<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 1, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ADVANTA BUSINESS SERVICES CORP.
(SPONSOR OF THE SECURITIES DESCRIBED HEREIN)
ADVANTA LEASING RECEIVABLES CORP. VIII
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
NEVADA 6189 52-217-0910
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
639 ISBELL ROAD, SUITE 390-A
RENO, NEVADA 89509
(775) 823-3080
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
PRINCIPAL EXECUTIVE OFFICES OF REGISTRANT)
ADVANTA LEASING RECEIVABLES CORP. IX
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
NEVADA 6189 52-217-0234
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
<TABLE>
<S> <C> <C>
639 ISBELL ROAD,
SUITE 390-B
RENO, NEVADA 89509
(775) 823-3016
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF PRINCIPAL EXECUTIVE OFFICES OF REGISTRANT)
COLE SILVER, ESQ.
C/O ADVANTA BUSINESS SERVICES CORP.
1020 LAUREL OAK ROAD
VOORHEES, NEW JERSEY 08043
(609) 782-7300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
COPIES TO:
CAMERON L. COWAN, ESQ.
ORRICK, HERRINGTON & SUTCLIFFE LLP
3050 K STREET, N.W.
WASHINGTON, D.C. 20007
(202) 339-8488
Approximate date of commencement of proposed sale to the public: AS SOON AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
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. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equipment Receivables Asset-Backed Notes,
Series 1999-1, Class A, Class B and Class
C.......................................... $1,000,000 100% $1,000,000 $278
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) of the Securities Act
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE AMENDED. WE MAY
NOT SELL THESE SECURITIES UNTIL WE DELIVER A FINAL PROSPECTUS. THIS PROSPECTUS
IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED , 1999
PROSPECTUS
$
ADVANTA LEASING RECEIVABLES CORP. VIII
ADVANTA LEASING RECEIVABLES CORP. IX
ISSUERS
ADVANTA BUSINESS SERVICES CORP.
ORIGINATOR AND SERVICER
EQUIPMENT RECEIVABLES ASSET-BACKED NOTES, SERIES 1999-1
CONSIDER CAREFULLY THE RISK
FACTORS BEGINNING ON PAGE 6
IN THIS PROSPECTUS.
A note is not a deposit and
neither the notes nor the
underlying contracts or
receivables are insured or
guaranteed by any
governmental agency.
The notes offered in this
prospectus are obligations
of the issuers only. They
are payable only from a
limited pool of assets. The
notes are not obligations
of Advanta Business
Services Corp., Advanta
Corp. or any of their
affiliates.
<TABLE>
<CAPTION>
ORIGINAL
PRINCIPAL PRICE TO UNDERWRITING PROCEEDS
INTEREST AMOUNT PUBLIC DISCOUNT TO ISSUER
CLASS RATE PER CLASS PER NOTE PER NOTE PER NOTE
----- -------- --------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C>
A.................... % $ % % $
B.................... % $ % % $
C.................... % $ % % $
</TABLE>
The total price to public is $ , the total
amount of the underwriting discount is $ ,
and the total amount of proceeds plus accrued
interest and before deduction of expenses is
$ .
CREDIT ENHANCEMENT
- Subordination of the Class B notes provides credit
enhancement for the Class A notes.
- Subordination of the Class C notes provides credit
enhancement for the Class A and Class B notes.
- The issuers also are issuing $ of Class
D asset-backed notes. The Class D notes are
subordinated to, and provide credit enhancement
for, the Class A, Class B and Class C notes.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE CLASS A NOTES, THE CLASS B NOTES OR THE CLASS C
NOTES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
UNDERWRITERS OF THE CLASS A NOTES
UNDERWRITERS OF THE CLASS B AND THE CLASS C NOTES
, 1999
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 1
Issuers.............................. 1
Limited Obligations.................. 1
Originator and Servicer.............. 1
Trustee.............................. 1
The Pledged Assets................... 1
The Contracts........................ 1
The Notes............................ 2
Payment Date......................... 2
Issuance Date........................ 2
Interest Payments.................... 2
Principal Payments................... 3
Final Scheduled Payment Dates........ 3
Subordination........................ 3
Residual Receipts.................... 3
Residual Account..................... 3
Reserve Account...................... 4
Collections by the Servicer.......... 4
Flow of Funds........................ 4
Optional Redemption.................. 4
Federal Income Tax Status............ 4
ERISA Considerations................. 5
Ratings.............................. 5
Risk Factors........................... 6
Introduction........................... 12
The Issuers............................ 12
Management's Discussion and Analysis of
Financial Condition.................. 12
Directors and Executive Officers of the
Issuers.............................. 13
Use of Proceeds........................ 14
The Trustee............................ 14
The Pledged Assets..................... 15
Advanta Business Services's
Underwriting, Origination and
Servicing Practices.................. 17
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Modifications and Sale and Re-leasing
of Assets............................ 21
Statistical Information................ 21
Servicing Portfolio Delinquency and
Default Information.................. 24
Description of the Notes............... 25
Prepayment and Yield Considerations.... 42
Legal Matters Affecting the
Receivables.......................... 45
Federal Income Tax Consequences........ 46
State Tax Consequences................. 49
ERISA Considerations................... 49
Underwriting........................... 51
Ratings of the Offered Notes........... 52
Experts................................ 53
Legal Matters.......................... 53
Reports to Noteholders................. 53
Where You Can Find More Information.... 53
Index of Terms......................... 54
Appendix A: Global Clearance,
Settlement and Tax Documentation
Procedures........................... A-1
Appendix B: Report of Independent
Accountants for Advanta Leasing
Receivables Corp. VIII............... B-1
Appendix C: Financial Statements of
Advanta Leasing Receivables Corp.
VIII................................. C-1
Appendix D: Notes to Advanta Leasing
Receivables Corp. VIII Financial
Statements........................... D-1
Appendix E: Report of Independent
Accountants for Advanta Leasing
Receivables Corp. IX................. E-1
Appendix F: Financial Statements of
Advanta Leasing Receivables Corp.
IX................................... F-1
Appendix G: Notes to Advanta Leasing
Receivables Corp. IX Financial
Statements........................... G-1
</TABLE>
The Underwriters may engage in transactions that stabilize, maintain, or in
some way affect the price of the notes. These types of transactions may include
stabilizing, the purchase of notes to cover syndicate short positions and the
imposition of penalty bids. For a description of these activities, please read
the section entitled "Underwriting."
If you have received a copy of this prospectus in an electronic format, and
if the legal prospectus delivery period has not expired, you may obtain a paper
copy of this prospectus from Advanta Business Services Corp. or an underwriter
by asking for it.
i
<PAGE> 4
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION AND DOES NOT CONTAIN ALL OF THE
INFORMATION THAT YOU NEED TO MAKE YOUR INVESTMENT DECISION. IT PROVIDES GENERAL,
SIMPLIFIED DESCRIPTIONS OF CALCULATIONS, CASH FLOWS AND OTHER MATTERS THAT, IN
SOME CASES, ARE HIGHLY TECHNICAL AND COMPLEX. MORE DETAIL IS PROVIDED IN OTHER
SECTIONS OF THIS PROSPECTUS.
TO UNDERSTAND ALL OF THE TERMS OF THE OFFERING OF THE NOTES, CAREFULLY READ THIS
ENTIRE DOCUMENT.
ISSUERS
Advanta Leasing Receivables Corp. VIII and Advanta Leasing Receivables Corp. IX
will issue the notes and will be joint and several obligors on the notes.
Advanta Leasing Receivables Corp. VIII is a Nevada corporation. Its principal
place of business is 639 Isbell Road, Suite 390-A, Reno, Nevada 89509. Its
telephone number is (775) 823-3080.
Advanta Leasing Receivables Corp. IX is a Nevada corporation. Its principal
place of business is 639 Isbell Road, Suite 390-B, Reno, Nevada 89509. Its
telephone number is (775) 823-3016.
Each of the issuers is a newly created special purpose corporation.
LIMITED OBLIGATIONS
Our obligation to pay the notes is limited to a specific source of funds. We
will pay the notes only from payments received on the contracts and security
provided for the contracts. The contracts will be equipment leases and loan
agreements. We will identify all of the contracts at the time we issue the
notes.
ORIGINATOR AND SERVICER
Advanta Business Services Corp. originated or acquired the contracts. Advanta
Business Services will transfer the contracts to Advanta Leasing Receivables
Corp. IX. Advanta Business Services will transfer the residual interests in the
equipment to Advanta Leasing Receivables Corp. VIII.
Advanta Business Services or its successor will service the contracts for the
issuers. The servicer will collect payments on the contracts and enforce
defaulted contracts when necessary. The servicer may, but is not required to,
make advances to cover delinquent contract payments.
Advanta Business Services is a Delaware corporation. Its principal place of
business is 1020 Laurel Oak Road, Voorhees, New Jersey 08043. Its telephone
number is (609) 782-7300.
The Indenture will permit Advanta Business Services to assign its rights and
obligations as servicer to any affiliate of Advanta Corp.
TRUSTEE
The trustee is Bankers Trust Company. The trustee's address is 4 Albany Street,
New York, New York 10006.
THE PLEDGED ASSETS
We will pledge the contracts and all amounts due on the contracts and a limited
amount of the residual interests in the equipment to secure payments on the
notes. More specifically, the pledged assets will include:
- the contracts;
- amounts due or to become due on the contracts;
- all collections and security associated with the contracts;
- collections or proceeds of the contracts held by the trustee in the
collection account, the reserve account and other series accounts;
- the issuers' interest in the sale and contribution agreement;
- rights, if any, of the issuers in the equipment (including residual
interests in the equipment); and
- any other proceeds of the Series 1999-1 contracts.
THE CONTRACTS
We will use the proceeds from the sale of the notes to buy a portfolio of
contracts and the residual interests in the related equipment from Advanta
Business Services.
1
<PAGE> 5
The contracts include leases and loan agreements for a wide variety of
small-ticket equipment. The equipment includes, but is not limited to, office
equipment, telecommunications equipment, automotive repair equipment,
surveillance equipment and furniture. The lessees or borrowers are referred to
in this prospectus collectively as the users. The users are businesses and
business owners throughout the United States.
The contracts which are leases are triple-net leases. This means that the lessee
is required to pay all taxes, maintenance and insurance associated with the
equipment. The contracts which are leases do not allow prepayment at the option
of the user. The servicer may, however, allow prepayments.
Those contracts which are leases cannot be cancelled by the lessees. Payments
due under the leases are unconditional obligations of the lessee without right
of offset.
We will calculate the principal value of the contracts at any time by
discounting the contracts' remaining scheduled payments at a rate of %.
The contracts we will pledge to secure the notes had the following
characteristics at , 1999:
- original statistical aggregate contract principal balance: $
- original aggregate contract principal balance: $
- number of contracts:
We expect some variance between this information and the portfolio on the day we
issue the notes. The characteristics of the portfolio on the date of issuance
will not vary by more than 5% from the information presented in this document.
We will make payments on the notes from collections on the contracts. Residual
receipts may be available to make required payments; however, you should not
rely on the sale of equipment or other residual receipts as a significant source
of payment for your notes.
THE NOTES
In this document, we are offering three classes of notes:
- [ %] Class A notes with an initial principal balance of $ ;
- [ %] Class B notes with an initial principal balance of $ ;
and
- [ %] Class C notes with an initial principal balance of $ .
We also will issue $ Class D notes at the same time as the offered
notes.
We are not offering the Class D notes by this document.
The notes represent non-recourse asset-backed debt obligations of the issuers.
The notes are secured by and payable only from the pledged assets.
We will issue the notes under the Advanta Business Receivables Master Facility
Agreement, dated as of , 1999. We refer to this document in this
prospectus as the indenture. The terms of the notes will be contained in the
Series 1999-1 supplement to the indenture.
The indenture allows for the issuance of series of notes in addition to Series
1999-1. If an additional series were issued, it would be payable from a separate
portfolio of contracts. We do not, however, currently contemplate the issuance
of any additional series under the indenture.
PAYMENT DATE
We will pay interest and principal on the offered notes on the 15th day of each
month if the fifteenth is a business day. If the fifteenth is not a business
day, then the payment will be on the next business day.
, 1999 will be the first payment date.
ISSUANCE DATE
We will issue the notes on or about , 1999.
INTEREST PAYMENTS
Interest on the notes will accrue from one payment date to the day before the
next payment date. For the first payment, interest will begin to accrue on the
day we issue the notes.
The interest rate for each class of offered notes is specified in this
Prospectus Summary under "The Notes."
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
2
<PAGE> 6
PRINCIPAL PAYMENTS
We will pay monthly principal on the notes from available funds only after
servicer advances are repaid and after servicing fees and interest are paid.
Principal payments will be made from remaining amounts.
Monthly principal payments will be an amount equal to the decrease in the
principal value of the contracts between determination dates.
We will pay principal monthly as follows:
- the monthly Class A principal amount to the Class A notes;
- the monthly Class B principal amount to the Class B notes; and
- the monthly Class C principal amount to the Class C notes.
- following the funding of the reserve account to its required level, the
monthly Class D principal amount to the Class D notes.
These monthly distributions of principal to the notes are subject to targets. We
refer you to "Description of the Notes -- Flow of Funds" in this prospectus for
more detail on the payment of principal and interest.
FINAL SCHEDULED PAYMENT DATES
If the offered notes have not already been paid in full, we will be obligated to
pay the outstanding principal amount of the Class A, Class B and Class C notes
in full on the following payment dates:
<TABLE>
<CAPTION>
CLASS PAYMENT DATE
- ----- ------------
<S> <C>
A.......................
B.......................
C.......................
</TABLE>
We expect that payment on the notes of each class will be made before the
payment date set forth in the table above.
SUBORDINATION
The Class D notes will be subordinated to the Class A, Class B and Class C
notes. The Class C notes will be subordinated to the Class A and Class B notes.
The Class B notes will be subordinated to the Class A notes.
- On each payment date, the trustee will use the amount available to pay
interest on the Class A notes, then interest on the Class B notes, and
then interest on the Class C notes; and
- On each payment date, the trustee will use the amount available to pay
principal due on the Class A notes, then principal due on the Class B
notes, and then principal due on the Class C notes.
We refer you to "Description of the Notes -- Subordination Provisions" in this
prospectus for a more complete description of the subordination of the Class B
and Class C notes.
RESIDUAL RECEIPTS
Proceeds may be realized from the sale of the equipment following the
termination of the contracts or from periodic payments made for the continued
use of the equipment after the termination date of the contract. These proceeds,
known as residual receipts, subject to a limit, will be deposited into the
collection account, included as available funds, and used to pay the servicer or
to cover payments of interest and principal to noteholders.
Under limited circumstances called residual events, the residual receipts not
paid to the servicer, distributed to you or paid to the issuers will be
deposited into the residual account.
Residual receipts will be included in available funds only up to the residual
cap amount. The residual cap amount is $ . Each dollar of residual
receipts collected and used to pay the servicer, to pay the holders of the
offered notes or paid into the residual account is included in determining if
the residual cap amount has been reached. Once the residual cap amount has been
reached all residual receipts belong to the issuers free and clear.
RESIDUAL ACCOUNT
The Trustee will establish the residual account. Deposits to the residual
account will not be made unless a residual event has occurred and is continuing.
If a residual event occurs and is continuing deposits to the residual account
will be made only in limited amounts and only after payments with a higher
priority in the flow of funds are made.
During the continuation of a residual event, amounts that otherwise would be
released to the
3
<PAGE> 7
issuers will be retained in the residual account for application on future
payment dates.
Once the residual event ends, amounts in the residual account will be:
- deposited into the reserve account, if the amount in the reserve account
is less than the required reserve amount; or
- released to the issuers.
RESERVE ACCOUNT
The trustee will establish a reserve account and the issuers will deposit an
amount equal to % of the initial principal balance of all offered notes
(approximately $ ). The trustee will use the amounts in the reserve
account to pay the following amounts if collections on the contracts are
insufficient:
- amounts owed to the servicer;
- interest due on the notes; and
- principal due on the notes.
COLLECTIONS BY THE SERVICER
Advanta Business Services or its successor will service the receivables under
the indenture. Advanta Business Services or any successor may be removed as
servicer if an event of servicer default occurs.
The servicer manages and administers the contracts. It also enforces and makes
collections on the contracts and any insurance policies and, if needed, realizes
on the issuers' interest. In exchange for its services, the servicer receives a
monthly servicer fee.
FLOW OF FUNDS
On each payment date, the trustee will make the following payments from the
available funds in the collection account. The trustee will make payments in the
following order of priority:
- first, to the servicer to pay for any unrecoverable servicer advances;
- then, to the servicer to pay the servicer fee along with miscellaneous
amounts;
- then, to the Class A noteholders to pay the Class A note interest and
overdue interest;
- then, to the Class B noteholders to pay the Class B note interest and
overdue interest;
- then, to the Class C noteholders to pay the Class C note interest and
overdue interest;
- then, to the Class A noteholders to pay the Class A principal payment
then due and any Class A overdue principal;
- then, to the Class B noteholders to pay the Class B principal payment
then due and any Class B overdue principal;
- then, to the Class C noteholders to pay the Class C principal payment
then due and any Class C overdue principal;
- then, to the reserve account in the amount needed to increase the amount
in the reserve account to the required amount;
- then, if a residual event has occurred and is continuing, to the residual
account the lesser of (i) the available funds remaining on deposit in the
collection account and (ii) the aggregate amount of residual receipts
originally included in available funds for that payment date;
- then, to the Class D noteholders to pay the Class D principal then due
and the Class D overdue principal; and
- finally, to the issuers, any remaining available funds in the collection
account.
OPTIONAL REDEMPTION
The servicer has the option to direct the redemption of all remaining notes when
the aggregate contract principal balance is 10% or less of the initial aggregate
contract principal balance.
If a redemption occurs, you will receive a final distribution equaling the
entire unpaid balance of your notes plus any accrued and unpaid interest.
FEDERAL INCOME TAX STATUS
In the opinion of Orrick, Herrington & Sutcliffe LLP, special tax counsel to the
issuers, under existing law, the offered notes will be characterized as debt for
federal income tax purposes. By your acceptance of an offered note, you will
agree to treat your offered note as debt for federal, state and local income and
franchise tax purposes. We refer you to "Federal Income Tax Consequences" in
this
4
<PAGE> 8
prospectus for additional information about the application of federal income
tax laws.
ERISA CONSIDERATIONS
Subject to important considerations described under "ERISA Considerations" in
this prospectus, the notes are eligible for purchase by persons investing assets
of employee benefit plans or individual retirement accounts. A fiduciary or
other person contemplating purchasing the notes on behalf of or with plan assets
of any plan should consult with its counsel regarding whether the purchase or
holding of the notes could give rise to a transaction prohibited or not
otherwise permissible under ERISA or section 4975 of the Internal Revenue Code.
RATINGS
We will not issue the offered notes unless the rating agencies have assigned the
following ratings (or higher) to each class of offered notes:
<TABLE>
<CAPTION>
[RATING [RATING [RATING
CLASS AGENCY] AGENCY] AGENCY]
- ----- ------- ------- -------
<S> <C> <C> <C>
A....................
B....................
C....................
</TABLE>
The ratings may be lowered, qualified or withdrawn by the rating agencies in
their discretion.
5
<PAGE> 9
RISK FACTORS
You should carefully consider the following risk factors before deciding to
invest in the notes offered by this prospectus.
YOU MAY NOT BE ABLE TO SELL
YOUR
NOTES If no public market develops, you, as a
noteholder, may not be able to liquidate your
investment in the notes prior to maturity.
There currently is no public market for the
notes, and we offer no assurance that one will
develop. The underwriters expect, but are not
obligated, to make a market in the notes. There
is no assurance, however, that any market will
be created or, if created, will continue.
PREPAYMENTS ON CONTRACTS MAY
CAUSE EARLY PAYMENT OF NOTES
AND
YOU MAY NOT BE ABLE TO
REINVEST AT
A COMPARABLE RATE The rate of principal payments on the notes is
unpredictable because it depends on, among
other things, the rate of payment on the
contracts. In addition to the normally
scheduled payments on the contracts, payments
may come earlier as a result of a number of
different events, including:
- prepayments permitted by the servicer;
- payments resulting from contracts that are
defaulted;
- payments resulting from contracts accelerated
by the servicer;
- payments due to loss, theft, destruction or
other casualty; and
- payments upon repurchases by Advanta Business
Services because of a breach of
representations and warranties.
Furthermore, the rate of early terminations of
contracts due to prepayments and defaults may
be influenced by a variety of economic and
other factors. For example, adverse economic
conditions and natural disasters such as
floods, hurricanes, earthquakes and tornadoes
may increase prepayments.
In addition, the servicer may direct the
redemption of all remaining notes on any
payment date when the aggregate contract
principal balance is 10% or less of the initial
aggregate contract principal balance. A
redemption may result in an early return of
your investment. You will not receive a premium
if your notes are redeemed.
There can be no assurance that you will be able
to reinvest any early payments at a rate of
return equal to or greater than that on your
offered notes.
Be aware that you bear the risk of reinvesting
distributions resulting from payment of the
notes earlier than expected.
SUBORDINATION OF THE CLASS B
NOTES
AND CLASS C NOTES MAY RESULT
IN
LOSSES TO HOLDERS OF THE CLASS
B
NOTES AND CLASS C NOTES Payments of interest and principal on the Class
B notes will be subordinated in priority of
payment to interest and principal,
respectively, on the Class A notes. Similarly,
payments of interest and principal on the Class
C notes will be subordinated in priority of
payment to interest and principal,
respectively, on the Class A notes and the
Class B notes.
In each month, payments will be made only from
limited available funds which include
collections on the contracts, residual
receipts,
6
<PAGE> 10
if available, and amounts, if any in the
reserve account and residual account. If, in
any month available funds are not sufficient to
pay all amounts due, then Class A will be paid
first, Class B second, Class C third and
finally Class D. Therefore, if there are
significant delinquencies or losses on the
contracts, if you own a Class C note, your risk
of nonpayment or late payment is greater than
the risk to holders of the Class A notes and
Class B notes. Likewise, if you own a Class B
note, your risk of nonpayment or late payment
is greater than the risk to holders of the
Class A Notes.
SERVICER'S POSSESSION OF THE
CONTRACTS MAY RESULT IN
DELAYED PAYMENTS, LOSSES OR
ACCELERATED PAYMENTS The servicer will retain possession of the
contracts. If the servicer, while in possession
of the contracts, sells or pledges and delivers
them to another party, in violation of its
agreements, the other party could acquire an
interest in the contracts and take priority
over you. Also, if the servicer becomes
insolvent while in possession of the contracts,
competing claims to ownership or security
interests in the contracts may result. Even if
unsuccessful, these claims could delay payments
to you. If successful, these claims could
result in losses to you or accelerate the
prepayment of the notes.
STATE LAWS AND OTHER FACTORS
MAY RESTRICT OR DELAY RECOVERY
EFFORTS AND ADVERSELY AFFECT
THE RECOVERY OF THE FULL AMOUNT
DUE ON THE CONTRACTS State laws may limit or delay recoveries on the
contracts. State laws impose requirements and
restrictions relating to foreclosure sales and
obtaining deficiency judgments. If we must rely
on repossession and disposition of equipment to
cover losses, we may not be able to realize the
full amount due.
Other factors that may affect our ability to
realize the full amount due on the contracts
include:
- in most cases, no financing statements will
be filed to perfect Advanta Business
Services' security interest or the issuers'
interest or the trust's interest in the
equipment against a lessee;
- depreciation;
- obsolescence; and
- damage to or loss of any piece of equipment.
As a result, you may experience delays in
payments and losses on your investments.
SECURITY INTERESTS IN MOST
EQUIPMENT ARE NOT PERFECTED
AND OTHER CREDITORS MAY HAVE
RIGHTS TO THE EQUIPMENT The users' obligation to make payment on the
contracts are, in most cases, secured by a
security interest or ownership interest in the
related equipment. The security interests or
ownership interests are, in most cases, not
perfected unless a UCC financing statement has
been filed in the appropriate filing office.
Advanta Business Services has not filed and
does not expect to file UCC financing
statements for equipment that originally cost
$25,000 or less. Financing statements have, in
most cases, been filed for equipment that
originally cost more than $25,000. Financing
statements in favor of Advanta Business
Services have, therefore, been filed for
approximately % of the original
statistical aggregate contract principal
balance. As a result, the security interest or
ownership
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<PAGE> 11
interest in equipment that represents
approximately % of the original
statistical aggregate contract principal
balance has not and will not be perfected in
favor of Advanta Business Services, the issuers
or the trustee.
Consequently, another party (such as a creditor
of the user) may acquire rights in the
equipment superior to those of Advanta Business
Services, the issuers and the trustee. The lack
of a perfected security interest or ownership
interest in the equipment may result in claims
against the users being unsecured and may
adversely affect the ability of the servicer to
realize on the equipment.
ARTICLE 2A OF THE UCC MAY
DIMINISH RECOVERIES Some states have adopted a version of Article
2A of the UCC. 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
limit the enforceability of any
"unconscionable" lease or "unconscionable"
provisions in a lease.
Article 2A also may provide a lessee with
remedies, including the right to cancel the
lease contract for lessor breaches or defaults.
Article 2A may add to or modify the terms of
consumer leases and leases where the lessee is
a merchant lessee. Moreover, it recognizes
typical consumer 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 freedom of contract and permits
the parties in a commercial context a wide
degree of latitude to vary provisions of the
law.
RECHARACTERIZATION OF THE
TRANSFER OF CONTRACTS AS A
SECURED BORROWING COULD REDUCE
OR DELAY YOUR PAYMENTS If Advanta Business Services were to become a
debtor under the federal bankruptcy code or
similar applicable federal or state laws, a
creditor or trustee in bankruptcy (including
Advanta Business Services as
debtor-in-possession) might argue that the
transfer of the contracts and the residual
interests from Advanta Business Services to the
issuers was (or should be recharacterized as) a
pledge to secure a borrowing rather than an
absolute sale. If a court accepted this
position, then the issuers and the trustee
could experience a delay in or reduction of
collections on all of the contracts.
Consequently, you could incur a loss on your
investment. If the transactions contemplated in
this prospectus are treated as a sale, the
contracts would not be part of Advanta Business
Services's bankruptcy estate and would not be
available to the creditors of Advanta Business
Services.
A case decided by the United States Court of
Appeals for the Tenth Circuit contains language
to the effect that accounts sold by an entity
that subsequently became bankrupt remained
property of the debtor's bankruptcy estate
because the sale of accounts is treated as a
"security interest" that must be perfected
under the UCC. Although the contracts
constitute chattel paper or general intangibles
rather than accounts under the UCC, sales of
chattel paper, like sales of accounts, must be
perfected under Article 9 of the UCC. If
Advanta Business Services were to become a
debtor in bankruptcy and a court were to follow
the reasoning of the
8
<PAGE> 12
Tenth Circuit Court of Appeals and apply the
same reasoning to chattel paper, the issuers
(and thus the trustee) could experience a delay
in or reduction of collections on the
contracts. You could incur a loss on your
investment as a result.
SUBSTANTIVE CONSOLIDATION OF
ADVANTA BUSINESS SERVICES AND
THE ISSUERS MAY RESULT IN
LOSSES ON YOUR INVESTMENT The issuers have taken and will take steps to
ensure that a voluntary or involuntary petition
for relief by or against Advanta Business
Services under the federal bankruptcy code or
similar applicable federal or state laws will
not result in the consolidation of the assets
and liabilities of the issuers with those of
Advanta Business Services. Nevertheless, it is
possible that, in the event of a bankruptcy or
insolvency, a court would order the issuers'
assets and liabilities to be substantively
consolidated with those of Advanta Business
Services. An order to consolidate would
adversely affect the issuers' ability to
receive payments on the contracts, and you
could therefore incur a loss on your
investment.
COMMINGLING OF TRUST ASSETS BY
ADVANTA BUSINESS SERVICES MAY
RESULT IN REDUCED OR DELAYED
PAYMENTS TO YOU While Advanta Business Services is the
servicer, cash collections held by Advanta
Business Services will be commingled and used
for its benefit until those collections are
required to be deposited into the collection
account. If the servicer were unable to remit
collections, or if the servicer became
insolvent, the issuers may not have a perfected
ownership or security interest in those
collections. As a result, you could incur a
loss on your investment.
INSOLVENCY OF ADVANTA BUSINESS
SERVICES MAY RESULT IN AN
INABILITY TO REPURCHASE
CONTRACTS Advanta Business Services will make
representations and warranties regarding the
contracts and the equipment. In the event that
a representation or warranty concerning a
specific contract is breached, if the breach is
not cured within a specified time period and
the value of the contract is materially and
adversely affected by the breach, Advanta
Business Services will be required to purchase
the contract from the issuers. In the event of
a bankruptcy or insolvency of Advanta Business
Services, the trustee may be unable to compel
Advanta Business Services to repurchase
contracts, and you could incur a loss on your
investment.
INSOLVENCY OF THE ISSUERS
COULD REDUCE OR DELAY YOUR
PAYMENTS If one or both of the issuers were to become
bankrupt or insolvent under any bankruptcy or
insolvency law, delays in distributions to you
would be likely and you could incur a loss on
your investment. Each issuer has taken steps to
minimize the likelihood that it will become
bankrupt or otherwise insolvent.
DEFAULT OR INSOLVENCY OF USERS
MAY REDUCE PAYMENTS TO YOU To the extent users default on the contracts,
including through insolvency, contract payments
will decrease. Accordingly, funds available to
you, as a noteholder, will be reduced.
IF THE PLEDGED ASSETS ARE NOT
SUFFICIENT, DEFAULTS WILL
OCCUR The notes are debt of the issuers secured by
and payable only from the pledged assets. If
the contract payments and other assets pledged
to secure the notes are insufficient to pay the
notes in full, you have no rights to obtain
payment from Advanta Business Services or any
of its affiliates or from any other source.
TECHNOLOGICAL OBSOLESCENCE OF
EQUIPMENT MAY REDUCE VALUE OF
COLLATERAL If the user does not pay the amount due on a
contract, the only other source of monies to
pay amounts due will be the income and
9
<PAGE> 13
proceeds from the disposition of the related
equipment or other security, if any, provided
by the user. If the servicer or the trustee
must repossess and sell equipment, it may not
recover the entire amount due on a contract
because the market value of equipment usually
declines with age and may be subject to sudden,
significant declines in value because of
technological advances. As a result, you may
experience delays in receiving payments and
suffer losses on your investments in the notes.
GEOGRAPHIC CONCENTRATION OF
THE CONTRACT PORTFOLIO CAUSES
INCREASE RISK FROM LOCAL
ECONOMIC CONDITIONS AND
NATURAL DISASTERS As of the statistical calculation date,
approximately %, %, %, %,
% and % of the contracts (based on
the original statistical aggregate contract
principal balance) were located in [California,
New York, Texas, Florida, New Jersey and
Pennsylvania,] respectively. No other state
accounts for more than % of the original
statistical aggregate contract principal
balance. Accordingly, adverse economic
conditions, natural disasters or other factors
particularly affecting any of these states
could have a disproportionate affect on the
performance of the portfolio.
BOOK-ENTRY REGISTRATION WILL
RESULT IN YOUR INABILITY TO
EXERCISE DIRECTLY YOUR RIGHTS
AS A NOTEHOLDER The notes will be registered in the name of
Cede & Co., as nominee of The Depository Trust
Company. As a result, unless and until
definitive notes are issued, you will not be
recognized by the issuers or the trustee as a
noteholder. You will only be able to exercise
the rights of noteholders indirectly, through
The Depository Trust Company, Euroclear or
Cedelbank and their respective participating
organizations. You will receive reports and
other information provided for in the indenture
only to the extent provided by The Depository
Trust Company, Euroclear or Cedelbank.
LIMITED NATURE OF CREDIT
RATINGS ASSIGNED TO THE
NOTES Each credit rating assigned to your notes
reflects the rating agency's assessment only of
the likelihood that interest and principal will
be paid to you when required under the
indenture, not that it will be paid when
expected or scheduled. These ratings are based
on the rating agencies' determination of the
value of the contracts, the reliability of the
payments on the contracts in the portfolio and
the subordination provisions.
The ratings do not address the following:
- the likelihood that the principal or interest
on your notes will be prepaid, paid on a
scheduled date or paid on any particular date
before the final required payment date for
your class;
- the possibility that your notes will be paid
early or the possibility of the imposition of
United States withholding tax for non-U.S.
noteholders;
- the marketability of the notes, or any market
price; or
- that an investment in the notes is a suitable
investment for you.
A rating is not a recommendation to purchase,
hold or sell notes.
RISKS ASSOCIATED WITH YEAR
2000 COMPLIANCE Advanta Business Services is faced with the
task of completing its Year 2000 compliance
goals. The Year 2000 issue results from the
two-digit format programmed into nearly all
computers. Without
10
<PAGE> 14
adjustment, computers will recognize "00" as
1900 instead of 2000, and will begin to
generate incomplete or inaccurate information.
Advanta Business Services reasonably believes
that its servicing system will be Year 2000
compliant before the Year 2000.
Nevertheless, it presently is engaged in
various procedures to determine if its computer
systems and software will be Year 2000
compliant. Advanta Business Services also is
determining if the computer systems and
software of its material suppliers, customers,
brokers and agents will be Year 2000 compliant.
In the event that Advanta Business Services, or
any of its suppliers, customers, brokers or
agents do not successfully and timely achieve
Year 2000 compliance, the performance of
Advanta Business Services's obligations as
servicer could be adversely affected. Failure
to achieve Year 2000 compliance could result in
delays in processing payments on the contracts
or a shut down of operations for a period of
time which could have a material adverse effect
on our ability to pay the offered notes.
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<PAGE> 15
INTRODUCTION
Advanta Leasing Receivables Corp. VIII ("ADVANTA LEASING RECEIVABLES
VIII,") and Advanta Leasing Receivables Corp. IX ("ADVANTA LEASING RECEIVABLES
IX") will issue $ of their Equipment Receivables Asset-Backed Notes,
Series 1999-1 (the "NOTES") in four classes, Class A, Class B, Class C and Class
D. Only the Class A, Class B and Class C Notes (the "OFFERED NOTES") are offered
by this Prospectus. The Class D Notes will be placed privately by the Issuers.
The Class D Notes may be placed with Advanta Business Services or any another
affiliate of Advanta Corp. Capitalized terms used in this Prospectus are defined
on the pages indicated in the table entitled "Index of Terms" at the back of
this Prospectus.
The Notes will be issued under the terms of the Advanta Business
Receivables Master Facility Agreement, dated as of 1, 1999 (the
"INDENTURE"), among Advanta Leasing Receivables VIII, Advanta Leasing
Receivables IX, together as the Issuers, Advanta Business Services Corp.
("ADVANTA BUSINESS SERVICES"), as servicer, and Bankers Trust Company, as
Trustee (the "TRUSTEE"). The specific terms of the Notes will be set forth in
the Series 1999-1 Supplement, dated , 1999, to the Indenture (the
"SERIES SUPPLEMENT") also among the Issuers, Advanta Business Services and the
Trustee.
The Indenture will allow the Issuers to issue additional series of notes
subsequent to the issuance of Series 1999-1. Any additional series would be
issued under a separate series supplement and would be payable from a separate
pool of assets. The Issuers do not currently expect to issue any additional
series of notes under the Indenture.
The Issuers will enter into a Master Sale and Contribution Agreement dated
, 1999 and a Series 1999-1 Supplement thereto (collectively, the
"CONTRIBUTION AGREEMENT"), with Advanta Business Services. Pursuant to the
Contribution Agreement, Advanta Leasing Receivables IX will acquire the
Contracts that will be pledged to secure the Notes and Advanta Leasing
Receivables VIII will acquire the Residual Interest in the equipment that is the
subject of the Contracts.
Advanta Business Services, as originator of the Contracts, is referred to
herein as the "ORIGINATOR."
THE ISSUERS
The Issuers are Advanta Leasing Receivables VIII and Advanta Leasing
Receivables IX. Each of Advanta Leasing Receivables VIII and Advanta Leasing
Receivables IX is referred to in this Prospectus individually as an "ISSUER,"
and collectively they are referred to as the "ISSUERS." The Issuers will be
jointly and severally liable on the Notes.
Each Issuer is a Nevada corporation formed May , 1999. Each Issuer is a
wholly-owned subsidiary of Advanta Business Services. The principal office of
Advanta Leasing Receivables VIII is located at 639 Isbell Road, Suite 390-A,
Reno, Nevada 89509 and the principal office of Advanta Leasing Receivables IX is
located at 639 Isbell Road, Suite 390-B, Reno, Nevada 89509.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
As of the date of this Prospectus, neither of the Issuers has an operating
history. The net proceeds of the sale of the Notes will be used by the Issuers
to purchase a portion of the Contracts and to make the initial deposit to the
Reserve Account. See "Use of Proceeds." The Issuers are prohibited by their
respective articles of incorporation from engaging in business other than (i)
the purchase of equipment leases and lease receivables (including equipment),
loan agreements and other financing agreements from Advanta Business Services
and its affiliates, (ii) the issuance of notes collateralized by its assets and
(iii) engaging in acts incidental, necessary or convenient to the foregoing and
permitted under Nevada law. The Issuers' ability to incur, assume or guaranty
indebtedness for borrowed money are also restricted by their respective articles
of incorporation.
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<PAGE> 16
DIRECTORS AND EXECUTIVE OFFICERS OF THE ISSUERS
The following table sets forth the executive officers and directors of the
Issuers and their ages and positions as of May , 1999. Because the Issuers are
organized as special purpose companies and will be largely passive, it is
expected that the officers and directors of each Issuer in such capacity will
participate in the management of each Issuer to a limited extent. Most of the
actions related to maintaining and servicing the assets will be performed by
Advanta Business Services or any successor thereto, as servicer (with any
successors, the "SERVICER").
ADVANTA LEASING RECEIVABLES CORP. VIII
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
George Deehan............................. 56 Director
John Paris................................ 41 President and Director
Michael Coco.............................. 34 Chief Financial Officer and Director
Cole Silver............................... 42 Secretary and Director
Janice C. George.......................... 52 Assistant Secretary and Director
Francis B. Jacobs, II..................... 57 Director
Mark D. Shapiro........................... 37 Treasurer
</TABLE>
ADVANTA LEASING RECEIVABLES CORP. IX
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
George Deehan............................. 56 Director
John Paris................................ 41 President and Director
Michael Coco.............................. 34 Chief Financial Officer and Director
Cole Silver............................... 42 Secretary and Director
Janice C. George.......................... 52 Assistant Secretary and Director
Francis B. Jacobs, II..................... 57 Director
Mark D. Shapiro........................... 37 Treasurer
</TABLE>
George Deehan has served as Director since being elected on May , 1999.
John Paris has served as President and Director since being elected on May
, 1999.
Michael Coco has served as Chief Financial Officer since being elected on
May , 1999.
Cole Silver has served as Secretary and Director since being elected on May
, 1999.
Janice C. George has served as Assistant Secretary and Director since being
elected on May , 1999.
Francis B. Jacobs, II has served as Director since being elected on May ,
1999.
Mark D. Shapiro has served as Treasurer since being elected on May ,
1999.
None of the above-listed directors and officers of the Issuers will be
compensated directly by the Issuers with any funds or assets of the Issuers nor
will the directors and officers receive compensation in the capacities in which
they act for the Issuers.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "SECURITIES ACT"), may be permitted to directors,
officers and controlling persons of the Issuers pursuant to the foregoing
provisions, or otherwise, each of the Issuers has been advised that in the
opinion of the SEC, the indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against liabilities (other than the payment by the Issuers
of expenses incurred or paid by a director, officer or controlling person of the
Issuers in the successful defense of any action, suit or proceeding) is asserted
by a director, officer or controlling person in connection with
13
<PAGE> 17
the securities being registered, the Issuers 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 whether the indemnification by
them is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of the issue.
USE OF PROCEEDS
The Issuers will apply the net proceeds from the sale of the Notes as
follows: (i) to make the initial deposit to the Reserve Account, in the amount
of $ (the "RESERVE ACCOUNT INITIAL DEPOSIT"); and (ii) to acquire a
portion of the portfolio of Contracts from Advanta Business Services. The
balance of the portfolio of the Contracts, related rights and interests
including the Residual Interests will be contributed by Advanta Business
Services to the Issuers.
Advanta Business Services has, in a series of transactions, previously
transferred contracts to affiliates and the affiliates have transferred the
contracts to commercial paper conduits in return for cash or have pledged the
contracts as a source of payment for notes issued by the affiliates. The Issuers
will use proceeds from the sale of the Notes to acquire contracts from Advanta
Business Services, and Advanta Business Services will use proceeds from the sale
of the Contracts in part to acquire Contracts from the current owners. The
balance of the Contracts to be included in the portfolio are contracts
originated by Advanta Business Services and currently held by Advanta Business
Services.
Of the Contracts in the portfolio at the time of issuance of the Notes,
approximately % if the Aggregate Contract Principal Balance will be
acquired by Advanta Leasing Receivables IX by purchase from Advanta Business
Services and % will be acquired by Advanta Leasing Receivables IX by
contribution from Advanta Business Services. The Residual Interest will be
acquired by Advanta Leasing Receivables VIII by purchase or contribution, or in
part by purchase and in part by contribution, from Advanta Business Services.
THE TRUSTEE
Bankers Trust Company will be the Trustee under the Indenture. Advanta
Business Services, as Originator or Servicer, and its affiliates may from time
to time enter into normal banking and trustee relationships with the Trustee and
its affiliates. The Trustee, the Originator, the Servicer, and any of their
respective affiliates may hold Notes in their own names. In addition, for
purposes of meeting the legal requirements of some local jurisdictions, the
Trustee shall have the power to appoint a co-trustee or a separate trustee under
the Indenture. In the event the Trustee appoints a co-trustee, all rights,
powers, duties and obligations conferred or imposed upon the Trustee by the
Indenture will be conferred or imposed upon the Trustee and the separate trustee
or co-trustee jointly, or in any jurisdiction in which the Trustee shall be
incompetent or unqualified to perform specific acts, singly upon the separate
trustee or co-trustee, who shall exercise and perform its rights, powers, duties
and obligations solely at the direction of the Trustee.
The Trustee may resign at any time, in which event the Issuers will be
obligated to appoint a successor Trustee. The Issuers may also remove the
Trustee if the Trustee ceases to be eligible to continue as Trustee under the
Indenture, fails to perform in any material respect its obligations under the
Indenture, or becomes insolvent. The Issuers will be obligated to appoint a
successor Trustee.
14
<PAGE> 18
THE PLEDGED ASSETS
GENERAL
The assets pledged by the Issuers to the Trustee to secure the Notes
(collectively, the "PLEDGED ASSETS") will consist of:
- leases (including, but not limited to, finance leases, true leases and
full payout leases) and loans included on a list delivered to the Trustee
on the Closing Date (collectively, the "CONTRACTS"); the Contracts
provide financing for the purchase or lease of a variety of
"small-ticket" equipment items for businesses, including, without
limitation, office equipment (such as copy machines, facsimile machines
and telephones), telecommunications equipment, automotive repair
equipment, surveillance equipment and furniture (the "EQUIPMENT");
- all collections of amounts paid on the Contracts after the opening of
business on , 1999 (the "CUT-OFF DATE") and all related
security;
- all amounts in the Collection Account, the Reserve Account and the
Residual Account;
- all of the Issuers' rights in the Contribution Agreement;
- proceeds of each of the foregoing, but excluding any taxes, late charge
fees, any initial unpaid amounts and security deposits;
- interests in the Equipment (and proceeds, including net insurance
proceeds thereof) relating to the Contracts. [The Contracts, together
with the interests in the related Equipment and other property
appurtenant thereto, are collectively referred to as the "RECEIVABLES."]
To facilitate servicing, the Servicer will retain possession of the
Contracts and the related Contract Files and will hold the Contract Files in
accordance with the provisions of the Indenture, subject to the interests of the
Trustee and the Holders of the Notes.
The "CONTRACT FILES" means, with respect to each Contract, the following
documents:
- the executed original counterparts of the Contract;
- a copy of the related agreement, if any, between the Originator and a
broker pursuant to which the Originator acquired Contracts;
- copies of all documents (which may be in microfiche form or on the
Servicer's computerized information system), if any, that the Originator
or the Servicer keeps on file for the benefit of the Originator in
accordance with the Originator's or Servicer's customary procedures; and
- copies (together with all amendments, assignments and continuations
thereof and including evidence of filings with the appropriate office) of
all Uniform Commercial Code ("UCC") financing statements filed with
respect to the Contracts, identifying the User as debtor and the
Originator as secured party, if applicable.
TRUST ESTATE
Under the Series Supplement, the Issuers will pledge all of the Pledged
Assets to the Trustee to secure the payment of the Notes. The Trustee will hold
the interests in the Pledged Assets as the "TRUST ESTATE."
THE CONTRACTS
The Contracts are in the form of leases or loans. Leases may be "true"
leases or leases intended as security agreements. Loans may include installment
sale contracts.
Approximately % of the Contracts, measured by the Original Statistical
Aggregate Contract Principal Balance, are leases and the remaining % are
loan agreements.
15
<PAGE> 19
Statistical information concerning the Contracts is included in this
Prospectus under the caption "Statistical Information." References to the "USER"
means any obligor, under any Contract, whose obligations thereunder constitute
the sources of payments under the Contract, including any guarantor of the
obligation.
The Contracts typically require a "residual" payment at the end of the term
most of which payments are in the form of either a purchase option or required
balloon payment.
Contracts that take the form of leases contain "hell or high water" clauses
unconditionally obligating the User to make periodic payments, without setoff,
at the time and on the dates specified in the Contract, notwithstanding default
by the Originator, the Servicer, or the Issuers, or any assignee of any of them,
under the Contract, damage to or destruction of the related Equipment or any
other event.
Under the Contracts which are leases, the user does not have the right to
prepay its obligations. Those Contracts which are loans are prepayable.
Pursuant to the terms of the Indenture, however, the Servicer may allow
prepayment of a Contract, whether in the form of a lease or a loan, in an amount
not less than the Prepayment Amount of the Contract. In addition, in the event
that a User requests an upgrade or trade-in of Equipment, the Servicer may
remove the Equipment and related Contract from the Trust Estate, upon payment of
an amount equal to the Prepayment Amount. The "PREPAYMENT AMOUNT" means, for a
Contract, as of any date, the sum of (a) the Contract Principal Balance of the
Contract (without deduction for any security deposit paid by the User, unless
the security deposit has been applied to the Contract Principal Balance pursuant
to the Servicer's credit and collection policy and deposited into the Collection
Account), plus (b) the product of the Contract Principal Balance and one-twelfth
of the Applicable Discount Rate, plus (c) the Booked Residual Value for the
Contract.
Users, under Contracts that take the form of leases, may, upon prior
written notice to the Servicer, assign or sublease the related Equipment,
provided that the Servicer consents to the assignee or sublessee in accordance
with the terms of the related Contract. The right to receive prior written
notice and grant or deny consent shall be exercised by the Servicer.
Notwithstanding any assignment or sublease, each User will remain liable for the
lessee obligations under the related Contract and the Contract will remain part
of the Trust Estate.
Some Contracts which take the form of leases contain provisions requiring
that the related User purchase the Equipment at the end of the Contract term.
The amount payable at the end of the Contract term (the "FINAL CONTRACT
PAYMENT") may be (i) a specified amount or (ii) a minimum specified amount plus
an unspecified excess amount which together with the minimum specified amount is
the lesser of (a) the fair market value of the related Equipment at Contract
maturity or (b) a maximum specified amount. Any excess amount received from a
User is an "EXCESS AMOUNT."
Other Contracts which take the form of leases do not contain a provision
requiring the User to purchase the Equipment, but rather contain an end-of-term
purchase option (the "PURCHASE OPTION CONTRACTS" and "PURCHASE OPTION
EQUIPMENT," respectively). These purchase options are exercisable at varying
amounts, and are referred to as "PURCHASE OPTION PAYMENTS." If a User under a
Purchase Option Contract does not exercise its purchase option, the User is
required to either re-lease the Equipment on a month to month basis or return
the related Purchase Option Equipment to the Servicer.
Contracts which are in the form of a lease are on a "triple-net" basis
(i.e., the User assumes all responsibility with respect to the related
Equipment, including the obligation to pay all costs relating to its operation,
maintenance, repair and insurance).
Contracts which are in the form of a lease also contain provisions that
unconditionally obligate the User to make all Scheduled Payments and any Final
Contract Payment thereunder.
On any date of calculation with respect to a Contract, the present value of
the Scheduled Payments to become due with respect to the Contract on and after
the date of calculation (but in any event prior to
) (excluding Scheduled Payments previously due and
unpaid), discounted
16
<PAGE> 20
monthly at one-twelfth of the Applicable Discount Rate is the "CONTRACT
PRINCIPAL BALANCE" of the Contract, except that a Defaulted Contract has a
Contract Principal Balance of $0.
The "SCHEDULED PAYMENTS" with respect to any Contract are the stated
periodic rental or loan payments (exclusive of any amounts in respect of
insurance or taxes) set forth in the Contract and due from the User.
"AGGREGATE CONTRACT PRINCIPAL BALANCE" means, for any Payment Date, the
aggregate Contract Principal Balance of all Contracts in the Trust Estate as of
the related Calculation Date.
References herein to percentages of Contracts refer, in each case, to the
percentage of the Original Statistical Aggregate Contract Principal Balance of
the Contracts.
ADVANTA BUSINESS SERVICES'S
UNDERWRITING, ORIGINATION AND SERVICING PRACTICES
GENERAL
Advanta Business Services is a wholly-owned subsidiary of Advanta Leasing
Holding Corp., a Delaware corporation. Advanta Leasing Holding Corp. is a
wholly-owned subsidiary of Advanta Corp. (a publicly-traded company based in
Spring House, Pennsylvania and is listed on the NASDAQ as ADVNA, ADVNB and
ADVNZ). Advanta Business Services is headquartered at 1020 Laurel Oak Road,
Voorhees, New Jersey 08043-7228 and its phone number is (609) 782-7300.
As of October 1, 1998, Advanta Business Services ceased originating
contracts related to equipment financing. Since October 1, 1998, Advanta Bank
Corp., a Utah industrial loan corporation based in Draper, Utah and an affiliate
of Advanta Corp. the ultimate parent of Advanta Business Services, has assumed
the origination of the equipment financings. Advanta Business Services currently
services equipment financing arrangements originated by Advanta Bank Corp. and
Advanta Business Services continues to service contracts which it originated or
acquired prior to October 1, 1998.
CONTRACT ORIGINATION
Prior to October 1, 1998, Advanta Business Services originated contracts
primarily through its sales and marketing programs at its Voorhees, New Jersey
headquarters. Advanta Business Services no longer originates and funds leases or
other equipment financing arrangements; however, it provides origination
services to Advanta Bank Corp. in connection with Advanta Bank Corp.'s equipment
financing program. The Contracts which will be included in the Pledged Assets
are Contracts which were originated or acquired by Advanta Business Services
prior to October 1, 1998. Most of the Contracts were, after origination or
acquisition by Advanta Business Services, sold, contributed or pledged in
various securitization programs. These Contracts will be acquired by Advanta
Business Services from the current owners under the securitization programs and
sold or contributed to the Issuers in connection with the issuance of the Notes.
The Contracts were originally either (i) originated in the name of Advanta
Business Services directly or through a vendor or broker; (ii) originated with
funding by Advanta Business Services through a vendor or broker which vendor or
broker assigned the Contract to Advanta Business Services but did not reveal the
name of the originator to the User or (iii) originated by another funding source
and purchased by Advanta Business Services.
The following describes Advanta Business Services' origination practices
with respect to equipment financing arrangements, originated or acquired by
Advanta Business Services prior to October 1, 1998, including the Contracts.
Advanta Business Services continues to use these practices in connection with
the origination services performed for Advanta Bank Corp.
Advanta Business Services originates leases through marketing programs,
vendors, brokers and bulk or portfolio purchases. Advanta Business Services
establishes both formal and informal relationships with equipment vendors. As a
result of previous transactions with Advanta Business Services, vendors may
17
<PAGE> 21
recommend that prospective customers make a credit application to Advanta
Business Services for financing. A more formal program between Advanta Business
Services and a vendor may offer prospective customers financing at pre-arranged
rates, based upon the vendor's equipment, and terms and conditions approved by
Advanta Business Services.
Advanta Business Services also originates contracts through the use of
brokers. In a typical broker transaction, the broker refers potential customers
to Advanta Business Services and the broker is paid a referral fee. Contracts
originated under the broker program are reviewed in a manner consistent with
Advanta Business Services' then-existing policies and procedures.
In a majority of these programs, the Equipment is owned by the originator
(Advanta Business Services with respect to the Contracts) and the originator
bills the User and collects payments in its own name.
For some select vendor and broker programs, Advanta Business Services bills
and collects payments in the vendor's name or the broker's name so that the User
is not aware that Advanta Business Services is a party to the transaction. Under
this program, once a contract becomes 60-90 days past due, Advanta Business
Services is then immediately identified to the User.
Vendors or brokers may choose to use Advanta Business Services's standard
contract or they may use their own contract. In either case, the credit approval
remains with Advanta Business Services. Contract documents for all programs are
either identical to Advanta Business Services' standard lease documents or are
reviewed by the legal staff of Advanta Business Services to insure substantial
compliance with its standard terms.
In instances where Advanta Business Services originated a Contract or
acquired a Contract but does not own the equipment, it has, in some cases,
obtained a perfected security interest in the Equipment.
Advanta Business Services also arranges purchases of contracts 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 are reviewed and
approved by the Advanta Business Services credit staff, using pre-determined
guidelines. For each potential bulk or portfolio purchase, Advanta Business
Services is able to accept or reject individual contracts.
CREDIT REVIEW
In connection with the origination or acquisition of contracts is prior to
October 1, 1998 and in connection with the origination services currently
performed for Advanta Bank Corp., Advanta Business Services performed and
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 application processing system called ACE. Applications can be
entered into ACE either internally or externally. A customized credit scoring
model is employed and the credit decision based on several criteria which may
include verification of a credit bureau report for the principal(s) of the
prospective obligor, verification of a Dunn & Bradstreet listing for the
company, and a review of the total dollar amount of exposure for all contracts
the obligor has outstanding with Advanta Business Services, which may not exceed
a specified 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 range in the model. For those credit applications not falling
within a specified dollar amount and/or credit score, the decision is based on
an analysis by the credit staff utilizing criteria developed by Advanta Business
Services. Authority to make credit decisions is based on seniority and the
lending experience of the credit personnel. In general, transactions in excess
of $500,000 must be approved by the senior management. The overall credit due
diligence process is support by a comprehensive set of policies and procedures
that outline the company's credit processes and philosophies.
Advanta Business Services'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 establishes the credit
polices and procedures throughout the company.
18
<PAGE> 22
In addition, the credit department has 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, Advanta Business Services considers, among other things,
length of time in business, bank, credit and trade references, Dunn & Bradstreet
reports, and credit bureau reports on all of the officers of the vendor being
reviewed.
COLLECTION/SERVICING
Collection activities with respect to delinquent contracts are performed by
Advanta Business Services'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 twenty days past due. All
collection activity is entered into Advanta Business Services's computerized
collection system. Collectors input activity notes (i.e., notes summarizing
recent collection activities) directly into the collection system, which enables
company personnel to monitor the status of the account and take any necessary
actions. Collectors have the latest status and collection history on each
account available on their computer terminals.
If a contract is delinquent the following action is taken:
-- If a payment has not been received by the third day after the due
date, the system automatically generates a computerized late notice which
is sent directly to the User (except for the select vendor programs where
the User does not recognize Advanta Business Services as a party to the
transaction, in those situations the vendor is notified).
-- If a payment has not been received by the 15th day after the due
date, a past due letter is sent out to the User (except for the select
vendor programs where the User does not recognize Advanta Business Services
as a party to the transaction, in those situations, the vendor is
notified).
-- If a payment has not been received by the 31st day after the due
date, a default letter is sent out to the User (except for the select
vendor programs where the obligor does not recognize Advanta Business
Services as a party to the transaction, in those situations, the vendor is
notified).
-- If a payment has not been received by the 61st day after the due
date, a demand letter is sent out directly to the User.
Telephone contact is continued throughout the delinquency period. If the
transaction continues to be delinquent, Advanta Business Services 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 and the current
financial strength of the User.
If collection activities do not rectify the account, Advanta Business
Services typically charges off the account at 121 days past due. An account may
be charged off prior to 121 days by Advanta Business Services if it is
determined that there will be no further payments made.
At the time of charge-off, the account is turned over to Advanta Business
Services's in-house litigation department for suit purposes. In general, a
decision is made whether to pursue the obligor and/or personal guarantor through
litigation. All third party collection agency assignments are made via the
collection department in order to enforce the original terms of the contract
should an account not be suit worthy. The litigation decision is dependent on a
review of the account including credit bureau reports, obligor payment history,
and/or Dunn & Bradstreet reports.
In cases where the User filed for bankruptcy, the Advanta Business Services
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 obligors 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 department cannot settle with the
non-bankrupt obligors, the file may be passed to the litigators for suit. In
many cases, although the User has filed for bankruptcy protection from its
creditors, it continues to make regular payments on its contract to Advanta
Business Services.
19
<PAGE> 23
RESIDUAL VALUES
Advanta Business Services has realized residual values which, on average,
exceeded the booked residual values for the contracts. For contracts in which
there is a pre-determined buy-out price, the buy-out price is the residual value
recorded on Advanta Business Services's books. In the event the equipment is
returned, Advanta Business Services utilizes the services of its vendors and
brokers and also participates in an active secondary market for the sale of this
returned, used equipment.
YEAR 2000
With the approach of the Year 2000, Advanta Business Services as Originator
and Servicer is actively managing the Year 2000 issue. The Year 2000 issue
results from computer programs, which use two digits, rather than four digits to
define a year. Advanta Business Services has instituted a corporate-wide effort
to address and resolve the system/application tasks associated with Year 2000.
In the event that the project plans are not timely or successfully completed,
there can be no assurance that the Year 2000 issue will not have a material
adverse effect on the operations of the Originator and Servicer, including a
shut down of operations for a period of time, which may, in turn, have a
material adverse effect on the Offered Notes.
Advanta Business Services is also in the process of reviewing its exposure
to Year 2000 issues resulting from third party vendors and brokers from whom it
purchases equipment leases, and outside service providers' computer systems.
Advanta Business Services, and its parent Advanta Corp., are in the process of
contacting outside service providers regarding the state of their remediation
activities for material Year 2000 issues. There can be no assurance that the
systems used by outside service providers or other third parties upon which
Advanta Business Services's systems rely, will be timely converted and compliant
with Year 2000 issues.
MATTERS RELATED TO ADVANTA CORP.
On January 22, 1999 Fleet Financial Group, Inc. and some of its affiliates
("FLEET") filed a lawsuit (the "COMPLAINT") against Advanta Corp. and some of
its subsidiaries relating to the transaction with Fleet which closed on February
20, 1998 in which Advanta Corp. contributed substantially all of its consumer
credit card business to a limited liability company owned by Fleet (the "FLEET
TRANSACTION"). The Complaint centers around post-closing adjustments and other
matters relating to the Fleet Transaction.
Advanta Corp. has filed an answer to the Complaint denying the material
allegations of the Complaint. Advanta Corp. also has filed a countersuit against
Fleet seeking damages from Fleet. Advanta Corp. does not expect this suit to
have any material adverse effect on the financial position or future operating
results of Advanta Corp.
This Prospectus contains forward-looking statements that are subject to
risks and uncertainties that could cause actual results to differ materially
from those projected. The most significant among these risks and uncertainties
is the uncertainty of the legal process. Additional risks that may affect
Advanta Corp.'s performance are detailed in Advanta Corp.'s filings with the
SEC, including its most recent Annual Report on Form 10-K and its Quarterly
Reports on Form 10-Q.
The ability of Advanta Corp.'s subsidiaries to honor their financial and
other obligations is to some extent influenced by the financial condition of
Advanta Corp. Those obligations, insofar as they relate to the Trust Estate and
the Offered Notes, primarily consist of Advanta Business Service's obligation to
repurchase Contracts which are inconsistent with representations and warranties
set forth in the Contribution Agreement as well as the obligations of the
Servicer pursuant to the Master Agreement. To the extent that the Servicer's
ability to perform its functions and obligations is adversely affected, the
Contracts may experience an increased level of delinquencies and losses.
20
<PAGE> 24
MODIFICATIONS AND SALE AND RE-LEASING OF ASSETS
The Servicer has the right to modify the payment terms of the Contracts,
provided the Contract, as modified, (i) has a Contract Principal Balance not
lower than the Contract Principal Balance of the Contract prior to the
modification and (ii) does not have a maturity date later than the maturity date
of the Contract then pledged to the Trustee that has the latest maturity date of
all the Contracts then included in the Trust Estate. See "Description of the
Notes -- Remittance and Other Servicing Procedures" for a description of
additional provisions regarding modifications.
Upon repossession and disposition of any Equipment subject to a Defaulted
Contract, any deficiency remaining will be pursued to the extent deemed
practicable by the Servicer. The Servicer is directed to maximize the residual
value of the Equipment relating to any Defaulted Contract (the "NET RESIDUAL
VALUE"), and, to do so, the Servicer may sell the Equipment at the best
available price, refurbish the Equipment and re-lease or sell the Equipment to
third parties, or take any other commercially reasonable steps to maximize the
Equipment's Net Residual Value. Residual Receipts with respect to a Defaulted
Contract, including any future payments received for Defaulted Contracts, shall
be paid to the Collection Account as Available Funds. If the Servicer reasonably
believes that the Net Residual Value of any Equipment is zero or de minimis, it
will dispose of the Equipment in accordance with its standard procedures.
With respect to Contracts which are Charged-Off Contracts, at the request
of the Issuers, the Trustee shall release the lien of the Indenture with respect
to the Charged-Off Contracts and the Issuers may sell the Contracts provided
that any proceeds of the sale of Charged-Off Contracts shall be treated as
Recoveries and deposited into the Collection Account as Available Funds.
STATISTICAL INFORMATION
The statistical information presented in this Prospectus concerning the
Contracts reflects the portfolio of Contracts as of the opening of business on
, 1999 (the "STATISTICAL CALCULATION DATE"), and has been
calculated using an assumed discount rate of % per year (the "STATISTICAL
DISCOUNT RATE"). The Aggregate Contract Principal Balance of the Contracts as of
the Statistical Calculation Date is $ using the Statistical Discount
Rate. The Aggregate Contract Principal Balance of the Contracts as of the
Cut-Off Date is $ using the Applicable Discount Rate. The "APPLICABLE
DISCOUNT RATE" is %, which is the [sum of (i) the weighted average (as of
the Closing Date) of the Class A Interest Rate, the Class B Interest Rate and
the Class C Interest Rate and (ii) the Servicer Fee Percentage.]
The statistical distribution of the characteristics of the Contracts as of
the Cut-Off Date using the Applicable Discount Rate may vary somewhat from the
statistical distribution of the characteristics of the Contracts as of the
Statistical Calculation Date using the Statistical Discount Rate as presented in
this Prospectus, due to the fact that some Contracts reflected in the
statistical information presented herein may have had payments made in respect
thereof or may be determined not to meet the eligibility requirements for the
final pool and also due to the fact that, during the period from the Statistical
Calculation Date to the Cut-Off Date, some contracts may have been added to the
Contracts. The variance in the characteristics of the final pool will not be
greater than 5% (plus or minus) compared to the characteristics that are
described in this Prospectus, based upon the Aggregate Contract Principal
Balance. The statistical characterization of the final pool will be filed with
the Commission on a current report on Form 8-K.
As used in the tables below, the "ORIGINAL STATISTICAL AGGREGATE CONTRACT
PRINCIPAL BALANCE" is the aggregate of the Contract Principal Balances of the
related Contracts, calculated as of the Statistical Calculation Date using the
Statistical Discount Rate. Unless otherwise noted, all calculations of Contract
Principal Balances with respect to the Contracts and all statistical percentages
in this Prospectus are measured by the Original Statistical Aggregate Contract
Principal Balance. Furthermore, in all instances in this Prospectus where the
Statistical Discount Rate is used to calculate the Contract Principal Balances,
the calculation is performed by discounts related to Scheduled Payments at the
same frequency as the payment interval of the related Contract.
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<PAGE> 25
Following is statistical information relating to the Contracts, calculated
as of the Statistical Calculation Date.
DISTRIBUTION OF CONTRACTS BY STATE
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF ORIGINAL STATISTICAL ORIGINAL STATISTICAL
NUMBER OF NUMBER OF AGGREGATE CONTRACT AGGREGATE CONTRACT
STATE CONTRACTS CONTRACTS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ----- --------- ------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Alabama.......................... % $
Alaska........................... % %
Arizona.......................... % %
Arkansas......................... % %
California....................... % %
Colorado......................... % %
Delaware......................... % %
District of Columbia............. % %
Florida.......................... % %
Georgia.......................... % %
Hawaii........................... % %
Idaho............................ % %
Illinois......................... % %
Indiana.......................... % %
Iowa............................. % %
Kansas........................... % %
Kentucky......................... % %
Louisiana........................ % %
Maine............................ % %
Maryland......................... % %
Massachusetts.................... % %
Michigan......................... % %
Minnesota........................ % %
Mississippi...................... % %
Missouri......................... % %
Montana.......................... % %
Nebraska......................... % %
Nevada........................... % %
New Hampshire.................... % %
New Jersey....................... % %
New Mexico....................... % %
New York......................... % %
North Carolina................... % %
North Dakota..................... % %
Ohio............................. % %
Oklahoma......................... % %
Oregon........................... % %
Pennsylvania..................... % %
Rhode Island..................... % %
South Carolina................... % %
South Dakota..................... % %
Tennessee........................ % %
Texas............................ % %
Utah............................. % %
Vermont.......................... % %
Virgin Islands................... % %
Virginia......................... % %
Washington....................... % %
West Virginia.................... % %
Wisconsin........................ % %
Wyoming.......................... % %
------- ----- ---------- -----
Total....................... % $ %
======= ===== ========== =====
</TABLE>
22
<PAGE> 26
DISTRIBUTION OF CONTRACTS BY CONTRACT PRINCIPAL BALANCE
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF ORIGINAL STATISTICAL ORIGINAL STATISTICAL
NUMBER OF NUMBER OF AGGREGATE CONTRACT AGGREGATE CONTRACT
CONTRACT PRINCIPAL BALANCE CONTRACTS CONTRACTS PRINCIPAL BALANCE OF PRINCIPAL BALANCE
- -------------------------- --------- ------------- -------------------- --------------------
<S> <C> <C> <C> <C>
$ 0.00 -- $ 5,000.00....... % %
$ 5,000.01 -- $ 10,000.00.......
$ 10,000.01 -- $ 15,000.00.......
$ 15,000.01 -- $ 20,000.00.......
$ 20,000.01 -- $ 25,000.00.......
$ 25,000.01 -- $ 30,000.00.......
$ 30,000.01 -- $ 35,000.00.......
$ 35,000.01 -- $ 40,000.00.......
$ 40,000.01 -- $ 45,000.00.......
$ 45,000.01 -- $ 50,000.00.......
$ 50,000.01 -- $ 60,000.00.......
$ 60,000.01 -- $ 70,000.00.......
$ 70,000.01 -- $ 80,000.00.......
$ 80,000.01 -- $ 90,000.00.......
$ 90,000.01 -- $100,000.00.......
$100,000.01 -- $125,000.00.......
$125,000.01 -- $150,000.00.......
$150,000.01 -- $175,000.00.......
$175,000.01 -- $200,000.00.......
Greater than $200,000.01.........
