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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 29, 2000.
Advanta Bank Corp.
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(Exact name of registrant as specified in its charter)
Utah 333-93915 23-2597173
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification Number)
11850 South Election Road
Draper, Utah 08020
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(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code (801) 523-0858
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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INFORMATION TO BE INCLUDED IN THE REPORT
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Item 1. Not Applicable.
Item 2. Not Applicable.
Item 3. Not Applicable.
Item 4. Not Applicable.
Item 5. Acquisition and Disposition of Assets.
</TABLE>
Advanta Equipment Receivables Series 2000-1 LLC (the "Issuer") issued a
series of asset-backed notes, entitled Equipment Receivables Asset-Backed Notes,
Series 2000-1 ("Series 2000-1"), pursuant to the Indenture, dated as of March 1,
2000 (attached hereto as Exhibit 4.1) between the Issuer and Bankers Trust
Company, as trustee. The Issuer entered into a Transfer and Servicing Agreement,
dated as of March 1, 2000 (the "Transfer and Servicing Agreement") with Advanta
Bank Corp., as transferor and as servicer (attached hereto as Exhibit 4.2).
Pursuant to the Transfer and Servicing Agreement, the Issuer will acquire
Advanta Bank Corp.'s right, title and interest in the pledged assets (as
described in a prospectus supplement, dated as of March 17, 2000 (the
"Prospectus Supplement"), and a base prospectus, dated as of March 13, 2000
(together with the Prospectus Supplement, the "Prospectus"). The Issuer will be
operated under the terms of a Limited Liability Company Operating Agreement,
dated as of March 29, 2000 (attached hereto as Exhibit 4.3).
Series 2000-1 consists of four classes identified as the $181,285,000
6.840% Class A-1 Asset Backed Notes (the "Class A-1 Notes"), the $63,269,000
7.255% Class A-2 Asset Backed Notes (the "Class A-2 Notes"), the $84,623,000
7.405% Class A-3 Asset Backed Notes (the "Class A-3 Notes" and, together with
the Class A-1 Notes and the Class A-2 Notes, the "Class A Notes"), the
$28,215,000 7.560% Class B Asset Backed Notes (the "Class B Notes"), the
$18,810,000 7.685% Class C Asset Backed Notes (the "Class C Notes") and the
$9,405,000 8.015% Class D Asset Backed Notes (the "Class D Notes"). The Class A
Notes, the Class B Notes, the Class C Notes and the Class D Notes were publicly
offered, as described in the Prospectus, pursuant to an Underwriting Agreement
(the "Underwriting Agreement"), dated as of March 17, 2000 (attached hereto as
Exhibit 1.1), among the Issuer, Advanta Bank Corp. and Prudential Securities
Incorporated, as representative of the underwriters.
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Item 6. Not Applicable.
Item 7. Exhibits.
</TABLE>
The following are filed as Exhibits to this Report under the
following:
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Exhibit 1.1 Underwriting Agreement, dated as of March 17, 2000
Exhibit 4.1 Indenture, dated as of March 1, 2000
Exhibit 4.2 Transfer and Servicing Agreement, dated as of March 1, 2000
Exhibit 4.3 Limited Liability Company Operating Agreement, dated as of March
29, 2000
Item 8. Not Applicable.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ADVANTA BANK CORP.
As Registrant
By: _______________________
Name: Mark Hales
Title: President and Director
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ADVANTA BANK CORP.
As Registrant
By: /s/ Mark Hales
Name: Mark Hales
Title: President and Director
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EXHIBIT INDEX
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<CAPTION>
Exhibit Description
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Exhibit 1.1 Underwriting Agreement, dated as of March 17, 2000
Exhibit 4.1 Indenture, dated as of March 1, 2000
<CAPTION>
Exhibit 4.2 Transfer and Servicing Agreement, dated as of March 1, 2000
Exhibit 4.3 Limited Liability Company Operating Agreement, dated as of March
29, 2000
</TABLE>
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EXHIBIT 1.1
EXECUTION COPY
ADVANTA EQUIPMENT RECEIVABLES SERIES 2000-1 LLC
EQUIPMENT RECEIVABLES ASSET-BACKED NOTES, SERIES 2000-1
$181,285,000 6.840% CLASS A-1 NOTES
$ 63,269,000 7.255% CLASS A-2 NOTES
$ 84,623,000 7.405% CLASS A-3 NOTES
$ 28,215,000 7.560% CLASS B NOTES
$ 18,810,000 7.685% CLASS C NOTES
$ 9,405,000 8.015% CLASS D NOTES
UNDERWRITING AGREEMENT
March 17, 2000
PRUDENTIAL SECURITIES INCORPORATED
as Representative of the several Underwriters
One New York Plaza
New York, New York 10292
Ladies and Gentlemen:
1. Introductory. Advanta Equipment Receivables Series 2000-1 LLC, a
Nevada limited liability company (the "Company"), and Advanta Bank Corp., a Utah
industrial loan corporation ("Advanta"), propose, subject to the terms and
conditions stated herein, to sell to the Underwriters named in Schedule A hereto
(the "Underwriters"), for whom Prudential Securities Incorporated is acting as
representative (the "Representative") an aggregate of $181,285,000 principal
amount of the 6.840% Class A-1 Notes, $63,269,000 principal amount of the 7.255%
Class A-2 Notes, $84,623,000 principal amount of the 7.405% Class A-3 Notes,
$28,215,000 principal amount of the 7.560% Class B Notes, $18,810,000 principal
amount of the 7.685% Class C Notes, and $9,405,000 principal amount of the
8.015% Class D Notes (collectively, the "Offered Securities"), of the Company.
The Offered Securities will be issued under an Indenture (the "Indenture") dated
as of March 1, 2000 between the Company and Bankers Trust Company, as trustee
(the "Trustee").
The Company has previously purchased or will purchase or has previously
received a contribution or shall receive a contribution of the Contracts on or
before the Time of Delivery (each as defined below) and certain interests in the
equipment related to the Contracts (the "Equipment") from Advanta pursuant to
the Transfer and Servicing Agreement, (the "Transfer Agreement") dated as of
March 1, 2000 by and between Advanta and the Company.
The Company will acquire a pool of equipment leases (each a "Lease
Contract") and installment sale contracts, promissory notes, loan and security
agreements and similar types of
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receivables (each a "Loan Contract," and collectively with the Lease
Contracts, the "Contracts"), the security interest of Advanta in Equipment
securing the Loan Contracts, the security interest, if any, in Advanta's
interest in the Equipment related to the Lease Contracts and certain other
rights pursuant to the Transfer Agreement, pursuant to which Advanta has agreed
to service the Contracts. As used herein, the term "Transaction Documents" means
the Indenture, the Offered Securities, the Transfer Agreement and the Letter of
Representations among the Company, the Trustee and The Depository Trust Company.
Capitalized terms used herein without definition shall have the
meanings set forth in the Indenture or the Transfer Agreement.
2. Representations and Warranties of the Company and Advanta. Each of
the Company and Advanta, jointly and severally, represents and warrants to, and
agrees with, each of the Underwriters that:
(a) Advanta and the Offered Securities meet the requirements for use of
Form S-3 under the Securities Act of 1933, as amended (the "Act");
Advanta has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-93915),
including a representative form of prospectus supplement and the
related preliminary prospectus or prospectuses, relating to the Offered
Securities and the offering thereof from time to time in accordance
with Rule 415 under the Act. Such registration statement, as amended,
has been declared effective by the Commission, and the Indenture has
been qualified under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). The Company will prepare and file with the
Commission a prospectus supplement (together with any later dated
prospectus supplement relating to the Offered Securities, the
"Prospectus Supplement") specifically relating to the Offered
Securities pursuant to Rule 424 under the Act. The registration
statement as amended at the date hereof is hereinafter referred to as
the "Registration Statement." The term "Base Prospectus" means the
prospectus dated March 13, 2000 filed pursuant to Rule 424(b) under the
Act relating to all offerings of securities under the Registration
Statement. The term "Prospectus" means the Base Prospectus together
with the Prospectus Supplement. The term "Preliminary Prospectus" means
any preliminary prospectus supplement specifically relating to the
Offered Securities, together with the Base Prospectus. As used herein,
the terms "Registration Statement," "Prospectus," "Base Prospectus" and
"Preliminary Prospectus" shall include in each case the documents, if
any, incorporated by reference therein (but not including any
Computational Materials, ABS Term Sheets or Collateral Term Sheets
described in Section 5A of this Agreement). If the Company has filed an
abbreviated registration statement to register additional debt
securities pursuant to Rule 462(b) under the Act (the "Rule 462(b)
Registration Statement"), then any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462(b)
Registration Statement. For purposes of this Agreement, all references
to the Registration Statement, any Preliminary Prospectus or the
Prospectus or any amendment or supplement to any of the foregoing shall
be deemed to include the electronically transmitted copy thereof filed
with the Commission pursuant to its Electronic Data Gathering, Analysis
and Retrieval system ("EDGAR"). All references in this Agreement to
financial
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statements and schedules and other information that is "contained,"
"included" or "stated" in the Registration Statement, any Preliminary
Prospectus or the Prospectus (or other references of like import) shall
be deemed to mean and include all such financial statements and
schedules and other information that is incorporated by reference in
the Registration Statement, any Preliminary Prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to mean and
include the filing of any document with the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that
is incorporated by reference in the Registration Statement, such
Preliminary Prospectus or the Prospectus, as the case may be;
(b) No stop order preventing or suspending the effectiveness or use of
the Registration Statement or the Prospectus has been issued by the
Commission and no proceeding for that purpose has been initiated or, to
the knowledge of the Company or Advanta, threatened by the Commission.
The Registration Statement conforms, and the Prospectus and any further
amendments to supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements
of the Act, and the rules and regulations of the Commission thereunder,
and did not and will not contain an untrue statement of a material fact
or omit to state 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; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
written information furnished to the Company by any Underwriter
specifically for use therein, it being understood and agreed that the
only such information furnished by any Underwriter consists of the
following information in the Prospectus Supplement furnished on behalf
of such Underwriter: on the cover page the price to public per note and
the total price to the public, the information in each of the tables
under the caption "Underwriting", the concession and reallowance
figures appearing in the second paragraph under the caption
"Underwriting", the information contained in the fourth paragraph under
the caption "Underwriting" and the discount and commission table on
page S-37 under "Underwriting" (collectively, the "Provided
Information") and the information in the last paragraph under the
caption "Underwriting". In addition, the statements in "Description of
the Notes" in the Prospectus Supplement and in the Base Prospectus and
"The Transaction Documents" in the Base Prospectus, to the extent they
constitute a summary of the Notes, the Indenture and the Transfer
Agreement, constitute a fair and accurate summary thereof;
(c) The documents incorporated or deemed to be incorporated by
reference in the Prospectus (but not including any Computational
Materials, ABS Term Sheets or Collateral Term Sheets described in
Section 5A of this Agreement), when they became effective or were
filed with the Commission, as the case may be, conformed in all
material respects to the requirements of the Act or the Exchange Act,
as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein
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not misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement
thereto, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects
to the requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in the Provided Information;
(d) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any
change, or any development involving a prospective change, in or
affecting the Company, Advanta or any of their respective subsidiaries
(other than as contemplated in the Registration Statement or the
Prospectus) which would be expected to have a material adverse effect
on either (1) the ability of such person to consummate the transactions
contemplated by, or to perform its respective obligations under, this
Agreement or any of the Transaction Documents to which it is a party or
(2) the Contracts considered in the aggregate;
(e) The Company has been duly formed and is validly existing as a
limited liability company in good standing under the laws of Nevada;
Advanta has been duly incorporated and is validly existing as an
industrial loan corporation in good standing under the laws of Utah;
each of the Company and Advanta has the power and authority (corporate
and/or other) to own its properties and conduct its business to the
extent described in the Prospectus and to perform its obligations
under this Agreement and the Transaction Documents to which it is a
party; and each of the Company and Advanta has been duly qualified as
a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction;
(f) As of the Time of Delivery, each consent, approval, authorization
or order of, or filing with, any court or governmental agency or body
that is required to be obtained or made by the Company and Advanta or
their subsidiaries for the consummation of the transactions
contemplated by this Agreement and the Transaction Documents shall
have been obtained or made, except for such consents, approvals,
authorizations, registrations or qualifications as may be required
under Blue Sky laws;
(g) Any taxes, fees and other governmental charges that are assessed
and due from the Company or Advanta in connection with the execution,
delivery and issuance of this Agreement and each Transaction Document
shall have been paid or will be paid at or prior to the Time of
Delivery to the extent then due;
(h) This Agreement has been duly authorized, executed and delivered by
the Company and Advanta and constitutes a legal, valid and binding
agreement of the
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the Company and Advanta enforceable in accordance with its terms,
except as enforceability may be limited by (i) bankruptcy, insolvency,
liquidation, receivership, moratorium, reorganization or other similar
laws affecting the enforcement of the rights of creditors and (ii)
general principles of equity, whether enforcement is sought in a
proceeding in equity or at law;
(i) The Offered Securities have been duly and validly authorized by the
Company, the direction by the Company to the Trustee to authenticate
the Offered Securities has been duly authorized by the Company and,
when issued pursuant to the Indenture and delivered pursuant to this
Agreement, will have been duly executed, authenticated, issued and
delivered and will constitute valid and legally binding obligations of
the Company, enforceable in accordance with their terms, and entitled
to the benefits provided by the Indenture under which they are to be
issued, which Indenture will be substantially in the form filed as an
exhibit to the Registration Statement; the Indenture has been duly
authorized and duly qualified under the Trust Indenture Act and,
assuming the due authorization, execution and delivery thereof by the
other parties thereto, the Indenture will constitute a valid and
legally binding instrument of the Company, enforceable in accordance
with its terms, except as enforceability may be limited by (i)
bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the enforcement of the
rights of creditors and (ii) general principles of equity, whether
enforcement is sought in a proceeding in equity or at law; assuming the
due authorization, execution and delivery thereof by the other parties
thereto, each of the other Transaction Documents will constitute a
valid and legally binding obligation of the Company and Advanta, as
applicable, enforceable in accordance with its terms, except as
enforceability may be limited by (i) bankruptcy, insolvency,
liquidation, receivership, moratorium, reorganization or other similar
laws affecting the enforcement of the rights of creditors and (ii)
general principles of equity, whether enforcement is sought in a
proceeding in equity or at law; the execution, delivery and performance
by the Company and Advanta of the Transaction Documents to which they
are a party and the consummation of the transactions contemplated
thereby have been duly and validly authorized by all necessary action
and proceedings required of them; and the Offered Securities, the
Indenture, the Transfer Agreement and the other Transaction Documents
