, with respect to any
Settlement Date, the aggregate notional principal balances set forth in all
Hedging Agreements with respect to such Settlement Date.
"Applicable Discount Rate" means with respect to any Series
________ Contract, the sum of (i) the Swap Rate applicable thereto, (ii) the
Servicing Fee, (iii) ________% and (iv) _____%.
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"Average Floating Rate" means, with respect to any Settlement
Date, the weighted average (weighted by the related notional balances) of the
rates pursuant to which floating rate payments due from the related Swap-holder
are calculated under each Hedging Agreement that is a Swap Contract.
"Average Swap Rate" means, with respect to any Settlement
Date, the weighted average (weighted by the related notional balances) of the
rates pursuant to which fixed rate payments due from the Series Obligors are
calculated under each Hedging Agreement that is a Swap Contract.
"Business Day" shall mean any day that is a Business Day under
the Master Agreement which is also a day on which banks are not authorized or
required to close in ________________ and on which The Depository Trust Company
of New York is open for business; provided, however, that when used in
connection with the LIBO Rate, "Business Day" shall mean a day on which
dealings in dollar deposits are also carried on in the London interbank market.
"Cap Agreement" means a Hedging Agreement under which the
Swap-holder will only make payments when and if a floating rate referenced
therein exceeds a specified level, and which provides for no payment by the
purchaser of such Cap Agreement other than an upfront payment which has, in the
case of any Cap Agreement dated prior to the date hereof, already been made.
"Change of Control" means (i) Advanta Leasing Holding Corp.
shall cease to own, free and clear of all Adverse Claims, 100% of the
outstanding shares of voting stock of ABS on a fully-diluted basis (other than
directors' qualifying shares, if any); (ii) ABS shall cease to own, either
directly or indirectly, free and clear of all Adverse Claims, (x) 100% of the
outstanding shares of voting stock of _________________________ or (y) 100% of
the outstanding membership interests of _______________________ on a
fully-diluted basis (other than directors' qualifying shares, if any); or (iii)
Advanta Corp. shall cease to own, directly or indirectly, free and clear of all
Adverse Claims, 100% of the outstanding shares of voting stock of Advanta
Leasing Holding Corp.
"Charged-Off Ratio" means, as of the last day of any
Collection Period, a percentage equal to (a) 12 times the excess of (x) the sum
of the aggregate Contract Principal Balance of all Charged-Off Contracts which
became Charged-Off Contracts during such Collection Period, over (y) the sum of
all disposition proceeds and Recoveries received during such Collection Period,
divided by (b) the Contract Principal Balance of all Series ________ Contracts
at the beginning of the related Collection Period.
"Closing Checklist" means the list of closing documents
required to be delivered on the Series ________ Closing Date.
"Compensating Interest Requirement" means with respect to any
Settlement Date, the product of (x)(i) the Aggregate Notional Balance
applicable to such Settlement Date, minus (ii) the Series ________ Note Balance
outstanding immediately prior to such
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Settlement Date and (y) the Average Swap Rate minus the Average Floating Rate,
each as applicable to the related Collection Period and calculated for such
Collection Period on the basis of a year of 360 days for the actual number of
days elapsed; provided, that if such amount is a negative number, then the
Compensating Interest Requirement shall be zero for the related Settlement
Date, provided, further that if Servicer ever deposits to the Series _________
Facility Account an aggregate cumulative amount in respect of Compensating
Interest Requirements of $_____________ then the Compensating Interest
Requirement shall thereafter be zero.
"Delinquency Ratio" means, at any time, a percentage equal to
(i) the aggregate Contract Balance Remaining of all Series ______ _ Contracts
that were Delinquent Contracts at such time, divided by (ii) the aggregate
Contract Balance Remaining of all Series ________ Contracts at such time.
"Discounted Booked Residual" means, with respect to any Series
________ Contract as of any date, the present value as of such date of the
Booked Residual with respect thereto, discounted at the Applicable Discount
Rate.
"Early Collection Fee" means, with respect to any Settlement
Date, the amount specified by the Agent as the "Early Collection Fee" in the
notice delivered pursuant to Section 3.02 hereof.
"Eligible Booked Residuals" means, on any date of
determination, with respect to all Series ________ Contracts, the product of
(i) the present value of the Booked Residuals discounted by the Applicable
Discount Rate and (ii) __%.
"Eligible Contracts" means, at the time of Pledge, a Series
________ Contract with respect to which:
(a) (i) is with a User whose billing address is in the
United States or its territories and possessions and requires all
payments under such Contract to be made in United States dollars and
(ii) is with a User who, if a natural person, is a resident of the
United States or its territories and possessions with legal capacity
to contract or, if a corporation or other business organization, is
organized under the laws of the United States, its territories or any
political subdivision thereof and has its chief executive office in
the United States or its territories,
(b) has not had any of its terms, conditions or
provisions modified or waived other than in compliance with the Credit
and Collection Policy and has not been restructured at any time when
such Contract was a Delinquent Contract,
(c) which constitutes "chattel paper" within the meaning
of Section 9-105(b) of the UCC of all applicable jurisdictions (other
than a Contract which is a loan in form and does not purport to
evidence a security interest in goods within the meaning of Section
9-105(h) of the UCC of all applicable jurisdictions) and there is
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only one original of such Contract that constitutes "chattel paper"
for purposes of the _________________ and ____________________,
(d) does not contravene any applicable federal, state and
local laws, and regulations thereunder (including, without limitation,
any law, rule and regulation relating to truth in lending, fair credit
billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) and with respect to which no part of
such Contract thereto is in violation of any applicable law, rule or
regulation,
(e) satisfies in all material respects all applicable
requirements of the Credit and Collection Policy,
(f) if a Municipal Contract, does not have an Contract
Principal Balance that, when aggregated with the Contract Principal
Balances of all other Municipal Contracts included as Series ________
Contracts, that exceeds __% of the aggregate Contract Principal
Balance of all Series ________ Contracts,
(g) as of the related Pledge Date, is not a Delinquent
Contract; provided, that with respect to the Contracts Pledged on (and
only on) the initial Pledge Date, up to $________________ in aggregate
Contract Balance Remaining as of the related Cut-Off Date may be
represented by Delinquent Contracts,
(h) as of the related Pledge Date (other than a Contract
which is a loan in form), (i) contains "hell or high water" provisions
requiring the related User to assume all risk of loss or malfunction
of the related Equipment, and (ii) makes the related User absolutely
and unconditionally liable for all payments required to be made
thereunder, without any right of set-off, counterclaim, or other
defense (other than the discharge in bankruptcy of such related User)
and without any right to prepay the Contract or any contingencies tied
to the Series Obligors,
(i) when aggregated with the sum of the Contract
Principal Balance of the Series ________ Contracts of a single User
shall not be greater than the product of (i) ____% and (ii) the Series
________ Note Balance outstanding,
(j) creates a valid and enforceable security interest in
favor of the Contributor in the related Equipment, if any,
(k) is free and clear of any Adverse Claims, other than
the claims arising pursuant to this the Series ________ Supplement and
Master Agreement and the Transaction Documents; provided, however,
that nothing in this Section (k) shall prevent or be deemed to
prohibit the Contributor from suffering to exist upon such Contract
any Adverse Claim for federal, state, municipal or other local taxes
if such taxes shall not at the time be due and payable or if the
Contributor shall concurrently be contesting the validity thereof in
good faith by appropriate
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proceedings that have stayed enforcement thereof and shall have set
aside on its books adequate reserves with respect thereto,
(l) is in full force and effect in accordance with its
terms and contains enforceable provisions such that the right and
remedies of the holder thereof shall be adequate for realization
against the Equipment, if any, thereunder and of the benefits of any
security granted thereunder;
(m) does not provide for the substitution, exchange, or
addition of any other items of Equipment pursuant to such Contract
which would result in any reduction or extension of payments due
thereunder;
(n) by its terms is due and payable on or within ___
months of the applicable Pledge Date and, in either event, has not had
its payment terms extended other than in compliance with the Credit
and Collection Policy;
(o) arises under a Contract in substantially the form of
one of the form contracts set forth in Exhibit E hereto or otherwise
approved by the Agent in writing, which is in full force and effect
and constitutes the legal, valid and binding obligation of the related
User enforceable against such User in accordance with its terms
subject to no offset, counterclaim or other defense (other than the
discharge in bankruptcy of such User);
(p) (i) does not preclude the pledge, transfer or
assignment thereof, (ii) does not require the consent of the User to
the pledge, assignment or transfer thereof, and (iii) does not contain
a confidentiality provision that purports to restrict the ability of
the Trustee to exercise its rights under the Series _____ Related
Documents with respect thereto, including, without limitation, its
right to review the Contract; and
(q) was (i) originated or purchased by the Contributor in
the ordinary course of its business and (ii) approved and purchased or
funded in the ordinary course of the Contributor's business;
(r) is with a User that is not the User of any Charged-Off
Contract;
(s) except with respect to the Series ________ Contracts which
are the subject of the initial Pledge, is not and has never been a
Charged-Off Contract;
(t) either (i) is an account receivable representing all or
part of the sales price of merchandise, insurance and/or services
within the meaning of Section 3(c)(5) of the Investment Company Act of
1940, as amended, or (ii) represents a financial asset that converts
to cash within a finite period of time within the meaning of Rule 3a-7
promulgated under the Investment Company Act of 1940, as amended;
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(u) has not been designated by the Agent in a written notice
delivered to the Obligors' Agent as a Contract or member of a class of
Contracts that is not acceptable as an Eligible Contract, including,
without limitation, because such Contract arises under a Contract that
is not acceptable to the Agent, and
(v) in the case of a Non-Monthly Payment Contract, does not
have a Contract Principal Balance that, when aggregated with the
Contract Principal Balances of all other Series _______ Contracts
which are Non-Monthly Payment Contracts, exceeds __% of the aggregate
Contract Principal Balance of all Series ________ Contracts.
"Funding Agreement" means this Series ________ Supplement and
any agreement or instrument executed by any Funding Source with or for the
benefit of Falcon.
"Hedging Agreement" means any swap agreement (i) providing for
the Series Obligors to pay fixed interest rate payments in exchange for
receiving payments based on a weighted average floating rate calculated off of
the daily "H-15" commercial paper rate for related calendar month, (ii) issued
by a Swap-holder, (iii) purchased by the Obligors' Agent with respect to all or
a portion of the Series ________ Contracts, as the same may be modified from
time to time in accordance with the terms hereof and shall include any
supplemental or replacement Hedging Agreement and (iv) approved by the Agent.
Under each Hedging Agreement, payments due by one party will be net of payments
due to the other, and the party owing such net amount shall then remit the
difference to the other party by ACH or such other means specified herein.
Each Hedging Agreement shall provide that if the Swap-holder for such agreement
is downgraded below AA- by S&P or Aa3 by Moody's, the Swap- holder shall be
responsible for finding a replacement Swap-holder that fulfills the Rating
Criteria within 30 days of such downgrade. Each Hedging Agreement executed
after the date hereof shall contain a "non-petition clause" with respect to the
Series Obligors.
"Interest Period" means, with respect to any Settlement Date,
the prior Collection Period.
"LIBO Rate" has the meaning set forth in the_________________.
"Liquidity Termination Date" means _____________________,
provided, that such Liquidity Termination Date may be extended by an additional
six calendar months on the last Business Day of ______________ and
_______________of each year, commencing with ________, if the Obligor's Agent
gives the Trustee and the Agent written notice not later than forty-five (45)
days prior to the end of such _____________ or _____________ as the case may
be, and the Agent provides the Series Obligors with its written consent to such
extension not later than thirty (30) days after receipt of the Series Obligors'
Notice.
"Master Agreement" shall mean, for purposes of this Series
________ Supplement, the Master Business Receivables Asset-Backed Financing
Facility
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Agreement, dated as of __________________, among the Series Obligors, the
Servicer and the Trustee (without regard to Supplements for other Series), as
the same may be amended, restated, supplemented or otherwise modified from time
to time.
"Monthly Interest" means, with respect to any Settlement Date,
the amount specified by the Agent in the notice delivered pursuant to Section
3.02 hereof, as calculated by the Agent pursuant to Section _________ of the
__________________________.
"Monthly Principal Collections" shall mean, with respect to
any Collection Period, the sum, without duplication, of (i) all Contract
Principal received (or, in the case of the principal portion of any Advance
Payment, applied) with respect to the Series _____________ Contracts and
relating to such Collection Period, (ii) an amount equal to the Contract
Principal Balance of each Series ________ Contract as to which a Prepayment was
received with respect to the Series ______________ Contracts during such
Collection Period or (iii) the amount described in clause (a) of the definition
of "Prepayment Amount" with respect to all Prepayment Amounts received with
respect to the Series ______________ Contracts during such Collection Period.
"Noteholder's Carryover Interest" means, with respect to or,
Settlement Date, the amount of Monthly Interest due on the prior Settlement
Date but not paid on such prior Settlement Date, plus interest thereon from
such prior Settlement Date, calculated using the interest rate applicable to
the Series ________ Note for such Settlement Date, all as determined by the
___________.
"Pledge" means the transfer and assignment by the Series
Obligors hereunder to the Trustee for the benefit of the Series ______ _
Noteholders in accordance with Section 1.02 or 1.03 here of in and to specified
Pledged Property related thereto.
"Pledge Date" means each Business Day on which a Pledge occurs
pursuant to the terms of this Series ________ Supplement.
"Pledge Notice" has the meaning specified in Section 1.03
hereof.
"Pledged Property" means, with respect to the Series ________
Trust Estate, each Series ________ Contract, together with all associated
property and rights with respect thereto described in clauses (2) through (7)
of the definition of Series ________ Trust Estate.
"Principal Increase Date" has the meaning specified in Section
4.01(b).
"Record Date" means, with respect to any Settlement Date, the
close of business on the Business Day preceding such Settlement Date.
"Redemption Price" has the meaning specified in Section 6.02
hereof.
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"Refinance Proceeds" shall mean with respect to any Collection
Period, any proceeds of the issuance of a new series of notes or the issuance
of certificates in connection with a securitization of receivables, or
otherwise remitted to the Trustee by the Series Obligors, and in each case,
designated by the Series Obligors as Refinance Proceeds with respect to the
Series ________ Note, in each case remitted to the Trustee on the Settlement
Date following such Collection Period for deposit into the Series
_________Facility Account and application in accordance with Section 3.03(a)
hereof.
"Required Amortization Event" means the earliest to occur of
the following:
(a) failure of the Series Obligors, due to a lack of
supply of Eligible Contracts, to pledge Series ________ Contracts to
the Trustee on a Settlement Date during the Revolving Period with an
aggregate Contract Principal Balance at least equal to the sum of (i)
the aggregate Monthly Principal Collections with respect to the
applicable Collection Period plus (ii) the excess, if any, of the
Required Reserve on such Settlement Date over the actual amount of the
Reserve;
(b) any Event of Default or any Event of Servicer
Termination;
(c) a Change of Control;
(d) the Tangible Net Worth of Advanta Leasing Holding
Corp. is below $____________ for a period in excess of 30 consecutive calendar
days; and
(e) any obligation of ABS to repay Indebtedness in excess
of $____________ then outstanding shall be in default, and shall have been
accelerated by the lender thereunder.