------- ----- ---------- -----
Total....................... % %
======= ===== ========== =====
</TABLE>
DISTRIBUTION OF CONTRACTS BY
REMAINING MONTHS TO STATED MATURITY
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE ORIGINAL STATISTICAL ORIGINAL STATISTICAL
NUMBER OF OF NUMBER AGGREGATE CONTRACT AGGREGATE CONTRACT
REMAINING TERM (MONTHS) CONTRACTS OF CONTRACTS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ----------------------- --------- ------------- -------------------- --------------------
<S> <C> <C> <C> <C>
0 -- 12......................... % $ %
13 -- 24.........................
25 -- 36.........................
37 -- 48.........................
49 -- 60.........................
61 -- 72.........................
73 -- 84.........................
------- ----- ---------- -----
Total....................... % $ %
======= ===== ========== =====
</TABLE>
23
<PAGE> 27
DISTRIBUTION OF CONTRACTS BY EQUIPMENT TYPE
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF ORIGINAL STATISTICAL ORIGINAL STATISTICAL
NUMBER OF NUMBER OF AGGREGATE CONTRACT AGGREGATE CONTRACT
EQUIPMENT DESCRIPTION CONTRACTS CONTRACTS PRINCIPAL BALANCE PRINCIPAL BALANCE
- --------------------- --------- ------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Agriculture Equipment.............. % %
Amusement..........................
Audio/Video Equipment..............
Automotive Equipment...............
Cleaning/Laundry Equipment.........
Communications.....................
Computers/Software.................
Furniture..........................
Health/Fitness.....................
Landscaping Equipment..............
Mailing Machines & Equipment.......
Measuring Equipment................
Medical Equipment..................
Mobile Communications..............
Office Machines....................
Packaging Equipment................
Photography Equipment..............
Printing Press/Type Setter.........
Refrigerators/Restaurants..........
Retail Business Equipment..........
Security/Alarm Equipment...........
Security Equipment.................
Sewing and Embroidery..............
Stenograph/Court Reporters.........
Vending Equipment..................
Water Coolers......................
Woodworking Equipment..............
Other..............................
-------- ------ -------- -----
Total......................... % %
======== ====== ======== =====
</TABLE>
No more than % of the Original Statistical Aggregate Contract
Principal Balance is attributable to any one User (including affiliates of the
User), and the average Contract Principal Balance is $ .
SERVICING PORTFOLIO DELINQUENCY AND DEFAULT INFORMATION
The following delinquency and default information relates to all equipment
financing contracts serviced by Advanta Business Services for the periods shown.
The information subsequent to October 1, 1998 includes equipment financing
contracts originated by Advanta Bank Corp. and serviced by Advanta Business
Services.
HISTORICAL DELINQUENCY INFORMATION
Delinquency information for all equipment financing contracts in the
Servicer's servicing portfolio is set forth below.
24
<PAGE> 28
HISTORICAL DELINQUENCY EXPERIENCE -- SERVICING PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF
---------------------------------------------------------------------------------------
MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Receivables
Balance(1)......... $755,437 $718,418 $674,570 $614,828 $460,224
No. of Delinquent
Days
31-60 Days........... 36,542 4.84% 36,522 5.08% 31,226 4.63% 34,521 5.61% 24,481 5.32%
61-90 Days........... 12,322 1.63 14,172 1.97 11,920 1.77 9,705 1.58 5,890 1.28
91 Days or more...... 9,952 1.32 9,462 1.32 9,189 1.36 6,702 1.09 4,828 1.05
-------- ---- -------- ---- -------- ---- -------- ---- -------- ----
Total Delinquency.... $ 58,816 7.79% $ 60,156 8.37% $ 52,335 7.76% $ 50,928 8.28% $ 35,199 7.65%
======== ==== ======== ==== ======== ==== ======== ==== ======== ====
</TABLE>
- ---------------
(1) The Total Receivables Balance is equal to the aggregate future payments
owing on all equipment financing contracts in the Servicer's servicing
portfolio.
HISTORICAL DEFAULT EXPERIENCE
Loss information for all equipment financing contracts in the Servicer's
servicing portfolio is set forth below.
HISTORICAL LOSS EXPERIENCE -- SERVICING PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED YEAR ENDED
------------- ---------------------------------------------------------
MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995
------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Average Receivables
Outstanding(1)............ $740,944 $676,817 $652,607 $551,645 $394,910
Net Losses.................. $ 4,926 $ 16,217 $ 15,293 $ 10,356 $ 6,320
Net Losses as a Percentage
of Average Receivables.... 2.66%(2) 2.40% 2.34% 1.88% 1.60%
</TABLE>
- ---------------
(1) Equals the arithmetic average of each month's Receivable Balance within the
period specified. The Receivable Balance is equal to the aggregate future
payments owing on all equipment financing contracts in the Servicer's
servicing portfolio.
(2) Annualized.
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the Indenture and the Series
Supplement. The Notes will be available only in book-entry form. See
"Description of the Notes -- Book-Entry Registration." The holders of the Notes
(the "HOLDERS") are those entities registered as the owner of a Note or Notes on
the registration books maintained by the Trustee.
PAYMENT DATES, BUSINESS DAYS AND STATED MATURITY DATE
Payments of principal and interest on the Notes will be made on the 15th
day of each month (or if the 15th day is not a Business Day, the next succeeding
Business Day), beginning on , 1999 (each, a "PAYMENT DATE"), to
holders of record on the last day of the immediately preceding calendar month
(each,
25
<PAGE> 29
a "RECORD DATE"). The Indenture defines a "BUSINESS DAY" to be any day other
than a Saturday, a Sunday or a day on which banks 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. The
stated maturity date with respect to the Notes will be the Payment Date in
(the "STATED MATURITY DATE"). However, if all payments on the
Contracts are made as scheduled, final payment with respect to the Notes would
occur prior to the Stated Maturity Date. The Issuers expect that the Notes will
be paid prior to the Stated Maturity Date.
DETERMINATION DATE AND COLLECTION PERIODS
On the third Business Day prior to each Payment Date (each, a
"DETERMINATION DATE"), the Servicer will determine the amount of payments
received on the Contracts in respect of the immediately preceding calendar month
(each calendar month, a "COLLECTION PERIOD") which will be available for
distribution on the Payment Date.
INTEREST PAYMENTS
On each Payment Date, the interest due (the "INTEREST PAYMENTS") on each
Class of Notes will be the interest that has accrued on those Notes since the
last Payment Date, or in the case of the , 1999 Payment Date, since
the Closing Date (each an "INTEREST ACCRUAL PERIOD") at the applicable Interest
Rate applied to the then unpaid principal amounts (the "OUTSTANDING PRINCIPAL
BALANCE") of the Notes of each Class, after giving effect to payments of
principal on the preceding Payment Date (the amount for the Class A Notes, the
"CLASS A NOTE INTEREST," for the Class B Notes, the "CLASS B NOTE INTEREST," and
for the Class C Notes, the "CLASS C NOTE INTEREST"). In addition, on each
Payment Date, any Interest Payment shortfalls for any prior Payment Date shall
be due to Noteholders (the Interest Payment shortfalls on the Class A Notes, the
"CLASS A OVERDUE INTEREST," the Class B Notes, the "CLASS B OVERDUE INTEREST"
and the Class C Notes, "CLASS C OVERDUE INTEREST").
PRINCIPAL PAYMENTS
Principal payments on the Notes will begin , 1999.
For each Payment Date, the Notes of each Class will be entitled to receive
payments of principal ("PRINCIPAL PAYMENTS"), to the extent funds are available
therefor, in the priorities set forth in the Indenture and described herein
below and under "Description of the Notes -- Flow of Funds" in this Prospectus.
On each Payment Date to the extent funds are available therefor, the
principal will be paid to the Noteholders in the following priority:
(a) to the Class A Noteholders, the Class A Principal Payment until the
Outstanding Principal Balance on the Class A Notes has been reduced to
zero,
(b) to the Class B Noteholders, the Class B Principal Payment until the
Outstanding Principal Balance on the Class B Notes has been reduced to
zero,
(c) to the Class C Noteholders, the Class C Principal Payment until the
Outstanding Principal Balance of the Class C Notes has been reduced to
zero, and
(d) following the funding of the Reserve Account to its required amount, to
the Class D Noteholders, the Class D Principal Payment until the
Outstanding Principal Balance on the Class D Notes has been reduced to
zero.
In addition, on each Payment Date, any Principal Payment shortfalls for any
prior Payment Date shall be due to the related Noteholders (Principal Payment
shortfalls on the Class A Notes, the "CLASS A OVERDUE PRINCIPAL," the Class B
Notes, the "CLASS B OVERDUE PRINCIPAL," the Class C Notes, the "CLASS C OVERDUE
PRINCIPAL" and the Class D Notes, the "CLASS D OVERDUE PRINCIPAL").
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The "CLASS A PRINCIPAL PAYMENT" is, for any Payment Date, [the Class A
Percentage of the positive difference between the Aggregate Contract Principal
Balance as of the Calculation Date in second preceding month and the Aggregate
Contract Principal Balance as of the Calculation Date for the current Payment
Date.]
The "CLASS B PRINCIPAL PAYMENT" is, for any Payment Date, [the Class B
Percentage of the positive difference between the Aggregate Contract Principal
Balance as of the Calculation Date in the second preceding month and the
Aggregate Contract Principal Balance as of the Calculation Date for the current
Payment Date.]
The "CLASS C PRINCIPAL PAYMENT" is, for any Payment Date, [the Class C
Percentage of the positive difference between the Aggregate Contract Principal
Balance as of the Calculation Date in the second preceding month and the
Aggregate Contract Principal Balance as of the Calculation Date for the current
Payment Date.]
The "CLASS D PRINCIPAL PAYMENT" is, for any Payment Date [the Class D
Percentage of the positive difference between the Aggregate Contract Principal
Balance as of the Calculation Date in the second preceding month and the
Aggregate Contract Principal Balance as of the Calculation Date for the current
Payment Date or, if all Offered Notes have been paid in full, the entire
positive difference between the Aggregate Contract Principal Balance as of the
Calculation Date in the second preceding month and the Aggregate Contract
Principal Balance as of the Calculation Date for the current Payment Date.]
The "CLASS A PERCENTAGE" means a fraction, expressed as a percentage, of
the Class A Initial Principal Balance divided by the Original Aggregate Contract
Principal Balance and being %.
The "CLASS B PERCENTAGE" means a fraction, expressed as a percentage, of
the Class B Initial Principal Balance divided by the Original Aggregate Contract
Principal Balance and being %.
The "CLASS C PERCENTAGE" means a fraction, expressed as a percentage, of
the Class C Initial Principal Balance divided by the Original Aggregate Contract
Principal Balance and being %.
The "CLASS D PERCENTAGE" means a fraction, expressed as a percentage, of
the Class D Initial Principal Balance divided by the Original Aggregate Contract
Principal Balance and being %.
The outstanding Class A Note principal balance for any Payment Date shall
be equal to the Class A Initial Principal Balance being the sum of
$ less any Class A Principal Payments previously made on the Class A
Notes (the "CLASS A PRINCIPAL BALANCE"); the outstanding Class B Note principal
balance for any Payment Date shall be equal to the Class B Initial Principal
Balance being the sum of $ less any Class B Principal Payments
previously made on the Class B Notes (the "CLASS B PRINCIPAL BALANCE"); the
outstanding Class C Note principal balance for any Payment Date shall be equal
to the Class C Initial Principal Balance being the sum of $ less any
Class C Principal Payments previously made on the Class C Notes (the "CLASS C
PRINCIPAL BALANCE"); the outstanding Class D Note principal balance for any
Payment Date shall be equal to the Class D Initial Principal Balance being the
sum of $ less any Class D Principal Payments previously made on the
Class D Notes (the "CLASS D PRINCIPAL BALANCE").
The "CALCULATION DATE" for a Collection Period is the close of business on
the last day of that Collection Period. Contract Principal Balances for a
Payment Date shall be calculated as of the related Calculation Date.
DEFINITIVE NOTES
The Offered Notes will be issued in fully registered, authenticated form to
Beneficial Owners or their nominees (the "DEFINITIVE NOTES"), rather than to DTC
or its nominee, only if (a) the Issuers advise the Trustee in writing that DTC
is no longer willing or able to discharge properly its responsibilities as
Depository, and the Trustee or the Issuers are unable to locate a qualified
successor or (b) the Issuers at their option elect to terminate the book-entry
system through DTC.
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Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee is required to notify all Beneficial Owners
through DTC of the availability of Definitive Notes. Upon surrender by DTC of
the Definitive Note representing the Notes and instructions for reregistration,
the Trustee will issue the Definitive Notes, and thereafter the Trustee will
recognize the holders of the Definitive Notes as Holders under the Indenture.
The Trustee will also notify the Holders of any adjustment to the Record Date
necessary to enable the Trustee to make distributions to Holders of the
Definitive Notes.
Additionally, upon the occurrence of any event described above,
distribution of principal of and interest on the Offered Notes will be made by
the Trustee directly to the Holders in accordance with the procedures set forth
herein and in the Indenture. Distributions will be made by check, mailed to the
address of such Holder as it appears on the Note register. Upon at least 10 days
notice to Holders of the Class, however, the final payment on any Note (whether
the Definitive Notes or the Note for the Class registered in the name of Cede
representing the Notes of the Class) will be made only upon presentation and
surrender of the Note at the office or agency specified in the notice of final
distribution to the Holders.
Definitive Notes of each Class will be transferable and exchangeable at the
offices of the Trustee or its agent in New York, New York, which the Trustee
shall designate on or prior to the issuance of any Definitive Notes. No service
charge will be imposed for any registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith.
BOOK-ENTRY REGISTRATION
The Beneficial Owners of the Class A, Class B and Class C Notes may hold
their interests through DTC (in the United States) or Cedelbank or Euroclear (in
Europe) if they are participants of such systems, or indirectly through
organizations that are participants in the systems.
Cede, as nominee for DTC, will be the registered holder of the global
Offered Notes of each Class. Cedelbank and Euroclear will hold omnibus positions
on behalf of Cedelbank Customers and Euroclear Participants, respectively,
through customers' securities accounts in Cedelbank's and Euroclear's names on
the books of their respective Depositaries (the "DEPOSITARIES"), which in turn
will hold the 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 Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its participating
organizations ("PARTICIPANTS") and facilitate the clearance and settlement of
securities transactions between Participants through electronic book-entry
changes in accounts of its Participants, thereby eliminating the need for
physical movement of notes. Participants include securities brokers and dealers
(who may include the underwriters of any Series), banks, trust companies and
clearing corporations and may include other organizations. 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").
DTC management is aware that some computer applications and systems used
for processing data were written using two digits rather than four to define the
applicable year, and therefore may not recognize a date using "00" as the Year
2000. This could result in the inability of these systems to properly process
transactions with dates in the Year 2000 and thereafter. DTC has developed and
is implementing a program to address this problem so that its applications and
systems relating to the payment of distributions (including principal and income
payments) to securityholders, book-entry deliveries and settlement of trades
within DTC continue to function properly. This program includes a technical
assessment and a remediation plan, each of which is complete. DTC plans to
implement a testing phase of this program which is expected to be completed
within appropriate time frames.
In addition, DTC is contacting (and will continue to contact) third party
vendors that provide services to DTC to determine the extent of their Year 2000
compliance, and DTC will develop contingency plans as it
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<PAGE> 32
deems appropriate to address failures in Year 2000 compliance on the part of
third party vendors. However, there can be no assurance that the systems of
third party vendors will be timely converted and will not adversely affect the
proper functioning of DTC's services.
THE INFORMATION SET FORTH IN THE PRECEDING TWO PARAGRAPHS HAS BEEN PROVIDED
BY DTC FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INTENDED TO SERVE AS A
REPRESENTATION, WARRANTY OR CONTRACT MODIFICATION OF ANY KIND. THE ISSUERS MAKE
NO REPRESENTATION AS TO THE ACCURACY OR COMPLETENESS OF THAT INFORMATION.
Transfers between Participants will occur in the ordinary way in accordance
with DTC rules. Transfers between Cedelbank Customers (as defined herein) and
Euroclear Participants (as defined herein) will occur in the ordinary way in
accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedelbank
Customers or Euroclear Participants, on the other, will be effected through DTC
in accordance with DTC rules on behalf of the relevant European international
clearing systems by its Depositary. Cross-market transactions will require
delivery of instructions to the relevant European international clearing system
by the counterparty in the 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. Cedelbank Customers and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities received in
Cedelbank or Euroclear as a result of a transaction with a participant will be
made during subsequent securities settlement processing and dated the business
day following the DTC settlement date. The credits or any transactions in the
securities settled during processing will be reported to the relevant Euroclear
Participants or Cedelbank Customers on that business day. Cash received in
Cedelbank or Euroclear as a result of sales of securities by or through a
Cedelbank Customer 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 Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC. For information on tax documentation procedures
relating to the Offered Notes, see "Federal Income Tax Consequences."
Beneficial Owners of the Offered Notes that are not Participants or
Indirect Participants but desire to purchase, sell or otherwise transfer
ownership of, or other interests in, Offered Notes may do so only through
Participants and Indirect Participants. In addition, Beneficial Owners will
receive all distributions of principal of and interest on the Offered Notes from
the Paying Agent or the Trustee through DTC and its Participants. Under a
book-entry format, Beneficial Owners may experience some delay in their receipt
of payments, since the payments will be forwarded by the Trustee to Cede, as
nominee for DTC. DTC will forward the payments to its Participants which
thereafter will forward them to Indirect Participants or holders of beneficial
interests in the Offered Notes. It is anticipated that the only Holder will be
Cede, as nominee of DTC, and that holders of beneficial interests in the Offered
Noteholders, under the Indenture will only be permitted to exercise the rights
of Holders, under the Indenture indirectly through DTC and its Participants who
in turn will exercise their rights through DTC.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among Participants
on whose behalf it acts with respect to the Offered Notes and is required to
receive and transmit distributions of principal of and interest on the Offered
Notes. Participants and Indirect Participants with which holders of beneficial
interests in the Offered Notes have accounts similarly are required to make
book-entry transfers and receive and transmit the payments on behalf of these
respective holders. Accordingly, although Beneficial Owners will not possess
Offered Notes, Beneficial Owners 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 some banks, the ability of holders of
beneficial interests in the Offered Notes to pledge Offered Notes to
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persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of the Offered Notes, may be limited due to the lack of a
Definitive Note for the Offered Notes.
DTC has advised the Issuers that it will take any action permitted to be
taken by a Holder under the Indenture only at the direction of one or more
Participants to whose account with DTC the Offered Notes are credited.
Additionally, DTC has advised the Issuers that it will take actions with respect
to specified percentages of the Holders' only at the direction of and on behalf
of Participants whose holdings include undivided interests that satisfy the
specified percentages. DTC may take conflicting actions with respect to other
undivided interests to the extent that actions are taken on behalf of
Participants whose holdings included the undivided interest.
Cedelbank, societe anonyme ("CEDELBANK"), is incorporated under the laws of
Luxembourg as a professional depository. Cedelbank holds securities for its
participating organizations ("CEDELBANK CUSTOMERS") and facilitates the
clearance and settlement of securities transactions between Cedelbank Customers
through electronic book-entry changes in accounts of Cedelbank Customers,
thereby eliminating the need for physical movement of certificates. Transactions
may be settled in Cedelbank in any of 28 currencies, including United States
dollars. Cedelbank provides to Cedelbank Customers, among other things, services
for safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Cedelbank interfaces
with domestic markets in several countries. As a registered bank in Luxembourg,
Cedelbank is subject to regulation by the Luxembourg Commission for the
Supervision of the Financial Sector. Cedelbank Customers are world-wide
financial institutions, including underwriters, securities brokers and dealers,
banks, trust companies, clearing corporations and other organizations and may
include the underwriters of any Series of Offered Notes. Indirect access to
Cedelbank is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Cedelbank Customer, 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 27 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. The Euroclear System is operated by the Brussels, Belgium
office of Morgan Guaranty Trust Company of New York (the "EUROCLEAR OPERATOR" or
"EUROCLEAR"), under contract with Euroclear Clearance System S.C., a Belgian
cooperative corporation (the "COOPERATIVE"). All operations are conducted by the
Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for the Euroclear System on
behalf of Euroclear Participants. Euroclear Participants include banks
(including central banks), securities brokers and dealers and other professional
financial intermediaries and may include any underwriters, agents or dealers
with respect to a Series of Offered Notes offered hereby. Indirect access to the
Euroclear System is also available to other firms that clear through or maintain
a custodial relationship with a Euroclear Participant, either directly or
indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. It is,
therefore, 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, withdrawals 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
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securities clearance accounts. The Euroclear Operator acts under the Terms and
Conditions only on behalf of Euroclear Participants, and has no record of or
relationship with persons holding through Euroclear Participants.
Distributions with respect to Offered Notes held through Cedelbank or
Euroclear will be credited to the cash accounts of Cedelbank Customers or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. The distributions will be
subject to tax reporting in accordance with relevant United States tax laws and
regulations. See "Federal Income Tax Consequences." Cedelbank or the Euroclear
Operator, as the case may be, will take any other action permitted to be taken
by a Holder, under the Indenture on behalf of a Cedelbank Customer or Euroclear
Participant only in accordance with its relevant rules and procedures and
subject to its Depositary's ability to effect the actions on its behalf through
DTC.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Offered Notes among participants
of DTC, Cedelbank and Euroclear, they are under no obligation to perform or
continue to perform those procedures and the procedures may be discontinued at
any time.
FLOW OF FUNDS
The Indenture will require that the Trustee establish an account (the
"COLLECTION ACCOUNT") and that the Servicer deposit to the Collection Account
(or the Advance Payment Account, as described herein), all collections or
receipts received by the Servicer on the Contracts no later than two Business
Days following the Servicer's determination that the amounts relate to the
Contracts or the Equipment.
Under the terms of the Indenture, "AVAILABLE FUNDS" for a Payment Date
means (i) amounts collected during the immediately preceding Collection Period
for the Contracts and the Equipment, including, without limitation, Scheduled
Payments, Final Contract Payments, Defaulted Residual Receipts, Recoveries from
the sale of Charged-Off Contracts, Residual Receipts (but only if the Residual
Cap Amount has not yet been reached), Prepayment Amounts, and investment
earnings on each of the Accounts, plus (ii) amounts transferred from the Reserve
Account and/or the Residual Account for that Payment Date and deposited in the
Collection Account.
On each Payment Date, the Trustee will be required to make the following
payments from the Available Funds for that Payment Date, in the following order
of priority:
(i) to the Servicer, any Servicer Advances which the Servicer has
determined it will not be able to recover;
(ii) to the Servicer, the Servicer Fee then due, together with
miscellaneous amounts which revert to the Servicer in consideration of the
servicing function performed by the Servicer such as late fees and
insufficient funds charges;
(iii) to the Class A Noteholders, the Class A Note Interest and Class
A Overdue Interest for the related Interest Accrual Period;
(iv) to the Class B Noteholders, the Class B Note Interest and the
Class B Overdue Interest for the related Interest Accrual Period;
(v) to the Class C Noteholders, the Class C Note Interest and the
Class C Overdue Interest for the related Interest Accrual Period;
(vi) until the Class A Principal Amount has been reduced to zero, to
the Class A Noteholders, the Class A Principal Payment and the Class A
Overdue Principal;
(vii) until the Class B Principal Balance has been reduced to zero, to
the Class B Noteholders, the Class B Principal Payment and the Class B
Overdue Principal;
(viii) until the Class C Principal Balance has been reduced to zero,
to the Class C Noteholders, the Class C Principal Payment and the Class C
Overdue Principal;
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(ix) to the Reserve Account, the amount needed to increase the amount
in the Reserve Account to the Required Reserve Amount for that Payment
Date;
(x) upon the occurrence and continuance of a Residual Event, the
lesser of (A) the remaining Available Funds and (B) the aggregate amount of
Residual Receipts originally included in Available Funds for that Payment
Date will be deposited to the Residual Account;
(xi) to the Class D Noteholders, the Class D Principal Payment and the
Class D Overdue Principal; and
(xii) to the Issuers, as owner of the Pledged Assets, any remaining
Available Funds on deposit in the Collection Account (the "ISSUERS'
INTEREST").
Residual Receipts will be included in "Available Funds" only through the
Payment Date on which Residual Receipts on deposit in the Residual Account, or
withdrawn from the Residual Account as a result of a shortfall and used (without
duplication) since the Closing Date to cover amounts owing to the Offered
Noteholders and to the Servicer equals the Residual Cap Amount. Once the
Residual Cap Amount has been reached, Residual Receipts will no longer be
required to be remitted to the Trustee as "Available Funds," and will be
released to the Issuers free and clear of the lien of the Indenture (whether or
not a Residual Event is then in effect or occurs thereafter). See
"-- Application of Residual Receipts."
A "RESIDUAL EVENT" is defined in the Indenture as the occurrence of one or
more of the following: (a) the occurrence of an Event of Default; or (b) the
Cumulative Net Loss Percentage as of any Calculation Date occurring during the
following periods exceeds the "Loss Trigger Level Percentage" set forth below:
<TABLE>
<CAPTION>
LOSS TRIGGER
PERIOD LEVEL PERCENTAGE
- ------ ----------------
<S> <C>
First Collection Period through 12th Collection Period...... %
13th Collection Period through 24th Collection Period....... %
25th Collection Period and thereafter....................... %
</TABLE>
Notwithstanding the foregoing: the Residual Event referred to in clause (b)
may be cured if the Cumulative Net Loss Percentage, although it exceeds the
"Loss Trigger Level Percentage" in a prior period, is less than or equal to the
"Loss Trigger Level Percentage" in a subsequent period.
"CUMULATIVE NET LOSS PERCENTAGE" means, with respect to each Collection
Period, the percentage equivalent of a fraction, the numerator of which is the
excess of (x) the aggregate amount of the Contract Principal Balances of all
Contracts which become Charged-Off Contracts during all prior Collection Periods
over (y) the aggregate amount of all Defaulted Residual Receipts collected by
the Servicer with respect to those Collection Periods and the denominator of
which is the Initial Aggregate Contract Principal Balance.
OPTIONAL REDEMPTION
The Servicer will have the option to direct the redemption of all, but not
less than all, of the Notes of all Classes on any Payment Date on which the
Aggregate Contract Principal Balance as of the related Calculation Date is less
than or equal to 10% of the Initial Aggregate Contract Principal Balance. The
Servicer shall give notice of the redemption to the Trustee at least 30 days
before the Payment Date fixed for the prepayment. Upon deposit of funds
necessary to effect the redemption, the Trustee shall pay the Outstanding
Principal Balances of the Notes that were called for redemption and all accrued
and unpaid interest as of the Payment Date fixed for redemption.
SUBORDINATION PROVISIONS
A portion of the credit enhancement available for the benefit of the Class
A Noteholders is provided by the subordination of the Class B Notes, the Class C
Notes, the Class D Notes and the Issuers' Interest. A portion of the credit
enhancement available for the benefit of the Class B Noteholders is provided by
the subordination of the Class C Notes, the Class D Notes and the Issuers'
Interest. A portion of the credit
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enhancement available for the benefit of the Class C Noteholders is provided by
the subordination of the Class D Notes and by the Issuers' Interest.
The cash flow and subordination provisions of the Indenture provide that
Available Funds on each Payment Date will be used to fund payments to the
Noteholders (and to pay the fees and expenses of the Servicer) with each
subordinated class being paid only after more senior classes.
On each Payment Date, with respect to amounts due to the Offered
Noteholders, the Indenture requires that there be paid (after amounts needed to
reimburse Servicer Advances and to pay Servicer Fees), first, interest (together
with any overdue interest and interest thereon) to the Class A Noteholders;
second, interest (together with any overdue interest and interest thereon) to
the Class B Noteholders; third, interest (together with any overdue interest and
interest thereon) to the Class C Noteholders; fourth, principal to the Class A
Noteholders; fifth, principal to the Class B Noteholders; and sixth, principal
to the Class C Noteholders, as further described herein.
Through the operation of the "Class A Overdue Principal," "Class B Overdue
Principal," "Class C Overdue Principal" and "Class D Overdue Principal"
provisions, the Class A Noteholders, the Class B Noteholders, the Class C
Noteholders and the Class D Noteholders are entitled to receive any aggregate,
cumulative shortfalls of Class A Principal Amounts, Class B Principal Amounts,
Class C Principal Amounts or Class D Principal Amounts not paid on prior Payment
Dates.
DEFAULTED CONTRACTS
A "DEFAULTED CONTRACT" means any Contract (i) that is a Delinquent Contract
with respect to which a User is contractually delinquent for 121 days or more
(without regard to any Servicer Advances or the application of any security
deposit provided by the User) or (ii) as to which the Servicer has determined in
accordance with its customary servicing practices that eventual payment of the
remaining Scheduled Payments thereunder is unlikely or (iii) that has been
rejected by or on behalf of the User in a bankruptcy proceeding.
A Defaulted Contract has, by definition, a Contract Principal Balance of
zero; given the cashflow mechanics of the Indenture, the effect of assigning a
zero balance is to require that the Noteholders receive on the next Payment Date
an amount of principal equal to the Defaulted Contract's Contract Principal
Balance, calculated immediately prior to the Contract becoming a Defaulted
Contract. The Issuers may direct the Trustee to release the lien of the
Indenture on any Defaulted Contract and the Issuers may then sell the Contracts.
APPLICATION OF RESIDUAL RECEIPTS
The Trustee will establish and maintain an Eligible Account designated as
the Residual Account (the "RESIDUAL ACCOUNT"). If a Residual Event has occurred
and is continuing, then on each Payment Date, Residual Receipts shall be
deposited into the Collection Account and applied as Available Funds until the
aggregate, cumulative amount of Residual Receipts so applied since the Closing
Date (without duplication), equals $ (the "RESIDUAL CAP AMOUNT").
Actual Residual Receipts may be more or less than the residual value of the
Equipment recorded on the books of the Issuers (the "BOOKED RESIDUAL VALUE"). If
a Residual Event occurs and for so long as the Residual Event continues in
effect, on each Payment Date a deposit will be made into the Residual Account
from Available Funds in the priority set forth in item (x) above under the
caption "Description of the Notes -- Flow of Funds" the lesser of (i) the
remaining Available Funds for that Payment Date or (ii) the amount of the
Residual Receipts deposited into the Collection Account for that Payment Date.
As provided in the Indenture, funds on deposit in the Residual Account will be
available to cover shortfalls in the amount available to pay the Servicer Fee
owing to the Servicer and to make interest and principal payments on the Offered
Notes. If, on any Payment Date, shortfall(s) exist and both the Residual Account
and the Reserve Account have amounts on deposit therein, the Indenture provides
that the shortfall shall first be funded from Residual Account moneys. Following
the termination of a Residual Event, amounts on deposit in the Residual Account
will be deposited into the Reserve Account to the extent that the amount on
deposit in the Reserve Account is less than the Required Reserve Amount and
thereafter will be released to the Issuers.
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RESERVE ACCOUNT
The Offered Noteholders will have the benefit of funds on deposit in an
account (the "RESERVE ACCOUNT") to the extent that, on any Payment Date, there
is a shortfall in the amount available to pay the Servicer Fee owing the
Servicer or to make interest and principal payments on the Offered Notes. The
Reserve Account will be funded by an initial deposit of [ ]% of the Initial
Principal Balance of all Offered Notes (that amount, the "RESERVE ACCOUNT
INITIAL DEPOSIT"). Thereafter, additional deposits will be made to the Reserve
Account on each Payment Date, to the extent that the amount on deposit in the
Reserve Account (the "AVAILABLE RESERVE AMOUNT") is less than the Required
Reserve Amount. See the caption "Description of Notes -- Flow of Funds" in this
prospectus. The "REQUIRED RESERVE AMOUNT" as of any Payment Date equals [ ]%
of the then aggregate Outstanding Principal Balances of the Offered Notes,
subject to a floor amount (the "RESERVE ACCOUNT FLOOR") equal to the lesser of
(a) [ ]% of the Initial Principal Balance of the Offered Notes and (b) the
aggregate Outstanding Principal Balance of the Offered Notes. Amounts on deposit
in the Reserve Account in excess of the Required Reserve Amount will be
disbursed to the Issuers in accordance with the provisions of the Indenture.
Amounts on deposit in the Reserve Account on any Payment Date shall be
withdrawn therefrom and transferred to the Collection Account if the Available
Funds (exclusive of the amounts transferred from the Reserve Account but after
taking into account any transfer to the Collection Account from the Residual
Account) for that Payment Date are insufficient to fund in full the items
described above under "-- Flow of Funds" which items are of a higher priority
than the funding of the Reserve Account.
REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR
The Originator will provide warranties in the Contribution Agreement (as of
the Closing Date with respect to the Contracts), the benefits of which will be
assigned to the Trustee, including that:
- as of the Cut-Off Date, no more than [ ]% of a payment on any
Contract was more than 60 days past due and (except for payments which
are 60 days or less past due) there was no default, breach, violation or
event permitting acceleration under the terms of any Contract;
- no provision of any contract has been waived, altered or modified in any
respect other than in compliance with the Servicer's credit and
collection policy, except by instruments or documents contained in the
related Contract File (other than payment delinquencies permitted under
clause (i) above);
- each Contract represents the legal, valid and binding payment obligation
of the User, enforceable in accordance with its terms, subject to
restrictions imposed under bankruptcy laws and the availability of
equitable relief;
- the Contracts generally are not, and will not be, subject to any right of
rescission, setoff, counterclaim or defense, including the defense of
usury;
- all requirements of applicable federal, state and local laws, and
regulations thereunder, including, without limitation, usury laws, if
any, in respect of each Contract have been complied with in all material
respects;
- each Contract contains provisions requiring the User to assume all risk
of loss or malfunction of the related Equipment, and making the User
absolutely and unconditionally liable for all payments required to be
made thereunder, without any right of setoff for any reason whatsoever;
- no Contract provides for the substitution, exchange or addition of any
other items of equipment pursuant to the Contract which would result in
any reduction of the total Scheduled Payments thereon or extension of
payments due under each Contract except for extensions which would not
extend beyond the term of the Contract with the longest remaining term as
of the Closing Date;
- each Contract was assignable by the Originator and is assignable by the
Issuers;
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- all necessary action shall have been taken by the Originator to transfer
to the Issuers all of the Originator's right, title and interest in and
to each Contract and the related Equipment;
- immediately prior to the sale or contribution of the Contracts and the
related Equipment to the Issuers, the Originator was the sole owner of
each Contract and the related Equipment free and clear of any liens and
encumbrances;
- no Contract has been satisfied, subordinated or rescinded, except for any
Contract prepaid in full after the Cut-Off Date but before the Closing
Date; and
- no one User (including its affiliates) has Contracts with an Aggregate
Contract Principal Balance that exceeds [ ]% of the Original
Aggregate Contract Principal Balance.
The Originator will also represent that, as of the Closing Date, the
Contracts have the following characteristics assuming a discount rate equal to
the Statistical Discount Rate: (A) each Contract has a remaining term as of the
Closing Date of not less than [ ] months and not more than [ ] months,
(B) the weighted average remaining term of the Contracts is approximately
[ ] months, (C) none of the Contracts have a Contract Principal Balance, as
of the Cut-Off Date, of more than $[ ], (D) as of the Cut-Off Date, no
item of Equipment has been repossessed, (E) no more than [ ]% of the
Original Aggregate Contract Principal Balance is attributable to Contracts with
Users in any single state, and (F) no Contract has a Scheduled Payment or Final
Contract Payment due after , .
The representations and warranties will survive the pledge of the Contracts
to the Trustee, for the benefit of the Noteholders.
Under the terms of the Contribution Agreement and the Indenture, the
Originator will be obligated to accept the reconveyance of any Contract and
deposit the related Prepayment Amount with the Trustee on or before the end of
the calendar month following the month of its discovery or receipt of notice of
a breach of a representation or warranty made by the Originator or the Servicer,
respectively, that materially adversely affects the Contract, which breach has
not been cured or waived in all material respects. This obligation either to
accept the reconveyance of the Contract and remit the Prepayment Amount will
constitute the sole remedy against the Originator available to the Issuers, the
Trustee and the Noteholders for a breach of a representation or warranty made by
the Originator with respect to the required characteristics of the Contracts.
INDEMNIFICATION
The Indenture will provide that the Servicer will defend and indemnify the
Issuers, the Originator, the Trustee and the Noteholders against any and all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel and expenses of litigation, reasonably incurred,
arising out of or resulting from (i) the use, repossession or operation by the
Servicer or any affiliate thereof of any Equipment and (ii) the failure of the
Servicer to perform its duties under the Indenture. Advanta Business Services's
obligations, as Servicer, to indemnify the Noteholders for its acts or omissions
as Servicer will survive the removal of the Servicer but will not apply to any
acts or omissions of a successor Servicer. The indemnification does not extend
to indirect, incidental, special or consequential damages.
THE ACCOUNTS
The Trustee is required in accordance with the Indenture and the Series
Supplement to establish and maintain four accounts (each, an "ACCOUNT"), the
Collection Account, the Advance Payment Account, the Residual Account and the
Reserve Account. Each is to be held by the Trustee for the benefit of the
Noteholders. Each Account will be one or more segregated trust accounts.
The Servicer is required to deposit in the Collection Account all
collections received by it with respect to the Contracts within two Business
Days, or any later date as permitted by the Rating Agencies, following the
Servicer's determination that the amounts relate to the Contracts or the
Equipment.
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Servicer Advances, if any, are required to be deposited into the Collection
Account not later than the Determination Date for the related Collection Period.
The Originator or the Servicer will deposit in the Collection Account, not later
than the Determination Date, any Prepayment Amount then due and payable by it.
The Servicer is required to deposit Advance Payments and Security Deposits
received by the Servicer in the Advance Payment Account not later than the
Determination Date for the related Collection Period. "ADVANCE PAYMENTS" are
amounts paid by a User during a Collection Period with respect to amounts due
from the User in subsequent Collection Periods but do not include Prepayment
Amounts. The Servicer is required to instruct the Trustee for any Collection
Period to transfer from the Advance Payment Account to the Collection Account
not later than the related Determination Date (i) the portion of any Advance
Payment that constitutes Scheduled Payments due and owing for a Collection
Period and (ii) the portion of any Security Deposit being applied to a Scheduled
Payment or Final Contract Payment in accordance with the Indenture, in each
case, no later than the related Determination Date.
The Indenture permits the Servicer to direct the investment of amounts in
the Accounts in Eligible Investments that mature not later than the Business Day
prior to the next succeeding Payment Date. Any income from the investments will
be included in Available Funds.
The Servicer may deduct from amounts otherwise payable to the Collection
Account with respect to a Collection Period an amount equal to amounts
previously deposited by the Servicer into the Collection Account but (i)
subsequently deemed 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.
"ELIGIBLE INVESTMENTS" include any of the following: (i) marketable full
faith and credit obligations of the United States; (ii) marketable obligations
directly and fully guaranteed by the full faith and credit of the United States
of America; (iii) bankers' acceptances and certificates of deposit and other
interest-bearing obligations issued by any bank with capital, surplus and
undivided profits of at least $100,000,000 and the short-term securities of
which are rated "A-1" by S&P and "P-1" by Moody's; (iv) repurchase obligations
for underlying securities of the types described in (i), (ii) and (iii) above
entered into with a bank of the type described in (iii) above; (v) commercial
paper rated at least "A-1+" by S&P and "P-1" by Moody's; (vi) shares in money
market funds which invest solely in obligations, bankers' acceptances,
certificates of deposit, repurchase agreements and commercial paper of the types
described in clauses (i) through (v), bankers' acceptances, certificates of
deposit, repurchase agreements or commercial paper set forth in those clauses,
which money market funds are rated at least "AAm" or "AAm-g" by S&P and "Aa1" by
Moody's; and (vii) 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 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 the investment, or the commitment to make
such investment, is entered into, the short-term debt rating of the depository
institution or trust company shall be at least "A-1" by S&P and "P-1" by
Moody's.
ADVANCES
In the event that any User fails to remit its full Scheduled Payment or
Final Contract Payment on any Delinquent Contract by the Calculation Date, the
Servicer may, but is not required to, make an advance, no later than the related
Determination Date, from its own funds of an amount equal to the unpaid
Scheduled Payment (a "SERVICER ADVANCE").
A "DELINQUENT CONTRACT" will mean, as of any date, a Contract as to which
Scheduled Payment, or part thereof, remains unpaid for more than 60 days from
the original due date therefor. With respect to any Delinquent Contract,
whenever the Servicer shall have determined that it will be unable to recover a
proposed Servicer Advance or a portion thereof on the Delinquent Contract, the
Servicer will have no obligation to make the advance, but will be required to
enforce its remedies (including acceleration) under the Contract. The Indenture
provides that, in the event that the Servicer determines that any Servicer
Advances previously made are nonrecoverable ("NONRECOVERABLE ADVANCES") or any
Delinquent Contracts for which the Servicer
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has made a Servicer Advance in respect thereof become Defaulted Contracts, the
Trustee shall draw on the Collection Account to repay the Servicer Advances to
the Servicer before the payment to Noteholders has been made as set forth above
under " -- Flow of Funds."
WITHHOLDING
The Trustee is required to comply with all applicable federal income tax
withholding requirements respecting payments of interest with respect to the
Notes. The consent of Noteholders will not be required for the withholding. In
the event that the Trustee does withhold or causes to be withheld any amount
from interest payments or advances thereof to any Noteholders pursuant to
federal income tax withholding requirements, the Trustee shall indicate the
amount withheld annually to the affected Noteholders.
REPORTS TO NOTEHOLDERS
On each Payment Date, the Trustee will forward with each payment to the
Noteholders, a statement prepared by the Servicer setting forth the following
information (per $1,000 of Initial Note Principal Amount as to (a) and (b)
below):
(a) The amount of the payment allocable to that Noteholder's
Percentage Interest of the Class A Principal Payment, the Class B Principal
Payment, the Class C Principal Payment or the Class D Principal Payment, as
applicable, and Class A Overdue Principal, the Class B Overdue Principal,
Class C Overdue Principal or Class D Overdue Principal, as applicable;
(b) The amount of the payment allocable to that Noteholder's portion
of Class A Note Interest, Class B Note Interest or Class C Note Interest,
as applicable, and Class A Overdue Interest, Class B Overdue Interest or
Class C Overdue Interest, as applicable;
(c) The aggregate amount of fees and compensation received by the
Servicer pursuant to the Indenture for the Collection Period;
(d) The Class A Note Principal Balance, the Class B Note Principal
Balance, the Class C Note Principal Balance, the Class D Note Principal
Balance, the Class A Note Factor, the Class B Note Factor, the Class C Note
Factor, the Class D Note Factor, the Aggregate Contract Principal Balance
and the Collateral Factor, after taking into account all distributions made
on that Payment Date;
(e) The total unreimbursed Servicer Advances with respect to the
related Collection Period;
(f) The Aggregate Contract Principal Balance for all Contracts that
became Defaulted Contracts during the related Collection Period, calculated
immediately prior to the time the Contracts became Defaulted Contracts; and
(g) The amount on deposit in the Reserve Account and the Residual
Account.
The "CLASS A NOTE FACTOR" is the seven digit decimal number that the
Servicer will compute or cause to be computed for each Collection Period and
will make available on the related Determination Date representing the ratio of
(x) the Class A Principal Balance which will be outstanding on the next Payment
Date (after taking into account all distributions to be made on that Payment
Date) to (y) the Class A Initial Principal Balance.
The "CLASS B NOTE FACTOR" is the seven digit decimal number that the
Servicer will compute or cause to be computed for each Collection Period and
will make available on the related Determination Date representing the ratio of
(x) the Class B Principal Balance which will be outstanding on the next Payment
Date (after taking into account all distributions and to be made on that Payment
Date) to (y) the Class B Initial Principal Balance.
The "CLASS C NOTE FACTOR" is the seven digit decimal number that the
Servicer will compute or cause to be computed for each Collection Period and
will make available on the related Determination Date representing the ratio of
(x) the Class C Principal Balance which will be outstanding on the next Payment
Date (after taking into account all distributions to be made on that Payment
Date) to (y) the Class C Initial Principal Balance.
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The "CLASS D NOTE FACTOR" is the seven digit decimal number that the
Servicer will compute or cause to be computed for each Collection Period and
will make available on the related Determination Date representing the ratio of
(x) the Class D Principal Balance which will be outstanding on the next Payment
Date (after taking into account all distributions to be made on that Payment
Date) to (y) the Class D Initial Principal Balance.
The "COLLATERAL FACTOR" is the seven digit decimal number that the Servicer
will compute or cause to be computed for each Collection Period and will make
available on the related Determination Date representing the ratio of (x) the
Aggregate Contract Principal Balance as of the immediately preceding Calculation
Date to (y) the Original Aggregate Contract Principal Balance.
In addition, by January 31 of each calendar year following any year during
which the Notes are outstanding, commencing January 31, 2000, the Trustee will
furnish to each Noteholder of record at any time during the preceding calendar
year, information as to the aggregate of amounts reported pursuant to items (a)
and (b) above for the preceding calendar year to enable Noteholders to prepare
their federal income tax returns.
REBATES, REFUNDS, MODIFICATIONS, PAYMENTS FROM THIRD PARTIES
The Servicer has agreed to manage, administer and service the Receivables
and to enforce and make collections on the Receivables and any insurance
policies, exercising the degree of skill and care consistent with that which the
Servicer customarily exercises with respect to similar property owned, managed
or serviced by it.
The Servicer may grant to a User any rebate, refund or adjustment that the
Servicer in good faith believes is required, because of prepayment in full of a
Contract. The Servicer may deduct the amount of the rebate, refund or adjustment
from the amount otherwise payable by the Servicer into the Collection Account;
provided, however, that the Servicer will not permit any rescission or
cancellation of any Contract which would materially impair the rights of the
Trustee or the Noteholders in the Contracts or the proceeds thereof, nor will
the prepayment price, after giving effect to the rebate, refund or adjustment
(and without any adjustment for any Security Deposit previously paid by the
User) be less than the Prepayment Amount.
The Servicer may waive, modify or vary any term of a Contract if the
Servicer, in its reasonable and prudent judgment, determines that it will not be
materially adverse to the Noteholders. The Servicer will be required to pursue,
in its reasonable business judgment, all of its rights and remedies to require
each User to pay all Scheduled Payments due on each Contract, as well as to
maximize other recoveries with respect thereto in the form of Residual Receipts
and Defaulted Residual Receipts.
With respect to amounts due under a Contract, the Servicer may accept
payments from any entity on behalf of the relevant User and credit the amounts
against amounts due from the User.
As used herein:
"FINAL CONTRACT PAYMENT" means a payment required to be made by a User at
the time of the Contract's maturity in the nature of a "balloon" payment, which
payment may be (i) a specified amount or (ii) a minimum specified amount plus an
unspecified excess amount which together with the minimum specified amount is
the lesser of (a) the fair market value of the related Equipment at contract
maturity or (b) a maximum specified amount.
"RESIDUAL RECEIPTS" means, generally, (x) the proceeds of a User's optional
purchase or renewal of Equipment and (y) proceeds of the sale or re-lease of
Equipment, in each case to the extent the proceeds exceed any Scheduled Payments
and Final Contract Payments remaining unpaid.
"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 Equipment, the sale or other distribution of
Defaulted Contracts, 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 from a security deposit and applied by the Servicer as a Recovery
and, in each case, as reduced by (i) any unreimbursed Servicer
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Advances with respect to the Contract or the Equipment and (ii) any reasonably
incurred out-of-pocket expenses incurred by the Servicer in enforcing the
Contract or in liquidating the Equipment. Recoveries are not Residual Receipts.
SERVICING COMPENSATION
For its servicing of the Contracts, the Servicer will be entitled to
receive (a) a monthly fee (the "SERVICER FEE") of the product of (i) one-twelfth
of 1.00% (the "SERVICER FEE PERCENTAGE") and (ii) the Aggregate Contract
Principal Balance of all Contracts as of the beginning of the previous
Collection Period, payable out of the Collection Account and (b) the Servicing
Charges. "SERVICING CHARGES" means (i) any late payment charges paid by a User
on a delinquent Contract after application of the charges to amounts then due
under the Contract and (ii) any other incidental charges or fees received from a
User, including insurance premium payments and prepayment charges paid by a User
in connection with a prepayment.
The servicing compensation will compensate the Servicer for customary
equipment contract servicing activities to be performed by the Servicer for the
Trustee for the benefit of the Noteholders, additional administrative services
performed by the Servicer on behalf of the Trustee for the benefit of the
Noteholders and expenses paid by the Servicer on behalf of the Trustee for the
benefit of the Noteholders.
The Servicer, on behalf of the Trustee for the benefit of the Noteholders,
will be responsible for the managing, servicing and administering the Contracts
and enforcing and making collections on the Contracts and any insurance policies
and for the enforcing of any security interest in any item of Equipment, all as
set forth in the Indenture. The Servicer's responsibilities will include
collecting and posting of all payments, responding to inquiries of Users,
investigating delinquencies, accounting for collections, furnishing monthly and
annual statements to the Trustee with respect to distributions, providing
appropriate federal income tax information for use in providing information to
Noteholders, collecting and remitting sales and property taxes on behalf of
taxing authorities and maintaining the perfected security interest of the
Trustee in the Equipment and the Contracts.
The Servicer is required to furnish to the Trustee, and the Trustee is
required to furnish to the Noteholders, copies of the Servicer's annual audited
and quarterly unaudited financial statements.
The Indenture will provide that the Servicer, upon request of the Trustee,
will furnish to the Trustee the underlying data necessary for performing the
Trustee's duties under the Indenture or for enforcement actions as can be
generated by the Servicer's existing data processing system.
SERVICER NOT TO RESIGN
The Indenture will provide that the Servicer may not resign from its
obligations and duties as Servicer thereunder, except upon a determination that
the Servicer's performance of its duties is no longer permissible under
applicable law; however, as described below, the Servicer may transfer its
duties, obligations, rights and privileges to a successor and the successor
shall become the Servicer. The Servicer can only be removed pursuant to an
Events of Servicer Termination as discussed below.
MERGER, CONSOLIDATION, OR ASSUMPTION OF THE OBLIGATIONS OF THE 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 under the Indenture and the successor 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 under the Indenture and under the 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 shall have a tangible net worth of at least $20,000,000.
In addition to the provisions set forth in the preceding paragraph, if the
Servicer is Advanta Business Services or an affiliate thereof, the Servicer may
transfer all of its duties, obligations, rights and privileges as
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Servicer under the Indenture and all Supplements hereto to any affiliate of
Advanta Business Services provided that the then Servicer shall give 30 days
prior written notice of the change to the Trustee and the entity assuming the
Servicer position shall execute an agreement of assumption, in a form reasonably
satisfactory to the Trustee agreeing to perform every obligation of the Servicer
under the Indenture and under the Series Supplement. Upon the execution and
delivery to the Trustee of the written assumption the Affiliate shall become the
Servicer under the Indenture and under the Series Supplement without any further
act on the part of any of the parties thereto.
EVENTS OF DEFAULT AND NOTICE THEREOF
The following events will be defined in the Indenture as "EVENTS OF
DEFAULT":
(a) default for five calendar days or more in making Interest Payments
when due and payable;
(b) the Outstanding Principal Balance of any Class of Offered Notes is
not reduced to zero by that Class's Stated Maturity Date;
(c) default in the performance, or breach, by either Issuer of
negative covenants limiting its actions;
(d) default in the performance, or breach, of any other covenant of
either Issuer in the Indenture, and continuance of the default or breach
for a period of 30 days after the earliest of (i) any officer of the Issuer
first acquiring the knowledge thereof, (ii) the Trustee's giving written
notice thereof to the Issuer or (iii) the holders of a majority of the then
Outstanding Principal Balance of the Notes giving written notice thereof to
the Issuers and the Trustee;
(e) if any representation or warranty of either Issuer made in the
Indenture or any other writing provided to the holders of the Notes proves
to be incorrect in any material respect as of the time when the same has
been made; provided, however, that the breach of any representation or
warranty made by either Issuer will be deemed to be "material" only if it
negatively affects the Noteholders, the enforceability of the Indenture or
of the Notes; or
(f) insolvency or bankruptcy events relating to either Issuer.
The Indenture will provide that the Trustee shall give the Noteholders
notice of all uncured defaults known to it (the term "default" to include the
events specified above without grace periods).
If an Event of Default specified in clause (f) above occurs, the unpaid
principal amount of all outstanding Notes shall automatically become due and
payable together with all accrued and unpaid interest thereon.
If any other Event of Default occurs and is continuing, then the Trustee
may or, if so directed by the holders of 66 2/3% of the then Outstanding
Principal Balance of the Notes, will declare the unpaid principal amount of all
the Notes to be due and payable immediately, together with all accrued and
unpaid interest thereon.
If the Notes have been declared due and payable, the Trustee may institute
proceedings to collect amounts due or foreclose on the Trust Estate or any
portion thereof, exercise remedies as a secured party, sell the Trust Estate or
any portion thereof or elect to have the Issuers maintain possession of the
Trust Estate and continue to apply collections on the Trust Estate as if there
had been no declaration of acceleration. The Trustee, however, will be
prohibited from selling the Trust Estate following an Event of Default, unless
(i) the Holders of all the outstanding Notes consent to the sale; (ii) the
proceeds of the sale distributable to Holders of the Notes are sufficient to pay
in full the principal of and the accrued interest on all the outstanding Notes
at the date of the sale; or (iii) the Trustee determines that the Trust Estate
may not be sufficient on an ongoing basis to make all payments on the Notes as
the payments would have become due if the obligations had not been declared due
and payable, and the Trustee obtains the consent of the Holders of 66 2/3% of
the aggregate outstanding amount of the Notes. However, if the Event of Default
involves other than non-payment of principal or interest on the Notes, the
Trustee may not sell the Trust Estate unless the sale is for an
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amount greater than or equal to the Outstanding Principal Balance of the Offered
Notes or unless directed to do so by the holders of 66 2/3% of the then
Outstanding Principal Balance of the Notes.
Subsequent to an Event of Default and following any acceleration of the
Notes pursuant to the Indenture, any moneys that may then be held or thereafter
received by the Trustee shall be applied in the following order of priority, at
the date or dates fixed by the Trustee and, in case of the distribution of the
entire amount due on account of principal or interest, upon presentation of the
Notes and surrender thereof:
First to the payment of all costs and expenses of collection incurred
by the Trustee and the Noteholders (including the reasonable fees and
expenses of any counsel to the Trustee and the Noteholders);
Second to the payment of all Servicer's Fees then due to the Servicer;
Third first, to the payment of all accrued and unpaid interest on the
Outstanding Principal Balance of the Class A Notes to the date of payment
thereof, including (to the extent permitted by applicable law) interest on
any overdue interest and principal to the date of payment thereof at the
rate per annum equal to the Class A Interest Rate; second, to the payment
of all accrued and unpaid interest on the Outstanding Principal Balance of
the Class B Notes to the date of payment thereof, including (to the extent
permitted by applicable law) interest on any overdue interest and principal
to the date of payment thereof at the rate per annum equal to the Class B
Interest Rate; third, to the payment of all accrued and unpaid interest on
the Outstanding Principal Balance of the Class C Notes to the date of
payment thereof, including (to the extent permitted by applicable law)
interest on any overdue interest and principal to the date of payment
thereof at the rate per annum equal to the Class C Interest Rate; fourth,
to the payment of the Outstanding Principal Balance of the Class A Notes to
the date of payment when the balance is reduced to zero; fifth, to the
payment to zero of the Outstanding Principal Balance of the Class B Notes
to the date of payment when the balance is reduced to zero; and sixth, to
the payment of the Outstanding Principal Balance of the Class C Notes to
the date of payment when the balance is reduced to zero; provided that the
Noteholders may allocate the payments for interest and principal at their
own discretion, except that the allocation shall not affect the allocation
of the amounts or future payments received by any other Noteholder;
Fourth to the payment of amounts then due to the Trustee under the
Indenture and not paid pursuant to clause First above; and
Fifth to the payment of the remainder, if any, to the Class D
Noteholders, to the Issuers or any other Person legally entitled thereto.
The Issuers will be required to furnish annually to the Trustee, a
statement of officers of the Issuers to the effect that to the best of their
knowledge the Issuers are not in default in the performance and observance of
the terms of the Indenture or, if the Issuers are in default, specifying the
default.
The Indenture will provide that the holders of 66 2/3% in Outstanding
Principal Balance of the Offered Notes (excluding any Notes held by Advanta
Business Services or any of its affiliates) will have the right to waive
defaults and, subject to limitations established in the Indenture, to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee for exercising any trust or power conferred on the Trustee. The
Indenture will provide that in case an Event of Default shall occur (which shall
not have been cured or waived), the Trustee will be required to exercise its
rights and powers under the Indenture and to use the degree of care and skill in
its exercise of its rights that a prudent man would exercise or use in the
conduct of his own affairs. Subject to those provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any of the Noteholders unless they shall have offered to the
Trustee reasonable security or indemnity.
AMENDMENT OF INDENTURE
Subject to specific exceptions, under the Indenture, the rights and
obligations of the Issuers and the rights of the Noteholders may not be modified
by the Issuers without the consent of the holders of not less
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than 66 2/3% in Outstanding Principal Balance of the Notes (excluding any Notes
held by Advanta Business Services or any of its affiliates); but no modification
may be made which would (a) extend the fixed maturity of any Note, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
principal or interest thereon, without the consent of the holder of each Note so
affected or (b) reduce the above-stated percentage of Offered Notes, without the
consent of the holders of all Notes then outstanding under the Indenture.
EVENTS OF SERVICER TERMINATION
The following events and conditions are defined in the Indenture as "EVENTS
OF SERVICER TERMINATION":
(a) failure on the part of the Servicer to remit to the Trustee within
five calendar days following the receipt thereof any monies received by the
Servicer required to be remitted to the Trustee under the Indenture;
(b) failure on the part of the Servicer to perform or observe any
other term, covenant or agreement in the Indenture or in any related
agreement with the result that the interests of the Noteholders or of the
Trustee have been materially and adversely affected, and the failure has
been unremedied for 30 calendar days after receipt by the Servicer of a
written notice from the Trustee;
(c) if any representation or warranty of the Servicer made in the
Indenture or any related agreement shall prove to be incorrect in any
material respect as of the time made; provided, however, that the breach of
any representation or warranty made by the Servicer will be deemed to be
"material" only if it affects the Noteholders, the enforceability of the
Indenture or of the Notes; and provided further that the material breach of
any representation or warranty made by Advanta Business Services in the
Contribution Agreement with respect to any of the Contracts or the
Equipment subject thereto will not constitute a Servicer Event of Default
if Advanta Business Services or successor thereto repurchases the Contract
and Equipment in accordance with the Contribution Agreement to the extent
provided therein; and
(d) events of insolvency or bankruptcy relating to the Servicer.
SERVICER TERMINATION
So long as an Event of Servicer Termination under the Indenture is
continuing, the Trustee shall, upon the instructions of the holders of 66 2/3%
in Outstanding Principal Balance of the Notes (excluding any Notes held by the
Servicer or any affiliate of the Servicer), by notice in writing to the Servicer
terminate all of the rights and obligations of the Servicer (but the Servicer's
obligations which shall survive the termination) under the Indenture. Upon the
receipt by the Servicer of the written notice, all authority and power of the
Servicer under the Indenture to take any action with respect to any Contract or
Equipment will cease and the same will pass to and be vested in the Trustee (or
other successor Servicer) pursuant to and under the Indenture.
PREPAYMENT AND YIELD CONSIDERATIONS
The rate of principal payments on the Notes will be directly related to the
rate of principal payments on the underlying Contracts. If purchased at a price
other than par, the yield to maturity will also be affected by the rate of
principal payments. The principal payments on the Contracts may be in the form
of scheduled principal payments or liquidations due to default, casualty and the
like. Any of these payments will result in distributions to Noteholders of
amounts which would otherwise have been distributed over the remaining term of
the Contracts. In general, the rate of payments may be influenced by a number of
other factors, including general economic conditions. The rate of payment of
principal may also be affected by any removal of the Contracts from the pool and
the deposit of the related Prepayment Amount into the Collection Account.
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<PAGE> 46
Most Contracts which are leases in form do not provide for the right of the
User to prepay. Under the Indenture, the Servicer will be permitted to allow
prepayments in full or in part; provided that no prepayment of a Contract will
be allowed in an amount less than the Prepayment Amount.
The effective yield to Noteholders will depend upon, among other things,
the price at which the Notes are purchased, and the amount of and rate at which
principal, including both scheduled and nonscheduled payments thereof, is paid
to the Noteholders. The yield to Noteholders will be affected by lags between
the time interest accrues to Noteholders and the time the related interest
income is received by the Noteholders.
The following chart sets forth the percentage of the Initial Principal
Balance of the Class A, Class B and Class C Notes (assuming Initial Principal
Balances equal to $ , $ and $ , respectively) which
would be outstanding on the Payment Dates set forth below assuming a CPR of
% and %, respectively, and were calculated using the Statistical
Discount Rate. This information is hypothetical and is set forth for
illustrative purposes only.
This information is based upon assumptions which may or may not be
accurate. Actual payment experience may vary significantly from the following
table.
The Conditional Payment Rate ("CPR") assumes that a fraction of the
Aggregate Contract Principal Balance is prepaid on each Calculation Date, which
implies that each Contract is equally likely to prepay. This fraction, expressed
as a percentage, is annualized to arrive at the CPR for the Contract pool. The
CPR equals the monthly prepayments divided by the previous month's outstanding
discounted present value of the Contracts minus the payment of all Scheduled
Payments on the Contracts during that Collection Period. The CPR further assumes
that all Contracts are the same size and amortize at the same rate and that each
Contract will be either paid as scheduled or prepaid in full. The amounts set
forth below are based upon the timely receipt of Scheduled Payments as of the
Statistical Calculation Date, assumes that the Issuers do not exercise their
options to redeem the Notes and assumes the Closing Date is , 1999
and the first Payment Date is , 1999.
PERCENTAGE OF THE CLASS A, CLASS B AND CLASS C NOTES
OUTSTANDING AT THE RESPECTIVE CONDITIONAL PAYMENT RATE SET FORTH BELOW
<TABLE>
<CAPTION>
% CPR % CPR
-------------------------------- --------------------------------
CLASS CLASS CLASS CLASS CLASS CLASS
PAYMENT DATE A B C A B C
- ------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Closing Date
June 1999................
July 1999................
August 1999..............
September 1999...........
October 1999.............
November 1999............
December 1999............
January 2000.............
February 2000............
March 2000...............
April 2000...............
May 2000.................
June 2000................
July 2000................
August 2000..............
September 2000...........
October 2000.............
</TABLE>
43
<PAGE> 47
PERCENTAGE OF THE CLASS A, CLASS B AND CLASS C NOTES
OUTSTANDING AT THE RESPECTIVE CONDITIONAL PAYMENT RATE SET FORTH BELOW
<TABLE>
<CAPTION>
% CPR % CPR
-------------------------------- --------------------------------
CLASS CLASS CLASS CLASS CLASS CLASS
PAYMENT DATE A B C A B C
- ------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
November 2000............
December 2000............
January 2001.............
February 2001............
March 2001...............
April 2001...............
May 2001.................
June 2001................
July 2001................
August 2001..............
September 2001...........
October 2001.............
November 2001............
December 2001............
January 2002.............
February 2002............
March 2002...............
April 2002...............
May 2002.................
June 2002................
July 2002................
August 2002..............
September 2002...........
October 2002.............
November 2002............
December 2002............
January 2003.............
February 2003............
March 2003...............
April 2003...............
May 2003.................
June 2003................
July 2003................
August 2003..............
September 2003...........
October 2003.............
November 2003............
December 2003............
January 2004.............
February 2004............
March 2004...............
April 2004...............
May 2004.................
</TABLE>
44
<PAGE> 48
PERCENTAGE OF THE CLASS A, CLASS B AND CLASS C NOTES
OUTSTANDING AT THE RESPECTIVE CONDITIONAL PAYMENT RATE SET FORTH BELOW
<TABLE>
<CAPTION>
% CPR % CPR
-------------------------------- --------------------------------
CLASS CLASS CLASS CLASS CLASS CLASS
PAYMENT DATE A B C A B C
- ------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
June 2004................
July 2004................
August 2004..............
September 2004...........
October 2004.............
November 2004............
December 2004............
January 2005.............
February 2005............
March 2005...............
April 2005...............
May 2005.................
Weighted Average Life(1)
(Years)................
</TABLE>
- ---------------
(1) The weighted average life of a Note is determined by (a) multiplying the
amount of cash distributions in reduction of the Outstanding Principal
Balance of the respective Note by the number of years from the Closing Date
to such Payment Date, (b) adding the results, and (c) dividing the sum by
the respective Initial Principal Balance.
For the % CPR and % CPR scenarios, if the Issuers exercise their
option to redeem the Notes pursuant to a "clean-up call," the average life of
the Class A Notes, Class B Notes and Class C Notes would be years, years and
years, respectively.
LEGAL MATTERS AFFECTING THE RECEIVABLES
GENERAL
The Contracts which are leases, are triple-net leases, requiring the Users
to pay all taxes, maintenance and insurance associated with the Equipment, and
primarily cannot be cancelled by the Users.
The Contracts which are leases are "hell or high water" leases, under which
the obligations of the User are absolute and unconditional, regardless of any
defense, setoff or abatement which the User may have against Advanta Business
Services, the Servicer, the Issuers, or any other person or entity whatsoever.
Events of default under the Contracts are generally the result of failure
to pay amounts when due, failure to observe other covenants in the Contract,
misrepresentations by, or the insolvency, bankruptcy or appointment of a trustee
or receiver for the User under a Contract. The remedies of the Originator (and
the Issuers as assignee) following a notice and cure period are generally to
seek to enforce the performance by the User of the terms and covenants of the
Contract (including the User's obligation to make scheduled payments) or recover
damages for the breach thereof, to accelerate the balance of the remaining
scheduled payments paid to terminate the rights of the User under the Contract.
Although the Contracts permit the Originator to repossess and dispose of the
related Equipment in the event of a lease default, and to credit the proceeds
against the User's liabilities thereunder, the remedies may be limited where the
User thereunder is subject to bankruptcy, or other insolvency proceedings.
45
<PAGE> 49
UCC AND BANKRUPTCY CONSIDERATIONS
Most Contracts which are leases are "chattel paper" which creates a
security interest in the related item of Equipment with respect to the Contract.
A security interest in personal property is generally not a perfected security
interest unless a UCC financing statement has been filed in the appropriate
filing office with respect to the security interest. The Originator has filed
UCC financing statements in its favor against Users in respect of Equipment with
an original Equipment cost in excess of $25,000. Financing statements in favor
of the Originator with respect to approximately % of the Original
Statistical Aggregate Contract Principal Balance have been so filed. Neither the
Issuers nor Advanta Business Services expect to take action to perfect the
interest of the Originator in any Equipment to the extent the original Equipment
cost of the related Equipment is less than or equal to $25,000. As a result, the
Originator generally does not have a perfected security interest in Equipment
with an original Equipment cost of less than or equal to $25,000. To the extent
UCC financing statements evidencing the Originator's security interest in the
Equipment have not been filed against the User (i.e., with respect to those
Users relating to Equipment with an original cost of less than $25,000) no
security interests in the Equipment will be perfected in favor of the
Originator, the Issuers or the Trustee. Consequently, another party (such as a
creditor of the User) may acquire rights in the Originator's interest in the
Equipment superior to those of the Issuer or the Trustee. The lack of a
perfected security interest in the Equipment will result in claims against the
Users being unsecured and may adversely affect the ability of the Servicer to
realize on the Equipment.
For Contracts relating to items of Equipment with original Equipment costs
in excess of $25,000, the Originator will represent and warrant that a UCC
financing statement in its favor has been filed in the appropriate filing
office, with the result that the Originator has obtained a perfected security
interest in the Equipment. Because of the administrative burden and expense
involved, no UCC financing statements will be individually assigned by the
Originator to either the Issuers or the Trustee. General, "blanket" UCC
financing statements will be filed, however, naming (i) the Originator, as
debtor, and the Issuers as secured party (in New Jersey), and (ii) the Issuers,
as debtors, and the Trustee as secured party (in most states).