will conform in all material respects to the descriptions thereof in
the Prospectus;
(j) The issue and sale of the Offered Securities by the Company
hereunder and the compliance by the Company and Advanta with all of the
provisions of this Agreement, and the compliance by the Company and
Advanta with all of the provisions of all of the Transaction Documents
to which they are parties and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or Advanta is a
party or by which the Company or Advanta or any of their subsidiaries
is bound or to which any of the property or assets of the Company or
Advanta is subject, nor will such action result in any violation of the
provisions of the Articles of Organization, Certificate of
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Incorporation, By-laws or Limited Liability Company Operating Agreement
of the Company or Advanta, as applicable, or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or Advanta or any of their properties;
and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required to be obtained by any of them for the issue and sale of the
Offered Securities by the Company or the consummation by the Company or
Advanta of the transactions contemplated by this Agreement or the
Transaction Documents, except the registration under the Act of the
Offered Securities and the qualification of the Indenture under the
Trust Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state or
foreign securities or Blue Sky laws in connection with the purchase and
distribution of the Offered Securities by the Underwriters;
(k) There are no legal or governmental proceedings to which the
Company or Advanta is a party or of which any property of the Company
or Advanta is the subject (i) asserting the invalidity of this
Agreement, the Offered Securities or any other Transaction Documents,
(ii) seeking to prevent the issuance of the Offered Securities or the
consummation of any of the transactions contemplated by this Agreement
or any Transaction Document, (iii) which is reasonably expected to
materially and adversely affect the performance by the Company or
Advanta, of their respective obligations under, or the validity or
enforceability of, this Agreement, the Offered Securities or the other
Transaction Documents, as applicable, (iv) seeking to affect
adversely the federal income tax attributes of the Offered Securities
described in the Prospectus or (v) which is reasonably expected to,
individually or in the aggregate, have a material adverse effect on
the Company or Advanta; and, to the best of the Company's and
Advanta's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(l) The Company and Advanta are not in violation of their respective
Articles of Organization, Certificate of Incorporation, Limited
Liability Company Operating Agreement or By-laws, and neither the
Company nor Advanta is in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any of
its properties may be bound;
(m) Neither the Company nor Advanta is and, after giving effect to the
offering and sale of the Offered Securities and other transactions
contemplated hereby, will be, an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in
the Investment Company Act of 1940, as amended (the "Investment Company
Act");
(n) As of the Cut-off Date, the computer tape of the Contracts made
available to the Representative by Advanta and the Company was accurate
in all material respects;
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(o) No selection procedures adverse to the holders of the Offered
Securities were utilized in selecting those Contracts transferred by
Advanta to the Company from those lease and loan contracts available
therefor;
(p) Upon execution and delivery of the Transfer Agreement, the Company
will acquire the Contracts, free and clear of any lien, charge or
encumbrance (other than as contemplated by the Transaction Documents),
but subject to the rights of the related obligors;
(q) As of the date hereof and as of the Time of Delivery, Advanta is
not obligated to repurchase Contracts constituting a material portion
of the Aggregate Contract Principal Balance (as defined in the Transfer
Agreement);
(r) As of the date hereof, the Company is wholly owned by Advanta;
(s) In accordance with General Accepted Accounting Principles, as
currently in effect, each party to the Transfer Agreement will treat
the transactions contemplated by the Transfer Agreement as an absolute
assignment of the Contracts and security interests in the related
Equipment to the Company;
(t) Advanta represents and warrants that it has made available to the
Underwriters copies of the consolidated financial statements of Advanta
Corp. for the year ended December 31, 1999, as filed with the SEC.
Except as set forth in or contemplated in the Registration Statement
and the Prospectus or as described by Advanta Corp. in SEC filings or
press releases of general distribution, copies of which have been
delivered to you, there has been no material adverse change in the
condition (financial or otherwise) of Advanta Corp. since December 31,
1999;
(u) Each of the Company and Advanta hereby makes and repeats each of
the respective representations and warranties expressly made by it in
the Transaction Documents. Such representations and warranties are
incorporated by reference in this Section 2 and the Underwriters may
rely thereon as if such representations and warranties were fully set
forth herein;
(v) Any taxes, fees and other governmental charges arising from the
execution and delivery by Advanta or the Company of this Agreement, the
Transfer Agreement and the Indenture and in connection with the
execution, delivery and issuance of the Offered Securities and with the
transfer of the Contracts and interests in the Equipment, have been
paid or will be paid by the Company prior to the Closing Date; and
(w) Arthur Andersen LLP is an independent public accountant with
respect to Advanta and the Company within the meaning of the Act and
the rules and regulations promulgated thereunder.
All representations, warranties and agreements made herein shall be
deemed made as of the date hereof and as of the Time of Delivery; provided,
however, that to the extent any
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representation or warranty relates to a specific date, such representation and
warranty shall be deemed to continue to relate to such date.
3. Sale and Delivery to the Underwriters; Closing. Subject to the terms
and conditions herein set forth, the Company agrees to issue and sell the
Offered Securities to each of the Underwriters, severally and not jointly, and
each of the Underwriters agrees, severally and not jointly, to purchase from the
Company, the principal amount of Offered Securities set forth opposite the name
of such Underwriter, and at the purchase price set forth, in Schedule A hereto.
Each class of the Offered Securities will be represented initially by
one or more definitive global certificates in registered form which will be
deposited by or on behalf of the Company with The Depository Trust Company
("DTC") or, on DTC's behalf, with DTC's designated nominee or custodian and duly
endorsed to DTC or in blank by an effective endorsement. The Company will
transfer the Offered Securities in book-entry form to the Representative, for
the account of each Underwriter, against payment by the Representative (by or on
behalf of each such Underwriter or otherwise) of the purchase price therefor by
wire transfer payable to the order of the Company in federal (same day) funds
(to such account or accounts as the Company shall designate), by causing DTC to
credit the Offered Securities to the account of the Representative at DTC. The
Company will cause the global certificates referred to above to be made
available to the Representative for checking at least 24 hours prior to the Time
of Delivery at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be 9:00 a.m., New
York City time, on March 29, 2000 or such other time and date as the
Representative and the Company may agree upon in writing. Such time and date are
herein called the "Time of Delivery."
The documents to be delivered at Time of Delivery by or on behalf of
the parties hereto pursuant to Section 6 hereof, including the cross receipt for
the Offered Securities and any additional documents requested by the
Underwriters pursuant to Section 6(q) hereof, will be delivered at the offices
of Orrick, Herrington & Sutcliffe LLP, 666 Fifth Avenue, New York, New York
10103 (the "Closing Location"), and the Offered Securities will be delivered at
the Designated Office, all at the Time of Delivery. A meeting will be held at
the Closing Location at 10:00 a.m., New York time, on the New York Business Day
next preceding the Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are authorized or
obligated by law or executive order to close.
4. Offering by Underwriters. (a) It is understood that upon the
authorization by the Representative of the release of the Offered Securities,
the Underwriters propose and agree to offer the Offered Securities for sale upon
the terms and conditions set forth in the Prospectus.
(b) Each of the Underwriters agrees that if it is a foreign broker or
dealer not eligible for membership in the National Association of
Securities Dealers, Inc. (the "NASD"), it will not effect any
transaction in the Offered Securities within the United States or
induce or attempt to induce the purchase of or sale of the Offered
Securities within the United States, except that you shall be permitted
to make sales to the other
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Underwriters or to their United States affiliates; provided that such
sales are made in compliance with an exemption of certain foreign
brokers or dealers under Rule 15a-6 under the Exchange Act, and in
conformity with the Rules of Fair Practice of the NASD as such rules
apply to non-NASD brokers or dealers.
(c) Each Underwriter further represents that:
(i) 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
Securities 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;
(ii) 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 Securities in, from or otherwise
involving the United Kingdom;
(iii) 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 Securities to a person of a kind
described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 or persons to whom
such document may otherwise lawfully be issued, distributed or passed
on; and
(iv) it is a person of a kind described in Article II(3) of
the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996.
5. Certain Agreements of the Company and Advanta. The Company and
Advanta, jointly and severally, agree with each of the Underwriters that:
(a) The Company will prepare the Prospectus in a form approved by the
Representative (which approval will not be unreasonably withheld) and
will file such Prospectus pursuant to Rule 424(b) under the Act not
later than the date required by Rule 424; make no further amendment or
any supplement to the Registration Statement (including any
post-effective amendment and any filing under Rule 462(b) under the
Act) or Prospectus prior to the Time of Delivery which shall be
reasonably disapproved by the Representative promptly after reasonable
notice thereof; will advise the Representative, promptly after it
receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed
and to furnish you with copies thereof, will file promptly all reports
and any definitive proxy or information statements required to be filed
by the Company with the Commission pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of the Prospectus
and for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Offered Securities; to
advise the Representative, promptly after it receives notice thereof,
of the issuance by the
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Commission of any stop order or of any order preventing or suspending
the use of the Prospectus, of the suspension of the qualification of
the Offered Securities for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of
any request by the Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional information;
and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of the Prospectus or suspending any
such qualification, will promptly use its best efforts to obtain the
withdrawal of such order.
(b) The Company will promptly from time to time take such action as the
Representative may reasonably request to qualify the Offered Securities
for offering and sale under the securities laws of such states as the
Representative may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such states for as
long as may be necessary to complete the distribution of the Offered
Securities, provided that in connection therewith the Company shall not
be required to qualify as a foreign corporation or entity or to file a
general consent to service of process in any state.
(c) The Company will furnish the Underwriters with copies of the
Prospectus in such quantities as the Underwriters may from time to
time reasonabl request, and, if the delivery of a prospectus is
required at any time prior to the expiration of nine months after the
time of issue of the Prospectus in connection with the offering or
sale of the Offered Securities and if at such time any event shall
have occurred 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 in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such period to
amend or supplement the Prospectus or to file under the Exchange Act
any document incorporated by reference in the Prospectus in order to
comply with the Act or the Exchange Act or the Trust Indenture Act,
will notify the Representative and promptly will file such document
which will correct such statement or omission and will prepare and
furnish without charge to each Underwriter and to any dealer in
securities as many copies as you may from time to time reasonably
request of an amended Prospectus or a supplement to the Prospectus
which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Offered Securities
at any time nine months or more after the time of issue of the
Prospectus, upon the Representative' request will, at the Company's
expense, prepare and deliver to such Underwriter as many copies as
such Underwriter may request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Act.
(d) As soon as practicable, the Company will make generally available
to Noteholders and to the Underwriters an earnings statement or
statements of the Company which will satisfy the provisions of
Section 11(a) of the Act and Rule 158 under the Act. The Company will
comply with the periodic reporting requirements under the Exchange Act.
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(e) During the period beginning from the date hereof and continuing to
and including the later of the Time of Delivery or the termination of
the syndicate, which shall in no event exceed 30 days from the Time of
Delivery, neither the Company, nor Advanta will offer, sell, contract
to sell or otherwise dispose of, except as provided hereunder, any
securities secured by or evidencing interests in receivables similar to
the Contracts.
(f) So long as any Offered Securities shall be outstanding, the Company
will deliver or cause to be delivered to the Representative the annual
statement as to compliance to be delivered by the Company to the
Trustee pursuant to the Transfer Agreement, as soon as such statement
is furnished to the Company.
(g) The Company and Advanta will cooperate with the Underwriters and
use their best efforts to permit the Offered Securities to be
eligible for clearance and settlement through DTC.
(h) The Company will furnish such information, execute such
instruments and take such actions, if any, as the Representative may
reasonably request in connection with the filing with the NASD
relating to the Offered Securities should the Representative
determine that such filing is required or appropriate.
(i) So long as any of the Offered Securities are outstanding, the
Company will furnish to the Representative as soon as practicable (i)
all documents required to be distributed to the holders of the Offered
Securities or filed with the Commission pursuant to the Exchange Act or
any order of the Commission thereunder, (ii) all monthly reports
required to be delivered to or filed with the Trustee, (iii) all
notices or requests to or from the Rating Agencies with respect to the
Offered Securities that have been delivered to or received by the
Company and (iv) from time to time, any other publicly available
information concerning the Company filed with any government or
regulatory authority, as the Representative may reasonably request.
(j) At the Time of Delivery, the electronic ledger used by Advanta as a
master record of the Contracts conveyed by Advanta to the Company shall
be marked in such a manner as shall clearly indicate the Company's
absolute ownership of the Contracts, and from and after the Time of
Delivery, neither the Company nor Advanta nor any of their affiliates
shall take any action inconsistent with the Company's ownership of such
Contracts, other than as permitted by the Transfer Agreement.
(k) To the extent, if any, that the rating provided with respect to the
Offered Securities by any of the Rating Agencies that initially rate
the Offered Securities is conditional upon the furnishing of documents
or the taking of any other reasonable actions by the Company or
Advanta, the Company and Advanta will use their best efforts to
furnish, as soon as practicable, such documents and take (or cause the
taking of) any such other actions.
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(l) The Company will use the net proceeds received by it from the
issuance of the Offered Securities in the manner specified in the
Prospectus under the caption "Use of Proceeds."