"Required Reserve" means, on any date of determination, the
greater of (a) ____% of the Series Limit, and (b) an amount equal to
_______________:
"Reserve" means, on any date of determination, the excess, if
any, of (i) the aggregate Contract Principal Balance of all Series ________
Contracts on the date of determination plus the Eligible Booked Residuals, over
(ii) the Series ________ Note Balance outstanding on such date of
determination.
"Reserve Percentage" means ___%.
"Reserve Requirement" means the maximum aggregate reserve
requirement (including all basic, supplemental, marginal and other reserves)
which is imposed against the Reference Bank in respect of Eurocurrency
liabilities, as defined in Regulation D of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Residual Realization" means with respect to each Series
________ Contract that has reached the end of its term or has otherwise been
terminated during any previous
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Collection Period (other than a Charged-Off Contract) and with respect to which
the Equipment has been sold during the related Collection Period, an amount
equal to (a) Residual Receipts received by the Servicer with respect to such
Series ________ Contract divided by (b) the Discounted Booked Residual of such
Contract.
"Revolving Period" means the period from the initial Pledge
Date to but excluding the Revolving Period Termination Date.
"Revolving Period Termination Date" means the earlier to occur
of___________________________________.
"Series Limit" means $________________.
"Series Termination Date" means, with respect to the Series
________ Note, the Settlement Date occurring on the __th month following the
month in which the Revolving Period Termination Date occurs.
"Series Trust Estate" shall have the meaning set forth in
Section 1.02 hereof.
"Series Closing Date" shall mean _______________________.
"Series ________________ Contract" means each Contract listed
on a List of Contracts attached to a Pledge Notice which is delivered in
connection with a Pledge of Pledged Property with respect to the Series
________ Trust Estate, and which Contract (a) has not been released from the
Series ________ Trust Estate as provided herein or in the Master Agreement and
(b) is not a Charged-Off Contract.
"Series __________________ Facility Account" means the
______________________ Account.
"Series ________ Monthly Remittance Amount" means, with
respect to any Settlement Date, the aggregate amount of Collections received by
the Servicer during the prior Collection Period with respect to the Series
________ Trust Estate (other than Collections representing Advance Payments
until such Advance Payments are applied as Collections), together with all
Servicing Advances paid by the Servicer with respect to such Settlement Date
pursuant to Section 3.06 hereof.
"Series ____________ Note" shall mean any one of the Series
________ Notes executed by the Series Obligors, jointly and severally, in favor
of the Agent and authenticated by or on behalf of the Trustee, substantially in
the form of Exhibit A hereto, and any replacement therefore.
"Series ________ Note Balance" shall mean, for any date of
determination, an amount equal to (a) $________________ plus (b) the aggregate
principal amount of any Additional Principal Amounts paid by the Series
__________ Noteholders pursuant to Section
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4.01(b) hereof on or prior to such date of determination minus (d) the
aggregate amount of payments of principal paid to the Series __________
Noteholders pursuant to Section 3.03(b)(i) hereof prior to such date of
determination.
"Series _____________ Noteholder" shall mean the _________.
"Series ________ Event of Default" has the meaning specified
in Section 5.01 hereof.
"Series ________ Related Documents" means, collectively, this
Series ___________ Supplement, the Fee Letter, the Hedging Agreement(s), the
Master Agreement, the Contribution Agreement, the Series ________ Notes and all
other instruments, documents, financing statements and agreements executed and
delivered by the Series Obligors in connection herewith or therewith and each
Contribution Agreement Supplement executed pursuant thereto with respect to the
Series ________ Trust Estate.
"Servicer's Certificate" means a report with respect to Series
________, in substantially the form of Exhibit D hereto (appropriately
completed), furnished by the Servicer to the Trustee and the Agent pursuant to
Section 6.06 of the Master Agreement.
"Servicing Fee" means as of any Settlement Date, an amount
equal to one-twelfth of ______% of the average Contract Principal Balance of
the Series ________ in the prior Collection Period, payable on each Settlement
Date to the Servicer as compensation for the performance of its duties under
the Master Agreement.
"Settlement Date" means, the 20th of each month hereafter (or
if the 20th of any such month is not a Business Day, then on the next
succeeding Business Day) commencing with ____________.
"Swap Contract" means a Hedging Agreement which is not a Cap
Agreement.
"Swap Rate" means, with respect to any Settlement Date, the
rate pursuant to which Payments to be made by the Series Obligors are
calculated under the applicable Hedging Agreement.
"Swap-holder" means any financial institution having the legal
authority and corporate power to issue Hedging Agreements and which possesses a
rating of at least AA- by S&P and Aa3 by Moody's.
"Tangible Net Worth" means, with respect to Advanta Leasing
Holding Corp., the excess, if any, of (a) its consolidated total assets (less
the book value of its consolidated intangible assets) over (b) its consolidated
total liabilities, in each case, determined in accordance with generally
accepted accounting principles.
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ARTICLE III
DISTRIBUTIONS AND STATEMENTS TO
SERIES ____________ NOTEHOLDER; SERIES SPECIFIC COVENANTS
SECTION 3.01. Series Facility Account. (a) The Trustee, for
the benefit of the Series ________ Noteholder, shall establish and maintain an
account (the "Series Facility Account") as a segregated trust
account in the Trustee's corporate trust department, identified as the
"Facility Account for Advanta Master Asset-Backed Facility Agreement, in trust
for the registered Holder of the Series ____________ Note." The Trustee shall
make or permit withdrawals from the Series ______________ Facility Account only
as provided in this Series ________ Supplement.
(b) On each Settlement Date, the Trustee shall transfer
the Series __________ Monthly Remittance Amount with respect to such Settlement
Date from the Master Facility Account to the Series ________ Facility Account.
(c) On each Settlement Date, the Trustee shall deposit to
the Series ___________ Facility Account each payment, if any, received by the
Trustee from the Swap-holder pursuant to the terms of the Hedging Agreements.
(d) On each Settlement Date, ABS (whether or not ABS is
then the Servicer) shall deposit to the Series ___________ Facility Account the
Compensating Interest Requirement then due;
(e) The Trustee shall deposit to the Series ________
Facility Account all Refinance Proceeds remitted to it by the Series Obligors
in New York automated clearing house funds, within one Business Day after its
receipt thereof;
(f) The Trustee shall deposit to the Series ________
Facility Account any Crossover Amounts required to be deposited therein from
other Series assigned to Group A, as provided in the Series Supplement(s)
relating to such other Series; and
(g) Notwithstanding the foregoing, the Trustee and/or the
Servicer may deduct from amounts otherwise specified for deposit to the Series
___________ Facility Account any amounts previously deposited by the Trustee
into the Series __________ Facility Account but which are (i) subsequently
uncollectible as a result of dishonor of the instrument of payment for or on
behalf of the User or (ii) later determined to have resulted from mistaken
deposits.
SECTION 3.02. Notice of Amounts Due. On each Determination
Date the _____________ shall send to the Servicer a notice in the form of
Exhibit B hereto, in which the ______________ certifies the amounts described
in clauses fifth, sixth, seventh and twelfth of Section 3.03(a) hereof for the
related Settlement Date.
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SECTION 3.03. Distributions from Series Facility Account.
(a) On each Settlement Date, the Trustee (based solely on the information set
forth in the related Servicer's Certificate) shall allocate and distribute
funds on deposit in the Series _____________ Facility Account in the following
order of priority, without duplication:
first, to pay to any Persons that mistakenly deposited funds into the
Series __________ Facility Account, such mistakenly deposited funds;
second, to each Swap-holder, an amount equal to the payment then due
to it pursuant to any Hedging Agreement, if any;
third, if ABS or any Affiliate thereof is not then the Servicer, to
the Servicer, in payment of any Servicing Fee then due;
fourth, to the Servicer, an amount necessary to reimburse the Servicer
for any unreimbursed Servicer Advances;
fifth, to the Series ________ Noteholder, for the benefit of the
applicable Purchasers, the Monthly Interest due on such Settlement
Date, plus the Noteholder's Carryover Interest, if any;
sixth, to the Series ________ Noteholder, for the benefit of the
applicable Purchaser(s), the Early Collection Fee then due;
seventh, to the Series ________ Noteholder, for the benefit of the
applicable Purchaser(s), any other fees due under the Fee Letter;
eighth, to the Series ________ Noteholder, for the benefit of the
applicable Purchaser(s), in payment of principal, the Contract
Principal Balance of any Series ________ Contract which became a
Charged-Off Contract during the prior Collection Period; provided,
however, that if such Settlement Date occurs during the Revolving
Period, no distribution shall be required to be made pursuant to this
clause eighth, to the extent that the Series Obligors pledge Pledged
Property on such Settlement Date in the amount of such Contract
Principal Balance of such Charged-Off Contract;
ninth, (a) if such Settlement Date occurs during the Revolving Period,
and after giving effect to any Pledges of Pledged Property made on
such Settlement Date, the Reserve equals or exceeds the Required
Reserve, to the Series Obligors, in consideration of the Pledge and
delivery of Pledged Property on such Settlement Date, in an amount
equal to the sum (without duplication) of the aggregate Monthly
Principal Collections with respect to the prior Collection Period and
if after giving effect to any Pledges of Pledged Property made on such
Settlement Date, the Reserve is less than the Required Reserve, the
Series Obligors shall contribute additional Eligible Contracts as
provided in Section 1.03(c) herein or, to the extent additional assets
are unavailable, use such Collections to reduce the
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Series ________ Note Balance until the Reserve equals or exceeds the
Required Reserve, and (b) if such Settlement Date occurs after the
Revolving Period, to the Agent on behalf of the Series _______
Noteholders, in payment of the Series __________ Note Balance, in an
amount equal to the Monthly Principal Collections with respect to the
prior Collection Period;
tenth, to the Series ________ Noteholder, for the benefit of the
applicable Purchaser(s), in prepayment of the Series ________ Note
Balance, in the amount equal to the excess (if any) of the Required
Reserve over the then actual amount of the Reserve (after taking into
account all payments applied under the preceding clauses eighth and
ninth);
eleventh, if ABS or any Affiliate thereof is then the Servicer, to the
Servicer, in payment of any Servicing Fee then due;
twelfth, to the Series ________ Noteholder, for the benefit of the
applicable Purchaser(s), in payment of any other amounts owing to the
Series _______ Noteholder or the Agent under the Series ________
Related Documents; and
thirteenth, the balance, if any, to the Obligors' Agent for the
benefit of the applicable Series Obligor(s), or as otherwise directed
by it in writing;
provided, that notwithstanding such priorities, any Refinance Proceeds shall be
applied as directed in writing by the Obligor's Agent.
(b) All payments to the Series _____________ Noteholder
hereunder shall be made on the Settlement Date to the Agent for the benefit of
the applicable Purchaser(s) by wire transfer of immediately available funds to
an account designated in writing in the form of Exhibit C hereto delivered to
the Trustee on or prior to the related Determination Date without presentation
or surrender of the Series _____________ Note or the making of any notation
thereon. Any designation by the Agent of an account for receipt of wire
transfers pursuant to the preceding sentence shall be a standing instruction,
effective with respect to the applicable distribution date and all subsequent
distribution dates thereafter until revoked. In the absence of such timely wire
transfer instructions, payment will be made by cashiers check sent by overnight
courier to the Agent at the address designated pursuant to Section 7.01. All
reasonable costs and expenses incurred by the Trustee in connection with the
distribution of the payments to the Series ___________ Noteholder as set forth
in this Section 3.03(b) shall be paid by the Servicer.
(c) The Servicer will perform the duties of the
calculation agent under each Hedging Agreement and the Servicer and the Trustee
hereby acknowledge such appointment.
(d) By virtue of its acceptance of the Series ___________
Note, the Agent on behalf of the applicable Purchaser(s) shall be deemed to
have agreed that it will have
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<PAGE> 19
no direct right of action against any Swap-holder for any failure to make any
payment due under the related Hedging Agreement; provided, that the Trustee
shall, and is hereby granted by the Obligors' Agent, the right to proceed
against any Swap-holder for any failure to make any payment due under the
related Hedging Agreement.
(e) If not theretofore paid in full, all amounts
outstanding with respect to the Series ________ Note shall be due and payable
on the Series Termination Date.
SECTION 3.04. Reporting Requirements. (a) The Servicer
shall send to the Agent, a copy of each Servicer's Certificate with respect to
each Collection Period, such Servicer's Certificate to be in the form of that
attached hereto as Exhibit D, at the same time as the Servicer sends such
Servicer's Certificate to the Trustee.
(b) By January 31 of each calendar year, commencing
January 31, 1998, the Servicer shall prepare and distribute to the Trustee and
to the Agent a statement containing such information as is required to be
provided by an issuer of indebtedness under the Code and such other customary
information as is necessary or may reasonably be requested by the Agent to
enable the Purchasers to prepare their tax returns.
(c) The Servicer and the Trustee shall furnish to the
Agent during the term of this Series ________ Supplement, such periodic,
special or other reports or information not specifically provided for herein,
as shall be necessary, reasonable or appropriate as shall be requested by the
Agent, all such reports or information to be provided by and in accordance with
reasonable instructions and directions as the Agent may reasonably require and
as the Servicer and the Trustee may reasonably be able to produce. In
furtherance of, and not in limitation of the foregoing, there shall be
delivered to the Agent by the Trustee, promptly following the Trustee's receipt
thereof, copies of (i) each Servicer's annual compliance statement delivered to
the Trustee pursuant to Section 6.07 of the Master Agreement, and (ii) each
financial statement and report delivered to the Trustee pursuant to Section
6.08 of the Master Agreement. The Trustee's obligation under this Section
3.04(c) shall only pertain to information provided by the Servicer to the
Trustee or otherwise in the Trustee's possession.
(d) The Trustee shall promptly, after any Responsible
Officer's receipt of copies thereof, or any Responsible Officer acquiring
actual knowledge thereof, send to the Agent (at the Servicer's expense):
(i) Written notice of any breach by the Contributor,
the Series Obligors or the Servicer of any of their respective
representations, warranties or covenants made in any of the Series
________ Related Documents to which it is a party;
(ii) A copy of each Servicer compliance statement
delivered to the Trustee pursuant to Section 6.07 of the Master
Agreement;
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(iii) A copy of each financial statement, Independent
Accountant's review, notice and report delivered to the Trustee
pursuant to Sections 6.08 and 12.04 of the Master Agreement;
(iv) Written notice of the occurrence of any Series
Event of Default, Required Amortization Event or Event of Servicer
Termination;
(v) Written notice of any failure of the Trustee to
conform to the eligibility requirements for the Trustee pursuant to
Section 11.08 of the Master Agreement;
(vi) Written notice of the appointment of any
co-trustee or separate trustee by the Trustee pursuant to Section
11.15 of the Master Agreement; and
(vii) Copies of all other financial statements, reports,
information and/or notices as may be reasonably requested by the Agent
and, in each case, which has been received by or is otherwise in the
possession of the Trustee or to which the Trustee would have access or
would be entitled to receive or request in accordance with the terms
of the Master Agreement;
provided, however, that in each case the Trustee shall only be required to send
such notices and other items to the Agent to the extent that the Trustee has
itself received or has knowledge of the related information. Except as may be
specifically provided herein, the Trustee shall have no obligation to seek to
obtain any such information.