Furthermore, the Bankruptcy Code provides that the retention of bare legal
title to a property interest, such as a lien on personal property, for servicing
purposes, does not, in and of itself, vest beneficial ownership of the property
interest in the legal title holder. The likely legal result of the foregoing, in
light of the transfer of the Contracts and the Equipment to the Issuers, is to
transfer to the Issuers the benefits of all perfected security interests in
those items of Equipment in which the Originator itself had a perfected security
interest (i.e., with respect to items of Equipment with an original Equipment
cost in excess of $25,000). Pursuant to the Indenture, the Issuers will pledge
all of their respective right, title and interest in and to the Trust Estate
(including security interests in the Equipment) to the Trustee for the benefit
of the Noteholders.
FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary describes generally the material United States
federal income tax consequences of an investment in the Offered Notes. The
following summary has been prepared and reviewed by Orrick, Herrington &
Sutcliffe LLP as special tax counsel to the Issuers ("SPECIAL TAX COUNSEL"). The
summary is based on the Internal Revenue Code of 1986, as amended (the "CODE")
as of the date hereof, and existing final, temporary and proposed Treasury
regulations, revenue rulings and judicial decisions, all of which are subject to
prospective and retroactive changes. The summary is addressed only to original
purchasers of the Offered Notes, deals only with Offered Notes held as capital
assets within the meaning of Section 1221 of the Code and, except as
specifically set forth below, does not address tax consequences of holding
Offered Notes that may be relevant to investors in light of their own investment
circumstances or their special tax situations, such as certain financial
institutions, tax-exempt organizations, life insurance companies, dealers in
securities, non-U.S. persons, or investors holding the Offered Notes as part of
a conversion transaction, as part of a hedge or hedging transaction, or as a
position in a straddle for tax purposes. Further, this discussion does not
address alternative minimum tax consequences or any tax consequences to holders
of interests in an
46
<PAGE> 50
Offered Noteholder. Special Tax Counsel is of the opinion that the following
summary of federal income tax consequences is correct in all material respects.
An opinion of Special Tax Counsel, however, is not binding on the Internal
Revenue Service ("IRS") or the courts, and no ruling on any of the issues
discussed below will be sought from the IRS. Moreover, there are no authorities
on similar transactions involving interests issued by an entity with terms
similar to those of the Offered Notes described herein. Accordingly, persons
considering the purchase of Offered Notes should consult their own tax advisors
with regard to the United States federal income tax consequences of an
investment in the Offered Notes and the application of United States federal
income tax laws, as well as the laws of any state, local or foreign taxing
jurisdictions, to their particular situations.
CONSEQUENCES TO HOLDERS OF THE OFFERED NOTES
Treatment of the Offered Notes as Debt. Special Tax Counsel is of the
opinion that, although no transaction closely comparable to that contemplated
herein has been the subject of any Treasury regulation, revenue ruling or
judicial decision and hence the matter cannot be free from doubt, the Offered
Notes will be characterized as debt for United States federal income tax
purposes. Additionally, the Issuers will agree by entering into the Indenture,
and the Offered Noteholders will agree by their purchase and holding of Offered
Notes, to treat the Offered Notes as debt for United States federal income tax
purposes.
If, contrary to the opinion of Special Tax Counsel, the IRS successfully
asserted that a class of Offered Notes did not represent debt for United States
federal income tax purposes, those Offered Notes might be treated as equity
interests in an Issuer or some other entity for such purposes. If so treated,
investors could be treated for such purposes either as partners in a partnership
or, alternatively, as shareholders in a taxable corporation. Treatment of an
Offered Noteholder as a partner could have adverse tax consequences to certain
holders; for example, income to foreign persons generally would be subject to
United States tax and United States tax return filing and withholding
requirements, and individual holders might be subject to certain limitations on
their ability to deduct their share of partnership expenses. If Offered Notes
instead were treated as corporate stock, the taxable corporation would not be
able to reduce its taxable income by deductions for interest expense on Offered
Notes recharacterized as equity, and any increase in the corporate tax imposed
with respect to such corporation could materially reduce cash available to make
payments on the Offered Notes; further, Offered Noteholders might not be
entitled to any dividends received deduction in respect of payments of interest
on Notes treated as dividends. Prospective investors should consult with their
own tax advisors with regard to the consequences of each such possible
alternative characterization to them in their particular circumstances; the
following discussion assumes that the characterization of the Offered Notes as
debt is correct.
INTEREST AND ORIGINAL ISSUE DISCOUNT
In general, stated interest on an Offered Note will be includible in gross
income as it accrues or is received in accordance with an Offered Noteholder's
usual method of tax accounting. If the Offered Notes are issued with original
issue discount ("OID"), the provisions of Sections 1271 through 1273 and 1275 of
the Code will apply to those Offered Notes. Under those provisions, a Holder of
an Offered Note (including a cash basis holder) generally would be required to
include the OID on an Offered 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. In general, an Offered Note
will be treated as having OID to the extent that its "stated redemption price"
exceeds its "issue price," if such excess equals or exceeds 0.25 percent
multiplied by the weighted average life of the Offered Note (determined by
taking into account the number of complete years following issuance until
payment is made for each partial principal payment). 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 Offered
Notes is unclear, but the application of Section 1272(a)(6) could affect the
rate of accrual of OID and could have other consequences to Holders of the
Offered Notes. Additionally, the IRS could take the position based on Treasury
regulations that none of the interest payable on an Offered Note is
47
<PAGE> 51
"unconditionally payable" and hence that all of such interest should be included
in the Offered Note's stated redemption price at maturity. If sustained, such
treatment should not significantly affect tax liabilities for most Holders of
the Offered Notes, but prospective Noteholders should consult their own tax
advisors concerning the impact to them in their particular circumstances. The
Issuers intend to take the position that interest on the Offered Notes
constitutes "qualified stated interest" and that the above consequences do not
apply.
MARKET DISCOUNT
A Holder of an Offered Note who purchases an interest in an Offered Note at
a discount that exceeds any OID not previously includible in income may be
subject to the "market discount" rules of Sections 1276 through 1278 of the
Code. These rules provide, in part, that gain on the sale or other disposition
of an Offered Note and partial principal payments on an Offered Note are treated
as ordinary income to the extent of accrued market discount. The market discount
rules also provide for deferral of interest deductions with respect to debt
incurred to purchase or carry an Offered Note that has market discount.
MARKET PREMIUM
A Holder of an Offered Note who purchases an interest in an Offered Note at
a premium may elect to amortize the premium against interest income over the
remaining term of the Offered Note in accordance with the provisions of Section
171 of the Code.
SALE OF THE OFFERED NOTES
Upon the sale of an Offered Note, the Holder of the Offered Note generally
will recognize taxable gain or loss in an amount equal to the difference between
the amount realized on the sale (other than amounts attributable to accrued
interest) and the Holder's adjusted tax basis in the Offered Note. The Holder's
adjusted tax basis in the Offered Note generally will equal the cost of the
Offered Note to such Holder, increased by any market or original issue discount
previously included in income by such Holder with respect to the Offered Note,
and decreased by the amount of any bond premium previously amortized and any
payments of principal or OID previously received by such Holder with respect to
such Offered Note. Any such gain or loss will be capital gain or loss, except to
the extent of accrued market discount not previously included in income, and
will be long-term capital gain or loss if at the time of sale the Offered Note
has been held for more than one year.
FOREIGN HOLDERS
Under United States federal income tax law now in effect, payments of
interest by the Issuers to a Holder of an Offered Note who, as to the United
States, is a nonresident alien individual or a foreign corporation (a "foreign
person") generally will be considered "portfolio interest," and generally will
not be subject to United States federal income tax and withholding tax, provided
the interest is not effectively connected with the conduct of a trade or
business within the United States by the foreign person and the foreign person
(i) is not for United States federal income tax purposes (a) actually or
constructively a "10 percent shareholder" of an Issuer, (b) a "controlled
foreign corporation" with respect to which an Issuer is a "related person"
within the meaning of the Code, or (c) a bank extending credit pursuant to a
loan agreement entered into in the ordinary course of its trade or business, and
(ii) provides the person who is otherwise required to withhold United States tax
with respect to the Offered Notes with an appropriate statement (on IRS Form W-8
or a substitute form), signed under penalties of perjury, certifying that the
beneficial owner of the Offered Note is a foreign person and providing the
foreign person's name and address. If an Offered Note is held through a
securities clearing organization or certain other financial institutions (as is
expected to be the case unless Definitive Notes are issued), the organization or
institution may provide the relevant signed statement generally to the
withholding agent; in that case, however, the signed statement generally must be
accompanied by an IRS Form W-8 or substitute form provided by the foreign person
that owns the Offered 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%, unless reduced or eliminated pursuant to
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<PAGE> 52
an applicable tax treaty or such interest is effectively connected with the
conduct of a trade or business within the United States and, in either case, the
appropriate statement has been provided. The U.S. Treasury Department recently
issued final Treasury regulations which will revise some of the foregoing
procedures whereby a foreign person may establish an exemption from withholding
generally beginning January 1, 2001; foreign persons should consult their tax
advisors concerning the impact to them, if any, of such revised procedures.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of an Offered Note by a foreign person will be exempt from
United States federal income tax 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 person, and (ii) in the case of an individual
foreign person, such individual is not present in the United States for 183 days
or more in the taxable year.
BACKUP WITHHOLDING
Payments of principal and interest, as well as payments of proceeds from
the sale, retirement or disposition of an Offered Note, may be subject to
"backup withholding" tax under Section 3406 of the Code at a rate of 31% if a
recipient of such payments fails to furnish to the payor certain identifying
information. Any amounts deducted and withheld would be allowed as a credit
against such recipient's United States federal income tax, provided appropriate
proof is provided under rules established by the IRS. Furthermore, certain
penalties may be imposed by the IRS on a recipient of payments that is required
to supply information but that does not do so in the proper manner. Backup
withholding will not apply with respect to payments made to certain exempt
recipients, such as corporations and financial institutions. Holders of the
Offered Notes should consult their tax advisors regarding their qualification
for exemption from backup withholding and the procedure for obtaining such an
exemption.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY, MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR TAX SITUATION, AND DOES NOT PURPORT TO ADDRESS THE ISSUES DESCRIBED
WITH THE DEGREE OF SPECIFICITY THAT WOULD BE PROVIDED BY A TAXPAYER'S OWN TAX
ADVISOR. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE OFFERED NOTES AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL
TAX LAWS.
STATE TAX CONSEQUENCES
Because of the differences in state and local tax laws and their
applicability to different investors, it is not possible to summarize the
potential state and local tax consequences of holding the Offered Notes.
However, purchasers of Offered Notes should be aware that if some of the Offered
Notes were classified as interests in a partnership rather than as debt for
applicable state and local tax purposes, certain states and localities might
assert that the partnership is doing business therein and subject the affected
Holders to taxation as a result of holding the affected Offered Notes. In
addition, the Issuers, as Nevada corporations, are not subject to income or
franchise taxes imposed by the state of Nevada, but the Issuers could be taxable
in other states and localities by reason of their activities; if so, state and
local taxes could reduce amounts available for distribution to Holders of the
Offered Notes. ACCORDINGLY, PURCHASERS OF OFFERED NOTES SHOULD CONSULT THEIR OWN
TAX ADVISORS REGARDING THE STATE AND LOCAL TAX CONSEQUENCES OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF ANY OFFERED NOTES.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Code impose certain requirements on employee benefit
plans and certain other plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and certain collective investment funds or
insurance company general or separate accounts in which such plans, accounts or
arrangements are invested, that are subject to the fiduciary responsibility
provisions of ERISA and/or Section 4975 of the Code
49
<PAGE> 53
(collectively, "PLANS"), and on persons who are fiduciaries with respect to
Plans, in connection with the investment of "plan assets" of any Plan ("PLAN
ASSETS"). ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan.
ERISA and Section 4975 of the Code prohibit a broad range of transactions
involving Plan Assets and persons ("parties in interest" under ERISA and
"disqualified persons" under the Code, collectively, "PARTIES IN INTEREST") who
have certain specified relationships to a Plan or its Plan Assets, unless a
statutory or administrative exemption is available. Parties in Interest that
participate in a prohibited transaction may be subject to a penalty imposed
under ERISA and/or an excise tax imposed pursuant to Section 4975 of the Code,
unless a statutory or administrative exemption is available. These prohibited
transactions generally are set forth in Section 406 of ERISA and Section 4975 of
the Code.
Subject to the considerations described below, the Notes are eligible for
purchase with Plan Assets of any Plan.
Any fiduciary or other Plan investor considering whether to purchase the
Notes with Plan Assets of any Plan should determine whether such purchase is
consistent with its fiduciary duties and whether such purchase would constitute
or result in a non-exempt prohibited transaction under ERISA and/or Section 4975
of the Code because any of the Originator, the Issuers, the Servicer, the
Trustee or any other party may be Parties in Interest with respect to the
investing Plan and may be deemed to be benefiting from the issuance of the
Notes. If the Originator, any Issuer or the Servicer is a Party in Interest with
respect to the prospective Plan investor, any fiduciary or other Plan investor
considering whether to purchase or hold the Notes should consult with its
counsel regarding the availability of exemptive relief under U.S. Department of
Labor ("DOL") Prohibited Transaction Class Exemption ("PTCE") 96-23 (relating to
transactions determined by "in-house asset managers"), 95-60 (relating to
transactions involving insurance company general accounts), 91-38 (relating to
transactions involving bank collective investment funds), 90-1 (relating to
transactions involving insurance company pooled separate accounts) or 84-14
(relating to transactions determined by independent "qualified professional
asset managers") or any other prohibited transaction exemption issued by the
DOL. A purchaser of the Notes should be aware, however, that even if the
conditions specified in one or more of the above-referenced exemptions are met,
the scope of the exemptive relief provided by the exemption might not cover all
acts which might be construed as prohibited transactions.
In addition, under DOL Regulation Section 2510.3-101 (the "PLAN ASSET
REGULATION"), the purchase with Plan Assets of equity interests in the Trust
Estate could, in certain circumstances, cause the Contracts and other property
and rights included in the Trust Estate to be deemed Plan Assets of the
investing Plan which, in turn, would subject the Issuers and the Trust Estate to
the fiduciary responsibility provisions of ERISA and the prohibited transaction
provisions of ERISA and Section 4975 of the Code. Nevertheless, because the
Offered Notes (a) are expected to be treated as indebtedness under local law and
will, in the opinion of Special Tax Counsel, be treated as debt, rather than
equity, for federal tax purposes (see "Federal Income Tax
Consequences -- Consequences to Holders of the Offered Notes" herein), and (b)
should not be deemed to have any "substantial equity features," purchases of the
Notes with Plan Assets should not be treated as equity investments and,
therefore, the Contracts and other assets included in the Trust Estate should
not be deemed to be Plan Assets of the investing Plans. Those conclusions are
based, in part, upon the traditional debt features of the Notes, including the
reasonable expectation of purchasers of the Notes that the Notes will be repaid
when due, as well as the absence of conversion rights, warrants and other
typical equity features.
The Notes may not be purchased or held by any Plan, or any person investing
Plan Assets of any Plan, if any of the Originator, the Issuers, the Servicer,
the Trustee or any of their respective affiliates (a) has investment or
administrative discretion with respect to the Plan Assets used to effect such
purchase; (b) has authority or responsibility to give, or regularly gives,
investment advice with respect to such Plan Assets, for a fee and pursuant to an
agreement or understanding that such advice (1) will serve as a primary basis
for investment decisions with respect to such Plan Assets, and (2) will be based
on the particular investment needs of such Plan; or (c) unless PTCE 95-60, 91-38
or 90-1 is applicable, is an employer maintaining or
50
<PAGE> 54
contributing to such Plan. Each purchaser or holder of the Notes or any interest
therein will be deemed to have represented by its purchase and holding thereof
that it is not subject to the foregoing limitation.
Any fiduciary or other Plan investor considering whether to purchase any
Notes on behalf of or with Plan Assets of any Plan should consult with its
counsel and refer to this Prospectus for guidance regarding the ERISA
considerations applicable to the Notes offered hereby.
Certain employee benefit plans, such as governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of
ERISA), are not subject to the requirements of ERISA or Section 4975 of the
Code. Accordingly, assets of such plans may be invested in the Notes without
regard to the ERISA considerations described herein, subject to the provisions
of other applicable federal and state law. However, any such plan that is
qualified and exempt from taxation under Sections 401(a) and 501(a) of the Code
is subject to the prohibited transaction rules set forth in Section 503 of the
Code.
UNDERWRITING
Under the terms and subject to the conditions set forth in the underwriting
agreement (the "UNDERWRITING AGREEMENT") for the sale of the Offered Notes,
Advanta Business Services and the Issuers have agreed to sell and the
underwriters named below (the "UNDERWRITERS") have agreed to purchase the
Offered Notes as set forth below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF THE
UNDERWRITERS OF THE CLASS A NOTES CLASS A NOTES
--------------------------------- -----------------------
<S> <C>
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF THE
UNDERWRITER OF THE CLASS B NOTES CLASS B NOTES
-------------------------------- -----------------------
<S> <C>
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF THE
UNDERWRITER OF THE CLASS C NOTES CLASS C NOTES
-------------------------------- -----------------------
<S> <C>
</TABLE>
The Issuers have been advised by , as representative of the
Underwriters, that the Underwriters propose initially to offer the Offered Notes
to the public at the respective public offering prices set forth on the cover
page of this Prospectus, and to certain dealers at such price, less a concession
not in excess of % per Class A Note, % per Class B Note and % per
Class C Note. The Underwriters may allow and such dealers may reallow to other
dealers a discount not in excess of % per Class A Note, % per Class B
Note and % per Class C Note.
<TABLE>
<CAPTION>
UNDERWRITERS'
DISCOUNTS AND AMOUNT PER
COMMISSIONS $1,000 OF PRINCIPAL TOTAL AMOUNT
------------- ------------------- ------------
<S> <C> <C> <C>
Class A Notes............................ % $ $
Class B Notes............................ % $ $
Class C Notes............................ % $ $
-------- --------
Total...............................
======== ========
</TABLE>
Additional offering expenses are estimated to be $ .
51
<PAGE> 55
Each Underwriter will represent and agree that:
(a) it has not offered or sold, and, prior to the expiry of six months
from the Closing Date, will not offer or sell, any Offered Notes 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 purposes of their business, 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 Public Offers of
Securities Regulations 1995;
(b) it has complied and will comply with all applicable provisions of
the Financial Services Act 1986 with respect to anything done by it in
relation to the Offered Notes in, from or otherwise involving the United
Kingdom;
(c) if it is an authorized person under Chapter III of part I of the
Financial Services Act 1986, it has only promoted and will only promote (as
that term is defined in Regulation 1.02(2) of the Financial Services
(Promotion of Unregulated Schemes) Regulations 1991) to any person in the
United Kingdom the scheme described in this Prospectus if that person is of
a kind described either in Section 76(2) of the Financial Services Act 1986
or in Regulation 1.04 of the Financial Services (Promotion of Unregulated
Schemes) Regulations 1991; and
(d) it is a person of a kind described in Article II(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1996.
The Originator has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Issuers have been advised by , as representative of the
Underwriters, that the Underwriters presently intend to make a market in the
Offered Notes, as permitted by applicable laws and regulations. The Underwriters
are not obligated, however, to make a market in the Offered Notes and any such
market making may be discontinued at any time at the sole discretion of the
Underwriters. Accordingly, no assurance can be given as to the liquidity of, or
trading markets for, the Offered Notes.
In connection with the offering of the Offered Notes, the Underwriters and
selling group members and their respective affiliates may engage in transactions
that stabilize, maintain or otherwise affect the market price of the Offered
Notes. Such transactions may include stabilization transactions effected in
accordance with Rule 104 of Regulation M, pursuant to which such person may bid
for or purchase the Offered Notes for the purpose of stabilizing its market
price.
RATINGS OF THE OFFERED NOTES
It is a condition to the issuance of the Notes that the Class A Notes be
rated at least " ," that the Class B Notes be rated at least " " and
that the Class C Notes be rated at least " " by , the Class A
Notes be rated at least " ," the Class B Notes be rated at least " " and
the Class C Notes be rated at least " " by and the Class A
Notes be rated at least " ," the Class B Notes be rated at least " " and
the Class C Notes be rated at least " " by , respectively
(each, a "RATING AGENCY" and, together, the "RATING AGENCIES").
Each rating, will reflect only the views of the related Rating Agency and
will be based primarily on the amount of subordination, the availability of
funds on deposit in the Reserve Account and the Rating Agency's opinion of the
credit quality of the Contracts and the other Pledged Assets included in the
Trust Estate. The ratings are not a recommendation to purchase, hold or sell the
related Notes, inasmuch as ratings do not comment as to market price or
suitability for a particular investor. There is no assurance that any rating
will continue for any period of time or that it will not be lowered or withdrawn
entirely by the related Rating Agency if, in its judgment, circumstances so
warrant. A revision or withdrawal of a rating may have an adverse affect on the
market price of the Offered Notes. The rating of the Offered Notes addresses the
likelihood of the timely payment of interest and the ultimate payment of
principal on the Offered Notes by the Stated Maturity Date. The rating does not
address the rate of prepayments that may be experienced on the
52
<PAGE> 56
Contracts and, therefore, does not address the effect of the rate of prepayments
on the return of principal to the Noteholders. See "Risk -- Limited Nature of
Credit Ratings Assigned to the Notes" in this Prospectus.
EXPERTS
The balance sheets of Advanta Leasing Receivables Corp. VIII and Advanta
Leasing Receivables Corp. IX as of May 13, 1999, included in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
LEGAL MATTERS
Legal matters relating to the validity of the issuance of the Notes will be
passed upon for the Issuers by Orrick, Herrington & Sutcliffe LLP, Washington,
D.C. Legal matters will be passed upon for the Underwriters by ,
.
REPORTS TO NOTEHOLDERS
The Servicer will prepare monthly and annual reports that will contain
information about the Offered Notes. The financial information contained in the
reports will be prepared in accordance with generally accepted accounting
principles. Unless and until Definitive Notes are issued, the reports will be
sent to Cede & Co., the nominee of DTC and the registered holder of the Offered
Notes. No reports will be sent to you.
WHERE YOU CAN FIND MORE INFORMATION
We filed a registration statement relating to the Offered Notes with the
SEC. This prospectus is part of the registration statement, but the registration
statement includes additional information.
The Servicer will file with the SEC all required annual, monthly and
special SEC reports and other information about the Offered Notes.
You may read and copy any reports, statements or other information we file
at the SEC's public reference room in Washington, D.C. You can request copies of
these documents, upon payment of a duplicating fee, by writing to the SEC.
Please call the SEC at (800) SEC-0330 for further information on the operation
of the public reference rooms. Our SEC filings also are available to the public
on the SEC Internet Site (http://www.sec.gov).
53
<PAGE> 57
INDEX OF TERMS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Account............................. 35
Advance Payments.................... 36
Advanta Business Services........... 12
Advanta Leasing Receivables VIII.... 12
Advanta Leasing Receivables IX...... 12
Aggregate Contract Principal
Balance........................... 17
Applicable Discount Rate............ 21
Available Funds..................... 31
Available Reserve Amount............ 34
Booked Residual Value............... 33
Business Day........................ 26
Calculation Date.................... 27
Cedelbank........................... 30
Cedelbank Customers................. 30
Class A Note Factor................. 37
Class A Note Interest............... 26
Class A Overdue Interest............ 26
Class A Overdue Principal........... 26
Class A Percentage.................. 27
Class A Principal Balance........... 27
Class A Principal Payment........... 27
Class B Note Factor................. 37
Class B Note Interest............... 26
Class B Overdue Interest............ 26
Class B Overdue Principal........... 26
Class B Percentage.................. 27
Class B Principal Balance........... 27
Class B Principal Payment........... 27
Class C Note Factor................. 37
Class C Note Interest............... 26
Class C Overdue Interest............ 26
Class C Overdue Principal........... 26
Class C Percentage.................. 27
Class C Principal Balance........... 27
Class C Principal Payment........... 27
Class D Note Factor................. 38
Class D Overdue Principal........... 26
Class D Percentage.................. 27
Class D Principal Balance........... 27
Class D Principal Payment........... 27
Code................................ 46
Collateral Factor................... 38
Collection Account.................. 31
Collection Period................... 26
Complaint........................... 20
Contract Files...................... 15
</TABLE>
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Contract Principal Balance.......... 17
Contracts........................... 15
Contribution Agreement.............. 12
Cooperative......................... 30
CPR................................. 43
Cumulative Net Loss Percentage...... 32
Cut-Off Date........................ 15
Defaulted Contract.................. 33
Definitive Notes.................... 27
Delinquent Contract................. 36
Depositaries........................ 28
Determination Date.................. 26
DOL................................. 50
Eligible Investments................ 36
Equipment........................... 15
ERISA............................... 49
Euroclear........................... 30
Euroclear Operator.................. 30
Euroclear Participants.............. 30
Events of Default................... 40
Events of Servicer Termination...... 42
Excess Amount....................... 16
Final Contract Payment.............. 16, 38
Fleet............................... 20
Fleet Transaction................... 20
Holders............................. 25
Indenture........................... 12
Indirect Participants............... 28
Interest Accrual Period............. 26
Interest Payments................... 26
IRS................................. 47
Issuer.............................. 12
Issuers............................. 12
Issuers' Interest................... 32
Net Residual Value.................. 21
Nonrecoverable Advances............. 36
Notes............................... 12
Offered Notes....................... 12
OID................................. 47
Original Statistical Aggregate
Contract Principal Balance........ 21
Originator.......................... 12
Outstanding Principal Balance....... 26
Participants........................ 28
Parties in Interest................. 50
Payment Date........................ 25
</TABLE>
54
<PAGE> 58
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Plan Asset Regulation............... 50
Plan Assets......................... 50
Plans............................... 50
Pledged Assets...................... 15
Prepayment Amount................... 16
Principal Payments.................. 26
PTCE................................ 50
Purchase Option Contracts........... 16
Purchase Option Equipment........... 16
Purchase Option Payments............ 16
Rating Agencies..................... 52
Rating Agency....................... 52
Receivables......................... 15
Record Date......................... 26
Recoveries.......................... 38
Required Reserve Amount............. 34
Reserve Account..................... 34
Reserve Account Floor............... 34
Reserve Account Initial Deposit..... 14, 34
Residual Account.................... 33
Residual Cap Amount................. 33
</TABLE>
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Residual Event...................... 32
Residual Receipts................... 38
Scheduled Payments.................. 17
Securities Act...................... 13
Series Supplement................... 12
Servicer............................ 13
Servicer Advance.................... 36
Servicer Fee........................ 39
Servicer Fee Percentage............. 39
Servicing Charges................... 39
Special Tax Counsel................. 46
Stated Maturity Date................ 26
Statistical Calculation Date........ 21
Statistical Discount Rate........... 21
Terms and Conditions................ 30
Trust Estate........................ 15
Trustee............................. 12
UCC................................. 15
Underwriters........................ 51
Underwriting Agreement.............. 51
User................................ 16
</TABLE>
55
<PAGE> 59
APPENDICES
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
A Global Clearance, Settlement and Tax Documentation A-1
Procedures................................................
B Report of Independent Accountants for Advanta Leasing B-1
Receivables Corp. VIII....................................
C Financial Statements of Advanta Leasing Receivables Corp. C-1
VIII......................................................
D Notes to Advanta Leasing Receivables Corp. VIII Financial D-1
Statements................................................
E Report of Independent Accountants for Advanta Leasing E-1
Receivables Corp. IX......................................
F Financial Statements of Advanta Leasing Receivables Corp. F-1
IX........................................................
G Notes to Advanta Leasing Receivables Corp. IX Financial G-1
Statements................................................
</TABLE>
56
<PAGE> 60
APPENDIX A
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in limited circumstances, the globally offered Equipment Receivables
Asset-Backed Notes, Series 1999-1 (the "Global Securities") will be available
only in book-entry form. Investors in the Global Securities may hold such Global
Securities through any of The Depository Trust Company ("DTC"), Cedelbank or
Euroclear. The Global Securities will be tradeable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedelbank and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedelbank or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective Depositaries of Cedelbank and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet specific requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect Participants in DTC. As a result, Cedelbank and Euroclear will hold
positions on behalf of their participants through their respective Depositaries,
which in turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC (other than
through accounts at Cedelbank or Euroclear) will follow the settlement practices
applicable to U.S. corporate debt obligations. Investor securities custody
accounts will be credited with their holdings against payment in same-day funds
on the settlement date.
Investors electing to hold their Global Securities through Cedelbank or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds in registered form. Global Securities will be credited to
the securities custody accounts on the business day following the settlement
date against payment for value on the settlement date.
SECONDARY MARKET TRADING
Because the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants (other than Citibank, N.A. ("Citibank") and Morgan Guaranty Trust
Company of New York ("Morgan") as depositories for Cedelbank and Euroclear,
respectively) will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
Trading between Cedelbank Customers and/or Euroclear
Participants. Secondary market trading between Cedelbank Customers and/or
Euroclear Participants will be settled using the procedures applicable to
conventional eurobonds in same-day funds.
A-1
<PAGE> 61
Trading between DTC seller and Cedelbank or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC Participant
(other than Citibank and Morgan as depositories for Cedelbank and Euroclear,
respectively) to the account of a Cedelbank Customer or a Euroclear Participant,
the purchaser will send instructions to Cedelbank before settlement date 12:30.
Cedelbank or Euroclear, as the case may be, will instruct Citibank or Morgan
respectively, to receive the Global Securities against payment. Payment will
then be made by Citibank or Morgan, as the case may be, to the DTC Participant's
account against delivery of the Global Securities. After settlement has been
completed, the Global Securities will be credited to the respective clearing
system and by the clearing system, in accordance with its usual procedures, to
the Cedelbank Customer's or Euroclear Participant's account. Credit for the
Global Securities will appear the next day (European time) and cash debit will
be back-valued to, and the interest on the Global Securities will accrue from,
the value date (which would be the preceding day when settlement occurred in New
York). If settlement is not completed on the intended value date (i.e., the
trade fails), the Cedelbank or Euroclear cash debit will be valued instead as of
the actual settlement date.
Cedelbank Customers and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedelbank or Euroclear. Under this approach,
they may take on credit exposure to Cedelbank or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if Cedelbank or Euroclear has extended a line of credit
to them, Cedelbank Customers or Euroclear Participants can elect not to
pre-position funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Cedelbank Customers or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day, assuming
they cleared the overdraft when the Global Securities were credited to their
accounts. However, interest on the Global Securities would accrue from the value
date. Therefore, in many cases the investment income on the Global Securities
earned during that one-day period may substantially reduce or offset the amount
of such overdraft charges, although this result will depend on each Cedelbank
Customer's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
Citibank or Morgan for the benefit of Cedelbank Customers or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently from a trade between two DTC Participants.
Trading between Cedelbank or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, Cedelbank Customers and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through Citibank or Morgan, to another DTC Participant. The seller will send
instructions to Cedelbank before settlement date 12:30. In these cases,
Cedelbank or Euroclear will instruct Citibank or Morgan, as appropriate, to
credit the Global Securities to the DTC Participant's account against payment.
The payment will then be reflected in the account of the Cedelbank Customer or
Euroclear Participant the following business day, and receipt of the cash
proceeds in the Cedelbank Customer's or Euroclear Participant's account would be
back-valued to the value date (which would be the preceding day, when settlement
occurred in New York). If the Cedelbank Customer or Euroclear Participant has a
line of credit with its respective clearing system and elects to draw on such
line of credit in anticipation of receipt of the sale proceeds in its account,
the back-valuation may substantially reduce or offset any overdraft charges
incurred over that one-day period. If settlement is not completed on the
intended value date (i.e., the trade fails), receipt of the cash proceeds in the
Cedelbank Customer's or Euroclear Participant's account would instead be valued
as of the actual settlement date.
U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through
Cedelbank or Euroclear (or through DTC if the holder has an address outside the
U.S.) will be subject to the 30% U.S. withholding tax that
A-2
<PAGE> 62
generally applies to payments of interest (including original issue discount) on
registered debt issued by U.S. Persons, unless, under currently applicable law,
(i) each clearing system, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business in the
chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of
Certificates that are non-U.S. Persons generally can obtain a complete exemption
from the withholding tax by filing a signed Form W-8 (Certificate of Foreign
Status). If the information shown on Form W-8 changes, a new Form W-8 must be
filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Persons resident in treaty countries
(Form 1001). Non-U.S. Persons that are Certificate Owners residing in a country
that has a tax treaty with the United States can obtain an exemption or reduced
tax rate (depending on the treaty terms) by filing Form 1001 (Ownership,
Exemption or Reduced Rate Certificate). If the treaty provides only for a
reduced rate, withholding tax will be imposed at that rate unless the filer
alternatively files Form W-8. Form 1001 may be filed by the Certificate Owner or
his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds
(the clearing agency, in the case of persons holding directly on the books of
the clearing agency). Form W-8 and Form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
the income of which is includible in gross income for United States tax
purposes, regardless of its source. This summary does not deal with all aspects
of U.S. Federal income tax withholding that may be relevant to foreign holders
of the Global Securities. Investors are advised to consult their own tax
advisors for specific tax advice concerning their holding and disposing of the
Global Securities. Further, the U.S. Treasury Department has recently finalized
new regulations that would revise some aspects of the current system for
withholding on amounts paid to foreign persons. Under these proposed
regulations, interest or OID paid to a nonresident alien would continue to be
exempt from U.S. withholding taxes (including backup withholding) provided that
the holder complies with the new certification procedures.
A-3
<PAGE> 63
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of Advanta Leasing Receivables Corp. VIII:
We have audited the accompanying balance sheet of Advanta Leasing
Receivables Corp. VIII (a Nevada corporation and wholly owned subsidiary of
Advanta Business Services Corp.) as of May 13, 1999. This financial statement is
the responsibility of the Company's management. Our responsibility is to express
an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Advanta Leasing Receivables Corp.
VIII as of May 13, 1999, in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
Philadelphia, Pa.,
May 13, 1999
B-1
<PAGE> 64
ADVANTA LEASING RECEIVABLES CORP. VIII
BALANCE SHEET -- AS OF MAY 13, 1999
<TABLE>
<S> <C>
ASSET
CASH........................................................ $1,000
======
SHAREHOLDER'S EQUITY
SHAREHOLDER'S EQUITY:
Common stock (authorized, 1,000 shares, $.01 par value,
issued and outstanding, 1,000 shares).................. $ 10
Additional paid-in capital................................ 990
------
Total liabilities and shareholder's equity........ $1,000
======
</TABLE>
The accompanying notes are an integral part of this statement.
C-1
<PAGE> 65
ADVANTA LEASING RECEIVABLES CORP. VIII
NOTES TO FINANCIAL STATEMENT
MAY 13, 1999
1. NATURE OF OPERATIONS:
Advanta Leasing Receivables Corp. VIII (the "Company"), a wholly owned
subsidiary of Advanta Business Services Corp. ("ABSC"), was incorporated in the
state of Nevada on May 5, 1999. The Company has been inactive since that date.
The Company was organized to engage exclusively in the following business
and financial activities: to acquire equipment described in certain equipment
leases and to purchase equipment leases and lease receivables (collectively
lease receivables) from ABSC and any of its affiliates; to issue and sell notes
collateralized by any or all of its assets pursuant to one or more indentures
between the Company and an indenture trustee; and to engage in any lawful act or
activity and to exercise any power that is incidental and is necessary or
convenient to the foregoing and permitted under Nevada law.
2. CAPITAL CONTRIBUTION:
ABSC purchased 1,000 shares of the common stock of the Company for $1,000
on May 13, 1999.
D-1
<PAGE> 66
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of Advanta Leasing Receivables Corp. IX:
We have audited the accompanying balance sheet of Advanta Leasing
Receivables Corp. IX (a Nevada corporation and wholly owned subsidiary of
Advanta Business Services Corp.) as of May 13, 1999. This financial statement is
the responsibility of the Company's management. Our responsibility is to express
an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Advanta Leasing Receivables Corp.
IX as of May 13, 1999, in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
Philadelphia, Pa.,
May 13, 1999
E-1
<PAGE> 67
ADVANTA LEASING RECEIVABLES CORP. IX
BALANCE SHEET -- AS OF MAY 13, 1999
<TABLE>
<S> <C>
ASSET
CASH........................................................ $1,000
======
SHAREHOLDER'S EQUITY
SHAREHOLDER'S EQUITY:
Common stock (authorized, 1,000 shares, $.01 par value,
issued and outstanding, 1,000 shares).................. $ 10
Additional paid-in capital................................ 990
------
Total liabilities and shareholder's equity........ $1,000
======
</TABLE>
The accompanying notes are an integral part of this statement.
F-1
<PAGE> 68
ADVANTA LEASING RECEIVABLES CORP. IX
NOTES TO FINANCIAL STATEMENT
MAY 13, 1999
1. NATURE OF OPERATIONS:
Advanta Leasing Receivables Corp. IX (the "Company"), a wholly owned
subsidiary of Advanta Business Services Corp. ("ABSC"), was incorporated in the
state of Nevada on May 5, 1999. The Company has been inactive since that date.
The Company was organized to engage exclusively in the following business
and financial activities: to acquire equipment described in certain equipment
leases and to purchase equipment leases and lease receivables (collectively
lease receivables) from ABSC and any of its affiliates; to issue and sell notes
collateralized by any or all of its assets pursuant to one or more indentures
between the Company and an indenture trustee; and to engage in any lawful act or
activity and to exercise any power that is incidental and is necessary or
convenient to the foregoing and permitted under Nevada law.
2. CAPITAL CONTRIBUTION:
ABSC purchased 1,000 shares of the common stock of the Company for $1,000
on May 13, 1999.
G-1
<PAGE> 69
ADVANTA LEASING RECEIVABLES CORP. VIII
ADVANTA LEASING RECEIVABLES CORP. IX
ISSUERS
ADVANTA BUSINESS SERVICES CORP.
ORIGINATOR AND SERVICER
EQUIPMENT RECEIVABLES ASSET-BACKED NOTES, SERIES 1999-1
$[ ] [ %] Class A Equipment Receivables Asset-Backed Notes
$[ ] [ %] Class B Equipment Receivables Asset-Backed Notes
$[ ] [ %] Class C Equipment Receivables Asset-Backed Notes
------------------------
PROSPECTUS
------------------------
UNDERWRITERS OF THE CLASS A NOTES
UNDERWRITERS OF THE CLASS B AND CLASS C NOTES
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with different information.
We are not offering the Class A notes, the Class B notes or the Class C
notes in any state where the offer is not permitted.
Dealers will deliver a prospectus when acting as underwriters of the Class
A notes, the Class B notes or the Class C notes and with respect to their unsold
allotments or subscriptions. In addition, all dealers selling the Class A, the
Class B or the Class C notes will deliver a prospectus until ,
1999.
<PAGE> 70
PART II
ITEM 14. Other Expenses of Issuance and Distribution.
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
<TABLE>
<S> <C>
Registration Statement Fee.................................. $278
Printing and Engraving Expenses............................. *
Trustee's Fees and Expenses................................. *
Legal Fees and Expenses..................................... *
Blue Sky Fees and Expenses.................................. *
Accountants' Fees and Expenses.............................. *
Rating Agency Fees.......................................... *
Miscellaneous Fees and Expenses............................. *
----
Total............................................. $ *
====
</TABLE>
- ---------------
* To be provided by amendment.
ITEM 15. Indemnification of Directors and Officers.
Indemnification. Under the laws which govern the organization of the
registrants, the registrants have 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.
Article XI of the By-laws of Advanta Leasing Receivables Corp. VIII
provided that the corporation shall indemnify, in the manner and to the full
extent permitted by law, any person who was or is a party to, or is threatened
to be made a party to, any action, suit or proceeding, by reason of the fact
that such person 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 or another corporation, partnership, joint
venture, trust or other enterprise. To the full extent permitted by law, the
indemnification shall include expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement.
Article XI of the By-laws of Advanta Leasing Receivables Corp. IX provided
that the corporation shall indemnify, in the manner and to the full extent
permitted by law, any person who was or is a party to, or is threatened to be
made a party to, any action, suit or proceeding, by reason of the fact that such
person 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 or another corporation, partnership, joint venture, trust or
other enterprise. To the full extent permitted by law, the indemnification shall
include expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement.
The form of the Underwriting Agreement, filed as Exhibit 1.1 to this
Registration Statement, provides 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 or the
Prospectus. In addition, the Underwriting Agreement provides that the
underwriter(s) will similarly indemnify and reimburse Advanta Business Services
Corp., Advanta Leasing Receivables Corp. VIII and Advanta Leasing Receivables
Corp. IX with respect to certain material misstatements or omissions in the
Registration Statement which are
II-1
<PAGE> 71
based on certain written information furnished by the underwriter(s) for use in
the Registration Statement or the Prospectus.
Insurance. As permitted under the respective laws which govern the
organization of Advanta Business Services Corp., Advanta Leasing Receivables
Corp. VIII and Advanta Leasing Receivables Corp. IX, the by-laws of each such
corporation 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.
ITEM 16. Exhibits.
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
1.1 Form of Underwriting Agreement for the Offered Notes
3.1.1 Certificate of Incorporation of Advanta Business Services
Corp.
3.1.2 Articles of Incorporation of Advanta Leasing Receivables
Corp. VIII
3.1.3 Articles of Incorporation of Advanta Leasing Receivables
Corp. IX
3.2.1 By-Laws of Advanta Business Services Corp.
3.2.2 By-Laws of Advanta Leasing Receivables Corp. VIII
3.2.3 By-Laws of Advanta Leasing Receivables Corp. IX
4.1 Form of Master Facility Agreement
4.2 Form of Series Supplement to Master Facility Agreement
4.3 Form of Master Contribution and Sale Agreement
4.4 Form of Supplement to Master Contribution and Sale Agreement
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP with respect
to validity
8.1 Opinion of Orrick, Herrington & Sutcliffe LLP with respect
to tax matters
23.1 Consent of Orrick, Herrington & Sutcliffe LLP
23.2 Consent of Orrick, Herrington & Sutcliffe LLP
23.3 Consent of Arthur Andersen LLP
24.1 Powers of Attorney for Advanta Business Services Corp.
24.2 Powers of Attorney for Advanta Leasing Receivables Corp.
VIII
24.3 Powers of Attorney for Advanta Leasing Receivables Corp. IX
25.1 Statement of Eligibility of Trustee (Form T-1)
</TABLE>
ITEM 17. Undertakings.
Undertaking in respect of indemnification. Each of the undersigned,
Advanta Business Services Corp., Advanta Leasing Receivables Corp. VIII and
Advanta Leasing Receivables Corp. IX (collectively, the "Registrants"), hereby
undertakes that, insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of the Registrants pursuant to the foregoing provisions, or
otherwise, the Registrants have 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 Registrants of expenses incurred or
paid by a director, officer or controlling person of the Registrants 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 Registrants 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
II-2
<PAGE> 72
public policy as expressed in the Securities Act of 1933 and will be governed by
the final adjudication of such issue.
The Registrants hereby undertake:
(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 Registrants 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.
The Registrants, hereby undertake that, for purposes of determining any
liability under the Securities Act of 1933, each filing of its respective annual
report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE> 73
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Advanta Business Services Corp., a Registrant, 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 June 1, 1999.
ADVANTA BUSINESS SERVICES CORP.,
as Registrant
By: /s/ JOHN PARIS
------------------------------------
Name: John Paris
Title: Senior Vice President
KNOW ALL MEN BY THESE PRESENTS; that each person whose signature appears
below constitutes and appoints John Paris, Cole Silver and Mark D. Shapiro, and
each of them his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for and in his name, place and stead, in any
and all capacities to sign any or all amendments (including 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 person, hereby ratifying
and confirming all said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on June 1, 1999 below by the
following persons in the capacities with respect to Advanta Business Services
Corp. indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ DENNIS ALTER Director
- -----------------------------------------------------
Dennis Alter
/s/ GEORGE DEEHAN President and Chief Executive Officer, Advanta
- ----------------------------------------------------- Leasing Services (principal executive
George Deehan officer)
/s/ JOHN PARIS Senior Vice President and Chief Financial
- ----------------------------------------------------- Officer (principal financial officer and
John Paris principal accounting officer)
</TABLE>
II-4
<PAGE> 74
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Advanta Leasing Receivables Corp. VIII, a Registrant, 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 June 1, 1999.
ADVANTA LEASING RECEIVABLES CORP. VIII
By: /s/ JOHN PARIS
------------------------------------
Name: John Paris
Title: President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints John Paris, Cole Silver, and Mark D. Shapiro, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for an in his name, place and stead, in any
and all capacities to sign any or all amendments (including post-effective
amendments) to this Registration Statement and any or all other documents in
connection therewith, and to file the same, with all exhibits thereto, with the
Securities and Exchange Commission, granting unto said authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as might or could be
done in person, hereby ratifying and confirming all said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof. Pursuant to the requirements of the
Securities Act of 1933, as amended, this Registration Statement has been signed
on June 1, 1999 by the following persons in the capacities with respect to
Advanta Leasing Receivables Corp. VIII indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ GEORGE DEEHAN Director
- -----------------------------------------------------
George Deehan
/s/ JOHN PARIS President and Director (principal executive
- ----------------------------------------------------- officer)
John Paris
/s/ MICHAEL COCO Chief Financial Officer and Director
- ----------------------------------------------------- (principal financial officer and principal
Michael Coco accounting officer)
/s/ COLE SILVER Secretary and Director
- -----------------------------------------------------
Cole Silver
/s/ JANICE C. GEORGE Assistant Secretary and Director
- -----------------------------------------------------
Janice C. George
/s/ FRANCIS B. JACOBS, II Director
- -----------------------------------------------------
Francis B. Jacobs, II
</TABLE>
II-5
<PAGE> 75
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Advanta Leasing Receivables Corp. IX, a Registrant, certifies that it 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 June 1, 1999.
ADVANTA LEASING RECEIVABLES CORP. IX
By: /s/ JOHN PARIS
------------------------------------
Name: John Paris
Title: President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints John Paris, Cole Silver and Mark D. Shapiro, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for an in his name, place and stead, in any
and all capacities to sign any or all amendments (including post-effective
amendments) to this Registration Statement and any or all other documents in
connection therewith, and to file the same, with all exhibits thereto, with the
Securities and Exchange Commission, granting unto said authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as might or could be
done in person, hereby ratifying and confirming all said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof. Pursuant to the requirements of the
Securities Act of 1933, as amended, this Registration Statement has been signed
on June 1, 1999 by the following persons in the capacities with respect to
Advanta Leasing Receivables Corp. IX indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ GEORGE DEEHAN Director
- -----------------------------------------------------
George Deehan
/s/ JOHN PARIS President and Director
- ----------------------------------------------------- (principal executive officer)
John Paris
/s/ MICHAEL COCO Chief Financial Officer and Director
- ----------------------------------------------------- (principal financial officer and principal
Michael Coco accounting officer)
/s/ COLE SILVER Secretary and Director
- -----------------------------------------------------
Cole Silver
/s/ JANICE C. GEORGE Assistant Secretary and Director
- -----------------------------------------------------
Janice C. George
/s/ FRANCIS B. JACOBS, II Director
- -----------------------------------------------------
Francis B. Jacobs, II
</TABLE>
II-6
<PAGE> 76
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
1.1 Form of Underwriting Agreement for the Offered Notes
3.1.1 Certificate of Incorporation of Advanta Business Services
Corp. (incorporated herein by reference to Exhibit 3.1 to
Registration Statement on Form S-3 No. 333-38575 filed
October 23, 1997)
3.1.2 Articles of Incorporation of Advanta Leasing Receivables
Corp. VIII
3.1.3 Articles of Incorporation of Advanta Leasing Receivables
Corp. IX
3.2.1 By-Laws of Advanta Business Services Corp. (incorporated
herein by reference to Exhibit 3.1 to Registration Statement
on Form S-3 No. 333-38575 filed October 23, 1997)
3.2.2 By-Laws of Advanta Leasing Receivables Corp. VIII
3.2.3 By-Laws of Advanta Leasing Receivables Corp. IX
4.1 Form of Master Facility Agreement
4.2 Form of Series Supplement to Master Facility Agreement
4.3 Form of Master Contribution and Sale Agreement
4.4 Form of Supplement to Master Contribution and Sale Agreement
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP with respect
to validity
8.1 Opinion of Orrick, Herrington & Sutcliffe LLP with respect
to tax matters
23.1 Consent of Orrick, Herrington & Sutcliffe LLP (included in
Exhibit 5.1)
23.2 Consent of Orrick, Herrington & Sutcliffe LLP (included in
Exhibit 8.1)
23.3 Consent of Arthur Andersen LLP
24.1 Powers of Attorney for Advanta Business Services Corp.
(included on Page II-4)
24.2 Powers of Attorney for Advanta Leasing Receivables Corp.
VIII (included on Page II-5)
24.3 Powers of Attorney for Advanta Leasing Receivables Corp. IX
(included on Page II-6)
25.1 Statement of Eligibility of Trustee (Form T-1)
</TABLE>
II-7
<PAGE> 1
EXHIBIT 1.1
OH&S DRAFT
5/7/99
FORM OF UNDERWRITING AGREEMENT
1999
-------- --,
[Underwriter]
Ladies and Gentlemen:
1. Introduction. Advanta Leasing Receivables Corp. VIII ("ALRC VIII") and
Advanta Leasing Receivables Corp. IX ("ARLC IX" and, together with ALRC VIII,
the "Series Obligors") propose to issue the $___________ aggregate principal
amount of Equipment Receivables Asset-Backed Notes, Series 1999-1, Class A (the
"Class A Notes"), $____________ aggregate principal amount of Equipment
Receivables Asset-Backed Notes, Series 1999-1, Class B (the "Class B Notes"),
the $___________ aggregate principal amount of Equipment Receivables
Asset-Backed Notes, Series 1999-1, Class C (the "Class C Notes" and, together
with the Class A Notes and Class B Notes, the "Offered Notes"). The Series
Obligors also propose to issue the $___________ aggregate principal amount of
Equipment Receivables Asset-Backed Notes, Series 1999-1, Class D (the "Class D
Notes" and, together with the Offered Notes, the "Notes"). The Notes are to be
issued pursuant to Advanta Business Receivables Master Facility Agreement, dated
as of______ ___, 1999 (the "Master Agreement"), among the Series Obligors, as
issuers, Advanta Business Services Corp. ("ABS"), as servicer (in such capacity,
the "Servicer"), and _____________, as trustee (the "Trustee"), and the Series
1999-1 Supplement thereto, dated as of ________ _____, 1999 (the "Series 1999-1
Supplement" and, together with the Master Agreement, the "Agreement"), also
among the Series Obligors, ABS, as servicer, and the Trustee. Any capitalized
terms used herein but not defined shall have the meaning set forth in the
Agreement.
ABS and the Series Obligors hereby agree with _____________ (the
"Representative"), as representative of the underwriters attached on Schedule A
hereto (the "Underwriters") as follows:
2. Representations and Warranties of ALRC VIII. ALRC VIII represents and
warrants to, and agrees with, the Underwriters that:
(a) ALRC VIII 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 underwriting agreement (the
"Underwriting Agreement"), the Notes, and each of the Master Agreement, the
Series 1999-1 Supplement, the Master Contribution and Sale Agreement, dated as
of_________ _____, 1999 (the "Master Contribution Agreement"), among ABS, ALRC
VIII and ALRC IX, and the Series 1999-1 Contribution Agreement Supplement, dated
as of______ ____, 1999, among ABS, ALRC VIII and ALRC IX (the "Series 1999-1
Contribution Agreement
<PAGE> 2
Supplement" and, together with the Master Agreement, the Series 1999-1
Supplement and the Master Contribution Agreement, the "Transaction Documents").
(b) The execution and delivery of the 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 the Board of
Directors of ALRC VIII and all other necessary action has been taken.
(c) The Underwriting Agreement has been duly authorized and validly
executed and delivered by ALRC VIII.
(d) Each of the Transaction Documents will be executed and delivered
by ALRC VIII on or before the Closing Date, and when executed and delivered by
the other parties thereto, will constitute a valid and binding agreement of ALRC
VIII, enforceable against ALRC VIII in accordance with its terms, except to the
extent that (i) the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, receivership or other
similar laws now or hereafter in effect affecting the enforcement of creditors'
or other obligees' rights in general, (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 Agreement may be
unenforceable in whole or in part under the Uniform Commercial Code (the "UCC"),
but the inclusion of such provisions does not render the other provisions of the
Agreement invalid and, notwithstanding that such provisions may be unenforceable
in whole or in part, the Trustee, on behalf of the Noteholders, 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 Agreement
and, when executed by ALRC VIII and ALRC IX and authenticated by the Trustee in
accordance with the Agreement and, with respect to the Offered Notes only,
delivered pursuant to the Underwriting Agreement, will be validly issued and
outstanding and entitled to the benefits of the Agreement. The Notes will be in
all material respects in the form contemplated by the Agreement and will conform
to the description thereof contained in the Prospectus (as defined herein) and
Registration Statement (as defined herein), each as amended or supplemented.
(f) ALRC VIII 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 ALRC VIII.
(g) Neither the issuance and sale of the Offered Notes, nor the
execution and delivery by ALRC VIII of the Underwriting Agreement, the Notes or
the Transaction Documents, nor the incurrence by ALRC VIII 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)
2
<PAGE> 3
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 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 ALRC VIII of the 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 ALRC VIII as a condition to
the offer and sale of the Offered Notes as described herein 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.
(j) The Agreement has been qualified under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act").
(k) The representations and warranties made by ALRC VIII in the
Agreement and made in any Officer's Certificate of ALRC VIII delivered pursuant
to the Agreement will be true and correct at the time made and on and as of the
Closing Date as if set forth herein.
(1) ALRC VIII 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 Contracts,
except as provided in the Agreement, and agrees to take all action required by
the Agreement in order to maintain the security interest in the Contracts
granted pursuant to the Agreement.
(m) A registration statement on Form S-l (No. __________), including a
form of prospectus and such amendments thereto as may have been required to the
date hereof, relating to the Offered Notes and the offering thereof in
accordance with 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 the Underwriting Agreement, the most recent such amendment has
been declared effective by the Commission. For purposes of the Underwriting
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." The
Prospectus, together with 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
3
<PAGE> 4
"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 the
Underwriting 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 ALRC VIII 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 ALRC VIII
from _______ ____,1999.
3. Representations and Warranties of ALRC IX. ALRC IX represents and
warrants to, and agrees with, the Underwriters that:
(a) ALRC IX 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 the Underwriting Agreement, the Notes
and each of the Transaction Documents.
(b) The execution and delivery of the 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 the Board of
Directors of ALRC LX and all other necessary action has been taken.
(c) The Underwriting Agreement has been duly authorized and validly
executed and delivered by ALRC IX.
(d) Each of the Transaction Documents will be executed and delivered
by ALRC IX on or before the Closing Date, and when executed and delivered by the
other parties thereto, will constitute a valid and binding agreement of ALRC IX
enforceable against ALRC IX in accordance with its terms, except to the extent
that (i) the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, receivership or other similar laws now
or hereafter in effect affecting the enforcement of creditors' or other
obligees' rights in general, (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 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 Agreement invalid and,
notwithstanding that such provisions may be unenforceable in whole or in part,
the Trustee, on behalf of the Noteholders, will be able to enforce the remedies
of a secured party under the UCC.
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<PAGE> 5
(e) The Notes will be issued pursuant to the terms of the Agreement
and, when executed by ALRC VIII and ALRC IX and authenticated by the Trustee in
accordance with the Agreement and, with respect to the Offered Notes only,
delivered pursuant to the Underwriting Agreement, will be validly issued and
outstanding and entitled to the benefits of the Agreement. The Notes will be in
all material respects in the form contemplated by the Agreement and will conform
to the description thereof contained in the related Prospectus (as defined
herein) and Registration Statement (as defined herein), each as amended or
supplemented.
(f) ALRC IX 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 ALRC IX.
(g) Neither the issuance and sale of the Offered Notes, nor the
execution and delivery by ALRC IX of the Underwriting Agreement, the Notes or
the Transaction Documents, nor the incurrence by ALRC IX 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
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 ALRC IX of the 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 ALRC IX as a condition to the
offer and sale of the Offered Notes as described herein 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.
(j) The Agreement has been qualified under the Trust Indenture Act.
(k) The representations and warranties made by ALRC IX in the
Agreement and made in any Officer's Certificate of ALRC IX delivered pursuant to
the Agreement will be true and correct at the time made and on and as of the
Closing Date as if set forth herein.
(1) ALRC IX 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 Contracts,
except as provided in the Agreement, and agrees to take all action
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<PAGE> 6
required by the Agreement in order to maintain the security interest in the
Contracts granted pursuant to the Agreement.
(m) The Registration Statement (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 the
Act, has been filed with, and has been declared effective by, the Commission. If
any post-effective amendment to such registration statement has been filed with
the Commission prior to the execution and delivery of the Underwriting
Agreement, the most recent such amendment has been declared effective by the
Commission.
(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 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 the Underwriting
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 ALRC IX 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 ALRC IX from
________ ____,1999.
4. Purchase, Sale, Payment and Delivery of the Offered Notes. (a) On
the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, the Series Obligors
agree to sell to the Underwriters, and the Underwriters agree to purchase from
the Series Obligors, the Offered Notes, each Underwriter to purchase the amounts
shown on Schedule A hereto at the prices set forth on such Schedule A. The
Offered Notes will settle without accrued interest.
(b) The Series Obligors will deliver the Offered Notes to you against
payment of the purchase price in immediately available funds, drawn to the order
of the Series Obligors, at the office of Orrick, Herrington & Sutcliffe LLP,
[666 Fifth Avenue, New York, New York 10103] at 10:00 a.m., New York City time,
on ______ ____ 1999, or at such other time not later than seven full business
days thereafter as you and ABS determine, such time being herein referred to as
the "Closing Date." Each of the Offered Notes so to be delivered shall be
represented by one or more definitive Offered Notes registered in the name of
Cede & Co., as nominee for The Depository Trust Company. The Series Obligors
shall make such definitive Offered Notes representing the Offered Notes
available for inspection by the Underwriters at the office at which the Offered
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.
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<PAGE> 7
5. Offering by Underwriters. It is understood that after the
Effective Date, the Underwriters propose to offer the Offered Notes for sale to
the public (which may include selected dealers) as set forth in the Prospectus.
6. Certain Agreements of the Series Obligors. The Series Obligors
agree with the Underwriters that:
(a) The Series Obligors will not file any amendment of the
Registration Statement with respect to the Offered 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. The Series Obligors 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 the Series Obligors of any
notification with respect to the suspension of qualification of the Offered
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 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 Offered 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, the Series Obligors 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, the Series Obligors will make generally
available to the Noteholders an earnings statement or statements of the Series
Obligors 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) The Series Obligors 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) The Series Obligors will endeavor to qualify the Offered 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 Offered 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 Offered Notes; provided, however, that none of ABS, ALRC
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<PAGE> 8
VIII or ALRC IX shall be obligated to qualify to do business in any jurisdiction
where such qualification would subject ABS, ALRC VIII or ALRC IX, as the case
may be, to general or unlimited service of process in any jurisdiction where it
is not now so subject.
(f) For a period from the date of the Underwriting Agreement until the
retirement of the Offered Notes, ABS, as Servicer, will furnish to you copies of
each certificate and the annual statements of compliance delivered to the
Trustee pursuant to Section [6.07] of the Master Agreement and the annual
independent certified public accountant's servicing reports furnished to the
Trustee pursuant to Section [6.08] of the Master Agreement, by first class mail
as soon as practicable after such Offered Notes, statements and reports are
furnished to the Trustee.
(g) So long as any Offered Note is outstanding, the Series Obligors
will furnish to you, by first-class mail as soon as practicable (i) all
documents concerning the Offered 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 in regard to the Series Obligors or to ABS, or pursuant to a
"no action" letter obtained from the staff of the Commission by the Series
Obligors or ABS and affecting the Series Obligors or ABS and (iii) from time to
time, such other information concerning the Series Obligors as you may
reasonably request.
(h) Whether or not the transactions contemplated by the Underwriting
Agreement are consummated or the Underwriting Agreement is terminated for any
reason, except a default by you hereunder, ABS will pay all expenses incident to
the performance of ABS's and the Series Obligors' obligations under the
Underwriting Agreement and will reimburse the Underwriters for [any other fees
or expenses agreed upon by ABS and the Underwriters.]
(i) To the extent, if any, that any of the ratings provided with
respect to the Offered Notes by the Rating Agencies are conditional upon the
furnishing of documents or the taking of any other actions by the Series
Obligors, the Series Obligors shall furnish such documents and take any such
other actions.
7. Conditions of the Obligations of the Underwriters. The obligation
of the Underwriters to purchase and pay for the Offered Notes will be subject to
the accuracy of the representations and warranties on the part of the Series
Obligors herein, to the accuracy of the statements of officers of the Series
Obligors made pursuant to the provisions hereof, to the performance by the
Series Obligors of their obligations hereunder and to the following additional
conditions precedent:
(a) On or prior to the date of the Underwriting Agreement, you shall
have received a letter, dated the date of the Underwriting Agreement, of
[independent accountants], 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 6(a) of the Underwriting
Agreement; and, prior to the
8
<PAGE> 9
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 the Series Obligors or you, shall be
contemplated by the Commission.
(c) Subsequent to the execution and delivery of the Underwriting
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 the Series Obligors, ABS or Advanta Corp. which, in your judgment,
materially impairs the investment quality of the Offered Notes; (ii) any
downgrading in the rating of any debt securities of the Series Obligors, 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 the Series
Obligors, 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 Offered Notes.
(d) You shall have received an opinion, dated the Closing Date, of
Cole Silver, General Counsel for ABS and/or Woodburn and Wedge, special Nevada
counsel, to the effect that:
(i) ABS is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Such opinion shall
be based solely upon the review of a certificate issued by the Secretary
of State of the State of Delaware.
(ii) ABS is an active corporation authorized to do business and
in good standing in the State of New Jersey. Such opinion shall be based
solely upon the review of a "Short Form Standing" certificate issued by
the Secretary of State of the State of New Jersey.
(iii) Each of ALRC VIII and ALRC IX is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Nevada. Such opinion shall be based solely upon the review of a
"Certificate of Existence with Status in Good Standing" issued by the
Secretary of State of the State of Nevada.
(iv) Each of ABS, ALRC VIII and ALRC IX has taken all necessary
corporate action to authorize the execution and delivery of each of the
Transaction Documents to which it is a party and the performance of its
obligations thereunder.
(v) The execution and delivery of each of the Transaction
Documents to which ABS, ALRC VIII or ALRC IX is a party, and its
respective performance of its
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<PAGE> 10
obligations thereunder, will not (i) contravene, or constitute a default
under, any provision of applicable law or regulation or of its
certificate (or articles) of incorporation or bylaws or of any agreement,
judgment, injunction, order, decree or other instrument binding upon such
company. Such opinion shall be based upon actual knowledge.
(vi) Based on actual knowledge, there is no action, suit or
other proceeding against ABS, ALRC VIII or ALRC IX that would materially
adversely affect the business or financial condition of such party or
that would materially adversely affect the ability of such company to
perform its obligations under the Transaction Documents to which it is a
party.
(e) You shall have received an opinion dated the closing date,
of Orrick, Herrington & Sutcliffe LLP, special counsel to ALRC VIII, ALRC IX and
ABS, to the effect that:
(i) The Registration Statement has become effective under the
Act and the Prospectus has been filed with the Securities and Exchange
Commission pursuant to Rule 424(b) promulgated under the Act; to the best
of such counsel's knowledge, no stop order, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Act; and the Registration Statement and the
Prospectus (other than the financial and statistical information therein
as to which such counsel expresses no opinion), as of its effective date,
with respect to the Registration Statement, or its date, with respect to
the Prospectus, complied as to form in all material respects with
requirements of the Act and the rules and regulations promulgated
thereunder.
(ii) Each of the Underwriting Agreement, the Transaction
Documents and the Offered Notes conform in all material respects to the
descriptions thereof contained in the Registration Statement, in the form
in which it became effective, and the Prospectus.
(iii) Each of the Underwriting Agreement, the Transaction
Documents and the Offered Notes constitutes the legal, valid and binding
obligation of ABS, ALRC VIII and ALRC IX, enforceable against each of
ABS, ALRC VIII and ALRC IX in accordance with its terms, subject to (a)
limitations imposed by bankruptcy, insolvency, reorganization,
arrangement, moratorium, receivership, conservatorship, readjustment of
debts or other laws, including those relating to fraudulent transfers or
relating to or affecting the rights of creditors generally; (b) rights to
indemnification and contribution which may be limited by applicable law
or equitable principles or otherwise unenforceable as against public
policy; (c) the unenforceability under certain circumstances of
provisions imposing penalties, forfeiture, late payment charges, or an
increase in interest rate upon delinquency in payment or to the
occurrence of any event of default; or (d) general principles of equity,
including without limitation, concepts of materiality, reasonableness,
good faith and fair dealing, and the possible unavailability of specific
performance or injunctive relief, regardless of whether such
enforceability is considered in a proceeding at equity or at law.
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<PAGE> 11
(iv) The Agreement has been duly qualified under the Trust
Indenture Act of 1939, as amended.
(v) None of ABS, ALRC VIII or ALRC IX is an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(f) You shall have received from Woodburn and Wedge, special Nevada
counsel, an opinion with respect to the perfection of the security interests
granted by ALRC VIII and ALRC IX, and from ______________ an opinion with
respect to the perfection of transfers from ABS to ALRC VIII and ALRC IX.
(g) You shall have received an opinion, dated the Closing Date, from
Orrick, Herrington & Sutcliffe LLP, special counsel to ABS, ALRC VIII and ALRC
IX, with respect to federal bankruptcy matters satisfactory to the Rating
Agencies.
(h) You shall have received a certificate from ALRC VIII, dated the
Closing Date, of a Vice President or senior officer in which such officer, to
the best of his or her knowledge after reasonable investigation, shall state
that (v) the representations and warranties of ALRC VIII in the Underwriting
Agreement are true and correct in all material respects on and as of the Closing
Date, (w) ALRC VIII 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, (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
officer's attention that would lead such officer to believe that the
Registration Statement or the Prospectus, and any amendment or supplement
thereto, as of its date and as of the Closing Date, contained an untrue
statement of a material fact or omitted to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and (z) subsequent to the date of the
Prospectus, there has been no material adverse change in the financial position
or results of operation of ALRC VIII's business except as set forth in or
contemplated by the Prospectus or as described in such certificate.
(i) You shall have received a certificate from ALRC IX, dated the
Closing Date, of a Vice President or senior officer in which such officer, to
the best of his or her knowledge after reasonable investigation, shall state
that (v) the representations and warranties of ALRC IX in the Underwriting
Agreement are true and correct in all material respects on and as of the Closing
Date, (w) ALRC IX 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, (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
officer's attention that would lead such officer to believe that the
Registration Statement or the Prospectus, and any amendment or supplement
thereto, as of its date and as of the Closing Date, contained an untrue
statement of a material fact or omitted to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and (z) subsequent to the date of the
Prospectus, there has been
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<PAGE> 12
no material adverse change in the financial position or results of operation of
ALRC IX's 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 is __________________ and is authorized
thereunder to transact the business of banking and to exercise fiduciary
powers.