(m) The Company will file with the Commission within fifteen days of
the issuance of the Offered Securities a current report on Form 8-K
setting forth specific information concerning the Offered Securities
and the Contracts to the extent that such information is not set forth
in the Prospectus. The Company will also file with the Commission a
current report on Form 8-K setting forth all Computational Materials,
ABS Term Sheets and Collateral Term Sheets (as such terms are defined
herein) provided to the Company by any Underwriter within the
applicable time periods allotted for such filing pursuant to the
No-Action Letters (as such term is defined herein).
5A. Investor Information. Each Underwriter may prepare and provide to
prospective investors certain Computational Materials, ABS Term Sheets or
Collateral Term Sheets in connection with its offering of the Offered
Securities, subject to the following conditions:
(a) Such Underwriter shall comply with the requirements of the
No-Action Letter of May 20, 1994 issued by the Commission to Kidder,
Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated
and Kidder Structured Asset Corporation, as made applicable to other
issuers and underwriters by the Commission in response to the request
of the Public Securities Association dated May 24, 1994 (collectively,
the "KIDDER/PSA LETTER"), and the requirements of the No-Action Letter
of February 17, 1995 issued by the Commission to the Public Securities
Association (the "PSA LETTER" and, together with the Kidder/PSA Letter,
the "NO-ACTION LETTERS").
(b) For purposes hereof, "COMPUTATIONAL MATERIALS" shall have the
meaning given such term in the No-Action Letters, but shall include
only those Computational Materials that have been prepared or delivered
to prospective investors by any Underwriter. For purposes hereof, "ABS
TERM SHEETS" and "COLLATERAL TERM SHEETS" shall have the meanings given
such terms in the PSA Letter but shall include only those ABS Term
Sheets or Collateral Term Sheets that have been prepared or delivered
to prospective investors by any Underwriter.
(c) Each Underwriter shall provide to the Company any Computational
Materials, ABS Term Sheets or Collateral Term Sheets which are provided
to investors by it no later than the date preceding the date such
Computational Materials, ABS Term Sheets or Collateral Term Sheets are
required to be filed pursuant to the applicable No-Action Letters. Each
Underwriter may provide copies of the foregoing in a consolidated or
aggregated form including all information required to be filed.
(d) In the event that the Company or any Underwriter discovers an error
in the Computational Materials, ABS Term Sheets or Collateral Term
Sheets, the Underwriter that prepared such material shall prepare
corrected Computational Materials, ABS Term Sheets or Collateral Term
Sheets, as applicable, and deliver them to the Company for filing
pursuant to Section 5(o).
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6. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters hereunder shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and Advanta herein are, at and as of the Time of Delivery, true and
correct (except to the extent that any representation or warranty relates to a
specific date, in which case such representation or warranty shall be deemed to
continue to relate to such date), the condition that the Company and Advanta
shall have performed all of their respective obligations hereunder theretofore
to be performed, and the following additional conditions precedent:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance
with Section 5(a) hereof; no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued
and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with
to the Representative's reasonable satisfaction;
(b) Winston & Strawn, counsel for the Underwriters, shall have
furnished to the Underwriters such opinion or opinions, dated the Time
of Delivery, with respect to certain securities law issues and other
related matters as the Representative may reasonably request, and such
counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(c) The Underwriters shall have received (i) from Orrick, Herrington &
Sutcliffe LLP, an opinion, in form and substance satisfactory to the
Representative and dated the Time of Delivery, that (x) the Trustee,
for the benefit of the Noteholders, has a security interest under a
letter agreement between Advanta and the Trustee in the Conveyed Assets
owned by Advanta and such security interest in the Conveyed Assets is
enforceable against Advanta with respect to such collateral and (y) the
Indenture creates in favor of the Trustee a security interest in the
rights of the Company in the Collateral and (ii) letters authorizing
the Underwriters to rely upon any other opinion or opinions delivered
by counsel or certificates delivered by any party to any of the Rating
Agencies in connection with the transactions contemplated by this
Agreement and the Transaction Documents;
(d) Orrick, Herrington & Sutcliffe LLP, counsel for the Company and
Advanta, shall have furnished to the Underwriters their opinion, dated
the Time of Delivery, with respect to the validity of this Agreement
and the Transaction Documents and corporate, perfection, tax and other
matters in form and substance satisfactory to the Representative.
(e) Van Cott, Bagley, Cornwall & McCarthy and Woodburn and Wedge,
counsel for Advanta and the Company, respectively, shall have
furnished to the Underwriters their opinion, dated the Time of
Delivery, with respect to the validity of this Agreement and the
Transaction Documents and corporate, perfection and other matters in
form and substance satisfactory to the Representative.
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<PAGE> 14
(f) Seward & Kissel, counsel for the Trustee, shall have furnished to
the Underwriters their opinion, dated the Time of Delivery, in form and
substance satisfactory to the Representative, substantially to the
effect that:
(i) The Trustee is a banking corporation validly existing under the
laws of the State of New York;
(ii) The Trustee has the requisite power and authority to execute,
deliver and perform its obligations under each of the Transaction
Documents, and has taken all necessary action to authorize the
execution, delivery and performance by it of each of the Transaction
Documents;
(iii) Each of the Transaction Documents has been duly executed and
delivered by the Trustee, and constitutes a legal valid and binding
obligation of the Trustee, enforceable against the Trustee in
accordance with its terms, except that such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium, liquidation, or
other similar laws affecting the enforcement of creditors' rights
generally, and by general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and
fair dealing (regardless of whether such enforceability is considered
in a proceeding in equity or at law);
(iv) The Notes delivered on the date hereof have been duly
authenticated by the Trustee in accordance with the terms of the
Indenture;
(v) To the best of our knowledge, without independent investigation, no
approval, authorization or other action by or filing with any
governmental authority of the United States of America, or of the State
of New York, having jurisdiction over the banking or trust powers of
the Trustee is required in connection with the execution and delivery
by the Trustee of each of the Transaction Documents; and
(vi) The execution and delivery of each of the Transaction Documents,
and the performance by the Trustee of the respective terms of each of
the Transaction Documents, do not conflict with or result in a
violation of the Articles of Incorporation or By-laws of the Trustee
or any federal or State of New York law or regulation governing the
banking or trust powers of the Trustee.
(g) (i) On the date of the Prospectus, (ii) at 9:30 a.m., New York City
time, on the effective date of any post-effective amendment to the
Registration Statement filed subsequent to the date of this Agreement
and (iii) at the Time of Delivery, Arthur Andersen LLP shall have
furnished to the Representative a letter or letters, dated the
respective dates of delivery thereof, in form and substance
satisfactory to the Representative, containing statements and
information of the type customarily included in accountants'
"agreed-upon procedures letters" to underwriters in transactions of
this nature, including a statement by each to the effect that Arthur
Andersen LLP is an independent public accountant with respect to the
Company and
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<PAGE> 15
Advanta, as defined in the Act and the rules and regulations of the
Commission thereunder;
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall
not have been any change, or any development involving a prospective
change, in or affecting the Company or Advanta (other than as
contemplated in the Registration Statement) which, in the reasonable
judgment of the Representative, would be expected to have an adverse
effect on either (a) the ability of such person to consummate the
transactions contemplated by, or to perform its respective obligations
under, this Agreement or any of the Transaction Documents to which it
is a party or (b) the Contracts that, in either case, would make it
impractical or inadvisable to proceed with the offering or the
delivery of the Offered Securities as contemplated by the
Registration Statement and the Prospectus (and any supplements
thereto);
(i) At the Time of Delivery, (i) the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes, the Class B Notes, the Class C Notes and
the Class D Notes shall be rated by Moody's Investors Services, Inc.
("Moody's") at least "Aaa", "Aaa", "Aaa", "Aa3", "A2", and "Baa2",
respectively and (ii) the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes, the Class B Notes, the Class C Notes and the Class D
Notes shall be rated by Fitch IBCA, Inc. ("Fitch") at least "AAA",
"AAA", "AAA", "AA-", "A" and "BBB+", respectively;
(j) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a general
moratorium on commercial banking activities declared by either Federal
or New York State authorities; or (iii) the outbreak or escalation of
hostilities involving the United States or the declaration by the
United States of a national emergency or war, if the effect of any such
event specified in this clause (iii) in the judgment of the
Representative makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the Offered Securities on the
terms and in the manner contemplated in the Prospectus;
(k) Each of the Company and Advanta shall have delivered to the
Representative a certificate, dated the Time of Delivery, signed by its
Chairman of the Board, President, Executive Vice President, Senior Vice
President, Vice President, principal financial officer, principal
accounting officer, treasurer or any manager to the effect that the
signer of such certificate has examined this Agreement, the Transfer
Agreement, the Indenture, the Prospectus (and any supplements thereto),
the Registration Statement, and the other Transaction Documents and
that:
(i) the representations and warranties of the Company or
Advanta, as applicable, in this Agreement are true and correct at and
as of the Time of Delivery as if made on and as of the Time of Delivery
(except to the extent they expressly relate to an earlier date, in
which case the representations and warranties of such party are true
and correct as of such earlier date as if made at the Time of
Delivery);
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(ii) the Company or Advanta, as applicable, has complied with
all the agreements and satisfied all the conditions on its part to be
performed or satisfied under this Agreement at or prior to the Time of
Delivery;
(iii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the knowledge of the signer,
threatened;
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any change, or any development involving a prospective change, in
or affecting the Company or Advanta (other than as contemplated in the
Registration Statement) which would be expected to have a material
adverse effect on either (1) the ability of such person to consummate
the transactions contemplated by, or to perform its respective
obligations under, this Agreement or any of the Transaction Documents
to which it is a party or (2) the Contracts (taken as a group);
(v) there has not occurred any material adverse change, or, to
such officer's knowledge, any development involving a prospective
material adverse change, in the condition, financial or otherwise,
results of operations, business or operations of the Company and
Advanta, taken as a whole, since December 31, 1999;
(vi) on or prior to the Closing Date, there has been no
downgrading nor has any notice been given of (A) any intended or
potential downgrading or (B) any review or possible change in rating,
the direction of which has not been indicated in, the rating, if any,
accorded the Offered Securities by any "nationally recognized
statistical rating organization," as such term is defined for purposes
of the Act;
(vii) as of the Time of Delivery, no Contracts constituting a
material portion of the aggregate contract principal balance constitute
Ineligible Contracts; and
(viii) as to such other matters as the Representative may
reasonably request.
(l) The Company shall have delivered to the Representative a copy,
certified by an officer of the Company, of the Registration Statement as
initially filed with the Commission and of all amendments thereto (including all
exhibits) and full and complete sets of all written comments of the Commission
or its staff and all written responses thereto with respect to the Registration
Statement;
(m) The Underwriters shall have received a certificate, signed by a
secretary or an assistant secretary of Advanta and a manager of the Company,
dated the Closing Date, to the effect that each person who, as an officer or
representative of Advanta or a manager of the Company, signed or signs any
Transaction Document or any other document delivered pursuant hereto, on the
date hereof or on the Closing Date, was, at the respective times of such signing
and delivery, and is now, duly elected or
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<PAGE> 17
appointed, qualified and acting as such officer or manager, and the
signatures of such persons appearing on such documents are their
genuine signatures;
(n) The Company, Advanta and the Trustee shall have executed and
delivered each Transaction Document and this Agreement to which it is a
party;
(o) The Underwriters shall have received copies of all UCC searches as
Winston & Strawn shall reasonably request. The Underwriters shall have
received evidence satisfactory to it that, on or before the Closing
Date, UCC-1 financing statements have been or are being filed in Utah
to perfect the transfer from Advanta to the Company and in Nevada to
perfect the security interest granted by the Company to the Trustee;
(p) The Company shall have transferred to the Trustee, for deposit in
the Collection Account to be maintained by the Trustee in accordance
with the Indenture, all payments on the Contracts actually received by
the Company which were due subsequent to the Cut-Off Date and received
on or prior to the Closing Date.
(q) The Underwriters and Winston & Strawn shall have received such
information, certificates and documents as the Underwriters or Winston
& Strawn may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all respects when and as provided in this Agreement, if the
Company or Advanta is in breach of any covenants or agreements contained herein
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Underwriters and counsel to the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled on,
or at any time prior to, the Closing Date by the Underwriters. Notice of such
cancellation shall be given to the Company and Advanta in writing, or by
telephone or telegraph confirmed in writing.
7. Indemnification and Contribution.
(a) The Company and Advanta, jointly and severally, will indemnify and
hold harmless each Underwriter, its partners, directors and officers
and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act, from and against (i) any and all
losses, claims, damages or liabilities, joint or several, to which such
Underwriter or any such controlling person 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 (x) an untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus,
or (y) 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 will promptly reimburse each Underwriter, their
respective directors and officers and each person who controls the
Underwriter within the meaning of Section 15 of the Act, for any
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<PAGE> 18
legal or other expenses reasonably incurred by any Underwriter and such
other indemnified persons in connection with investigating, preparing
or defending any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Company and Advanta
shall 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 or omission or alleged omission
made in the Registration Statement or the Prospectus in reliance upon
and in conformity with the Provided Information and provided further
that such Provided Information was not based upon Company-Provided
Information (as defined below) and (ii) against any losses, claims,
damages, liabilities, joint or several, and expenses whatsoever, as
incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Computational Materials,
ABS Term Sheets or Collateral Term Sheets distributed by any
Underwriter; unless such untrue statement or alleged untrue statement
of a material fact was made in reliance upon and in conformity with
Derived Information provided by such Underwriter expressly for use in
the Computational Materials, the ABS Term Sheets or the Collateral Term
Sheets and the untrue statement or alleged untrue statement did not
derive from an inaccuracy in the Company-Provided Information used in
the preparation of such Computational Materials, ABS Term Sheets or
Collateral Term Sheets. The foregoing indemnity agreement is in
addition to any liability which each of the Company and Advanta may
otherwise have to the Underwriters or any person who controls such
Underwriter.