SECTION 3.05. Compliance With Withholding Requirements.
Notwithstanding any other provisions of this Series ________ Supplement or the
Master Agreement to the contrary, the Trustee, for and on behalf of, and at the
direction of the Servicer, shall comply with all federal withholding
requirements respecting payments (or advances thereof) to the Agent on behalf
of the Purchasers as may be applicable to instruments constituting indebtedness
for federal income tax purposes. Any amounts so withheld shall be treated as
having been paid to the Agent on behalf of the applicable Purchasers for all
purposes of this Master Agreement. In no event shall the consent of the Agent
or any Purchasers be required for any such withholding.
SECTION 3.06. Servicer Advances. No later than one
Business Day preceding each Settlement Date, the Servicer shall make a Servicer
Advance for each Contract which is a Delinquent with respect to each Overdue
Payment as of the related Calculation Date in an amount equal to the Scheduled
Payments, or portion thereof, which were due but not received during the
related Collection Period (and not previously covered by an unreimbursed
Servicer Advance); provided, however, that the Servicer shall not be obligated
to make any Servicer Advance pursuant to this Section 3.06 which the Servicer
determines in its sole discretion and in accordance with its customary
servicing practices is unlikely to be eventually repaid from Scheduled Payments
or from Residual Receipts made by or on behalf of the related User. On each
Determination Date, the Servicer shall deliver to the Trustee and the Agent the
Servicer's Certificate
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<PAGE> 21
listing the aggregate amount of Scheduled Payments not received for the
immediately prior Collection Period as of the related Calculation Date which it
has determined, in its sole discretion and in accordance with its customary
servicing practices, is likely to be recoverable from the related Users and in
respect of which the Servicer shall so make Servicer Advances. The Servicer
shall remit any Servicer Advances to the Series ___________ Facility Account
for application in accordance with the terms of Section 3.03.
SECTION 3.07. Special Covenants and Acknowledgements. (a)
With respect to the Series ________ Note, each Series Obligor and the Obligors'
Agent does hereby represent and warrant, as of the initial Pledge Date and each
Subsequent Pledge Date:
(i) Insolvency. None of the Series Obligors or
the Obligors' Agent is insolvent and none of them will be rendered
insolvent by the transactions contemplated by this Agreement, the
Master Facility Agreement and each Series _______ Related Document to
which it is a party.
(ii) Principal Place of Business. Exhibit F
hereto set forth the principal place of business and chief executive
office and, the location of the Contract Files for each Series Obligor
and the Obligors' Agent.
(iii) Valid Pledge. It is the intention of each
Series Obligor and the Obligors' Agent that each Pledge herein
contemplated constitutes the grant of a perfected, first priority
security interest in all Pledged Property (other than any Equipment
having a value of $25,000 or less) to the Trustee.
(iv) Governmental Authorization. Other than the
filing of the financing statements required hereunder, no
authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required
for the due execution, delivery and performance by each Series Obligor
and the Obligors' Agent of this Agreement, the Master Facility
Agreement and each Series ________ Related Document to which it is a
party except for such authorizations, approvals, actions, notices and
filings as have already been obtained, taken or made in connection
with Municipal Contracts.
(v) Accuracy of Information. All information
heretofore furnished in writing by either Series Obligor, or the
Obligors' Agent to the Trustee or to the Agent for purposes of or in
connection with this Agreement, the Master Facility Agreement and each
Series _______ Related Document to which it is a party or any Pledge
is true, accurate and complete in every material respect on the date
such information is stated or certified.
(vi) Names. In the past two years, none of the
Series Obligors or the Obligors' Agent has used any corporate names,
trade names or assumed names other than the name in which it has
executed this Agreement.
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<PAGE> 22
(vii) No Adverse Selection. The Eligible Contracts
have been, and will be, selected by the Obligors' Agent in a manner
that is not adverse to the interests of the Trustee or the Series
________ Noteholder.
(b) With respect to the Series ________ Note, the Series
Obligors, the Obligors' Agent and the Servicer do hereby acknowledge
and agree that:
(i) the Agent and its duly authorized
representatives, attorneys or accountants shall have the same access
to the documentation relating to the Series ________ Trust Estate as
the Trustee is provided pursuant to Section 6.09 of the Master
Agreement;
(ii) the Servicer shall indemnify the Agent to the
same extent and on the same terms as the Trustee, pursuant to Section
8.01 of the Master Agreement;
(iii) the prior written consent of the Agent shall
be required for either Series Obligor to take any action described in
Section 14.03(a) or 14.03(b) of the Master Agreement;
(iv) the Servicer shall give the Agent notice of
any return of final payment given to the Trustee pursuant to Section
5.06 of the Master Agreement, at the same time such notice is given to
the Trustee;
(v) each Series Obligor hereby confirms and
acknowledges that, by its execution hereof, (a) it shall be deemed to
be a party to the Master Agreement and to the Contribution Agreement
for the purpose of making all representations, warranties and
covenants, and being bound by all obligations, applicable to an
Obligor thereunder, to the extent (and only to the extent) such
representations, warranties, covenants and obligations relate to the
Series _______ Note and/or the Series ________ Trust Estate and (b) it
confirms the right and ability of the Obligors' Agent to executive any
and all Series ________ Documents on behalf of such Series Obligor,
and that the Obligors' Agent's signatory thereon shall have the same
force and effect as of each of the Series Obligors were a direct
signature thereto;
(vi) the parties hereto acknowledge that the Agent
is the "Series Controlling Party" with respect to the Series _________
Note for purposes of the Master Agreement;
(vii) there are no "Support Default" events with
respect to the Series________ Note;
(viii) the "Series Trustee Secured Obligations" and
the "Series Secured Obligations" with respect to the Series _________
Note shall mean,
19
<PAGE> 23
collectively (x) any amounts due to the Agent hereunder, either in its
individual capacity or on behalf of the Purchasers, (y) any fees and
expenses due to the Trustee with respect to the Series _______ Note
and (z) any payments due to any Swap-holder with respect to the Series
_______ Note;
(ix) the "Series Secured Parties" with respect to
the Series __________ Note are the Trustee, the Agent and each
Swap-holder with respect to the Series ________ Note;
(x) the "Original Servicer Fee Rate" with respect
to the Series ________ Note is the Servicing Fee;
(xi) the "Original Issue Date" with respect to the
Series ________ Note is__________________;
(xii) the Servicer shall not accept any Prepayment
unless the amount received in connection therewith is at least equal
to the related Prepayment Amount as of such date, or, if less, unless
the Servicer makes a non-recoverable deposit to the Master Facility
Account in the amount of any shortfall; and
(xiii) the Servicer acknowledges that it has
previously made all required Servicer Advances with respect to the Series
_____________ Contracts which are the subject of the initial Pledge.
(c) With respect to the Series ________ Note, the parties
hereto acknowledge that the reduction of Advanta Corp. long-term, senior
unsecured debt below BB- by S&P or below Ba3 by Moody's shall constitute an
additional Event of Servicer Termination.
ARTICLE IV
SERIES PRINCIPAL AMOUNT FOR SERIES __________
SECTION 4.01. Increasing the Series ________ Note Balance.
(a) The Trustee shall deliver the Series ________ Note when authenticated as
directed in writing by the Series Obligors, and in accordance with Section 5.01
of the Master Agreement.
(b) (i) The Series ________ Noteholder agrees, by its
acceptance of the Series ________ Note, that the Obligors' Agent may on any
Business Day (a "Principal Increase Date") prior to the Revolving Period
Termination Date, request upon not less than three (3) Business Days' prior
notice to the Agent, the Servicer and the Trustee and upon satisfaction of the
conditions set forth in the _______________ Agreement that the Purchasers
increase their respective investment in the Series ________ Note in specified
amounts (each such amount, an "Additional Principal Amount"), but not in excess
of the Series Limit.
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<PAGE> 24
(ii) Except as otherwise provided in subsection (c) below, no
such investment shall occur unless the conditions set forth in Article IV of
the Note Purchase Agreement are satisfied (or are waived in writing by the
Agent).
(c) If the Purchasers make such additional investments, the
Agent shall remit the related Additional Principal Amount to the Trustee on
behalf of the Series Obligors, and, in consideration of the applicable
Purchaser's or Purchasers' payment of the amount of the Additional Principal
Amount, the Servicer shall notify the Trustee of the amount of such Additional
Principal Amounts and shall appropriately note such Additional Principal
Amounts (and the increased Series ________ Note Balance) on the next succeeding
monthly Servicer's Certificate.
The Agent shall and is hereby authorized to record on the grid
attached to the Series ________ Note (or at the Agent's option, in its internal
books and records) the date and amount of any Additional Principal Amount paid
by it on behalf of the Purchasers, and each repayment thereof; provided, that
failure to make any such recordation on such grid or any error in such grid
shall not adversely affect the Agent's rights with respect to the full Series
____________ Note Balance and its right to receive interest payments in respect
of the Series _________ Note Balance.
On each Principal Increase Date, upon the satisfaction of the
conditions described above, the Agent shall remit the amount of the related
Additional Principal Amount to the Trustee on behalf of the Series Obligors no
later than 2:00 p.m. (New York City time) in immediately available funds.
ARTICLE V
SERIES EVENTS OF DEFAULT
SECTION 5.01. Series Events of Default. If any one of the
following shall occur:
(a) The Series Obligors or the Servicer shall fail to
make when due any payment or deposit required hereunder or under any other
Series ________ Related Document, or ABS shall fail to make when due a payment
of Compensating Interest, in any case on or before the date occurring three
Business Days after the date such payment or deposit shall become due.
(b) (i) Either Series Obligor shall fail to perform or
observe any covenant of it set forth in any Series ____________ Related
Document, which failure has a material adverse effect on the Series ________
Noteholder hereunder and such failure shall remain unremedied for thirty (30)
Business Days after receipt by the Obligors' Agent of written notice thereof by
the Trustee or the Agent,
(ii) The Contributor fails to repurchase, within the
time period specified therein, from the Series Obligors any Series ________
Contract with respect to
21
<PAGE> 25
which a breach of any representation or warranty listed in Section 3 of any
Contribution Agreement Supplement relating to the Series ________ Note has
occurred,
(iii) ABS shall fail to perform or observe any
covenant (other than the covenant described in clause (b)(ii) above)
of it set forth in any Series _________Related Document, which failure
has a material adverse effect on the Series ________ Noteholder
hereunder and such failure shall remain unremedied for thirty (30)
Business Days after receipt by the Obligors' Agent of written notice
thereof by the Trustee or the Agent,
(c) (i) Any representation or warranty made by the Series
Obligors or in any Series ___________ Related Document or in any other document
delivered pursuant thereto, (x) shall prove to have been incorrect when made or
deemed made and continues to be incorrect for a period of thirty (30) Business
Days after the earlier to occur of (1) the discovery thereof by a Series
Obligor or (2) the receipt by the Obligors' Agent of written notice thereof
from the Trustee or the Agent and (y) as a result of such error, the interests
of the Trustee and/or the Series Secured Parties are materially and adversely
affected, or
(ii) any representation or warranty made by ABS in
any Series _____________ Related Document or in any other document
delivered pursuant thereto, (x) shall prove to have been incorrect
when made or deemed made and continues to be incorrect for a period of
thirty (30) Business Days after the earlier to occur of (1) the
discovery thereof by a ABS or (2) the receipt by ABS of written notice
thereof from the Obligors' Agent, the Trustee or the Agent and (y) as
a result of such error, the interests of the Trustee and/or the Series
_______ Noteholder are materially and adversely affected.
(d) An Insolvency Event shall occur with respect to any
Series Obligor.
(e) As of the end of any Collection Period the rolling
average for the three prior Collection Periods (including the Collection Period
just ended) with respect to the Delinquency Ratio shall exceed __%.
(f) As of the end of any Collection Period the
Delinquency Ratio for such Collection Period shall exceed ____% for such
Collection Period.
(g) As of the end of any Collection Period, the rolling
average for the three prior Collection Periods (including the Collection Period
just ended) with respect to the Charged-Off Ratio shall exceed _____%.
(h) For any Collection Period, the average Residual
Realization is less than ___%.
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(i) If ABS makes payments under Section 3.01(d) hereof
with respect to Compensating Interest Requirements in an aggregate, cumulative
amount in excess of $__________________.
then, in the case of any event described in subparagraph (d) above, such Series
Event of Default shall occur without any notice or any other action. In the
case of any event described in the other remaining lettered paragraphs above,
subject to applicable law and subject to the applicable cure periods stated
within, a Series Event of Default shall occur after written notice has been
provided to the Series Obligors by the Trustee or the Agent, upon the
occurrence of such event; provided, that in the case of any event described in
subparagraphs (e), (f) or (g) such Series Event of Default shall not occur if
the Series Obligors are able to remedy the default by transferring additional
Pledged Property as provided in Section 1.03(b) hereof; provided, further, that
the Agent must consent to any such remedy.
If a Series Event of Default occurs, the Series ________ Note
shall automatically become due and payable. At any time following such
declaration of acceleration, the Agent shall have the right to liquidate the
Series ________ Trust Estate and retain the proceeds thereof remaining after
the payment of any unpaid fees and expenses of the Trustee with respect to the
Series ________ Note (but only to the extent of the Series ________ Note
Balance and any interest thereon (including any Compensating Interest which is
due from ABS but which remains unpaid) which has accrued and remains unpaid,
plus any unpaid fees due under the Fee Letter, and any other amounts owing to
the Series ________ Noteholders or the Agent under the Series ________ Related
Documents). Any remaining proceeds from the liquidation, after payment of the
such amounts shall be paid to the Series Obligors.