(ii) Each of the Transaction Documents to which the Trustee is a
party has been duly and validly authorized, executed and delivered by the
Trustee, and constitutes the legal, valid, binding and enforceable
obligations of the Trustee, except as enforceability may be limited by
(a) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization, arrangement, or other similar laws relating to bank
insolvency (including the Federal Deposit Insurance Act, as amended by
the Financial Institutions, Reform, Recovery and Enforcement Act of 1989)
and affecting the enforcement of the rights of creditors generally,
whether now or hereinafter in effect, and (b) general principles of
equity, whether such enforcement is considered in a proceeding in equity
or at law.
(k) You shall have received evidence satisfactory to you that the
Class A Notes shall be rated "___" by _________ and _________, the Class B Notes
shall be rated no lower than "___" by _________ and ________, and the Class C
Notes shall be rated no lower than "___" by _________ and ________.
(l) The Series Obligors will furnish you with such conformed copies of
such opinions, Offered Notes, letters and documents as you reasonably request.
8. 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 Offered 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 the Series Obligors
and ABS shall have furnished any amendments or supplements thereto) and, if
required by law, a copy of the Prospectus (as so
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<PAGE> 13
amended or supplemented) shall not have been furnished to such person at or
prior to the written confirmation of the sale of such Offered 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 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 the Series Obligors and ABS by the
Underwriters specifically for use therein.
(b) The Underwriters agree, severally and not jointly, to indemnify
and hold harmless the Series Obligors and ABS against any losses, claims,
damages or liabilities to which the Series Obligors or ABS may become subject,
under the Act or otherwise and will reimburse any legal or other expenses
reasonably incurred by the Series Obligors or 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 the Series Obligors or ABS by the Underwriters
specifically for use therein, and will reimburse any legal or other expenses
reasonably incurred by the Series Obligors or 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
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. 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 the Series Obligors or ABS on the one hand and
the Underwriters on the other from the offering of the Offered 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
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but also the relative fault of Series Obligors and 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 Series
Obligors and 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 Offered Notes received by the Series Obligors
and ABS bear to the total underwriting discounts and commissions received by the
Underwriters with respect to the Offered 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 the Series Obligors and 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 Offered 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 (c) 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 (c). Notwithstanding the provisions of this subsection (c), the
Underwriters shall not be required to contribute any amount in excess of the
amount by which the total price at which the Offered 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 Offered 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. The obligations of the Series Obligors and ABS under this
Section shall be in addition to any liability which the Series Obligors and 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 the Series Obligors and ABS,
to each officer of the Series Obligors and ABS who has signed the Registration
Statement and to each person, if any, who controls a Series Obligor or ABS
within the meaning of the Act.
9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Series Obligors and ABS or their officers and of the
Underwriters set forth in or made pursuant to the Underwriting 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, the Series
Obligors and ABS or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Notes. If the Underwriting Agreement is terminated, or if for
any reason other than default by the Underwriters the purchase of the Offered
Notes by the Underwriters is not consummated, the Series Obligors and ABS shall
remain responsible for the expenses to be paid or reimbursed by it pursuant to
Section 6 and the respective obligations of the Series Obligors and ABS and the
Underwriters pursuant to Section 8 shall remain in effect. If for any reason the
purchase of the Offered 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 7(c) or because of the failure of the Underwriters to comply with
the terms of this
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<PAGE> 15
Underwriting Agreement, the Series Obligors and ABS will reimburse the
Underwriters for all out-of-pocket expenses (including ________ and ________ to
the extent set forth in Section 6(h)) reasonably incurred by them in connection
with the offering of the Offered Notes.
10. Computational Materials and ABS Term Sheets.
(a) Each Underwriter agrees to provide to the Series Obligors and ABS,
not less than two Business Days prior to the date on which the Series Obligors
and ABS are required to file the Prospectus pursuant to Rule 424(b), any
information used by it (in such written or electronic format as required by the
Series Obligors and ABS) with respect to the offering of the Offered 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 the Series Obligors and ABS,
not less than two Business Days prior to the date on which the Series Obligors
and ABS are required to file the Prospectus pursuant to Rule 424(b), any
information used by it (in such written or electronic format as required by the
Series Obligors and ABS) with respect to the offering of the Offered 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 the Series Obligors and ABS is accurate and complete in all material
respects, to indemnify and hold harmless the Series Obligors and ABS, each of
the officers and directors of the Series Obligors and ABS and each person who
controls the Series Obligors and 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 10(c) shall be in addition to
any liability that the Underwriter may otherwise have.
The procedures set forth in Sections 8(b) and 8(c) shall be equally
applicable to this Section 10(c).
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<PAGE> 16
11. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to the Representative.
12. Counterparts. The Underwriting 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.
13. Applicable Law. THE UNDERWRITING AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF.
14. Financial Services Act. Each Underwriter represents and warrants
to, and agrees with, the Series Obligors and ABS that (w) it has complied and
will 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 Offered Notes in, from or
otherwise involving the United Kingdom; (x) it has only issued or passed on and
will only issue or pass on in the United Kingdom any document received by it in
connection with the issue of the Offered Notes to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or are persons to whom the document may
otherwise lawfully be issued or passed on; (y) if it is an authorized person
under Chapter III of part I of the Financial Services Act 1986, it has only
promoted and will only promote (as that term is defined in Regulation 1.02(2) of
the Financial Services (Promotion of Unregulated Schemes Regulations 1991) to
any person in the United Kingdom the scheme described in the Prospectus if that
person is of a kind described in either section 76(2)of the Financial Services
Act 1986 or in Regulation 1.04 of the Financial Services (Promotion of
Unregulated Schemes) Regulation 1991; and (z) it is a person of a kind described
in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996.
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<PAGE> 17
If you are in agreement with the foregoing, please sign two counterparts
hereof and return one to the Series Obligors and ABS whereupon this letter and
your acceptance shall become a binding agreement among the Series Obligors and
ABS and the Underwriters.
Very truly yours,
ADVANTA BUSINESS SERVICES CORP.
By:
----------------------
Name:
Title:
ADVANTA LEASING RECEIVABLES CORP. VIII
By:
----------------------
Name:
Title:
ADVANTA LEASING RECEIVABLES CORP. IX
By:
----------------------
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date hereof
[Underwriter]
as Representative of the
Underwriters set forth herein
By:
------------------
Name:
Title:
<PAGE> 18
SCHEDULE A
<TABLE>
<S> <C> <C>
Principal
Amount of
Underwriters Class A Notes Price
- ------------ ------------- -----
Principal
Amount of
Underwriters Class B Notes Price
- ------------ ------------- -----
Principal
Amount of
Underwriters Class C Notes Price
- ------------ ------------- -----
</TABLE>
<PAGE> 1
EXHIBIT 3.1.2
ARTICLES OF INCORPORATION
OF
ADVANTA LEASING RECEIVABLES CORP. VIII
I, the person hereinafter named as incorporator, for the
purpose of establishing a corporation under the provisions and subject to the
requirements of Title 7, chapter 78 of the Nevada Revised Statutes and the acts
amendatory thereof, and hereinafter sometimes referred to as the General
Corporation Law of the State of Nevada, do hereby adopt and make the following
Articles of Incorporation:
ARTICLE FIRST
The name of this corporation is ADVANTA LEASING RECEIVABLES
CORP. VIII (the "Corporation").
ARTICLE SECOND
The address of the Corporation's registered office and
resident agent in the State of Nevada is as follows:
639 Isbell Road
Suite 390
Reno, Nevada 89509
The resident agent at the foregoing address is Griffin Corporate
Services, located in Washoe County.
ARTICLE THIRD
The total number of shares which this Corporation is
authorized to issue is one-thousand (1,000), all of which are of a par value of
One Cent ($0.01) per share. All of said shares are of one class and are
designated as common stock.
No holder of any of the shares of any class of the Corporation
shall be entitled as a right to subscribe for, purchase or otherwise acquire any
shares of any class of the Corporation which the Corporation proposes to issue,
or any rights to options which the Corporation proposes to grant for the
purchase of shares of any class of the Corporation or for the purchase of any
shares, bonds, securities, or obligations of the Corporation which are
convertible into or exchangeable for, or which carry any rights to subscribe
for, purchase or otherwise acquire shares of any class of the Corporation; and
any and all of such shares, bonds, securities or obligations of the Corporation,
whether now or hereafter authorized or created, may be issued or may be reissued
or transferred if the same have been reacquired and have treasury status, and
any and all of such rights and options may be granted by the
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<PAGE> 2
Board of Directors to such persons, firms, corporations and associations for
such lawful consideration and on such terms as the Board of Directors in its
discretion may determine, without first offering the same, or any thereof, to
any said holder.
The capital stock of the Corporation, after the amount of the
consideration for the issuance of shares, as determined by the Board of
Directors, has been paid, is not subject to assessment to pay the debts of the
Corporation and no stock issued as fully paid up may ever be assessed, and the
Articles of Incorporation cannot be amended in this respect.
ARTICLE FOURTH
(a) The governing board of the Corporation shall be styled as
a "Board of Directors", and any member of said Board shall be styled as a
"Director" except as provided by statute.
(b) The number of members constituting the first Board of
Directors of the Corporation is six; and the name and post office box or street
address, either residence or business, of each of said members is as follows:
<TABLE>
<CAPTION>
NAME ADDRESS
- ---- -------
<S> <C>
George Deehan 1020 Laurel Oak Road
Voorhees, New Jersey 08043
John Paris 1020 Laurel Oak Road
Voorhees, New Jersey 08043
Michael Coco 1020 Laurel Oak Road
Voorhees, New Jersey 08043
Cole Silver 1020 Laurel Oak Road
Voorhees, New Jersey 08043
Janice C. George 639 Isbell Road, Suite 390
Reno, Nevada 89502
Francis B. Jacobs, II c/o Delaware Trust Capital Management
900 Market Street
Wilmington, DE 19801
</TABLE>
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<PAGE> 3
The number of directors of the corporation may be increased or
decreased in the manner provided in the By-laws of the Corporation, provided,
that the number of directors shall never be less than one, and provided, further
that the sole remaining director must be an Independent Director. The
Corporation shall at all times have at least two independent directors, (each an
"Independent Director") except where there is only one remaining director.
Each Independent Director shall satisfy the following
conditions:
(i) Such Independent Director shall be an individual who
is not, and never was and does not have any family member who is or
ever was,
(A) a stockholder, director, officer, employee,
affiliate, associate, customer or supplier of, or any person
that has received any benefit (excluding, however, any
compensation received by the director, in such person's
capacity as director as required by this Article FOURTH) in
any form whatever from, or any person that has provided any
service (excluding, however, any service provided by the
director, in such person's capacity as director as required by
this Article FOURTH) in any form whatever to, Advanta Corp.,
Advanta Business Services Corp. or any of their affiliates,
subsidiaries, parents or associates, or
(B) (i) any person owning beneficially, directly or
indirectly, any outstanding shares of common stock of Advanta
Corp., Advanta Business Services Corp. or any of their
affiliates, subsidiaries, parents or (ii) a stockholder,
director, officer, employee, affiliate, associate, customer or
supplier of, or any person that has received any benefit
(excluding, however, any compensation received by the
director, in such person's capacity as director as required by
this Article FOURTH) in any form whatever from, or any person
that has provided any service (excluding, however, any service
provided by the director, in such person's capacity as
director as required by this Article FOURTH) in any form
whatever to, such beneficial owner or any of such beneficial
owner's affiliates or associates; provided, that, the
ownership of up to 5% of any class of stock (other than stock
of the Corporation) listed on a national securities exchange
shall not prevent an individual from meeting the requirements
of this Article FOURTH;
provided, that, such Independent Director may act as a director or
officer of other special purpose corporations or special purpose
entities.
Each Independent Director shall satisfy the following
conditions:
(i) No director serving pursuant to the requirements of
this Article FOURTH shall, with regard to any act, or failure to act,
in connection with any
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<PAGE> 4
matter referred to in clause (iv) of Article EIGHTH, owe a fiduciary
duty or other obligation to the stockholders (except as may
specifically be required by the statutory law of any applicable
jurisdiction); instead, such director's fiduciary duty and other
obligations with regard to such act, or failure to act, in connection
with any matter referred to in clause (iv) of Article EIGHTH shall be
owed to the Corporation, including, without limitation, the creditors
of the Corporation. Every stockholder shall be deemed to have consented
to the foregoing by virtue of such stockholder's purchase of shares of
capital stock of the Corporation, no further act or deed of any
stockholder being required to evidence such consent;
(ii) As used in this Article FOURTH, the term "person"
means a natural person, corporation or other entity, government, or
political subdivision, agency, or instrumentality of a government; an
"affiliate" of a person is a person that directly, or indirectly
through one of more intermediaries, controls or is controlled by, or is
under common control with, or owns, directly or indirectly, 50% or more
of, the person specified; and the term "associate," when used to
indicate a relationship with any person, means (1) a corporation or
organization of which such person is an officer, director or partner or
is, directly or indirectly, the beneficial owner of 10% or more of any
class of equity securities, (2) any trust or other estate in which such
person serves as trustee or in a similar capacity, and (3) any relative
or spouse of such person, or any relative of such spouse, who has the
same home as such person;
(iii)When voting on matters subject to the vote of the
Board of Directors, including those matters specified in clause (iv) of
Article EIGHTH hereof, notwithstanding that the Corporation is not then
insolvent, the directors serving pursuant to the requirements of this
Article FOURTH shall take into account the interests of the creditors
of the Corporation as well as the interests of the Corporation.
(C) In the interim between elections of directors by
stockholders entitled to vote, all vacancies, including vacancies caused by an
increase in the number of directors and including vacancies resulting from the
removal of directors by the stockholders entitled to vote which are not filled
by said stockholders, may be filled by the remaining directors or the sole
remaining director, though less than a quorum.
ARTICLE FIFTH
The name and address of the incorporator is as follows:
Gregg Barnard
Woodburn & Wedge
One East First Street, Suite 1600
Reno, NV 89501
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<PAGE> 5
ARTICLE SIXTH
The business in which the Corporation may engage and the
powers which the Corporation may exercise are restricted exclusively to the
following:
(a) to acquire from time to time all right, title and interest
in and to (i) financial contracts including but not limited to, lease
contracts, loans, accounts receivables, credit card receivables, credit
line receivables, insurance policy loans or premiums or installment
sale or lease contracts or promissory notes, arising out of or relating
to, the purchase or lease of equipment or goods, whether or not secured
by such equipment or goods, receivables or other rights to monies due
or to become due under any such financial contracts, security interests
therein, proceeds form claims on insurance policies related thereto, or
(ii) the equipment and/or goods which are the subject of any of such
financial contracts or the residual value of such equipment or goods or
rights in such equipment or goods or any interest therein and the right
to acquire equipment in goods or an interest therein or proceeds from
the sale or other disposition of such equipment or goods or any other
interest in such equipment or goods and the proceeds thereof and rights
therein or value thereof, or (iii) any participation interest
(including, without limitation, interest only strips) in or security
based on or backed by any of the foregoing and related rights and other
property appurtenant thereto (items in (a)(i), (a)(ii) and (a)(iii),
collectively, the "Assets");
(b) enter into agreements to acquire assets by purchase,
contribution or any other method;
(c) to acquire, own, hold, service, sell, assign, pledge and
otherwise deal with the Assets, collateral securing or otherwise
relating to the Assets, related insurance policies, agreements with
vendors or lessors or other originators or servicers of Assets and any
proceeds or further rights associated with any of the foregoing;
(d) from time to time to transfer, pledge and/or grant a
security interest or other lien on Assets to one or more trusts, banks,
financial institutions, commercial paper issuers, insurance companies
or similar entities pursuant to one or more pooling and servicing
agreements, indentures, master facility agreements or other agreements
("Securitization Agreements"), to be entered into by, among others, the
Corporation, the trustee named therein (the "Trustee"), and any entity
acting as servicer of the Assets;
(e) to transfer from time to time Assets pursuant to one or
more receivables transfer agreements, sale and purchase agreements or
other agreements ("Receivables Transfer Agreements"), to be entered
into by, among other things, the Corporation, any entity acting as
placement agent, the transferor of the Assets, and any entity acting as
servicer of the Assets;
5
<PAGE> 6
(f) to authorize, and cause the issuance of one or more series
of notes, certificates or other securities issued pursuant to
Securitization Agreements or Receivables Transfer Agreements;
(g) to authorize, borrow, issue, sell and deliver one or more
series and classes of bonds, notes or other evidences of indebtedness
secured or collateralized by one or more pools of Assets issued under a
Securitization Agreement or Receivables Transfer Agreement by
certificates of any class issued by any trust established by the
Corporation (collectively, the "Asset-Backed Securities"), provided
that the Corporation shall have absolutely no liability under any
Asset-Backed Securities except to the extent of the Assets or the
certificates securing or collateralizing such Asset-Backed Securities
and to enter into interest rate swaps, interest rate caps or other
hedging transactions;
(h) to acquire from the Trustee certificates or other
subordinate Asset-Backed Securities issued under the Securitization
Agreements or Receivables Transfer Agreement pursuant to which the
Corporation transferred Assets or granted security interests;
(i) to hold and enjoy all of the rights and privileges of any
certificates or other subordinate Asset-Backed Securities issued to the
Corporation under the related agreements;
(j) to purchase Assets from and sell Assets to any Related
Company or any third party as defined in Article EIGHTH in connection
with Securitization Agreements or Receivables Transfer Agreements;
(k) to perform its obligations under each Securitization
Agreement, Receivables Transfer Agreement, Interim Agreement (as
defined below) or other agreement entered into by the Corporation;
(l) to invest proceeds from any Assets, and any other income
as determined by the Board of Directors, including investing in other
Assets;
(m) to enter from time to time into interim arrangements
relating to the Assets whereby assets are transferred to a custodian on
behalf of the entity providing financing, pursuant to one or more
repurchase agreements or other agreements (each, an "Interim
Agreement") to be entered into by, among others, the Corporation, the
entity providing financing, the custodian named therein and any entity
acting as servicer of the Assets; provided, however, that the
Corporation shall have no liability under any Interim Agreement except
to the extent of the Assets funded thereby; and
(n) to engage in any acts and activities and exercise any
powers permitted to corporations under the laws of the State of Nevada
which are incidental
6
<PAGE> 7
to, or connected with, the foregoing, and necessary, suitable or
convenient to accomplish any of the foregoing.
ARTICLE SEVENTH
No Director or, to the extent specified from time to time by
the Board of Directors, officer of the Corporation will be liable to the
Corporation or its stockholders for damages for breach of fiduciary duty as a
director or officer, excepting only (a) acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law or (b) the payment
of dividends in violation of 78.300 of the Nevada Revised Statutes. No amendment
or repeal of this Article SEVENTH applies to or has any effect on the liability
or alleged liability of any Director or officer of this Corporation for or with
respect to any acts or omissions of the Director or officer occurring prior to
the amendment or repeal, except as otherwise required by law. In the event that
Nevada law is amended to authorize the further elimination or limitation of
liability of directors or officers, then this Article SEVENTH shall also be so
amended to provide for the elimination or limitation of liability to the fullest
extent permitted by Nevada law.
The Corporation shall indemnify the officers and directors of
the Corporation to the fullest extent permitted by the Nevada Private
Corporations Law as the same exists or may hereafter be amended. In the event
that the Nevada Private Corporations Law is amended, after the filing of these
Articles of Incorporation, to authorize corporate action further eliminating or
limiting the personal liability of an officer or director, then the liability of
an officer or director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Nevada Private Corporations Law, as so amended.
The Corporation shall pay the expenses incurred by an officer
or director in defending any civil, criminal, administrative, or investigative
action, suit or proceeding in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
officer or director to repay such amount if it should be ultimately determined
that he/she is not entitled to be indemnified by the Corporation as authorized
by Nevada Private Corporations Law.
Any amendment to or repeal of any of the provisions in this
Article SEVENTH shall not adversely affect any right or protection of an officer
or director of the Corporation for or with respect to any act or omissions of
such director occurring prior to such amendment or repeal.
ARTICLE EIGHTH
Notwithstanding any other provision of these Articles of
Incorporation and any provision of law that otherwise so empowers the
Corporation, the Corporation shall not, without the prior written consent of the
Trustee under any applicable Securitization Agreement (and any supplements
thereto) and the purchaser under any applicable Receivables Transfer Agreement,
do any of the following:
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<PAGE> 8
(i) (x) consolidate or merge with or into any other
entity or convey, transfer or assign to any Related Company (as defined
below), or dissolve or transfer its properties and assets substantially
as an entirety to any entity (other than pursuant to a Securitization
Agreement or a Receivables Transfer Agreement) , or lend or advance any
moneys to, or make an investment in, any person or amend or repeal
Article FOURTH (b), Article SIXTH, Article NINTH or this Article EIGHT
of these Articles of Incorporation or (y) engage in any other action
that bears on whether the separate legal identity of the Corporation
and any Related Company will be respected, including, without
limitation (a) holding itself out as being liable for the debts of any
other party; (b) forming, or causing to be formed, any subsidiaries;
(c) acting other than in its corporate name and through its duly
authorized officers or agents; (d) failing to hold appropriate meetings
of the Board of Directors at least three times per annum and otherwise
as necessary to authorize all corporate action; and (e) failing to hold
meetings of the stockholders at least one time per annum;
(ii) incur any indebtedness, or assume or guaranty any
indebtedness of any other entity, in either such case which involves a
pledge of the Corporation's general corporate credit; the Corporation
may only incur indebtedness in the form of the non-recourse
Asset-Backed Securities authorized pursuant to Article SIXTH;
(iii)consolidate or merge with or into any other entity
or convey or transfer its properties and assets substantially as an
entirety to any entity, unless
(A) the entity (if other than the Corporation) formed
or surviving the consolidation or merger or which acquires the
properties and assets of the Corporation is organized and
existing under the laws of the State of Nevada, expressly
assumes the due and punctual payment of all obligations of the
Corporation, including those obligations of the Corporation
under each Securitization Agreement and each Receivables
Transfer Agreement and has Articles of Incorporation
containing provisions substantially identical to the
provisions of Articles FOURTH, SIXTH and this Article EIGHTH;
and
(B) immediately after giving effect to the
transaction, no default or event of default has occurred and
is continuing under any Securitization Agreement or any
Receivables Transfer Agreement; or
(iv) without (A) the affirmative vote of 100% of the
members of the Board of Directors of the Corporation (including an
affirmative vote of each Independent Director required by Article
FOURTH) and (B) the affirmative vote of the holders of 100% of the
common stock outstanding of the Corporation, make an assignment for the
benefit of creditors, file a petition in bankruptcy, petition or apply
to any tribunal for the appointment of a custodian, receiver or any
trustee for it or for a substantial part of its property, commence any
proceeding under any
8
<PAGE> 9
bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, whether
now or hereinafter in effect, consent or acquiesce to the entry of an
order for relief, or in the filing of any such petition, application,
proceeding or appointment of or taking possession by the custodian,
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Corporation or any substantial part of its property,
or admit its inability to pay its debts generally as they become due or
authorize any of the foregoing to be done or taken on behalf of the
Corporation; provided that if there shall not be two directors required
by Article FOURTH (b) of these Articles of Incorporation then in office
and acting, a vote upon any matter set forth in this Article EIGHTH
shall not be taken unless and until two directors meeting the
requirements of Article FOURTH (b) of these Articles of Incorporation
shall have been elected.
For purpose of these Articles of Incorporation, "Related
Company" means the stockholder or stockholders of this Corporation or any entity
other than this Corporation now or hereafter controlled directly or indirectly
by, or under direct or indirect common control with, the stockholders of this
Corporation.
ARTICLE NINTH
In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors of the Corporation is expressly authorized:
(a) To make, alter, amend or repeal the By-laws of the
Corporation, except that such By-laws or any alteration, amendment or
repeal thereof shall not in any manner impair the intent of, Article
SIXTH, Article EIGHTH or this Article NINTH of these Articles of
Incorporation.
(b) To determine the use and disposition of any surplus and
net profits of the Corporation, including the determination of the
amount of working capital required, to set apart out of any of the
funds of the Corporation, whether or not available for dividends, a
reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
(c) By a majority of the Board of Directors, to designate one
or more committees, each committee to consist of one or more of the
directors of the Corporation. The Board of Directors may designate one
or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the
committee. The By-laws may provide that in the absence or
disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member. Any such committee, to
the extent provided in the resolution of the Board of Directors, or in
the By-laws of the Corporation, shall
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<PAGE> 10
have and may exercise all the powers and authority 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 to all papers which may require it; and no such committee shall
have the power or authority in reference to amending the Articles of
Incorporation, to authorize or take any action described in Article
SIXTH, Article EIGHTH and this Article NINTH, adopting an agreement of
merger or consolidation, recommending to the stockholders the sale,
lease, or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders a dissolution of
the Corporation or a revocation of a dissolution, or amending the
By-laws of the Corporation; and no such committee shall have the power
or authority to declare a dividend or to authorize the issuance of
stock.
(d) When and as authorized by the stockholders in accordance
with statute, to sell, lease or exchange all or substantially all of
the property and assets of the Corporation, including its good will and
its corporate franchise, upon such terms and conditions and for such
consideration, which may consist in whole or in part of money or
property including shares of stock in, and/or other securities of, any
other corporation or corporations, as the Board of Directors shall deem
expedient for the best interests of the Corporation.
(e) To exercise, in addition to the powers and authorities
hereinbefore or by law conferred upon it, any such powers and
authorities and do all such acts and things as may be exercised or done
by the Corporation, subject, nevertheless, to the provisions of the
laws of the State of Nevada and of these Articles of Incorporation and
of the By-laws of the Corporation.
In addition to the foregoing, the Corporation shall, except as
otherwise provided in the documents relating to the securitization of
the Assets, conduct its affairs in the following manner:
(i) it shall not commingle the Corporation's assets with those
of any Related Company;
(ii) it shall maintain separate corporate records and books of
account from those of any Related Company;
(iii) it shall conduct its business from an office separate
from any Related Company;
(iv) it shall maintain its assets separately from the accounts
of any other Person (including through the maintenance of a separate
bank account); and
(v) it shall pay from its assets all Asset-Backed Securities
issued by it, and shall not pay from its assets any obligations or
10
<PAGE> 11
indebtedness of any other entity or person.
ARTICLE TENTH
Without (i) the prior written consent of each Trustee under
any Securitization Agreement (and any supplements thereto), (ii) the affirmative
vote of 100% of the members of the Board of Directors of the Corporation,
including, without limitation, the affirmative vote of each of the directors
required by Article FOURTH (b) of these Articles of Incorporation, and (iii) the
affirmative vote of the holders of 100% of the Common Stock outstanding, the
Corporation shall not amend, alter, change or repeal Article FOURTH, Article
SIXTH, Article EIGHTH, Article NINTH or this Article TENTH; provided, however,
that if the two directors required by Article FOURTH (b) of these Articles of
Incorporation are not then in office and acting, a vote upon any matter set
forth in this Article TENTH shall not be taken unless and until two directors
meeting the requirements of Article FOURTH (b) of these Articles of
Incorporation shall have been elected and shall be present and acting at such
vote.
ARTICLE ELEVENTH
The Corporation is to have perpetual existence.
I, THE UNDERSIGNED, being the incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the laws of the State of
Nevada, as amended, do make this certificate, hereby declaring and certifying
that this is my act and deed and that the facts herein stated are true and that
I have accordingly hereunto affixed my signature this 5th day of May, 1999.
/s/ Gregg P. Barnard
---------------------------
Gregg P. Barnard
Incorporator
11
<PAGE> 12
STATE OF NEVADA )
)
COUNTY OF WASHOE )
This instrument was acknowledged before me on May 5, 1999, by Gregg P.
Barnard.
/s/ Victoria Crisologo
------------------------------------
NOTARY PUBLIC
My Commission Expires: 2/10/2003
--------------
12
<PAGE> 1
EXHIBIT 3.1.3
ARTICLES OF INCORPORATION
OF
ADVANTA LEASING RECEIVABLES CORP. IX
I, the person hereinafter named as incorporator, for the
purpose of establishing a corporation under the provisions and subject to the
requirements of Title 7, chapter 78 of the Nevada Revised Statutes and the acts
amendatory thereof, and hereinafter sometimes referred to as the Nevada Private
Corporations Law, do hereby adopt and make the following Articles of
Incorporation:
ARTICLE FIRST
The name of this corporation is ADVANTA LEASING RECEIVABLES
CORP. IX (the "Corporation").
ARTICLE SECOND
The address of the Corporation's registered office and
resident agent in the State of Nevada is as follows:
639 Isbell Road
Suite 390
Reno, Nevada 89509
The resident agent at the foregoing address is Griffin Corporate
Services, located in Washoe County.
ARTICLE THIRD
The total number of shares which this Corporation is
authorized to issue is one-thousand (1,000), all of which are of a par value of
One Cent ($0.01) per share. All of said shares are of one class and are
designated as common stock.
No holder of any of the shares of any class of the Corporation
shall be entitled as a right to subscribe for, purchase or otherwise acquire any
shares of any class of the Corporation which the Corporation proposes to issue,
or any rights to options which the Corporation proposes to grant for the
purchase of shares of any class of the Corporation or for the purchase of any
shares, bonds, securities, or obligations of the Corporation which are
convertible into or exchangeable for, or which carry any rights to subscribe
for, purchase or otherwise acquire shares of any class of the Corporation; and
any and all of such shares, bonds, securities or obligations of the Corporation,
whether now or hereafter authorized or created, may be issued or may be reissued
or transferred if the same have been reacquired and have treasury status, and
any and all of such rights and options may be granted by the
<PAGE> 2
Board of Directors to such persons, firms, corporations and associations for
such lawful consideration and on such terms as the Board of Directors in its
discretion may determine, without first offering the same, or any thereof, to
any said holder.
The capital stock of the Corporation, after the amount of the
consideration for the issuance of shares, as determined by the Board of
Directors, has been paid, is not subject to assessment to pay the debts of the
Corporation and no stock issued as fully paid up may ever be assessed, and the
Articles of Incorporation cannot be amended in this respect.
ARTICLE FOURTH
(a) The governing board of the Corporation shall be styled as
a "Board of Directors", and any member of said Board shall be styled as a
"Director" except as provided by statute.
(b) The number of members constituting the first Board of
Directors of the Corporation is six; and the name and post office box or street
address, either residence or business, of each of said members is as follows:
<TABLE>
<CAPTION>
NAME ADDRESS
- ---- -------
<S> <C>
George Deehan 1020 Laurel Oak Road
Voorhees, New Jersey 08043
John Paris 1020 Laurel Oak Road
Voorhees, New Jersey 08043
Michael Coco 1020 Laurel Oak Road
Voorhees, New Jersey 08043
Cole Silver 1020 Laurel Oak Road
Voorhees, New Jersey 08043
Janice C. George 639 Isbell Road, Suite 390
Reno, Nevada 89502
Francis B. Jacobs, II c/o Delaware Trust Capital Management
900 Market Street
Wilmington, DE 19801
</TABLE>
2
<PAGE> 3
The number of directors of the corporation may be increased or
decreased in the manner provided in the By-laws of the Corporation, provided,
that the number of directors shall never be less than one, and provided, further
that the sole remaining director must be an Independent Director. The
Corporation shall at all times have at least two independent directors, (each an
"Independent Director") except where there is only one remaining director.
Each Independent Director shall satisfy the following
conditions:
(i) Such Independent Director shall be an individual who
is not, and never was and does not have any family member who is or
ever was,
(A) a stockholder, director, officer, employee,
affiliate, associate, customer or supplier of, or any person
that has received any benefit (excluding, however, any
compensation received by the director, in such person's
capacity as director as required by this Article FOURTH) in
any form whatever from, or any person that has provided any
service (excluding, however, any service provided by the
director, in such person's capacity as director as required by
this Article FOURTH) in any form whatever to, Advanta Corp.,
Advanta Business Services Corp. or any of their affiliates,
subsidiaries, parents or associates, or
(B) (i) any person owning beneficially, directly or
indirectly, any outstanding shares of common stock of Advanta
Corp., Advanta Business Services Corp. or any of their
affiliates, subsidiaries, parents or (ii) a stockholder,
director, officer, employee, affiliate, associate, customer or
supplier of, or any person that has received any benefit
(excluding, however, any compensation received by the
director, in such person's capacity as director as required by
this Article FOURTH) in any form whatever from, or any person
that has provided any service (excluding, however, any service
provided by the director, in such person's capacity as
director as required by this Article FOURTH) in any form
whatever to, such beneficial owner or any of such beneficial
owner's affiliates or associates; provided, that, the
ownership of up to 5% of any class of stock (other than stock
of the Corporation) listed on a national securities exchange
shall not prevent an individual from meeting the requirements
of this Article FOURTH;
provided, that, such Independent Director may act as a director or
officer of other special purpose corporations or special purpose
entities.
Each Independent Director shall satisfy the following
conditions:
(i) No director serving pursuant to the requirements of
this Article FOURTH shall, with regard to any act, or failure to act,
in connection with any
3
<PAGE> 4
matter referred to in clause (iv) of Article EIGHTH, owe a fiduciary
duty or other obligation to the stockholders (except as may
specifically be required by the statutory law of any applicable
jurisdiction); instead, such director's fiduciary duty and other
obligations with regard to such act, or failure to act, in connection
with any matter referred to in clause (iv) of Article EIGHTH shall be
owed to the Corporation, including, without limitation, the creditors
of the Corporation. Every stockholder shall be deemed to have consented
to the foregoing by virtue of such stockholder's purchase of shares of
capital stock of the Corporation, no further act or deed of any
stockholder being required to evidence such consent;
(ii) As used in this Article FOURTH, the term "person"
means a natural person, corporation or other entity, government, or
political subdivision, agency, or instrumentality of a government; an
"affiliate" of a person is a person that directly, or indirectly
through one of more intermediaries, controls or is controlled by, or is
under common control with, or owns, directly or indirectly, 50% or more
of, the person specified; and the term "associate," when used to
indicate a relationship with any person, means (1) a corporation or
organization of which such person is an officer, director or partner or
is, directly or indirectly, the beneficial owner of 10% or more of any
class of equity securities, (2) any trust or other estate in which such
person serves as trustee or in a similar capacity, and (3) any relative
or spouse of such person, or any relative of such spouse, who has the
same home as such person;
(iii)When voting on matters subject to the vote of the
Board of Directors, including those matters specified in clause (iv) of
Article EIGHTH hereof, notwithstanding that the Corporation is not then
insolvent, the directors serving pursuant to the requirements of this
Article FOURTH shall take into account the interests of the creditors
of the Corporation as well as the interests of the Corporation.
(C) In the interim between elections of directors by
stockholders entitled to vote, all vacancies, including vacancies caused by an
increase in the number of directors and including vacancies resulting from the
removal of directors by the stockholders entitled to vote which are not filled
by said stockholders, may be filled by the remaining directors or the sole
remaining director, though less than a quorum.
ARTICLE FIFTH
The name and address of the incorporator is as follows:
Gregg Barnard
Woodburn & Wedge
Wells Fargo Tower
One East First Street, Suite 1600
Reno, NV 89501
4
<PAGE> 5
ARTICLE SIXTH
The business in which the Corporation may engage and the
powers which the Corporation may exercise are restricted exclusively to the
following:
(a) to acquire from time to time all right, title and interest
in and to (i) financial contracts including but not limited to, lease
contracts, loans, accounts receivables, credit card receivables, credit
line receivables, insurance policy loans or premiums, or installment
sale or lease contracts or promissory notes, arising out of or relating
to, the purchase or lease of equipment or goods, whether or not secured
by such equipment or goods, receivables or other rights to monies due
or to become due under any such financial contracts, security interests
therein, proceeds from claims on insurance policies related thereto, or
(ii) any participation interest (including, without limitation,
interest only strips) in or security based on or backed by any of the
foregoing and related rights and other property appurtenant thereto
(items in (a)(i) and (a)(ii), collectively, the "Assets");
(b) to enter into agreements to acquire assets by purchase,
contribution or any other method;
(c) to acquire, own, hold, service, sell, assign, pledge and
otherwise deal with the Assets, collateral securing or otherwise
relating to the Assets, related insurance policies, agreements with
vendors or lessors or other originators or servicers of Assets and any
proceeds or further rights associated with any of the foregoing;
(d) from time to time, to transfer, pledge and/or grant a
security interest or other lien on Assets to one or more trusts, banks,
financial institutions, commercial paper issuers, insurance companies
or similar entities pursuant to one or more pooling and servicing
agreements, indentures, master facility agreements or other agreements
("Securitization Agreements"), to be entered into by, among others, the
Corporation, the trustee named therein (the "Trustee"), and any entity
acting as servicer of the Assets;
(e) to transfer from time to time Assets pursuant to one or
more receivables transfer agreements, sale and purchase agreements or
other agreements ("Receivables Transfer Agreements"), to be entered
into by, among other things, the Corporation, any entity acting as
placement agent, the transferor of the Assets, and any entity acting as
servicer of the Assets;
(f) to authorize, and cause the issuance of one or more series
of notes, certificates or other securities issued pursuant to
Securitization Agreements or Receivables Transfer Agreements;
(g) to authorize, borrow, issue, sell and deliver one or more
series and
5
<PAGE> 6
classes of bonds, notes or other evidences of indebtedness secured or
collateralized by one or more pools of Assets issued under a
Securitization Agreement or Receivables Transfer Agreement by
certificates of any class issued by any trust established by the
Corporation (collectively, the "Asset-Backed Securities"), provided
that the Corporation shall have absolutely no liability under any
Asset-Backed Securities except to the extent of the Assets or the
certificates securing or collateralizing such Asset-Backed Securities
and to enter into interest rate swaps, interest rate caps or other
hedging transactions;
(h) to acquire from the Trustee certificates or other
subordinate Asset-Backed Securities issued under the Securitization
Agreements or Receivables Transfer Agreement pursuant to which the
Corporation transferred Assets or granted security interests;
(i) to hold and enjoy all of the rights and privileges of any
certificates or other subordinate Asset-Backed Securities issued to the
Corporation under the related agreements;
(j) to purchase Assets from and sell Assets to any Related
Company or any third party as defined in Article EIGHTH in connection
with Securitization Agreements or Receivables Transfer Agreements;
(k) to perform its obligations under each Securitization
Agreement, Receivables Transfer Agreement, Interim Agreement (as
defined below) or other agreement entered into by the Corporation;
(l) to invest proceeds from any Assets, and any other income
as determined by the Board of Directors, including investing in other
Assets;
(m) to enter from time to time into interim arrangements
relating to the Assets whereby assets are transferred to a custodian on
behalf of the entity providing financing, pursuant to one or more
repurchase agreements or other agreements (each, an "Interim
Agreement") to be entered into by, among others, the Corporation, the
entity providing financing, the custodian named therein and any entity
acting as servicer of the Assets; provided, however, that the
Corporation shall have no liability under any Interim Agreement except
to the extent of the Assets funded thereby; and
(n) to engage in any acts and activities and exercise any
powers permitted to corporations under the laws of the State of Nevada
which are incidental to, or connected with, the foregoing, and
necessary, suitable or convenient to accomplish any of the foregoing.
ARTICLE SEVENTH
No Director or, to the extent specified from time to time by
the Board of
6
<PAGE> 7
Directors, officer of the Corporation will be liable to the Corporation or its
stockholders for damages for breach of fiduciary duty as a director or officer,
excepting only (a) acts or omissions which involve intentional misconduct, fraud
or a knowing violation of law or (b) the payment of dividends in violation of
78.300 of the Nevada Revised Statutes. No amendment or repeal of this Article
SEVENTH applies to or has any effect on the liability or alleged liability of
any Director or officer of this Corporation for or with respect to any acts or
omissions of the Director or officer occurring prior to the amendment or repeal,
except as otherwise required by law. In the event that Nevada law is amended to
authorize the further elimination or limitation of liability of directors or
officers, then this Article SEVENTH shall also be so amended to provide for the
elimination or limitation of liability to the fullest extent permitted by Nevada
law.
The Corporation shall indemnify the officers and directors of
the Corporation to the fullest extent permitted by the Nevada Private
Corporations Law as the same exists or may hereafter be amended. In the event
that the Nevada Private Corporations Law is amended, after the filing of these
Articles of Incorporation, to authorize corporate action further eliminating or
limiting the personal liability of an officer or director, then the liability of
an officer or director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Nevada Private Corporations Law, as so amended.
The Corporation shall pay the expenses incurred by an officer
or director in defending any civil, criminal, administrative, or investigative
action, suit or proceeding in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
officer or director to repay such amount if it should be ultimately determined
that he/she is not entitled to be indemnified by the Corporation as authorized
by Nevada Private Corporations Law.
Any amendment to or repeal of any of the provisions in this
Article SEVENTH shall not adversely affect any right or protection of an officer
or director of the Corporation for or with respect to any act or omissions of
such director occurring prior to such amendment or repeal.
ARTICLE EIGHTH
Notwithstanding any other provision of these Articles of
Incorporation and any provision of law that otherwise so empowers the
Corporation, the Corporation shall not, without the prior written consent of the
Trustee under any applicable Securitization Agreement (and any supplements
thereto) and the purchaser under any applicable Receivables Transfer Agreement,
do any of the following:
(i) (x) consolidate or merge with or into any other
entity or convey, transfer or assign to any Related Company (as defined
below), or dissolve or transfer its properties and assets substantially
as an entirety to any entity (other than pursuant to a Securitization
Agreement or a Receivables Transfer Agreement), or lend or advance any
moneys to, or make an investment in, any person or amend or
7
<PAGE> 8
repeal Article FOURTH (b), Article SIXTH, Article NINTH or this Article
EIGHT of these Articles of Incorporation or (y) engage in any other
action that bears on whether the separate legal identity of the
Corporation and any Related Company will be respected, including,
without limitation (a) holding itself out as being liable for the debts
of any other party; (b) forming, or causing to be formed, any
subsidiaries; (c) acting other than in its corporate name and through
its duly authorized officers or agents; (d) failing to hold appropriate
meetings of the Board of Directors at least three times per annum and
otherwise as necessary to authorize all corporate action; and (e)
failing to hold meetings of the stockholders at least one time per
annum;
(ii) incur any indebtedness, or assume or guaranty any
indebtedness of any other entity, in either such case which involves a
pledge of the Corporation's general corporate credit; the Corporation
may only incur indebtedness in the form of the non-recourse
Asset-Backed Securities authorized pursuant to Article SIXTH;
(iii) consolidate or merge with or into any other entity
or convey or transfer its properties and assets substantially as an
entirety to any entity, unless
(A) the entity (if other than the Corporation) formed
or surviving the consolidation or merger or which acquires the
properties and assets of the Corporation is organized and
existing under the laws of the State of Nevada, expressly
assumes the due and punctual payment of all obligations of the
Corporation, including those obligations of the Corporation
under each Securitization Agreement and each Receivables
Transfer Agreement and has Articles of Incorporation
containing provisions substantially identical to the
provisions of Articles FOURTH, SIXTH and this Article EIGHTH;
and
(B) immediately after giving effect to the
transaction, no default or event of default has occurred and
is continuing under any Securitization Agreement or any
Receivables Transfer Agreement; or
(iv) without (A) the affirmative vote of 100% of the
members of the Board of Directors of the Corporation (including an
affirmative vote of each Independent Director required by Article
FOURTH) and (B) the affirmative vote of the holders of 100% of the
common stock outstanding of the Corporation, make an assignment for the
benefit of creditors, file a petition in bankruptcy, petition or apply
to any tribunal for the appointment of a custodian, receiver or any
trustee for it or for a substantial part of its property, commence any
proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereinafter in effect, consent or
acquiesce to the entry of an order for relief, or in the filing of any
such petition, application, proceeding or appointment of or taking
possession by the custodian, receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Corporation or any
substantial part of its property, or admit its
8
<PAGE> 9
inability to pay its debts generally as they become due or authorize
any of the foregoing to be done or taken on behalf of the Corporation;
provided that if there shall not be two directors required by Article
FOURTH (b) of these Articles of Incorporation then in office and
acting, a vote upon any matter set forth in this Article EIGHTH shall
not be taken unless and until two directors meeting the requirements of
Article FOURTH (b) of these Articles of Incorporation shall have been
elected.
For purpose of these Articles of Incorporation, "Related
Company" means the stockholder or stockholders of this Corporation or any entity
other than this Corporation now or hereafter controlled directly or indirectly
by, or under direct or indirect common control with, the stockholders of this
Corporation.
ARTICLE NINTH
In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors of the Corporation is expressly authorized:
(a) To make, alter, amend or repeal the By-laws of the
Corporation, except that such By-laws or any alteration, amendment or
repeal thereof shall not in any manner impair the intent of, Article
SIXTH, Article EIGHTH or this Article NINTH of these Articles of
Incorporation.
(b) To determine the use and disposition of any surplus and
net profits of the Corporation, including the determination of the
amount of working capital required, to set apart out of any of the
funds of the Corporation, whether or not available for dividends, a
reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
(c) By a majority of the Board of Directors, to designate one
or more committees, each committee to consist of one or more of the
directors of the Corporation. The Board of Directors may designate one
or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the
committee. The By-laws may provide that in the absence or
disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member. Any such committee, to
the extent provided in the resolution of the Board of Directors, or in
the By-laws of the Corporation, shall have and may exercise all the
powers and authority 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 to all papers which may require it; and
no such committee shall have the power or authority in reference to
amending the Articles of Incorporation, to authorize or take any action
described in Article SIXTH, Article EIGHTH and this Article NINTH,
adopting an agreement of
9
<PAGE> 10
merger or consolidation, recommending to the stockholders the sale,
lease, or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders a dissolution of
the Corporation or a revocation of a dissolution, or amending the
By-laws of the Corporation; and no such committee shall have the power
or authority to declare a dividend or to authorize the issuance of
stock.
(d) When and as authorized by the stockholders in accordance
with statute, to sell, lease or exchange all or substantially all of
the property and assets of the Corporation, including its good will and
its corporate franchise, upon such terms and conditions and for such
consideration, which may consist in whole or in part of money or
property including shares of stock in, and/or other securities of, any
other corporation or corporations, as the Board of Directors shall deem
expedient for the best interests of the Corporation.
(e) To exercise, in addition to the powers and authorities
hereinbefore or by law conferred upon it, any such powers and
authorities and do all such acts and things as may be exercised or done
by the Corporation, subject, nevertheless, to the provisions of the
laws of the State of Nevada and of these Articles of Incorporation and
of the By-laws of the Corporation.
In addition to the foregoing, the Corporation shall, except as
otherwise provided in the documents relating to the securitization of
the Assets, conduct its affairs in the following manner:
(i) it shall not commingle the Corporation's assets with those
of any Related Company;
(ii) it shall maintain separate corporate records and books of
account from those of any Related Company;
(iii) it shall conduct its business from an office separate
from any Related Company;
(iv) it shall maintain its assets separately from the accounts
of any other Person (including through the maintenance of a separate
bank account); and
(v) it shall pay from its assets all Asset-Backed Securities
issued by it, and shall not pay from its assets any obligations or
indebtedness of any other entity or person.
ARTICLE TENTH
Without (i) the prior written consent of each Trustee under
any Securitization Agreement (and any supplements thereto), (ii) the affirmative
vote of 100%
10
<PAGE> 11
of the members of the Board of Directors of the Corporation, including, without
limitation, the affirmative vote of each of the directors required by Article
FOURTH (b) of these Articles of Incorporation, and (iii) the affirmative vote of
the holders of 100% of the Common Stock outstanding, the Corporation shall not
amend, alter, change or repeal Article FOURTH, Article SIXTH, Article EIGHTH,
Article NINTH or this Article TENTH; provided, however, that if the two
directors required by Article FOURTH (b) of these Articles of Incorporation are
not then in office and acting, a vote upon any matter set forth in this Article
TENTH shall not be taken unless and until two directors meeting the requirements
of Article FOURTH (b) of these Articles of Incorporation shall have been elected
and shall be present and acting at such vote.
ARTICLE ELEVENTH
The Corporation is to have perpetual existence.
I, THE UNDERSIGNED, being the incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the laws of the State of
Nevada, as amended, do make this certificate, hereby declaring and certifying
that this is my act and deed and that the facts herein stated are true and that
I have accordingly hereunto affixed my signature this 5th day of May, 1999.
/s/ Gregg P. Barnard
---------------------------
Gregg P. Barnard
Incorporator
11
<PAGE> 12
STATE OF NEVADA )
)
COUNTY OF WASHOE )
This instrument was acknowledged before me on May 5, 1999, by Gregg P.
Barnard.
/s/ Victoria Crisologo
------------------------------------
NOTARY PUBLIC
My Commission Expires: 2/10/2003
--------------
12
<PAGE> 1
EXHIBIT 3.2.2
ADVANTA LEASING RECEIVABLES CORP. VIII
Bylaws
ARTICLE I
Meetings of Stockholders
Section A. Annual Meetings. The annual meeting of the
stockholders for the election of directors and for the transaction of such other
business as properly may come before such meeting shall be held each year on
such date, and at such time and place within or out of the State of Nevada, as
may be designated by the Board of Directors.
Section 1.2 Special Meetings. Special meetings of the
stockholders for any proper purpose or purposes may be called at any time by the
Board of Directors, the President, any Vice President, to be held on such date,
and at such time and place within or out of the State of Nevada, as the Board of
Directors, the President, any Vice President, whichever has called the meeting,
shall direct. A special meeting of the stockholders shall be called by the
President, any Vice President whenever stockholders owning a majority of the
shares of the Corporation then issued and outstanding and entitled to vote on
matters to be submitted to stockholders of the Corporation shall make
application therefor in writing. Any such written request shall state a proper
purpose or purposes of the meeting and shall be delivered to the President or
any Vice President.
Section 1.3 Notice of Meeting. Written notice, signed by the
President, any Vice President, the Secretary or any Assistant Secretary, of
every meeting of stockholders stating the date and time when, and the place
where, such meeting is to be held, shall be delivered either personally or by
mail to each stockholder entitled to vote at
1
<PAGE> 2
such meeting not less than ten nor more than sixty days before the date of such
meeting, except as otherwise provided by law. The purpose or purposes for which
such meeting is called may, in the case of an annual meeting, and shall in the
case of a special meeting, also be stated in such notice. If mailed, such notice
shall be directed to a stockholder at such Stockholder's address as it shall
appear on the stock books of the Corporation, unless such Stockholder shall have
filed with the Secretary a written request that notices intended for such
Stockholder be mailed to some other address, in which case it shall be mailed to
the address designated in such request. Whenever any notice is required to be
given under the provisions of the Private Corporations Law of the State of
Nevada, the Articles of Incorporation or these Bylaws, a waiver thereof, signed
by the stockholder entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Attendance of a stockholder
at the meeting shall not be deemed equivalent to a written waiver of notice of
such meeting; a written waiver is required.
Section 1.4 Quorum. The presence at any meeting of
stockholders, in person or by proxy, of the holders of record of a majority of
the shares then issued and outstanding and entitled to vote shall be necessary
and sufficient to constitute a quorum for the transaction of business.
Section 1.5 Adjournments. In the absence of a quorum, a
majority in interest of the stockholders entitled to vote, present in person or
by proxy, or, if no stockholder entitled to vote is present in person or by
proxy, any officer entitled to preside at or act as secretary of a meeting of
stockholders, may adjourn such meeting from time to time until a quorum shall be
present.
Section 1.6 Voting. Directors shall be chosen by a plurality
of the votes cast at the election, and, except as otherwise provided by law or
by the Articles of
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Incorporation, including provisions regarding Independent Directors, all other
questions shall be determined by a majority of the votes cast on such question.
Section 1.7 Proxies. Any stockholder entitled to vote may vote
by proxy, provided that the instrument authorizing such proxy to act shall have
been executed in writing (which shall include telegraphing or cabling) by the
stockholder himself or by such Stockholder's duly authorized attorney and
delivered to the Secretary.
Section 1.8 Judges of Election. The Board of Directors may
appoint judges of election to serve at any election of directors and at
balloting on any other matter that may properly come before a meeting of
stockholders. If no such appointment shall be made, or if any of the judges so
appointed shall fail to attend, or refuse or be unable to serve, then such
appointment may be made by the presiding officer at the meeting.
ARTICLE II
Board of Directors
Section 2.1 Number. The number of directors which shall
constitute the whole Board of Directors shall be fixed from time to time by
resolution of the Board of Directors or stockholders (any such resolution of
either the Board of Directors or stockholders being subject to any later
resolution of either of them). The first Board of Directors and subsequent
Boards of Directors shall consist of six directors, including two Independent
Directors, until changed as herein provided and subject to the provisions of the
Articles of Incorporation regarding Independent Directors.
Section 2.2 Election and Term of Office. Directors shall be
elected at the annual meeting of the stockholders, except as provided in Section
2.3 and subject to the provisions of the Articles of Incorporation regarding
Independent Directors. Each director (whether elected at an annual meeting or to
fill a vacancy or otherwise) shall continue in
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office until such Director's successor shall have been elected and qualified or
until such Director's earlier death, resignation or removal in the manner
hereinafter provided.
Section 2.3 Vacancies and Additional Directorships. If any
vacancy shall occur among the directors by reason of death, resignation or
removal, or as the result of an increase in the number of directorships, a
majority of the directors then in office, or the remaining directors, or sole
remaining director, though less than a quorum, may fill any such vacancy subject
to the provisions of the Articles of Incorporation regarding Independent
Directors.
Section 2.4 Regular Meetings. A regular meeting of the Board
of Directors shall be held for organization, for the election of officers and
for the transaction of such other business as may properly come before such
meeting, within thirty days after each annual meeting of stockholders. The Board
of Directors by resolution may provide for the holding of other regular meetings
and may fix the times and places at which such meetings shall be held. Notice of
regular meetings shall not be required to be given, provided that whenever the
time or place of regular meetings shall be fixed or changed, notice of such
action shall be mailed promptly to each director who shall not have been present
at the meeting at which such action was taken, addressed to such Director at
such Director's residence or usual place of business.
Section 2.5 Special Meetings. Special meetings of the Board of
Directors shall be held upon call by or at the direction of the President, any
Vice President or any two directors, except that when the Board of Directors
consists of one director, then the one director may call a special meeting.
Except as otherwise required by law, notice of each special meeting shall be
mailed to each director, addressed to such Director at such Director's residence
or usual place of business, at least two days before the day on which the
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meeting is to be held, or shall be sent to such Director at such place by telex,
facsimile transmission, telegram, radio or cable, or telephoned or delivered to
him personally, not later than the day before the day on which the meeting is to
be held. Such notice shall state the time and place of such meeting, but need
not state the purposes thereof, unless otherwise required by law, the Articles
of Incorporation or these Bylaws.
Section 2.6 Waiver of Notice. Whenever any notice is required
to be given under the provisions of the Private Corporations Law of the State of
Nevada, the Articles of Incorporation or these Bylaws, a waiver thereof, signed
by the director entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. Attendance of a director at a
meeting shall not be deemed equivalent to a written waiver of notice of such
meeting; a written waiver is required.
Section 2.7 Quorum and Manner of Acting. At each meeting of
the Board of Directors the presence of a majority of the total number of members
of the Board of Directors as constituted from time to time, shall be necessary
and sufficient to constitute a quorum for the transaction of business, except
that when the Board of Directors consists of one director, then the one director
shall constitute a quorum, provided that such director must be an Independent
Director. Meetings may be held by telephone. In the absence of a quorum, a
majority of those present at the time and place of any meeting may adjourn the
meeting from time to time until a quorum shall be present and the meeting may be
held as so adjourned without further notice or waiver. A majority of those
present at any meeting at which a quorum is present may decide any question
brought before such meeting, except as otherwise provided by law, the Articles
of Incorporation, including the provisions regarding Independent Directors, or
these Bylaws. The Board of Directors may also act without a meeting so long as
such action is taken with the unanimous written consent of the Board of
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Directors.
Section 2.8 Resignation of Directors. Any director may resign
at any time by giving written notice of such resignation to the Board of
Directors, the President, any Vice President or the Secretary, subject to the
provisions of the Articles of Incorporation regarding Independent Directors.
Unless otherwise specified in such notice, such resignation shall take effect
upon receipt thereof by the Board of Directors or any such officer, and the
acceptance of such resignation shall not be necessary to make it effective.
Section 2.9 Removal of Directors. At any special meeting of
the stockholders, duly called as provided in these Bylaws, any director or
directors may be removed from office, either with or without cause, by a
two-thirds majority vote of the shareholders. At such meeting a successor or
successors may be elected by a plurality of the votes cast, or if any such
vacancy is not so filled, it may be filled by the Board of Directors as provided
in Section 2.3, subject to the provisions of the Articles of Incorporation
regarding Independent Directors.
Section 2.10 Compensation of Directors. Directors shall
receive such reasonable compensation for their services as such, whether in the
form of salary or a fixed fee for attendance at meetings, with expenses, if any,
as the Board of Directors may from time to time determine. Nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 2.11 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 Bylaws, may exercise all powers of the Corporation and do all
such lawful acts and things as are not by
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statute, these Bylaws or the Articles of Incorporation directed or required to
be exercised or done by the stockholders.
Notwithstanding anything in these Bylaws to the contrary,
except to the extent prohibited by law, the Board of Directors shall have the
right (which, to the extent exercised, shall be exclusive) to establish the
rights, powers, duties, rules and procedures that from time to time shall govern
the Board of Directors and each of its members, including without limitation,
the vote required for any action by the Board of Directors, and that from time
to time shall affect the Directors' power to manage the business and affairs of
the Company; and no Bylaw shall be adopted by stockholders which shall impair or
impede the implementation of the foregoing, and provided further, that no right,
duty, rule or procedure established by the Board of Directors, and no Bylaw
adopted by the stockholders shall have the effect of amending, altering or
changing Article TENTH of the Articles of Incorporation.
Section 2.12 Specific Powers. Without limiting the general
powers conferred by the last preceding clause and the powers conferred by the
Articles of Incorporation and Bylaws of the Corporation, but subject to the
limitations set forth in Section 2.13, it is hereby expressly declared that the
Board of Directors shall have the following powers to engage in the following
activities:
(a) to acquire from time to time all right, title and
interest in and to (i) financial contracts including but not limited
to, lease contracts, loans, accounts receivables, credit card
receivables, credit line receivables, insurance policy loans or
premiums, or installment sale or lease contracts or promissory notes,
arising out of or relating to, the purchase or lease of equipment or
goods, receivables or other rights to monies due or to become due under
any such financial contracts, whether
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or not secured by such equipment or goods, security interests therein,
proceeds from claims on insurance policies related thereto, or (ii) the
equipment and/or goods which are the subject of any of such financial
contracts or the residual value of such equipment or goods or rights in
such equipment or goods or any interest therein and the right to
acquire equipment or goods or an interest therein or proceeds from the
sale or other disposition of such equipment or goods or any other
interest in such equipment or goods and the proceeds thereof and rights
therein or value thereof or (iii) any participation interest
(including, without limitation, interest only strips) in or security
based on or backed by any of the foregoing and related rights and other
property appurtenant thereto (items in (a)(i), (a)(ii) and (a) (iii)),
collectively, the "Assets");
(b) enter into agreements, to acquire assets by purchase
contribution or any other method;
(c) to acquire, own, hold, service, sell, assign, pledge and
otherwise deal with the Assets, collateral securing or otherwise
relating to the Assets, related insurance policies, agreements with
vendors or lessors or other originators or servicers of Assets and any
proceeds or further rights associated with any of the foregoing;
(d) from time to time, to transfer, pledge and/or grant a
security interest or other lien on Assets to one or more trusts, banks,
financial institutions, commercial paper issuers, insurance companies
or similar entities pursuant to one or more pooling and servicing
agreements, indentures, master facility agreements or other agreements
("Securitization Agreements"), to be entered into by, among others, the
Corporation, the trustee named therein (the "Trustee"), and any entity
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acting as servicer of the Assets;
(e) to transfer from time to time Assets pursuant to one or
more receivables transfer agreements, sale and purchase agreements or
other agreements ("Receivables Transfer Agreements"), to be entered
into by, among other things, the Corporation, any entity acting as
placement agent, the transferor of the Assets, and any entity acting as
servicer of the Assets;
(f) to authorize, and cause the issuance of one or more series
of certificates or other securities issued pursuant to Securitization
Agreements or Receivables Transfer Agreements;
(g) to authorize, borrow, issue, sell and deliver one or more
series and classes of bonds, notes or other evidences of indebtedness
secured or collateralized by one or more pools of Assets issued under a
Securitization Agreement or Receivables Transfer Agreement by
certificates of any class issued by any trust established by the
Corporation (collectively, the "Asset-Backed Securities"), provided
that the Corporation shall have absolutely no liability under any
Asset-Backed Securities except to the extent of the Assets or the
certificates securing or collateralizing such Asset-Backed Securities
and to enter into interest rate swaps, interest rate caps or other
hedging transactions;
(h) to acquire from the Trustee certificates or other
subordinate Asset-Backed Securities issued under the Securitization
Agreements or Receivables Transfer Agreement pursuant to which the
Corporation transferred Assets or granted security interests;
(i) to hold and enjoy all of the rights and privileges of any
certificates or other subordinate Asset-Backed Securities issued to the
Corporation under the
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related agreements;
(j) to purchase Assets from and sell Assets to any Related
Company or any third party as defined in Article EIGHTH of the Articles
of Incorporation in connection with Securitization Agreements or
Receivables Transfer Agreements;
(k) to perform its obligations under each Securitization
Agreement, Receivables Transfer Agreement, Interim Agreement (as
defined below) or other agreement entered into by the Corporation;
(l) to invest proceeds from any Assets, and any other income
as determined by the Board of Directors, including investing in other
Assets;
(m) to enter from time to time into interim arrangements
relating to the Assets whereby assets are transferred to a custodian on
behalf of the entity providing financing, pursuant to one or more
repurchase agreements or other agreements (each, an "Interim
Agreement") to be entered into by, among others, the Corporation, the
entity providing financing, the custodian named therein and any entity
acting as servicer of the Assets; provided, however, that the
Corporation shall have no liability under any Interim Agreement except
to the extent of the Assets funded thereby; and
(n) to engage in any acts and activities and exercise any
powers permitted to corporations under the laws of the State of Nevada
which are incidental to, or connected with, the foregoing, and
necessary, suitable or convenient to accomplish any of the foregoing.
Section 2.13 Forbidden Actions. So long as the Corporation
owns (i) any Assets pursuant to any agreement or (ii) is liable for any
obligations under any such or a related agreement, notwithstanding any other
provision of the Articles of Incorporation and
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any provision of law which otherwise so empowers the Corporation, the
Corporation shall not perform any act in contravention of any of the following:
(a) (i) (x) consolidate or merge with or into any other
entity or convey, transfer or assign to any Related Company (as defined
below), or dissolve or transfer its properties and assets substantially
as an entirety to any entity (other than pursuant to a Securitization
Agreement or a Receivables Transfer Agreement), or lend or advance any
moneys to, or make an investment in, any person or amend or repeal
Article FOURTH (b), Article SIXTH, Article NINTH or Article EIGHT of
the Articles of Incorporation or (y) engage in any other action that
bears on whether the separate legal identity of the Corporation and any
Related Company will be respected, including, without limitation (a)
holding itself out as being liable for the debts of any other party;
(b) forming, or causing to be formed, any subsidiaries; (c) acting
other than in its corporate name and through its duly authorized
officers or agents; (d) failing to hold appropriate meetings of the
Board of Directors at least three times per annum and otherwise as
necessary to authorize all corporate action; and (e) failing to hold
meetings of the stockholders at least one time per annum;
(ii) incur any indebtedness, or assume or guaranty any
indebtedness of any other entity, in either such case which involves a
pledge of the Corporation's general corporate credit; the Corporation
may only incur indebtedness in the form of the non-recourse
Asset-Backed Securities authorized pursuant to Article SIXTH of the
Articles of Incorporation;
(iii) consolidate or merge with or into any other entity
or convey or transfer its properties and assets substantially as an
entirety to any entity, unless
(A) the entity (if other than the Corporation) formed
or surviving
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the consolidation or merger or which acquires the properties
and assets of the Corporation is organized and existing under
the laws of the State of Nevada, expressly assumes the due and
punctual payment of all obligations of the Corporation,
including those obligations of the Corporation under each
Securitization Agreement and each Receivables Transfer
Agreement and has Articles of Incorporation containing
provisions substantially identical to the provisions of
Articles FOURTH, SIXTH and EIGHTH of the Articles of
Incorporation of the Corporation; and
(B) immediately after giving effect to the
transaction, no default or event of default has occurred and
is continuing under any Securitization Agreement or any
Receivables Transfer Agreement; or
(iv) without (A) the affirmative vote of 100% of the
members of the Board of Directors of the Corporation (including an
affirmative vote of each Independent Director required by Article
FOURTH of the Articles of Incorporation ) and (B) the affirmative vote
of the holders of 100% of the common stock outstanding of the
Corporation, make an assignment for the benefit of creditors, file a
petition in bankruptcy, petition or apply to any tribunal for the
appointment of a custodian, receiver or any trustee for it or for a
substantial part of its property, commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, whether
now or hereinafter in effect, consent or acquiesce to the entry of an
order for relief, or in the filing of any such petition, application,
proceeding or appointment of or taking possession by the custodian,
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Corporation or any substantial
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part of its property, or admit its inability to pay its debts generally
as they become due or authorize any of the foregoing to be done or
taken on behalf of the Corporation; provided that if there shall not be
two directors required by Article FOURTH (b) of the Articles of
Incorporation then in office and acting, a vote upon any matter set
forth in Article EIGHTH of the Articles of Incorporation shall not be
taken unless and until two directors meeting the requirements of
Article FOURTH (b) of the Articles of Incorporation shall have been
elected. (b) except as otherwise provided in the documents relating to
the securitization of the Assets,
(i) commingle the Corporation's assets with those of any
direct or ultimate parent of the Corporation or any subsidiary or
affiliate of any such parent;
(ii) fail to maintain separate corporate records and books of
account from those of any direct or ultimate parent of the Corporation
or any subsidiary or affiliate of any such parent;
(iii) fail to conduct its business from an office separate
from any direct or ultimate parent of the Corporation or any subsidiary
or affiliate of any such parent;
(iv) fail to maintain its assets separately from the accounts
of any other person (including through maintenance of a separate bank
account); and
(v) fail to pay from its assets all obligations and
indebtedness of any kind incurred by it, nor pay from its assets any
obligations or indebtedness of any other entity or person.
For purpose of this Section 2.13, "Related Company" means the
stockholder or stockholders of this Corporation or any entity other than this
Corporation now or hereafter controlled directly or indirectly by, or under
direct or indirect common control with, the stockholders of this Corporation.
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ARTICLE III
Committees of the Board
Section 3.1 Designation, Power, Alternate Members and Term of
Office. The Board of Directors may, by resolution passed by a majority of the
whole Board of Directors, designate one or more committees, including but not
limited to an Executive Committee, each committee to consist of one or more of
the directors of the Corporation. Any such committee, to the extent provided in
such resolution and permitted by law, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation or a
facsimile thereof to be affixed to or reproduced on all such papers as said
committee shall designate; but no such committee shall have power or authority
in reference to amending the Articles of Incorporation, adopting an agreement of
merger of consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, amending the Bylaws of the Corporation, declaring a
dividend or authorizing the issuance of stock. The Board of Directors may
designate one or more directors as alternate members of any committee who, in
the order specified by the Board of Directors, may replace any absent or
disqualified member at any meeting of such committee. If at a meeting of any
committee one or more of the members thereof should be absent or disqualified,
and if either the Board of Directors has not so designated any alternate member
or members, or the number of absent or disqualified members exceeds the number
of alternate members who are present at such meeting, then the member or members
of such committee (including alternates) present at any meeting and not
disqualified from voting, whether or not he or they constitute a
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quorum, may unanimously appoint another director to act at such meeting in the
place of any such absent or disqualified member. The term of office of the
members of each committee shall be as fixed from time to time by the Board of
Directors, subject to these Bylaws; provided, however, that any committee member
who ceases to be a member of the Board of Directors shall ipso facto cease to be
a committee member. Each committee shall appoint a secretary, who may be a
Director or an officer of the Corporation.