(b) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company and Advanta, their respective directors and
officers and each person, if any who controls the Company or Advanta,
as the case may be, within the meaning of Section 15 of the Act,
against (i) any losses, claims, damages or liabilities to which the
Company or Advanta 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 (x) an untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or (y) 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,
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 the Registration Statement or the Prospectus in reliance
upon and in conformity with the Provided Information and provided that
such Provided Information was not based upon Company-Provided
Information (as defined herein); and will reimburse the Company and
Advanta, their respective directors and officers and each person who
controls the Company or Advanta within the meaning of Section 15 of the
Act, for any legal or other expenses reasonably incurred by the
Company, Advanta and such other indemnified persons in connection with
investigating, preparing or defending any such loss, claim, damage,
liability or action as such expenses are incurred and (ii) any losses,
claims, damages and expenses described in the indemnity contained in
subsection (a) of this Section 7, as incurred, but only with respect to
untrue statements or alleged untrue statements made in the
Computational Materials, Collateral Term Sheets or ABS Term Sheets
furnished by
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<PAGE> 19
such Underwriter to the extent that such untrue statement or alleged
untrue statement of a material fact was made in reliance upon and in
conformity with Derived Information provided by it expressly for use in
the Computational Materials, the ABS Term Sheets or the Collateral Term
Sheets and the untrue statements or alleged untrue statements were not
derived from any inaccuracy in the Company-Provided Information used in
the preparation of such Computational Materials, ABS Term Sheets or
Collateral Term Sheets. The foregoing indemnity agreement is in
addition to any liability which the Underwriters may otherwise have to
each of the Company and Advanta as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the
indemnifying party in writing of the claim or commencement thereof; but
the omission so to notify the indemnifying party shall not relieve it
from any liability which it may have to any indemnified party otherwise
than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such
indemnified party (who may be counsel to the indemnifying party);
provided, however, that if the defendants in any such action include
both the indemnified party and the indemnifying party, and the
indemnified party shall have been advised in writing (with a copy to
the indemnifying party) by counsel that representation of such
indemnified party and the indemnifying party is inappropriate under
applicable standards of professional conduct due to actual or potential
differing interests between them, the indemnified party or parties
shall have the right to select separate counsel to defend such action
on behalf of such indemnified party or parties. It is understood that
the indemnifying party shall, in connection with any such action or
separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only
one separate firm of attorneys together with appropriate local counsel
at any time from all indemnified parties not having actual or potential
differing interests with any other indemnified party. The indemnifying
party will not be liable for any settlement entered into without its
consent and will not be liable to such indemnified party under this
Section 7 for any legal or other expenses incurred by such indemnified
party in connection with the defense thereof unless (i) the indemnified
party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence, (ii) the indemnifying party
shall not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party; and
provided that, if clause (i) or (iii) is applicable, such liability
shall be only in respect of the counsel referred to in such clause (i)
or (iii).
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(d) Each Underwriter severally agrees, except to the extent any loss,
claim, damage or liability described in this subsection (d) occurs
because Company-Provided Information (defined below) is not accurate
and complete in all material respects, to indemnify and hold harmless
the Company and Advanta, and their respective directors, officers,
managers and controlling persons 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 Derived Information
provided by such Underwriter, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, and agrees to reimburse each such indemnified party for any
legal or other expenses reasonably incurred by him, her or it in
connection with investigating or defending or preparing to defend any
such loss, claim, damage, liability or action as such expenses are
incurred, provided that, in no event shall any Underwriter be
responsible under this clause (d) for any amount in excess of the
underwriting discount applicable to the Offered Securities purchased by
such Underwriter hereunder. Each Underwriter's obligations under this
Section 7(d) shall be in addition to any liability which each
Underwriter may otherwise have to the Company or Advanta.
(e) Each of the Company and Advanta agrees to indemnify and hold
harmless the Underwriters, each of the Underwriters' officers and
directors and each person who controls the Underwriters 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
Company-Provided Information provided by the Company and Advanta, 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 him, her or it in connection with investigating
or defending or preparing to defend any such loss, claim, damage,
liability or action as such expenses are incurred. The Company and
Advanta's obligation under this Section 7(e) shall be in addition to
any liability which they may otherwise have to the Underwriters.
The procedures set forth in Section 7(c) shall be equally applicable to
Sections 7(d) and 7(e).
(f) For purposes of this Section 7, the term "DERIVED INFORMATION"
means such portion, if any, of the information delivered to the Company
or Advanta by the Underwriters for filing with the Commission as:
20
<PAGE> 21
(i) is not contained in the Prospectus without taking into
account information incorporated therein by reference;
(ii) does not constitute Company-Provided Information; and
(iii) is of the type of information defined as Collateral Term
Sheets, ABS Term Sheets or Computational Materials (as such terms are
interpreted in the No-Action Letters).
"COMPANY-PROVIDED INFORMATION" means any computer tape furnished to the
Underwriters by the Company concerning the Contracts or any other information
furnished by the Company to the Underwriters that is relied on or is reasonably
anticipated by the parties hereto to be relied on by the Underwriters in the
course of the Underwriters' preparation of its Derived Information or the
Provided Information.
(g) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Company and Advanta on the one hand and the
Underwriters on the other from the offering of the Offered Securities.
If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the indemnified party
failed to give the notice required under subsection (c) above, then
each indemnifying party shall contribute to such amount paid or payable
by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of
the Company and Advanta 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 (or actions or proceedings
in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and
Advanta 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 of the Offered Securities purchased under this Agreement
(before deducting expenses) received by the Company and Advanta bear to
the total underwriting discounts and commissions received by the
Underwriters with respect to the Offered Securities purchased under
this Agreement, in each case as set forth in the table on the cover
page of the Prospectus. 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 Company or
Advanta on the one hand or the Underwriters on the other and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Company, Advanta and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this subsection (g) were
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation which
21
<PAGE> 22
does not take into account the equitable considerations referred to
above in this subsection (g). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to
above in this subsection (g) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating, preparing or defending any such action
or claim. Notwithstanding the provisions of this subsection (g), no
Underwriter shall be obligated to contribute any amount in excess of
the underwriting discount applicable to the Offered Securities
purchased by such Underwriter under this Agreement. 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 Underwriters'
obligations in this subsection (g) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(h) The obligations of the Company and Advanta under this Section 7
shall be in addition to any liability which the Company and Advanta may
otherwise have and shall extend, upon the same term and conditions, to
each person, if any, who controls any Underwriter within the meaning of
the Act; and the obligations of the Underwriters under this Section 7
shall be in addition to any liability which the respective Underwriters
may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company or Advanta who
has signed the Registration Statement and to each person, if any, who
controls the Company or Advanta within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase Offered Securities hereunder at the Time of
Delivery, the remaining Underwriters (the "Non-Defaulting Underwriters") shall
have the right, but not the obligation, to make arrangements satisfactory to the
Representative and the Company for the purchase of such Offered Securities by
other persons within 36 hours after such default; if, however, the
Non-Defaulting Underwriters shall not have completed such arrangements with such
36 hour period, then this Agreement shall terminate without liability on the
part of any Non-Defaulting Underwriter, Advanta or the Company, except as
provided in Section 10 hereof. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section. Nothing
herein will relieve a defaulting Underwriter from liability for its default.
In the event of any such default which does not result in a termination
of this Agreement, any of the Non-Defaulting Underwriters or the Company shall
have the right to postpone the Closing Date for a period not exceeding seven
days in order to effect any required change in the Registration Statement or
Prospectus or in any other documents or arrangements.
9. Reimbursement of Expenses. If (x) no closing of the sale of the
Offered Securities occurs by the Closing Date through no fault of the Company or
Advanta or because the conditions set forth in Section 6 have not been met, or
(y) the Underwriters terminate the engagement pursuant to Section 12 or because
any conditions precedent in Section 6 have not been fulfilled, then the
Company's or Advanta's liability to the Underwriters shall be limited to the
reimbursement of the Underwriters' expenses incurred through the date of
termination for their reasonable out-of-pocket and incidental expenses including
the reasonable fees and
22
<PAGE> 23
expenses of Underwriters' counsel. In addition, whether or not the Offered
Securities are issued or sold:
(a) The Company or Advanta shall pay the reasonable fees and
expenses associated with the transactions contemplated hereby not paid
by the Underwriters in accordance with the provisions of Section 9(b)
including, without limitation, the following fees and expenses:
(i) rating agency fees payable with respect to their
ratings of the Offered Securities;
(ii) any fees charged by the firm of independent
public accountants referred to in Section 6(g);
(iii) filing fees in connection with the transactions
contemplated hereby including, but not limited to, the
Commission;
(iv) the Trustee's fees and expenses and reasonable
fees and expenses of counsel to the Trustee;
(v) the costs and expenses of printing the Prospectus
(except the amount to be paid by the Underwriters in Section
9(b) below);
(vi) the costs of printing or reproducing this
Agreement, the Blue Sky Survey, if applicable, and any other
documents in connection with the offer, sale and delivery of
the Offered Securities;
(vii) all expenses in connection with the
qualification of the Offered Securities under state securities
laws, including the fees and disbursements of counsel in
connection with the Blue Sky Survey, if applicable;
(viii) the cost of preparing the Offered Securities;
(ix) the cost or expenses of any transfer agent or
registrar; and
(x) all other costs and expenses incident to the
performance of their obligations hereunder which are not
otherwise specifically provided for in this Section 9;
provided, that neither the Company nor Advanta waives any
rights to reimbursement from the Underwriters in the event of
any Underwriter's failure to perform in accordance with this
Agreement.
(b) It is understood and agreed that, except as provided in
Sections 7 and 10, the Underwriters will pay (i) securities transfer
taxes on resale of any of the Offered Securities by them, (ii) 50% of
the costs and expenses of printing the Prospectus, (iii) any
advertising expenses connected with any offers they may make and (iv)
fees and expenses of counsel to the Underwriters.
23
<PAGE> 24
10. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company, Advanta and the several Underwriters, as set forth in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of any Underwriter or
any controlling person of any Underwriter, or the Company or Advanta, or any
officer or director or controlling person of the Company or Advanta, and shall
survive delivery of and payment for the Offered Securities.
If this Agreement is terminated pursuant to Section 8 or if for any
reason the purchase of the Offered Securities by the Underwriters is not
consummated, the Company shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 9, and the respective obligations of the
Company and the Underwriters pursuant to Section 7 shall remain in effect, and
if any Offered Securities have been purchased hereunder, the representations and
warranties in Section 2 and all obligations under Section 5 shall also remain in
effect. If the purchase of the Offered Securities by the Underwriters is not
consummated for any reason other than solely because of the termination of this
Agreement pursuant to Section 8, the Company will reimburse the Underwriters
through the Representative for all out-of-pocket expenses approved in writing by
the Representative, including fees, expenses and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the Offered Securities, but neither Advanta nor the Company
shall then be under no further liability to any Underwriter except as provided
in Sections 7 and 9 hereof.
11. Notices. All statements, requests, notices and agreements hereunder
shall be in writing, and if to the Underwriters shall be delivered or sent by
mail, telex or facsimile transmission to you as the Representative in care of
Prudential Securities Incorporated, One New York Plaza, New York, New York,
10292 Attention: Robert Schwartz; if to Advanta shall be delivered or sent by
mail, telex or facsimile transmission to the address of Advanta set forth in the
Registration Statement, Attention: Secretary; and if to the Company shall be
delivered or sent by mail, telex or facsimile transmission to Advanta Equipment
Receivables Series 2000-1 LLC, 639 Ishell Road, Suite 390-1, Reno, Nevada 89509,
provided, however, that any notice to an Underwriter pursuant to Section 7(c)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by the Representative upon request. Any such statements, requests,
notices or agreements shall take effect at the time of receipt thereof.
12. Termination.
(a) This Agreement may be terminated by you in your absolute discretion
at any time upon the giving of notice at any time prior to the Closing
Date: (i) if there has been any material adverse change in the
condition, financial or otherwise, of the Company or Advanta, or in the
earnings, business affairs or business prospects of the Company or
Advanta, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any outbreak or escalation of hostilities or
other calamity or crisis the effect of which on the financial markets
of the United States is such as to make it, in your reasonable
judgment, impracticable to market the Offered Securities
24
<PAGE> 25
or enforce contracts for the sale of the Offered Securities, or (iii)
if trading generally on either the American Stock Exchange or the New
York Stock Exchange has been suspended, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices for
securities have been required, by either of said exchanges or by order
of the Commission or any other governmental authority, or (iv) if a
banking moratorium has been declared by either federal or New York
authorities. In the event of any such termination, no party will have
any liability to any other party hereto, except as otherwise provided
in Section 7 hereof.
(b) This Agreement may not be terminated by the Company or Advanta
without the written consent of the Underwriters, except in accordance
with law.
(c) Notwithstanding anything herein to the contrary, in the event the
Company or Advanta does not perform any obligation under this Agreement
or any representation and warranty hereunder is incomplete or
inaccurate in any material respect, this Agreement and all of the
Underwriters' obligations hereunder may be immediately cancelled by the
Underwriters by notice thereof to the Company or Advanta. Any such
cancellation shall be without liability of any party to any other party
except that the provisions of Sections 7 and 10 hereof shall survive
any such cancellation.
13. Successors. This Agreement shall be binding upon, and inure solely
to the benefit of, the Underwriters, the Company and Advanta and, to the extent
provided in Sections 7 and 8 hereof, the officers, directors and managers of the
Company and Advanta and each person who controls the Company and Advanta or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Offered Securities from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Representation of Underwriters. In all dealings hereunder, you
shall act on behalf of each of the Underwriters, and the parties hereto shall be
entitled to act and rely upon any statement, request, notice or agreement on
behalf of any Underwriter made or given by you.
15. Time of the Essence. Time shall be of the essence of this
Agreement.
16. Counterparts. This Agreement may be executed by any one or more of
the parties hereto 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 instrument.
17. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
The Company and Advanta hereby submit to the non-exclusive jurisdiction
of the Federal and state courts in the Borough of Manhattan in The City of New
York in any suit or proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby.
18. Miscellaneous. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party
25
<PAGE> 26
against whom enforcement of the change, waiver, discharge or termination is
sought. The headings in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof.