ARTICLE VI
PREPAYMENT AND REDEMPTION
SECTION 6.01. Mandatory Prepayment. Notwithstanding any
limitation on recourse contained in this Series ________ Supplement or the
Master Agreement, if:
(a) on any day, any Series ________ Contract is
discovered not to have been an Eligible Contract on its applicable Pledge Date,
or
(b) on any day, the Contract Principal Balance of a
Series ________ Contract is partially reduced as a result of any discount or
adjustment by the Obligors' Agent, either of the Series Obligors, or the
Servicer,
then the Series Obligors shall, on or prior to the Business Day preceding the
next following Settlement Date, deliver to the Servicer for deposit in the
Series ________ Facility Account (i) in the case of an event described in (a)
above, the related Prepayment Amount and (ii) in the case of an event described
in (b) above, an amount equal to the
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<PAGE> 27
amount of such reduction, provided, that if such discount or reduction is in
effect at a time when a Contract is a Delinquent Contract, then the full
Prepayment Amount shall be so delivered. Upon payment in full by the Obligors'
Agent to the Servicer of such amounts in respect of a Series ________ Contract
described in the foregoing clause (a) or (b), the security interest of the
Trustee in the related Series ________ Contract and the Related Security shall
be deemed released, and the Trustee shall, upon request, promptly deliver to
the Series Obligors any documents in the Trustee's possession evidencing the
Series ________ Contract and its interest in such Equipment related thereto and
such Related Security. The Trustee shall take all necessary actions to ensure
that such security interest is released, including, at the Series Obligors'
expense, execute such UCC-3 assignments, termination statements and other
documents as may reasonably be requested by the Obligors' Agent.
SECTION 6.02. Optional "Clean-Up" Redemption. On any
Settlement Date occurring on or after the date upon which the Series ________
Note Balance shall have been reduced to an amount which is less than or equal
to 10% of the Series Limit, the Series Obligors shall have the option to redeem
the outstanding Series __________ Note at a redemption price (the "Redemption
Price") equal to the outstanding Series _________ Note Balance of the Series
___________ Notes, plus all accrued and unpaid interest thereon and all fees
and other amounts owing to the Agent on behalf of the Purchasers in connection
therewith. The Obligors' Agent shall give the Servicer, the Trustee and the
Agent at least 30 days' irrevocable prior written notice of the date on which
the Series Obligors intend to exercise such option to purchase. Not later than
12:00 P.M., New York City time, on such Settlement Date the Series Obligors
shall remit such amount to the Agent (by wire transfer to an account to be
designated by the Agent, which designation may be a standing wire direction) in
immediately available funds. Such purchase option is subject to payment in
full of the Redemption Price. The Agent shall promptly thereafter distribute
the applicable amounts to each of the applicable Purchasers in accordance with
their respective interests therein.
SECTION 6.03. Tender of Series ________ Note. The
Obligor's Agent may request the Agent to tender to the Trustee all or a portion
of the Series ________ Note that it then holds, provided that such tender shall
only take place if:
(a) (i) the Agent and the Trustee have received
written and irrevocable notice on or before the last day of the Collection
Period most recently ended prior to, and in any event at least 30 days but no
more than 40 days prior to any date set for such tender and the Agent has
consented to such tender (which consent shall not be unreasonably withheld) and
(ii) the Trustee shall have received written and irrevocable notice of the
election described in subsection (b)(i) and (b)(ii) below, and in the event
such election is that described in (b)(ii) such payment will be deposited with
the Trustee with instructions to pay the Agent;
(b) Upon the date set for tender, the Agent shall receive
either (i) if it so elects, in lieu of payment, a new Series of Notes or (ii)
payment in an amount equal to the then Series ________ Note Balance being
tendered, plus interest accrued but unpaid
24
<PAGE> 28
on such Series ________ Note to, but not including, the date of tender,
together with all other amounts then due and payable or, relating to the Series
__________ Note Balance being tendered;
(c) the purchaser of any Series ________ Notes so
tendered shall not be any Series Obligor or any Affiliate of any Series
Obligor.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Agent Authorized to Act for the Purchasers;
Notices. The parties hereto acknowledge that the Agent is authorized, pursuant
to the terms of the Note Purchase Agreement, to act for the Purchasers,
including, without limitation, for purposes of receiving distributions as
described in this Series ________ Supplement on behalf of such Purchasers.
Notwithstanding anything to the contrary in the Master Agreement or this Series
________ Supplement, the Trustee and the Servicer shall deliver all notices and
distributions to be made to the Agent as the registered owner of a Series
_____________ Note and such delivery shall be deemed to comply with all
requirements of the Master Agreement.
SECTION 7.02. Ratification of Master Agreement. As
supplemented by this Series ________ Supplement, the Master Agreement is in all
respects ratified and confirmed and the Master Agreement, as so supplemented by
this Series ________ Supplement shall be read, taken and construed as one and
the same instrument.
SECTION 7.03. Counterparts. This Series ________
Supplement may be executed in one or more counterparts, each of which so
executed shall be deemed to be an original, but all of which shall together
constitute but one and the same instrument.
SECTION 7.04. GOVERNING LAW. THIS SERIES ________
SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT TAKING INTO
ACCOUNT THE CONFLICT OF LAWS PRINCIPLES OF ANY JURISDICTION.
SECTION 7.05. Amendments and Waivers. (a) Notwithstanding
anything contained in the Master Agreement to the contrary, no term or
condition of this Series ________ Supplement shall be amended, modified, waived
or terminated without the prior written consent of the Obligors' Agent, the
Servicer, the Trustee and the Agent.
(b) No waiver with respect to any term or condition of
the Master Agreement or this Series ________ Supplement shall extend to any
subsequent or other event, circumstance or default or impair any right
consequent thereon except to the extent expressly so waived.
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<PAGE> 29
SECTION 7.06. Non-petition Clause. By its acceptance of
the Series ________________ Note on behalf of the Purchasers, the Agent on
behalf of itself and the Purchasers, together with the Agent shall be deemed to
have agreed that prior to the date which is one year and one day after the
termination of the Master Agreement, such Person shall not acquiesce, petition
or otherwise invoke or cause the Series Obligors to invoke the process of any
Governmental Authority for the purpose of commencing or sustaining a case
against the Series Obligors under any Federal or state bankruptcy, insolvency
or similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of or for the Series Obligors
or any substantial part of its property or ordering the winding-up or
liquidation of the affairs of the Series Obligors.
SECTION 7.07. Certain Information. Certain information
concerning the Series Obligors and the Servicer is set forth in Exhibit F
hereto.
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<PAGE> 30
IN WITNESS WHEREOF, the Series Obligors, the Obligors' Agent,
ABS, in its individual capacity and as the Servicer and the Trustee have caused
this Series ________ Supplement to be fully executed by their respective
officers as of the day and year first above written.
ADVANTA BUSINESS SERVICES CORP.,
in its individual capacity and as Servicer
By_____________________________________
Name:
Title:
_____________________________________
as a Series Obligor and
the Obligors' Agent
By_____________________________________
Name:
Title:
_______________________________________
as a Series Obligor
By_____________________________________
Name:
Title:
_______________________________________
as Trustee
By_____________________________________
Name:
Title:
27
<PAGE> 31
EXHIBIT F
PLACES OF BUSINESS OF THE SERIES OBLIGORS AND THE SERVICER;
LOCATIONS OF RECORDS; FEDERAL EMPLOYER IDENTIFICATION NUMBERS
A. Series Obligors
B. Servicer
1
<PAGE> 1
Exhibit 4.3
________________________________________________________________________________
MASTER CONTRIBUTION AGREEMENT
between
ADVANTA BUSINESS SERVICES CORP.,
as the Contributor
and
ADVANTA LEASING RECEIVABLES CORP. III,
as the Obligors' Agent
Dated as of
May 1, 1997
________________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01 Terms Defined in the Master Facility Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02 Additional Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. CONVEYANCE OF INITIAL CONVEYED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.01 Capital Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.02 Custody of Contract Files . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.03 Servicing of Contracts and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.04 Contribution of Conveyed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3.01 Representations and Warranties of ABS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3.02 Representations and Warranties of the Obligors' Agent . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.03 Removal of Contracts and Equipment by ABS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV. COVENANTS OF ABS, THE OBLIGORS AND THE OBLIGORS' AGENT . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4.01 ABS Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4.02 Covenants of the Obligors' Agent and each Obligor . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.03 Pledge of Conveyed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.01 Conditions to the Obligors' Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.02 Conditions to ABS's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.01 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.02 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
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<TABLE>
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ARTICLE VII. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.01 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.02 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.04 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 7.05 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 7.06 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 7.07 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 7.08 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 7.09 Binding Effect; Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 7.10 Merger and Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7.12 Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7.13 No Bankruptcy Petition Against Obligors' Agent or any Obligor . . . . . . . . . . . . . . . . . . . 16
EXHIBIT A - Form of Contribution Agreement Supplement
</TABLE>
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<PAGE> 4
MASTER CONTRIBUTION AGREEMENT
THIS MASTER CONTRIBUTION AGREEMENT, dated as of May 1,
1997, is entered into between ADVANTA BUSINESS SERVICES CORP. ("ABS"), a
Delaware corporation located at 1020 Laurel Oak Road, Voorhees, New Jersey
08043, and ADVANTA LEASING RECEIVABLES CORP. III, a Nevada corporation located
at 1325 Airmotive Way, Reno, Nevada 89502 (the "Obligors' Agent").
W I T N E S S E T H:
WHEREAS, ABS in the ordinary course of its business
originates and acquires Contracts in the United States and its territories and
possessions; and
WHEREAS, ABS desires to transfer and assign all of its
right, title and interest in and to the Conveyed Assets (as defined below) to
the Obligors upon the terms and conditions hereinafter set forth;
WHEREAS, the Obligors, ABS, in its capacity as Servicer
and The Chase Manhattan Bank have heretofore entered into the Master Business
Receivables Asset-Backed Financing Facility Agreement dated as of May 1, 1997
(the "Master Facility Agreement") pursuant to which the Obligors will finance
their acquisition and holding of the Conveyed Assets;
WHEREAS, it is contemplated that following such transfer
and assignment, ABS will continue to administer and service the Conveyed Assets
in its capacity as Servicer pursuant to the Master Facility Agreement;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01 Terms Defined in the Master Facility
Agreement. For the purposes of this Agreement, capitalized terms used herein
but not otherwise defined shall have the respective meanings assigned to such
terms in the Master Facility Agreement.
SECTION 1.02 Additional Definitions. Whenever used in
this Agreement, the following words and phrases shall have the following
meanings:
<PAGE> 5
"Agreement" shall mean this Master Contribution
Agreement, as defined in the preamble to this Agreement, and all amendments
hereto.
"ABS" shall mean Advanta Business Services Corp., a
Delaware corporation.
"Capital Contribution" shall have the meaning set forth
in Section 2.01 hereof.
"Contribution Agreement Supplement" shall mean each
Contribution Agreement Supplement executed and delivered pursuant to this
Agreement substantially in the form of Exhibit A.
"Contribution Date" shall mean each date on which a
contribution of Conveyed Assets is to be effected, as set forth in the related
Contribution Agreement Supplement.
"Conveyed Assets" means (i) each Contract contributed or
otherwise transferred to the Related Obligor(s) by ABS pursuant to a
Contribution Agreement Supplement under the Master Facility Agreement, together
with (ii) all Collections after the related Contribution Date, (iii) Related
Security associated therewith, (iv) all balances, instruments, monies and other
securities and investments held from time to time by ABS, as Servicer,
representing Collections or Residual Receipts or Insurance Proceeds received
after the related Contribution Date; (v) all security interests in the
Equipment not owned by ABS, and all Equipment owned by ABS, in each case
associated with such Contracts, and (vii) all proceeds of the foregoing, but
excluding any Insurance Premiums, taxes, late charge fees, Initial Unpaid
Amounts and Security Deposits.
"Electronic Ledger" shall mean ABS's master electronic
record of all contracts serviced by it, including the Contracts.
"Related Obligor(s)" shall mean the Obligor(s)
designated as the "Related Obligors" in the related Contribution Agreement
Supplement.
ARTICLE II.
CONVEYANCE OF INITIAL CONVEYED ASSETS
SECTION 2.01 Capital Contribution. (a) ABS shall, from
time to time, and pursuant to a Contribution Agreement Supplement make a
capital contribution (a "Capital Contribution") to the Obligor(s) specified in
such Contribution Agreement Supplement of all of ABS's right, title and
interest in, to, and under the related Conveyed Assets, whether now existing or
hereafter arising, and ABS shall, from time to time, and
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<PAGE> 6
pursuant to a Contribution Agreement Supplement assigns, conveys, grants and
transfers to such Related Obligors, without representation, warranty or
recourse except as expressly provided in Section 3.01, all of its right, title
and interest in and to such related Conveyed Assets.
(b) In connection with such contribution and
conveyance, prior to the related Contribution Date, ABS agrees to record and
file, at its own expense, financing statements (and thereafter timely
continuation statements with respect to such financing statements) with respect
to the related Conveyed Assets, meeting the requirements of applicable state
law in such manner and in such jurisdictions as are necessary to perfect and to
maintain the perfection of, the transfer and contribution of the related
Conveyed Assets from ABS to the Related Obligors and the pledge of such related
Conveyed Assets from the Related Obligors to the Trustee, and to deliver a
file-stamped copy of such financing statements or other evidence of such
filings to the Obligors' Agent on or prior to the related Contribution Date;
provided, however, that, except as required by the Master Facility Agreement,
no financing statements will be recorded or filed with respect to the
contribution or transfer of the Equipment unless ABS shall be requested by the
Obligors' Agent, to file UCC-3 statements or similar statements with respect to
Equipment on which ABS has a security interest only in order to exercise
remedies with respect to Charged-Off Contracts to which such Equipment
relates; and provided, further, that the Contract Files will not be physically
delivered to the Related Obligors or to the Trustee, but instead will be held
by ABS on behalf of the Trustee and the Contract Files will be marked as
required by the Master Facility Agreement. A carbon, photographic or other
reproduction of this Agreement or of any financing statement required by ABS or
the Obligors' Agent is sufficient as a financing statement in any state to
perfect the transfers granted in this Agreement.
(c) In connection with each such contribution and
conveyance, ABS shall, at its own expense, (i) cause its Electronic Ledger to
be marked to show that the related Conveyed Assets have been contributed and
transferred to the Related Obligors in accordance with this Agreement, and the
related Conveyed Assets pledged to the Trustee in accordance with the Master
Facility Agreement on or prior to the related Contribution Date and (ii)
deliver to the Trustee on behalf of the Related Obligors the related List of
Contracts on the related Contribution Date.
SECTION 2.02 Custody of Contract Files. In connection
with (a) each contribution, assignment, transfer and conveyance of Conveyed
Assets to the Related Obligors pursuant to the related Contribution Agreement
Supplement, and (b) each pledge by such Related Obligors to the Trustee for the
benefit of the related Series Secured Parties, pursuant to the Master Facility
Agreement, ABS, for so long as it shall act as the Servicer under the Master
Facility Agreement, will retain the Contract Files and any related evidence of
insurance and payments, all of which shall be held on behalf of the Trustee.
3
<PAGE> 7
SECTION 2.03 Servicing of Contracts and Equipment. In
connection with the contribution, assignment, transfer and conveyance of the
Contracts and Equipment to the Related Obligors pursuant to the related
Contribution Agreement Supplement and pledge thereof to the Trustee, ABS hereby
agrees to service the Contracts and Equipment for the benefit of the Related
Obligors (and their respective successors and assigns) and the Trustee in
accordance with the terms and conditions of the Master Facility Agreement.