Section 3.2 Meetings, Notices and Records. Each committee may
provide for the holding of regular meetings, with or without notice, and may fix
the times and places at which such meetings shall be held. Special meetings of
each committee shall be held upon call by or at the direction of its chairman
or, if there be no chairman, by or at the direction of any one of its members.
Except as otherwise provided by law, notice of each special meeting of a
committee shall be mailed to each member of such committee, addressed to such
member at such member's residence or usual place of business, at least two days
before the day on which the meeting is to be held, or shall be sent to him at
such place by telex, facsimile transmission, telegram, radio or cable, or
telephoned or delivered to such member personally, not later than the day before
the day on which the meeting is to be held. Such notice shall state the time and
place of such meeting, but need not state the purposes thereof, unless otherwise
required by law, the Articles of Incorporation of the Corporation or these
Bylaws.
Notice of any meeting of a committee need not be given to any
member thereof who shall attend such meeting in person or who shall waive notice
thereof, before or after such meeting, in a signed writing. Each committee shall
keep a record of its proceedings.
Section 3.3 Quorum and Manner of Acting. At each meeting of
any
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committee the presence of a majority of its members then in office shall be
necessary and sufficient to constitute a quorum for the transaction of business,
except that when a committee consists of one member, then the one member shall
constitute a quorum. In the absence of a quorum, a majority of the members
present at the time and place of any meeting may adjourn the meeting from time
to time until a quorum shall be present and the meeting may be held as so
adjourned without further notice or waiver. The act of a majority of the members
present at any meeting at which a quorum is present shall be the act of such
committee. Subject to the foregoing and other provisions of these Bylaws and
except as otherwise determined by the Board of Directors, each committee may
make rules for the conduct of its business.
Section 3.4 Resignations. Any member of a committee may resign
at any time by giving written notice of such resignation to the Board of
Directors, the President, any Vice President or the Secretary. Unless otherwise
specified in such notice, such resignation shall take effect upon receipt
thereof by the Board of Directors or any such officer, and the acceptance of
such resignation shall not be necessary to make it effective.
Section 3.5 Removal. Any member of any committee may be
removed at any time with or without cause by the Board of Directors.
Section 3.6 Vacancies. If any vacancy shall occur in any
committee by reason of death, resignation, disqualification, removal or
otherwise, the remaining member or members of such committee, so long as a
quorum is present, may continue to act until such vacancy is filled by the Board
of Directors.
Section 3.7 Compensation. Committee members shall receive such
reasonable compensation for their services as such, whether in the form of
salary or a fixed fee for attendance at meetings, with expenses, if any, as the
Board of Directors may from
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time to time determine. Nothing herein contained shall be construed to preclude
any committee member from serving the Corporation in any other capacity and
receiving compensation therefor.
ARTICLE IV
Officers
Section 4.1 Officers. The officers of the Corporation shall be
a President, one or more Vice Presidents, a Secretary, a Treasurer, and such
other officers as may be appointed in accordance with the provisions of Section
4.3.
Section 4.2 Election, Term of Office and Qualifications. Each
officer (except such officers as may be appointed in accordance with the
provisions of Section 4.3) shall be elected by the Board of Directors. Each such
officer shall hold such office until such officer's successor shall have been
elected and shall qualify, or until such officer's death, or until such officer
shall have resigned in the manner provided in Section 4.4 or shall have been
removed in the manner provided in Section 4.5.
Section 4.3 Subordinate Officers and Agents. The Board of
Directors from time to time may appoint other officers or agents (including one
or more Assistant Vice Presidents, one or more Assistant Secretaries and one or
more Assistant Treasurers), to hold office for such periods, have such authority
and perform such duties as are provided in these Bylaws or as may be provided in
the resolutions appointing them. The Board of Directors may delegate to any
officer or agent the power to appoint any such subordinate officers or agents
and to prescribe their respective terms of office, authorities and duties.
Section 4.4 Resignations. Any officer may resign at any time
by giving written notice of such resignation to the Board of Directors, the
President, any Vice President or the Secretary. Unless otherwise specified in
such written notice, such
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resignation shall take effect upon receipt thereof by the Board of Directors or
any such officer, and the acceptance of such resignation shall not be necessary
to make it effective.
Section 4.5 Removal. Any officer specifically designated in
Section 4.1 may be removed with or without cause at any meeting of the Board of
Directors by affirmative vote of a majority of the directors then in office. Any
officer or agent appointed in accordance with the provisions of Section 4.3 may
be removed with or without cause at any meeting of the Board of Directors by
affirmative vote of a majority of the directors present at such meeting, or at
any time by any superior officer or agent upon whom such power of removal shall
have been conferred by the Board of Directors.
Section 4.6 Vacancies. A vacancy in any office by reason of
death, resignation, removal, disqualification or any other cause shall be filled
for the unexpired portion of the term in the manner prescribed by these Bylaws
for regular election or appointment to such office.
Section 4.7 The President. The President shall be the chief
executive officer of the Corporation, subject to the direction of the Board of
Directors, shall have general charge of the business, affairs and property of
the Corporation and general supervision over its officers and agents. If
present, the President shall preside at all meetings of stockholders and the
President shall see that all orders and resolutions of the Board of Directors
are carried into effect. The President may sign, with any other officer
thereunto duly authorized, certificates representing stock of the Corporation
the issuance of which shall have been duly authorized (the signature to which
may be a facsimile signature), and may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts, agreements or other instruments
duly authorized by the Board of Directors, except in cases where the signing and
execution thereof shall be expressly
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delegated by the Board of Directors to some other officer or agent or shall be
required by law to be otherwise executed. From time to time President shall
report to the Board of Directors all matters within the President's knowledge
which the interests of the Corporation may require to be brought to their
attention. The President shall have such other powers and perform such other
duties as may from time to time be prescribed by the Board of Directors or these
Bylaws. If no Treasurer shall have been appointed by the Board of Directors the
President shall have, in addition to and not in limitation of the foregoing, the
powers afforded the Treasurer pursuant to Section 4.10 hereof.
Section 4.8 The Vice Presidents. At the request of the
President or in the absence or disability of the President, the Vice President
designated by the Board of Directors shall perform all the duties of the
President and, when so acting, shall have all the powers of and be subject to
all restrictions upon the President. Any Vice President may also sign, with any
other officer thereunto duly authorized, certificates representing stock of the
Corporation the issuance of which shall have been duly authorized (the signature
to which may be a facsimile signature), and may sign and execute in the name of
the Corporation deeds, mortgages, bonds, contracts, agreements or other
instruments duly authorized by the Board of Directors, except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent or shall be required by law to be
otherwise executed. Each Vice President shall have such other powers and perform
such other duties as may from time to time be prescribed by the Board of
Directors, the President or these Bylaws.
Section 4.9 The Secretary. The Secretary shall:
(a) record all the proceedings of the meetings of the
stockholders, the Board of Directors, and any committees of the Board
of Directors in a book or
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books to be kept for that purpose;
(b) cause all notices to be duly given in accordance with the
provisions of these Bylaws and as required by law;
(c) whenever any committee shall be appointed in pursuance of
a resolution of the Board of Directors, furnish the chairman of such
committee with a copy of such resolution;
(d) be custodian of the records and of the seal of the
Corporation, and cause such seal to be affixed to or a facsimile to be
reproduced on all certificates representing stock of the Corporation
prior to the issuance thereof and to all instruments the execution of
which on behalf of the Corporation under its seal shall have been duly
authorized;
(e) see that its lists, books, reports, statements,
certificates and other documents and records required by law are
properly kept and filed;
(f) have charge of the stock and transfer books of the
Corporation, and exhibit such stock book at all reasonable times to
such persons as are entitled by law to have access thereto;
(g) sign certificates representing stock of the Corporation
the issuance of which shall have been duly authorized (the signature to
which may be a facsimile signature); and
(h) in general, perform all duties incident to the office of
Secretary and have such other powers and perform such other duties as
may from time to time be prescribed by the Board of Directors, the
President or these Bylaws.
Section 4.10 The Treasurer. The Treasurer shall be the chief
financial officer of the Corporation and shall:
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(a) have charge of and supervision over and be responsible for
the funds, securities, receipts and disbursements of the Corporation;
(b) cause the moneys and other valuable effects of the
Corporation to be deposited in the name and to the credit of the
Corporation in such banks or trust companies or with such bankers or
other depositaries as shall be selected in accordance with Section 5.3
or to be otherwise dealt with in such manner as the Board of Directors
may direct;
(c) cause the funds of the Corporation to be disbursed by
checks or drafts upon the authorized depositaries of the Corporation,
and cause to be taken and preserved proper vouchers for all moneys
disbursed;
(d) render to the Board of Directors or the President,
whenever requested, a statement of the financial condition of the
Corporation and of all his transactions as Treasurer;
(e) cause to be kept at the Corporation's principal office
correct books of account of all its business and transactions and such
duplicate books of account as the Treasurer shall determine and upon
application cause such books or duplicates thereof to be exhibited to
any director;
(f) be empowered, from time to time, to require from the
officers or agents of the Corporation reports or statements giving such
information as the Treasurer may desire with respect to any and all
financial transactions of the Corporation;
(g) sign certificates representing stock of the Corporation
the issuance of which shall have been duly authorized (the signature to
which may be a facsimile signature); and
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(h) in general, perform all duties incident to the office of
Treasurer and have such other powers and perform such other duties as
may from time to time be prescribed by the Board of Directors, the
President or these Bylaws.
Section 4.11 Salaries. The salaries of the officers of the
Corporation shall be fixed from time to time by the Board of Directors, except
that the Board of Directors may delegate to any person the power to fix the
salaries or other compensation of any officers or agents appointed in accordance
with the provisions of Section 4.3. No officer shall be prevented from receiving
such salary by reason of the fact that such officer is also a director of the
Corporation.
ARTICLE V
Execution of Instruments and
Deposit of Corporate Funds
Section 5.1 Execution of Instruments Generally. Subject to the
restrictions set forth in Sections 2.12 and 2.13 hereof, which such Sections
shall control, the President, any Vice President or the Secretary or the Chief
Financial Officer, subject to the approval of the Board of Directors, may enter
into any contract or execute and deliver any instrument in the name and on
behalf of the Corporation. Subject to the restrictions set forth in Sections
2.12 and 2.13 hereof, which such Sections shall control, the Board of Directors
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute and deliver any instrument in the name and on behalf of the
Corporation, and such authorization may be general or confined to specific
instances.
Section 5.2 Borrowing. Subject to the restrictions set forth
in Sections 2.12 and 2.13 hereof, which such Sections shall control, no loans or
advance shall be obtained or contracted for, by or on behalf of the Corporation
and no negotiable paper shall be issued in its name, unless and except as
authorized by the Board of Directors. Such
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authorization may be general or confined to specific instances. Subject to the
restrictions set forth in Sections 2.12 and 2.13 hereof, which such Sections
shall control, any officer or agent of the Corporation thereunto so authorized
may obtain loans and advances for the Corporation, and for such loans and
advances may make, execute and deliver promissory notes, bonds, or other
evidences of indebtedness of the Corporation. Subject to the restrictions set
forth in Sections 2.12 and 2.13 hereof, which such Sections shall control, any
officer or agent of the Corporation thereunto so authorized may pledge,
hypothecate or transfer as security for the payment of any and all loans,
advances, indebtedness and liabilities of the Corporation, any and all stocks,
bonds, other securities and other personal property at any time held by the
Corporation, and to that end may endorse, assign and deliver the same and do
every act and thing necessary or proper in connection therewith.
Section 5.3 Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to its credit in such
banks or trust companies or with such bankers or other depositaries as the Board
of Directors may select, or as may be selected by any officer or officers or
agent or agents authorized so to do by the Board of Directors. Endorsements for
deposit to the credit of the Corporation in any of its duly authorized
depositaries shall be made in such manner as the Board of Directors from time to
time may determine.
Section 5.4 Checks, Drafts, etc. All checks, drafts or other
orders for the payment of money, and all notes or other evidences of
indebtedness issued in the name of the Corporation, shall be signed by such
officer or officers or agent or agents of the Corporation, and in such manner,
as from time to time shall be determined by the Board of Directors.
Section 5.5 Proxies. Proxies to vote with respect to shares of
stock of
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other Corporations owned by or standing in the name of the Corporation may be
executed and delivered from time to time on behalf of the Corporation by the
President or any Vice President or by any other person or persons thereunto
authorized by the Board of Directors.
ARTICLE VI
Record Dates
Section 6.1 Record Dates. In order that the Corporation may
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, the Board of Directors may fix, in
advance, a record date, which shall be not more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. Only those stockholders of record on the date so fixed shall be
entitled to any of the foregoing rights, notwithstanding the transfer of any
such stock on the books of the Corporation after any such record date fixed by
the Board of Directors.
ARTICLE VII
Corporate Seal
Section 7.1 Corporate Seal. The corporate seal shall be
circular in form and shall bear the name of the Corporation and words and
figures denoting its organization under the laws of the State of Nevada and the
year thereof and otherwise shall be in such form as shall be approved from time
to time by the Board of Directors.
ARTICLE VIII
Fiscal Year
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Section 8.1 Fiscal Year. The fiscal year of the Corporation
shall be as designated by the Board of Directors.
ARTICLE IX
Amendments
Section 9.1 Amendments. All Bylaws of the Corporation may be
amended or repealed, and new Bylaws may be made, by an affirmative majority of
the votes cast at any annual or special stockholders' meeting by holders of
outstanding shares of stock of the Corporation entitled to vote, or by an
affirmative vote of a majority of the directors present at any organizational,
regular, or special meeting of the Board of Directors.
ARTICLE X
Action Without A Meeting
Section 10.1 Action Without A Meeting. Any action which might
have been taken under these Bylaws by a vote of the stockholders at a meeting
thereof may be taken without a meeting, without prior notice and without a vote,
if a consent in writing setting forth the action so taken, shall be individually
signed and dated by the holders of outstanding shares of stock of the
Corporation having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted, provided that no written
consent will be effective unless the necessary number of written consents is
delivered to the Corporation within sixty days of the earliest delivered consent
to the Corporation, and provided further that prompt notice shall be given to
those stockholders who have not so consented if less than unanimous written
consent is obtained. Any action which might have been taken under these Bylaws
by vote of the directors at any meeting of the Board of Director or any
committee thereof may be taken without a meeting if all the members of the Board
of
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Directors or such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of the Board of Directors or
such committee.
ARTICLE XI
Indemnification
Section 11.1 Indemnification. The Corporation shall indemnify,
in the manner and to the full extent permitted by law, any person (or the estate
of any person) who was or is a party to, or is threatened to be made a party to,
any threatened, pending or completed action, suit or proceeding, whether or not
by or in the right of the Corporation, and whether civil, criminal,
administrative, investigative or otherwise, by reason of the fact that such
person 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 or another Corporation, partnership, joint venture, trust or
other enterprise. Where required by law, the indemnification provided for herein
shall be made only as authorized in the specific case upon a determination, in
the manner provided by law, that indemnification of the director, officer,
employee or agent is proper in the circumstances. The Corporation may, to the
full extent permitted by law, purchase and maintain insurance on behalf of any
such person against any liability which may be asserted against such person. To
the full extent permitted by law, the indemnification provided herein shall
include expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement, and, in the manner provided by law, any such expenses may be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding. The indemnification provided herein shall not be deemed to limit the
right of the Corporation to indemnify any other person for any such expenses to
the full extent permitted by law, nor shall it be deemed exclusive of any other
rights to which any person seeking indemnification from the Corporation may be
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entitled under any 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. Such indemnification 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
person.
Section 11.2 No director shall be personally liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for acts or omissions
which involve intentional misconduct, fraud, or a knowing violation of law, or
(ii) for the payment of distributions in violation of the Section 78.300 of the
Nevada Revised Statutes. Any repeal or modification of this Section 11.2 by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification with respect to acts or omissions occurring prior to such repeal
or modification.
ARTICLE XII
Offices
Section 12.1 Resident Office and Resident. The Corporation
shall maintain a resident office and resident within the State of Nevada, which
may be changed by the Board of Directors from time to time.
Section 12.2 Other Offices. The Corporation may also have
offices at such other place, within or without the State of Nevada, as the Board
of Directors may from time to time determine.
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EXHIBIT 3.2.3
ADVANTA LEASING RECEIVABLES CORP. IX
Bylaws
ARTICLE I
Meetings of Stockholders
Section A. Annual Meetings. The annual meeting of the
stockholders for the election of directors and for the transaction of such other
business as properly may come before such meeting shall be held each year on
such date, and at such time and place within or out of the State of Nevada, as
may be designated by the Board of Directors.
Section 1.2 Special Meetings. Special meetings of the
stockholders for any proper purpose or purposes may be called at any time by the
Board of Directors, the President, any Vice President, to be held on such date,
and at such time and place within or out of the State of Nevada, as the Board of
Directors, the President, any Vice President, whichever has called the meeting,
shall direct. A special meeting of the stockholders shall be called by the
President, any Vice President whenever stockholders owning a majority of the
shares of the Corporation then issued and outstanding and entitled to vote on
matters to be submitted to stockholders of the Corporation shall make
application therefor in writing. Any such written request shall state a proper
purpose or purposes of the meeting and shall be delivered to the President or
any Vice President.
Section 1.3 Notice of Meeting. Written notice, signed by the
President, any Vice President, the Secretary or any Assistant Secretary, of
every meeting of stockholders stating the date and time when, and the place
where, such meeting is to be
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held, shall be delivered either personally or by mail to each stockholder
entitled to vote at such meeting not less than ten nor more than sixty days
before the date of such meeting, except as otherwise provided by law. The
purpose or purposes for which such meeting is called may, in the case of an
annual meeting, and shall in the case of a special meeting, also be stated in
such notice. If mailed, such notice shall be directed to a stockholder at such
Stockholder's address as it shall appear on the stock books of the Corporation,
unless such Stockholder shall have filed with the Secretary a written request
that notices intended for such Stockholder be mailed to some other address, in
which case it shall be mailed to the address designated in such request.
Whenever any notice is required to be given under the provisions of the Private
Corporations Law of the State of Nevada, the Articles of Incorporation or these
Bylaws, a waiver thereof, signed by the stockholder entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto. Attendance of a stockholder at the meeting shall not be deemed
equivalent to a written waiver of notice of such meeting; a written waiver is
required.
Section 1.4 Quorum. The presence at any meeting of
stockholders, in person or by proxy, of the holders of record of a majority of
the shares then issued and outstanding and entitled to vote shall be necessary
and sufficient to constitute a quorum for the transaction of business.
Section 1.5 Adjournments. In the absence of a quorum, a
majority in interest of the stockholders entitled to vote, present in person or
by proxy, or, if no stockholder entitled to vote is present in person or by
proxy, any officer entitled to preside at or act as secretary of a meeting of
stockholders, may adjourn such meeting from time to time until a quorum shall be
present.
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Section 1.6 Voting. Directors shall be chosen by a plurality
of the votes cast at the election, and, except as otherwise provided by law or
by the Articles of Incorporation, including provisions regarding Independent
Directors, all other questions shall be determined by a majority of the votes
cast on such question.
Section 1.7 Proxies. Any stockholder entitled to vote may vote
by proxy, provided that the instrument authorizing such proxy to act shall have
been executed in writing (which shall include telegraphing or cabling) by the
stockholder himself or by such Stockholder's duly authorized attorney and
delivered to the Secretary.
Section 1.8 Judges of Election. The Board of Directors may
appoint judges of election to serve at any election of directors and at
balloting on any other matter that may properly come before a meeting of
stockholders. If no such appointment shall be made, or if any of the judges so
appointed shall fail to attend, or refuse or be unable to serve, then such
appointment may be made by the presiding officer at the meeting.
ARTICLE II
Board of Directors
Section 2.1 Number. The number of directors which shall
constitute the whole Board of Directors shall be fixed from time to time by
resolution of the Board of Directors or stockholders (any such resolution of
either the Board of Directors or stockholders being subject to any later
resolution of either of them). The first Board of Directors and subsequent
Boards of Directors shall consist of six directors, including two Independent
Directors, until changed as herein provided and subject to the provisions of the
Articles of Incorporation regarding Independent Directors.
Section 2.2 Election and Term of Office. Directors shall be
elected at the
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annual meeting of the stockholders, except as provided in Section 2.3 and
subject to the provisions of the Articles of Incorporation regarding Independent
Directors. Each director (whether elected at an annual meeting or to fill a
vacancy or otherwise) shall continue in office until such Director's successor
shall have been elected and qualified or until such Director's earlier death,
resignation or removal in the manner hereinafter provided.
Section 2.3 Vacancies and Additional Directorships. If any
vacancy shall occur among the directors by reason of death, resignation or
removal, or as the result of an increase in the number of directorships, a
majority of the directors then in office, or the remaining directors, or sole
remaining director, though less than a quorum, may fill any such vacancy subject
to the provisions of the Articles of Incorporation regarding Independent
Directors.
Section 2.4 Regular Meetings. A regular meeting of the Board
of Directors shall be held for organization, for the election of officers and
for the transaction of such other business as may properly come before such
meeting, within thirty days after each annual meeting of stockholders. The Board
of Directors by resolution may provide for the holding of other regular meetings
and may fix the times and places at which such meetings shall be held. Notice of
regular meetings shall not be required to be given, provided that whenever the
time or place of regular meetings shall be fixed or changed, notice of such
action shall be mailed promptly to each director who shall not have been present
at the meeting at which such action was taken, addressed to such Director at
such Director's residence or usual place of business.
Section 2.5 Special Meetings. Special meetings of the Board of
Directors shall be held upon call by or at the direction of the President, any
Vice President
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or any two directors, except that when the Board of Directors consists of one
director, then the one director may call a special meeting. Except as otherwise
required by law, notice of each special meeting shall be mailed to each
director, addressed to such Director at such Director's residence or usual place
of business, at least two days before the day on which the meeting is to be
held, or shall be sent to such Director at such place by telex, facsimile
transmission, telegram, radio or cable, or telephoned or delivered to him
personally, not later than the day before the day on which the meeting is to be
held. Such notice shall state the time and place of such meeting, but need not
state the purposes thereof, unless otherwise required by law, the Articles of
Incorporation or these Bylaws.
Section 2.6 Waiver of Notice. Whenever any notice is required
to be given under the provisions of the Private Corporations Law of the State of
Nevada, the Articles of Incorporation or these Bylaws, a waiver thereof, signed
by the director entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. Attendance of a director at a
meeting shall not be deemed equivalent to a written waiver of notice of such
meeting; a written waiver is required.
Section 2.7 Quorum and Manner of Acting. At each meeting of
the Board of Directors the presence of a majority of the total number of members
of the Board of Directors as constituted from time to time, shall be necessary
and sufficient to constitute a quorum for the transaction of business, except
that when the Board of Directors consists of one director, then the one director
shall constitute a quorum, provided that such director must be an Independent
Director. Meetings may be held by telephone. In the absence of a quorum, a
majority of those present at the time and place of any meeting may adjourn the
meeting from time to time until a quorum shall be present and the meeting may be
held as
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so adjourned without further notice or waiver. A majority of those present at
any meeting at which a quorum is present may decide any question brought before
such meeting, except as otherwise provided by law, the Articles of
Incorporation, including the provisions regarding Independent Directors, or
these Bylaws. The Board of Directors may also act without a meeting so long as
such action is taken with the unanimous written consent of the Board of
Directors.
Section 2.8 Resignation of Directors. Any director may resign
at any time by giving written notice of such resignation to the Board of
Directors, the President, any Vice President or the Secretary, subject to the
provisions of the Articles of Incorporation regarding Independent Directors.
Unless otherwise specified in such notice, such resignation shall take effect
upon receipt thereof by the Board of Directors or any such officer, and the
acceptance of such resignation shall not be necessary to make it effective.
Section 2.9 Removal of Directors. At any special meeting of
the stockholders, duly called as provided in these Bylaws, any director or
directors may be removed from office, either with or without cause, by a
two-thirds majority vote of the shareholders. At such meeting a successor or
successors may be elected by a plurality of the votes cast, or if any such
vacancy is not so filled, it may be filled by the Board of Directors as provided
in Section 2.3, subject to the provisions of the Articles of Incorporation
regarding Independent Directors.
Section 2.10 Compensation of Directors. Directors shall
receive such reasonable compensation for their services as such, whether in the
form of salary or a fixed fee for attendance at meetings, with expenses, if any,
as the Board of Directors may from time to time determine. Nothing herein
contained shall be construed to preclude any
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director from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 2.11 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 Bylaws, may exercise all powers of the Corporation and do all
such lawful acts and things as are not by statute, these Bylaws or the Articles
of Incorporation directed or required to be exercised or done by the
stockholders.
Notwithstanding anything in these Bylaws to the contrary,
except to the extent prohibited by law, the Board of Directors shall have the
right (which, to the extent exercised, shall be exclusive) to establish the
rights, powers, duties, rules and procedures that from time to time shall govern
the Board of Directors and each of its members, including without limitation,
the vote required for any action by the Board of Directors, and that from time
to time shall affect the Directors' power to manage the business and affairs of
the Company; and no Bylaw shall be adopted by stockholders which shall impair or
impede the implementation of the foregoing, and provided further, that no right,
duty, rule or procedure established by the Board of Directors, and no Bylaw
adopted by the stockholders shall have the effect of amending, altering or
changing Article TENTH of the Articles of Incorporation.
Section 2.12 Specific Powers. Without limiting the general
powers conferred by the last preceding clause and the powers conferred by the
Articles of Incorporation and Bylaws of the Corporation, but subject to the
limitations set forth in Section 2.13, it is hereby expressly declared that the
Board of Directors shall have the
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following powers to engage in the following activities:
(a) to acquire from time to time all right, title and
interest in and to (i) financial contracts including but not limited
to, lease contracts, loans, accounts receivables, credit card
receivables, credit line receivables, insurance policy loans or
premiums, or installment sale or lease contracts or promissory notes,
arising out of or relating to, the purchase or lease of equipment or
goods, whether or not secured by such equipment or goods, receivables
or other rights to monies due or to become due under any such financial
contracts, security interests therein, proceeds from claims on
insurance policies related thereto, or (ii) any participation interest
(including, without limitation, interest only strips) in or security
based on or backed by any of the foregoing and related rights and other
property appurtenant thereto (items in (a)(i), and (a)(ii)
collectively, the "Assets");
(b) to enter into agreements to acquire assets by purchase,
contribution or any other method;
(c) to acquire, own, hold, service, sell, assign, pledge and
otherwise deal with the Assets, collateral securing or otherwise
relating to the Assets, related insurance policies, agreements with
vendors or lessors or other originators or servicers of Assets and any
proceeds or further rights associated with any of the foregoing;
(d) from time to time to transfer, pledge and/or grant a
security interest or other lien on Assets to one or more trusts, banks,
financial institutions, commercial paper issuers, insurance companies
or similar entities pursuant to one or more pooling and servicing
agreements, indentures, master facility agreements or
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other agreements ("Securitization Agreements"), to be entered into by,
among others, the Corporation, the trustee named therein (the
"Trustee"), and any entity acting as servicer of the Assets;
(e) to transfer from time to time Assets pursuant to one or
more receivables transfer agreements, sale and purchase agreements or
other agreements ("Receivables Transfer Agreements"), to be entered
into by, among other things, the Corporation, any entity acting as
placement agent, the transferor of the Assets, and any entity acting as
servicer of the Assets;
(f) to authorize, and cause the issuance of one or more series
of certificates or other securities issued pursuant to Securitization
Agreements or Receivables Transfer Agreements;
(g) to authorize, borrow, issue, sell and deliver one or more
series and classes of bonds, notes or other evidences of indebtedness
secured or collateralized by one or more pools of Assets issued under a
Securitization Agreement or Receivables Transfer Agreement by
certificates of any class issued by any trust established by the
Corporation (collectively, the "Asset-Backed Securities"), provided
that the Corporation shall have absolutely no liability under any
Asset-Backed Securities except to the extent of the Assets or the
certificates securing or collateralizing such Asset-Backed Securities
and to enter into interest rate swaps, interest rate caps or other
hedging transactions;
(h) to acquire from the Trustee certificates or other
subordinate Asset-Backed Securities issued under the Securitization
Agreements or Receivables Transfer Agreement pursuant to which the
Corporation transferred Assets or
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granted security interests;
(i) to hold and enjoy all of the rights and privileges of any
certificates or other subordinate Asset-Backed Securities issued to the
Corporation under the related agreements;
(j) to purchase Assets from and sell Assets to any Related
Company or any third party as defined in Article EIGHTH of the Articles
of Incorporation in connection with Securitization Agreements or
Receivables Transfer Agreements;
(k) to perform its obligations under each Securitization
Agreement, Receivables Transfer Agreement, Interim Agreement (as
defined below) or other agreement entered into by the Corporation;
(l) to invest proceeds from any Assets, and any other income
as determined by the Board of Directors, including investing in other
Assets;
(m) to enter from time to time into interim arrangements
relating to the Assets whereby assets are transferred to a custodian on
behalf of the entity providing financing, pursuant to one or more
repurchase agreements or other agreements (each, an "Interim
Agreement") to be entered into by, among others, the Corporation, the
entity providing financing, the custodian named therein and any entity
acting as servicer of the Assets; provided, however, that the
Corporation shall have no liability under any Interim Agreement except
to the extent of the Assets funded thereby; and
(n) to engage in any acts and activities and exercise any
powers permitted to corporations under the laws of the State of Nevada
which are incidental to, or connected with, the foregoing, and
necessary, suitable or convenient to
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accomplish any of the foregoing.
Section 2.13 Forbidden Actions. So long as the Corporation
owns (i) any Assets pursuant to any agreement or (ii) is liable for any
obligations under any such or a related agreement, notwithstanding any other
provision of the Articles of Incorporation and any provision of law which
otherwise so empowers the Corporation, the Corporation shall not perform any act
in contravention of any of the following:
(a) (i) (x) consolidate or merge with or into any other
entity or convey, transfer or assign to any Related Company (as defined
below), or dissolve or transfer its properties and assets substantially
as an entirety to any entity (other than pursuant to a Securitization
Agreement or a Receivables Transfer Agreement), or lend or advance any
moneys to, or make an investment in, any person or amend or repeal
Article FOURTH (b), Article SIXTH, Article NINTH or this Article EIGHT
of the Articles of Incorporation or (y) engage in any other action that
bears on whether the separate legal identity of the Corporation and any
Related Company will be respected, including, without limitation (a)
holding itself out as being liable for the debts of any other party;
(b) forming, or causing to be formed, any subsidiaries; (c) acting
other than in its corporate name and through its duly authorized
officers or agents; (d) failing to hold appropriate meetings of the
Board of Directors at least three times per annum and otherwise as
necessary to authorize all corporate action; and (e) failing to hold
meetings of the stockholders at least one time per annum;
(ii) incur any indebtedness, or assume or guaranty any
indebtedness of any other entity, in either such case which involves a
pledge of the Corporation's
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general corporate credit; the Corporation may only incur indebtedness
in the form of the non-recourse Asset-Backed Securities authorized
pursuant to Article SIXTH of the Articles of Incorporation;
(iii) consolidate or merge with or into any other entity
or convey or transfer its properties and assets substantially as an
entirety to any entity, unless
(A) the entity (if other than the Corporation) formed
or surviving the consolidation or merger or which acquires the
properties and assets of the Corporation is organized and
existing under the laws of the State of Nevada, expressly
assumes the due and punctual payment of all obligations of the
Corporation, including those obligations of the Corporation
under each Securitization Agreement and each Receivables
Transfer Agreement and has Articles of Incorporation
containing provisions substantially identical to the
provisions of Articles FOURTH, SIXTH and EIGHTH of the
Articles of Incorporation of the Corporation; and
(B) immediately after giving effect to the
transaction, no default or event of default has occurred and
is continuing under any Securitization Agreement or any
Receivables Transfer Agreement; or
(iv) without (A) the affirmative vote of 100% of the
members of the Board of Directors of the Corporation (including an
affirmative vote of each Independent Director required by Article
FOURTH of the Articles of Incorporation) and (B) the affirmative vote
of the holders of 100% of the common stock outstanding of the
Corporation, make an assignment for the benefit of creditors, file a
petition in bankruptcy, petition or apply to any tribunal for the
appointment of a
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custodian, receiver or any trustee for it or for a substantial part of
its property, commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or
hereinafter in effect, consent or acquiesce to the entry of an order
for relief, or in the filing of any such petition, application,
proceeding or appointment of or taking possession by the custodian,
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Corporation or any substantial part of its property,
or admit its inability to pay its debts generally as they become due or
authorize any of the foregoing to be done or taken on behalf of the
Corporation; provided that if there shall not be two directors required
by Article FOURTH (b) of the Articles of Incorporation then in office
and acting, a vote upon any matter set forth in Article EIGHTH of the
Articles of Incorporation shall not be taken unless and until two
directors meeting the requirements of Article FOURTH (b) of the
Articles of Incorporation shall have been elected.
(b) except as otherwise provided in the documents
relating to the securitization of the Assets;
(i) commingle the Corporation's assets with those of
any direct or ultimate parent of the Corporation or any subsidiary or affiliate
of any such parent;
(ii) fail to maintain separate corporate records and
books of account from those of any direct or ultimate parent of the Corporation
or any subsidiary or affiliate of any such parent;
(iii) fail to conduct its business from an office
separate from any
13
<PAGE> 14
direct or ultimate parent of the Corporation or any subsidiary or affiliate of
any such parent;
(iv) fail to maintain its assets separately from the
accounts of any other person (including through maintenance of a separate bank
account); and
(v) fail to pay from its assets all obligations and
indebtedness of any kind incurred by it, nor pay from its assets any obligations
or indebtedness of any other entity or person.
For purpose of this Section 2.13, "Related Company" means the
stockholder or stockholders of this Corporation or any entity other than this
Corporation now or hereafter controlled directly or indirectly by, or under
direct or indirect common control with, the stockholders of this Corporation.
ARTICLE III
Committees of the Board
Section 3.1 Designation, Power, Alternate Members and Term of
Office. The Board of Directors may, by resolution passed by a majority of the
whole Board of Directors, designate one or more committees, including but not
limited to an Executive Committee, each committee to consist of one or more of
the directors of the Corporation. Any such committee, to the extent provided in
such resolution and permitted by law, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation or a
facsimile thereof to be affixed to or reproduced on all such papers as said
committee shall designate; but no such committee shall have power or authority
in reference to amending the Articles of Incorporation, adopting an agreement of
merger of consolidation, recommending to the stockholders the sale, lease or
exchange of all or
14
<PAGE> 15
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
amending the Bylaws of the Corporation, declaring a dividend or authorizing the
issuance of stock. The Board of Directors may designate one or more directors as
alternate members of any committee who, in the order specified by the Board of
Directors, may replace any absent or disqualified member at any meeting of such
committee. If at a meeting of any committee one or more of the members thereof
should be absent or disqualified, and if either the Board of Directors has not
so designated any alternate member or members, or the number of absent or
disqualified members exceeds the number of alternate members who are present at
such meeting, then the member or members of such committee (including
alternates) present at any meeting and not disqualified from voting, whether or
not he or they constitute a quorum, may unanimously appoint another director to
act at such meeting in the place of any such absent or disqualified member. The
term of office of the members of each committee shall be as fixed from time to
time by the Board of Directors, subject to these Bylaws; provided, however, that
any committee member who ceases to be a member of the Board of Directors shall
ipso facto cease to be a committee member. Each committee shall appoint a
secretary, who may be a Director or an officer of the Corporation.
Section 3.2 Meetings, Notices and Records. Each committee may
provide for the holding of regular meetings, with or without notice, and may fix
the times and places at which such meetings shall be held. Special meetings of
each committee shall be held upon call by or at the direction of its chairman
or, if there be no chairman, by or at the direction of any one of its members.
Except as otherwise provided by law, notice of each special meeting of a
committee shall be mailed to each member of such committee,
15
<PAGE> 16
addressed to such member at such member's residence or usual place of business,
at least two days before the day on which the meeting is to be held, or shall be
sent to him at such place by telex, facsimile transmission, telegram, radio or
cable, or telephoned or delivered to such member personally, not later than the
day before the day on which the meeting is to be held. Such notice shall state
the time and place of such meeting, but need not state the purposes thereof,
unless otherwise required by law, the Articles of Incorporation of the
Corporation or these Bylaws.
Notice of any meeting of a committee need not be given to any
member thereof who shall attend such meeting in person or who shall waive notice
thereof, before or after such meeting, in a signed writing. Each committee shall
keep a record of its proceedings.
Section 3.3 Quorum and Manner of Acting. At each meeting of
any committee the presence of a majority of its members then in office shall be
necessary and sufficient to constitute a quorum for the transaction of business,
except that when a committee consists of one member, then the one member shall
constitute a quorum. In the absence of a quorum, a majority of the members
present at the time and place of any meeting may adjourn the meeting from time
to time until a quorum shall be present and the meeting may be held as so
adjourned without further notice or waiver. The act of a majority of the members
present at any meeting at which a quorum is present shall be the act of such
committee. Subject to the foregoing and other provisions of these Bylaws and
except as otherwise determined by the Board of Directors, each committee may
make rules for the conduct of its business.
Section 3.4 Resignations. Any member of a committee may resign
at
16
<PAGE> 17
any time by giving written notice of such resignation to the Board of Directors,
the President, any Vice President or the Secretary. Unless otherwise specified
in such notice, such resignation shall take effect upon receipt thereof by the
Board of Directors or any such officer, and the acceptance of such resignation
shall not be necessary to make it effective.
Section 3.5 Removal. Any member of any committee may be
removed at any time with or without cause by the Board of Directors.
Section 3.6 Vacancies. If any vacancy shall occur in any
committee by reason of death, resignation, disqualification, removal or
otherwise, the remaining member or members of such committee, so long as a
quorum is present, may continue to act until such vacancy is filled by the Board
of Directors.
Section 3.7 Compensation. Committee members shall receive such
reasonable compensation for their services as such, whether in the form of
salary or a fixed fee for attendance at meetings, with expenses, if any, as the
Board of Directors may from time to time determine. Nothing herein contained
shall be construed to preclude any committee member from serving the Corporation
in any other capacity and receiving compensation therefor.
ARTICLE IV
Officers
Section 4.1 Officers. The officers of the Corporation shall be
a President, one or more Vice Presidents, a Secretary, a Treasurer, and such
other officers as may be appointed in accordance with the provisions of Section
4.3.
Section 4.2 Election, Term of Office and Qualifications. Each
officer (except such officers as may be appointed in accordance with the
provisions of Section 4.3)
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<PAGE> 18
shall be elected by the Board of Directors. Each such officer shall hold such
office until such officer's successor shall have been elected and shall qualify,
or until such officer's death, or until such officer shall have resigned in the
manner provided in Section 4.4 or shall have been removed in the manner provided
in Section 4.5.
Section 4.3 Subordinate Officers and Agents. The Board of
Directors from time to time may appoint other officers or agents (including one
or more Assistant Vice Presidents, one or more Assistant Secretaries and one or
more Assistant Treasurers), to hold office for such periods, have such authority
and perform such duties as are provided in these Bylaws or as may be provided in
the resolutions appointing them. The Board of Directors may delegate to any
officer or agent the power to appoint any such subordinate officers or agents
and to prescribe their respective terms of office, authorities and duties.
Section 4.4 Resignations. Any officer may resign at any time
by giving written notice of such resignation to the Board of Directors, the
President, any Vice President or the Secretary. Unless otherwise specified in
such written notice, such resignation shall take effect upon receipt thereof by
the Board of Directors or any such officer, and the acceptance of such
resignation shall not be necessary to make it effective.
Section 4.5 Removal. Any officer specifically designated in
Section 4.1 may be removed with or without cause at any meeting of the Board of
Directors by affirmative vote of a majority of the directors then in office. Any
officer or agent appointed in accordance with the provisions of Section 4.3 may
be removed with or without cause at any meeting of the Board of Directors by
affirmative vote of a majority of the directors present at such meeting, or at
any time by any superior officer or agent upon whom such power of removal shall
have been conferred by the Board of Directors.
18
<PAGE> 19
Section 4.6 Vacancies. A vacancy in any office by reason of
death, resignation, removal, disqualification or any other cause shall be filled
for the unexpired portion of the term in the manner prescribed by these Bylaws
for regular election or appointment to such office.
Section 4.7 The President. The President shall be the chief
executive officer of the Corporation, subject to the direction of the Board of
Directors, shall have general charge of the business, affairs and property of
the Corporation and general supervision over its officers and agents. If
present, the President shall preside at all meetings of stockholders and the
President shall see that all orders and resolutions of the Board of Directors
are carried into effect. The President may sign, with any other officer
thereunto duly authorized, certificates representing stock of the Corporation
the issuance of which shall have been duly authorized (the signature to which
may be a facsimile signature), and may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts, agreements or other instruments
duly authorized by the Board of Directors, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent or shall be required by law to be otherwise executed.
From time to time President shall report to the Board of Directors all matters
within the President's knowledge, which the interests of the Corporation may
require to be brought to their attention. The President shall have such other
powers and perform such other duties as may from time to time be prescribed by
the Board of Directors or these Bylaws. If no Treasurer shall have been
appointed by the Board of Directors the President shall have, in addition to and
not in limitation of the foregoing, the powers afforded the Treasurer pursuant
to Section 4.10 hereof.
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<PAGE> 20
Section 4.8 The Vice Presidents. At the request of the
President or in the absence or disability of the President, the Vice President
designated by the Board of Directors shall perform all the duties of the
President and, when so acting, shall have all the powers of and be subject to
all restrictions upon the President. Any Vice President may also sign, with any
other officer thereunto duly authorized, certificates representing stock of the
Corporation the issuance of which shall have been duly authorized (the signature
to which may be a facsimile signature), and may sign and execute in the name of
the Corporation deeds, mortgages, bonds, contracts, agreements or other
instruments duly authorized by the Board of Directors, except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent or shall be required by law to be
otherwise executed. Each Vice President shall have such other powers and perform
such other duties as may from time to time be prescribed by the Board of
Directors, the President or these Bylaws.
Section 4.9 The Secretary. The Secretary shall:
(a) record all the proceedings of the meetings of the
stockholders, the Board of Directors, and any committees of the Board
of Directors in a book or books to be kept for that purpose;
(b) cause all notices to be duly given in accordance with the
provisions of these Bylaws and as required by law;
(c) whenever any committee shall be appointed in pursuance of
a resolution of the Board of Directors, furnish the chairman of such
committee with a copy of such resolution;
(d) be custodian of the records and of the seal of the
Corporation, and
20
<PAGE> 21
cause such seal to be affixed to or a facsimile to be reproduced on all
certificates representing stock of the Corporation prior to the
issuance thereof and to all instruments the execution of which on
behalf of the Corporation under its seal shall have been duly
authorized;
(e) see that its lists, books, reports, statements,
certificates and other documents and records required by law are
properly kept and filed;
(f) have charge of the stock and transfer books of the
Corporation, and exhibit such stock book at all reasonable times to
such persons as are entitled by law to have access thereto;
(g) sign certificates representing stock of the Corporation
the issuance of which shall have been duly authorized (the signature to
which may be a facsimile signature); and
(h) in general, perform all duties incident to the office of
Secretary and have such other powers and perform such other duties as
may from time to time be prescribed by the Board of Directors, the
President or these Bylaws.
Section 4.10 The Treasurer. The Treasurer shall be the chief
financial officer of the Corporation and shall:
(a) have charge of and supervision over and be responsible for
the funds, securities, receipts and disbursements of the Corporation;
(b) cause the moneys and other valuable effects of the
Corporation to be deposited in the name and to the credit of the
Corporation in such banks or trust companies or with such bankers or
other depositaries as shall be selected in accordance with Section 5.3
or to be otherwise dealt with in such manner as the
21
<PAGE> 22
Board of Directors may direct;
(c) cause the funds of the Corporation to be disbursed by
checks or drafts upon the authorized depositaries of the Corporation,
and cause to be taken and preserved proper vouchers for all moneys
disbursed;
(d) render to the Board of Directors or the President,
whenever requested, a statement of the financial condition of the
Corporation and of all his transactions as Treasurer;
(e) cause to be kept at the Corporation's principal office
correct books of account of all its business and transactions and such
duplicate books of account as the Treasurer shall determine and upon
application cause such books or duplicates thereof to be exhibited to
any director;
(f) be empowered, from time to time, to require from the
officers or agents of the Corporation reports or statements giving such
information as the Treasurer may desire with respect to any and all
financial transactions of the Corporation;
(g) sign certificates representing stock of the Corporation
the issuance of which shall have been duly authorized (the signature to
which may be a facsimile signature); and
(h) in general, perform all duties incident to the office of
Treasurer and have such other powers and perform such other duties as
may from time to time be prescribed by the Board of Directors, the
President or these Bylaws.
Section 4.11 Salaries. The salaries of the officers of the
Corporation shall be fixed from time to time by the Board of Directors,
22
<PAGE> 23
except that the Board of Directors may delegate to any person the power to fix
the salaries or other compensation of any officers or agents appointed in
accordance with the provisions of Section 4.3. No officer shall be prevented
from receiving such salary by reason of the fact that such officer is also a
director of the Corporation.
ARTICLE V
Execution of Instruments and Deposit of Corporate Funds
Section 5.1 Execution of Instruments Generally. Subject to the
restrictions set forth in Sections 2.12 and 2.13 hereof, which such Sections
shall control, the President, any Vice President or the Secretary or the Chief
Financial Officer, subject to the approval of the Board of Directors, may enter
into any contract or execute and deliver any instrument in the name and on
behalf of the Corporation. Subject to the restrictions set forth in Sections
2.12 and 2.13 hereof, which such Sections shall control, the Board of Directors
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute and deliver any instrument in the name and on behalf of the
Corporation, and such authorization may be general or confined to specific
instances.
Section 5.2 Borrowing. Subject to the restrictions set forth
in Sections 2.12 and 2.13 hereof, which such Sections shall control, no loans or
advance shall be obtained or contracted for, by or on behalf of the Corporation
and no negotiable paper shall be issued in its name, unless and except as
authorized by the Board of Directors. Such authorization may be general or
confined to specific instances. Subject to the restrictions set forth in
Sections 2.12 and 2.13 hereof, which such Sections shall control, any officer or
agent of the Corporation thereunto so authorized may obtain loans and advances
for the Corporation, and for such loans and advances may make, execute and
deliver promissory
23
<PAGE> 24
notes, bonds, or other evidences of indebtedness of the Corporation. Subject to
the restrictions set forth in Sections 2.12 and 2.13 hereof, which such Sections
shall control, any officer or agent of the Corporation thereunto so authorized
may pledge, hypothecate or transfer as security for the payment of any and all
loans, advances, indebtedness and liabilities of the Corporation, any and all
stocks, bonds, other securities and other personal property at any time held by
the Corporation, and to that end may endorse, assign and deliver the same and do
every act and thing necessary or proper in connection therewith.
Section 5.3 Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to its credit in such
banks or trust companies or with such bankers or other depositaries as the Board
of Directors may select, or as may be selected by any officer or officers or
agent or agents authorized so to do by the Board of Directors. Endorsements for
deposit to the credit of the Corporation in any of its duly authorized
depositaries shall be made in such manner as the Board of Directors from time to
time may determine.
Section 5.4 Checks, Drafts, etc. All checks, drafts or other
orders for the payment of money, and all notes or other evidences of
indebtedness issued in the name of the Corporation, shall be signed by such
officer or officers or agent or agents of the Corporation, and in such manner,
as from time to time shall be determined by the Board of Directors.
Section 5.5 Proxies. Proxies to vote with respect to shares of
stock of other Corporations owned by or standing in the name of the Corporation
may be executed and delivered from time to time on behalf of the Corporation by
the President or any Vice President or by any other person or persons thereunto
authorized by the Board of Directors.
24
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ARTICLE VI
Record Dates
Section 6.1 Record Dates. In order that the Corporation may
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, the Board of Directors may fix, in
advance, a record date, which shall be not more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. Only those stockholders of record on the date so fixed shall be
entitled to any of the foregoing rights, notwithstanding the transfer of any
such stock on the books of the Corporation after any such record date fixed by
the Board of Directors.
ARTICLE VII
Corporate Seal
Section 7.1 Corporate Seal. The corporate seal shall be
circular in form and shall bear the name of the Corporation and words and
figures denoting its organization under the laws of the State of Nevada and the
year thereof and otherwise shall be in such form as shall be approved from time
to time by the Board of Directors.
ARTICLE VIII
Fiscal Year
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Section 8.1 Fiscal Year. The fiscal year of the Corporation
shall be as designated by the Board of Directors.
ARTICLE IX
Amendments
Section 9.1 Amendments. All Bylaws of the Corporation may be
amended or repealed, and new Bylaws may be made, by an affirmative majority of
the votes cast at any annual or special stockholders' meeting by holders of
outstanding shares of stock of the Corporation entitled to vote, or by an
affirmative vote of a majority of the directors present at any organizational,
regular, or special meeting of the Board of Directors.
ARTICLE X
Action Without A Meeting
Section 10.1 Action Without A Meeting. Any action which might
have been taken under these Bylaws by a vote of the stockholders at a meeting
thereof may be taken without a meeting, without prior notice and without a vote,
if a consent in writing setting forth the action so taken, shall be individually
signed and dated by the holders of outstanding shares of stock of the
Corporation having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted, provided that no written
consent will be effective unless the necessary number of written consents is
delivered to the Corporation within sixty days of the earliest delivered consent
to the Corporation, and provided further that prompt notice shall be given to
those stockholders who have not so consented if less than unanimous written
consent is obtained. Any action which might have been taken under these Bylaws
by vote of the directors at any meeting of the Board of Director or any
26
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committee thereof may be taken without a meeting if all the members of the Board
of Directors or such committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of the Board of Directors
or such committee.
ARTICLE XI
Indemnification
Section 11.1 Indemnification. The Corporation shall indemnify,
in the manner and to the full extent permitted by law, any person (or the estate
of any person) who was or is a party to, or is threatened to be made a party to,
any threatened, pending or completed action, suit or proceeding, whether or not
by or in the right of the Corporation, and whether civil, criminal,
administrative, investigative or otherwise, by reason of the fact that such
person 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 or another Corporation, partnership, joint venture, trust or
other enterprise. Where required by law, the indemnification provided for herein
shall be made only as authorized in the specific case upon a determination, in
the manner provided by law, that indemnification of the director, officer,
employee or agent is proper in the circumstances. The Corporation may, to the
full extent permitted by law, purchase and maintain insurance on behalf of any
such person against any liability which may be asserted against such person. To
the full extent permitted by law, the indemnification provided herein shall
include expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement, and, in the manner provided by law, any such expenses may be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding. The indemnification provided herein shall not be deemed to limit the
right of the Corporation to indemnify any other person for any
27
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such expenses to the full extent permitted by law, nor shall it be deemed
exclusive of any other rights to which any person seeking indemnification from
the Corporation may be entitled under any 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. Such
indemnification 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 person.
Section 11.2 No director shall be personally liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for acts or omissions
which involve intentional misconduct, fraud, or a knowing violation of law, or
(ii) for the payment of distributions in violation of the Section 78.300 of the
Nevada Revised Statutes. Any repeal or modification of this Section 11.2 by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification with respect to acts or omissions occurring prior to such repeal
or modification.
ARTICLE XII
Offices
Section 12.1 Resident Office and Resident. The Corporation
shall maintain a resident office and resident within the State of Nevada, which
may be changed by the Board of Directors from time to time.
Section 12.2 Other Offices. The Corporation may also have
offices at such other place, within or without the State of Nevada, as the Board
of Directors may from time to time determine.
28
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EXHIBIT 4.1
OH&S DRAFT
5/17/99
===============================================================================
MASTER FACILITY AGREEMENT
by and among
ADVANTA BUSINESS SERVICES CORP.,
as the Servicer,
ADVANTA LEASING RECEIVABLES CORP. VIII,
and
ADVANTA LEASING RECEIVABLES CORP. IX,
as the Obligors
And
Bankers Trust Company,
as Trustee
Dated as of ____________ __, 1999
===============================================================================
<PAGE> 2
ARTICLE I
DEFINITIONS
<TABLE>
<S> <C> <C>
Section 1.01. Definitions..............................................................................2
Section 1.02. Acts of Holders.........................................................................18
Section 1.03. Notice to Holders: Waiver...............................................................19
Section 1.04. Alternate Payment and Notice Provisions.................................................20
Section 1.05. Conflict with Trust Indenture Act.......................................................20
Section 1.06. Effect of Headings and Table of Contents................................................20
Section 1.07. Successors and Assigns..................................................................20
Section 1.08. Benefits of Master Agreement............................................................20
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations, Warranties and Covenants of Obligors...................................21
Section 2.02. Representations, Warranties and Covenants of Servicer...................................23
ARTICLE III
PLEDGING THE TRUST ESTATE
Section 3.01. Series Trust Estates....................................................................25
Section 3.02. Preservation of Series Collateral.......................................................26
Section 3.03. Waiver of Stay or Extension Laws; Marshalling of Assets.................................26
Section 3.04. Noninterference, Etc....................................................................26
Section 3.05. Obligor Changes.........................................................................26
Section 3.06. Limited Recourse to Obligors............................................................27
Section 3.07. Authorization of Actions to be Taken by the Trustee.....................................27
Section 3.08. Termination of Security Interests.......................................................27
Section 3.09. Filing; Maintenance of Contract Files...................................................28
Section 3.10. Costs and Expenses.......................................................................28
ARTICLE IV
NOTE FORMS
Section 4.01. Forms Generally.........................................................................28
Section 4.02. Form of Trustee's Certificate of Authentication.........................................29
Section 4.03. Securities Legend.......................................................................29
</TABLE>
ARTICLE V
THE NOTES
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<PAGE> 3
<TABLE>
<S> <C> <C>
Section 5.01. Amount Limited; Issuable in Series......................................................30
Section 5.02. Execution, Authentication, Delivery and Dating..........................................30
Section 5.03. Temporary Notes.........................................................................31
Section 5.04. Registration, Registration of Transfer and Exchange, Transfer Restrictions..............31
Section 5.05. Mutilated, Destroyed, Lost and Stolen Notes.............................................33
Section 5.06. Final Distribution......................................................................33
Section 5.07. Persons Deemed Owners...................................................................35
Section 5.08. Cancellation............................................................................35
Section 5.09. Book-Entry Notes........................................................................35
Section 5.10. Notices to Clearing Agency..............................................................36
Section 5.11. Definitive Notes........................................................................36
ARTICLE VI
ADMINISTRATION AND SERVICING OF THE CONTRACTS AND EQUIPMENT
Section 6.01. Appointment of Servicer: Responsibilities of Servicer...................................37
Section 6.02. Standard of Care........................................................................39
Section 6.03. Credit and Collection Policy............................................................39
Section 6.04. Maintenance of Interest in the Trust Estate.............................................39
Section 6.05. Servicing Compensation; Payment of Certain Expenses by Servicer.........................39
Section 6.06. Servicer's Certificate..................................................................40
Section 6.07. Annual Statement as to Compliance.......................................................40
Section 6.08. Financial Statements and Independent Accountant's Servicing Certificate Review..........40
Section 6.09. Access to Certain Documentation and Information Regarding the Pledged Property..........41
Section 6.10. Other Necessary Data....................................................................42
Section 6.11. Release of Contracts....................................................................42
Section 6.12. Removal Related to Upgrades or Trade-Ins................................................43
Section 6.13. Notification to Noteholders of Defaults and Events of Default...........................43
Section 6.14. Security Deposits.......................................................................43
Section 6.15. Removal of Nonconforming Pledged Property...............................................44
ARTICLE VII
ACCOUNTS
Section 7.01. Establishment of Series Accounts.......................................................44
Section 7.02. Investment of Funds in the Series Accounts..............................................45
Section 8.01. Liability of Servicer; Indemnities......................................................45
Section 8.02. Merger, Consolidation, or Assumption of the Obligations of Servicer.....................46
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 8.03. Limitation on Liability of Servicer and Others..........................................46
Section 8.04. Servicer Not to Resign..................................................................47
Section 8.05. Reserved................................................................................47
Section 8.06. Indemnities of the Obligors.............................................................47
Section 8.07. Limitation on Liability of the Obligors.................................................48
ARTICLE IX
SERVICER TERMINATION
Section 9.01. Events of Servicer Termination..........................................................48
Section 9.02. Trustee to Act; Appointment of Successor................................................49
Section 9.03. Notification to Noteholders.............................................................51
Section 9.04. Waiver of Past Events of Servicer Termination...........................................51
Section 9.05. Effects of Termination of Servicer......................................................51
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.01. Events of Default......................................................................52
Section 10.02. Collection of Indebtedness and Suits for Enforcement by Trustee: Authority
of Controlling Party....................................................................52
Section 10.03. Limitation on Suits....................................................................54
Section 10.04. Unconditional Right of Holders to Receive Principal and Interest.......................55
Section 10.05. Restoration of Rights and Remedies.....................................................55
Section 10.06. Rights and Remedies Cumulative.........................................................55
Section 10.07. Delay or Omission Not Waiver...........................................................55
Section 10.08. Control by Holders.....................................................................56
Section 10.09. Waiver of Past Defaults................................................................56
Section 10.10. Undertaking for Costs..................................................................56
Section 10.11. Action on Notes........................................................................57
ARTICLE XI
THE TRUSTEE
Section 11.01. Certain Duties and Responsibilities....................................................57
Section 11.02. Notice of Defaults.....................................................................59
Section 11.03. Certain Rights of Trustee..............................................................59
Section 11.04. Not Responsible for Recitals or Issuance of Notes......................................60
Section 11.05. May Hold Notes.........................................................................60
Section 11.06. Compensation and Indemnity.............................................................60
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Section 11.07. Disqualification; Conflicting Interests................................................61
Section 11.08. Corporate Trustee Required; Eligibility................................................61
Section 11.09. Resignation and Removal, Appointment of Successor......................................61
Section 11.10. Acceptance of Appointment by Successor.................................................62
Section 11.11. Merger, Conversion, Consolidation or Succession to Business............................63
Section 11.12. Preferential Collection of Claims Against Obligors.....................................63
Section 11.13. Appointment of Authenticating Agent....................................................63
Section 11.14. Paying Agent...........................................................................65
Section 11.15. Appointment of Co-Trustee or Separate Trustee..........................................66
ARTICLE XII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND OBLIGORS
Section 12.01. Obligors to Furnish Trustee Names and Addresses of Holders.............................67
Section 12.02. Preservation of Information; Communications to Holders.................................68
Section 12.03. Reports by Trustee.....................................................................68
Section 12.04. Reports by Obligors....................................................................68
ARTICLE XIII
MASTER AGREEMENT SUPPLEMENTS
Section 13.01. Supplements Affecting All Series, or the Master Agreement Generally....................69
Section 13.02. Supplements Authorizing a Series of Notes..............................................72
Section 13.03. Execution of Master Agreement Supplements..............................................73
Section 13.04. Effect of Master Agreement Supplements.................................................73
Section 13.05. Reference in Notes to Master Agreement Supplements.....................................73
ARTICLE XIV
COVENANTS
Section 14.01. Payment of Principal and Interest......................................................73
Section 14.02. Maintenance of Non-U.S. Office or Agency...............................................73
Section 14.03. Consolidation, Merger, Sale of Assets..................................................74
Section 14.04. Negative Covenants.....................................................................75
Section 14.05. Performance of Obligations: Servicing of each Series Trust Estate......................76
Section 14.06. Money for Note Payments to Be Held in Trust............................................77
Section 14.07. Corporate Existence; Separate Corporate Existence......................................78
Section 14.08. Payment of Taxes and Other Claims......................................................80
Section 14.09. Amendment of Organizational Documents..................................................80
Section 14.10. Rule 144A Information..................................................................81
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Section 14.11. Further Instruments and Acts...........................................................81
Section 14.12. Compliance with Laws...................................................................81
Section 14.13. Income Tax Characterization............................................................81
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 15.01. Counterparts...........................................................................81
Section 15.02. Governing Law..........................................................................81
Section 15.03. Notices................................................................................82
Section 15.04. Severability of Provisions.............................................................82
Section 15.05. Binding Effect.........................................................................82
Section 15.06. Exhibits...............................................................................82
Section 15.07. Calculations...........................................................................82
Section 15.08. Further Assurances.....................................................................83
Section 15.09. Nonpetition Covenant...................................................................83
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This MASTER FACILITY AGREEMENT, dated as of ____________ __, 1999, by
and among Advanta Business Services Corp., a Delaware corporation, as Servicer,
Advanta Leasing Receivables Corp. VIII, a Nevada corporation, and Advanta
Leasing Receivables Corp. IX, a Nevada corporation, as the Obligors and Bankers
Trust Company, 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 Master 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 Indenture 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 "herein," "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 limitations
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 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).
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<PAGE> 8
Advance Payment. 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.
Adverse Claim. 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.
Applicable Discount Rate. With respect to any Contract has the meaning
set forth in the related Series Supplement.
Authenticating Agent. Any Person authorized by the Trustee to act on
behalf of the Trustee to authenticate Notes.
Authorized Officer. With respect to any Obligor, any president, senior
vice president, vice president, treasurer or the chief financial officer of
such Obligor.
Bearer Notes. Has the meaning specified in Section 4.01.
Book-Entry Notes. Notes registered in the name of a Clearing Agency,
or its nominee as described in Section 5.09.
Booked Residual. With respect to any Contract on any date of
determination, the residual value of the Equipment subject to such Contract, as
reflected in the Servicer's servicing system.
Broker. The Person (including any broker, vendor or other Person, but
excluding the Originator) that originally leases an item of Equipment to a User
pursuant to a Contract between the Originator and the User of such Equipment, or
any Person from whom the Originator purchased a Contract in respect of which the
Originator is not a party.
Broker Agreement. Any agreement between the Originator and a Broker
pursuant to which the Originator 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.
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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.
Cedelbank. Cedelbank, societe anonyme, incorporated under the laws of
Luxembourg.
Charged-Off Contract. 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 as uncollectible, or (ii) as to which any amount remains unpaid for
121 days or more from the original due date for such payment.
Class. With respect to any Series, any one of the classes of such
Notes as designated in the Series Supplement for such Series.
Clearing Agency. 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. A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book entry transfers and pledges of securities deposited with the Clearing
Agency.
Closing Date. ____________ __, 1999.
Code. The Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
Collection Period. With respect to any Payment Date, the immediately
preceding calendar month; provided that if, with respect to any Series, 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 Series 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 and any Collection Period, all
collections and proceeds of the Contracts and the Related Security, including
without limitation, Scheduled Payments, Prepayments, Offset Amounts, Residual
Receipts and any other Recoveries, Prepayment Amounts, Investment Earnings, and
Insurance Proceeds received by the Servicer, the Trustee or the Obligors, in
each case, during such Collection Period; provided that "Collections" shall not
include (i) Advance Payments until (and then 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, 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.
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Commission. 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.
Computer Tape. Collectively, the computer tapes generated by the
Originator which provide information relating to the Contracts and which were,
or will be, used by the Originator in selecting the Contracts sold to the
Obligors pursuant to the Master Sale Agreement and Sale Agreement Supplement.
Contract Balance Remaining. With respect to any Contract, as of any
date, the aggregate (undiscounted) amount of all unpaid Scheduled Payments due
under such Contract.
Contract. Each of the agreements conveyed by the Originator to an
Obligor pursuant to the Master Sale Agreement and subsequently pledged by such
Obligor to the Trustee pursuant to this Master Agreement or a Series Supplement,
pursuant to which the applicable originator thereof leases specified Equipment
to, or makes loans to or otherwise finances equipment for a User and, with
respect to a Series, which are identified on the List of Contracts delivered to
the Servicer on or about the date of issuance of such Series.
Contract File. With respect to each Contract, the following documents:
(i) The executed original counterparts of the Contract;
(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 Originator or the Servicer keeps on file for the benefit of
the Originator in accordance with the Originator's or Servicer's
customary procedures (A) which indicate that the ownership of the
Equipment and/or (B) which relate 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 filings with the
appropriate office) of all UCC financing statements filed with respect
to the Contracts, identifying the User as debtor and the Originator as
secured party, if applicable.
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.
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Contract Principal Balance. As to each Series, the amount described
in the Series Supplement.
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 Master 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 Servicer as the same may be modified from time to time in
accordance with the terms of this Master Agreement.
Cut-Off Date. With respect to any Series, the "Cut-Off Date" as set
forth in the related Series Supplement.
Default. 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 more than 60 days after the original due date for such
payment.
Depositaries. Means 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. Means, if applicable with respect to any Series
or Tranche, the agreement among the Obligors, the Trustee and a Clearing Agency,
or as otherwise provided in the related Series Supplement.
Determination Date. With respect to any Series as set forth in the
related Series Supplement.
Dollars or $. The lawful money of the United States.
Eligible Investments. Any instrument, security or security
entitlement evidencing 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;
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<PAGE> 12
(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) through (g) above,
any Eligible Investment must mature no later than the Business Day prior to the
next Payment Date.
Eligible Contract. With respect to any Series, as defined in the
related Series Supplement.
Equipment. The equipment leased to or sold to a User or otherwise
financed pursuant to any Contract and any security interest in such equipment
and the Residual Interest therein or derived therefrom.
Euroclear Operator. Means 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.
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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. Means Cedelbank 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.
Holder or Noteholder. Means (i), 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) and (ii) otherwise, the Registered Holder.
Increased Servicer Fee. Has the meaning ascribed to such term in
Section 9.02 hereof.
Increased Servicer Fee Differential. Has 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 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 (g) obligations of such Person under any
interest rate or currency exchange agreement.
Indemnified Amounts. Has the meaning set forth in subsection 8.01(b)
hereof.
Indemnified Party. Has the meaning set forth in subsection 8.01(b)
hereof.
Independent Accountant. A firm of nationally recognized independent
certified public accountants with respect to Advanta Leasing Holding Corp.,
Advanta Corp., Advanta Business
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<PAGE> 14
Services Corp., the Originator, the Servicer (if other than Advanta Business
Services Corp.), and/or the Obligors, as applicable, within the meaning of the
Securities Act.
Initial Unpaid Amounts. Means 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 commencement of a petition seeking entry of a decree
or order for relief by a court having, jurisdiction in the premises in
respect of such Person or any substantial part of such Person's assets
in an involuntary case under any applicable Federal or state
bankruptcy, insolvency, receivership, conservatorship 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 such Person or any substantial part of such Person's
assets, or ordering the winding-up or liquidation of such Person's
affairs, and such petition shall remain unstayed and in effect for a
period of 60 consecutive days or immediately upon entry of such decree
or order; or
(ii) the commencement by such Person of a voluntary case under
any applicable Federal or state bankruptcy, insolvency, receivership,
conservatorship 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, conservator,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of such Person for such Person or 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
generally to pay its debts as such debts become due, or the admission
in writing by such Person of its inability generally to pay its debts
as they 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 Originator 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.
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Investment Earnings. Any income or earnings received from the
investment of funds from time to time on deposit in or credited to any Series
Account in accordance with a Series Supplement, 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
limitations 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 each Series the electronic list of
Contracts delivered to the Trustee and designating the Contracts pledged to
secure such Series. 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. Means 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 Agreement. This Master Facility Agreement, as the same may be
amended, restated or otherwise modified from time to time.
Master Agreement Supplement. Means any Series Supplement or any other
document which amends or supplements this Master Agreement.
Master Sale Agreement. Means the Master Sale and Contribution
Agreement, dated as of ____________ __, 1999, by and among the Originator and
the Obligors.
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 Payment
Date or by declaration of acceleration, prepayment or otherwise,
Moody's. Moody's Investors Service, Inc.
Municipal Contract. Means a Contract under which the User is a state or
local Government or government agency.
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Non-Monthly Payment Contracts. Means any Contract that does not require
the User to make regularly scheduled 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
and a Series Supplement.