[signature page follows]
26
<PAGE> 27
If the foregoing is in accordance with your understanding, please sign
and return to us one for each of the Company and Advanta and for each of the
Underwriters plus one for each counsel counterparts hereof, and upon the
acceptance hereof by you, on behalf of each of the Underwriters, this letter and
such acceptance hereof shall constitute a binding agreement between each of the
Underwriters, Advanta, and the Company.
Very truly yours,
ADVANTA EQUIPMENT RECEIVABLES
SERIES 2000-1 LLC
By: /S/ Mark Shapiro
---------------------------------
Printed Name: Mark Shapiro
Title: President
ADVANTA BANK CORP.
By: /S/ Mark Hales
-----------------------------------
Printed Name: Mark Hales
Title: President
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
as Representative of the Underwriters
By: PRUDENTIAL SECURITIES INCORPORATED
By: /S/ Robert Schwartz
---------------------------------
Authorized Representative
Signature Page to Underwriting Agreement
<PAGE> 28
SCHEDULE A
<TABLE>
<CAPTION>
Total Aggregate Principal Amount
Underwriter of Offered Securities to be Purchased
Class A-1 Class A-2 Class A-3 Class B Class C Class D
Prudential Securities
<S> <C> <C> <C> <C> <C> <C>
Incorporated............. $90,642,500 $31,634,500 $42,311,500 $28,215,000 $18,810,000 $9,405,000
Barclays Capital Inc........... 45,321,250 15,817,250 21,155,750 -- -- --
Morgan Stanley & Co.
Incorporated....................... 45,321,250 15,817,250 21,155,750 -- -- --
---------- ---------- ---------- ----------- ----------- ----------
Total $181,285,000 $63,269,000 $84,623,000 $28,215,000 $18,810,000 $9,405,000
============ =========== =========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Purchase Price to Public
(as a percentage of
the principal amount of
each class of Offered Securities)*
<S> <C>
Class A-1: 0.30%
Class A-2: 0.30%
Class A-3: 0.30%
Class B: 0.35%
Class C: 0.35%
Class D: 0.50%
</TABLE>
<PAGE> 1
EXHIBIT 4.1
EXECUTION COPY
- --------------------------------------------------------------------------------
ADVANTA EQUIPMENT RECEIVABLES SERIES 2000-1 LLC,
Issuer
Class A-1 6.840% Asset Backed Notes
Class A-2 7.255% Asset Backed Notes
Class A-3 7.405% Asset Backed Notes
Class B 7.560% Asset Backed Notes
Class C 7.685% Asset Backed Notes
Class D 8.015% Asset Backed Notes
Class E 10.250% Asset Backed Notes
Class F Interest
-------------------------
INDENTURE
Dated as of March 1, 2000
-------------------------
BANKERS TRUST COMPANY,
Trustee
- --------------------------------------------------------------------------------
<PAGE> 2
-------------------------------
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE
ACT OF 1939 AND INDENTURE PROVISIONS*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
----------- -----------------
<S> <C>
310(a)(1).................................................................. 6.11
(a)(2)................................................................ 6.11
(a)(3)................................................................ 6.10
(a)(4)................................................................ Not Applicable
(b)................................................................... 6.08(a)(1)
(c)................................................................... Not Applicable
311(a)..................................................................... 6.12
(b)................................................................... 6.12
312(a)..................................................................... 7.01(a)
(b)................................................................... 7.02(b)
(c)................................................................... 7.02(c)
313(a)..................................................................... 7.04
(b)................................................................... 7.04
(c)................................................................... 7.04
(d)................................................................... 7.04
314(a)..................................................................... 3.09, 7.03(a)
(b)................................................................... 3.06
(c)(1)................................................................ 2.09, 8.04(b)
(c)(2)................................................................ 2.09, 8.04(b), 11.01(a)
(c)(3)................................................................ 2.09, 8.04(b), 11.01(a)
(d)(1)................................................................ 2.09, 8.04(b), 11.01(a)
(d)(2)................................................................ Not Applicable
(d)(3)................................................................ Not Applicable
(e)................................................................... 11.01(a)
315(a)..................................................................... 6.01(b)
(b)................................................................... 6.05
(c)................................................................... 6.01(b)
(d)................................................................... 6.01(b)
(d)(1)................................................................ 6.01(b)
(d)(2)................................................................ 6.01(c)
(d)(3)................................................................ 6.01(c)
(e)................................................................... 5.13
316(a)(1)(A)............................................................... 5.11
316(a)(1)(B)............................................................... 5.12
316(a)(2).................................................................. Not Applicable
316(b)..................................................................... 5.07
317(a)(1).................................................................. 5.03
317(a)(2).................................................................. 5.03
317(b)..................................................................... 5.03
318(a)..................................................................... 11.07
</TABLE>
- --------
* This reconciliation and tie shall not, for any purpose, be deemed to be
part of the within indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
GRANTING CLAUSE................................................................................................. 3
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. (a) Definitions.................................................................. 4
Section 1.02. Incorporation by Reference of Trust Indenture Act................................. 12
Section 1.03. Calculations of Interest.......................................................... 12
ARTICLE II
THE NOTES AND THE CLASS F INTEREST
Section 2.01. Form.............................................................................. 13
Section 2.02. Execution, Authentication and Delivery............................................ 13
Section 2.03. Temporary Notes................................................................... 14
Section 2.04. Registration; Registration of Transfer and Exchange............................... 14
Section 2.05. Mutilated, Destroyed, Lost or Stolen Notes........................................ 15
Section 2.06. Persons Deemed Owner.............................................................. 16
Section 2.07. Interest Rates; Maturity Dates; Payment of Principal and Interest;
Defaulted Interest................................................................ 16
Section 2.08. Cancellation...................................................................... 18
Section 2.09. Release of Collateral............................................................. 18
Section 2.10. Book-Entry Interests.............................................................. 19
Section 2.11. Notices to Clearing Agency........................................................ 20
Section 2.12. Definitive Notes.................................................................. 20
Section 2.13. Class F Interest.................................................................. 20
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and Interest................................................. 21
Section 3.02. Maintenance of Office or Agency................................................... 21
Section 3.03. Money for Payments To Be Held in Trust............................................ 21
Section 3.04. Existence......................................................................... 22
Section 3.05. Protection of Trust Estate........................................................ 23
</TABLE>
-i-
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 3.06. Opinions as to Trust Estate....................................................... 23
Section 3.07. Performance of Obligations; Servicing of Contracts................................ 23
Section 3.08. Negative Covenants................................................................ 25
Section 3.09. Statements as to Compliance....................................................... 26
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms............................... 26
Section 3.11. Successor or Transferee........................................................... 27
Section 3.12. No Other Business................................................................. 28
Section 3.13. No Borrowing...................................................................... 28
Section 3.14. Servicer's Obligations............................................................ 28
Section 3.15. Guarantees, Loans, Advances and Other Liabilities................................. 28
Section 3.16. Capital Expenditures.............................................................. 28
Section 3.17. Notice of Events of Default....................................................... 28
Section 3.18. Further Instruments and Acts...................................................... 28
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture........................................... 29
Section 4.02. Application of Trust Money........................................................ 30
Section 4.03. Repayment of Moneys Held by Paying Agent.......................................... 30
ARTICLE V
REMEDIES
Section 5.01. Events of Default................................................................. 31
Section 5.02. Acceleration of Maturity; Rescission and Annulment................................ 32
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Trustee................... 32
Section 5.04. Remedies; Priorities.............................................................. 34
Section 5.05. Optional Preservation of the Contracts............................................ 36
Section 5.06. Limitation of Suits............................................................... 36
Section 5.07. Unconditional Rights of Noteholders to Receive Principal and Interest............. 37
Section 5.08. Restoration of Rights and Remedies................................................ 37
</TABLE>
-ii-
<PAGE> 5
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 5.09. Rights and Remedies Cumulative.................................................... 37
Section 5.10. Delay or Omission Not a Waiver.................................................... 38
Section 5.11. Control by Noteholders............................................................ 38
Section 5.12. Waiver of Past Default............................................................ 38
Section 5.13. Undertaking for Costs............................................................. 39
Section 5.14. Waiver of Stay or Extension Laws.................................................. 39
Section 5.15. Action on Notes................................................................... 39
Section 5.16. Performance and Enforcement of Certain Obligations................................ 39
ARTICLE VI
THE TRUSTEE
Section 6.01. Duties of Trustee................................................................. 41
Section 6.02. Rights of Trustee................................................................. 42
Section 6.03. Individual Rights of Trustee...................................................... 42
Section 6.04. Trustee's Disclaimer.............................................................. 43
Section 6.05. Notice of Defaults................................................................ 43
Section 6.06. Reports by Trustee to Holders..................................................... 43
Section 6.07. Compensation and Indemnity........................................................ 43
Section 6.08. Replacement of Trustee............................................................ 44
Section 6.09. Successor Trustee by Merger....................................................... 45
Section 6.10. Appointment of Co-Trustee or Separate Trustee..................................... 45
Section 6.11. Eligibility; Disqualification..................................................... 46
Section 6.12. Preferential Collection of Claims Against......................................... 46
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer To Furnish Trustee Names and Addresses of Noteholders...................... 47
Section 7.02. Preservation of Information; Communications to Noteholders........................ 47
Section 7.03. Reports by Issuer................................................................. 47
Section 7.04. Reports by Trustee................................................................ 48
</TABLE>
-iii-
<PAGE> 6
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money............................................................... 49
Section 8.02. Collection and Reserve Accounts................................................... 49
Section 8.03. General Provisions Regarding Accounts............................................. 49
Section 8.04. Release of Trust Estate........................................................... 50
Section 8.05. Opinion of Counsel................................................................ 50
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders............................ 52
Section 9.02. Supplemental Indentures with Consent of Noteholders............................... 53
Section 9.03. Execution of Supplemental Indentures.............................................. 54
Section 9.04. Effect of Supplemental Indenture.................................................. 54
Section 9.05. Conformity With Trust Indenture Act............................................... 54
Section 9.06. Reference in Notes to Supplemental Indentures..................................... 55
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption........................................................................ 56
Section 10.02. Form of Redemption Notice......................................................... 56
Section 10.03. Notes Payable on Redemption Date.................................................. 56
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions etc.......................................... 57
Section 11.02. Form of Documents Delivered to Trustee............................................ 57
Section 11.03. Acts of Noteholders............................................................... 58
Section 11.04. Notices, etc. to Trustee, Issuer and Rating Agencies.............................. 59
Section 11.05. Notices to Noteholders; Waiver.................................................... 59
Section 11.06. Alternate Payment and Notice Provisions........................................... 60
Section 11.07. Conflict with Trust Indenture Act................................................. 60
</TABLE>
-iv-
<PAGE> 7
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 11.08. Effect of Headings and Table of Contents.......................................... 60
Section 11.09. Successors and Assigns............................................................ 60
Section 11.10. Separability...................................................................... 60
Section 11.11. Benefits of Indenture............................................................. 60
Section 11.12. Legal Holidays.................................................................... 60
Section 11.13. GOVERNING LAW..................................................................... 60
Section 11.14. Counterparts...................................................................... 61
Section 11.15. Recording of Indenture............................................................ 61
Section 11.16. Trust Obligation.................................................................. 61
Section 11.17. No Petition....................................................................... 61
Section 11.18. Inspection........................................................................ 61
Section 11.19. Restrictions on Transfer of Class F Interest...................................... 62
Section 11.20. Rule 144A Information............................................................. 62
Section 11.21. Tax Treatment..................................................................... 62
</TABLE>
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EXHIBITS
EXHIBIT A - List of Contracts[Deemed Incorporated]................. A-1
EXHIBIT B - Form of Transfer and Servicing Agreement............... B-1
EXHIBIT C - Form of Depository Agreement........................... C-1
EXHIBIT D - Form of Note........................................... D-1
EXHIBIT E - Form of Class E Note Transferee Restrictions Letter.... E-1
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This INDENTURE dated as of March 1, 2000 is hereby executed by
and between ADVANTA EQUIPMENT RECEIVABLES SERIES 2000-1 LLC, a Nevada limited
liability company (the "Issuer") and BANKERS TRUST COMPANY, (the "Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Issuer's Class A-1 6.840%
Asset Backed Notes, Class A-2 7.255% Asset Backed Notes, Class A-3 7.405% Asset
Backed Notes, Class B 7.560% Asset Backed Notes, Class C 7.685% Asset Backed
Notes, Class D 8.015% Asset Backed Notes, Class E 10.250% Asset Backed Notes and
Class F Interest:
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee at the Closing Date, as Trustee
for the benefit of the Holders of the Notes, all of the Issuer's right, title
and interest, whether now owned or hereafter acquired, in, to and under all of
the following: (a) the Contracts listed on the List of Contracts and all
obligations of the Obligors thereunder, including all monies (including accrued
interest but excluding Excluded Amounts) due or to become due thereon on or
after the Cut-off Date (provided that the Issuer has not received and this Grant
does not include any interest in the Residual Interests related to the
Contracts); (b) the Related Property; (c) any and all Collections with respect
to the Contracts; (d) all balances, monies, securities, investment property,
instruments and other property received or held from time to time in the
Collection Account and the Reserve Account, and in all interest, dividends,
earnings, income and other distributions from time to time received, receivable
or otherwise distributed to or in respect thereto; (e) the Transfer and
Servicing Agreement and the Issuer's rights to enforce the provisions of, and to
benefit from the representations, warranties and covenants made in the Transfer
and Servicing Agreement; (f) all accounts, money, chattel paper, instruments,
documents, deposit accounts, certificates of deposit, letters of credit, advices
of credit, investment property, general intangibles, and goods consisting of,
arising from or relating to any of the foregoing; (g) all present and future
claims, demands, causes and chose in action in respect of any or all of the
foregoing and all payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all proceeds,
products, rents, receipts or profits of the conversion, voluntary or
involuntary, into cash or other property, all cash and non-cash proceeds, and
other property consisting of, arising from or relating to all or any part of any
of the foregoing or any proceeds thereof and (h) all proceeds of the foregoing
(collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture. This Indenture shall be deemed to be and hereby is a security
agreement within the meaning of the UCC as in effect in the States of New York,
Utah and Nevada.