SECTION 2.04 Contribution of Conveyed Assets. Each
contribution of Conveyed Assets shall be evidenced by the execution and
delivery by ABS and the Related Obligors of the related Contribution Agreement
Supplement in the form of Exhibit A hereto, and all of the Related Obligors'
rights thereunder shall similarly be pledged to the Trustee for the benefit of
the related Series Secured Parties, as of the related Contribution Date. Each
such contribution shall be effective as of the related Contribution Date.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties of ABS. ABS
hereby makes the following representations and warranties for the benefit of
the Related Obligors, the Trustee and the related Series Secured Parties. Such
representations and warranties speak as of the related Contribution Date,
unless otherwise indicated, but shall survive each contribution, assignment,
transfer and conveyance of the Conveyed Assets to the Related Obligors and
their successors and assigns.
(a) As to the Conveyed Assets, those representations and
warranties set forth in, or referenced in, Section 3 of the related
Contribution Agreement Supplement.
(b) As to ABS:
(i) Organization and Good Standing. ABS is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, with full corporate power and
authority to own its properties and to conduct its business as
presently conducted, and had at all relevant times, and now has,
power, authority, and legal right to acquire, own and convey the
Conveyed Assets;
(ii) Due Qualification. ABS is duly qualified
to do business as a foreign corporation and is in good standing, and
has obtained all necessary licenses and approvals, in all
jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, license or
approval, except to the extent that the failure to be so qualified, or
to obtain such
4
<PAGE> 8
licenses and approvals, would not, in the aggregate, materially and
adversely affect the ability of ABS to perform its obligations under
this Agreement, the Master Facility Agreement and each Series Related
Document to which ABS is a party, including those Series Related
Documents to which ABS is a party in its capacity as the Servicer;
(iii) Power and Authority. ABS has the
corporate power and authority to execute and deliver this Agreement,
the Master Facility Agreement, and each Series Related Document to
which ABS is a party, including those Series Related Documents to
which ABS is a party in its capacity as the Servicer, and to carry out
their respective terms; ABS has duly authorized the transfer and
assignment to the Related Obligor(s) of the related Conveyed Assets by
all necessary corporate action; and the execution, delivery, and
performance of all Series Related Documents has been duly authorized
by ABS by all necessary corporate action;
(iv) Valid Contribution; Binding Obligations.
Upon execution and delivery of each Contribution Agreement Supplement
by ABS, such Contribution Agreement Supplement will constitute a valid
contribution, assignment, transfer and conveyance to the Related
Obligor(s) of all right, title and interest of ABS in, to and under
the Conveyed Assets transferred thereby, and the Conveyed Assets will
thereafter be held by such Related Obligors free and clear of any
Adverse Claims of ABS or any Person claiming through or under ABS,
except for Adverse Claims permitted under, or to be created by, the
Master Facility Agreement and the Series Supplement; this Agreement,
the Master Facility Agreement and each Series Related Document to
which ABS is a party, including those Series Related Documents to
which ABS is a party in its capacity as the Servicer, when duly
executed and delivered, will constitute a legal, valid, and binding
obligation of ABS, enforceable against ABS in accordance with its
terms, except that (A) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws (whether
statutory, regulatory or decisional) now or hereafter in effect
relating to creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to certain equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought whether a
proceeding at law or in equity;
(v) No Violation. The consummation of the
transactions contemplated by and the fulfillment of the terms of this
Agreement, the Master Facility Agreement and each Series Related
Document to which ABS is a party, including those Series Related
Documents to which ABS is a party in its capacity as the Servicer,
will not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time)
a default under, the certificate of incorporation or bylaws of ABS, or
any material term of any indenture, agreement, mortgage, deed of
trust, or other instrument to which
5
<PAGE> 9
ABS is a party or by which it is bound, or result in the creation or
imposition of any Adverse Claim upon any of its properties pursuant to
the terms of any such indenture, agreement, mortgage, deed of trust,
or other instrument, other than this Agreement, the Master Facility
Agreement and each Series Related Document to which ABS is a party,
including those Series Related Documents to which ABS is a party in
its capacity as the Servicer, or violate any law or any order, writ,
judgment, award, injunction, decree, rule, or regulation applicable to
ABS or affecting it or its property, which would have a material
adverse effect on the Conveyed Assets, and no transaction contemplated
hereby requires compliance with any bulk sales act or similar law;
(vi) No Proceedings. There are no proceedings
or investigations pending, or, to the knowledge of ABS, threatened,
before any court, regulatory body, administrative agency, or other
tribunal or governmental authority (A) asserting the invalidity of
this Agreement, the Master Facility Agreement and each Series Related
Document to which ABS is a party in its capacity as the Servicer, (B)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, any Contribution Agreement Supplement
or the Master Facility Agreement, or (C) seeking any determination or
ruling that might (in the reasonable judgment of ABS) materially and
adversely affect the performance by ABS of its obligations under, or
the validity or enforceability of, this Agreement, any Contribution
Agreement Supplement or the Master Facility Agreement;
(vii) Insolvency. ABS is not insolvent and will
not be rendered insolvent by the transactions contemplated by this
Agreement, the Master Facility Agreement and each Series Related
Document to which ABS is a party in its capacity as the Servicer;
(viii) Principal Place of Business. ABS's
principal place of business, the location of the Contract Files and
chief executive office is in the State of New Jersey, County of
Camden;
(ix) Valid Transfer. It is the intention of
ABS that each assignment, transfer and conveyance herein contemplated
constitute a transfer of the related Conveyed Assets from ABS to the
Related Obligors and that the beneficial interest in and title to the
Conveyed Assets not be part of the estate of ABS, as a debtor, in the
event of the filing of a bankruptcy petition by or against ABS under
any bankruptcy law;
(x) Governmental Authorization. Other than
the filing of the financing statements required hereunder, no
authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required
for the due execution, delivery and performance by ABS of this
Agreement, the Master Facility Agreement and each Series Related
6
<PAGE> 10
Document to which ABS is a party in its capacity as the Servicer,
except for such authorizations, approvals, actions, notices and
filings as have already been obtained, taken or made in connection
with Municipal Contracts;
(xi) Accuracy of Information. All information
heretofore furnished in writing by ABS to the Obligors, the Obligors'
Agent or the Trustee for purposes of or in connection with this
Agreement, the Master Facility Agreement and each Series Related
Document to which ABS is a party in its capacity as the Servicer, or
any Pledge is true, accurate and complete in every material respect on
the date such information is stated or certified, and all such
information hereafter furnished by ABS to such Persons will be true,
accurate and complete in every material respect, on the date such
information is stated or certified; and
(xii) Names. In the past two years, ABS has not
used any corporate names, trade names or assumed names other than the
name in which it has executed this Agreement and Advanta Leasing Corp.
SECTION 3.02 Representations and Warranties of the
Obligors' Agent. The Obligors' Agent hereby makes the following
representations and warranties to ABS, the Trustee and each Series Secured
Party on which ABS relies in investing in the Obligors by contributing the
Conveyed Assets. Such representations and warranties speak as of each
Contribution Date, and shall survive each assignment, transfer and conveyance
of the respective Conveyed Assets to the Related Obligors and their respective
successors and assigns.
(a) Organization and Good Standing. Each Obligor is a
legal entity duly organized, validly existing and in good standing under the
laws of the State of its organization, with full corporate power and authority
to own its properties and to conduct its business as presently conducted;
(b) Due Qualification. Each Obligor is duly qualified to
do business as a foreign corporation and is in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which its
ownership or lease of property or the conduct of its business requires such
qualification, license or approval, except to the extent that the failure to be
so qualified, or to obtain such license and approvals would not, in the
aggregate, materially and adversely affect the ability of such Obligor to
comply with the terms of all Series Related Documents to which such Obligor is
a party;
(c) Power and Authority. Each Obligor has the corporate
power and authority to execute and deliver all Series Related Documents to
which such Obligor is a party and to carry out their respective terms; and the
execution, delivery, and performance of all Series Related Documents to which
such Obligor is a party have been duly authorized by such Obligor by all
necessary corporate action;
7
<PAGE> 11
(d) Binding Obligations. Each Series Related Document to
which such Obligor is a party, when each has been duly executed and delivered,
will constitute a legal, valid, and binding obligation of such Obligor
enforceable against such Obligor in accordance with its terms, except that (A)
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws (whether statutory, regulatory or decisional)
now or hereafter in effect relating to creditors' rights generally and (B) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to certain equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought whether a
proceeding at law or in equity;
(e) No Violation. The consummation of the transactions
contemplated by and the fulfillment of the terms of this Agreement, the Note
Purchase Agreement, the Notes, the Master Facility Agreement, the Series
Supplement and each Contribution Agreement Supplement will not conflict with,
result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time) a default under, the Organizational
Documents of such Obligor, or any material term of any agreement to which such
Obligor is a party.
SECTION 3.03 Removal of Contracts and Equipment by ABS.
Upon discovery by ABS, the Obligors' Agent or any Obligor of a breach of any of
the representations and warranties made pursuant to Section 3.01 or in any
Contribution Agreement Supplement that materially and adversely affects the
interests of the Related Obligor or its successors or assigns, including the
Trustee, in any of the Contracts or the Equipment, the party discovering such
breach shall give prompt written notice to the others. Unless the breach shall
have been cured by ABS or waived by the Trustee in all material respects within
30 days following the discovery by ABS of, or ABS' receipt of written notice
from the Trustee, the Obligors' Agent or any Obligor of, such breach, ABS shall
remove such Contract and the Equipment subject to such Contract, and deposit in
the Master Facility Account the Prepayment Amount pursuant to the terms of the
Master Facility Agreement. The obligation of ABS as provided in this Section
3.03 to remove any Contract and the Equipment subject to such Contract as to
which a breach has occurred and is continuing and to remit the Reconveyance
Amount shall constitute the sole remedy against ABS for such breach available
to, the Obligors' Agent or any Obligor and the Trustee. The representations
and warranties set forth in Section 3.01 shall survive each contribution and
assignment of the Conveyed Assets to the Related Obligor and their Pledge to
the Trustee.
ARTICLE IV.
COVENANTS OF ABS, THE OBLIGORS
AND THE OBLIGORS' AGENT
SECTION 4.01 ABS Covenants. ABS hereby covenants and
agrees with the Obligors and the Obligors' Agent as follows:
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(a) Merger or Consolidation of, or Assumption of the
Obligations of, ABS. Any corporation (i) into which ABS may be merged or
consolidated, (ii) resulting from any merger, conversion, or consolidation to
which ABS shall be party, or (iii) succeeding to the business of ABS
substantially as a whole, which corporation in any of the foregoing cases
executes an agreement of assumption to perform every obligation of ABS under
this Agreement and each Contribution Agreement Supplement, will be the
successor to ABS under this Agreement and each Contribution Agreement
Supplement, without the execution or filing of any document or any further act
on the part of any of the parties to this Agreement, anything in this Agreement
or any Contribution Agreement Supplement to the contrary notwithstanding;
provided, however, that immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 3.01 shall have been
breached.
(b) Limitation on Liability of ABS and Others. ABS and
any director or officer or employee or agent of ABS may rely in good faith on
any document of any kind, prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement and each
Contribution Agreement Supplement. ABS shall not be under any obligation to
appear in, prosecute, or defend any legal action that is not incidental to its
obligations as the transferor of the Conveyed Assets under this Agreement or
any Contribution Agreement Supplement and that in its opinion may involve it in
any expense or liability.
(c) Preservation of Security Interest. ABS shall execute
and file such financing statements and cause to be executed and filed such
continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain, and protect the interest of the
Related Obligors under this Agreement and each Contribution Agreement
Supplement in the Conveyed Assets and in the proceeds thereof; provided, that,
no filings shall be required on any Equipment except (i) as required by ABS'
Credit and Collection Policy and (ii) as otherwise required by any Contribution
Agreement Supplement. ABS shall not be required to file financing statements
with respect to the Equipment except as otherwise required hereby.
(d) Preservation of Name, etc. ABS will not change its
name, identity or corporate structure in any manner that would, could, or might
make any financing statement or continuation statement filed by ABS in
accordance with paragraph (c) above or the Master Facility Agreement seriously
misleading within the meaning of Section 9-402 (7) of the UCC, unless it shall
have given the Obligors' Agent and the Trustee at least 30 days' prior written
notice thereof.
(e) Preservation of Office. ABS will give the Obligors'
Agent and the Trustee at least 30 days' prior written notice of any relocation
of its principal executive office if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new
financing statement filed hereunder or pursuant to the terms of any conveyance
agreement.
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(f) Electronic Ledger. ABS as Servicer of the Contracts
and Equipment will, at its own cost and expense, (i) retain the Electronic
Ledger as a master record of the Contracts and Equipment and (ii) mark the
Electronic Ledger to the effect that the Contracts and Equipment have been
transferred to the Related Obligors and that they have been transferred and
assigned to the Trustee pursuant to the Master Facility Agreement.
(g) Compliance with Law. ABS will comply, in all
material respects, with all acts, rules, regulations, orders, decrees and
directions of any governmental authority applicable to the Conveyed Assets or
any part thereof; provided, however, that ABS may contest any act, regulation,
order, decree or direction in any reasonable manner which shall not materially
and adversely affect the rights of the Related Obligors or the Trustee in the
Conveyed Assets.
(h) Conveyance of Conveyed Assets; Security Interests.
Except for the transfers and conveyances under the Contribution Agreement
Supplements and pursuant to the Master Facility Agreement, ABS will not sell,
pledge, assign or transfer to any other Person, or grant, create, incur, assume
or suffer to exist any Adverse Claim on any Asset, or any interest therein and
ABS shall defend the right, title, and interest of the Related Obligors and
their successors and assigns in, to, and under the Conveyed Assets, against all
claims of third parties claiming through or under ABS; provided, however, that
nothing in this Section 4.01(h), shall prevent or be deemed to prohibit ABS
from suffering to exist upon any of the Conveyed Assets any Adverse Claim for
federal, state, municipal or other local taxes if such taxes shall not at the
time be due and payable or if ABS shall concurrently be contesting the validity
thereof in good faith by appropriate proceedings which act to stay enforcement
thereof and shall have set aside on its books adequate reserves with respect
thereto.
(i) Notification of Breach. ABS will advise the
Obligors' Agent and the Trustee promptly, in reasonable detail, of the
occurrence of any breach by ABS or any other party hereto following discovery
by ABS of such breach of any of its representations, warranties and covenants
contained herein.
(j) Further Assurances. ABS will make, execute or
endorse, acknowledge and file or deliver to the Obligors' Agent and/or the
Obligors from time to time such schedules, confirmatory assignments,
conveyances, transfer endorsements, powers of attorney, certificates, reports
and other assurances or instruments and take such further steps relating to the
Conveyed Assets and other rights covered by this Agreement, as the Obligors'
Agent and/or the Obligors or the Trustee may request and reasonably require;
provided, that, no UCC filing will be required with respect to the Equipment
except as otherwise required hereby or by the Master Facility Agreement.