Obligors. Means Advanta Leasing Receivables Corp. VIII and Advanta
Leasing Receivables Corp. IX, the initial Obligors under this Master Agreement.
Obligors' Order or Obligors' Request. With respect to an Obligor, a
written request or order signed by such Obligor and, with respect to more than
one Obligor, a written request or order signed by all such Obligors and, in each
case, delivered to the Trustee.
Officer's Certificate. Means a certificate signed by an Authorized
Officer.
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 the Originator 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 and bylaws.
Original Issue Date. Means, for any Series the date of original issue
of such Series of Notes, as specified in the related Series Supplement.
Original Servicer Fee Rate. With respect to any Series, the rate at
which the Servicer Fee is calculated, as specified on the related Series
Supplement.
Originator. Means Advanta Business Services Corp., its successors and
assigns.
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
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(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 Servicer 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, the Servicer, the Originator
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 Originator or
any Affiliate of any Obligor or of any of the foregoing Persons.
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 or portion thereof 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 Date. With respect to a Series, the date specified therefor in
the related Series Supplement.
Payment Interval. Means, 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.
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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 with respect to each Series, the pledge by the Obligors
of the related Series Trust Estate to the Trustee for the benefit of the
Noteholders of such Series in accordance with Section 3.01 hereof.
Pledged Property. With respect to any Series Trust Estate, the property
described as Pledge Property in the related Series Supplement.
Predecessor Note. Means every previous Note evidencing all or a portion
of the same debt as that evidenced by a 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.
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 to become due on such Contract if the User has designated
such payment as a prepayment and the Servicer has consented to such prepayment.
Advance Payments and Residual Receipts are not "Prepayments."
Prepayment Amount. 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. 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 Payment 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 Servicer 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
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imposed thereon; (xii) the priority of such Series with respect to any other
Series; and (xiii) any other terms of such Series.
Proceeding. Any suit in equity, action at law or other judicial or
administrative proceeding.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Rating Agencies. ________ and _______ and any other nationally
recognized rating agencies specified with respect to a Series in the Series
Supplement for such Series.
Record Date. 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 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, amounts received in
connection with the sale or other disposition of the Charged-Off Contracts,
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 from a
Security Deposit and applied by the Servicer as a Recovery and net of costs of
collection in connection with such Charged-Off Contract.
Refinance Proceeds. Means 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 Obligors to the Trustee on the Payment Date following such Collection
Period for deposit into the related Series Accounts and application in
accordance with the related Series Supplement, and (ii) any amounts remitted to
the Trustee by the Obligors in accordance with the related Series Supplement for
deposit into the related Series Accounts 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'
rights, title and interest in, to and under:
(i) the related Master Sale Agreement and the Sale Agreement
Supplement (including without limitation, all rights, remedies, powers
and privileges thereunder),
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pursuant to which, among, other things, the Contract, the Contract
Files and the related Equipment have been purchased by or contributed
to the Obligors;
(ii) all of the Obligors' interest in the related Equipment,
together with such Obligor's interest in all property from time to time
securing or purporting to secure obligations under 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 Originator and/or such Obligors (and, in the case
of those UCC financial 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 whatever character from time to time
supporting or securing a payment of such Contract whether pursuant to
the Contract or otherwise (including, without limitation, the Security
Deposits);
(iv) all of such Obligors' interest in the Equipment, Residual
Receipts and Recoveries related to such Contract;
(v) the Contract Files and other instruments, documents,
agreements, Computer Tapes, books, and records relating to such
Contract; and
(vi) 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 bylaws or other
organizational or governing, documents of such Person.
Residual Interest. The ownership interest in Residual Receipts and/or
the contractual right to receive and retain Residual Receipts as owner thereof.
Residual Receipts. With respect to any Collection Period, all residual
proceeds received by the Servicer, proceeds of the sale of the 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 relating to a Security Deposit applied by the
Servicer as a Residual Receipt, plus any other amounts which are received by the
Servicer and applied against the Booked Residual of such Contract in accordance
with the Servicer's servicing standards during such Collection Period, 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.
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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 a direct responsibility for the administration of
this Master 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.
Sale Agreement Supplement. Each supplement to the Master Sale
Agreement.
Scheduled Payments. With respect to any 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 Originator by a User as a
security deposit on a Contract, which has not previously been refunded to such
User.
Series. With respect to any Notes means those Notes issued pursuant to
the same Series Supplement.
Series Accounts. Any deposit, trust, escrow, collateral, reserve or
similar account established and maintained by the Trustee for the benefit of the
Noteholders of 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 in the related Series
Supplement.
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Series Supplement. With respect to any Series, a Supplement to this
Master Agreement setting fourth the terms of such Series and, 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 overcollateralization provided to
any Series and the subordination of any Series or Class to another Series or
Class shall be deemed to be 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 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 in the related Series Supplement.
Servicer. The Person performing the duties of the Servicer hereunder,
which shall initially be Advanta Business Services Corp. and may subsequently be
(i) any Person which is an Affiliate of Advanta Business Services Corp. and has
fulfilled the conditions set forth in Section 8.02 of this Master Agreement or
(ii) a successor Servicer appointed as provided in Section 9.02 of this Master
Agreement.
Servicer Advance. With respect to any Series, the amount, if any, which
the Servicer at its option advances 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 Payment 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 subsection 9.01(a)
hereof.
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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 by the
Servicer to the Trustee and to any other Persons which are entitled to such
certificate under the terms of any Series Supplement.
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 (x) insurance premium payments and (y)
prepayment charges paid by a User in connection with a Prepayment.
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.
State. Any state of the United States of America, its territories and
possessions and the District of Columbia.
Supplement. Each supplement to amendment of this Master Agreement.
Support Default. With respect to a Series, those events specified in
the related Series Supplement.
Trust Indenture Act. 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 unless 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 registered under the
Securities Act.
User. Any obligor, under any Contract, whose obligations thereunder
constitute the principal source of payments under such Contract, including any
guarantor 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
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instruments are, delivered to the Trustee and, where it is hereby expressly
required, to the Obligors. 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 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 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. Withstanding any
provision of this Master Agreement, any Series Supplement or any of the Notes to
the contrary, the Obligors 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 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 Servicer shall bind the
successors and assigns of the Servicer and all covenants and agreements in this
Master Agreement or any Series Supplement by any Obligor shall bind the
successors and assigns of such Obligor, 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 Master 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 equal 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.
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ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations, Warranties and Covenants of Obligors.
By its execution and delivery of this Master Agreement each Obligor hereby makes
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 remade and reaffirmed on the Series Closing Date for each
Series, and shall survive the date of the making or remaking of such
representations and warranties. Each of the covenants of each Obligor 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, 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, the Master Sale Agreement and
the 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 Organizational Documents,
(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, the
Master Sale Agreement and the 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, the Master
Sale Agreement and the Series Related Documents to which such Obligor
is a party constitutes
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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 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 or under a Series Supplement, (i) such Obligor, if conveying
Contracts and such Obligor's right in the Related Security (other than
the Residual Interest with respect thereto) is the legal and beneficial
owner of the Contracts and the Related Security (except the Residual
Interest in the Equipment) subject to such Pledge and is taking or has
taken all requisite steps to obtain on its behalf a first priority
perfected security interest in, the Equipment related to such contracts
and the Related Security with respect to such equipment (other than
Equipment valued at $25,000 or less on its acquisition date in which
neither the Originator nor such Obligor has reserved a perfected
security interests) and the title and interest of such Obligor is free
and clear of any Adverse Claim except as created by this Master
Agreement, the Master Sale Agreement and the Series Related Documents,
and such Obligor has the legal right to Pledge the Contracts and the
associated Collections and Related Security to the Trustee and (ii)
such Obligor, if conveying the Residual Interest in the Equipment, is
the legal and beneficial owner of such Residual Interest in each case,
free and clear of any Adverse Claim except as created by this Master
Agreement, the Master Sale Agreement and the Series Related Documents,
and such Obligor has the legal right to Pledge such Residual Interest.
(viii) Places of Business. Except in accordance with Section
3.05(c), 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 this Master Agreement, the Master Sale Agreement or the
Series Related Documents, (ii) seeking to prevent the consummation of
any of the
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transactions contemplated by this Master Agreement, the Master Sale
Agreement or 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 this Master Agreement, the Master Sale
Agreement or the Series Related Documents and (iv) seeking any
determination or ruling that would materially and adversely affect the
validity or enforceability of this Master Agreement, the Master Sale
Agreement or 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 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, the Master Sale Agreement and the Series Related Documents
to which it is a party and the execution, delivery and performance of
this Master Agreement, the Master Sale 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, the Master
Sale Agreement and the 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.
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(iv) No Violation. The consummation by the Servicer of the
transactions contemplated by this Master Agreement, the Master Sale
Agreement and the 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 bylaws 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 Master
Sale Agreement 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 a 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 Governmental Authority (A) asserting the invalidity
of this Master Agreement, the Master Sale Agreement or any of the
Series Related Documents, (B) seeking to prevent the consummation of
any of the transactions contemplated by this Master Agreement, the
Master Sale Agreement or any of the 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, the
Master Sale Agreement or any of the 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, the Master Sale Agreement or any of the 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 08043. The Servicer shall give
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the Trustee and each Obligor at least 30 days' prior written notice of
any relocation of such chief executive office.
(b) The Servicer 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, or, with
respect to Contracts contained in a Series Trust Estate, as
contemplated in the related Series Supplement, 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 or in the related Series Supplement.
(iii) Books and Records. The Servicer (1) will (A) maintain
its books and records, as Servicer, separate from the books and records
of the Originator and of any Obligor, (B) maintain bank accounts
separate from those of the Originator and 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 the Originator and of any Obligor, (Y) guarantee
(directly or indirectly), endorse or otherwise become contingently
liable (directly or indirectly) for the obligations of the Originator
or any Obligor (except as expressly permitted hereunder) including a
merger, consolidation or other transfer of assets and assumption of
obligations permitted by Section 8.02 hereof involving the Servicer and
the Originator) or (Z) institute against the Originator or any Obligor,
or join any other person in instituting against the Originator and of
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,
shall
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pledge the related Series Trust Estate to and grant a security interest in the
related Series Trust Estate to 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 specified in the Series Supplement, 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 Servicer or the Trustee 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 the 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 Servicer or Trustee or otherwise in
connection with such delivery.
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 and shall effect any necessary or
appropriate assignments or amendments thereto and filings of financing
statements or amendments thereto within 60 days of such change.
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(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 and effects within 60
days of such change whatever appropriate recordations and filings of financing
statements or amendments thereto 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 Obligors hereunder, including, without limitation,
the obligations of the Obligors in respect of the Notes shall be payable solely
from the related Series Trust Estate and that neither the Trustee nor any Holder
shall look to any other Property or assets of such Obligors 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 Obligor's obligations hereunder or for any payment obligation or
claim arising out of or based on this Master 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 and hereof. Subject to the
provisions thereof and hereof, 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
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
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related Series Trust Estate with respect to such Series Secured Obligations.
In addition, the Trustee shall, if and as provided in the related Series
Supplement, release the Lien on any Contract or other Property which has been
sold or otherwise disposed of by the Obligors.
Section 3.09. Filing; Maintenance of Contract Files. (a) On or prior to
the Series Closing Date with respect to a Series, the Obligors shall, and shall
cause the Originator 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 the Obligors against the Originator, shall be assigned by the
Obligors to the Trustee). Notwithstanding the foregoing, it is expressly agreed
that no such UCC-1 Financing Statement shall be filed with respect to the
Originator's ownership interest in any particular piece of Equipment, except to
the extent then required by the Servicer's Credit and Collection Policy, or as
may otherwise be required in the related Sale Agreement Supplement. On or prior
to each Series Closing Date the Obligors shall, and shall cause the Originator
to mark its internal records (including, where applicable, its electronic
ledger) to reflect (x) the conveyance of the related Pledged Property from the
Originator to the Obligors and (y) the Pledge of the related Pledged Property to
the Trustee.
Section 3.10. Costs and Expenses. The Obligors agree to pay all
reasonable costs and disbursements (and in the event the 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.
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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).
Section 4.02. Form of Trustee's Certificate of Authentication. This is
one of the Notes designated herein and issued pursuant to in the
within-mentioned Master Agreement and the within-mentioned Series Supplement
thereto.
--------------------,
as Trustee
By
-------------------
Authorized Signatory
Section 4.03. Securities Legend. Each Unregistered Note issued
hereunder will contain the following legend:
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 THEIR 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 within a Series.
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 each of the Obligors by any of the Authorized
Officers of such Obligor. 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
shall bind the Obligors, notwithstanding that such individuals or any of them do
not hold such offices at the time of 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
may deliver Notes of the related Series (including Notes of any Class within
such Series) executed by the Obligors 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.
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 of authentication upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
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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, and the Obligors 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, 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 within a Series), the Obligors 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 within a Series) are
issued, Obligors will cause definitive Notes of that Series (or Class) to be
prepared without unreasonable delay. After the preparation of definitive Notes
of such Series (or Class), such temporary Notes shall be exchangeable for
definitive Notes of such Series (or Class) 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 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) and tenor, of
authorized denominations. Until so exchanged, the temporary Notes of any Series
(or Class) 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).
Section 5.04. Registration, Registration of Transfer and Exchange,
Transfer Restrictions. The Obligors shall cause to be kept a register (the "Note
Register") in which, subject to such reasonable regulations as they may
prescribe, the Obligors 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 shall
promptly appoint a successor or, if the Obligors elect not to make such an
appointment, one of the Obligors shall assume the duties of the Note Registrar.
If a Person other than the Trustee is appointed by the Obligors as Note
Registrar, the Obligors 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
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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 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 Series Supplement). Whenever any Notes are so
surrendered for exchange, the Obligors 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 Obligors, evidencing the same debt, 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 or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Obligors, 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 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 Sections 5.03 or 5.05 not involving any transfer.
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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 shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Note of the same Series and Class, of like tenor and
principal amount and bearing a number not contemporaneously outstanding. If
there shall be delivered to the Obligors and the Trustee, (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,
the Trustee or the Support Provider that such Note has been acquired by a bona
fide purchaser, the Obligors 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.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Obligors in their discretion may,
instead of issuing a new Note, cause the Trustee to pay such Note by depositing
with the Trustee the full amount needed to pay such Note.
Upon the issuance of any new Note under this Section, the Obligors 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 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 Payment Date on which the Noteholders of any Series or Class may
surrender their Notes for payment of
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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 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 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 six months 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 Obligors
any moneys held by them for the payment of principal or interest that remains
unclaimed for two years. After payment to the Obligors, Noteholders entitled to
the money must look to the Obligors 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 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 Noteholders shall be published in a newspaper of
general circulation in Luxembourg within the time period prescribed in this
Master 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 Noteholders of such Series or Class shall be published in a newspaper
designated in the related Series Supplement within the time period prescribed in
this Master Agreement.
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Section 5.07. Persons Deemed Owners. Prior to due presentment of a Note
for registration of transfer, the Obligors, 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
Series 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
Series Supplement and for all other purposes whatsoever; and none of the
Obligors, the related Series Support Provider, the Trustee nor any agent of any
of them, shall be affected by notice to the contrary.
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. Any Obligor may at any time deliver to the
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Obligor 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
have 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 Series 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
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 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 Master 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
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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 Master Agreement requiring, or
permitting actions with the consent of, or at the direction of, Noteholders
evidencing a specified 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 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 advise the Trustee that
the Clearing Agency is no longer willing or able to discharge properly its
responsibilities under the Depository Agreement with respect to such Series or
Class and the Trustee or the Obligors are unable to locate a qualified successor
or (b) the Obligors, at their 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 shall execute and the
Trustee shall authenticate and the Transfer Agent and Registrar shall deliver
such Definitive Notes. Neither the Obligors 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, executed by any
bank, trust company or recognized securities dealer, wherever situated,
satisfactory to the Obligors. 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 a 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 CONTRACTS AND EQUIPMENT
Section 6.01. Appointment 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
Contracts and the Equipment; provided, however, that the Servicer shall
administer and service the Contracts and the Equipment materially and only in
conformance with the terms of this Master Agreement and the Series Supplements
and shall take no action to affect adversely the interests of the Trustee or the
Noteholders in such Contracts and Equipment. In consideration of such
appointment, 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 Contracts and
the Equipment, 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. In
addition, the Servicer may make Servicer Advances at its option and shall make
Servicer Advances to the extent required by a Series Supplement, provide
appropriate Federal income tax information to the Trustee for use in providing
information to the Noteholders, collect and remit sales and property taxes on
behalf of taxing authorities and maintain 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 Master Agreement, the
Servicer shall have full power and authority, acting at its sole discretion, to
do any and all things in connection with the management, 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
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other Servicing Charges that may become due from any User in the ordinary
course of servicing any Contract. The Trustee and the Obligors 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 and the Obligors 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
(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.
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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
willfully 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 the expense of
the Obligors as provided in Section 3.10 of this Master Agreement, 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 as to which such
perfection is not required under Section 3.09 and other than with respect to the
Pledged Property removed from the Trust Estate pursuant to Sections 6.11, 6.12
or 6.15 hereof). In connection with enforcing a Charged-Off Contract, if
necessary, the Servicer shall prepare and the related Obligor shall (and, to the
extent necessary, the related Obligor shall cause the Originator 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 Period, on the Payment 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
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shall be payable on any future Payment 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 Originator, 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 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 Payment Date.
Section 6.07. Annual Statement as to Compliance. The Servicer will
deliver to the Obligors 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 subsection
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. or another Affiliate of Advanta Corp., of
Advanta Corp.'s) annual audited financial statements for such fiscal year,
audited by an Independent Accountant.
(b) The Servicer shall, within 45 days after the end of each of the
first three calendar quarters of the Servicer's fiscal year, deliver to the
Obligors and the Trustee, quarterly, unaudited financial statements of the
Servicer (or, in the case of Advanta Business Services Corp. or another
Affiliate of Advanta Corp., of Advanta Corp.) for such calendar quarter.
(c) The Servicer shall inform the Obligors and the Trustee in writing
of the Servicer's fiscal year and any change in such fiscal year.
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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 removals of Contracts from such List of Contracts
or (y) maintain electronic facilities which allow such a list and the
reconciliation thereof 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 (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 respective Series 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, except when the
Servicer consents to the disclosure of any material nonpublic information with
respect to it (i) to any other such party, (ii) to any
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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; however, the Servicer
shall not be obligated to provide such a method. The Servicer will cooperate in
generating additional data reasonably requested by the Trustee.
Section 6.11. Release of Contracts
(a) Each of the following events shall herein be a "Release Event": (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 related Obligor 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)
delivery to the Servicer by the Obligor of evidence that a Charged-Off Contract
has been sold and the sale proceeds deposited as Recoveries into the appropriate
Series Account, or (v) any removal of a Contract by the related Obligor pursuant
to subsection 6.12. Upon each Release Event, the Servicer will so notify the
Trustee on the next succeeding Determination Date or such other date as the
Servicer deems appropriate 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
appropriate Series 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 appropriate
Series 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 (except that such release shall not be granted if the release is
pursuant to (iv) in the immediately preceding paragraph) 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 or upon the direction
of the related Obligor 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 the purchaser of the Contract in the
event of a release
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under 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, 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 subsection 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 subsection 6.11(b) shall be paid by the Obligors.
Section 6.12. Removal Related to Upgrades or Trade-Ins. In the event
that a User requests an upgrade or trade-in of Equipment, the Obligors may
remove the Equipment and the related Contract from the related Series Trust
Estate during any Collection Period by remitting to the Trustee the applicable
Prepayment Amount in for deposit in the appropriate Series 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 Series Controlling Parties and each of the Series Support Providers.
Section 6.14. Security Deposits. The Servicer acknowledges that the
Security Deposits are held by Obligors 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 appropriate Obligor written demand that such Obligor 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 appropriate Series Account within two
Business Days after its receipt thereof. The Servicer shall not be required to
remit from its own funds any Offset Amounts not received from the Obligor.
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The Servicer shall notify the appropriate Obligor 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 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
received by it from an Obligor. This right of indemnification shall survive the
termination of this Master 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 Originator set forth in the related Master
Sale Agreement or Sale 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 notify the
appropriate Obligor of such breach and the appropriate Obligor shall remove such
Contract and the related Pledged Property from the related Series Trust Estate.
In consideration for the removal of such Pledged Property, the appropriate
Obligor shall, no later than the Determination Date prior to the Payment Date
next following such date, pay the Prepayment Amount to the Servicer for deposit
into the appropriate Series Account. Without limiting the foregoing in any way,
in the event of a breach of any representation or warranty of the Originator
contained in any Master Agreement or Sale 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
notify the related Obligor of such breach and the related Obligor shall remove
such Contract.
ARTICLE VII
ACCOUNTS
Section 7.01. Establishment of Series Accounts. The Obligors shall in
the respective Series Supplement direct the Trustee to establish and maintain
with respect to each Series such Series Accounts as the Obligors shall deem to
be appropriate.
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Section 7.02. Investment of Funds in the Series Accounts. The Trustee,
at the written instruction of the Servicer, shall or, if the Servicer fails to
so give such instruction, may, at the Trustee's sole discretion, invest the
amounts from time to time on deposit in the Series Accounts in Eligible
Investments or any other investments permitted by the Series Supplement.
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.
(c) The Servicer shall pay any amounts owing pursuant to subsection
8.01(b) hereof directly to the applicable Indemnified Parties entitled to the
receipt thereof, and such amounts shall not be deposited in any Series Account.
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 pay such
amounts collected to the Servicer, without interest.
(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
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incurred by any such indemnified party hereunder as a result of the Trustee's or
such other successor Servicer's 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 and the Trustee.
In addition to the provisions set forth in the preceding paragraph, if
the Servicer is an Affiliate of Advanta Corp., the Servicer may transfer all of
its duties, obligations, rights and privileges as Servicer under this Master
Agreement and all Supplements hereto to such Affiliate of Advanta Corp. provided
that the then Servicer shall give 30 days prior written notice of such change to
the Trustee, each of the Obligors and each Series Controlling Person and the
entity assuming the Servicer position 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. Upon the
execution and delivery to the Trustee of such written assumption such Affiliate
of Advanta Corp. shall become the Servicer hereunder and under each Series
Supplement without any further act on the part of any of the parties hereto.
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
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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.
Section 8.04. Servicer Not to Sign. 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.
(a) 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, the Master Sale Agreement or in any of the
Series Related Documents to which such Obligor 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 Master
Agreement, the Master Sale Agreement or any of the Series Related
Documents to which any such Person is a party, or the failure by such
Obligor or the Originator, to comply with any applicable law, rule or
regulation with respect to any Contract,
(iii) the nonconformity of any Contract with any applicable
law, rule or regulation;
(iv) the failure of such Obligor to vest and maintain in the
name of the Trustee a valid first priority perfected security interest
in the property pledged by such Obligor (except to the extent that such
perfection is not required with respect to Equipment);
(v) the failure of such Obligor to pay or cause to be paid
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 14.08
hereof.
(b) Any request by any Indemnified Party for indemnity pursuant to this
Section 8.06 shall be made in writing delivered to the affected Obligor and the
Trustee describing in reasonable detail the amount thereof and the circumstances
giving rise thereto. The related
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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' right
to contest the basis for such indemnity so long as the Obligor provides written
notice to the applicable Indemnified Party at the time of the affected Obligor's
payment of the respective Indemnified Amounts, which written notice shall state
the basis, in reasonable detail, for the Obligor's dispute of the requested
Indemnified Amount.
(c) The agreement contained in this Section 8.06 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 Originator, the Servicer, any Series Support
Provider 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 Master 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 principal of or interest on 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, under the Master Sale Agreement,
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, the Master Sale
Agreement, in any Series Related
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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;
(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 a majority in
aggregate principal amount of Notes Outstanding, 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
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Servicer under this Master Agreement, the Master Sale Agreement and each Series
Related Document and the transactions set forth or provided for herein and
therein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof and
thereof; provided, however, that (a) the Trustee shall be permitted in its sole
discretion, but shall have no obligation, to make any Servicer Advances and (b)
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 Originator
of any of their respective representations and warranties contained herein, in
the Master Sale 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 a majority in aggregate principal amount of Notes Outstanding, shall appoint
any servicing entity acceptable to or designated by a majority in aggregate
principal amount of Notes Outstanding 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 and the
Equipment. 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 the Originator (at the time of the origination of the
Contracts) or providing servicing services similar to that of the Servicer
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 Original Servicer Fee shall be 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
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Differential not paid when due as a result of there not being sufficient
available funds therefor on any Payment Date shall be payable on any future
Payment 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 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 Series
Controlling 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 of the
Series Controlling Parties, the Noteholders, the Series Support Providers, the
Obligors and the Originator.
Section 9.04. Waiver of Past Events of Servicer Termination. A majority
in aggregate principal amounts of Notes Outstanding, on behalf of all
Noteholders may waive any default by the Servicer in the performance of its
obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Servicer
Termination arising, therefrom shall be deemed to have been remedied for every
purpose of this Master 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. 5. 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, Recoveries, 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 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.
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(c) Notwithstanding Section 9.05(b) hereof, it is hereby agreed by the
parties hereto that unless the Originator is Servicer, hereunder, the Obligors,
upon the request of the Trustee, shall instruct the Originator pursuant to the
Master Sale 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 "Events 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 Series 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 Series Controlling
Party, proceed to protect and enforce its rights and the rights of the
Noteholders of such Series by such appropriate Proceeding 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 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 to the Originator or the Servicer 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, receivership, conservatorship or
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other similar law, or in case a receiver, conservator, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official shall
have been appointed for or taken possession of any Obligor or any substantial
part of 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 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
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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 judgement, 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
ramble 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. Limitations 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;
(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.
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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 Series 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.
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
Series 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 Series 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.
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Section 10.08. Control by Holders. If the Trustee is the Series
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.
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
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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 a 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. 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.
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
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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 willful 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 Series 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 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,
the Servicer and the
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Obligors 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 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 Originator, 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 not materially adverse to 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 on, 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;
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(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:
(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 Authentication 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) The Obligors agree that 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 agreement with respect to such fees
and expenses shall be set
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forth in a separate agreement between the Trustee and the Obligors. The Obligors
also agree 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 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 or 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. If the instrument of acceptance
by a successor Trustee required
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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.
(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
(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 (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 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, 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
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vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Obligors, 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 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 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 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 or Classes of Notes which shall be authorized to act on behalf of
the Trustee to authenticate Notes of such Series or Class 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, 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. 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. 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 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 agree 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 Authentication Agent, the Obligors
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.
If an appointment with respect to one or more Series, Classes or
Tranches is made pursuant to this Section, the Notes of such Series or Classes
may have endorsed thereon, in
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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.
--------------------,
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 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, 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 mercer,
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.
A Paying Agent may resign at any time by giving, written notice thereof
to the Trustee and to the Obligors. The Trustee may at any time terminate the
agency of a Paying Agent by giving a written notice thereof to such Paying Agent
and to the Obligors. Upon receiving- such a
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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 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 agree 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 agree 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:
(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
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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 Master 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
Section 12.01. Obligors to Furnish Names and Addresses of Holders. The
Obligors 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 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 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.
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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 subsection 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 subsection 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 subsection 12.02(b).
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. If this Master Agreement is
qualified under the Trust Indenture Act, 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
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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.
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 and the Servicer, 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 and
the assumption by any
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such successor of the covenants of the Obligors herein, in any
Series Supplement and in the Notes; or
(3) to add to the covenants of the Obligors for the benefit the
Holders of the Notes or to surrender any right or power herein
conferred upon the Obligors; 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 expressly permitted by the Trust
Indenture 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, 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
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notice to each Series Support Provider, enter into a 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, 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 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
(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 Series Supplement with respect
to any part of the related Series Trust Estate, or
terminate the lien created by the related Series
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
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(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 shall in their 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.
Promptly after the execution by the parties hereto of any Master
Agreement Supplement 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 Master Agreement Supplement. 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 Master Agreement Supplement.
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 Series Supplements shall be covered by the provisions
of Section 13.01, which for such purpose shall be deemed to refer only to the
related Series 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.
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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 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 Master Agreement Supplement 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 Obligors shall so determine, new Notes so modified as to
conform, in the opinion of the Obligors, to any such Master Agreement Supplement
may be prepared and executed by the Obligors and authenticated and delivered by
the Trustee in exchange for Outstanding Notes.
ARTICLE XIV
COVENANTS
The Obligors hereby covenant and agree that so long as this Master
Agreement is in effect and any Notes remain Outstanding:
Section 14.01. Payment of Principal and Interest. The 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 Accounts (other than amounts representing payments
under any related Series Support) in respect of principal and interest on a
Payment Date shall constitute full satisfaction of the 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 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
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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 each
Obligor 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 and the Servicer the due and
punctual payment of the principal of and interest on all Notes
previously issued 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 shall have occurred and be continuing;
(iii) each Series Support Provider relating to such Series
previously issued, 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 a Master Agreement Supplement,
executed and delivered to the Trustee the due and punctual payment of
the principal of and interest on all Notes previously issued and the
performance or
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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 Master
Agreement Supplement 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 Master
Agreement Supplement, 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 (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;
(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 shall have occurred and be
continuing;
(iii) each Series Support Provider relating to such Series
previously issued, 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 related Trustee(s) by the
related Series Supplement(s) shall have been taken.
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 Series 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 Series 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
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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 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 Series 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 other
Obligors) 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 has knowledge of the occurrence of a "Servicer
Termination Event" under any Series Related Document, the Obligor shall promptly
notify the Trustee and the related Series Support Provider, if any, shall
specify in such notice the action, if any, such Obligor 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 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 shall promptly notify the Trustee.
As soon as a successor
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Servicer is appointed, the Obligors shall notify the Trustee of such
appointment, specifying in such notice the name and address of such successor
Servicer.
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 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 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
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 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.
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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 years after such principal or interest has become due and payable shall
be paid to the Obligors, as specified in an Obligors' Order; and the Holder of
such Note shall thereafter, as an unsecured general creditor, look only to the
Obligors 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 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.
Section 14.07. Corporate Existence; Separate 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. Each Obligor shall, in addition:
(i) Maintain its own bank or securities account or accounts,
separate from those of any Affiliate of such Obligor, with commercial
financial institutions. The funds and other property of such Obligor
will not be diverted to any other Person or for other than the
corporate use of such Obligor, and, except as may be expressly
permitted by this Master Agreement or the Master Sale Agreement or any
Sale Agreement Supplement to which it is a party, the funds and the
other property of such Obligor shall not be commingled with those of
any Affiliate of such Obligor.
(ii) Ensure that, to the extent that it shares the same
officers or other employees as any of its stockholders or Affiliates,
the salaries of and the expenses related to providing benefits to such
officers and other employees shall be fairly allocated among such
entities, and each such entity shall bear its fair share of the salary
and benefit costs associated with all such common officers and
employees.
(iii) Ensure that, to the extent that it jointly contracts
with any of its stockholders or Affiliates to do business with vendors
or service providers or to share overhead expenses, the costs incurred
in so doing shall be allocated fairly among such entities, and each
such entity shall bear its fair share of such costs. To the extent that
such Obligor contracts or does business with vendors or service
providers where the goods and services provided are partially for the
benefit of any other Person, the costs incurred in so doing shall be
fairly
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allocated to or among such entities for whose benefit the goods and
services are provided, and each such entity shall bear its fair share
of such costs. All material transactions between such Obligor and any
of its Affiliates shall be only on an arm's length basis and shall
receive the approval of such Obligor's Board of Directors including at
least two Independent Directors (defined below).
(iv) Maintain a principal executive and administrative office
through which its business is conducted and a telephone number separate
from those of its stockholders and Affiliates. To the extent that such
Obligor and any of its stockholders or Affiliates have offices in
contiguous space, there shall be fair and appropriate allocation of
overhead costs among them, and each such entity shall bear its fair
share of such expenses.
(v) Conduct its affairs strictly in accordance with its
Articles of Incorporation and observe all necessary, appropriate and
customary corporate formalities, including, but not limited to, holding
all regular and special stockholders' and directors' meetings
appropriate to authorize all corporate action, keeping separate and
accurate minutes of such meetings, passing all resolutions or consents
necessary to authorize actions taken or to be taken, and maintaining
accurate and separate books, records and accounts, including, but not
limited to, payroll and intercompany transaction accounts. Regular
stockholders' and directors' meetings shall be held at least annually.
(vi) Ensure that its Board of Directors shall at all times
include at least two Independent Directors (for purposes hereof,
"Independent Directors" shall mean any member of the Board of Directors
of such Obligor that is not and has not at any time during the
preceding five years been (x) a director, officer, consultant, agent,
employee, affiliate or shareholder of any Affiliate of such Obligor or
any affiliate or subsidiary thereof, or of any major creditor thereof,
and who is not the beneficial owner, at the time of such individual's
appointment as an Independent Director, of more than 1,000 shares in
the aggregate of all classes of common stock of an Affiliate of such
Obligor, or if greater, such number of shares the value of which
constitutes no more than 10% of such individual's net worth or (y) a
member of the immediate family of any of the foregoing).
(vii) Ensure that decisions with respect to its business and
daily operations shall be independently made by such Obligor (although
the officer making any particular decision may also be an officer or
director of an Affiliate of such Obligor) and shall not be dictated by
an Affiliate of such Obligor.
(viii) Act solely in its own corporate name and through its
own authorized officers and agents, and no Affiliate of such Obligor
shall be appointed to act as agent of such Obligor, except as expressly
contemplated by this Master Agreement or the Master Sale Agreement
or any Sale Agreement
79
<PAGE> 85
Supplement to which it is a party. The Obligor shall at all times
use its own stationery.
(ix) Ensure that no Affiliate of such Obligor shall advance
funds to such Obligor, and no Affiliate of such Obligor will otherwise
guaranty debts of, such Obligor; provided, however, that an Affiliate
of such Obligor may provide funds to such Obligor in connection with
the capitalization of such Obligor, including capital necessary to
assure that such Obligor has "substantial assets" as described in
Treasury Regulation Section 301.7701-2(d)(2) as in effect on December
16, 1996 prior to amendment by Treasury Decision 8697.
(x) Other than organization expenses and as expressly provided
herein, pay all expenses, indebtedness and other obligations incurred
by it.
(xi) Not enter into any guaranty, or otherwise become liable,
with respect to any obligation of any Affiliate of such Obligor nor
shall such Obligor make any loans to any Person.
(xii) Ensure that any financial reports required of such
Obligor shall be issued separately from, but may be consolidated with,
any reports prepared for any of its Affiliates.
(xiii) Ensure that at all times it is adequately capitalized
to engage in the transactions contemplated in its Articles of
Incorporation.
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.
(a) No Obligor will make any material change in any of its
Organizational Documents without the prior written consent of the related Series
Controlling 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 from its parent, or which would adversely
impact its status as a
80
<PAGE> 86
"bankruptcy remote" entity. Each Obligor shall strictly abide by the restrictive
provisions of its Organizational Documents in furtherance of the forgoing.
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 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
Master Sale 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.
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
81
<PAGE> 87
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
first class mail or overnight courier, or delivered by facsimile and shall be
deemed to have been duly given upon receipt (a) in the case of the Originator
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: Bankers Trust Company, 4
Albany Street, New York, New York 10006, Attention: _____________________; (c)
in the case of the Obligors, at the following, address: Advanta Leasing
Receivables Corp. VIII, 639 Isbell Road, Suite 390A, Reno, Nevada 89509;
Attention: Treasurer, and Advanta Leasing Receivables Corp. IX, Reno, 639 Isbell
Road, Suite 390B, Nevada 89509; 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) through (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 Master 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 Master 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) 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 Master
Agreement.
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
Master Agreement will be carried out to at least seven decimal places. All
payments on the Contracts shall be calculated on the Actuarial Method.
82
<PAGE> 88
Section 15.08. Further Assurances. The Obligors and the Servicer agree
to do and perform and the Obligors agree to cause the Originator to do and
perform, from time to time, any and all acts and to execute (or cause the
Originator 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 Originator, 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.
83
<PAGE> 89
IN WITNESS WHEREOF, the Servicer, the Obligors and the Trustee have
caused this Master 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:
-----------------------------------
Name:
Title:
ADVANTA LEASING RECEIVABLES
CORP. VIII, as Obligor
By:
-----------------------------------
Name:
Title:
ADVANTA LEASING RECEIVABLES
CORP. IX, as Obligor
By:
-----------------------------------
Name:
Title:
BANKERS TRUST COMPANY,
as Trustee
By:
-----------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.2
OH&S DRAFT
05/26/99
================================================================================
ADVANTA BUSINESS SERVICES CORP.,
Individually, and as the Servicer,
ADVANTA LEASING RECEIVABLES CORP. VIII,
as an Obligor
ADVANTA LEASING RECEIVABLES CORP. IX,
as an Obligor
and
BANKERS TRUST COMPANY,
as Trustee
=========================================
SERIES 1999-1 SUPPLEMENT
Dated as of ________ __, 1999
to the
MASTER FACILITY AGREEMENT
Dated as of __________ __, 1999
================================================================================
<PAGE> 2
ADVANTA EQUIPMENT RECEIVABLES
ASSET-BACKED NOTES
Reconciliation and Tie between the Master Agreement and Series 1999-1 Supplement
and the Trust Indenture Act of 1939, as amended
<TABLE>
<CAPTION>
Trust Indenture Act Section Master Agreement Series 1999-1 Supplement
- --------------------------- ---------------- ------------------------
<S> <C> <C>
SECTION 310 (a)(1) SECTION 11.08 SECTION See Master Agreement
(a)(2) 11.08 See Master Agreement
(a)(3) 11.15 See Master Agreement
(a)(4) Not Applicable Not Applicable
(b) 11.07 See Master Agreement
(c) Not Applicable Not Applicable
311 (a) 11.12 See Master Agreement
(b) 11.12 See Master Agreement
312 (a) 12.01, 12.02 See Master Agreement
(b) 12.02 See Master Agreement
(c) 12.02 See Master Agreement
313 (a) 12.03 See Master Agreement
(b)(1) Not Applicable Not Applicable
(b)(2) 12.03 See Master Agreement
(c) 12.03; 1.03 See Master Agreement
(d) 12.03 See Master Agreement
314 (a) 12.04; 6.07; 6.08; 1.03 See Master Agreement
(b) Not Applicable Not Applicable
(c)(1) See Series 1999-1 Supplement 6.06
(c)(2) See Series 1999-1 Supplement 6.06
(c)(3) 1.05 See Master Agreement
(d) 1.05 See Master Agreement
(e) See Series 1999-1 Supplement 6.06
(f) Not Applicable Not Applicable
315 (a) 11.01(a) See Master Agreement
(b) 11.02; 1.03 See Master Agreement
(c) 11.01(b) See Master Agreement
(d) 11.01(c) See Master Agreement
(e) 10.10 4.14
316(a)(1)(A) 10.08 4.12
(a)(1)(B) See Series 1999-1 Supplement 4.13
(a)(2) Not Applicable Not Applicable
(a)(last sentence) 1.01 See Master Agreement
(b) 10.04, 13.01(c) See Master Agreement
(c) 10.09 See Master Agreement
317 (a)(1) See Series 1999-1 Supplement 4.03(c)
(a)(2) 10.02(c) 4.04
(b) 14.06 See Master Agreement
318 (a) 1.05 See Master Agreement
(c) 1.05 See Master Agreement
</TABLE>
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE I.
CREATION OF THE SERIES 1999-1 NOTES
<S> <C>
SECTION 1.01 Designation.........................................................................................1
SECTION 1.02 Pledge of Series 1999-1 Trust Estate................................................................1
SECTION 1.03 Custody of the Series 1999-1 Trust Estate...........................................................3
SECTION 1.04 Conditions to Issuance of the Series 1999-1 Notes...................................................3
SECTION 1.05 Acceptance by Trustee...............................................................................4
SECTION 1.06 Liabilities of the Trustee and Parties to the Master Agreement, this Series 1999-1 Supplement
and the Series 1999-1 Notes; Limitations Thereon.........................................................4
SECTION 1.07 Forms of Notes......................................................................................5
ARTICLE II
DEFINITIONS
SECTION 2.01 Definitions.........................................................................................5
ARTICLE III
SERIES ACCOUNTS; DISTRIBUTIONS AND STATEMENTS TO SERIES 1999-1 NOTEHOLDERS;
SERIES 1999-1 SPECIFIC COVENANTS
SECTION 3.01 Collection Account.................................................................................18
SECTION 3.02 Reserve Account and Residual Account...............................................................20
SECTION 3.03 Investment of Monies Held in the Series 1999-1 Accounts; Subaccounts...............................21
SECTION 3.04 Flow of Funds......................................................................................21
SECTION 3.05 Statements to Series 1999-1 Noteholders............................................................23
SECTION 3.06 Compliance With Withholding Requirements...........................................................25
SECTION 3.07 Servicer Advances..................................................................................25
SECTION 3.08 Modifications......................................................................................25
SECTION 3.09 Servicer to Act as Custodian.......................................................................25
ARTICLE IV
SERIES 1999-1 EVENTS OF DEFAULT
SECTION 4.01 Events of Default..................................................................................26
SECTION 4.02 Acceleration of Maturity; Rescission and Annulment.................................................27
SECTION 4.03 Remedies...........................................................................................29
</TABLE>
-i-
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
SECTION 4.04 Trustee Shall File Proofs of Claim.................................................................29
SECTION 4.05 Trustee May Enforce Claims Without Possession of Series 1999-1 Notes...............................30
SECTION 4.06 Application of Money Collected.....................................................................30
SECTION 4.07 Limitation on Suits................................................................................31
SECTION 4.08 Unconditional Right of Series 1999-1 Noteholders to Receive Principal and Interest.................32
SECTION 4.09 Restoration of Rights and Remedies.................................................................32
SECTION 4.10 Rights and Remedies Cumulative.....................................................................32
SECTION 4.11 Delay or Omission Not Waiver.......................................................................32
SECTION 4.12 Control by Series 1999-1 Noteholders...............................................................33
SECTION 4.13 Waiver of Events of Default........................................................................33
SECTION 4.14 Undertaking for Costs..............................................................................33
SECTION 4.15 Waiver of Stay or Extension Laws...................................................................34
SECTION 4.16 Sale of Series 1999-1 Trust Estate.................................................................34
ARTICLE V
PREPAYMENT AND REDEMPTION
SECTION 5.01 Optional "Clean-up Call" Redemption of Series 1999-1 Notes.........................................35
SECTION 5.02 Notice of Redemption and Disposition of Funds......................................................36
ARTICLE VI
MISCELLANEOUS
SECTION 6.01 Ratification of Master Agreement...................................................................36
SECTION 6.02 Counterparts.......................................................................................36
SECTION 6.03 GOVERNING LAW......................................................................................36
SECTION 6.04 Amendments and Waivers.............................................................................37
SECTION 6.05 Non-petition Clause................................................................................37
SECTION 6.06 Officers' Certificate and Opinion of Counsel as to Conditions Precedent............................37
SECTION 6.07 Restriction on Further Indebtedness................................................................38
SECTION 6.08 Special Covenants and Acknowledgements.............................................................38
</TABLE>
-ii-
<PAGE> 5
TABLE OF CONTENTS
PAGE
EXHIBIT A -- FORM OF SERVICER'S CERTIFICATE
EXHIBIT B -- FORM OF CONTRACT
EXHIBIT C -- FORMS OF NOTES
<PAGE> 6
This Series 1999-1 Supplement, dated as of ________ __, 1999 (the
"Series 1999-1 Supplement"), supplements the Master Agreement (as described
herein) and is by and among Advanta Business Services Corp., a Delaware
corporation, individually ("ABS"), as the entity which originated or acquired
the Contracts and which will sell or contribute the Contracts and other
property, rights and interests to the Obligors (in such capacity, the
"Originator"), and as initial servicer (ABS in such capacity or any successor,
the "Servicer"), Advanta Leasing Receivables Corp. VIII, a Nevada corporation,
as an obligor ("ALRC VIII"), Advanta Leasing Receivables Corp. IX, a Nevada
corporation, as an obligor ("ALRC IX" and, together with ALRC VIII, the
"Obligors") and Bankers Trust Company, a New York banking corporation, as
trustee (in such capacity, the "Trustee") for the Noteholders.
RECITALS
This Series 1999-1 Supplement is being executed and delivered by the
parties hereto pursuant to Section 13.02 of the Master Facility Agreement, dated
as of ________ __, 1999 (the "Master Agreement"), among the Servicer, the
Obligors and the Trustee. 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
1999-1 Supplement shall govern with respect to the Series 1999-1 Notes.
Capitalized terms used herein, but not defined herein, shall have the meaning as
set forth in the Master Agreement.
ARTICLE I.
CREATION OF THE SERIES 1999-1 NOTES
SECTION 1.01 Designation. There is hereby created a Series of Notes to
be issued pursuant to the Master Agreement and this Series 1999-1 Supplement to
be known as "Advanta Business Receivables Master Facility Notes, Series 1999-1"
(the "Series 1999-1 Notes"). The Obligors with respect to the Series 1999-1
Notes are ALRC VIII and ALRC IX, jointly and severally.
SECTION 1.02 Pledge of Series 1999-1 Trust Estate. (a) Each Obligor
hereby pledges to the Trustee and grants a security interest to the Trustee for
the benefit of the Series 1999-1 Noteholders, and the Trustee hereby accepts the
pledge of and grant of a security interest in, all of such Obligor's now owned
and existing and hereafter acquired or arising right, title and interest, if
any, in, to and under all of the following: (1) each and every Contract now or
hereafter listed as a Series 1999-1 Contract on the List of Contracts delivered
to the Trustee together with all amounts due or to become due under such Series
1999-1 Contracts, (2) all Collections and Related Security associated therewith,
(3) all balances, instruments, monies and other securities and investments from
time to time in the Collection Account, the Advance Funding Account, the Reserve
Account and the Residual Account, (4) the Contribution Agreement and the Series
1999-1 Contribution Agreement Supplement for Series 1999-1 and all of its rights
to enforce the provisions of, and to benefit from the representations,
warranties and covenants made in the Contribution Agreement and the Series
1999-1 Contribution Agreement Supplement, (5) all rights, if any, of the Obligor
in the Equipment associated with the Series 1999-1 Contracts and the Residual
Interest therein, and (6) all proceeds of each of the foregoing and all
accounts, contract rights, general intangibles,
<PAGE> 7
chattel paper, instruments, documents, money, deposit accounts, certificates of
deposit, goods, letters of credit, advices of credit, certificated securities
and uncertificated securities consisting of, arising from or related to any of
the foregoing, but excluding any obligations of the Obligors, if any, under each
Series 1999-1 Contribution Agreement Supplement and excluding any Servicing
Charges, taxes, Initial Unpaid Amounts and Security Deposits, all in accordance
with, and for the purposes set forth in, this Series 1999-1 Supplement (such
property, the "Series 1999-1 Trust Estate").
(b) It is the intention of the Obligors, which intention is
acknowledged by the Trustee, that this Series 1999-1 Supplement, together with
the Master Agreement, shall be deemed to be a security agreement within the
meaning of Article 8 and Article 9 of the UCC as in effect in the States of New
York, Nevada and Delaware and the pledge provided for by this Section 1.02 and
elsewhere herein shall be deemed to be a grant by the Obligors to the Trustee
for the benefit of the Series 1999-1 Noteholders of a valid first-priority
perfected security interest in all of the Obligors' right, title and interest in
and to the Series 1999-1 Trust Estate. The Obligors hereby grant and assign such
interests, in each case to the Trustee, to secure the obligations of the
Obligors to the Trustee and the Series 1999-1 Noteholders hereunder and under
the Series 1999-1 Notes.
(c) The Obligors and ABS represent that as of the Closing Date UCC-1
financing statements will have been filed against the User and in favor of ABS
in respect of each item of Equipment having an original Equipment cost greater
than $25,000. In addition, the Obligors represent that as of the Closing Date
UCC-1 financing statements naming the Obligors as the "debtors" will be filed in
favor of Trustee on the Series 1999-1 Trust Estate with the Secretary of State
of each of the 50 states, other than [Georgia, Louisiana, Maryland, Oklahoma and
Tennessee,] and in the following counties: (i) Cobb, Georgia, (ii) Fulton,
Georgia and (iii) Oklahoma, Oklahoma.
(d) In the case of any Series 1999-1 Contract which has been prepaid in
full during the period from the related Cut-Off Date to the Closing Date, the
Obligors shall, on the Closing Date, deposit the Prepayment Amount therefor in
the Collection Account in lieu of pledging such Series 1999-1 Contract to the
Trustee.
(e) [Any Noteholder of Class A Notes, Class B Notes or Class C Notes
using the assets of (i) an employee benefit plan (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that
is subject to the provisions of Title I of ERISA, (ii) a plan described in
Section 4957 (e) (1) of the Internal Revenue Code of 1986, as amended, or (iii)
any entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (collectively, a "Plan") to purchase the Class A Notes,
Class B Notes or Class C Notes, or to whom the Class A Notes, Class B Notes or
Class C Notes are transferred, will be deemed to have represented that the
acquisition and continued holding of the Class A Notes, Class B Notes or Class C
Notes will be covered by a U.S. Department of Labor Class Exemption. Any
Noteholder of Class D Notes will be deemed to have represented that it is not
using the assets of a Plan to purchase the Class D Notes.]
2
<PAGE> 8
SECTION 1.03 Custody of the Series 1999-1 Trust Estate. For the
avoidance of doubt, the parties agree that notwithstanding the use of the terms
"deposit," "deposited," "transfer" and "transferred" in this Series 1999-1
Supplement, the Trustee will not take physical possession of any of the Series
1999-1 Trust Estate (other than the amounts on deposit in the Series 1999-1
Accounts) pursuant to the terms hereof. Instead, the Servicer will hold the
Series 1999-1 Trust Estate (other than the amounts on deposit in the Series
1999-1 Accounts) as custodian on behalf of the Trustee as further described in
Section 3.10 hereof.
SECTION 1.04 Conditions to Issuance of the Series 1999-1 Notes. As
conditions to the execution by the Obligors, and the authentication and delivery
by the Trustee of the Series 1999-1 Notes at the written direction of the
Obligors and the sale of the Series 1999-1 Notes by the Obligors on the Closing
Date, (i) the Obligors shall have received by wire transfer the net proceeds of
sale of the Class A Notes, the Class B Notes and the Class C Notes (the "Offered
Notes"), together with the Class D Notes and (ii) the Trustee shall have
received the following on or before the Closing Date:
(a) The List of Contracts;
(b) Copies of resolutions of the board of directors of ABS and of each
of ALRC VIII, ALRC IX, approving the execution, delivery and performance of this
Series 1999-1 Supplement and the transactions contemplated hereby, certified, in
each case, by a secretary or an assistant secretary of the respective
corporation;
(c) A copy of an officially certified document, dated not more than 30
days prior to the Closing Date and evidencing the due organization and good
standing of each of ABS and the Obligors in their respective states of
organization;
(d) Copies of the Certificate of Incorporation and By-Laws of ABS and
copies of the Articles of Incorporation and By-Laws of each of ALRC VIII and
ALRC IX certified, in each case, by a secretary or an assistant secretary of the
respective corporation;
(e) Delivery of executed UCC-1 financing statements, prepared by the
Servicer for filing (i) with the Secretary of State of New Jersey, naming the
Originator as the debtor and the Obligors as secured parties, and (ii) with the
Secretary of State of each of the 50 states, other than [Georgia, Louisiana,
Maryland, Oklahoma and Tennessee], and in the following counties: (i) Cobb,
Georgia, (ii) Fulton, Georgia and (iii) Oklahoma, Oklahoma naming the Obligors
as the debtors and the Trustee as secured party;
(f) A certificate listing the Servicing Officers as of the Closing
Date;
(g) An executed copy each of the Contribution Agreement, the Series
1999-1 Contribution Agreement Supplement, the Master Agreement and this Series
1999-1 Supplement; and
(h) Copies of resolutions of the board of directors of ABS approving
the execution, delivery and performance of the Master Agreement, this Series
1999-1 Supplement, the
3
<PAGE> 9
Contribution Agreement, the Series 1999-1 Contribution Agreement Supplement and
the transactions contemplated hereby and thereby, certified on behalf of such
entity by a secretary or an assistant secretary of such entity.
SECTION 1.05 Acceptance by Trustee. The Trustee acknowledges its
acceptance, simultaneously with the execution and delivery of this Series 1999-1
Supplement, of the pledge of and security interest in all right, title and
interest in and to the Series 1999-1 Trust Estate and declares that the Trustee
holds and will continue to hold the pledge of and security interest in such
right, title and interest in and to the Series 1999-1 Trust Estate for the
benefit of all present and future Series 1999-1 Noteholders for the use and
purpose and subject to the terms and provisions of this Series 1999-1
Supplement. The Obligors hereby (x) appoint the Trustee as the Obligors'
attorney-in-fact with all power independently to enforce all of the Obligors'
rights against the Originator and the Servicer under the Contribution Agreement
and the Series 1999-1 Contribution Agreement Supplement, as applicable and (y)
direct the Trustee to enforce such rights. The Trustee hereby accepts such
appointment and agrees to enforce such rights.
SECTION 1.06 Liabilities of the Trustee and Parties to the Master
Agreement, this Series 1999-1 Supplement and the Series 1999-1 Notes;
Limitations Thereon. The obligations evidenced by the Series 1999-1 Notes
provide recourse only to the Series 1999-1 Trust Estate and provide no recourse
against either of the Obligors generally, the Originator, the Servicer, the
Trustee, or any other Person.
(a) The Obligors, the Servicer and the Originator shall not be liable
to the Trustee except as expressly provided herein and in the Master Agreement,
and, with respect to the Originator, as provided in the Contribution Agreement.
The Obligors, the Originator and the Servicer shall not be liable to the Series
1999-1 Noteholders except, with respect to the Obligors and the Servicer, for
the non-performance of obligations expressly undertaken by them pursuant hereto
and, with respect to the Originator, as expressly provided for in the
Contribution Agreement. Without limiting the generality of the foregoing, if any
User fails to pay any Scheduled Payment, Final Contract Payment, exercised
Purchase Option Payment or other amounts due under a Series 1999-1 Contract,
then neither the Trustee nor the Series 1999-1 Noteholders will have any
recourse against the Obligors, the Originator or the Servicer for such Scheduled
Payment, Final Contract Payment, exercised Purchase Option Payment, other
amounts due under such Series 1999-1 Contract or any losses, damages, claims,
liabilities or expenses incurred by the Trustee or any Series 1999-1 Noteholder
as a direct or indirect result thereof.
(b) The Trustee agrees that in the event of a default by a User under
the terms of a Series 1999-1 Contract, which default is not cured within any
applicable cure period set forth in such Series 1999-1 Contract, the Trustee and
the Series 1999-1 Noteholders shall be expressly limited to the sources of
payment specified herein. In addition, the Trustee shall have the right to
exercise the rights of the Originator (which rights have been assigned to the
Obligors and then to the Trustee) under the Series 1999-1 Contracts, the
Insurance Policies, any document in any Contract File and any Related Document
in the name of the Trustee and the Series 1999-1 Noteholders, either directly or
through the Servicer as agent, and the Trustee is hereby directed by the
Obligors to exercise such rights; provided, however, that the Trustee shall not
be required to
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take any action pursuant to this Section 1.06 except upon written instructions
from the Servicer and to the extent it is fully indemnified to its reasonable
satisfaction therefor.
(c) A carbon, photographic or other reproduction of the Master
Agreement, this Series 1999-1 Supplement or any financing statement is
sufficient as a financing statement in any applicable jurisdiction.
The receipt of the Series 1999-1 Trust Estate by the Trustee (through
possession thereof by the Servicer acting as custodian) does not constitute and
is not intended to result in an assumption by the Trustee or any Series 1999-1
Noteholder of any obligation (except for the obligation not to disturb a User's
right of quiet enjoyment) of the Originator, either Obligor or the Servicer to
any User or other Person in connection with the Equipment, the Series 1999-1
Contracts, the Insurance Policies, any document in the Contract Files or any
Related Document.
SECTION 1.07 Forms of Notes. The Series 1999-1 Notes shall be in the
forms set forth in Exhibit C hereto.
ARTICLE II
DEFINITIONS
SECTION 2.01 Definitions.
(a) Whenever used in this Series 1999-1 Supplement and when used in the
Master Agreement with respect to the Series 1999-1 Notes, 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 1999-1 Supplement, terms defined in the
Master Agreement are used herein as therein defined.
ABS: Advanta Business Services Corp., a Delaware corporation.
Aggregate Contract Balance Remaining: With respect to any Payment Date,
the aggregate Contract Balances Remaining of all Series 1999-1 Contracts (other
than Charged-Off Contracts) in the Series 1999-1 Trust Estate as of the related
Calculation Date.
Aggregate Contract Principal Balance: With respect to any date, the
aggregate Contract Principal Balances of all Series 1999-1 Contracts (other than
Charged-Off Contracts) in the Series 1999-1 Trust Estate as of such date.
ALRC VIII: Advanta Leasing Receivables Corp. VIII, a Nevada
corporation.
ALRC IX: Advanta Leasing Receivables Corp. IX, a Nevada corporation.
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Ancillary Servicing Income: Certain miscellaneous amounts which revert
to the Servicer in consideration of the servicing function performed by the
Servicer, such as late fees, insufficient funds charges, and the like.
Applicable Discount Rate: The sum of (i) the weighted average (as of
the Closing Date) of the Class A Interest Rate, the Class B Interest Rate and
the Class C Interest Rate and (ii) the Servicer Fee Percentage.
Available Funds: With respect to a Payment Date, (i) all amounts on
deposit in the Collection Account which relate to the Collection Period for such
Payment Date (including, without limitation, Scheduled Payments, Final Contract
Payments, Defaulted Residual Receipts, Residual Receipts (but only if the
Residual Cap Amount has not yet been reached), Prepayment Amounts, and
investment earnings on each of the Series 1999-1 Accounts), plus (ii) amounts
transferred from the Reserve Account and/or the Residual Account with respect to
such Payment Date and deposited in the Collection Account.
Available Reserve Amount: As of any date of determination, the amount
on deposit in the Reserve Account on such date.
Available Residual Amount: As of any date of determination, the amount
on deposit in the Residual Account on such date.
Bankruptcy Code: The Bankruptcy Code of 1978, as amended, as codified
under Title 11 of the United States Code, and the Bankruptcy Rules promulgated
thereunder, as the same may be in effect from time to time.
Charged-Off Contract: Any Series 1999-1 Contract (a)(i) that is a
Delinquent Contract with respect to which a User is contractually delinquent for
121 days or more (without regard to any Servicer Advances or the application of
any Security Deposit) or (ii) as to which the Servicer has determined in
accordance with its customary servicing practices that eventual payment of the
remaining Scheduled Payments thereunder is unlikely or (iii) that has been
rejected by or on behalf of the User in a bankruptcy proceeding and (b) as to
which a Release Event has not occurred; provided, however, that if a Series
1999-1 Contract is a Charged-Off Contract at the time that a Release Event
occurs such Series 1999-1 Contract shall nevertheless continue to be treated as
a "Charged-Off Contract" for purposes of calculating the Cumulative Net Loss
Percentage.
Class A Initial Principal Balance: $___________________.
Class A Interest Rate: ____ % per annum.
Class A Maturity Date: ____________ _____ Payment Date.
Class A Note Factor: With respect to any Payment Date, a seven digit
decimal number representing the ratio of the (the Class A Principal Balance
which will be outstanding on such
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Payment Date (after taking into account all distributions and allocations to be
made on such Payment Date) to (ii) the Class A Initial Principal Balance.
Class A Noteholder: Person in whose name a Class A Note is registered
in the Note Register.
Class A Note Interest: With respect to any Payment Date, the sum of (i)
the product of (A) the Class A Principal Balance immediately prior to such
Payment Date and (B) one-twelfth of the Class A Interest Rate and the Class A
Overdue Interest from the Preceding Payment Date.
Class A Notes: The Equipment Receivables Asset-Backed Notes, Series
1999-1 Class A issued by ALRC VIII and ALRC IX.
Class A Overdue Interest: With respect to any Payment Date, the sum of:
(i) the excess, if any, of any Class A Note Interest due on
such Payment Date over the Class A Note Interest paid on such Payment
Date; and
(ii) the product of (i) the amount of Class A Overdue Interest
due on the immediately preceding Payment Date and not paid on such
immediately preceding Payment Date and (ii) one-twelfth of the Class A
Interest Rate.
Class A Overdue Principal: With respect to any Payment Date, the
positive difference, if any, between (i) the aggregate of the Class A-1
Principal Payments due on all prior Payment Dates and (ii) the aggregate amount
of the principal (from whatever source) actually distributed to the Class A
Noteholders on all prior Payment Dates.
Class A Percentage: A fraction, expressed as a percentage, equal to the
Class A Initial Principal Balance divided by the Initial Aggregate Contract
Principal Balance.
Class A Principal Balance: As of any date of determination, an amount
equal to the Class A Initial Principal Balance less any Class A Principal
Payments previously made on the Class A Notes.
Class A Principal Payment: With respect to any Payment Date, [the Class
A Percentage of the positive difference between the Aggregate Contract Principal
Balance as of the Calculation Date in second preceding month and the Aggregate
Contract Principal Balance as of the Calculation Date for the current Payment
Date.]
Class B Initial Principal Balance: $___________.
Class B Interest Rate: ____% per annum.
Class B Maturity Date: _________ ____ Payment Date.
Class B Note Factor: With respect to any Payment Date, a seven digit
decimal number representing the ratio of (i) the Class B Principal Balance which
will be outstanding on the such
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Payment Date (after taking into account all distributions and allocations to be
made on such Payment Date) to (ii) the Class B Initial Principal Balance.
Class B Noteholder: The Person in whose name a Class B Note is
registered in the Note Register.
Class B Note Interest: With respect to any Payment Date, the sum of (i)
the product of (A) the Class B Principal Balance immediately prior to such
Payment Date and (B) one-twelfth of the Class B Interest Rate and (ii) the Class
B Overdue Interest from the preceding Payment Date.
Class B Notes: The Equipment Receivables Asset-Backed Notes, Series
1999-1, Class B issued by ALRC VIII and ALRC IX.
Class B Overdue Interest: With respect to any Payment Date, the sum of:
(i) the excess, if any, of any Class B Note Interest due on
such Payment Date over the Class B Note Interest paid on such Payment
Date; and
(ii) the product of (a) the amount of Class B Overdue Interest
due on the immediately preceding Payment Date and not paid on such
immediately preceding Payment Date and (b) one-twelfth of the Class B
Interest Rate.
Class B Overdue Principal: With respect to any Payment Date, the
positive difference, if any, between (i) the aggregate of the Class B Principal
Payments due on all prior Payment Dates and (ii) the aggregate amount of the
principal (from whatever source) actually distributed to the Class B Noteholders
on all prior Payment Dates.
Class B Percentage: A fraction, expressed as a percentage, equal to the
Class B Initial Principal Balance divided by the Initial Aggregate Contact
Principal Balance.
Class B Principal Balance: As of any date, an amount equal to the Class
B Initial Principal Balance less any Class B Principal Payments previously made
on the Class B Notes.
Class B Principal Payment: With respect to any Payment Date, [the Class
B Percentage of the positive difference between the Aggregate Contract Principal
Balance as of the Calculation Date in the second preceding month and the
Aggregate Contract Principal Balance as of the Calculation Date for the current
Payment Date.]
Class C Initial Principal Balance: $_____________.
Class C Interest Rate: _______% per annum.
Class C Maturity Date: __________ ____ Payment Date.
Class C Note Factor: With respect to any Payment Date, a seven digit
decimal number representing the ratio of (i) the Class C Principal Balance which
will be outstanding on the such
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<PAGE> 14
Payment Date (after taking into account all distributions and allocations to be
made on such Payment Date) to (ii) the Class C Initial Principal Balance.
Class C Noteholder: The Person in whose name a Class C Note is
registered in the Note Register.
Class C Note Interest: With respect to any Payment Date, the sum of (i)
the product of (A) the Class C Principal Balance immediately prior to such
Payment Date and (B) one-twelfth of the Class C Interest Rate and (ii) the Class
C Overdue Interest from the preceding Payment Date.
Class C Notes: The Equipment Receivables Asset-Backed Notes, Series
1999-1, Class C issued by ALRC VIII and ALRC IX.
Class C Overdue Interest: With respect to any Payment Date, the sum of:
(i) the excess, if any, of any Class C Note Interest due on
such Payment Date over the Class C Note Interest paid on such Payment
Date and;
(ii) the product of (a) the amount of Class C Overdue Interest
due on the immediately preceding Payment Date and not paid on such
immediately preceding Payment Date and (b) one-twelfth of the Class C
Interest Rate.
Class C Overdue Principal: With respect to any Payment Date, the
positive difference, if any, between (i) the aggregate of the Class C Principal
Payments due on all prior Payment Dates and (ii) the aggregate amount of the
principal (from whatever source) actually distributed to the Class C Noteholders
on all prior Payment Dates.
Class C Percentage: A fraction, expressed as a percentage, equal to the
Class C Initial Principal Balance divided by the Initial Aggregate Contract
Principal Balance.
Class C Principal Balance: As of any date, an amount equal to the Class
C Initial Principal Balance less any Class C Principal Payments previously made
on the Class C Notes.
Class C Principal Payment: With respect to any Payment Date, [the Class
C Percentage of the positive difference between the Aggregate Contract Principal
Balance as of the Calculation Date in the second preceding month and the
Aggregate Contract Principal Balance as of the Calculation Date for the current
Payment Date.]
Class D Initial Principal Balance: $__________.
Class D Note Factor: With respect to any Payment Date, a seven digit
decimal number representing the ratio of (i) the Class D Principal Balance which
will be outstanding on the such Payment Date (after taking into account all
distributions and allocations to be made on such Payment Date) to (ii) the Class
D Initial Principal Balance.
Class D Noteholder: The Person in whose name a Class D Note is
registered in the Note Register.
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Class D Notes: The Equipment Receivables Asset-Backed Notes, Series
1999-1, Class D issued by ALRC VIII and ALRC IX.
Class D Overdue Principal: With respect to any Payment Date, the
positive difference, if any, between (i) the aggregate of the Class D Principal
Payments due on all prior Payment Dates and (ii) the aggregate amount of the
principal (from whatever source) actually distributed to the Class D Noteholders
on all prior Payment Dates.
Class D Percentage: A fraction, expressed as a percentage, equal to the
Class D Initial Principal Balance divided by the Initial Aggregate Contract
Principal Balance.
Class D Principal Balance: With respect to any Payment Date, the Class
D Initial Principal Balance less any Class D Principal Payments previously made
on the Class D Notes.
Class D Principal Payment: With respect to any Payment Date, [the Class
D Percentage of the positive difference between the Aggregate Contract Principal
Balance as of the Calculation Date in the second preceding month and the
Aggregate Contract Principal Balance as of the Calculation Date for the current
Payment Date or, if all Offered Notes have been paid in full, the entire
positive difference between the Aggregate Contract Principal Balance as of the
Calculation Date in the preceding month and the Aggregate Contract Principal
Balance as of the Calculation Date for the current Payment Date.]
Closing Date: ________ __, 1999.
Collateral Factor: With respect to any Payment Date, the seven digit
decimal number representing the ratio of (i) the Aggregate Contract Principal
Balance as of the immediately preceding Calculation Date to (ii) the Initial
Aggregate Contract Principal Balance.
Collection Account: The account by that name established and maintained
by the Trustee pursuant to subsection 3.01(a) hereof.
Contribution Agreement: That certain Contribution and Sale Agreement,
dated as of ________ __, 1999, by and between ALRC III and ABR LLC and ABS.
Contracts: The Series 1999-1 Contracts pledged to the Trustee on the
Closing Date, as identified on the List of Contracts.