The Trustee, as Trustee on behalf of the Holders of the Notes,
acknowledges such Grant, accepts the trusts under this Indenture in accordance
with the provisions of this Indenture and agrees to perform its duties as
expressly set forth in this Indenture.
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<PAGE> 10
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. (a) Definitions. Except as otherwise specified herein or
as the context may otherwise require, the following terms have the respective
meanings set forth below for all purposes of this Indenture.
"Act" has the meaning specified in Section 11.03(a).
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, the ownership of a membership interest, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authorized Officer" means any manager or agent of the Issuer who is
authorized to act for the Issuer in matters relating to the Issuer and who is
identified on the list of Authorized Officers, containing the specimen signature
of each such Person, delivered to the Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter).
"Basic Documents" means this Indenture, the Transfer and Servicing
Agreement, the Underwriting Agreement and other documents and certificates
delivered in connection therewith.
"Book-Entry Interest" means a beneficial interest in the Notes or any
Class of Notes ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 2.10.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions or trust companies in the City of New York and
Salt Lake City, Utah, and in such other location as the Corporate Trust Office
may be located are authorized or obligated by law, regulation or executive order
to remain closed.
"Class A Notes" means, collectively, the Class A-1 Notes, the Class A-2
Notes and the Class A-3 Notes.
"Class A-1 Note" means any Note, substantially in the form of Exhibit
D, designated therein as a Class A-1 6.840% Asset Backed Note.
"Class A-1 Note Interest Rate" means 6.840% per annum.
"Class A-1 Note Owner" means, with respect to a Book-Entry Interest in
the Class A-1 Notes, the Person who is the owner of such Book-Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
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<PAGE> 11
"Class A-1 Noteholder" means any Holder of a Class A-1 Note.
"Class A-2 Note" means any Note, substantially in the form of Exhibit
D, designated therein as a Class A-2 7.255% Asset Backed Note.
"Class A-2 Note Interest Rate" means 7.255% per annum.
"Class A-2 Note Owner" means, with respect to a Book-Entry Interest in
the Class A-2 Notes, the Person who is the owner of such Book-Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Class A-2 Noteholder" means any Holder of a Class A-2 Note.
"Class A-3 Note" means any Note, substantially in the form of Exhibit
D, designated therein as a Class A-3 7.405% Asset Backed Note.
"Class A-3 Note Interest Rate" means 7.405% per annum.
"Class A-3 Note Owner" means, with respect to a Book-Entry Interest in
the Class A-3 Notes, the Person who is the owner of such Book-Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Class A-3 Noteholder" means any Holder of a Class A-3 Note.
"Class B Note" means any Note, substantially in the form of Exhibit D,
designated therein as a Class B 7.560% Asset Backed Note.
"Class B Note Interest Rate" means 7.560% per annum.
"Class B Note Owner" means, with respect to a Book-Entry Interest in
the Class B Notes, the Person who is the owner of such Book-Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Class B Noteholder" means any Holder of a Class B Note.
"Class C Note" means any Note, substantially in the form of Exhibit D,
designated therein as a Class C 7.685% Asset Backed Note.
"Class C Note Interest Rate" means 7.685% per annum.
"Class C Note Owner" means, with respect to a Book-Entry Interest in
the Class C Notes, the Person who is the owner of such Book-Entry Interest, as
reflected on the books of the
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<PAGE> 12
Clearing Agency, or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"Class C Noteholder" means any Holder of a Class C Note.
"Class D Note" means any Note, substantially in the form of Exhibit D,
designated therein as a Class D 8.015% Asset Backed Note.
"Class D Note Interest Rate" means 8.015% per annum.
"Class D Note Owner" means, with respect to a Book-Entry Interest in
the Class D Notes, the Person who is the owner of such Book-Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Class D Noteholder" means any Holder of a Class D Note.
"Class E Note" means any Note, substantially in the form of Exhibit D,
designated therein as a Class E 10.250% Asset Backed Note.
"Class E Note Interest Rate" means 10.250% per annum.
"Class E Noteholder" means any Holder of a Class E Note.
"Class E Notes Interest Commencement Date" means the date designated by
the Issuer by written notice to the Trustee as the date from and after which the
Class E Notes shall bear interest.
"Class F Interest" means the rights and interests of the Issuer
described in Section 2.13 of this Indenture.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means March 29, 2000.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of this
Indenture.
"Collection Account" means the account by that name established by the
Servicer pursuant to the Transfer and Servicing Agreement and held by the
Trustee.
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<PAGE> 13
"Collections" has the meaning specified in the Transfer and Servicing
Agreement.
"Contract" means any lease agreement or other contract or agreement
identified on the List of Contracts.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which office at date of the execution of this Agreement is located at Four
Albany Street, New York, NY 10006, Attention: Corporate Trust and Agency Group.
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.10.
"Depository Agreement" means the agreement among the Issuer, the
Trustee and The Depository Trust Company, as the initial Clearing Agency, dated
as of the Closing Date, substantially in the form of Exhibit C.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, the Secretary, Assistant
Secretary, the Treasurer or Assistant Treasurer of such corporation; with
respect to any partnership, any general partner thereof and with respect to any
limited liability company the managers or officers described in the limited
liability company operating agreement of such company and any duly appointed
agents.
"Grant" means to mortgage, pledge, bargain, warrant, alienate, remise,
release, convey, assign, transfer, create, and grant a lien upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to this Indenture. A Grant of the Collateral or of any other agreement or
instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indenture" means this Indenture as amended or supplemented from time
to time.
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<PAGE> 14
"Independent" means, when used with respect to any specified Person,
that the Person (a) is in fact independent of the Issuer, any other obligor upon
the Notes, the Transferor and any Affiliate of any of the foregoing Persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Transferor or any Affiliate
of any of the foregoing Persons and (c) is not connected with the Issuer, any
such other obligor, the Transferor or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, made by an
Independent appraiser or other expert appointed by an Issuer Order, and such
opinion or certificate shall state that the signer has read the definition of
"Independent" in this Indenture and that the signer is Independent within the
meaning thereof.
"Investor Note Owners" means, with respect to a Book-Entry Interest in
any of the Investor Notes, the Person who is the owner of such Book-Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agent Participant or as an indirect participant, in each case in accordance with
the rules of such Clearing Agency).
"Investor Notes" means all Notes except Notes which at the date of
determination are owned by the Issuer or an Affiliate of the Issuer or of the
Transferor whether the Issuer or such Affiliate is a Holder of the Notes or is
the owner of a Book-Entry Interest in the Notes.
"Issuer" means Advanta Equipment Receivables Series 2000-1 LLC or any
successor thereto and, for purposes of any provision contained herein and
required by the TIA, each other obligor on the Notes.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Trustee.
"List of Contracts" means a printed or electronic list of Contracts,
certified by an Authorized Officer and attached hereto as Exhibit A.
"Maturity Date" for each Class of Notes means the date specified in
Section 2.07 of this Indenture.
"Note Interest Rate" means the per annum interest rate borne by a Note.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.04.
"Notes" means, collectively, the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes, the Class B Notes, the Class C Notes, the Class D Notes and
the Class E Notes; for avoidance of doubt, the term "Notes" does not include the
Class F Interest.
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<PAGE> 15
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to
the Trustee.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees of
or counsel to the Issuer, the Transferor or any Affiliate thereof and who shall
be satisfactory to the Trustee, and which opinion or opinions shall be addressed
to the Trustee as Trustee, shall comply with any applicable requirements of
Section 11.01, and shall be in form and substance reasonably satisfactory to the
Trustee.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor, satisfactory to the Trustee, has been made); and
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Trustee is presented that any such Notes are
held by a bona fide purchaser;
provided that in determining whether the Holders of the requisite Outstanding
Amount of the Notes have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document, Notes or other
interests owned by the Issuer, any other obligor upon the Notes, the Transferor
or any Affiliate of any of the foregoing Persons shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that the Trustee actually 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 the Issuer, any other obligor upon the Notes,
the Transferor or any Affiliate of any of the foregoing Persons. In making any
such determination, the Trustee may rely on the representations of the pledgee
and shall not be required to undertake any independent investigation.
"Outstanding Amount" means the aggregate principal amount of all Notes,
or a class of Notes, as applicable, Outstanding at the date of determination.
"Paying Agent" means the Trustee or any Person that meets the
eligibility standards for the Trustee specified in Section 6.11 and is
authorized by the Issuer to make the payments to and distributions from the
Collection Account and the Reserve Account, including payment of principal of or
interest on the Notes on behalf of the Issuer.
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<PAGE> 16
"Payment Date" means the 15th day of each calendar month, or, if any
such date is not a Business Day, the next succeeding Business Day, commencing
April 17, 2000.
"Person" means any individual, corporation, estate, partnership,
limited liability company, joint venture, association, joint stock company,
business trust, trust (including any beneficiary thereof), unincorporated
organization or government or any agency or political subdivision thereof.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Rating Agency" means Moody's Investors Service, Inc. and Fitch IBCA,
Inc. If no such organization or successor is any longer in existence, "Rating
Agency" shall be a nationally recognized statistical rating organization or
other comparable Person designated by the Issuer, notice of which designation
shall be given to the Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have notified the Transferor, the Servicer and the Issuer in
writing that such action will not result in a reduction or withdrawal of the
then current rating of any Class of the Notes.
"Record Date" means, with respect to a Payment Date or Redemption Date,
(i) if the Notes are held in book-entry form, the close of business on the
calendar day (whether or not such day is a Business Day) immediately preceding
such Payment Date or Redemption Date or (ii) if the Notes are held in definitive
form, the last calendar day (whether or not such day is a Business Day) of the
month preceding the month in which such Payment Date or Redemption Date occurs.
"Redemption Date" means the Payment Date specified by the Servicer or
the Issuer pursuant to Section 10.01, as applicable.
"Redemption Price" means in the case of a redemption of the Notes
pursuant to Section 10.01, an amount equal to the principal amount of the Notes
redeemed plus accrued and unpaid interest thereon at the related Note Interest
Rate to but excluding the Redemption Date.
"Registered Holder" means the Person in whose name a Note is registered
in the Note Register on the applicable Record Date.
"Related Property" as defined in the Transfer and Servicing Agreement.
"Reserve Account" means the account or accounts by that name
established by the Servicer under Section 5.05 of the Transfer and Servicing
Agreement held by the Trustee pursuant to Section 8.02.
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<PAGE> 17
"Responsible Officer" means, with respect to the Trustee, any officer
within the Corporate Trust Office including any Vice President, Managing
Director, Assistant Vice President, Secretary, Assistant Secretary, Treasurer or
Assistant Treasurer or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge and familiarity with the
particular subject.
"Servicer" means Advanta Bank Corp. and any successors thereto.
"State" means any one of the 50 states of the United States of America
or the District of Columbia.
"Successor Servicer" has the meaning specified in Section 3.07(e).
"Transfer and Servicing Agreement" means the Transfer and Servicing
Agreement dated as of March 1, 2000, among the Issuer, the Transferor and the
Servicer.
"Transferor" means Advanta Bank Corp. and any successor thereto.
"Trust Estate" means the Collateral and all money, instruments,
documents, securities, contract rights, general intangibles and other property
that are subject or intended to be subject to the lien and security interest of
this Indenture for the benefit of the Noteholders (including, without
limitation, all property and interests Granted to the Trustee), including all
proceeds thereof.
"Trustee" means Bankers Trust Company, a New York banking corporation
as Trustee under this Indenture, or any successor Trustee under this Indenture.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as in force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
(b) Other Definitional Provisions. (1)Capitalized terms used herein and
not otherwise defined have the meanings assigned to them in the Transfer and
Servicing Agreement.
(2) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(3) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles,
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<PAGE> 18
the definitions contained in this Agreement or in any such certificate or other
document shall control.
(4) The words "hereof," "herein," "hereunder," and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(5) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"Trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
Section 1.03. Calculations of Interest. Interest on the Class A-1
Notes, Class A-2 Notes, Class A-3 Notes, Class B Notes, Class C Notes, Class D
Notes and Class E Notes will be calculated on the basis of a year of 360 days
and twelve 30-day months.
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ARTICLE II
THE NOTES AND
THE CLASS F INTEREST
Section 2.01. Form. The Notes of each Class, together with the
Trustee's certificate of authentication, shall be in substantially the forms set
forth in Exhibit D, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof or on
subsequent pages thereof, with an appropriate reference thereto on the face of
the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibit D are part of the terms of this Indenture.
Section 2.02. Execution, Authentication and Delivery. The Notes shall
be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Trustee shall, upon written order of the Transferor, authenticate
and deliver Notes for original issue in an aggregate principal amount of
$409,119,000 including the Class E Note which shall be delivered to the Issuer.
The aggregate principal amount of Notes outstanding at any time may not exceed
such amount except as provided in Section 2.05. The Trustee shall be entitled to
conclusively rely upon such written order as authority to so authenticate and
deliver the Notes without further inquiry of any Person.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000 and
in integral multiples thereof provided, however, that a single Note of any Class
may be issued in any denomination.
No Note shall be entitled to any benefit under this Indenture 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 by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
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The Class E Notes and any other Notes issued under this Indenture may
be held by the Issuer for such period of time as the Issuer may determine and
the fact that the Class E Notes are held by the Issuer shall not cause the debt
and other obligations represented thereby to be cancelled or extinguished and
such Notes shall remain as valid obligations of the Issuer enforceable against
the Issuer in accordance with their terms.
Section 2.03. Temporary Notes. Pending the preparation of definitive Notes, the
Issuer may execute, and upon receipt of an Issuer Order the Trustee shall
authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the definitive
Notes in lieu of which they are issued and with such variations not inconsistent
with the terms of this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.02, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute, and the Trustee shall authenticate and deliver in exchange therefor, a
like principal amount of definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as definitive Notes.