(k) Indemnification. ABS agrees to indemnify, defend and
hold the Obligors' Agent and/or the Obligors harmless from and against any and
all loss, liability, damage, judgment, claim, deficiency, or expense (including
interest, penalties, reasonable attorneys' fees and amounts paid in settlement)
to which the Obligors' Agent and/or the
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<PAGE> 14
Obligors may become subject insofar as such loss, liability, damage, judgment,
claim, deficiency or expense arises out of or is based upon a breach by ABS of
its covenants contained in Section 4.01, or any information certified in any
schedule delivered by ABS hereunder or under any Contribution Agreement
Supplement, being untrue in any material respect at any time. The obligations
of ABS under this Section 4.01(k) shall be considered to have been relied upon
by the Obligors' Agent and the Obligors and shall survive the execution,
delivery, and performance of this Agreement regardless of any investigation
made by the Obligors' Agent and/or the Obligors or on its or their behalf.
(l) Non-disclosure. ABS hereby covenants and agrees with
the Obligors' Agent and the Obligors not to disclose to any Person (except the
Trustee) any of the information contained in the Electronic Ledger or any List
of Contracts delivered on subsequent Contribution Dates pursuant to Sections
2.02 and 5.01(c) hereof, except such disclosures as are required upon
appointment of a successor Servicer under the Supplement Agreement or by law
and except that ABS consents to the disclosure of any material nonpublic
information with respect to it (i) to any other such party, (ii) to any
prospective or actual assignee or participant of any of them, (iii) by the
Trustee to any Rating Agency, commercial paper dealer or Support Provider, or
any entity organized for the purpose of purchasing, or making loans secured by,
financial assets for which any Noteholders' Agent provides managerial services
or acts as the administrative agent and (iv) to any officers , directors,
employees, outside accountants and attorneys of any of the foregoing. ABS
hereby agrees to take such measures as shall be reasonably requested by the
Obligors' Agent and/or the Obligors or the Trustee to protect and maintain the
security and confidentiality of any of the information, and in connection
therewith, shall allow the Obligors' Agent and the Obligors or the Trustee from
time to time during normal business hours and upon reasonable prior notice to
inspect the applicable security and confidentiality arrangements from time to
time in normal business hours. ABS shall give the Obligors' Agent and the
Trustee five days' prior written notice of any disclosure pursuant to this
Section 4.01(l).
SECTION 4.02 Covenants of the Obligors' Agent and each
Obligor. The Obligors' Agent and each Obligor each hereby covenants and agrees
with ABS as follows:
(a) Non-disclosure; Inspection. The Obligors' Agent and
each Obligor each hereby covenants and agrees with ABS not to disclose to any
Person (except the Trustee) any of the information contained in the Electronic
Ledger, or any List of Contracts delivered on subsequent Contribution Dates to
the Related Obligors pursuant to Sections 2.02 and 5.01(c) hereof, except such
disclosures as are required upon appointment of a successor Servicer under the
Master Facility Agreement or by law and except that the Obligors' Agent and
each Obligor each consents to the disclosure of any material nonpublic
information with respect to it (i) to any other such party, (ii) to any
prospective or actual assignee or participant of any of them, (iii) by the
Trustee to any Rating Agency, commercial paper dealer or a support provider or
any entity organized for the purpose of purchasing, or making loans secured by,
financial assets for which any
11
<PAGE> 15
Noteholders' Agent provides managerial services or acts as the administrative
agent and (iv) to any officers, directors, employees, outside accountants and
attorneys of any of the foregoing. The Obligors' Agent and each Obligor each
agrees to take such measures as shall be reasonably requested by ABS to protect
and maintain the security and confidentiality of such information, and in
connection therewith, shall allow ABS from time to time during normal business
hours and upon reasonable prior notice to inspect the applicable security and
confidentiality arrangements from time to time in normal business hours. The
Obligors' Agent shall give ABS five days' prior written notice of any
disclosure pursuant to this Section 4.02(a).
(b) Reconveyance. Prior to each date as of which
Contracts and the Equipment subject to such Contracts are to be removed by ABS
pursuant to Section 3.03, the Trustee shall, in accordance with Section 6.11 of
the Master Facility Agreement, assign, on behalf of the Related Obligors,
without recourse, representation, or warranty, to ABS all of such Obligor's
right, title, and interest in and to such removed Contract, such purchased
Equipment, and all security and documents relating thereto, such assignment
being an assignment outright and not for security; and upon payment of the
Prepayment Amount ABS will thereupon own such Contract, such Equipment and all
such security and documents, free of any further obligation to the Obligors'
Agent or the Related Obligors with respect thereto. If in any enforcement suit
or legal proceeding it is held that ABS, as the Servicer may not enforce a
Contract on the ground that it is not a real party in interest or holder
entitled to enforce the Contract, the Related Obligors shall, at ABS's expense,
take such steps as the Obligor's Agent deems necessary to enforce the Contract,
including bringing suit in such Related Obligors' name.
(c) User's Quiet Enjoyment. Each Obligor and the
Obligors' Agent each hereby acknowledges and agrees that its rights in the
Equipment are expressly subject to the rights of the related Users in such
Equipment pursuant to the applicable Contract. Each Obligor and the Obligors'
Agent each covenants and agrees that, so long as a User shall not be in default
of any of the provisions of the applicable Contract, none of the Obligors'
Agent or any Obligor nor any assignee of any of them will disturb the Obligor's
quiet and peaceful possession of the related Equipment and the User's
unrestricted use thereof for its intended purpose.
SECTION 4.03 Pledge of Conveyed Assets. ABS understands
that the Obligors intend to Pledge the Conveyed Assets and their rights (but
not their obligations) under this Agreement to the Trustee pursuant to the
Master Facility Agreement and hereby consents to the assignment of all or any
portion of this Agreement by each Obligor to the Trustee. ABS agrees that any
such assignee of each Obligor may exercise the rights of such Obligor hereunder
and shall be entitled to all of the benefits of such Obligor hereunder and to
the extent provided for in the Master Facility Agreement.
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<PAGE> 16
ARTICLE V.
CONDITIONS PRECEDENT
SECTION 5.01 Conditions to the Obligors' Obligations. The
obligations of an Obligor to accept the contribution of any Conveyed Assets on
the related Contribution Date shall be subject to the satisfaction of the
following conditions:
(a) All representations and warranties of ABS contained
in this Agreement shall be true and correct on the related Contribution Date
with the same effect as though such representations and warranties had been
made on such date;
(b) All information concerning such Conveyed Assets
provided to such Obligor shall be true and correct as of the related Cut-Off
Date in all material respects;
(c) ABS shall have delivered to such Obligor a List of
Contracts as of the related Cut-Off Date and shall have substantially performed
all other obligations required to be performed by the provisions of this
Agreement;
(d) ABS shall have recorded and filed, at its expense,
any financing statement with respect to such Conveyed Assets pursuant to this
Agreement meeting the requirements of applicable state law in such manner in
such jurisdictions as are necessary to perfect the transfer and contribution of
such Conveyed Assets from ABS to such Obligor, and shall deliver a file-stamped
copy of such financing statements or other evidence of such filings to the
Obligors' Agent and the Trustee; and
(e) All corporate and legal proceedings and all
instruments in connection with the transactions contemplated by this Agreement
shall be satisfactory in form and substance to the Obligors' Agent, and the
Obligors' Agent shall have received from ABS copies of all documents
(including, without limitation, records of corporate proceedings) relevant to
the transactions herein contemplated as the Obligors' Agent may reasonably have
requested.
SECTION 5.02 Conditions to ABS's Obligations. The
obligations of ABS to convey and contribute any Conveyed Assets on the related
Contribution Date shall be subject to the satisfaction of the following
conditions:
(a) All representations and warranties of the Obligors'
Agent and each Related Obligor contained in this Agreement and in the related
Contribution Agreement Supplement shall be true and correct with the same
effect as though such representations and warranties had been made on such
date; and
(b) All corporate and legal proceedings and all
instruments in connection with the transactions contemplated by this Agreement
shall be satisfactory in form and substance to ABS, and ABS shall have received
from the Obligors' Agent
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<PAGE> 17
copies of all documents (including, without limitation, records of corporate
proceedings) relevant to the transactions herein contemplated as ABS may
reasonably have requested.
ARTICLE VI.
TERMINATION
SECTION 6.01 Termination. The respective obligations and
responsibilities of ABS, the Obligors' Agent and each Obligor created by this
Agreement and any Contribution Agreement Supplement shall terminate upon the
latest of (i) the maturity or other liquidation of the last Contract and the
disposition of any amounts received upon disposition of any Charged-Off
Contracts; (ii) the distribution to all Obligors of all amounts required to be
paid to them pursuant to this Agreement; and (iii) the termination of the
Master Facility Agreement.
SECTION 6.02 Effect of Termination. No termination nor
rejection or failure to assume the executory obligations of this Agreement in
the bankruptcy of ABS or the Obligors' Agent or any Obligor shall be deemed to
impair or affect the obligations pertaining to any executed contribution or
executed obligations, including, without limitation, pretermination breaches of
representations and warranties by ABS, the Obligors' Agent or any Obligor.
ARTICLE VII.
MISCELLANEOUS PROVISIONS
SECTION 7.01 Amendment. This Agreement may be amended
from time to time by ABS and the Obligors' Agent only with the prior written
consent of the Servicer and the Trustee.
SECTION 7.02 Governing Law. This Agreement and any
amendment hereof pursuant to Section 7.01 shall be construed in accordance with
and governed by the substantive laws of the State of New York (without regard
to choice of law principles) applicable to agreements made and to be performed
therein and the obligations, rights, and remedies of the parties under this
Agreement shall be determined in accordance with such laws.
SECTION 7.03 Notices. All demands, notices, and
communications under this Agreement shall be in writing and shall be deemed to
have been duly given, made and received (i) when delivered against receipt of
registered or certified mail or upon actual receipt of registered or certified
mail, postage prepaid, return receipt requested; (ii) when delivered by courier
with appropriate evidence of receipt; or (iii) upon transmission via facsimile
or telex with appropriate evidence of receipt (a) in the
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<PAGE> 18
case of ABS, at the following address: Advanta Business Services Corp., 1020
Laurel Oak Road, Voorhees, New Jersey 08043, attention: Treasury Department,
and (b) in the case of the Obligors' Agent, at the following address: 1325
Airmotive Way, Suite 130, Reno, Nevada 89502. Either party may alter the
address to which communications are to be sent by giving notice of such change
of address in conformity with the provisions of this Section 7.03 for giving
notice and by otherwise complying with any applicable terms of this Agreement,
including, but not limited to, subsections 4.01(d) and (e).
SECTION 7.04 Severability of Provisions. If any one or
more of the covenants, agreements, provisions, or terms of this Agreement shall
be for any reason whatsoever held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the remaining covenants,
agreements, provisions, or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement.
SECTION 7.05 Assignment. Notwithstanding anything to the
contrary contained in this Agreement, this Agreement may not be assigned by
ABS, except as (i) provided in Section 4.01(a) and (ii) as collateral security
granted to the Trustee, without the prior written consent of the Obligors'
Agent, and, except as provided in Section 4.03, this Agreement may not be
assigned by the Obligors' Agent without the prior written consent of ABS.
SECTION 7.06 Further Assurances. Each of ABS and the
Obligors' Agent and each Obligor agrees to do such further acts and to execute
and deliver to the Trustee such additional assignments, agreements, powers and
instruments as are required by the Trustee to carry into effect the purposes of
this Agreement or to better assure and confirm unto the Trustee its rights,
powers and remedies hereunder.
SECTION 7.07 No Waiver; Cumulative Remedies. No failure
to exercise and no delay in exercising, on the part of the Obligors' Agent, any
Obligor or ABS, any right, remedy, power or privilege hereunder, shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
hereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privilege provided by law.
SECTION 7.08 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 shall
constitute one and the same instrument.
SECTION 7.09 Binding Effect; Third-Party Beneficiaries.
This Agreement will inure to the benefit of and be binding upon the parties
hereto, the Trustee, the Noteholders and their respective successors and
permitted assigns.
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SECTION 7.10 Merger and Integration. Except as
specifically stated otherwise herein, this Agreement, the Contribution
Agreement Supplements, the Master Facility Agreement and all related Series
Related Documents set forth the entire understanding of the parties relating to
the subject matter hereof, and all prior understandings, written or oral, are
superseded by this Agreement and the Contribution Agreement Supplements. This
Agreement may not be modified, amended, waived or supplemented except as
provided herein.
SECTION 7.11 Headings. The headings herein are for
purposes of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.
SECTION 7.12 Schedules and Exhibits. The exhibit attached
hereto and referred to herein shall constitute a part of this Agreement and are
incorporated into this Agreement for all purposes.
SECTION 7.13 No Bankruptcy Petition Against Obligors'
Agent or any Obligor. ABS agrees that, prior to the date that is one year and
one day after the payment in full of the Notes, it will not institute against
the Obligors' Agent or any Obligor, or join any other Person in instituting
against the Obligors' Agent or any Obligor, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other proceedings under
the laws of the United States or any state of the United States. This Section
7.13 shall survive the termination of this Agreement.
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<PAGE> 20
IN WITNESS WHEREOF, ABS and the Obligors' Agent have caused
this Master Contribution Agreement to be duly executed by their respective
officers as of the day and year first above written.
ADVANTA BUSINESS SERVICES CORP.,
as the Contributor
By________________________________________
ADVANTA LEASING RECEIVABLES CORP. III,
as the Obligors' Agent
By________________________________________
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<PAGE> 21
EXHIBIT A
FORM OF CONTRIBUTION AGREEMENT SUPPLEMENT
THIS CONTRIBUTION AGREEMENT SUPPLEMENT, dated __________ (the
"Contribution Date") is entered into between ADVANTA Business Services Corp.
("ABS"), a Delaware corporation located at 1020 Laurel Oak Road, Voorhees, New
Jersey 08043, ADVANTA LEASING RECEIVABLES CORP. III ("ALRC III," in its
capacity as the "Obligors' Agent" and in its capacity as a "Related Obligor"),
a Nevada corporation located at 1325 Airmotive Way, Suite 130, Reno, Nevada
89502 and ADVANTA BUSINESS RECEIVABLES LLC ("ABRLLC," in its capacity as a
"Related Obligor"), a Nevada limited liability company located at 1325
Airmotive Way, Suite 130, Reno, Nevada 89502.
W I T N E S S E T H:
Reference is hereby made to that certain Master Contribution
Agreement dated as of May 1, 1997 (the "Contribution Agreement") between ABS
and the Obligors' Agent. Pursuant to the Contribution Agreement ABS agreed to
contribute, and the Obligors agreed to accept, from time to time, Conveyed
Assets (as defined below) and to Pledge such Conveyed Assets to the Trustee.