Contract Principal Balance: As of any date of calculation with respect
to a Series 1999-1 Contract, the present value of the Scheduled Payments to
become due with respect to such Series 1999-1 Contract on and after such date of
calculation (but in any event prior to __________ ____), together with all
Scheduled Payments previously due and unpaid which were not the subject of a
Servicer Advance on or prior to such date, discounted monthly to the Calculation
Date immediately prior to such date of calculation (or to such date of
calculation if such date of calculation is a Calculation Date) at one-twelfth of
the Applicable Discount Rate, except that a Charged-Off Contract has a Contract
Principal Balance of $0.
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Cumulative Net Loss Percentage: With respect to each Collection Period,
the percentage equivalent of a fraction, the numerator of which is the excess of
(x) the aggregate amount of the Contract Principal Balances of all Series 1999-1
Contracts which become Charged-Off Contracts during all prior Collection Periods
over (y) the aggregate amount of all Defaulted Residual Receipts collected by
the Servicer with respect to such Collection Periods and the denominator of
which is the Initial Aggregate Contract Principal Balance.
Cut-Off Date: With respect to the Series 1999-1 Contracts, the opening
of business on _________ __, 1999.
Defaulted Residual Receipts: With respect to any Series 1999-1 Contract
which has previously become a Charged-Off Contract, all proceeds of the sale of
the Equipment, all Insurance Proceeds and any amounts collected related to the
failure of a User to pay any required amounts under the related Series 1999-1
Contract or to return the Equipment, in each case as reduced by (i) any
unreimbursed Servicer Advances with respect to such Series 1999-1 Contract or
such Equipment and (ii) any reasonably incurred out-of-pocket expenses incurred
by the Servicer in enforcing such Series 1999-1 Contract or in liquidating such
Equipment.
Delinquent Contract: As of any date, a Contract as to which a Scheduled
Payment, or part thereof, remains unpaid for more than 60 days from the original
due date for such Scheduled Payment.
Determination Date: The third Business Day prior to each Payment Date.
Eligible Contracts: Means, at the time of pledge, a Series 1999-1
Contract which:
(i) (a) 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 (b) 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;
(ii) has not had any of its terms, conditions or provisions
modified or waived other than in compliance with the Credit and
Collection Policy except by instruments or documents contained in the
related Contract File;
(iii) 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 for which there is only
one original of such Contract that constitutes "chattel paper" for
purposes of the UCC;
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(iv) 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;
(v) satisfies in all material respects all applicable
requirements of the Credit and Collection Policy;
(vi) if it is a Municipal Contract, does not have a Contract
Principal Balance that, when aggregated with the Contract Principal
Balances of all other Municipal Contracts included as Series 1999-1
Contracts, exceeds ___% of the Aggregate Contract Principal Balance at
that time;
(vii) as of the Closing Date, is not a Delinquent Contract;
(viii) as of the Closing Date (other than a Contract which is
a loan in form), (a) contains "hell or high water" provisions requiring
the related User to assume all risk of loss or malfunction of the
related Equipment and (b) 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 Obligors;
provided that a Series 1999-1 Contract may be an Eligible Contract,
notwithstanding the fact that it does not meet the requirements of
provision (a) of this paragraph (viii) so long as contracts
representing at least 90% of the sum of the Contract Principal Balance
for the Series 1999-1 Contracts which qualify as Eligible Contracts do
meet the requirements of such provision (a);
(ix) when aggregated with the sum of the Contract Principal
Balances of all other Series 1999-1 Contracts relating to a single
User, shall not be greater than the product of (a) ____% and (b) the
Aggregate Contract Principal Balance of all other Series 1999-1
Contracts Outstanding at that time;
(x) creates a valid and enforceable security or ownership
interest in the related Equipment, if any, in favor of the Originator;
(xi) is free and clear of any Adverse Claims, other than the
claims arising pursuant to the Master Agreement, this Series 1999-1
Supplement and the Related Documents; provided, however, that nothing
in this clause (xi) shall prevent or be deemed to prohibit the Obligors
from suffering to exist upon such Series 1999-1 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 Obligors shall
concurrently be contesting the validity thereof in good faith by
appropriate proceedings that have stayed enforcement thereof and shall
have set aside on its books adequate reserves with respect thereto;
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(xii) 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;
(xiii) 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;
(xiv) by its terms is due and payable on or within ___ months
of the Closing Date and, in either event, has not had its payment terms
extended other than in compliance with the Credit and Collection
Policy;
(xv) arises under a Contract in substantially the form of one
of the form contracts set forth in Exhibit B hereto or otherwise
approved by the Obligors in writing, which is in full force and effect
and constitutes the legal, valid and binding obligation of the related
User, enforceable against the User in accordance with its terms,
subject to no offset, counterclaim or other defense (other than the
discharge in bankruptcy of such User);
(xvi) (a) does not preclude the pledge, transfer or assignment
thereof, (b) does not require the consent of the User to the pledge,
assignment or transfer thereof, and (c) does not contain a
confidentiality provision that purports to restrict the ability of the
Trustee to exercise its rights under the Related Documents with respect
thereto, including, without limitation, its right to review the Series
1999-1 Contract;
(xvii) was immediately prior to the sale or contribution to
the Obligors, the Originator was the sole owner of such Contract free
and clear of any liens or encumbrances;
(xviii) is not and has never been a Charged-Off Contract;
(xix) either (a) 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 (b) 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; and
(xx) in the case of a Non-Monthly Payment Contract or a
Variable Payment Contract, does not have a Contract Principal Balance
which, when aggregated with the Contract Principal Balances of all
other Series 1999-1 Contracts having a balloon payment, exceeds [15]%
of the Aggregate Contract Principal Balance at that time;
Equipment: The equipment leased to or sold to a User pursuant to any
Contract and any security interest in such equipment and the Residual Interest
therein or derived therefrom.
Event of Default: As defined in Section 4.01 hereof.
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Final Contract Payment: With respect to any Series 1999-1 Contract, any
specified amount or minimum specified amount set forth in such Series 1999-1
Contract and required to be paid by the related User at the maturity of such
Series 1999-1 Contract.
Included Residual Receipts: With respect to any Payment Date, the
aggregate, cumulative amount of Residual Receipts included as part of the
Monthly Remittance Amount on such Payment Date and all prior Payment Dates.
Initial Aggregate Contract Principal Balance: The Aggregate Contract
Principal Balances on the Closing Date, which is an amount equal to
$______________.
Interest Accrual Period: With respect to any Payment Date, the period
commencing on and including the prior Payment Date (or in the case of the first
Payment Date, the Closing Date) and ending on and including the day immediately
preceding such Payment Date.
List of Contracts: With respect to the Contracts, securing the Notes,
printed or electronic list of such Contracts, certified by an Authorized Officer
of each of the Obligors.
Master Agreement: The Master Facility Agreement dated as of __________,
1999 among the Servicer, ALRC VIII, ALRC IX and the Trustee.
Monthly Delinquency Percentage: With respect to any Payment Date, the
percentage equivalent of a fraction (a) the numerator of which is the aggregate
Contract Balance Remaining of all Contracts which are 31 or more days
delinquent, determined as of the related Calculation Date and (b) the
denominator of which is the Aggregate Contract Balance Remaining as of the
related Calculation Date.
Monthly Net Loss Percentage: With respect to any Collection Period, the
percentage equivalent of a fraction, the numerator of which is the excess of (x)
the aggregate amount of the Contract Principal Balances of all Series 1999-1
Contracts which became Charged-Off Contracts during such Collection Period over
(y) the aggregate amount of all Defaulted Residual Receipts collected by the
Servicer with respect to such Collection Periods, and the denominator of which
is the Aggregate Contract Principal Balance as of the beginning of such
Collection Period.
Monthly Residual Realization Percentage: With respect to any Payment
Date, the percentage equivalent of a fraction (a) the numerator of which is the
aggregate dollar amount of Residual Receipts collected during the immediately
preceding Collection Period and (b) the denominator of which is equal to the
aggregate Booked Residuals with respect to those Series 1999-1 Contracts for
which Residual Receipts were collected during such immediately preceding
Collection Period.
Monthly Remittance Amount: With respect to any Payment Date (x)
occurring on or prior to the Residual Cap Date, the aggregate amount of
Collections received by the Servicer during the prior Collection Period with
respect to the Series 1999-1 Trust Estate (other than Collections representing
Advance Payments until such Advance Payments are applied as Collections),
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together with all Servicing Advances paid by the Servicer with respect to such
Payment Date and (y) occurring after the Residual Cap Date, the amount described
in clause (x) above less any Residual Receipts with respect to the related
Collection Period. With respect to the Payment Date which is the Residual Cap
Date, Residual Receipts with respect to the related Collection Period will only
be included in the Monthly Remittance Amount to the extent that such inclusion
would not result in Included Residual Receipts exceeding the Residual Cap
Amount.
Nonrecoverable Advances: With respect to any Delinquent Contract, a
Servicer Advance which the Servicer has determined that it will be unable to
recover, in whole or in part, with respect to such Delinquent Contract.
Obligors: Advanta Leasing Receivables Corp. VIII and Advanta Leasing
Receivables Corp. IX.
Obligor's Interest: The Obligors' reversionary rights to the Series
1999-1 Trust Estate and the proceeds thereof, to the extent such proceeds are
not needed to make payments on the Series 1999-1 Notes.
Obligor's Interest Principal Balance: As of any date of determination,
an amount equal to the excess of (x) the Aggregate Contract Principal Balance
over (y) the Outstanding Note Principal Balance, as of such date.
Offered Notes: As defined in Section 1.05 hereof.
Originator: Advanta Business Services Corp. and its successors.
Outstanding Note Principal Balance: As of any date of determination,
the sum of the Class A Principal Balance, the Class B Principal Balance, the
Class C Principal Balance and the Class D Principal Balance as of such date.
Outstanding Note Principal Balance of the Offered Notes: As of any date
of determination, the sum of the Class A Principal Balance, the Class B
Principal Balance and the Class C Principal Balance.
Outstanding Residual Interest Principal Balance: As of any Payment
Date, the excess, if any, of (x) the Aggregate Contract Principal Balance as of
the related Calculation Date over (y) the Outstanding Note Principal Balance at
the end of such Payment Date.
Payment Date: The 15th day of each month, or, if such day is not a
Business Day, the next succeeding Business Day, commencing _________ __, 1999.
Predecessor Contract: As defined in Section 3.09 hereof.
Principal Payments: The payments of principal each Class of Notes is
entitled to receive in accordance with the priorities set forth in subsection
3.05(b) hereof.
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Rating Agencies: ________________.
Record Date: With respect to any Payment Date, the close of business on
the Business Day preceding such Payment Date.
Related Documents: The Master Agreement, the Series 1999-1 Supplement,
the Contribution Agreement, the Series 1999-1 Contribution Agreement Supplement
and all amendments and supplement thereto.
Release Event: With respect to any Series 1999-1 Contract, a payment in
full of such Series 1999-1 Contract or a removal of such Series 1999-1 Contract
from the Series 1999-1 Trust Estate following the deposit of the related
Prepayment Amount in the Collection Account or if such Series 1999-1 Contract is
a Charged-Off Contract removal from the Series 1999-1 Trust Estate of such
Contract as a result of the sale of such Contract and a deposit of the sale
proceeds into the Collection Account.
Required Reserve Amount: With respect to any Payment Date, an amount
equal to the greater of (x) ____% of the aggregate Outstanding Note Principal
Balance of the Offered Notes (after taking into account all payments of
principal on such Payment Date) and (y) the Reserve Account Floor.
Reserve Account: The account or accounts by that name established and
maintained by the Trustee pursuant to Section 3.02 hereof.
Reserve Account Floor: With respect to any Payment Date, an amount
equal to the lesser of (a) _____% of the initial Outstanding Note Principal
Balance of the Offered Notes and (b) the then aggregate Outstanding Note
Principal Balance of the Offered Notes.
Reserve Account Funding Date: The first date on which the Reserve
Account is funded to the level of the Required Reserve Amount.
Reserve Account Initial Deposit: $_____________.
Residual Account: The account or accounts by that name established and
maintained by the Trustee pursuant to subsection 3.02(c) hereof.
Residual Amount Cap: An amount equal to $_____________.
Residual Cap Date: The first date on which the Residual Amount Cap is
reached.
Residual Event: Means the occurrence of one or more of the following:
(a) the occurrence of an Event of Default; or (b) the Cumulative Net Loss
Percentage as of any Calculation Date occurring during the following periods
exceeds the "Loss Trigger Level Percentage" set forth below:
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<PAGE> 22
<TABLE>
<CAPTION>
Loss Trigger
Period Level Percentage
------ ----------------
<S> <C>
First Collection Period through 12th Collection
Period thereafter [____]%
13th Collection through 24th
Collection Period thereafter [____]%
25th Collection Period and thereafter [____]%
</TABLE>
Notwithstanding the foregoing: (i) the Residual Event referred to in
clause (b) may be cured if the Cumulative Net Loss Percentage, although it
exceeds the "Loss Trigger Level Percentage" in a prior period, is less than or
equal to the "Loss Trigger Level Percentage" in a subsequent period.
Scheduled Payments: With respect to any Series 1999-1 Contract, the
stated periodic rental payments (exclusive of any amounts in respect of
insurance or taxes) set forth in such Series 1999-1 Contract due from the
related User, together with any Final Contract Payment.
Series 1999-1 Accounts: The Collection Account, the Advance Funding
Account, the Residual Account and the Reserve Account.
Series 1999-1 Contracts: The Contracts pledged to the Trustee on the
Closing Date pursuant to Section 1.02 hereof and listed on the List of
Contracts.
Series 1999-1 Contribution Agreement Supplement: The Contribution
Agreement Supplement dated as of _______, 1999 and delivered with respect to the
Series 1999-1 Trust Estate.
Series 1999-1 Noteholders: The Class A Noteholders, the Class B
Noteholders, the Class C Noteholders and the Class D Noteholders.
Series 1999-1 Notes: As defined in Section 1.01 hereof.
Series 1999-1 Trust Estate: As defined in Section 1.02 hereof.
Servicer: The Person performing the duties of the Servicer hereunder,
initially Advanta Business Services Corp., a Delaware corporation.
Servicer Fee Percentage: The product of one-twelfth and the Servicer
Fee Rate.
Servicer Fee Rate: 1.00%.
Servicer's Certificate: A written informational statement,
substantially in the form of Exhibit A hereto, to be provided by the Servicer in
accordance with Section 6.06 of the Master
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<PAGE> 23
Agreement and signed by a Servicing Officer and furnished to the Trustee and
each Rating Agency by the Servicer.
Servicing Fee: The fee payable to the Servicer on each Payment Date in
consideration for the Servicer's performance of its duties pursuant to Section
3.06 hereof in an amount equal to the product of (a) one-twelfth of the Servicer
Fee Rate and (b) the Aggregate Contract Principal Balance as of the beginning of
the previous Collection Period.
Settlement Date: For the purpose of this Series 1999-1 Supplement, each
Payment Date.
Stated Maturity Date: _________ ____ Payment Date.
Trustee: Bankers Trust Company, a New York banking corporation.
ARTICLE III
SERIES ACCOUNTS; DISTRIBUTIONS AND STATEMENTS TO
SERIES 1999-1 NOTEHOLDERS; SERIES 1999-1 SPECIFIC COVENANTS
SECTION 3.01 Collection Account.
(a) The Trustee, for the benefit of the Series 1999-1 Noteholders,
shall establish and maintain an account (the "Collection Account") as a
segregated trust account in the Trustee's corporate trust department, identified
as the "Advanta Leasing Receivables Asset-Backed Notes Series 1999-1 Collection
Account in trust for the Series 1999-1 Noteholders." The Trustee shall make or
permit withdrawals from the Collection Account only as provided in this Series
1999-1 Supplement.
(b) Except as otherwise provided in this Series 1999-1 Supplement, the
Servicer and the Obligors shall deposit to the Collection 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.
Notwithstanding anything else in the Master Agreement or this Series 1999-1
Supplement to the contrary, for so long as Advanta Business Services Corp. or an
Affiliate thereof remains the Servicer and (x) maintains a short-term debt
rating of A-1 or better by S&P and P-1 by Moody's (or such other rating below
A-1 or P-1, as the case may be), or (y) the Servicer has provided to the Trustee
a letter of credit covering collection risk of the Servicer, the Servicer and
the Obligors need not make the daily deposits of Collections into the Collection
Account as provided in the preceding sentence, but the Servicer may make a
single deposit in the Collection Account in immediately available funds not
later than 12:00 noon, New York City time, on the date which is the Business Day
immediately preceding each Settlement Date following the Collection Period in
which the deposits were to have been made into the Collection Account.
Notwithstanding anything else in the Master Agreement or this Series 1999-1
Supplement to the contrary, with respect to any Collection Period, whether the
Servicer is required to make deposits of Collection pursuant to the first or the
second preceding sentence, (i) the Servicer will only be required to deposit
Collections into the Collection Account up to the Monthly Remittance Amount for
such Collection Period and (ii) if at any time prior to such Settlement Date,
the amount of
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<PAGE> 24
Collections deposited in the Collection Account exceeds the amount required to
be deposited pursuant to clause (i) above, the Servicer will be permitted to
withdraw the excess from the Collection Account and pay such amount to the
Obligors.
(c) The Trustee, for the benefit of the Series 1999-1 Noteholders,
shall also 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 "Advance Payment Account for the Advanta Leasing
Receivables Asset-Backed Notes Series 1999-1, 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 Series 1999-1 Supplement. 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 or any
Obligor, shall be deposited monthly to the Advance Payment Account in the same
manner as Collections are deposited to the Collection Account.
(e) Notwithstanding the foregoing, the Trustee and/or the Servicer may
deduct from amounts otherwise specified for deposit to the Collection Account or
the Advance Payment Account, as applicable, any amounts previously deposited by
the Trustee or the Servicer into the Collection 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 Collection Account and the Advance Payment Account shall each
be under the sole dominion and control of the Trustee for the benefit of the
Series 1999-1 Noteholders; 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 duties under the Master Agreement or
under this Series 1999-1 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 Collection Account or the Advance Payment
Account for any amount owed to it by the Servicer, the Obligors, the Trustee, or
any Noteholder.
(g) On each Payment Date, (i) the Trustee shall distribute the Monthly
Remittance Amount with respect to such Payment Date as provided in Section 3.04
hereof and (ii) on each Payment Date occurring after the Residual Cap Date, the
Trustee, based solely on information contained in the Servicer's Certificate
delivered on the related Determination Date as specified in Section 3.06 hereof,
shall pay to the Obligors all Residual Receipts with respect to the Series
1999-1 Contracts with respect to the related Collection Period. On the Payment
Date which is the Residual Cap Date, any excess of the Residual Receipts with
respect to the Series 1999-1 Contracts for such related Collection Period over
such Residual Receipts as are included in the Monthly Remittance Amount on such
Payment Date shall be paid to the Obligors by the Trustee.
(h) The Trustee shall deposit all net investment earnings on each
Series 1999-1 Account, as collected, to the Collection Account.
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<PAGE> 25
SECTION 3.02 Reserve Account and Residual Account.
(a) (i) The Trustee shall establish and maintain an account (the
"Reserve Account") as one or more segregated trust accounts in the Trustee's
corporate trust department in the name of "Advanta Equipment Receivables
Asset-Backed Notes Series 1999-1 Reserve Account, in trust for the Series 1999-1
Noteholders." The Trustee shall make or permit withdrawals from the Reserve
Account only as provided in this Series 1999-1 Supplement.
(ii) If, based solely on information contained in the
Servicer's Certificate delivered on the related Determination Date as
specified in Section 3.05 hereof:
(A) on any Payment Date, (x) the amounts described in
clauses (a)(iii), (a)(iv), (a)(v), (a)(vi), (a)(vii) and
(a)(viii) of Section 3.04 hereof exceed (y) the Available
Funds (exclusive of any Reserve Account transfers, but
inclusive of any Residual Account transfers pursuant to
paragraph (b) below) in the Collection Account after taking
into account the payment of amounts described in clauses
(a)(i) and (a)(ii) of Section 3.05 on such Payment Date;
(B) then, to the extent of the Available Reserve
Amount on deposit in the Reserve Account, the Trustee shall
transfer, prior to making payments to the Series 1999-1
Noteholders on such Payment Date, from the Reserve Account to
the Collection Account such amount as shall be necessary to
fund any such shortfall.
(iii) In the event that after giving effect to all the
disbursements required to be made on any Payment Date, the Available
Reserve Amount exceeds the Required Reserve Amount, the Trustee shall
transfer, not later than the end of business on such Payment Date, an
amount equal to such excess to the Obligors, in the proportions set
forth in the Servicer's Certificate delivered on the related
Determination Date as specified in Section 3.05 hereof, as the holders
of the Residual Interest.
(iv) Upon payment in full of the Series 1999-1 Notes, any
balance remaining in the Reserve Account, after all obligations to the
Noteholders hereunder have been fully satisfied, shall be paid to
reimburse the Trustee for any amounts owing to it arising from the
performance of its obligations under the Master Agreement and this
Series 1999-1 Supplement and, then, to the Obligors, as holders of the
Residual Interest.
(b) (i) The Trustee shall establish and maintain an account (the
"Residual Account") as one or more segregated trust accounts in the Trustee's
corporate trust department, in the name of "Advanta Leasing Receivables
Asset-Backed Notes Series 1999-1 Residual Account, in trust for the Series
1999-1 Noteholders." The Trustee shall make or permit withdrawals from the
Residual Account only as provided in this Series 1999-1 Supplement.
(ii) If, on any Payment Date, a Residual Event is in effect
(i.e., has occurred and not been cured) the Trustee shall deposit to
the Residual Account the amounts described in subsection 3.04(a)(xiv).
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<PAGE> 26
(iii) If, based solely on information contained in the
Servicer's Certificate delivered on the related Determination Date as
specified in Section 3.05 hereof:
(A) on any Payment Date, (x) the amounts described in
clauses (a)(iii), (a)(iv), (a)(v), (a)(vi), (a)(vii) and
(a)(viii) of Section 3.04 hereof exceed (y) the Available
Funds (exclusive of any Reserve Account or Residual Account
transfers) in the Collection Account after taking into account
the payment of amounts described in clauses (a)(i) and (a)(ii)
of Section 3.04 on such Payment Date;
(B) then, to the extent of the Available Residual
Amount on deposit in the Residual Account, the Trustee shall
transfer, prior to making payments to the Series 1999-1
Noteholders on such Payment Date and prior to making any
transfers from the Reserve Account on such Payment Date, from
the Residual Account to the Collection Account such amount as
shall be necessary to fund any such shortfall.
(iv) In the event that on any Payment Date the Trustee
determines that a Residual Event which has previously occurred has been
cured, the Trustee, prior to making any other transfers or
disbursements from the Series 1999-1 Accounts on such Payment Date,
shall transfer the full amount then on deposit in the Residual Account
to the Collection Account.
(v) Upon payment in full of the Series 1999-1 Notes, any
balance remaining in the Residual Account, after all obligations to the
Noteholders hereunder have been fully satisfied, shall be paid to
reimburse the Trustee for any amounts owing to it arising from the
performance of its obligations under the Master Agreement and this
Series 1999-1 Supplement and, then, to ALRC VIII.
SECTION 3.03 Investment of Monies Held in the Series 1999-1 Accounts;
Subaccounts.
(a) The Servicer shall direct the Trustee in writing to invest the
amounts in each Series 1999-1 Account in Eligible Investments that mature or are
otherwise available not later than the Business Day immediately preceding the
next Payment Date following the investment of such amounts. Eligible Investments
shall not be sold or disposed of prior to their maturities. Net investment
earnings on amounts held in any Series 1999-1 Account shall be deposited in the
Collection Account as earned.
(b) The Trustee and the Servicer may, from time to time and in
connection with the administration of each Series 1999-1 Account, establish and
maintain with the Trustee one or more sub-accounts of any of the Series 1999-1
Accounts, as the Trustee and/or the Servicer may consider useful.
SECTION 3.04 Flow of Funds.
(a) On the Payment Date, the Trustee (based solely on information
contained in the Servicer's Certificate delivered on the related Determination
Date as specified in Section 3.05
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<PAGE> 27
hereof) will be required to make the following payments from the Available Funds
(including amounts transferred from the Reserve Account and/or the Residual
Account on such Payment Date) then on deposit in the Collection Account, in the
following order of priority:
(i) from the Available Funds, to the Servicer, any
Nonrecoverable Advances;
(ii) from the Available Funds then remaining in the Collection
Account to the Servicer, the Servicing Fee then due, together with the
Ancillary Servicing Income;
(iii) from the Available Funds then remaining in the
Collection Account, to the Class A Noteholders, the Class A Note
Interest and Class A Overdue Interest for the related Interest Accrual
Period;
(iv) from the Available Funds then remaining in the Collection
Account, to the Class B Noteholders, the Class B Note Interest and the
Class B Overdue Interest for the related Interest Accrual Period;
(v) from the Available Funds then remaining in the Collection
Account, to the Class C Noteholders, the Class C Note Interest and the
Class C Overdue Interest for the related Interest Accrual Period;
(vi) until the Class A Principal Balance has been reduced to
zero, to the Class A Noteholders, from the Available Funds then
remaining in the Collection Account, the Class A Principal Payment and
the Class A Overdue Principal;
(vii) until the Class B Principal Balance has been reduced to
zero, to the Class B Noteholders, from the Available Funds then
remaining in the Collection Account, the Class B Principal Payment and
the Class B Overdue Principal;
(viii) until the Class C Principal Balance has been reduced to
zero, to the Class C Noteholders, from the Available Funds then
remaining in the Collection Account, the Class C Principal Payment and
the Class C Overdue Principal;
(ix) from the Available Funds then remaining in the Collection
Account, to the Reserve Account, the amount needed to increase the
amount on deposit in the Reserve Account to the Required Reserve Amount
for such Payment Date;
(x) upon the occurrence and continuance of a Residual Event,
the lesser of (A) the remaining Available Funds and (B) the aggregate
amount of Residual Receipts originally included in Available Funds for
such Payment Date will be deposited to the Residual Account;
(xi) from the Available Funds then remaining in the Collection
Account, to the Class D Noteholders, the Class D Principal Payment and
the Class D Overdue Principal;
(xii) to the Obligors, in the proportions set forth in the
Servicer's Certificate delivered on the related Determination Date as
specified in Section 3.05 hereof, as the
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<PAGE> 28
holders of the Residual Interest, any remaining Available Funds on
deposit in the Collection Account.
(b) All payments to Series 1999-1 Noteholders shall be made on each
Payment Date to each Series 1999-1 Noteholder of record on the related Record
Date by check, or, if requested by such Series 1999-1 Noteholder, by wire
transfer to the account designated in writing delivered to the Trustee on or
prior to the related Determination Date, in immediately available funds, in
amounts equal to such Series 1999-1 Noteholder's pro rata share of such payment.
SECTION 3.05 Statements to Series 1999-1 Noteholders.
(a) Provided that the Servicer shall have delivered to the Trustee the
Servicer's Certificate on the preceding Determination Date, containing all
information necessary to enable the Trustee to make all distributions pursuant
to Section 3.04 hereof as well as all distributions and transfers pursuant to
Sections 3.01 and 3.02 hereof, then on each Payment Date, the Trustee will
forward to each Rating Agency, and mail to each Series 1999-1 Noteholder, a
statement based solely on such Servicer's Certificate, not later than one
Business Day prior to such Payment Date, setting forth the following information
(per $1,000 of Class A Initial Principal Balance, Class B Initial Principal
Balance, Class C Initial Principal Balance or Class D Initial Principal Balance
(as the case may be) as to (i) and (ii) below):
(i) The amount of such payment allocable to the Class A
Principal Payment, Class B Principal Payment, Class C Principal Payment
or Class D Principal Balance as applicable, and the Class A Overdue
Principal, Class B Overdue Principal, Class C Overdue Principal or
Class D Overdue Principal, as applicable;
(ii) The amount of such payment allocable to such Class A Note
Interest, Class B Note Interest or Class C Note Interest, as
applicable, and the Class A Overdue Interest, Class B Overdue Interest
or Class C Overdue Interest, as applicable;
(iii) The aggregate amount of fees and compensation received
by the Servicer for the related Collection Period;
(iv) The aggregate Class A Principal Balance, Class B
Principal Balance, Class C Principal Balance and Class D Principal
Balance, as applicable, and the Class A Note Factor, Class B Note
Factor, Class C Note Factor or Class D Note Factor, as applicable,
after taking into account all distributions made on such Payment Date,
the Aggregate Contract Principal Balance and the Collateral Factor;
(v) The total unreimbursed Servicer Advances with respect to
the related Collection Period;
(vi) The aggregate Contract Principal Balance for all Series
1999-1 Contracts that became Charged-Off Contracts during the related
Collection Period calculated immediately prior to the time such
Contracts became Charged-Off Contracts; and
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<PAGE> 29
(vii) The amount on deposit in the Reserve Account and the
Residual Account; provided, however, the Trustee may deliver a copy of
the Servicer's Certificate to each Series 1999-1 Noteholder and Rating
Agency in satisfaction of the requirement set forth in this Section.
(b) By January 31 of each calendar year, commencing January 31, 2000,
or as otherwise required by applicable law, the Trustee shall furnish to each
Person who at any time during the immediately preceding calendar year was a
Series 1999-1 Noteholder a statement containing the applicable aggregate amounts
of interest and principal paid to such Noteholder for such calendar year or, in
the event such Person was a Series 1999-1 Noteholder during a portion of such
calendar year, for the applicable portion of such year, for the purposes of such
Series 1999-1 Noteholder's preparation of federal income tax returns. In
addition to the foregoing, the Trustee shall make available to Series 1999-1
Noteholders any other information provided to the Trustee or otherwise in the
Trustee's possession reasonably requested by Series 1999-1 Noteholders in
connection with tax matters, in accordance with the directions of the Servicer.
The obligation of the Trustee set forth in this paragraph shall be deemed to
have been satisfied to the extent that substantially comparable information
shall be provided by the Servicer pursuant to any requirements of the Code.
(c) The Servicer and the Trustee shall furnish to each Series 1999-1
Noteholder, on request, such periodic, special or other reports or information
not specifically provided for herein, as shall be necessary, reasonable or
appropriate with respect to such Series 1999-1 Noteholder and at the expense of
such requesting party all such reports or information to be provided by and in
accordance with such applicable instructions and directions as the Series 1999-1
Noteholder may reasonably require and as the Servicer and the Trustee may
reasonably be able to produce. A Series 1999-1 Noteholder may, by notice to the
Trustee, waive receipt of any reports. The Trustee's obligation under this
subsection 3.05(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 send to each Series 1999-1 Noteholder
and to each Rating Agency in writing:
(i) Notice of any breach by the Originator, either Obligor or
the Servicer of any of their respective representations, warranties and
covenants made herein or in the Contribution Agreement;
(ii) A copy of each Servicer compliance statement delivered to
the Trustee pursuant to Section 6.07 of the Master Agreement;
(iii) A copy of each financial statement delivered to the
Trustee pursuant to Section 6.08 of the Master Agreement;
(iv) 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;
(v) Notice of the appointment of any co-trustee or separate
trustee pursuant to Section 11.15 of the Master Agreement; and
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<PAGE> 30
(vi) Notice of the occurrence of any Event of Servicer
Termination or of any Event of Default;
provided, however, that in each case the Trustee shall only be required to send
such notices and other items to the Series 1999-1 Noteholders to the extent that
the Trustee has itself received the related information and the Series 1999-1
Noteholders have not already received such notice or other items. Except as may
be specifically provided herein, the Trustee shall have no obligation to seek to
obtain any such information.
SECTION 3.06 Compliance With Withholding Requirements. Notwithstanding
any other provisions of the Master Agreement and this Series 1999-1 Supplement,
the Trustee, as paying agent 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 Series 1999-1 Noteholders 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 related Series
1999-1 Noteholder for all purposes of this Series 1999-1 Supplement. In no event
shall the consent of Series 1999-1 Noteholders be required for any withholding.
SECTION 3.07 Servicer Advances. No later than one Business Day
preceding each Payment Date, the Servicer may, but is not required, to make a
Servicer Advance for each Series 1999-1 Contract which is a Delinquent Contract
with respect to each overdue Scheduled 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). On each Determination
Date, the Servicer shall deliver to the Trustee the Servicer's Certificate
listing the aggregate amount of Scheduled Payments not received for the
immediately prior Collection Period as of the related Calculation Date, together
with a listing of which such unpaid Scheduled Payments will not be the subject
of a corresponding Servicer Advance. The Servicer shall remit any Servicer
Advances to the Collection Account.
SECTION 3.08 Modifications. The Servicer may allow modifications and
prepayments of Contracts as provided in Sections 6.01, 6.02 and 6.03 of the
Master Agreement.
SECTION 3.09 Servicer to Act as Custodian.
(a) The Servicer shall hold and acknowledges that it is holding the
Series 1999-1 Contracts hereunder as custodian for the Trustee.
(b) The Servicer shall promptly report to the Trustee any failure by it
to hold the Series 1999-1 Contracts as herein provided and shall promptly take
appropriate action to remedy any such failure but only to the extent (i) any
such failure is caused by the acts or omissions of the Servicer and (ii) such
remedial action is otherwise within its capabilities or control. As custodian,
the Servicer shall have and perform the following powers and duties:
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<PAGE> 31
(1) hold the Series 1999-1 Contracts on behalf of the Trustee
for the benefit of the Series 1999-1 Noteholders, maintain accurate
records pertaining to each Series 1999-1 Contract to enable it to
comply with the terms and conditions of the Master Agreement and this
Series 1999-1 Supplement, and maintaining a current inventory thereof;
(2) implement policies and procedures in accordance with the
Servicer's normal business practices with respect to the handling and
custody of the Series 1999-1 Contracts so that the integrity and
physical possession of the Series 1999-1 Contracts will be maintained;
and
(3) attend to all details in connection with maintaining
custody of the Series 1999-1 Contracts on behalf of the Trustee on
behalf of the Series 1999-1 Noteholders.
(c) In acting as custodian of the Series 1999-1 Contracts, the Servicer
agrees further that it does not and will not have or assert any beneficial
ownership interest in such Series 1999-1 Contracts. The Servicer on behalf of
the Series 1999-1 Noteholders shall mark conspicuously its master data
processing records evidencing each Series 1999-1 Contract with a legend
evidencing that all right, title and interest in the Series 1999-1 Contracts has
been granted to the Trustee as provided in this Series 1999-1 Supplement.
(d) The Servicer agrees to maintain the Series 1999-1 Contracts at
either its office in Voorhees, New Jersey or at such other location as shall
from time to time be identified by prior written notice to the Trustee. Subject
to the foregoing, the Servicer may temporarily move individual Series 1999-1
Contracts or any portion thereof without notice as necessary to conduct
collection and other servicing activities.
ARTICLE IV
SERIES 1999-1 EVENTS OF DEFAULT
SECTION 4.01 Events of Default. Events of Default and Notice thereof.
The following events constitute "Events of Default":
(a) default by the Obligors in making payment of any installment of
interest on any Offered Note when such payment become due and payable and
continuation of such default for five calendar days;
(b) default in reducing the Outstanding Note Principal Balance of any
Class of Offered Notes to zero by the Stated Maturity Date;
(c) default in the performance, or breach, by either Obligor of the
provisions of its related organizational documents relating to corporate
separateness;
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(d) default in the performance, or breach, of any covenant of either
Obligor in the Master Agreement, or herein, and continuance of such default or
breach for a period of 30 days after the earliest of (i) any officer of either
Obligor first acquiring the knowledge thereof, (ii) the Trustee's giving written
notice thereof to the Obligors or (iii) the holders of a majority of the then
Outstanding Note Principal Balance giving written notice thereof to the Obligors
and the Trustee;
(e) if any representation or warranty of either Obligor made in the
Master Agreement, this Series 1999-1 Supplement or any other writing provided to
the Series 1999-1 Noteholders; provided, however, that the breach of any
representation or warranty made by either Obligor will be deemed to be
"material" only if it negatively affects the Series 1999-1 Noteholders, the
enforceability of the Master Agreement, this Series 1999-1 Supplement or the
Series 1999-1 Notes; or
(f) the commencement by either or both of the Obligors of a voluntary
case or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law, or the consent by either or both of the
Obligors to the entry of a decree or order for relief in respect of either or
both of the Obligors in an involuntary case or proceeding under any applicable
federal or state bankruptcy or insolvency case or proceeding against either or
both of the Obligors, or the filing by either or both of the Obligors of a
petition or answer or consent seeking reorganization or relief under any
applicable federal or state law, or the consent by it to the filing of such
petition or to the appointment of or taking possession of any substantial part
of the property of either or both of the Obligors by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of either or
both of the Obligors, or the making by either or both of the Obligors of an
assignment for the benefit of creditors, or the failure by either or both of the
Obligors to pay their debts generally as they become due, or the taking of
corporate action by either or both of the Obligors in furtherance of any such
action.
The Trustee shall give the Series 1999-1 Noteholders notice of all
uncured defaults known to it.
The Obligors shall furnish to the Trustee, annually before January 31st
of each year, commencing in 2000, a statement of certain officers of the
Obligors to the effect that to the best of their knowledge the Obligors is not
in default in the performance and observance of the terms of the Master
Agreement, this Series 1999-1 Supplement or the Series 1999-1 Notes or, if the
Obligors are in default, specifying such default.
SECTION 4.02 Acceleration of Maturity; Rescission and Annulment.
(a) If an Event of Default of the kind specified in subsection 4.01(f)
occurs, the unpaid principal amount of the Series 1999-1 Notes shall
automatically become due and payable at par together with all accrued and unpaid
interest thereon, without presentment, demand, protest or notice of any kind,
all of which are hereby waived by the Obligors. If an Event of Default (other
than an Event of Default of the kind described in subsection 4.01(f) occurs and
is continuing, then and in every such case the Trustee may, or if so directed by
the holders of Series 1999-1 Notes evidencing 66-2/3% of the then Outstanding
Note Principal Balance, shall declare the unpaid principal amount of all the
Series 1999-1 Notes to be due and payable immediately, by a notice in
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writing to the Obligors (and to the Trustee if given by Series 1999-1
Noteholders), and upon any such declaration such principal amount shall become
immediately due and payable together with all accrued and unpaid interest
thereon, without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Obligors. The Trustee may, however, if the
Event of Default involves other than non-payment of principal or interest on the
Series 1999-1 Notes, not sell the Series 1999-1 Trust Estate unless such sale is
for an amount greater than or equal to the Outstanding Note Principal Balance of
the Series 1999-1 Notes unless directed to do so by the holders of 66-2/3% of
the then Outstanding Note Principal Balance.
(b) At any time after such a declaration of acceleration has been made
and before a judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter in this Article provided, the holders of Series
1999-1 Notes evidencing 66-2/3% of the then Outstanding Note Principal Balance,
by written notice to the Obligors and the Trustee, may rescind and annul such
declaration and its consequences if:
(i) the Obligors have paid or deposited with the Trustee a sum
sufficient to pay:
(A) all principal on any Class A Notes, Class B Notes and
Class C Notes which has become due otherwise than by such declaration
of acceleration and interest thereon from the date when the same first
became due until the date of payment or deposit at the Class A Interest
Rate, the Class B Interest Rate and the Class C Interest Rate, as
applicable;
(B) all interest due with respect to any Class A Notes, Class
B Notes and Class C Notes and, to the extent that payment of such
interest is lawful, interest upon overdue interest from the date when
the same first became due until the date of payment or deposit at a
rate per annum equal to the Class A Interest Rate, Class B Interest
Rate or Class C Interest Rate, as applicable; and
(C) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements, and advances of the
Trustee, its agents and counsel;
and
(ii) all Events of Default, other than the non-payment of the
Outstanding Note Principal Balance which has become due solely by such
declaration of acceleration, have been cured or waived.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
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SECTION 4.03 Remedies.
(a) If an Event of Default occurs and is continuing of which a
Responsible Officer has actual knowledge, the Trustee shall immediately give
notice to each Series 1999-1 Noteholder and shall solicit the Series 1999-1
Noteholders for advice. The Trustee shall then take such action as the Trustee
shall deem appropriate provided that, if the Trustee is directed to take action
by the holders of Series 1999-1 Notes evidencing 66-2/3% of the then Outstanding
Note Principal Balance the Trustee shall act in accordance with such direction
subject to the provisions of Section 4.12 hereof.
(b) Following any acceleration of the Series 1999-1 Notes, the Trustee
shall have all of the rights, powers and remedies with respect to the Series
1999-1 Trust Estate as are available to secured parties under the UCC or other
applicable law. Such rights, powers and remedies may be exercised by the Trustee
in its own name as trustee of an express trust.
(c) If an Event of Default specified in subsection 4.01(a) or (b)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Obligors for the whole
amount of principal and interest remaining unpaid.
(d) In exercising its rights and obligations under this Section 4.03,
the Trustee may sell the Series 1999-1 Trust Estate in accordance with Section
4.16 hereof; provided that, if the Event of Default involves other than
non-payment of principal or interest on the Series 1999-1 Notes, then such sale
must be for an amount greater than or equal to amounts due under clauses first
through fourth in Section 4.06. Neither the Trustee nor any Series 1999-1
Noteholder shall have any rights against the Obligors other than to enforce the
Lien against the Series 1999-1 Trust Estate and to sell the Series 1999-1 Trust
Estate.
SECTION 4.04 Trustee Shall File Proofs of Claim.
(a) In case of the tendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition,
or other judicial proceeding relative to the Obligors, the Originator, the
Servicer or any other obligor upon the Series 1999-1 Notes or the other
obligations secured hereby or relating to the property of the Obligors, the
Originator, the Servicer or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Series 1999-1 Notes shall
then be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Obligors,
the Originator or the Servicer for the payment of overdue principal or interest
or any such other obligation) shall by intervention in such proceeding or
otherwise,
(i) file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Series 1999-1 Notes and
any other obligation secured hereby and file such other papers or
documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Series 1999-1 Noteholders allowed in such judicial
proceeding, and
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(ii) collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator, or
other similar official in any such judicial proceeding is hereby authorized by
each Series 1999-1 Noteholder to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly to
the Series 1999-1 Noteholders to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee.
(b) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Series 1999-1
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Series 1999-1 Notes or the rights of any holder thereof or to
authorize the Trustee to vote in respect of the claim of any Series 1999-1
Noteholder in any such proceeding.
SECTION 4.05 Trustee May Enforce Claims Without Possession of Series
1999-1 Notes. All rights of action and claims under the Master Agreement, this
Series 1999-1 Supplement or the Series 1999-1 Notes may be prosecuted and
enforced by the Trustee without the possession of any of the Series 1999-1 Notes
or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the holders
of the Series 1999-1 Notes in respect of which such judgment has been recovered.
SECTION 4.06 Application of Money Collected. Any money collected by the
Trustee pursuant to this Article, and any moneys that may then be held or
thereafter received by the Trustee shall be applied in the following order, at
the date or dates fixed by the Trustee and, in case of the distribution of the
entire amount due on account of principal or interest, upon presentation of the
Series 1999-1 Notes and surrender thereof:
first to the payment of all costs and expenses of collection
incurred by the Trustee and the Series 1999-1 Noteholders (including
the reasonable fees and expenses of any counsel to the Trustee and the
Series 1999-1 Noteholders);
second to the payment of all Servicing Fees then due to such
person;
third first, to the payment of all accrued and unpaid interest
on the Class A Principal Balance to the date of payment thereof,
including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the maturity of such
installment to the date of payment thereof at the rate per annum equal
to the Class A Interest Rate, second, to the payment of all accrued and
unpaid interest on the Class B Principal Balance to the date of payment
thereof, including (to the extent permitted by applicable law) interest
on any overdue installment of interest and principal from the maturity
of such installment to the date of payment thereof at the rate per
annum equal to
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the Class B Interest Rate, third, to the payment of all accrued and
unpaid interest on the Class C Principal Balance to the date of payment
thereof, including (to the extent permitted by applicable law) interest
on any overdue installment of interest and principal from the maturity
of such installment to the date of payment thereof at the rate per
annum equal to the Class C Interest Rate, fourth, to the payment to
zero of the Class A Principal Balance and any Class A Overdue
Principal, fifth, to the payment to zero of the Class B Principal
Balance and any Class B Overdue Principal and, sixth, to the payment of
the Class C Principal Balance and any Class C Overdue Principal;
provided that the Series 1999-1 Noteholders may allocate such payments
for interest and principal at their own discretion, except that no such
allocation shall affect the allocation of such amounts or future
payments received by any other Series 1999-1 Noteholder;
fourth to the payment of amounts then due the Trustee
hereunder;
fifth to the Class D Noteholders to the extent of the Class D
Principal Balance and any Class D Overdue Principal;
sixth to the Obligors or any other Person legally entitled
thereto.
SECTION 4.07 Limitation on Suits. None of the Series 1999-1 Noteholders
shall have any right to institute any proceeding, judicial or otherwise, with
respect to the Master Agreement, this Series 1999-1 Supplement or the Series
1999-1 Notes, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Series 1999-1 Noteholder has previously given written
notice to the Trustee of a continuing Event of Default;
(ii) the holders of not less than 66-2/3% of the then
Outstanding Note Principal Balance of the Series 1999-1 Notes shall
have made written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee hereunder;
(iii) such Series 1999-1 Noteholder or Series 1999-1
Noteholders have offered to the Trustee adequate indemnity against the
costs, expenses and liabilities to be incurred in compliance with such
request;
(iv) the Trustee for 30 days after its receipt of such notice,
request and offer of indemnity failed to institute any such proceeding;
and
(v) so long as any of the Series 1999-1 Notes remain
Outstanding, no direction inconsistent with such written request has
been given to the Trustee during such 30-day period by the holders of
66-2/3% of the then Outstanding Note Principal Balance of the Series
1999-1 Notes; it being understood and intended that no one or more
Series 1999-1 Noteholders shall have any right in any manner whatever
by virtue of, or by availing of, any provision of the Master Agreement,
this Series 1999-1 Supplement or the Series 1999-1 Notes to affect,
disturb, or prejudice the rights of any other Series 1999-1
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Noteholders, or to obtain or to seek to obtain priority or preference
over any other Series 1999-1 Noteholders or to enforce any right under
the Master Agreement, this Series 1999-1 Supplement or the Series
1999-1 Notes, except in the manner herein provided and for the equal
and ratable benefit of all the Series 1999-1 Noteholders. It is further
understood and intended that so long as any portion of the Series
1999-1 Notes remains Outstanding, ABS shall not have any right to
institute any proceeding, judicial or otherwise, with respect to the
Series 1999-1 Notes or for the appointment of a receiver or trustee
(including, without limitation, a proceeding under the Bankruptcy
Code), or for any other remedy hereunder. Nothing in this Section 4.07
shall be construed as limiting the rights of otherwise qualified Series
1999-1 Noteholders to petition a court for the removal of a Trustee
pursuant to Section 11.09 of the Master Agreement.
SECTION 4.08 Unconditional Right of Series 1999-1 Noteholders to
Receive Principal and Interest. Notwithstanding any other provision in the
Master Agreement, this Series 1999-1 Supplement or the Series 1999-1 Notes other
than the provisions hereof limiting the right to recover amounts due on the
Series 1999-1 Notes to recoveries from the property of the Series 1999-1 Trust
Estate, the holder of any Series 1999-1 Note shall have the absolute and
unconditional right to receive payment of the principal of and interest on such
Series 1999-1 Note on the related stated maturity date thereof, and to institute
suit for the enforcement of any such payment, and such rights shall not be
impaired without the consent of such Series 1999-1 Noteholder.
SECTION 4.09 Restoration of Rights and Remedies. If the Trustee or any
Series 1999-1 Noteholder has instituted any proceeding to enforce any right or
remedy under the Master Agreement, this Series 1999-1 Supplement or the Series
1999-1 Notes and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Series 1999-1
Noteholder, then and in every such case, subject to any determination in such
proceeding, the Obligors, the Trustee and the Series 1999-1 Noteholders shall be
restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Series 1999-1
Noteholders continue as though no such proceeding had been instituted.
SECTION 4.10 Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost, or stolen Series 1999-1 Notes, no right or remedy herein conferred upon or
reserved to the Trustee or to the Series 1999-1 Noteholders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 4.11 Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any holder of any Series 1999-1 Note to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee
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or to the Series 1999-1 Noteholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Series 1999-1
Noteholders, as the case may be.
SECTION 4.12 Control by Series 1999-1 Noteholders. The Holders of [a
majority] of the then Outstanding Note Principal Balance 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 Series 1999-1 Notes. Notwithstanding the foregoing:
(i) no such direction shall be in conflict with any rule of
law or with the Master Agreement, this Series 1999-1 Supplement or the
Series 1999-1 Notes;
(ii) (ii) the Trustee shall not be required to follow any such
direction which the Trustee reasonably believes might result in any
personal liability on the part of the Trustee for which the Trustee is
not adequately indemnified; and
(iii) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with any such direction; provided
that the Trustee shall give notice of any such action to each
Noteholder.
SECTION 4.13 Waiver of Events of Default.
(a) The Holders of [a majority] of the then Outstanding Note Principal
Balance may, by one or more instruments in writing, waive any Event of Default
hereunder and its consequences, except a continuing Event of Default:
(i) in respect of the payment of the principal of or premium
or interest on any Series 1999-1 Note (which may only be waived by the
holder of such Note); or
(ii) in respect of a covenant or provision hereof which cannot
be modified or amended without the consent of the holder of each
Outstanding Series 1999-1 Note affected (which only may be waived by
the holders of all Outstanding Series 1999-1 Notes affected).
(b) A copy of each waiver pursuant to subsection 4.13(a) shall be
furnished by the Obligors to the Trustee. Upon any such waiver, such Event of
Default shall cease to exist and shall be deemed to have been cured, for every
purpose of the Master Agreement, this Series 1999-1 Supplement or the Series
1999-1 Notes; but no such waiver shall extend to any subsequent or other Event
of Default or impair any right consequent thereon.
SECTION 4.14 Undertaking for Costs. All parties hereto agree (and each
Series 1999-1 Noteholder by its 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 the Master Agreement, this Series
1999-1 Supplement or the Series 1999-1 Notes, 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
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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 Trustee, to any suit
instituted by any Series 1999-1 Noteholder, or group of Series 1999-1
Noteholders, holding in the aggregate more than 10% of the then Outstanding Note
Principal Balance of the Series 1999-1 Notes, or to any suit instituted by any
Series 1999-1 Noteholder for the enforcement of the payment of the principal of
or interest on any Series 1999-1 Note on or after the maturity date for such
payments.
SECTION 4.15 Waiver of Stay or Extension Laws. The Obligors covenant
(to the extent that they may lawfully do so) that they will not at any time
insist upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of the
Master Agreement, this Series 1999-1 Supplement or the Series 1999-1 Notes; and
the Originator (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 4.16 Sale of Series 1999-1 Trust Estate.
(a) The power to effect any sale of any portion of the Series 1999-1
Trust Estate pursuant to Section 4.03 shall not be exhausted by any one or more
sales as to any portion of the Series 1999-1 Trust Estate remaining unsold, but
shall continue unimpaired until the entire Series 1999-1 Trust Estate shall have
been sold or all amounts payable on the Series 1999-1 Notes shall have been
paid. The Trustee may from time to time, upon directions in accordance with
Section 4.12, postpone any public sale by public announcement made at the time
and place of such sale. For any public sale of the Series 1999-1 Trust Estate,
the Trustee shall have provided each Series 1999-1 Noteholder with notice of
such sale at least two weeks in advance of such sale which notice shall specify
the date, time and location of such sale.
(b) To the extent permitted by applicable law, the Trustee shall not in
any private sale sell to a third party the Series 1999-1 Trust Estate, or any
portion thereof unless,
(i) the holders of 66-2/3% of the then Outstanding Note
Principal Balance consent to or direct the Trustee in writing to make
such sale; or
(ii) the proceeds of such sale would be not less than the sum
of all amounts due to the Trustee hereunder and the entire Outstanding
Note Principal Balance and interest due or to become due thereon on the
Payment Date next succeeding the date of such sale.
The foregoing provisions shall not preclude or limit the ability of the Trustee
to purchase all or any portion of the Series 1999-1 Trust Estate at a private
sale.
(c) In connection with a sale of all or any portion of the Series
1999-1 Trust Estate:
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(i) any one or more Series 1999-1 Noteholders may bid for and
purchase the property offered for sale, and upon compliance with the
terms of sale may hold, retain, and possess and dispose of such
property, without further accountability, and any Series 1999-1
Noteholder may, in paying the purchase money therefore, deliver in lieu
of cash any Outstanding Series 1999-1 Notes or claims for interest
thereon for credit in the amount that shall, upon distribution of the
net proceeds of such sale, be payable thereon, and the Series 1999-1
Notes, in case the amounts so payable thereon shall be less than the
amount due thereon, shall be returned to the Series 1999-1 Noteholders
after being appropriately stamped to show such partial payment;
(ii) the Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of
the Series 1999-1 Trust Estate in connection with a sale thereof;
(iii) the Trustee is hereby irrevocably appointed the agent
and attorney-in-fact of the Originator to transfer and convey its
interest in any portion of the Series 1999-1 Trust Estate in connection
with a sale thereof, and to take all action necessary to effect such
sale; and
(iv) no purchaser or transferee at such a sale shall be bound
to ascertain the Trustee's authority, inquire into the satisfaction of
any conditions precedent or see to the application of any moneys.
(d) The method, manner, time, place and terms of any sale of all or any
portion of the Series 1999-1 Trust Estate shall be commercially reasonable.
ARTICLE V
PREPAYMENT AND REDEMPTION
SECTION 5.01 Optional "Clean-up Call" Redemption of Series 1999-1
Notes. On any Payment Date following any Calculation Date as of which the
Aggregate Contract Principal Balance is less than ten percent (10.00%) of the
Initial Aggregate Contract Principal Balance, the Obligors shall have the option
to cause the redemption of the Series 1999-1 Notes by depositing with the
Trustee the sum of (i) the Class A Principal Balance, the Class B Principal
Balance, the Class C Principal Balance and the Class D Principal Balance as of
such Payment Date (after giving effect to the payment of any principal on such
Payment Date and any allocation of losses on such Payment Date), (ii) the Class
A Note Interest, Class B Note Interest and Class C Note Interest due on such
Payment Date and (iii) the amount, if any, of all Class A Overdue Principal, all
Class B Overdue Principal, all Class C Overdue Principal and all Class D Overdue
Principal and all Class A Overdue Interest, all Class B Overdue Interest and all
Class C Overdue Interest. Upon receipt of such amounts and all amounts then owed
to the Trustee, the Trustee shall (x) make the final payment in full to the
Series 1999-1 Noteholders and (y) release any remaining Series 1999-1 Trust
Estate to the Obligors, as the holder of the Residual Interest.
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SECTION 5.02 Notice of Redemption and Disposition of Funds.
(a) Notice of any termination pursuant to this Article V shall be given
to the Trustee by the Obligors, and then, promptly by the Trustee, by letter to
Noteholders and to each Rating Agency mailed not earlier than the 10th day and
not later than the 30th day of the month immediately preceding the month of such
final Payment Date specifying (i) the Payment Date upon which final payment of
the Series 1999-1 Notes so called for redemption will be made, (ii) the
scheduled amount of any such final payment, (iii) that interest shall cease to
accrue on the Series 1999-1 Notes so called for redemption on such final Payment
Date and (iv) at the option of the Trustee, the address for presentation of the
Series 1999-1 Notes so called for redemption for final payment. On such final
Payment Date, the Trustee shall cause to be distributed to the Series 1999-1
Noteholders so called for redemption an amount equal to the amount deposited by
the Obligors pursuant to Section 5.01, as applicable. After such Payment Date,
interest on the Series 1999-1 Notes so redeemed shall cease to accrue. Each
Series 1999-1 Noteholder shall use reasonable efforts to present its redeemed
Series 1999-1 Note to the Trustee at the office, if any, specified in the notice
described in clause (iv) of this paragraph (a), or in any similar written
notice, within sixty (60) days of such Series 1999-1 Noteholder's receipt of the
final payment of its Series 1999-1 Note. Each Noteholder shall indemnify the
Trustee for any damages suffered by the Trustee as a result of the Noteholder's
failure to present its Series 1999-1 Note on or after the final Payment Date
thereof.
(b) In the event that any amount due to any Series 1999-1 Noteholder
remains unclaimed after the final Payment Date, the Servicer shall, at its
expense, cause to be published once, in the eastern edition of The Wall Street
Journal, notice that such money remains unclaimed. If, within the period then
specified in the escheat laws of the State of New York after such publication,
such amount remains unclaimed, the Obligors shall be entitled to all unclaimed
funds and other assets which remain subject hereto, and the Trustee upon
transfer of such funds shall be discharged of any responsibility for such funds
and, the Series 1999-1 Noteholders shall look to the Obligors for payment.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01 Ratification of Master Agreement. As supplemented by this
Series 1999-1 Supplement, the Master Agreement is in all respects ratified and
confirmed and the Master Agreement, as so supplemented by this Series 1999-1
Supplement shall be read, taken and construed as one and the same instrument.
SECTION 6.02 Counterparts. This Series 1999-1 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 6.03 GOVERNING LAW. THIS SERIES 1999-1 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
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PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT
TAKING INTO ACCOUNT THE CONFLICT OF LAWS PRINCIPLES OF ANY JURISDICTION.
SECTION 6.04 Amendments and Waivers.
(a) Notwithstanding anything contained in the Master Agreement to the
contrary, no term or condition of this Series 1999-1 Supplement shall be
amended, modified, waived or terminated without the prior written consent of the
Obligors, the Servicer and the Trustee.
(b) No waiver with respect to any term or condition of the Master
Agreement or this Series 1999-1 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.
SECTION 6.05 Non-petition Clause. Notwithstanding anything contained in
Section 4.07 hereof, or elsewhere herein, the Trustee hereby, and by its
acceptance of the Series 1999-1 Note, each Series 1999-1 Noteholder 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 either Obligor to invoke the process of
any Governmental Authority for the purpose of commencing or sustaining a case
against such 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 such Obligor or any substantial
part of its property or ordering the winding-up or liquidation of the affairs of
such Obligor.
SECTION 6.06 Officers' Certificate and Opinion of Counsel as to
Conditions Precedent. Upon any request or application by the Obligors to the
Trustee to take any action under the Master Agreement or this Series 1999-1
Supplement, the Obligors shall furnish to the Trustee:
(a) an Officer's Certificate stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided for in the
Master Agreement or this Series 1999-1 Supplement relating to the proposed
action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such counsel,
all such conditions precedent and covenants have been complied with.
Each Officer's Certificate or Opinion of Counsel with respect to
compliance with a condition or covenant provided for in the Master Agreement or
this Series 1999-1 Supplement shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
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(c) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
SECTION 6.07 Restriction on Further Indebtedness. Neither Obligor shall
issue any indebtedness, including any new Series of Notes, or execute and
deliver any guaranties, unless the Obligors shall have previously received
confirmation of the ratings then assigned to the Series 1999-1 Notes by each of
[ Rating Agencies].
SECTION 6.08 Special Covenants and Acknowledgements. With respect to
the Series 1999-1 Notes, each Obligor does hereby represent and warrant, as of
the Closing Date:
(i) "Series Controlling Party." The parties hereto acknowledge
that the Trustee is the "Series Controlling Party" with respect to the
Series 1999-1 Notes for purposes of the Master Agreement.
(ii) "Support Defaults." There are no "Support Default" events
with respect to the Series 1999-1 Notes.
(iii) "Series Trustee Secured Obligations." The "Series
Trustee Secured Obligations" and the "Series Secured Obligations" with
respect to the Series 1999-1 Notes shall mean, collectively (x) any
amounts due to the Series 1999-1 Noteholders hereunder, and (y) any
fees and expenses due to the Trustee with respect to the Series 1999-1
Notes.
(iv) "Series Secured Parties." The "Series Secured Parties"
with respect to the Series 1999-1 Notes are the Trustee and the Series
1999-1 Noteholders.
(v) "Original Servicer Fee Rate." The "Original Servicer Fee
Rate" with respect to the Series 1999-1 Notes is the Servicing Fee.
(vi) "Original Issue Date." The "Original Issue Date" with
respect to the Series 1999-1 Note is ________ __, 1999.
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<PAGE> 44
IN WITNESS WHEREOF, the Obligors, ABS, in its individual capacity, as
Originator and as the Servicer and the Trustee have caused this Series 1999-1
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 and Originator
By _________________________________________
Name:
Title:
ADVANTA LEASING RECEIVABLES CORP. VIII, as an
Obligor
By _________________________________________
Name:
Title:
ADVANTA LEASING RECEIVABLES CORP. IX, as an
Obligor
By _________________________________________
Name:
Title:
BANKERS TRUST COMPANY, as Trustee
By _________________________________________
Name:
Title:
<PAGE> 1
EXHIBIT 4.3
OH&S DRAFT
05/19/99
- --------------------------------------------------------------------------------
MASTER SALE AND CONTRIBUTION AGREEMENT
among
ADVANTA BUSINESS SERVICES CORP.,
as the Originator and Servicer,
ADVANTA LEASING RECEIVABLES CORP. VIII
and
ADVANTA LEASING RECEIVABLES CORP. IX,
as the Obligors
Dated as of
______, 1999
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.01 Terms Defined in the Master Agreement..............................................................1
SECTION 1.02 Additional Definitions.............................................................................2
ARTICLE II
CONVEYANCE OF CONVEYED ASSETS
SECTION 2.01 Conveyance.........................................................................................2
SECTION 2.02 Custody of Contract Files..........................................................................3
SECTION 2.03 Servicing of Conveyed Assets.......................................................................4
SECTION 2.04 Conveyance of Conveyed Assets......................................................................4
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.0l Representations and Warranties of ABS..............................................................4
SECTION 3.02 Representations and Warranties of the Obligors.....................................................6
SECTION 3.03 Repurchase Contracts and Equipment by ABS..........................................................7
ARTICLE IV
COVENANTS OF ABS AND THE OBLIGORS
SECTION 4.01 ABS Covenants.......................................................................................8
SECTION 4.02 Covenants of Each Obligor.........................................................................11
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01 Conditions to the Obligors' Obligations...........................................................12
SECTION 5.02 Conditions to ABS's Obligations...................................................................12
ARTICLE VI
TERMINATION
SECTION 6.01 Termination.......................................................................................13
SECTION 6.02 Effect of Termination.............................................................................13
</TABLE>
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
ARTICLE VII
MISCELLANEOUS PROVISIONS
<S> <C> <C>
SECTION 7.01 Amendment.........................................................................................13
SECTION 7.02 Governing Law.....................................................................................13
SECTION 7.03 Notices...........................................................................................13
SECTION 7.04 Severability of Provisions........................................................................14
SECTION 7.05 Assignment........................................................................................14
SECTION 7.06 Further Assurances................................................................................14
SECTION 7.07 No Waiver; Cumulative Remedies....................................................................14
SECTION 7.08 Counterparts......................................................................................14
SECTION 7.09 Binding Effect....................................................................................14
SECTION 7.10 Merger and Integration............................................................................14
SECTION 7.11 Headings..........................................................................................15
SECTION 7.12 Exhibit............................................................................................15
SECTION 7.13 No Bankruptcy Petition Against any Obligor........................................................15
</TABLE>
-vii-
<PAGE> 4
MASTER SALE AND CONTRIBUTION AGREEMENT
THIS MASTER SALE AND CONTRIBUTION AGREEMENT, dated as of
______, 1999 (this "Master Sale Agreement"), is entered into among ADVANTA
BUSINESS SERVICES CORP., a Delaware corporation ("ABS"), as Originator and as
Servicer under the Master Agreement, ADVANTA LEASING RECEIVABLES CORP. VIII, a
Nevada corporation located at 639 Isbell Road, Suite 390-A, Reno, Nevada 89509
("ALRC VIII") and ADVANTA LEASING RECEIVABLES CORP. IX, a Nevada corporation
located at 639 Isbell Road, Suite 390-B, Reno, Nevada 89509 ("ALRC IX"), (ALRC
VIII and ALRC IX each individually, an "Obligor" and, together, the "Obligors")
as the purchasers or recipient of Conveyed Assets hereunder.
W I T N E S S E T H:
WHEREAS, ABS, in the ordinary course of its business has,
originated or acquired a portfolio of Contracts; and
WHEREAS, ABS desires to sell, contribute, 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 set forth herein;
WHEREAS, the Obligors, ABS, in its capacity as Servicer, and
Bankers Trust Company, as Trustee, have heretofore entered into a Master
Facility Agreement, dated as of ______, 1999 (the "Master Agreement") pursuant
to which the Obligors will finance, in whole or in part, their purchase and
holding of the Conveyed Assets;
WHEREAS, it is contemplated that, following the purchase of
the Conveyed Assets by the Obligors, ABS, as Servicer or any successor thereto
as Servicer under the Master Agreement, will administer and service the Conveyed
Assets;
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 Agreement. For the
purposes of this Master Sale Agreement, capitalized terms used herein but not
otherwise defined shall have the respective meanings assigned to such terms in
the Master Agreement.
<PAGE> 5
SECTION 1.02 Additional Definitions. Whenever used in this
Master Sale Agreement, the following words and phrases shall have the following
meanings:
"ABS" shall mean Advanta Business Services Corp., a Delaware
corporation, and its successors and assigns.
"Conveyance" shall have the meaning set forth in Section 2.01
hereof.
"Conveyed Assets" shall mean (i) each Contract sold or
contributed by ABS and acquired by the Obligor(s) pursuant to this Master Sale
Agreement together with all amounts due or to become due thereunder, (ii) all
Collections after the related Cut-Off Date, (iii) Related Security, associated
therewith, (iv) all balances, instruments, monies and other securities and
investments received or held from time to time by the Servicer and representing
Collections received after the related Cut-off Date, (v) the right, title and
interest of ABS in the Equipment, in each case associated with such Contracts,
and (vii) all proceeds of the foregoing, but excluding, any Insurance Premiums,
taxes, late charge fees and Initial Unpaid Amounts.
"Electronic Ledger" shall mean the Servicer's master
electronic record of all contracts serviced by it, including the Contracts.
"Insurance Premiums" shall mean any insurance premiums paid by
ABS with respect to the Contracts or the Equipment and which premiums are
returned to ABS as a refund of such amounts.
"Master Sale Agreement" shall mean this Master Sale and
Contribution Agreement and all amendments hereto.
"Purchase Date" shall mean each date on which a sale and/or
contribution of Conveyed Assets is to be effected, as set forth in the related
Sale Agreement Supplement.
"Sale Agreement Supplement" shall mean each Sale and
Contribution Agreement Supplement executed and delivered pursuant to this Master
Sale Agreement substantially in the form of Exhibit A.
"Substitute Contract" shall, with respect to any Series, have
the meaning specified in the related Series Supplement.
ARTICLE II
CONVEYANCE OF CONVEYED ASSETS
SECTION 2.01 Conveyance. (a) ABS hereby, on each Purchase
Date, as evidenced by the execution and delivery by ABS and the Obligors of a
Sale Agreement Supplement, sells, transfers, assigns, sets over, contributes,
quitclaims and otherwise conveys to the Obligors (collectively, the
"Conveyance") all of ABS's right, title and interest in, to and under the
related Conveyed Assets, whether in existence at the Purchase Date or thereafter
arising. The Conveyed Assets conveyed to each of the respective Obligors shall
be as set forth in the related Sale
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<PAGE> 6
Agreement Supplement. Each such transfer of Conveyed Assets by ABS shall be
without representation, warranty or recourse except as expressly provided in
Section 3.01.
(b) The purchase price for the Conveyed Assets conveyed
pursuant to this Master Sale Agreement and the amount of such Conveyed Assets
which will be contributed to the Obligors shall be determined by ABS and the
Obligors at the time of the execution and delivery of such related Sale
Agreement Supplement. The amount paid to ABS for the Conveyed Assets sold on a
Purchase Date shall be paid by the Obligors to or at the direction of ABS as
provided in the related Sale Agreement Supplement.