Section 2.04. Registration; Registration of Transfer and Exchange. (a)
The Issuer shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall
provide for the registration of Notes and the registration of transfers of
Notes. The Trustee shall be the initial "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
If a Person other than the Trustee is appointed by the Issuer as Note
Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to conclusively rely upon a certificate executed on
behalf of the Note Registrar by an Executive Officer thereof as to the names and
addresses of the Holders of the Notes and the principal amounts and number of
such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.02, if the
requirements of Section 8-401(1) of the UCC are met the Issuer shall execute,
and upon receipt of such surrendered Note the Trustee shall authenticate and the
Noteholder shall obtain from the Trustee, in the name of the designated
transferee or transferees, one or more new Notes of the same Class in any
authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of
the same class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes
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to be exchanged at such office or agency. Whenever any Notes are so surrendered
for exchange, if the requirements of Section 8-401(1) of the UCC are met, the
Issuer shall execute, and upon receipt of such surrendered Note the Trustee
shall authenticate and the Noteholder shall obtain from the Trustee, the Notes
which the Noteholder 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 Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by, the Holder
thereof or such Holder's 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. Any Class E Note
presented or surrendered for registration of transfer or exchange shall be
accompanied by a letter substantially in the form of Exhibit E hereto.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.03 or 9.06 not involving any transfer.
The preceding provisions of this section notwithstanding, the Issuer
shall not be required to make, and the Note Registrar need not register,
transfers or exchanges of Notes for a period of 20 days preceding the due date
for any payment with respect to the Note.
(b) The Class E Notes have not been registered under the Securities Act
or any state securities law. None of the Issuer, the Note Registrar or the
Trustee is obligated to register the Notes under the Securities Act or any other
securities or "Blue Sky" laws or to take any other action not otherwise required
under this Indenture to permit the transfer of any Note without registration.
(c) The Class E Notes shall bear the legend set forth in Exhibit E.
(d) No transfer of the Class E Note shall be registered unless the
Trustee receives a letter from the transferee is substantially the form of
Exhibit E to this Indenture.
Section 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Trustee, or the Trustee receives evidence
to its satisfaction of the destruction, loss or theft of any Note, and (ii)
there is delivered to the Trustee such security or indemnity as may be required
by it to hold the Issuer and the Trustee harmless, then, in the absence of
written notice to the Issuer, the Note Registrar or the Trustee that such Note
has been acquired by a bona fide purchaser, and provided that the requirements
of Section 8-405 of the UCC are met, the Issuer shall execute and upon its
written request the Trustee shall authenticate and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement
Note
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of the same class; provided, however, that if any such destroyed, lost or stolen
Note, but not a mutilated Note, shall have become or within twenty days shall be
due and payable, or shall have been called for redemption, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable or upon the Redemption Date without surrender thereof. If, after
the delivery of such replacement Note or payment of a destroyed, lost or stolen
Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of
the original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer and the Trustee shall be entitled to
recover such replacement Note (or such payment) from the Person to whom it was
delivered or any Person taking such replacement Note from such Person to whom
such replacement Note was delivered or any assignee of such Person, except a
bona fide-purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Issuer or the Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Trustee) connected therewith.
Except as set forth in the first paragraph of this Section 2.05, every
replacement Note issued pursuant to this Section in replacement of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
Section 2.06. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee and any agent of
the Issuer or the Trustee may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
neither the Issuer, the Trustee nor any agent of the Issuer or the Trustee shall
be affected by notice to the contrary.
Section 2.07. Interest Rates; Maturity Dates; Payment of Principal and
Interest; Defaulted Interest. (a) The Investor Notes shall bear interest from
and including the Closing Date to but excluding the date on which the final
principal payment is made at the following rates:
- The Class A-1 Notes shall bear interest at the Class A-1 Note
Interest Rate;
- The Class A-2 Notes shall bear interest at the Class A-2 Note
Interest Rate;
- The Class A-3 Notes shall bear interest at the Class A-3 Note
Interest Rate;
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- The Class B Notes shall bear interest at the Class B Note
Interest Rate;
- The Class C Notes shall bear interest at the Class C Note
Interest Rate;
- The Class D Notes shall bear interest at the Class D Note
Interest Rate; and
- The Class E Notes shall initially not bear interest; provided,
however, the Class E Notes shall commence bearing interest at
the Class E Note Interest Rate on the date designated by the
Issuer as the Class E Notes Interest Commencement Date which
date shall be designated by written notice from the Issuer
delivered to the Trustee.
- The Class F Interest shall not bear interest.
Principal of the Notes shall be payable on each Payment Date to the
extent funds are available therefor as provided in the flow of funds set forth
in Section 5.04 of the Transfer and Servicing Agreement. To the extent not paid
prior to such date, the principal of the Notes of each class shall be due and
payable on the following dates and such dates shall be the "Maturity Date" for
the respective Class:
Class Maturity Date
----- -------------
Class A-1 July 15, 2002
Class A-2 May 15, 2003
Class A-3 February 15, 2007
Class B February 15, 2007
Class C February 15, 2007
Class D February 15, 2007
Class E February 15, 2007
Any installment of interest or principal, if any, or any other amount,
payable on any Note which is punctually paid or duly provided for by the Issuer
on the applicable Payment Date shall be paid to the Person in whose name such
Note (or one or more Predecessor Notes) is registered on the Record Date, by
check mailed first-class, postage prepaid to such Person's address as it appears
on the Note Register on such Record Date, (i) except that with respect to Notes
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), payment will be made by wire
transfer in immediately available funds to the account designated by such
nominee, (ii) except that with respect to the Class E Notes, payment will be
made by wire transfer in immediately available funds to the account designated
by the Issuer or any other Holder of the Class E Notes and (iii) except for (A)
the final installment of principal payable with respect to any Note on a Payment
Date and (B) the Redemption Price for any Note called for redemption pursuant to
Section 10.01, in each case
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which shall be payable as provided below. The funds represented by any such
checks returned undelivered shall be held in accordance with Section 3.03.
(b) The entire unpaid principal amount of the Notes shall be due and
payable, if not previously paid, on the date on which an Event of Default shall
have occurred and be continuing and the Notes have become due and payable in the
manner provided in Section 5.02. All principal payments on each class of Notes
shall be made pro rata to the Noteholders of such Class entitled thereto. Upon
written notice to the Trustee by the Issuer, the Trustee shall notify the Person
in whose name a Note is registered at the close of business on the second Record
Date preceding the Payment Date on which the Issuer expects that the final
installment of principal of and interest on such Note will be paid. Such notice
shall be mailed no later than thirty days prior to such final Payment Date and
shall specify that such final installment will be payable only upon presentation
and surrender of such Note and shall specify the place where such Note may be
presented and surrendered for payment of such installment. Notices in connection
with redemptions of Notes shall be mailed to Noteholders as provided in Section
10.02.
(c) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted interest to
the extent lawful) at the applicable Note Interest Rate in any lawful manner.
The Class A-1 Overdue Interest, Class A-2 Overdue Interest, Class A-3 Overdue
Interest, Class B Overdue Interest, Class C Overdue Interest, Class D Overdue
Interest and Class E Overdue Interest for any Payment Date shall be calculated
as provided in the Transfer and Servicing Agreement and included in the Class
A-1 Note Interest, Class A-2 Note Interest, Class A-3 Note Interest, Class B
Note Interest, Class C Note Interest, Class D Note Interest and Class E Note
Interest as provided in the Transfer and Servicing Agreement and paid as
provided in Section 5.04 of the Transfer and Servicing Agreement.
Section 2.08. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall, following
its receipt thereof, be promptly cancelled by the Trustee. The Issuer may at any
time deliver to the Trustee for cancellation any Notes previously authenticated
and delivered hereunder which the Issuer may have acquired in any manner
whatsoever, and all Notes so delivered shall, following its receipt thereof, be
promptly cancelled by the Trustee. Notes acquired by the Issuer and not
delivered to the Trustee for cancellation shall remain valid obligations of the
Issuer. 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
Indenture. All cancelled Notes may be held or disposed of by the Trustee in
accordance with its standard retention or disposal policy as in effect at the
time unless the Issuer shall direct by an Issuer Order that they be destroyed or
returned to it; provided that such Issuer Order is timely and the Notes have not
been previously disposed of by the Trustee.
Section 2.09. Release of Collateral. Subject to Section 11.01, the
Trustee shall release property from the lien of this Indenture only upon receipt
of an Issuer Request accompanied by an Officer's Certificate, an Opinion of
Counsel and Independent Certificates in accordance with TIA Sections 314(c) and
314 (d)(1) or an Opinion of Counsel in lieu of such Independent Certificates to
the effect that the TIA does not require any such Independent Certificates.
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Section 2.10. Book-Entry Interests. The Class A Notes, the Class B
Notes, the Class C Notes and the Class D Notes, upon original issuance, will be
issued in the form of a typewritten, word processing system produced or printed
Note or Notes representing the Book-Entry Interests, to be delivered to The
Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the
Issuer. Such Notes shall initially be registered on the Note Register in the
name of Cede & Co., the nominee of the initial Clearing Agency, and no Class A-1
Note Owner's, Class A-2 Note Owner's, Class A-3 Note Owner's, Class B Note
Owner's, Class C Note Owner's or Class D Note Owner will receive a Definitive
Note representing such Class A-1 Note Owner, Class A-2 Note Owner, Class A-3
Note Owner, Class B Note Owner, Class C Note Owner's or Class D Note Owner's
interest in such Note, except as provided in Section 2.12. Unless and until
definitive, fully registered Notes (the "Definitive Notes") have been issued to
Class A-1 Note Owners, Class A-2 Note Owners, Class A-3 Note Owners, Class B
Note Owners, Class C Note Owners or Class D Note Owners pursuant to Section
2.12:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes which
are registered in the name of the nominee of the Clearing Agency and
the giving of instructions or directions hereunder) as the sole holder
of such Notes, and shall have no obligation to the Class A-1 Note
Owners, Class A-2 Note Owners, Class A-3 Note Owners, Class B Note
Owners, Class C Note Owners or the Class D Note Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Class A-1 Note Owners, Class A-2 Note
Owners, Class A-3 Note Owners, Class B Note Owners, Class C Note Owners
and Class D Note Owners shall be exercised only through the Clearing
Agency and shall be limited to those established by law and agreements
between such Class A-1 Note Owners, Class A-2 Note Owners, Class A-3
Note Owners, Class B Note Owners, Class C Note Owners or Class D Note
Owners and the Clearing Agency and/or the Clearing Agency Participants
pursuant to the Depository Agreement. Unless and until Definitive Notes
are issued pursuant to Section 2.12, the initial Clearing Agency will
make book-entry transfers among the Clearing Agency Participants and
receive and transmit payments of principal of and interest on the Notes
to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount of the
Notes, the Clearing Agency shall be deemed to represent such percentage
only to the extent that it has received instructions to such effect
from Class A-1 Note Owners, Class A-2 Note Owners, Class A-3 Note
Owners, Class B Note Owners, Class C Note Owners or Class D Note Owners
and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in
the Notes and has delivered such instructions to the Trustee.
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Section 2.11. Notices to Clearing Agency. Whenever, a notice or other
communication to the Holders of the Class A Notes, the Class B Notes, the Class
C Notes or the Class D Notes is required under this Indenture, unless and until
Definitive Notes shall have been issued to Class A-1 Note Owners, Class A-2 Note
Owners, Class A-3 Note Owners, Class C Note Owners or the Class D Note Owners
pursuant to Section 2.12, the Trustee shall give all such notices and
communications specified herein to be given to Holders of the Class A Notes, the
Class B Notes, the Class C Notes and the Class D Notes to the Clearing Agency,
and shall have no obligation to the Class A-1 Note Owners, Class A-2 Note
Owners, Class A-3 Note Owners, Class B Note Owners, Class C Note Owners or the
Class D Note Owners.
Section 2.12. Definitive Notes. (a) The Class E Notes shall be issued
in definitive fully-registered form and (b) if (i) the Issuer advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities with respect to the Investor Notes and
the Issuer is unable to locate a qualified successor, or (ii) the Issuer at its
option advises the Trustee in writing that it elects to terminate the book-entry
system through the Clearing Agency, or (iii) after the occurrence of an Event of
Default or a Servicer Default, Investor Note Owners representing beneficial
interests aggregating a majority of the Outstanding Amount of the Investor Notes
advise the Clearing Agency in writing that the continuation of a book-entry
system through the Clearing Agency is no longer in the best interests of the
Investor Note Owners then the Clearing Agency shall notify all Investor Note
Owners and the Trustee of the occurrence of any such event and of the
availability of Definitive Notes to the Investor Note Owners. Upon surrender to
the Trustee of the Note or Notes representing the Book-Entry Interests by the
Clearing Agency, accompanied by registration instructions, the Issuer shall
execute and the Trustee shall authenticate the Definitive Notes in accordance
with the instructions of the Clearing Agency. None of the Issuer, the Note
Registrar or the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Notes to Investor Note
Owners, the Trustee shall recognize the Holders of such Definitive Notes as
Noteholders.
Section 2.13. Class F Interest. There is hereby created under this
Indenture, an interest which shall be retained by the Issuer and which is hereby
designated as the "Class F Interest." The Class F Interest shall represent the
right of the Issuer to allocations, on each Payment Date, of specified amounts,
if any, of the Available Funds as provided in Section 5.04 of the Transfer and
Servicing Agreement. The Issuer's rights to distributions represented by the
Class F Interest shall, as provided in the Transfer and Servicing Agreement, be
subordinated to the rights of the Holders of the Notes. For purposes of
calculations to be made under the Transfer and Servicing Agreement, the Class F
Interest shall have assigned to it an initial principal balance of
$61,134,515.34. The principal balance of the Class F Interest will not accrue
interest. As holder of the Class F Interest, the Issuer shall be entitled to
receive distributions of Available Funds only in the amounts and in the priority
provided in Section 5.04 of the Transfer and Servicing Agreement.