The Contribution Agreement provides that each such contribution of Additional
Conveyed Assets be evidenced by the execution of delivery of a Contribution
Agreement Supplement such as this Contribution Agreement Supplement.
The Conveyed Assets consist of (i) the Contracts listed on the
schedule attached hereto, (ii) all Collections after the related Contribution
Date, (iii) Related Security associated therewith, (iv) all balances,
instruments, monies and other securities and investments held from time to time
by ABS, as Servicer, representing Collections or Residual Receipts or Insurance
Proceeds received after the related Contribution Date; (v) all security
interests in the Equipment not owned by ABS, and all Equipment owned by ABS, in
each case associated with such Contracts, and (vii) all proceeds of the
foregoing, but excluding any Insurance Premiums, taxes, late charge fees,
Initial Unpaid Amounts and Security Deposits.
The Cut-Off Date with respect to the Contracts is close of
business on the day prior to the Contribution Date. The Contribution Date is
__________.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
A-1
<PAGE> 22
Section 1. Definitions. For the purposes of this
Agreement, capitalized terms used herein but not otherwise defined shall have
the respective meanings assigned to such terms in the Master Facility Agreement
or the Contribution Agreement.
Section 2. Contribution; Conveyance. (a) (i) ABS
hereby assigns, transfers and conveys to ALRC III all of ABS's right, title and
interest in, to, and under all Conveyed Assets consisting of Equipment, whether
now existing or hereafter arising, and ABS hereby assigns, conveys, grants and
transfers to ALRC III, without representation, warranty or recourse except as
set forth in Section 3 hereof, all of its right, title and interest in and to
all Conveyed Assets consisting of Equipment, whether now existing or hereafter
arising.
(ii) ABS hereby assigns, transfers and conveys to ABRLLC
all of ABS's right, title and interest in, to, and under all Conveyed Assets
other than Equipment, whether now existing or hereafter arising, and ABS hereby
assigns, conveys, grants and transfers to ABRLLC, without representation,
warranty or recourse except as set forth in Section 3 hereof, all of its right,
title and interest in and to all Conveyed Assets other than Equipment, whether
now existing or hereafter arising.
(b) In connection with such contribution, ABS has
heretofore recorded and filed, at its own expense, financing statements (and
thereafter timely continuation statements with respect to such financing
statements) with respect to the Conveyed Assets, meeting the requirements of
applicable state law in such manner and in such jurisdictions as are necessary
to perfect and to maintain the perfection of, the transfer and contribution of
the Conveyed Assets from ABS to the Related Obligors and the Pledge of the
Conveyed Assets from the Related Obligors to the Trustee, and delivered a
file-stamped copy of such financing statements or other evidence of such
filings to the Related Obligors (and copies to the Agent); provided, however,
that no financing statements, except as required by the Master Facility
Agreement have been or will be recorded or filed with respect to the sale or
transfer of the Equipment unless (i) ABS shall be requested by ALRC III, or the
Obligors' Agent, to file UCC-3 or similar statements with respect to Equipment
in which ABS has a security interest only in order to exercise remedies with
respect to Charged-Off Contracts to which such Equipment relates or (ii) such
Equipment has a value in excess of $25,000; and provided, further, that the
Contract Files will not be physically delivered to the Related Obligors but
instead will be held by ABS on behalf of the Related Obligors and the Trustee
and the Contract Files will be marked as required by the Master Facility
Agreement. A carbon, photographic or other reproduction of this Agreement or
of any financing statement signed by ABS or the Related Obligor is sufficient
as a financing statement in any State to perfect the transfers granted in the
Agreement.
(c) In connection with such contribution ABS shall, at
its own expense, (i) cause its Electronic Ledger to be marked to show that the
Conveyed Assets have been contributed and transferred to the Related Obligors
in accordance with this Agreement and the Conveyed Assets conveyed to the
Contribution in accordance with the Master Facility
A-2
<PAGE> 23
Agreement on or prior to the Contribution Date and (ii) deliver to the Trustee
on behalf of the Related Obligors the related List of Contracts, which shall
also include, for each Series 1997-A Contract, the related Discounted Booked
Residual on the Contribution Date.
Section 3. Representations and Warranties. (a) ABS
hereby (i) confirms the accuracy, as of the Contribution Date, of the
representations and warranties of ABS set forth in Section 3.01 of the
Contribution Agreement and (ii) represents and warrants that, as of the
Contribution Date, each Contract is an "Eligible Contract" as of the
Contribution Date. Such representations and warranties are made for the
benefit of the Obligors' Agent, the Related Obligors and the Trustee, and the
Related Obligor is relying on such representations and warranties in accepting
the contribution of the related Conveyed Assets. Such representations and
warranties speak as of the Contribution Date, unless otherwise indicated, but
shall survive each contribution, assignment, transfer and conveyance of the
respective Conveyed Assets to the Related Obligor and its successors and
assigns and the Pledge by the Related Obligors to the Trustee.
(b) Each Related Obligor hereby confirms the accuracy as of
the Contribution Date of the representations and warranties made by the
Obligors' Agent on its behalf pursuant to Section 3.02 of the Contribution
Agreement.
Section 4. Amendment. This Agreement may be amended
from time to time by ABS, the Related Obligors and Obligors' Agent only with
the prior written consent of the Servicer and the Trustee.
Section 5. Governing Law. This Agreement and any
amendment hereof pursuant to Section 4 shall be construed in accordance with
and governed by the substantive laws of the State of New York (without regard
to choice of law principles) applicable to agreements made and to be performed
therein and the obligations, rights, and remedies of the parties under this
Agreement shall be determined in accordance with such laws.
Section 6. 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 shall
constitute one and the same instrument.
Section 7. Binding Effect; Third-Party Beneficiaries.
This Agreement will inure to the benefit of and be binding upon the parties
hereto, the Trustee and their respective successors and permitted assigns.
Section 8. Headings. The headings herein are for
purposes of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.
A-3
<PAGE> 24
IN WITNESS WHEREOF, ABS, the Obligors' Agent and the Related
Obligors have caused this Contribution Agreement Supplement to be duly executed
by their respective officers as of the day and year first above written.
ADVANTA BUSINESS SERVICES CORP.
By:______________________________________
Title:________________________________
ADVANTA LEASING RECEIVABLES CORP.
III, as the Obligors' Agent
By:______________________________________
Title:________________________________
ADVANTA LEASING RECEIVABLES CORP.
III, as a Related Obligor
By:______________________________________
Title:________________________________
ADVANTA BUSINESS RECEIVABLES LLC,
as a Related Obligor
By: ADVANTA LEASING RECEIVABLES CORP.
III, its Managing Member
By:______________________________________
Title:________________________________
A-4
<PAGE> 1
Exhibit 4.4
CONTRIBUTION AGREEMENT SUPPLEMENT
THIS CONTRIBUTION AGREEMENT SUPPLEMENT, dated __________, the
"Contribution Date") is entered into between ADVANTA Business Services Corp.
("ABS"), a Delaware corporation located at 1020 Laurel Oak Road, Voorhees, New
Jersey 08043, ADVANTA LEASING RECEIVABLES CORP. III ("ALRC III," in its
capacity as the "Obligors' Agent" and in its capacity as a "Related Obligor"),
a Nevada corporation located at 1325 Airmotive Way, Suite 130, Reno, Nevada
89502 and ADVANTA BUSINESS RECEIVABLES LLC ("ABRLLC," in its capacity as a
"Related Obligor"), a Nevada limited liability company located at 1325
Airmotive Way, Suite 130, Reno, Nevada 89502.
W I T N E S S E T H:
Reference is hereby made to that certain Master Contribution
Agreement dated as of ______________ (the "Contribution Agreement") between ABS
and the Obligors' Agent. Pursuant to the Contribution Agreement ABS agreed to
contribute, and the Obligors agreed to accept, from time to time, Conveyed
Assets (as defined below) and to Pledge such Conveyed Assets to the Trustee.
The Contribution Agreement provides that each such contribution of Additional
Conveyed Assets be evidenced by the execution of delivery of a Contribution
Agreement Supplement such as this Contribution Agreement Supplement.
The Conveyed Assets consist of (i) the Contracts listed on the
schedule attached hereto, (ii) all Collections after the related Contribution
Date, (iii) Related Security associated therewith, (iv) all balances,
instruments, monies and other securities and investments held from time to time
by ABS, as Servicer, representing Collections or Residual Receipts or Insurance
Proceeds received after the related Contribution Date; (v) all security
interests in the Equipment not owned by ABS, and all Equipment owned by ABS, in
each case associated with such Contracts, and (vii) all proceeds of the
foregoing, but excluding any Insurance Premiums, taxes, late charge fees,
Initial Unpaid Amounts and Security Deposits.
The Cut-Off Date with respect to the Contracts is close of
business on the day prior to the Contribution Date. The Contribution Date is
_______________.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. For the purposes of this
Agreement, capitalized terms used herein but not otherwise defined shall have
the respective meanings assigned to such terms in the Master Facility Agreement
or the Contribution Agreement.
<PAGE> 2
Section 2. Contribution; Conveyance. (a) (i) ABS
hereby assigns, transfers and conveys to ALRC III all of ABS's right, title and
interest in, to, and under all Conveyed Assets consisting of Equipment, whether
now existing or hereafter arising, and ABS hereby assigns, conveys, grants and
transfers to ALRC III, without representation, warranty or recourse except as
set forth in Section 3 hereof, all of its right, title and interest in and to
all Conveyed Assets consisting of Equipment, whether now existing or hereafter
arising.
(ii) ABS hereby assigns, transfers and conveys to ABRLLC
all of ABS's right, title and interest in, to, and under all Conveyed Assets
other than Equipment, whether now existing or hereafter arising, and ABS hereby
assigns, conveys, grants and transfers to ABRLLC, without representation,
warranty or recourse except as set forth in Section 3 hereof, all of its right,
title and interest in and to all Conveyed Assets other than Equipment, whether
now existing or hereafter arising.
(b) In connection with such contribution, ABS has
heretofore recorded and filed, at its own expense, financing statements (and
thereafter timely continuation statements with respect to such financing
statements) with respect to the Conveyed Assets, meeting the requirements of
applicable state law in such manner and in such jurisdictions as are necessary
to perfect and to maintain the perfection of, the transfer and contribution of
the Conveyed Assets from ABS to the Related Obligors and the Pledge of the
Conveyed Assets from the Related Obligors to the Trustee, and delivered a
file-stamped copy of such financing statements or other evidence of such
filings to the Related Obligors (and copies to the Agent); provided, however,
that no financing statements, except as required by the Master Facility
Agreement have been or will be recorded or filed with respect to the sale or
transfer of the Equipment unless (i) ABS shall be requested by ALRC III, or the
Obligors' Agent, to file UCC-3 or similar statements with respect to Equipment
in which ABS has a security interest only in order to exercise remedies with
respect to Charged-Off Contracts to which such Equipment relates or (ii) such
Equipment has a value in excess of $25,000; and provided, further, that the
Contract Files will not be physically delivered to the Related Obligors but
instead will be held by ABS on behalf of the Related Obligors and the Trustee
and the Contract Files will be marked as required by the Master Facility
Agreement. A carbon, photographic or other reproduction of this Agreement or
of any financing statement signed by ABS or the Related Obligor is sufficient
as a financing statement in any State to perfect the transfers granted in the
Agreement.
(c) In connection with such contribution ABS shall, at
its own expense, (i) cause its Electronic Ledger to be marked to show that the
Conveyed Assets have been contributed and transferred to the Related Obligors
in accordance with this Agreement and the Conveyed Assets conveyed to the
Contribution in accordance with the Master Facility Agreement on or prior to
the Contribution Date and (ii) deliver to the Trustee on behalf of the Related
Obligors the related List of Contracts, which shall also include, for each
Series 1997-A Contract, the related Discounted Booked Residual on the
Contribution Date.
2
<PAGE> 3
Section 3. Representations and Warranties. (a) ABS
hereby (i) confirms the accuracy, as of the Contribution Date, of the
representations and warranties of ABS set forth in Section 3.01 of the
Contribution Agreement and (ii) represents and warrants that, as of the
Contribution Date, each Contract is an "Eligible Contract" as of the
Contribution Date. Such representations and warranties are made for the
benefit of the Obligors' Agent, the Related Obligors and the Trustee, and the
Related Obligor is relying on such representations and warranties in accepting
the contribution of the related Conveyed Assets. Such representations and
warranties speak as of the Contribution Date, unless otherwise indicated, but
shall survive each contribution, assignment, transfer and conveyance of the
respective Conveyed Assets to the Related Obligor and its successors and
assigns and the Pledge by the Related Obligors to the Trustee.
(b) Each Related Obligor hereby confirms the accuracy as of
the Contribution Date of the representations and warranties made by the
Obligors' Agent on its behalf pursuant to Section 3.02 of the Contribution
Agreement.
Section 4. Amendment. This Agreement may be amended
from time to time by ABS, the Related Obligors and Obligors' Agent only with
the prior written consent of the Servicer and the Trustee.
Section 5. Governing Law. This Agreement and any
amendment hereof pursuant to Section 4 shall be construed in accordance with
and governed by the substantive laws of the State of New York (without regard
to choice of law principles) applicable to agreements made and to be performed
therein and the obligations, rights, and remedies of the parties under this
Agreement shall be determined in accordance with such laws.
Section 6. 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 shall
constitute one and the same instrument.
Section 7. Binding Effect; Third-Party Beneficiaries.
This Agreement will inure to the benefit of and be binding upon the parties
hereto, the Trustee and their respective successors and permitted assigns.
Section 8. Headings. The headings herein are for
purposes of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.
3
<PAGE> 4
IN WITNESS WHEREOF, ABS, the Obligors' Agent and the Related
Obligors have caused this Contribution Agreement Supplement to be duly executed
by their respective officers as of the day and year first above written.
ADVANTA BUSINESS SERVICES CORP.
By:______________________________________
Title:
ADVANTA LEASING RECEIVABLES CORP.
III, as the Obligors' Agent
By:______________________________________
Title:
ADVANTA LEASING RECEIVABLES CORP.
III, as a Related Obligor
By:______________________________________
Title:
ADVANTA BUSINESS RECEIVABLES LLC, as a
Related Obligor
By: ADVANTA LEASING RECEIVABLES CORP.
III, its Managing Member
By:______________________________________
Title:
A-4
<PAGE> 1
EXHIBIT 5.1
[Date]
TO THE ADDRESSEES LISTED
ON SCHEDULE ONE
Re: Advanta Commercial Receivables
Ladies and Gentlemen:
We have acted as special counsel to Advanta Business Services
Corp., a ______ corporation ("Advanta") as to certain matters in connection with
the Commercial Receivables Asset Backed Notes (the "Notes") which will be issued
pursuant to an Indenture dated as of _____ (the "Indenture") between the Issuer
and ______, as Indenture Trustee (the "Indenture Trustee").