(c) In connection with each such Conveyance, prior to each
related Purchase 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 or reasonably desirable to perfect and to
maintain the perfection of, the conveyance of the related Conveyed Assets from
ABS to the Obligors and the pledge of such related Conveyed Assets from the
Obligors to the Trustee, and to deliver a copy of such financing statements or
other evidence of such filings to the Obligors on or prior to the related
Purchase Date; provided, however, that except as required by the Master
Agreement, no financing statements will be recorded or filed with respect to the
sale or transfer of the Equipment owned by ABS unless (i) ABS, as Servicer shall
determine to file UCC-3 statements or similar statements with respect to such
Equipment 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 Obligors or to the Trustee, but instead will be held by the
Servicer (or its designated custodian) on behalf of the Trustee and the Contract
Files will be marked as required by the Master Agreement.
(d) In connection with each such Conveyance, ABS shall, at its
own expense, (i) cause its books and records to be marked to show that the
related Conveyed Assets have been transferred to the Obligors in accordance with
this Master Sale Agreement, and that the related Conveyed Assets have been
pledged to the Trustee in accordance with the Master Agreement on or prior to
the related Purchase Date and (ii) deliver to the Obligors the related List of
Contracts on the related Purchase Date. Each Obligor agrees (i) to mark its
books and records to show the acquisition of the Conveyed Assets and that such
Conveyed Assets have been pledged to the Trustee in accordance with the Master
Agreement and a specified Series Supplement and (ii) to deliver to the Trustee
the related List of Contracts on the related Purchase Date. In addition, the
Servicer, shall cause its Electronic Ledger to include the Conveyed Assets as
contracts serviced by the Servicer and shall mark its Electronic Ledger to show
that the related Conveyed Assets are owned by the Obligors in accordance with
this Master Sale Agreement and such Conveyed Assets have been pledged to the
Trustee in accordance with the Master Agreement and the Series Supplement on or
prior to the related Purchase Date.
SECTION 2.02 Custody of Contract Files. In connection with (a)
each Conveyance of Conveyed Assets to the Obligors, and (b) each pledge by such
Obligors to the Trustee for the benefit of the related Series Secured Parties,
pursuant to the Master Agreement, the Servicer will
3
<PAGE> 7
retain the Contract Files (provided that such Contract Files may be held by a
designated custodian of the Servicer) and any related evidence of insurance
and payments on behalf of the Trustee.
SECTION 2.03 Servicing of Conveyed Assets. In connection with
the Conveyance of the Conveyed Assets to the Obligors pursuant to this Master
Sale Agreement and pursuant to the related Sale Agreement Supplement and the
pledge thereof to the Trustee, ABS hereby agrees, until a successor servicer
accepts such duties and responsibilities, to service the Conveyed Assets for the
benefit of the Obligors (and their respective successors and assigns) and the
Trustee in accordance with the terms and conditions of the Master Agreement.
SECTION 2.04 Conveyance of Conveyed Assets. Each Conveyance of
Conveyed Assets shall be evidenced by the execution and delivery by the Obligors
and ABS of this Master Sale Agreement and the execution and delivery of a Sale
Agreement Supplement in the form of Exhibit A hereto, and all of the Obligors'
rights hereunder and thereunder shall similarly be pledged to the Trustee for
the benefit of the related Series Secured Parties as of the related Purchase
Date. Each such conveyance shall be effective as of the related Purchase Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.0l Representations and Warranties of ABS. ABS hereby
makes the following representations and warranties for the benefit of the
Obligors, the Trustee and the related Series Secured Parties. Such
representations and warranties speak, as to the Conveyed Assets conveyed as of
the related Purchase Date, unless otherwise indicated, but shall survive each
Conveyance of the Conveyed Assets to the Obligors and their successors and
assigns.
(a) As of the Purchase Date each, contract is an "Eligible
Contract" as such term is defined in the related Series Supplement and as
defined in the Sale 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 ABS had at all relevant times, and now has,
power, authority, and legal right to acquire, own, contribute and sell
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 servicing of the
contracts 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 licenses and approvals, would not, in the
aggregate, materially and adversely affect the ability of ABS to
perform its obligations under the Master Agreement and all supplements
thereto, this
4
<PAGE> 8
Master Sale Agreement, each Sale Agreement Supplement and each Series
Related Document to which ABS is a party;
(iii) Power and Authority. ABS has full corporate
power and authority to execute and deliver this Master Sale Agreement,
each Sale Agreement Supplement and each other Series Related Document
to which ABS is a party and to carry out their respective terms; ABS
has duly authorized the sale and contribution to the 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 Sale; Binding Obligations. Upon execution
and delivery of each Sale Agreement Supplement by ABS, such Sale
Agreement Supplement will constitute an absolute assignment to the
Obligors of all right, title and interest of ABS in the Conveyed Assets
transferred thereby, and the Conveyed Assets will thereafter be held by
the Obligors free and clear of 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 Agreement and the Series
Supplement; this Master Sale Agreement and each Series Related Document
to which ABS is a party when duly executed and delivered, will each
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, receivership,
conservatorship 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 the
Master Agreement, each Series Supplement, this Master Sale Agreement,
each Sale Agreement Supplement and each Series Related Document to
which ABS is a party 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 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 Master Sale Agreement, the Sale
Agreement Supplement, the Master Agreement and each Series Related
Document to which ABS is a party, 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
5
<PAGE> 9
Master Sale Agreement or the Master Agreement, (B) seeking to prevent
the consummation of the transactions contemplated by this Master Sale
Agreement, any Sale Agreement Supplement or the Master Agreement, or
(C) seeking any determination or ruling, that might (in the reasonable
judgement of ABS) materially and adversely affect the performance by
ABS of its obligations under, or the validity or enforceability of,
this Master Sale Agreement, any Sale Agreement Supplement or the Master
Agreement;
(vii) Insolvency. ABS is not insolvent and will not
be rendered insolvent by the transactions contemplated by this Master
Sale Agreement or the Master Agreement;
(viii) Principal Place of Business. Except to the
extent that notice of any change in such location or locations has been
given as provided in Section 4.01(e) of this Master Sale Agreement,
ABS's principal place of business, and chief executive office is
located at 1020 Laurel Oak Road, Voorhees, New Jersey 08043;
(ix) Valid Assignment. It is the intention of ABS
that each sale, contribution, transfer and assignment herein
contemplated constitute a valid assignment of the related Conveyed
Assets from ABS to the Obligors and that the beneficial interest in and
title to the Conveyed Assets not be part of the estate of ABS in the
event of any insolvency or receivership or conservatorship proceeding
with respect to ABS;
(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 Master Sale
Agreement or any Sale Agreement Supplement, 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 or the Trustee
for purposes of or in connection with this Master Sale Agreement or any
transfer 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. ABS has not, in the past two years, used
any corporate names, trade names or assumed names other than the name
in which it has executed this Master Sale Agreement.
SECTION 3.02 Representations and Warranties of the Obligors.
Each Obligor hereby makes the following representations and warranties with
respect to itself and not with respect to any other Obligor. The following
representations and warranties are made to ABS in its individual capacity and as
Seller and as Servicer and to the Trustee and to each Series Secured Party. ABS
will rely and the Obligors acknowledge and agree that ABS will rely on the
following representations and warranties in agreeing to enter into this Master
Sale Agreement and sell and
6
<PAGE> 10
contribute Conveyed Assets hereunder. Such representations and warranties speak
as of each Purchase Date, and shall survive each sale, transfer and assignment
of the respective Conveyed Assets to the Obligors and their respective
successors and assigns.
(a) Organization and Good Standing. The 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. The 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 the Obligor to comply with the terms of this
Master Sale Agreement, the Master Agreement and all Series Related Documents to
which the Obligor is a party;
(c) Power and Authority. The Obligor has the corporate power
and authority to execute and deliver this Master Sale Agreement, the Master
Agreement and all Series Related Documents to which it is a party and to carry
out their respective terms; and the execution, delivery, and performance of this
Master Sale Agreement, the Master Agreement and all Series Related Documents to
which the Obligor is a party have been duly authorized by the Obligor by all
necessary corporate action;
(d) Binding Obligations. This Master Sale Agreement, the
Master Agreement and each Series Related Document to which the Obligor is a
party, when 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 Master Sale Agreement,
the Master Agreement, the Series Supplement, each Sale Agreement Supplement to
which the Obligor is a party and all other Series Related Documents to which the
Obligor is a party 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 the Obligor, or any material
term of any agreement to which the Obligor is a party.
SECTION 3.03 Repurchase Contracts and Equipment by ABS. Upon
discovery by the Trustee, the Servicer or an Obligor of a breach of any of the
representations and warranties made pursuant to Section 3.01 above or in any
Sale Agreement Supplement that materially and adversely affects the interests of
the Obligors or their successors or assigns, including the Trustee
7
<PAGE> 11
or any Holder of Notes, in any of the Contracts, the Equipment or the Contract
File, the party discovering such breach shall give prompt written notice to the
others. Unless the breach shall have been cured by ABS or any successor thereto
or waived, ABS shall repurchase such Contract and the Equipment subject to such
Contract from appropriate Obligor or Obligors on the date such Contract is
removed from the Series Trust Estate and on such date pay the repurchase price
to the Trustee for the benefit of the Obligors and the Obligors shall direct the
Trustee to deposit such amount in the Collection Account created under the
appropriate Sereis Supplement. The repurchase price shall be equal to the
Prepayment Amount determined as provided under the terms of the Master
Agreement. The obligation of ABS as provided in this Section 3.03 to repurchase
any Contract and the Equipment subject to such Contract as to which a breach has
occurred and is continuing and to remit the Prepayment Amount shall constitute
the sole remedy against ABS for such breach available to the Obligors and the
Trustee. The representations and warranties set forth in Section 3.01 and the
Sale Agreement Supplements shall survive each sale, transfer and assignment of
the Conveyed Assets to the Obligors and their pledge to the Trustee.
ARTICLE IV
COVENANTS OF ABS AND THE OBLIGORS
SECTION 4.01 ABS Covenants. ABS hereby covenants and agrees
with the Obligors as follows:
(a) Merger of, 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 Master Sale Agreement and each Sale Agreement Supplement and under the
Master Agreement, each Series Supplement and all other Series Related Documents,
will be the successor to ABS under this Master Sale Agreement and each Sale
Agreement Supplement without the execution or filing of any document or the
taking of any further act on the part of any of the parties to this Master Sale
Agreement, anything in this Master Sale Agreement or any Sale Agreement
Supplement 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 Master Sale Agreement and each Sale
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 seller of the Conveyed Assets under this Master Sale Agreement or any
Sale 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
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Obligors under this Master Sale Agreement and each Sale Agreement Supplement in
the Conveyed Assets and in the proceeds thereof; provided, that no filings shall
be required on any Equipment owned by ABS except (i) as required by ABS's Credit
and Collection Policy and (ii) as otherwise required by any Sale Agreement
Supplement. ABS shall not be required to file financing statements with respect
to the Equipment owned by ABS 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 Agreement seriously misleading within the
meaning of Section 9-402 (7) of the UCC, unless it shall have given the Obligors
and the Trustee at least 30 days' prior written notice thereof.
(e) Preservation of Office. ABS will give the Obligors 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
and will give the Obligors and the Trustee at least 30 days' prior written
notice of any change in location of the Contract Files.
(f) Making of Record. ABS, as transferor of the Contracts and
Equipment will, at its own cost and expense, (i) maintain a master record of the
Contracts and Equipment and (ii) mark its records to show that the Contracts and
Equipment have been conveyed to the Obligors and that they have been pledged and
assigned to the Trustee pursuant to the Master 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 Obligors or the Trustee in the Conveyed
Assets.
(h) Conveyance of Conveyed Assets: Security Interests. Except
for the sales and conveyances under this Master Sale Agreement and under each
Sale Agreement Supplement and pursuant to the Master 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 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 each Obligor and
the Trustee promptly, in reasonable detail, of the occurrence of any breach by
ABS or other party hereto
9
<PAGE> 13
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 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 Master Sale Agreement, as the Obligors or the Trustee may request and
reasonably require; provided, however that, no UCC filing, will be required with
respect to the Equipment except as otherwise required hereby or by the Master
Agreement.
(k) Maintenance of Records. ABS agrees to maintain this Master
Sale Agreement and each Sale Agreement Supplement continuously from the time of
its execution.
(l) Non-disclosure. ABS hereby covenants and agrees with the
Obligors not to disclose to any Person (except the Trustee, any rating agency
rating obligations issued by the Obligors and investors or potential investors
in such obligations) any of the information provided to the Servicer to be
included in the Electronic Ledger or any List of Contracts delivered on any
Purchase Dates pursuant to Section 5.01(c) hereof or Section 2(c) of the Sale
Agreement Supplement, except such disclosures as are required upon the
appointment of a successor Servicer under the Master 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 or their
duly appointed agent or the Trustee to protect and maintain the security and
confidentiality of any of the information, and in connection therewith, shall
allow the Obligors or their duly appointed agent and 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 and the Trustee five days'
prior written notice of any disclosure pursuant to this Section 4.01(l).
(m) ABS understands that the Obligors intend to pledge the
Conveyed Assets and the Obligors' rights (but not their obligations) under this
Master Sale Agreement to the Trustee pursuant to the Master Agreement and hereby
consents to the assignment of all or any portion of this Master Sale Agreement
and the Sale Agreement Supplements 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 Agreement.
10
<PAGE> 14
SECTION 4.02 Covenants of Each Obligor. Each Obligor for
itself and not for any other Obligor, each hereby covenants and agrees with ABS
as follows:
(a) Non-disclosure; Inspection. Each Obligor hereby covenants
and agrees with ABS not to disclose to any Person (except the Servicer, the
Trustee, any rating agency rating obligations issued by the Obligors and
investors or potential investors in such obligations) any of the information
contained in the Electronic Ledger, or any List of Contracts delivered on any
Purchase Date to the Obligors pursuant to Section 5.01(c) hereof and Section
2(c) of the Sale Agreement Supplement, except such disclosures as are required
upon appointment of a successor Servicer under the Master Agreement or by law
and except that the Obligor 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 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. Each
Obligor 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. The Obligors 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 repurchased by ABS pursuant to
Section 3.03, the Obligors shall cause the Trustee, in accordance with Section
6.11 of the Master Agreement, to assign, on behalf of the Obligors, without
recourse, representation, or warranty, to ABS all of the 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 Obligor with respect thereto.
If 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
holder entitled to enforce the Contract, the Obligors shall, at the Obligor's
expense, take such steps as the Obligors deem necessary to enforce the Contract,
including bringing suit in such Obligors' names.
(c) User's Quiet Enjoyment. Each Obligor 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 covenants and agrees that, so long as a User shall not be in default of
any of the provisions of the applicable Contract, no Obligor nor any assignee of
any of the Obligor will disturb the Obligor's quiet and peaceful possession of
the related Equipment and the User's unrestricted use thereof for its intended
purpose.
11
<PAGE> 15
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01 Conditions to the Obligors' Obligations. The
obligations of an Obligor to enter into this Master Sale Agreement and each a
Sale Agreement Supplement and purchase or otherwise acquire Conveyed Assets on
the related Purchase Date shall be subject to the satisfaction of the following
conditions:
(a) All representations and warranties of ABS contained in
this Master Sale Agreement with respect to the Conveyed Assets conveyed on the
Purchase Date shall be true and correct on the related Purchase 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 Master
Sale Agreement;
(d) ABS shall have recorded and filed, at its expense, any
financing statement with respect to such Conveyed Assets pursuant to this Master
Sale Agreement meeting the requirements of applicable state law in such manner
in such jurisdictions as are necessary to perfect the transfer of such Conveyed
Assets from ABS to such Obligor, and shall deliver a copy of such financing
statements or other evidence of such filings to the Obligors and the Trustee;
and
(e) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Master Sale Agreement
shall be satisfactory in form and substance to the Obligors and the Obligors
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 may reasonably have requested.
SECTION 5.02 Conditions to ABS's Obligations. The obligations
of ABS to enter into this Master Sale Agreement any Sale Agreement Supplement
and to sell, transfer, contribute and assign any Conveyed Assets on the related
Purchase Date shall be subject to the satisfaction of the following conditions:
(a) ABS and the Obligors shall have agreed on the value of the
Conveyed Assets. The combination of the purchase price paid and the value of the
Conveyed Assets contributed by ABS to the capital of one or more Obligors shall
not be less than the fair market value of the Conveyed Assets.
(b) All representations and warranties of the Obligors
contained in this Master Sale Agreement and in the related Sale Agreement
Supplement shall be true and correct with the same effect as though such
representations and warranties had been made on such date; and
12
<PAGE> 16
(c) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Master Sale Agreement
shall be satisfactory in form and substance to ABS, and ABS shall have received
from the Obligors 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 and each Obligor created by this Master Sale Agreement
and any Sale Agreement Supplement shall terminate upon the earliest 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 or sale of the
Equipment; (ii) the distribution to all Obligors of all amounts required to be
paid to them pursuant to this Master Sale Agreement; and (iii) the termination
of the Master Sale Agreement.
SECTION 6.02 Effect of Termination. No termination nor
rejection or failure to assume the executory obligations of this Master Sale
Agreement in the bankruptcy, insolvency conservatorship or receivership of ABS,
or any Obligor shall be deemed to impair or affect the obligations pertaining to
any executed sale or executed obligations, including, without limitation,
pretermination breaches of representations and warranties by ABS or any Obligor.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.01 Amendment. This Master Sale Agreement may be
amended from time to time by ABS and each of the Obligors, only with the prior
written consent of the Trustee.
SECTION 7.02 Governing Law. This Master Sale 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
Master Sale Agreement shall be determined in accordance with such laws.
SECTION 7.03 Notices. All demands, notices, and communications
under this Master Sale 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 case of ABS, at the
following address: Advanta Business Services Corp., 1020 Laurel Oak Road,
Voorhees, New Jersey, 08043, attention: Treasury Department, (b) in the case of
Advanta Leasing Receivables Corp. VIII, to such Obligor at the
13
<PAGE> 17
following address: Advanta Leasing Receivables Corp. VIII, 639 Isbell Road,
Suite 390-A, Reno, Nevada 89509, and (c) in the case of Advanta Leasing
Receivables Corp. IX, to such Obligor at the following address: Advanta Leasing
Receivables Corp. IX, to such Obligor, at the following address: 639 Isbell
Road, Suite 390-B, Reno, Nevada 89509. Any 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 Master Sale 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 Master Sale 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 Master Sale Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Master Sale Agreement.
SECTION 7.05 Assignment. Notwithstanding, anything to the
contrary contained in this Master Sale Agreement, this Master Sale Agreement may
not be assigned by ABS, except (i) as provided in Section 4.01(a) and (ii) as
collateral security, granted to the Trustee, without the prior written consent
of each of the Obligors, and, except as provided in Section 4.03, this Master
Sale Agreement may not be assigned by any of the Obligors without the prior
written consent of ABS.
SECTION 7.06 Further Assurances. Each of ABS and each Obligor
agrees to do such further acts and to execute and deliver to the Trustee such
additional assigns, agreements, powers and instruments as are required by the
Trustee to carry into effect the purposes of this Master Sale 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 either 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 Master Sale 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. This Master Sale 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.
SECTION 7.10 Merger and Integration. Except as specifically
stated otherwise herein, this Master Sale Agreement, the Sale Agreement
Supplements, the Master Agreement and all related Series Related Documents set
forth the entire understanding of the parties relating to the
14
<PAGE> 18
subject matter hereof, and all prior understandings, written or oral, are
superseded by, this Master Sale Agreement, the Sale Agreement Supplements, the
Master Agreement and the Series Related Documents. This Master Sale 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 Exhibit. The exhibit attached hereto and referred
to herein shall constitute a part of this Master Sale Agreement and is
incorporated into this Master Sale Agreement for all purposes.
SECTION 7.13 No Bankruptcy Petition Against any Obligor. Each
of ABS and each Obligor 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 any
Obligor, or join any other Person in instituting against 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 Master
Sale Agreement.
15
<PAGE> 19
IN WITNESS WHEREOF, ABS and the Obligors have caused this
Master Sale and Contribution Agreement to be duly executed by their respective
officers as of the day and year first above written.
ADVANTA BUSINESS SERVICES CORP.,
in its individual capacity and as
Originator and Servicer
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
ADVANTA LEASING RECEIVABLES CORP. VIII,
as an Obligor
By:
------------------------------------
ADVANTA LEASING RECEIVABLES CORP. IX,
as an Obligor
By:
------------------------------------
<PAGE> 20
EXHIBIT A
FORM OF SALE AND CONTRIBUTION AGREEMENT SUPPLEMENT
THIS SALE AND CONTRIBUTION AGREEMENT SUPPLEMENT (this "Sale Agreement
Supplement"), dated _________________ (the "Purchase Date") is entered into
among ADVANTA BUSINESS SERVICES CORP., ("ABS," in its capacity as "Originator"
and "Servicer"), a Delaware corporation located at 1020 Laurel Oak Road,
Voorhees, New Jersey 08043, ADVANTA LEASING RECEIVABLES CORP. VIII ("ALRC
VIII"), a Nevada corporation located at 639 Isbell Road, Suite 390-A, Reno,
Nevada 89509 and ADVANTA LEASING RECEIVABLES CORP. IX ("ALRC IX"), a Nevada
corporation located at 639 Isbell Road, Suite 390-B, Reno, Nevada 89509 (each of
ALRC VIII and ALRC IX is an "Obligor" and a purchaser or recipient of a
contribution hereunder).
W I T N E S S E T H:
Reference is hereby made to that certain Master Sale and
Contribution Agreement dated as of ______, 1999 (the "Master Sale Agreement")
among ABS and the Obligors. Pursuant to the Master Sale Agreement ABS agrees to
sell, transfer, assign, set over, contribute, quitclaim and otherwise convey to
the Obligors and the Obligors agree to purchase, acquire or accept, from time to
time, Conveyed Assets (as defined below) and the Obligors agree to Pledge such
Conveyed Assets to the Trustee. The Master Sale Agreement provides that each
sale of Conveyed Assets be evidenced by the execution of delivery of a Sale and
Contribution Agreement Supplement (each a "Sale Agreement Supplement") such as
this Supplement.
The Conveyed Assets sold or contributed by ABS pursuant to
this Supplement consist of (i) the Contracts listed on List of Contracts
delivered with this Sale Agreement Supplement, all amounts due or to become due
thereunder (ii) all Collections after the related Cut-Off Date, (iii) Related
Security associated therewith, (iv) all balances, instruments, monies and other
securities and investments received or held from time to time by the Servicer
and representing Collections received after the related Cut-Off Date; (v) the
right, title and interest of ABS in the Equipment associated with such
Contracts, and (vi) all proceeds of the foregoing, but excluding any Insurance
Premiums, taxes, late charge fees and Initial Unpaid Amounts.
The Cut-Off Date with respect to the Contracts is the close of
business on ___________. The Purchase 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:
<PAGE> 21
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 Agreement or the Master
Sale Agreement.
Section 2. Conveyance. (a) (i) ABS hereby sells, transfers,
assigns, sets over contributes, quitclaims and otherwise conveys to ALRC VIII
all of ABS's right, title and interest in, to, and under all Conveyed Assets
consisting of ABS's Residual Interest in the Equipment, whether now existing or
hereafter arising. Each such transfer of the Residual Interest shall be without
representation, warranty or recourse except as set forth in Section 3 hereof.
(ii) ABS hereby sells, transfers, assigns, sets over
contributes, quitclaims and otherwise conveys to ALRC IX all of ABS's right,
title and interest in, to, and under all Conveyed Assets other than the Residual
Interest, whether now existing or hereafter arising. Each such transfer of
Conveyed Assets by ABS shall be without representation, warranty or recourse
except as set forth in Section 3 hereof.
(iii) Except to the extent such Conveyed Assets are
transferred as a contribution to the capital of the Obligor, the Obligors, in
consideration of the transfer of the Conveyed Assets to the Obligors, shall pay
to ABS on this Purchase Date the purchase price as specified below in subsection
(d) of this Section 2.
(b) In connection with such transfer, ABS has heretofore
recorded and filed, at its own expense, financing statements (and will hereafter
file 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 conveyance of the Conveyed Assets from
ABS to the Obligors and the pledge of the Conveyed Assets from the Obligors to
the Trustee, and delivered a copy of such financing statements or other evidence
of such filings to the Obligors; provided, however, that except as required by
the Master Agreement no financing statements have been or will be recorded or
filed with respect to the sale or transfer of the Equipment owned by ABS unless
(i) ABS as Servicer shall determine to file UCC-3 or similar statements with
respect to such Equipment 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 Obligors or to the Trustee but instead
will be held by the Servicer (or its designated custodian) on behalf of the
Trustee and the Contract Files will be marked as required by the Master
Agreement.
(c) In connection with such transfer, ABS shall, at its
expense, (i) cause its books and records to be marked to show that the Conveyed
Assets have been transferred to the Obligors in accordance with the Master Sale
Agreement and this Sale Agreement Supplement and the Conveyed Assets have been
pledged to the Trustee in accordance with the Master Agreement on or prior to
the Purchase Date and (ii) deliver to the Obligors the related List of
Contracts. Each Obligor agrees (i) to mark its books and records to show the
acquisition of the Conveyed Assets and that such Conveyed Assets have been
pledged to the Trustee in accordance with the Master Agreement and this Sale
Agreement Supplement and (ii) to deliver to the Trustee the related List of
Contracts on the Purchase Date.
A-2
<PAGE> 22
(d) (i) With respect to the Conveyed Assets consisting of the
Residual Interest contributed to ALRC VIII under Section 2(a)(i) of this Sale
Agreement Supplement, ABS and ALRC VIII agree that ALRC VIII shall pay to ABS
the sum of $___________and the balance of the value of such Residual Interest
conveyed hereunder shall constitute a contribution to the capital of ALRC VIII
and shall be duly recorded in the books of ALRC VIII. The amount, if any, to be
paid by ALRC VIII to ABS as set forth in this subsection 2(d)(i) shall be paid
to ABS on the date hereof in immediately available funds.
(ii) With respect to the Conveyed Assets sold and contributed
to ALRC IX under Section 2(a)(ii) of this Sale Agreement Supplement, ABS and
ALRC IX agree that ALRC IX shall pay to ABS the sum of $___________ and the
balance of the value of the Conveyed Assets conveyed to ALRC IX hereunder shall
constitute a contribution to the capital of ALRC IX and shall be duly recorded
in the books of ALRC VIII. The amount, if any, to be paid by ALRC IX to ABS as
set forth in this subsection 2(d)(ii) shall be paid to ABS on the date hereof in
immediately available funds.
Section 3. Representations and Warranties. (a) ABS hereby (i)
confirms the accuracy, as of the Purchase Date, of the representations and
warranties of ABS set forth in Section 3.01 of the Master Sale Agreement with
respect to the Contracts conveyed on the Purchase Date and (ii) represents and
warrants that, as of the Purchase Date, each Contract is an "Eligible
Contract" as such term is defined in the Series ____ Supplement dated as of
____, ___. Such representations and warranties are made for the benefit of the
Obligors and the Trustee, and the Obligor are relying on such representations
and warranties in purchasing the Conveyed Assets. Such representations and
warranties speak as of the Purchase Date, unless otherwise indicated, but
shall survive the transfer of the respective Conveyed Assets to the Obligor
and its successors and assigns and the Pledge by the Obligor to the Trustee.
(b) Each Obligor hereby confirms the accuracy as of the
Purchase Date of the representations and warranties set forth in Section 3.02
of the Master Sale Agreement.
Section 4. Amendment. This Sale Agreement Supplement may be
amended from time to time by ABS and the Obligors only with the prior written
consent of the Trustee.
Section 5. Governing Law. This Sale Agreement Supplement 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 Sale
Agreement Supplement shall be determined in accordance with such laws.
Section 6. Counterparts. This Sale Agreement Supplement may be
executed in two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which shall
constitute one and the same instrument.
A-3
<PAGE> 23
Section 7. Binding Effect: Third-Party Beneficiaries. This
Sale Agreement Supplement 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-4
<PAGE> 24
IN WITNESS WHEREOF, ABS and the Obligors have caused this Sale
and Contribution Agreement Supplement to be duly executed by their respective
officers as of the day and year first above written.
ADVANTA BUSINESS SERVICES CORP.,
in its individual capacity and as
Seller and Servicer
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
ADVANTA LEASING RECEIVABLES VIII,
as an Obligor
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
ADVANTA LEASING RECEIVABLES IX,
as an Obligor
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE> 1
EXHIBIT 4.4
OH&S DRAFT
5/19/99
SALE AND CONTRIBUTION AGREEMENT SUPPLEMENT
THIS SALE AND CONTRIBUTION AGREEMENT SUPPLEMENT (this "Sale Agreement
Supplement"), dated _____ __, 1999 (the "Purchase Date") is entered into among
ADVANTA BUSINESS SERVICES CORP., ("ABS," in its capacity as "Originator" and
"Servicer"), a Delaware corporation located at 1020 Laurel Oak Road, Voorhees,
New Jersey 08043, ADVANTA LEASING RECEIVABLES CORP. VIII ("ALRC VIII"), a Nevada
corporation located at 639 Isbell Road, Suite 390-A, Reno, Nevada 89509 and
ADVANTA LEASING RECEIVABLES CORP. IX ("ALRC IX"), a Nevada corporation located
at 639 Isbell Road, Suite 390-B, Reno, Nevada 89509 (each of ALRC VIII and ALRC
IX is an "Obligor" and a purchaser or recipient of a contribution hereunder).
W I T N E S S E T H:
Reference is hereby made to that certain Master Sale and
Contribution Agreement dated as of ____ __, 1999 (the "Master Sale Agreement")
between ABS and the Obligors. Pursuant to the Master Sale Agreement ABS agrees
to sell, transfer, assign, set over, contribute, quitclaim and otherwise convey
to the Obligors and the Obligors agree to purchase, acquire or accept, from time
to time, Conveyed Assets (as defined below) and the Obligors agree to Pledge
such Conveyed Assets to the Trustee. The Master Sale Agreement provides that
each sale of Conveyed Assets be evidenced by the execution of delivery of a Sale
and Contribution Agreement Supplement (each a "Sale Agreement Supplement") such
as this Supplement.
The Conveyed Assets sold or contributed by ABS pursuant to
this Supplement consist of (i) the Contracts listed on List of Contracts
delivered with this Sale Agreement Supplement, all amounts due or to become due
thereunder (ii) all Collections after the related Cut-Off Date, (iii) Related
Security associated therewith, (iv) all balances, instruments, monies and other
securities and investments received or held from time to time by the Servicer
and representing Collections received after the related Cut-Off Date; (v) the
right, title and interest of ABS in the Equipment associated with such
Contracts, and (vi) all proceeds of the foregoing, but excluding any Insurance
Premiums, taxes, late charge fees and Initial Unpaid Amounts.
The Cut-Off Date with respect to the Contracts is the close
of business on _____ __, 1999. The Purchase Date is _______ __, 1999.
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:
<PAGE> 2
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 Agreement or the Master
Sale Agreement.
Section 2. Conveyance. (a) (i) ABS hereby sells, transfers,
assigns, sets over contributes, quitclaims and otherwise conveys to ALRC VIII
all of ABS's right, title and interest in, to, and under all Conveyed Assets
consisting of ABS's Residual Interest in the Equipment, whether now existing or
hereafter arising. Each such transfer of the Residual Interest shall be without
representation, warranty or recourse except as set forth in Section 3 hereof.
(ii) ABS hereby sells, transfers, assigns, sets over
contributes, quitclaims and otherwise conveys to ALRC IX all of ABS's right,
title and interest in, to, and under all Conveyed Assets other than the Residual
Interest, whether now existing or hereafter arising. Each such transfer of
Conveyed Assets by ABS shall be without representation, warranty or recourse
except as set forth in Section 3 hereof.
(iii) Except to the extent such Conveyed Assets are
transferred as a contribution to the capital of the Obligor, the Obligors, in
consideration of the transfer of the Conveyed Assets to the Obligors, shall pay
to ABS on this Purchase Date the purchase price as specified below in subsection
(d) of this Section 2.
(b) In connection with such transfer, ABS has heretofore
recorded and filed, at its own expense, financing statements (and will hereafter
file 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 conveyance of the Conveyed Assets from
ABS to the Obligors and the pledge of the Conveyed Assets from the Obligors to
the Trustee, and delivered a copy of such financing statements or other evidence
of such filings to the Obligors; provided, however, that except as required by
the Master Agreement no financing statements have been or will be recorded or
filed with respect to the sale or transfer of the Equipment owned by ABS unless
(i) ABS as Servicer shall determine to file UCC-3 or similar statements with
respect to such Equipment 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 Obligors or to the Trustee but instead will
be held by the Servicer (or its designated custodian) on behalf of the Trustee
and the Contract Files will be marked as required by the Master Agreement.
(c) In connection with such transfer, ABS shall, at its
expense, (i) cause its books and records to be marked to show that the Conveyed
Assets have been transferred to the Obligors in accordance with the Master Sale
Agreement and this Sale Agreement Supplement and the Conveyed Assets have been
pledged to the Trustee in accordance with the Master Agreement on or prior to
the Purchase Date and (ii) deliver to the Obligors the related List of
Contracts. Each Obligor agrees (i) to mark its books and records to show the
acquisition of the Conveyed Assets and that such Conveyed Assets have been
pledged to the Trustee in accordance with the Master Agreement and this Sale
Agreement Supplement and (ii) to deliver to the Trustee the related List of
Contracts on the Purchase Date.
2
<PAGE> 3
(d) (i) With respect to the Conveyed Assets consisting of the
Residual Interest contributed to ALRC VIII under Section 2(a)(i) of this Sale
Agreement Supplement, ABS and ALRC VIII agree that ALRC VIII shall pay to ABS
the sum of $___________and the balance of the value of such Residual Interest
conveyed hereunder shall constitute a contribution to the capital of ALRC VIII
and shall be duly recorded in the books of ALRC VIII. The amount, if any, to be
paid by ALRC VIII to ABS as set forth in this subsection 2(d)(i) shall be paid
to ABS on the date hereof in immediately available funds.
(ii) With respect to the Conveyed Assets sold and contributed
to ALRC IX under Section 2(a)(ii) of this Sale Agreement Supplement, ABS and
ALRC IX agree that ALRC IX shall pay to ABS the sum of $___________ and the
balance of the value of the Conveyed Assets conveyed to ALRC IX hereunder shall
constitute a contribution to the capital of ALRC IX and shall be duly recorded
in the books of ALRC VIII. The amount, if any, to be paid by ALRC IX to ABS as
set forth in this subsection 2(d)(ii) shall be paid to ABS on the date hereof in
immediately available funds.
Section 3. Representations and Warranties. (a) ABS hereby (i)
confirms the accuracy, as of the Purchase Date, of the representations and
warranties of ABS set forth in Section 3.01 of the Master Sale Agreement with
respect to the Contracts conveyed on the Purchase Date and (ii) represents and
warrants that, as of the Purchase Date, each Contract is an "Eligible
Contract" as such term is defined in the Series 1999-1 Supplement dated as of
____ __, 1999. Such representations and warranties are made for the benefit of
the Obligors and the Trustee, and the Obligor are relying on such
representations and warranties in purchasing the Conveyed Assets. Such
representations and warranties speak as of the Purchase Date, unless otherwise
indicated, but shall survive the transfer of the respective Conveyed Assets to
the Obligor and its successors and assigns and the Pledge by the Obligor to
the Trustee.
(b) Each Obligor hereby confirms the accuracy as of the
Purchase Date of the representations and warranties set forth in Section 3.02
of the Master Sale Agreement.
Section 4. Amendment. This Sale Agreement Supplement may be
amended from time to time by ABS and the Obligors only with the prior written
consent of the Trustee.
Section 5. Governing Law. This Sale Agreement Supplement 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 Sale
Agreement Supplement shall be determined in accordance with such laws.
Section 6. Counterparts. This Sale Agreement Supplement may
be executed in two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which shall
constitute one and the same instrument.
3
<PAGE> 4
Section 7. Binding Effect: Third-Party Beneficiaries. This
Sale Agreement Supplement 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.
4
<PAGE> 5
IN WITNESS WHEREOF, ABS and the Obligors have caused this Sale
and Contribution Agreement Supplement to be duly executed by their respective
officers as of the day and year first above written.
ADVANTA BUSINESS SERVICES CORP.,
in its individual capacity and as
Seller and Servicer
By:
----------------------------------
Name:
----------------------------
Title:
---------------------------
By:
----------------------------------
Name:
----------------------------
Title:
---------------------------
ADVANTA LEASING RECEIVABLES VIII,
as an Obligor
By:
----------------------------------
Name:
----------------------------
Title:
---------------------------
ADVANTA LEASING RECEIVABLES IX,
as an Obligor
By:
----------------------------------
Name:
----------------------------
Title:
---------------------------
<PAGE> 1
EXHIBIT 5.1
[Letterhead of Orrick, Herrington & Sutcliffe LLP]
June 1, 1999
Advanta Business Services Corp.
1020 Laurel Oak Road
Voorhees, New Jersey 08043
Re: Advanta Leasing Receivables Corp. VIII and Advanta
Leasing Receivables Corp. IX Equipment
Receivables Asset-Backed Notes, Series 1999-1
Class A, Class B and Class C
---------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for Advanta Business Services Corp.,
a Delaware corporation, ("ABS"), in connection with the Registration Statement
on Form S-1 (the "Registration Statement") filed on June 1, 1999 with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"), for the registration under the Act of Equipment Receivables
Asset-Backed Notes, Series 1999-1 Class A, Class B and Class C (collectively,
the "Notes"). Such Notes will be issued pursuant to the Master Facility
Agreement (the "Master Facility Agreement"), among ABS, as Servicer, Advanta
Leasing Receivables Corp. VIII, as an Obligor, Advanta Leasing Receivables Corp.
IX, as an Obligor (collectively, the "Obligors"), and Bankers Trust Company, as
Trustee, and the Series 1999-1 Supplement thereto (the "Series 1999-1
Supplement" and, together with the Master Facility Agreement, the "Agreement").
We have examined such instruments, documents and records as we
deemed relevant and necessary as a basis of our opinion hereinafter expressed.
In such examination, we have assumed the following: (a) the authenticity of
original documents and the genuineness of all signatures; (b) the conformity to
the originals of all documents submitted to us as copies; and (c) the truth,
accuracy and completeness of the information, representations and warranties
contained in the records, documents, instruments and certificates we have
reviewed.
Based on such examination, we are of the opinion that when the
Notes have been duly executed, authenticated and delivered in accordance with
the Agreement, and sold in the manner described in the Registration Statement,
any amendment thereto and the prospectus
<PAGE> 2
Advanta Business Services Corp.
June 1, 1999
Page 2
included therein, the Notes will be legally issued, fully paid, non-assessable
and binding obligations of the Obligors and the holders of the Notes will be
entitled to the benefits of the Agreement, except as enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, arrangement,
fraudulent conveyance, moratorium, or other laws relating to or affecting the
rights of creditors generally and general principles of equity, including
without limitation concepts of materiality, reasonableness, good faith and fair
dealing, and the possible unavailability of specific performance or injunctive
relief, regardless of whether such enforceability is considered in a proceeding
in equity or at law.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name wherever appearing in
the Registration Statement and the prospectus contained therein. In giving such
consent, we do not admit that we are "experts" within the meaning of the term as
used in the Act or the rules and regulations of the Securities and Exchange
Commission issued thereunder, with respect to any part of the Registration
Statement, including this opinion as an exhibit or otherwise.
Very truly yours,
/s/ Orrick, Herrington & Sutcliffe LLP
ORRICK, HERRINGTON & SUTCLIFFE LLP
<PAGE> 1
EXHIBIT 8.1
[Letterhead of Orrick, Herrington & Sutcliffe LLP]
June 1, 1999
Advanta Business Services Corp.
1020 Laurel Oak Road
Voorhees, New Jersey 08043
Re: Advanta Leasing Receivables Corp. VIII and Advanta
Leasing Receivables Corp. IX Equipment
Receivables Asset-Backed Notes, Series 1999-1
Class A, Class B and Class C
---------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for Advanta Business Services Corp.,
a Delaware corporation ("ABS"), in connection with the preparation of the
Registration Statement on Form S-1 (the "Registration Statement"), filed on June
1, 1999 with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Act"), for the registration under the Act of Equipment
Receivables Asset-Backed Notes, Series 1999-1, Class A, Class B and Class C
(collectively, the "Notes"). Such Notes will be issued pursuant to the Master
Facility Agreement (the "Master Facility Agreement"), among ABS, as Servicer,
Advanta Leasing Receivables Corp. VIII, as an Obligor, Advanta Leasing
Receivables Corp. IX, as an Obligor, and Bankers Trust Company, as Trustee, and
the Series 1999-1 Supplement thereto.
We hereby confirm that the statements set forth in the
prospectus relating to the Notes (the "Prospectus") forming a part of the
Registration Statement under the headings "Prospectus Summary -- Federal Income
Tax Status" and "Federal Income Tax Consequences," which statements have been
prepared by us, to the extent that they constitute matters of law or legal
conclusions with respect thereto, are correct in all material respects, and we
hereby adopt and confirm the opinions set forth therein.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement. In giving such consent, we do not admit that we
are "experts" within the meaning of
<PAGE> 2
Advanta Business Services Corp.
June 1, 1999
Page 2
the term used in the Act or the rules and regulations of the Securities and
Exchange Commission issued thereunder, with respect to any part of the
Registration Statement, including this opinion as an exhibit or otherwise.
Very truly yours,
/s/ Orrick, Herrington & Sutcliffe LLP
ORRICK, HERRINGTON & SUTCLIFFE LLP
<PAGE> 1
EXHIBIT 23.3
ARTHUR ANDERSEN LLP
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our reports
and to all references to our Firm included in or made a part of this
registration statement.
/s/ Arthur Andersen LLP
Philadelphia, Pennsylvania
May 26, 1999
<PAGE> 1
EXHIBIT 25.1
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2) ___________
------------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
</TABLE>
BANKERS TRUST COMPANY
LEGAL DEPARTMENT
130 LIBERTY STREET, 31ST FLOOR
NEW YORK, NEW YORK 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
---------------------------------
ADVANTA BUSINESS SERVICES CORP.
(Sponsor of the Securities described herein)
ADVANTA LEASING RECEIVABLES CORP. VIII
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
NEVADA 52-217-0910
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
</TABLE>
639 Isbell Road, Suite 390-A
Reno, NV 89509
(775) 823-3080
(Address, including zip code of principal executive offices of registrant)
ADVANTA LEASING RECEIVABLES CORP. IX
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
NEVADA 52-217-0234
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
</TABLE>
639 Isbell Road, Suite 390-B
Reno, NV 89509
(775) 823-3016
(Address, including zip code of principal executive offices of registrant)
$1,000,000 EQUIPMENT RECEIVABLES ASSET-BACKED NOTES,
SERIES 1999-1 CLASS A, CLASS B AND CLASS C
(Title of the indenture securities)
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising authority
to which it is subject.
<TABLE>
<CAPTION>
NAME ADDRESS
---- -------
<S> <C>
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
</TABLE>
(b) Whether it is authorized to exercise corporate trust
powers. Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the Trustee, describe each such
affiliation.
None.
ITEM 3.-15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
EXHIBIT 1 - Restated Organization Certificate of Bankers Trust
Company dated August 7, 1990, Certificate of
Amendment of the Organization Certificate of
Bankers Trust Company dated June 21, 1995 -
Incorporated herein by reference to Exhibit 1
filed with Form T-1 Statement, Registration No.
33-65171, Certificate of Amendment of the
Organization Certificate of Bankers Trust Company
dated March 20, 1996, incorporate by referenced to
Exhibit 1 filed with Form T-1 Statement,
Registration No. 333-25843 and Certificate of
Amendment of the Organization Certificate of
Bankers Trust Company dated June 19, 1997, copy
attached.
EXHIBIT 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2
filed with Form T-1 Statement, Registration No.
333-12199.
EXHIBIT 3 - Authorization of the Trustee to exercise corporate
trust powers - Incorporated herein by reference to
Exhibit 2 filed with Form T-1 Statement,
Registration No. 333-12199.
EXHIBIT 4 - Existing By-Laws of Bankers Trust Company, as
amended on November 18, 1997. Copy attached.
EXHIBIT 5 - Not applicable.
EXHIBIT 6 - Consent of Bankers Trust Company required by
Section 321(b) of the Act. - Incorporated herein
by reference to Exhibit 4 filed with Form T-1
Statement, Registration No. 22-18864.
EXHIBIT 7 - The latest report of condition of Bankers Trust
Company dated as of September 30, 1998. Copy
attached.
EXHIBIT 8 - Not Applicable.
EXHIBIT 9 - Not Applicable.
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in The City of New York, and State of New York,
on the 28th day of May, 1999.
BANKERS TRUST COMPANY
By: /s/ Peter Becker
---------------------------
Assistant Vice President
<PAGE> 4
STATE OF NEW YORK,
BANKING DEPARTMENT
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION ERTIFICATE OF BANKERS TRUST COMPANY UNDER SECTION
8005 OF THE BANKING LAW," dated June 19, 1997, providing for an increase in
authorized capital stock from $1,601,666,670 consisting of 100,166,667 shares
with a par value of $10 each designated as Common Stock and 600 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$2,001,666,670 consisting of 100,166,667 shares with a par value of $10 each
designated as Common Stock and 1,000 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
WITNESS, my hand and official seal of the Banking Department at the City of New
York, this 27TH day of June in the Year of our Lord
one thousand nine hundred and NINETY-SEVEN.
Manuel Kursky
------------------------------
Deputy Superintendent of Banks
<PAGE> 5
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary of Bankers Trust Company, do hereby
certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of march, 1903.
3. The organization certificate as heretofore amended is hereby
amended to increase the aggregate number of shares which the corporation shall
have authority to issue and to increase the amount of its authorized capital
stock in conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock
outstanding, which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Six Hundred and One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,601,666,670), divided into
One Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred
Sixty-Seven (100,166,667) shares with a par value of $10 each
designated as Common Stock and 600 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Two Billion One Million, Six Hundred Sixty-Six Thousand, Six
Hundred Seventy Dollars ($2,001,666,670), divided into One Hundred
Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(100,166,667) shares with a par value of $10 each designated as Common
Stock and 1000 shares with a par value of One Million Dollars
($1,000,000) each designated as Series Preferred Stock."
<PAGE> 6
5. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
19th day of June, 1997.
James T. Byrne, Jr.
-----------------------------
James T. Byrne, Jr.
Managing Director
Lea Lahtinen
-----------------------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows
the contents thereof, and that the statements herein contained are true.
Lea Lahtinen
---------------------------
Lea Lahtinen
Sworn to before me this 19th day
of June, 1997.
Sandra L. West
- ------------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September 19, 2003
<PAGE> 7
BY-LAWS
NOVEMBER 18, 1997
BANKERS TRUST COMPANY
NEW YORK
<PAGE> 8
BY-LAWS
OF
BANKERS TRUST COMPANY
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of this Company shall be held
at the office of the Company in the Borough of Manhattan, City of New York, on
the third Tuesday in January of each year, for the election of directors and
such other business as may properly come before said meeting.
SECTION 2. Special meetings of stockholders other than those regulated by
statute may be called at any time by a majority of the directors. It shall be
the duty of the Chairman of the Board, the Chief Executive Officer or the
President to call such meetings whenever requested in writing to do so by
stockholders owning a majority of the capital stock.
SECTION 3. At all meetings of stockholders, there shall be present, either in
person or by proxy, stockholders owning a majority of the capital stock of the
Company, in order to constitute a quorum, except at special elections of
directors, as provided by law, but less than a quorum shall have power to
adjourn any meeting.
SECTION 4. The Chairman of the Board or, in his absence, the Chief Executive
Officer or, in his absence, the President or, in their absence, the senior
officer present, shall preside at meetings of the stockholders and shall direct
the proceedings and the order of business. The Secretary shall act as secretary
of such meetings and record the proceedings.
ARTICLE II
DIRECTORS
SECTION 1. The affairs of the Company shall be managed and its corporate powers
exercised by a Board of Directors consisting of such number of directors, but
not less than ten nor more than twenty-five, as may from time to time be fixed
by resolution adopted by a majority of the directors then in office, or by the
stockholders. In the event of any increase in the number of directors,
additional directors may be elected within the limitations so fixed, either by
the stockholders or within the limitations imposed by law, by a majority of
directors then in office. One-third of the number of directors, as fixed from
time to time, shall constitute a quorum. Any one or more members of the Board
of Directors or any Committee thereof may participate in a meeting of the Board
of Directors or Committee thereof by means of a conference telephone or similar
communications equipment which allows all persons participating in the meeting
to hear each other at the same time. Participation by such means shall
constitute presence in person at such a meeting.
<PAGE> 9
All directors hereafter elected shall hold office until the next annual meeting
of the stockholders and until their successors are elected and have qualified.
No person who shall have attained age 72 shall be eligible to be elected or
re-elected a director. Such director may, however, remain a director of the
Company until the next annual meeting of the stockholders of Bankers Trust New
York Corporation (the Company's parent) so that such director's retirement will
coincide with the retirement date from Bankers Trust New York Corporation.
No Officer-Director who shall have attained age 65, or earlier relinquishes his
responsibilities and title, shall be eligible to serve as a director.
SECTION 2. Vacancies not exceeding one-third of the whole number of the Board of
Directors may be filled by the affirmative vote of a majority of the directors
then in office, and the directors so elected shall hold office for the balance
of the unexpired term.
SECTION 3. The Chairman of the Board shall preside at meetings of the Board of
Directors. In his absence, the Chief Executive Officer or, in his absence, such
other director as the Board of Directors from time to time may designate shall
preside at such meetings.
SECTION 4. The Board of Directors may adopt such Rules and Regulations for the
conduct of its meetings and the management of the affairs of the Company as it
may deem proper, not inconsistent with the laws of the State of New York, or
these By-Laws, and all officers and employees shall strictly adhere to, and be
bound by, such Rules and Regulations.
SECTION 5. Regular meetings of the Board of Directors shall be held from time to
time on the third Tuesday of the month. If the day appointed for holding such
regular meetings shall be a legal holiday, the regular meeting to be held on
such day shall be held on the next business day thereafter. Special meetings of
the Board of Directors may be called upon at least two day's notice whenever it
may be deemed proper by the Chairman of the Board or, the Chief Executive
Officer or, in their absence, by such other director as the Board of Directors
may have designated pursuant to Section 3 of this Article, and shall be called
upon like notice whenever any three of the directors so request in writing.
SECTION 6. The compensation of directors as such or as members of committees
shall be fixed from time to time by resolution of the Board of Directors.
<PAGE> 10
ARTICLE III
COMMITTEES
SECTION 1. There shall be an Executive Committee of the Board consisting of not
less than five directors who shall be appointed annually by the Board of
Directors. The Chairman of the Board shall preside at meetings of the Executive
Committee. In his absence, the Chief Executive Officer or, in his absence, such
other member of the Committee as the Committee from time to time may designate
shall preside at such meetings.
The Executive Committee shall possess and exercise to the extent permitted by
law all of the powers of the Board of Directors, except when the latter is in
session, and shall keep minutes of its proceedings, which shall be presented to
the Board of Directors at its next subsequent meeting. All acts done and powers
and authority conferred by the Executive Committee from time to time shall be
and be deemed to be, and may be certified as being, the act and under the
authority of the Board of Directors.
A majority of the Committee shall constitute a quorum, but the Committee may act
only by the concurrent vote of not less than one-third of its members, at least
one of whom must be a director other than an officer. Any one or more directors,
even though not members of the Executive Committee, may attend any meeting of
the Committee, and the member or members of the Committee present, even though
less than a quorum, may designate any one or more of such directors as a
substitute or substitutes for any absent member or members of the Committee, and
each such substitute or substitutes shall be counted for quorum, voting, and all
other purposes as a member or members of the Committee.
SECTION 2. There shall be an Audit Committee appointed annually by resolution
adopted by a majority of the entire Board of Directors which shall consist of
such number of directors, who are not also officers of the Company, as may from
time to time be fixed by resolution adopted by the Board of Directors. The
Chairman shall be designated by the Board of Directors, who shall also from time
to time fix a quorum for meetings of the Committee. Such Committee shall conduct
the annual directors' examinations of the Company as required by the New York
State Banking Law; shall review the reports of all examinations made of the
Company by public authorities and report thereon to the Board of Directors; and
shall report to the Board of Directors such other matters as it deems advisable
with respect to the Company, its various departments and the conduct of its
operations.
In the performance of its duties, the Audit Committee may employ or retain, from
time to time, expert assistants, independent of the officers or personnel of the
Company, to make studies of the Company's assets and liabilities as the
Committee may request and to make an examination of the accounting and auditing
methods of the Company and its system of internal protective controls to the
extent considered necessary or advisable in order to determine that the
operations of the Company, including its fiduciary departments, are being
audited by the General Auditor in such a manner as to provide prudent and
adequate protection. The Committee also may direct the General Auditor to make
such investigation as it deems necessary or advisable with respect to the
Company, its various departments and the conduct of its operations. The
Committee shall hold regular quarterly
<PAGE> 11
meetings and during the intervals thereof shall meet at other times on call of
the Chairman.
SECTION 3. The Board of Directors shall have the power to appoint any other
Committees as may seem necessary, and from time to time to suspend or continue
the powers and duties of such Committees. Each Committee appointed pursuant to
this Article shall serve at the pleasure of the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 1. The Board of Directors shall elect from among their number a Chairman
of the Board and a Chief Executive Officer; and shall also elect a President,
and may also elect a Senior Vice Chairman, one or more Vice Chairmen, one or
more Executive Vice Presidents, one or more Senior Managing Directors, one or
more Managing Directors, one or more Senior Vice Presidents, one or more
Principals, one or more Vice Presidents, one or more General Managers, a
Secretary, a Controller, a Treasurer, a General Counsel, one or more Associate
General Counsels, a General Auditor, a General Credit Auditor, and one or more
Deputy Auditors, who need not be directors. The officers of the corporation may
also include such other officers or assistant officers as shall from time to
time be elected or appointed by the Board. The Chairman of the Board or the
Chief Executive Officer or, in their absence, the President, the Senior Vice
Chairman or any Vice Chairman, may from time to time appoint assistant officers.
All officers elected or appointed by the Board of Directors shall hold their
respective offices during the pleasure of the Board of Directors, and all
assistant officers shall hold office at the pleasure of the Board or the
Chairman of the Board or the Chief Executive Officer or, in their absence, the
President, the Senior Vice Chairman or any Vice Chairman. The Board of Directors
may require any and all officers and employees to give security for the faithful
performance of their duties.
SECTION 2. The Board of Directors shall designate the Chief Executive Officer of
the Company who may also hold the additional title of Chairman of the Board,
President, Senior Vice Chairman or Vice Chairman and such person shall have,
subject to the supervision and direction of the Board of Directors or the
Executive Committee, all of the powers vested in such Chief Executive Officer by
law or by these By-Laws, or which usually attach or pertain to such office. The
other officers shall have, subject to the supervision and direction of the Board
of Directors or the Executive Committee or the Chairman of the Board or, the
Chief Executive Officer, the powers vested by law or by these By-Laws in them as
holders of their respective offices and, in addition, shall perform such other
duties as shall be assigned to them by the Board of Directors or the Executive
Committee or the Chairman of the Board or the Chief Executive Officer.
The General Auditor shall be responsible, through the Audit Committee, to the
Board of Directors for the determination of the program of the internal audit
function and the evaluation of the adequacy of the system of internal controls.
Subject to the Board of Directors, the General Auditor shall have and may
exercise all the powers and shall perform all the duties usual to such office
and shall have such other powers as may be prescribed or assigned to him from
time to time by the Board of Directors or vested in him by law or by these
By-Laws. He shall perform such other duties and shall make such investigations,
examinations and reports as may be prescribed or required by the Audit
<PAGE> 12
Committee. The General Auditor shall have unrestricted access to all records and
premises of the Company and shall delegate such authority to his subordinates.
He shall have the duty to report to the Audit Committee on all matters
concerning the internal audit program and the adequacy of the system of internal
controls of the Company which he deems advisable or which the Audit Committee
may request. Additionally, the General Auditor shall have the duty of reporting
independently of all officers of the Company to the Audit Committee at least
quarterly on any matters concerning the internal audit program and the adequacy
of the system of internal controls of the Company that should be brought to the
attention of the directors except those matters responsibility for which has
been vested in the General Credit Auditor. Should the General Auditor deem any
matter to be of special immediate importance, he shall report thereon forthwith
to the Audit Committee. The General Auditor shall report to the Chief Financial
Officer only for administrative purposes.
The General Credit Auditor shall be responsible to the Chief Executive Officer
and, through the Audit Committee, to the Board of Directors for the systems of
internal credit audit, shall perform such other duties as the Chief Executive
Officer may prescribe, and shall make such examinations and reports as may be
required by the Audit Committee. The General Credit Auditor shall have
unrestricted access to all records and may delegate such authority to
subordinates.
SECTION 3. The compensation of all officers shall be fixed under such plan or
plans of position evaluation and salary administration as shall be approved from
time to time by resolution of the Board of Directors.
SECTION 4. The Board of Directors, the Executive Committee, the Chairman of the
Board, the Chief Executive Officer or any person authorized for this purpose by
the Chief Executive Officer, shall appoint or engage all other employees and
agents and fix their compensation. The employment of all such employees and
agents shall continue during the pleasure of the Board of Directors or the
Executive Committee or the Chairman of the Board or the Chief Executive Officer
or any such authorized person; and the Board of Directors, the Executive
Committee, the Chairman of the Board, the Chief Executive Officer or any such
authorized person may discharge any such employees and agents at will.
<PAGE> 13
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1. The Company shall, to the fullest extent permitted by Section 7018 of
the New York Banking Law, indemnify any person who is or was made, or threatened
to be made, a party to an action or proceeding, whether civil or criminal,
whether involving any actual or alleged breach of duty, neglect or error, any
accountability, or any actual or alleged misstatement, misleading statement or
other act or omission and whether brought or threatened in any court or
administrative or legislative body or agency, including an action by or in the
right of the Company to procure a judgment in its favor and an action by or in
the right of any other corporation of any type or kind, domestic or foreign, or
any partnership, joint venture, trust, employee benefit plan or other
enterprise, which any director or officer of the Company is servicing or served
in any capacity at the request of the Company by reason of the fact that he, his
testator or intestate, is or was a director or officer of the Company, or is
serving or served such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against judgments,
fines, amounts paid in settlement, and costs, charges and expenses, including
attorneys' fees, or any appeal therein; provided, however, that no
indemnification shall be provided to any such person if a judgment or other
final adjudication adverse to the director or officer establishes that (i) his
acts were committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of action so
adjudicated, or (ii) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
SECTION 2. The Company may indemnify any other person to whom the Company is
permitted to provide indemnification or the advancement of expenses by
applicable law, whether pursuant to rights granted pursuant to, or provided by,
the New York Banking Law or other rights created by (i) a resolution of
stockholders, (ii) a resolution of directors, or (iii) an agreement providing
for such indemnification, it being expressly intended that these By-Laws
authorize the creation of other rights in any such manner.
SECTION 3. The Company shall, from time to time, reimburse or advance to any
person referred to in Section 1 the funds necessary for payment of expenses,
including attorneys' fees, incurred in connection with any action or proceeding
referred to in Section 1, upon receipt of a written undertaking by or on behalf
of such person to repay such amount(s) if a judgment or other final adjudication
adverse to the director or officer establishes that (i) his acts were committed
in bad faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or (ii) he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.
SECTION 4. Any director or officer of the Company serving (i) another
corporation, of which a majority of the shares entitled to vote in the election
of its directors is held by the Company, or (ii) any employee benefit plan of
the Company or any corporation referred to in clause (i) in any capacity shall
be deemed to be doing so at the request of the Company. In all other cases, the
provisions of this Article V will apply (i) only if the person serving another
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise so served at the specific request of the Company, evidenced by
a written communication signed by the Chairman of the Board, the Chief Executive
Officer
<PAGE> 14
or the President, and (ii) only if and to the extent that, after making such
efforts as the Chairman of the Board, the Chief Executive Officer or the
President shall deem adequate in the circumstances, such person shall be unable
to obtain indemnification from such other enterprise or its insurer.
SECTION 5. Any person entitled to be indemnified or to the reimbursement or
advancement of expenses as a matter of right pursuant to this Article V may
elect to have the right to indemnification (or advancement of expenses)
interpreted on the basis of the applicable law in effect at the time of
occurrence of the event or events giving rise to the action or proceeding, to
the extent permitted by law, or on the basis of the applicable law in effect at
the time indemnification is sought.
SECTION 6. The right to be indemnified or to the reimbursement or advancement of
expense pursuant to this Article V (i) is a contract right pursuant to which the
person entitled thereto may bring suit as if the provisions hereof were set
forth in a separate written contract between the Company and the director or
officer, (ii) is intended to be retroactive and shall be available with respect
to events occurring prior to the adoption hereof, and (iii) shall continue to
exist after the rescission or restrictive modification hereof with respect to
events occurring prior thereto.
SECTION 7. If a request to be indemnified or for the reimbursement or
advancement of expenses pursuant hereto is not paid in full by the Company
within thirty days after a written claim has been received by the Company, the
claimant may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim and, if successful in whole or in part, the
claimant shall be entitled also to be paid the expenses of prosecuting such
claim. Neither the failure of the Company (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of or
reimbursement or advancement of expenses to the claimant is proper in the
circumstance, nor an actual determination by the Company (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant is
not entitled to indemnification or to the reimbursement or advancement of
expenses, shall be a defense to the action or create a presumption that the
claimant is not so entitled.
SECTION 8. A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character described
in Section 1 shall be entitled to indemnification only as provided in Sections 1
and 3, notwithstanding any provision of the New York Banking Law to the
contrary.
<PAGE> 15
ARTICLE VI
SEAL
SECTION 1. The Board of Directors shall provide a seal for the Company, the
counterpart dies of which shall be in the charge of the Secretary of the Company
and such officers as the Chairman of the Board, the Chief Executive Officer or
the Secretary may from time to time direct in writing, to be affixed to
certificates of stock and other documents in accordance with the directions of
the Board of Directors or the Executive Committee.
SECTION 2. The Board of Directors may provide, in proper cases on a specified
occasion and for a specified transaction or transactions, for the use of a
printed or engraved facsimile seal of the Company.
ARTICLE VII
CAPITAL STOCK
SECTION 1. Registration of transfer of shares shall only be made upon the books
of the Company by the registered holder in person, or by power of attorney, duly
executed, witnessed and filed with the Secretary or other proper officer of the
Company, on the surrender of the certificate or certificates of such shares
properly assigned for transfer.
ARTICLE VIII
CONSTRUCTION
SECTION 1. The masculine gender, when appearing in these By-Laws, shall be
deemed to include the feminine gender.
ARTICLE IX
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or added to by the Board of
Directors at any meeting, or by the stockholders at any annual or special
meeting, provided notice thereof has been given.
<PAGE> 16
I, Peter Becker, Assistant Vice President of Bankers Trust Company, New York,
New York, hereby certify that the foregoing is a complete, true and correct copy
of the By-Laws of Bankers Trust Company, and that the same are in full force and
effect at this date.
/s/ Peter Becker
--------------------------------
ASSISTANT VICE PRESIDENT
DATED: May 28, 1999
<PAGE> 17
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 09/30/98 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR SEPTEMBER 30, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
C400
---------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
<S> <C> <C>
a. Noninterest-bearing balances and currency and coin (1)................. 0081 2,291,000 1.a.
b. Interest-bearing balances (2).......................................... 0071 2,636,000 1.b.
2.
Securities: ////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A)............. 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)........... 1773 6,617,000 2.b.
3. Federal funds sold and securities purchased under agreements to resell...... 1350 32,734,000 3.
4. Loans and lease financing receivables: ////////////////
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 20,227,000 //////////////// 4.a.
b. LESS: Allowance for loan and lease losses...................RCFD 3123 619,000 //////////////// 4.b.
c. LESS: Allocated transfer risk reserve.......................RCFD 3128 0 //////////////// 4.c.
d. Loans and leases, net of unearned income, ////////////////
allowance, and reserve (item 4.a minus 4.b and 4.c).................... 2125 19,608,000 4.d.
5. Trading Assets (from schedule RC-D)......................................... 3545 49,545,000 5.
6. Premises and fixed assets (including capitalized leases).................... 2145 885,000 6.
7. Other real estate owned (from Schedule RC-M)................................ 2150 115,000 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 2130 391,000 8.
9. Customers' liability to this bank on acceptances outstanding................ 2155 392,000 9.
10. Intangible assets (from Schedule RC-M)...................................... 2143 266,000
11. Other assets (from Schedule RC-F)........................................... 2160 5,884,000 11.
12. Total assets (sum of items 1 through 11).................................... 2170 121,364,000 12.
---------------------
</TABLE>
- --------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE> 18
<TABLE>
<S> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 06/30/98 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2
City, State Zip: New York, NY 10006 12
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
</TABLE>
SCHEDULE RC--CONTINUED
<TABLE>
<CAPTION>
Dollar Amounts in Thousands ////////// Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
LIABILITIES ///////////////////////
13. Deposits: //////////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) RCON 2200 22,231,000 13.a.
(1) Noninterest-bearing(1)................RCON 6631 3,040,000...... ////////////////////// 13.a.(1)
(2) Interest-bearing......................RCON 6636 19,191,000...... ////////////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E //////////////////////
part II) RCFN 2200 21,932,000 13.b.
(1) Noninterest-bearing...................RCFN 6631 2,423,000...... ////////////////////// 13.b.(1)
(2) Interest-bearing......................RCFN 6636 19,509,000...... ////////////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase RCFD 2800 14,360,000 14.
15. a. Demand notes issued to the U.S. Treasury........................................ RCON 2840 0 15.a.
b. Trading liabilities (from Schedule RC-D)........................................ RCFD 3548 32,890,000 15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases): /////////////////// /
a. With a remaining maturity of one year or less................................... RCFD 2332 7,653,000 16.a.
b. With a remaining maturity of more than one year through three years............. A547 3,707,000 16.b.
c. With a remaining maturity of more than three years.............................. A548 3,034,000 16.c
17. Not Applicable ////////////////////// 17.
18. Bank's liability on acceptances executed and outstanding........................... RCFD 2920 392,000 18.
19. Subordinated notes and debentures (2).............................................. RCFD 3200 1,533,000 19.
20. Other liabilities (from Schedule RC-G)............................................. RCFD 2930 6,595,000 20.
21. Total liabilities (sum of items 13 through 20)..................................... RCFD 2948 114,327,000 21.
22. Not Applicable /////////////////////
//////////////////////// 22.
EQUITY CAPITAL //////////////////////
23. Perpetual preferred stock and related surplus...................................... RCFD 3838 1,500,000 23.
24. Common stock....................................................................... RCFD 3230 2,002,000 24.
25. Surplus (exclude all surplus related to preferred stock)........................... RCFD 3839 540,000 25.
26. a. Undivided profits and capital reserves.......................................... RCFD 3632 3,421,000 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities.......... RCFD 8434 ( 46,000) 26.b.
27. Cumulative foreign currency translation adjustments................................ RCFD 3284 ( 380,000) 27.
28. Total equity capital (sum of items 23 through 27).................................. RCFD 3210 7,037,000 28.
29. Total liabilities and equity capital (sum of items 21 and 28)...................... RCFD 3300 121,364,000 29.
</TABLE>
<TABLE>
<CAPTION>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed Number
for the bank by independent external -----------------------------------
auditors as of any date during 1997................................................... RCFD 6724 N/A M.1
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ----------------------
(1) Including total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
<PAGE> 19