The assets which will be sold to the Issuer for the benefit of
holders of the Securities (the "Securityholders") and will include a pool of
retail installment sales contracts (the "Receivables") secured by commercial
receivables, all monies paid or payable thereunder after _____ in the case of
the Initial Receivables and the Subsequent Cutoff Date in the case of Subsequent
Receivables, security interests in the vehicles financed thereby, certain bank
accounts and the proceeds thereof, the right to receive certain insurance
proceeds and certain other property. The Receivables are purchased from a
network of unaffiliated originators and from third party assignees who acquired
certain Receivables from unaffiliated originators.
Capitalized terms not otherwise defined herein have their
respective meanings as set forth in the Indenture.
As such counsel, we have examined original or certified copies of
the Articles of Incorporation and Bylaws of Advanta, as amended to date, and the
resolutions adopted by the Board of Directors of Advanta ratifying the
execution, delivery and participation in the transactions contemplated by the
Agreements (as hereinafter defined). We have examined each of the Agreements,
together with the Prospectus.
The term "Prospectus" means, together, the Base Prospectus and
the Prospectus Supplement. The term "Base Prospectus" means the prospectus
included in the Registration Statement. The term "Registration Statement" means
(i) the Registration Statement on Form S-3 (No. 333-______), including the
exhibits thereto, (ii) all documents incorporated by reference therein pursuant
to Item 12 of Form S-3 and (iii) any post-effective amendment filed and declared
effective prior to the date of issuance of the Notes. The term "Prospectus
Supplement" means the preliminary prospectus supplement dated ______ and the
prospectus supplement dated _____, both specifically relating to the Securities,
as both were filed with the Commission pursuant to Rule 424 of the Rules and
Regulations (together the "Prospectus Supplement").
The term "Agreements" as used herein means: (i) the Sale and
Servicing Agreement; (ii) the Purchase Agreement; (iii) the Underwriting
Agreement; (iv) the Indenture; (v) the Trust Agreement; (vi) the Insurance and
Indemnity Agreement, dated as of _____ (the "Insurance Agreement").
We have also examined such other documents, papers, statutes and
authorities as we have deemed necessary as a basis for the opinions hereinafter
set forth. In all such examinations made by us in connection with this opinion,
we have assumed the genuineness of all signatures, the completeness and
authenticity of all records and all documents submitted to us as originals, and
the conformity with the originals of all documents submitted to us as copies
thereof.
As to various matters of fact relevant to the opinions
hereinafter expressed, we have relied upon the representations and warranties
contained in the Agreements and statements and certificates of officers and
representatives of each of Advanta.
<PAGE> 2
In rendering the opinions expressed in paragraphs numbered 1 and
2 below, we have assumed, without investigation, that (i) each Receivable will
be enforced in a commercially reasonable manner and (ii) each Receivable has
been, and in the case of Subsequent Receivables will be, duly authorized,
executed and delivered by the respective Obligor thereunder and constitutes the
valid and legally binding obligation of such Obligor enforceable against such
Obligor in accordance with its terms, subject to standard exceptions.
We also have assumed, without investigation, (a) as to all
parties to the Agreements, the due authorization, execution, and delivery
thereof, and the validity and enforceability thereof against all parties thereto
other than Advanta, (b) each party has full power, authority and legal right,
under its charter and other governing documents, corporate and regulatory
legislation and the laws of its jurisdiction of incorporation or organization,
to execute and deliver the Agreements to which it is a party and to carry out
the transactions contemplated thereunder, (c) Advanta and the Issuer have their
respective rights in the Receivables as contemplated by the Agreements as of the
date hereof, (d) the purchase price for the Notes has been delivered and
received in accordance with the terms of the Underwriting Agreement and the
Indenture and Trust Agreement, respectively and (e) the Agreements will be
enforced in good faith and in a commercially reasonable manner.
We have assumed that the Receivables and rights to receive
payment under the Receivables are not subject to any right, lien or interest of
any government or any agency or instrumentality thereof (including without
limitation any federal or state tax lien, or lien arising under Title IV of
ERISA) and that they are not subject to any lien arising by operation of law or
any judicial lien.
We have also assumed that the Notes constitute debt and not
equity for purposes of ERISA and that each employee benefit plan covered by
ERISA, any of whose assets are invested in a Note, is a plan to which an
administrative prohibited transaction exemption is fully available.
For the purpose of rendering the opinions expressed in paragraph
number 8 below, our inquiry has been limited to a review of the Officer's
Certificates of Advanta, attached hereto as Exhibits A and B respectively (each,
an "Officer's Certificate" and together the "Officer's Certificates"), and the
documents, instruments and agreements referred to therein.
With respect to matters of fact, we have relied, without
investigation, on, and assumed the accuracy and completeness of, each Officer's
Certificate and the representations of Advanta and other parties contained in
the Agreements and in the instruments and documents delivered at the closing.
Where matters are stated to be to the best of our knowledge, or known to us, our
investigations consisted of inquiries of Advanta, the results of which are
reflected in the Officer's Certificates being furnished to you with this
opinion, and we have not made any investigation as to, and have not
independently verified the facts underlying, such matters nor have we undertaken
a search of court dockets in any jurisdiction.
The term "threatened litigation" as used herein has the meaning
accorded to such term in The American Bar Association Statement of Policy on
Lawyer's Responses to Auditors' Requests for Information dated January 15, 1976.
To the extent that our opinions expressed in paragraphs numbered
1 and 2 below are related to the enforceability of the choice of law provisions
contained in the Agreements, such opinions are based upon our reading of the
provisions of Section 5-1401 of the General Obligations Law of the State of New
York. While we have not found any reported cases construing such statutory
provisions, we believe that a New York court applying such statutory provisions
to the Agreements would give effect to the choice of law provisions set forth
therein.
Statements in this opinion as to the validity, binding effect and
enforceability of agreements, instruments and documents are subject (i) to
limitations as to enforceability imposed by bankruptcy,
<PAGE> 3
insolvency, moratorium, reorganization and other similar laws of general
application relating to or affecting the enforceability of creditors' rights;
(ii) to general limitations under equitable principles limiting the availability
of equitable remedies; (iii) to the equitable discretion of the court before
which any proceeding therefor may be brought; (iv) as to the enforceability of
any security interest or security agreement, to the limitations of good faith,
fair dealing and commercial reasonableness imposed by the Uniform Commercial
Code of the State of New York, as in effect on the date hereof ("UCC") as to the
remedies set out in such agreements, instruments and documents; and (v) as to
rights to indemnity, limitations that may exist under federal and state laws or
the public policy underlying such laws.
Statements in this opinion as to enforceability are further
qualified by (i) the application of judicial decisions involving statutes or
principles of equity which have held that certain covenants and other provisions
of agreements, including those providing for the acceleration of indebtedness
due under debt instruments upon the occurrence of events therein described, are
unenforceable in circumstances where it can be demonstrated that the enforcement
of such provisions is not reasonably necessary for the protection of the lender;
(ii) the effect of the law of any jurisdiction other than the State of New York
which limits the rate of interest which may be charged or collected; and (iii)
the validity, binding effect or enforceability, under certain circumstances, of
contractual provisions in the Agreements with respect to indemnification or
waiving defenses to obligations where such indemnification or such waivers are
against public policy, or granting self-help or summary remedies.
Based upon and subject to the foregoing, we are of the opinion
that:
1. Each of the Sale and Servicing Agreement, the Purchase
Agreement, the Insurance and Indemnity Agreement, the Underwriting Agreement,
the Sub-Servicing Agreement and the Custodian Agreement (the "Advanta
Documents") has been duly executed and delivered by Advanta and constitutes the
valid, legal and binding agreement of Advanta, enforceable against Advanta in
accordance with its respective terms.
2. Assuming each of the Indenture and the Sale and Servicing
Agreement has been duly executed and delivered by the parties thereto (other
than Advanta), each such agreement constitutes the valid, legal and binding
agreement of the Issuer, enforceable against the Issuer in accordance with its
terms. The Indenture creates a valid and enforceable security interest in the
Collateral (as defined therein) pledged thereunder by the Issuer.
3. No consent, approval, authorization or order of, registration
or filing with, or notice to, courts, governmental agency or body or other
tribunal is required under federal laws or the laws of the State of New York,
for the execution, delivery and performance by Advanta of Advanta Documents, the
offer, issuance, sale or delivery of the Notes, except such which have been
obtained.
4. No consent, approval, authorization or order of, registration
or filing with, or notice to, courts, governmental agency or body or other
tribunal is required under federal laws or the laws of the State of New York,
for the execution, delivery and performance by ______, except such which have
been obtained.
5. None of the transfer of the Receivables by Advanta ______, the
transfer of the Receivables by ______ to the Issuer, the execution, delivery or
performance by each of Advanta of the Advanta Documents or the issuance of the
Notes (a) conflicts or will conflict with or results or will result in a breach
of, or constitutes or will constitute a default under, any law, rule or
regulation of the State of New York or federal government presently in effect,
or (b) either to our knowledge or by operation of law, results in, or will
result in the creation or imposition of any lien, charge or encumbrance upon the
Receivables, upon the Notes, except as otherwise contemplated by the Agreements.
6. The Notes have been duly authorized by all requisite action
and, when duly and validly executed by the Indenture Trustee and authenticated
by the Trustee in accordance with the Indenture,
<PAGE> 4
will be validly issued and outstanding and entitled to the benefits of the
Indenture.
7. The Sale and Servicing Agreement establishes in favor of the
Issuer a valid and enforceable security interest in all right, title and
interest of ______ in the Receivables and the Other Conveyed Property.
8. The Indenture establishes in favor of the Trust Collateral
Agent for the benefit of the Noteholders and the Insurer a valid and enforceable
security interest in all right, title and interest of the Trust in the
Collateral (as defined therein).
9. The arrangement pursuant to which the Receivables are held
does not constitute an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
10. The Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended.
11. The statements in the Prospectus, under the captions "CREDIT
ENHANCEMENT," "THE POLICY", "DESCRIPTION OF THE NOTES", and "DESCRIPTION OF THE
_____ DOCUMENTS", to the extent such statements purport to summarize certain
provisions of the Policy, the Notes, or the Purchase Agreement, ______
Agreement, Sale and Servicing Agreement, Indenture, and Spread Account Agreement
are fair and accurate in all material respects.
2. The statements in the Prospectus, under the captions "RISK FACTORS",
"CERTAIN FEDERAL INCOME TAX CONSEQUENCES", "STATE TAX CONSIDERATIONS," and
"ERISA CONSIDERATIONS", insofar as such statements purport to summarize matters
of federal law or New York law, or legal conclusions with respect thereto,
provide a fair and accurate summary of such law or conclusions.
We have rendered legal advice and assistance to Advanta and the Issuer
relating to the sale and issuance of the Securities. Rendering such assistance
involved, among other things, discussions and inquiries concerning various legal
and related subjects and reviews of certain records, documents, opinions and
certificates in accordance with instructions of Advanta and the Issuer. We also
participated with Advanta and the Issuer in conferences with representatives of
the Underwriter, and representatives of _____ and its counsel, during which the
contents of the Prospectus and related matters were discussed. Although we are
not passing upon, and do not assume responsibility for, the accuracy,
completeness or fairness of the statements contained in the Prospectus (except
as set forth in paragraphs numbered 14 and 15 above), in the course of our
examination of the Prospectus and certain other documents and our participation
in the discussions hereinabove mentioned, no facts have come to our attention
which lead us to believe that the Prospectus (other than the financial
statements and other financial and statistical data contained therein, as to
which we are not called upon to express any belief), contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements therein not misleading.
We are members of the bar of the State of New York and this opinion is
limited to the laws of the State of New York and the Federal laws of the United
States of America.
This opinion is solely for the benefit of the addressees hereof and may
not be relied upon in any manner by any other person or entity.
This opinion is furnished by us as counsel to the Registrant. We hereby
consent to the filing of this opinion as an Exhibit to the Registration
Statement and to the reference to Dewey Ballantine in the Registration Statement
and the related prospectus under the heading "Legal Matters."
Very truly yours,
<PAGE> 1
EXHIBIT 8.1
[Date]
TO THE ADDRESSEES LISTED
ON SCHEDULE I HERETO:
Re: Advanta Commercial Receivables
Ladies and Gentlemen:
We have acted as special tax counsel to Advanta Business Services
Corp., a _____ corporation ("Advanta") as to certain matters in connection with
the issuance of Commercial Recevaibles Asset Backed Notes (the "Notes") which
will be issued pursuant to an Indenture (the "Indenture") dated as of _____
between Advanta and _____ (in that capacity, the "Indenture Trustee").
As special tax counsel, we have reviewed such documents as we
deemed appropriate for the purposes of rendering the opinions set forth below,
including the following: (i) the Indenture, (ii) the _____ Agreement, and (iii)
a Prospectus dated ______ and a Prospectus Supplement dated _____ (together, the
"Prospectus") with respect to the Notes. Capitalized terms not otherwise defined
herein have their respective meanings as set forth in the Indenture.
We have examined the question of whether the Notes issued under
the Indenture will be treated as indebtedness for federal income tax purposes.
Our analysis is based on the provisions of the Internal Revenue Code of 1986, as
amended, and the Treasury Regulations promulgated thereunder as in effect on the
date hereof and on existing judicial and administrative interpretations thereof.
These authorities are subject to change and to differing interpretations, which
could apply retroactively. The opinion of special tax counsel is not binding on
the courts or the Internal Revenue Service (the "IRS").
In general, whether a transaction constitutes the issuance of
indebtedness for federal income tax purposes is a question of fact, the
resolution of which is based primarily upon the economic substance of the
instruments and the transaction pursuant to which they are issued rather than
the form of the transaction or the manner in which the instruments are labeled.
The IRS and the courts have set forth various factors to be taken into account
in determining whether or not a transaction constitutes the issuance of
indebtedness for federal income tax purposes, which we have reviewed as they
apply to this transaction.
Based on the foregoing, and such legal and factual investigations
as we have deemed appropriate, we are of the opinion that for federal income tax
purposes:
(1) The Notes will be treated as indebtedness because (i) the
characteristics of the transaction strongly indicates that in economic
substance, the transaction is the issuance of indebtedness, (ii) the form of the
transaction is an issuance of indebtedness; and (iii) the parties have stated
unambiguously their intention to treat the transaction as the issuance of
indebtedness for tax purposes.
(2) The Issuer will not constitute an association (or a publicly
traded partnership) taxable as a corporation.
We express no opinion on any matter not discussed in this letter.
This opinion is rendered as of the Closing Date, for the sole benefit of the
addressees hereof and it may not be relied on by any other party or quoted
without our express consent in writing.
This opinion is furnished by us as counsel to the Registrant. We
hereby consent to the filing of this opinion as an Exhibit to the Registration
Statement and to the reference to Dewey Ballantine in the Registration Statement
and the related prospectus under the heading "Legal Matters."
Very truly yours,