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ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and Interest. The Issuer will duly
and punctually pay the principal of and interest, if any, on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting the
foregoing, the Issuer will cause amounts to be distributed from the Collection
Account on each Payment Date as provided in Section 8.02 of this Indenture and
Section 5.04 of the Transfer and Servicing Agreement. Amounts properly withheld
under the Code by any Person from a payment to any Noteholder of interest and/or
principal and/or premium shall be considered as having been paid by the Issuer
to such Noteholder for all purposes of this Indenture.
Section 3.02. Maintenance of Office or Agency. The Issuer will maintain
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, and where
notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints the Trustee to
serve as its agent for the foregoing purposes. The Issuer will give prompt
written notice to the Trustee of the location, and of any change in the
location, of any such office or agency. If at any time the Issuer shall fail to
maintain any such office or agency or shall fail to furnish the Trustee with the
address thereof, such surrenders, notices and demands may be made or served at
the Corporate Trust Office, the Trustee shall be entitled to conclusively rely
upon, and the Issuer hereby appoints the Trustee as its agent to receive, all
such surrenders, notices and demands.
Section 3.03. Money for 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 Collection Account shall be made on behalf of the
Issuer by the Trustee or by another Paying Agent, and no amounts so withdrawn
from the Collection Account for payments of Notes shall be paid over to the
Issuer except as provided in Section 5.04 of the Transfer and Servicing
Agreement.
The Issuer 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 (and if the Trustee acts as Paying Agent, it hereby
so agrees), subject to the provisions of this Section, that such Paying Agent
will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Trustee written notice of any default by the
Issuer of which it has actual knowledge (or any other obligor upon the
Notes) in the making of any payment required to be made with respect to
the Notes;
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(iii) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Trustee all sums held by it in trust for the payment of Notes if at
any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any 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 the 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.
Subject to applicable laws with respect to escheat of funds, any money
held by the Trustee or any Paying Agent in trust for the payment of any amount
due with respect to any Note and remaining unclaimed for two years after such
amount has become due and payable shall be discharged from such trust, and the
Trustee or such Paying Agent, as the case may be, shall give prompt notice of
such occurrence to the Issuer and shall release such money to the Issuer on
Issuer Request; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Issuer (and then only to the extent of the
amounts so paid to the Issuer) 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, shall at the expense and direction of the
Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in The City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Trustee shall also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including, but not limited to, mailing notice of such repayment to
Holders whose Notes have been called but have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Trustee or of any Paying Agent,
at the last address of record for each such Holder).
Section 3.04. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a limited liability company under the laws
of the State of Nevada (unless it becomes, or any successor Issuer hereunder is
or becomes, organized under the laws of any other State or of the United States
of America, in which case the Issuer will keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction) and will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall
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be necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral and each other instrument or agreement included in the
Trust Estate.
Section 3.05. Protection of Trust Estate. The Issuer will from time to
time take all actions necessary (other than taking possession of the original
Contracts and other than perfecting any security interest which it or the
Transferor may have in Financed Equipment with an original cost of $25,000 or
less), including without limitation preparing, executing, delivering and filing
all such supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
if applicable, and will take such other action necessary or advisable to:
(i) maintain or preserve the lien and security interest (and
the priority thereof) of this Indenture or carry out more effectively
the purposes hereof;
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture:
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee and the Noteholders in such Trust Estate against
the claims of all persons and parties.
The Issuer hereby designates the Trustee its agent and attorney-in-fact to
execute any financing statement, continuation statement or other instrument
pursuant to this Section.
Section 3.06. Opinions as to Trust Estate. On the Closing Date, the
Issuer shall furnish to the Trustee an Opinion of Counsel either stating that,
in the opinion of such counsel, such action has been taken to perfect the lien
and security interest of this Indenture, including without limitation with
respect to the recording and filing of this Indenture, any indentures
supplemental hereto, and any other requisite documents, and with respect to the
execution and filing of any financing statements and continuation statements, as
are so necessary and reciting the details of such action, or stating that, in
the opinion of such counsel, no such action is necessary to maintain the
perfection of such lien and security interest.
Section 3.07. Performance of Obligations; Servicing of Contracts. (a)
The Issuer will not take any action and will use its best efforts not to permit
any action to be taken by others that would release any Person from any of such
Person's material covenants or obligations under any instrument or agreement
included in the Trust 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 Indenture, the Transfer and Servicing Agreement or
such other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Trustee in an Officer's Certificate of the Issuer
shall be deemed to be action taken by the Issuer. Initially, the Issuer has
contracted with the Servicer to assist the Issuer in performing its duties under
this Indenture.
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(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust 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 Indenture and
the Transfer and Servicing Agreement in accordance with and within the time
periods provided for herein and therein; provided that no provision of this
Indenture or the Transfer and Servicing Agreement shall be deemed to require the
filing of any financing statement to perfect any security interest the Issuer or
the Transferor may have in any Financed Equipment with an original cost of
$25,000 or less. Except as otherwise expressly provided therein, the Issuer
shall not waive, amend, modify, supplement or terminate any Basic Document or
any provision thereof without the written consent of the Trustee or the Holders
of a majority of the Outstanding Amount of the Investor Notes; provided that the
written consent of the Trustee shall be required for any amendment which
increases the obligations of the Servicer.
(d) If the Issuer shall have knowledge of the occurrence of a Servicer
Default under the Transfer and Servicing Agreement, the Issuer shall promptly
notify the Trustee in writing and the Rating Agencies thereof, and shall specify
in such notice the action, if any, the Issuer is taking with respect to such
default. If a Servicer Default shall arise from the failure of the Servicer to
perform any of its duties or obligations under the Transfer and Servicing
Agreement with respect to the Contracts, the Issuer shall take all reasonable
steps available to it to remedy such failure.
(e) As promptly as possible after the giving of notice of termination
to the Servicer of the Servicer's rights and powers pursuant to Section 8.01 of
the Transfer and Servicing Agreement, the Issuer shall appoint a successor
servicer (the "Successor Servicer"), and such Successor Servicer shall accept
its appointment by a written assumption in a form acceptable to the Trustee. In
the event that a Successor Servicer has not been appointed and accepted its
appointment at the time when the Servicer ceases to act as Servicer, the Trustee
without further action shall automatically be appointed the Successor Servicer.
The Trustee may resign as the Servicer by giving written notice of such
resignation to the Issuer and in such event will be released from such duties
and obligations, such release not to be effective until the date a new servicer
enters into a servicing agreement with the Issuer as provided below. Upon
delivery of any such notice to the Issuer, the Issuer shall obtain a new
servicer as the Successor Servicer under the Transfer and Servicing Agreement.
Any Successor Servicer other than the Trustee shall (i) be a corporation having
a net worth of not less than $20,000,000 and whose regular business includes the
servicing of equipment receivables and (ii) enter into a servicing agreement
with the Issuer having substantially the same provisions as the provisions of
the Transfer and Servicing Agreement applicable to the Servicer. If within 30
days after the delivery of the notice referred to above, the Issuer shall not
have obtained such a new servicer, the Trustee may appoint, or may petition a
court of competent jurisdiction to appoint, a Successor Servicer. In connection
with any such appointment, the Trustee may make such arrangements for the
compensation of such successor as it and such successor shall agree, subject to
the limitations set forth below and in the Transfer and Servicing Agreement, and
in accordance with Section 8.02 of the Transfer and Servicing Agreement, the
Issuer shall enter into an agreement with such successor for the servicing of
the Contracts (such agreement to be in form and substance reasonably
satisfactory to the Trustee). Notwithstanding anything else herein to the
contrary, in no event shall the Trustee be liable for any servicing fee or for
any differential in the amount of
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the servicer fee paid hereunder and the amount necessary to induce any successor
Servicer to act as Successor Servicer under this Agreement and the transactions
set forth or provided for herein. If the Trustee shall succeed to the Servicer's
duties as servicer of the Contracts as provided herein, it shall do so in its
individual capacity and not in its capacity as Trustee and, accordingly, the
provisions of Article VI hereof shall be inapplicable to the Trustee in its
duties as the successor to the Servicer and the servicing of the Contracts. In
case the Trustee shall become a successor to the Servicer under the Transfer and
Servicing Agreement, the Trustee shall be entitled to appoint any one of its
Affiliates to carry out its functions as Servicer (pending appointment of a
Successor Servicer), provided that it shall be fully liable for the actions and
omissions of such Affiliate in such capacity as Successor Servicer.
(f) Upon any termination of the Servicer's rights and powers pursuant
to the Transfer and Servicing Agreement, the Issuer shall promptly notify the
Trustee in writing. As soon as a Successor Servicer is appointed, the Issuer
shall notify the Trustee in writing of such appointment, specifying in such
notice the name and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment
granted to the Trustee under this Indenture or the rights of the Trustee
hereunder, the Issuer agrees that it will not, without the prior written consent
of the Trustee or the Holders of a majority in Outstanding Amount of the
Investor Notes, amend, modify, waive, supplement, terminate or surrender, or
agree to any amendment, modification, supplement, termination, waiver or
surrender of, the terms of any Collateral (except to the extent otherwise
permitted pursuant to the terms of the Transfer and Servicing Agreement) or the
Basic Documents, or waive timely performance or observance by the Servicer or
the Transferor under the Transfer and Servicing Agreement; provided, however,
that no such amendment shall (i) except to the extent otherwise provided in the
Transfer and Servicing Agreement, increase or reduce in any manner the amount
of, or accelerate or delay the timing of, collections of payments on Contracts
or distributions that are required to be made for the benefit of the Noteholders
or (ii) reduce the aforesaid percentage of the Notes which are required to
consent to any such amendment, without the consent of the holders of all the
Outstanding Notes. If any such amendment, modification, supplement or waiver
shall be so consented to by the Trustee or such Holders, the Issuer agrees,
promptly following a request by the Trustee to do so, to execute and deliver, in
its own name and at its own expense, such agreements, instruments, consents and
other documents as the Trustee may reasonably deem necessary or appropriate
under the circumstances.
Section 3.08. Negative Covenants. So long as any Notes are Outstanding,
the Issuer shall not:
(i) except as expressly permitted by this Indenture or the
Transfer and Servicing Agreement, sell, transfer, exchange or otherwise
dispose of any of the properties or assets of the Issuer, including
those included in the Trust Estate, unless directed to do so by the
Trustee;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code or
applicable state law) or assert any claim against any present
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or former Noteholder by reason of the payment of the taxes levied or
assessed upon any part of the Trust Estate;
(iii) dissolve or liquidate in whole or in part; or
(iv) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations with
respect to the Notes under this Indenture except as may be expressly
permitted hereby, (B) permit any lien, charge, excise, claim, security
interest, mortgage or other encumbrance (other than the lien of this
Indenture) to be created on or extend to or otherwise arise upon or
burden the Trust Estate or any part thereof or any interest therein or
the proceeds thereof (other than tax liens, mechanics' liens and other
liens on a Financed Equipment arising solely as a result of an action
or omission of the related Obligor) or (C) permit the lien of this
Indenture not to constitute a valid first priority perfected security
interest in the Trust Estate (other than with respect to any such tax,
mechanics' or other lien).
Section 3.09. Statements as to Compliance. The Issuer will deliver to
the Trustee or cause the Servicer to deliver to the Trustee within 90 days after
the end of each fiscal year of the Issuer the Officer's Certificate described in
Section 4.10 of the Transfer and Servicing Agreement.
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms. (a)
The Issuer shall not consolidate or merge with or into any other Person, unless
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America or any State
and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee the payment of the principal of
and interest on all Notes as provided in this Indenture and in the
Notes and the performance or observance of every agreement and covenant
of this Indenture on the part of the Issuer to be performed or
observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Trustee) to the effect that
such transaction will not have any material adverse tax consequence to
any Noteholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
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(vi) the Issuer shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with
this Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any
filing required by the Exchange Act).
(b) The Issuer shall not convey all or substantially all of its
properties or assets to any Person, unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer shall be a United States citizen or
a Person organized and existing under the laws of the United States of
America or any State, expressly assumes, by an indenture supplemental
hereto, executed and delivered to the Trustee the due and punctual
payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all as
provided herein, expressly agrees by means of such supplemental
indenture that all right, title and interest so conveyed or transferred
shall be subject and subordinate to the rights of Holders of the Notes,
unless otherwise provided in such supplemental indenture, unless
expressly agreed in such supplemental indenture, expressly agrees to
indemnify, defend and hold harmless the Issuer against and from any
loss, liability or expense arising under or related to this Indenture
and the Notes and expressly agrees 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 Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing:
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Trustee) to the effect that
such transaction will not have any material adverse tax consequence to
any Noteholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any
filing required by the Exchange Act).
Section 3.11. Successor or Transferee. Upon any consolidation or merger
of the Issuer in accordance with Section 3.10(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise
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every right and power of, the Issuer under this Indenture with the same effect
as if such Person had been named as the Issuer herein.
Upon a conveyance or transfer of all the assets and properties of the
Issuer pursuant to Section 3.10(b), Advanta Equipment Receivables Series 2000-1
LLC will be released from every covenant and agreement of this Indenture to be
observed or performed on the part of the Issuer with respect to the Notes
immediately upon the delivery to the Trustee of the Officer's Certificate and
Opinion of Counsel specified in Section 3.10(b)(vi) stating that Advanta
Equipment Receivables Series 2000-1 LLC is to be so released.
Section 3.12. No Other Business. The Issuer shall not engage in any
business other than the purposes set forth in the Basic Documents including this
Indenture.
Section 3.13. No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except as expressly provided for pursuant to the terms of the Basic
Documents and the Notes.
Section 3.14. Servicer's Obligations. The Issuer shall cause the
Servicer to comply with all of its obligations under the Basic Documents.
Section 3.15. Guarantees, Loans, Advances and Other Liabilities. Except
as contemplated by the Transfer and Servicing Agreement or this Indenture, the
Issuer shall not make any loan or advance or credit to, or guarantee (directly
or indirectly or by an instrument having the effect of assuring another's
payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
Section 3.16. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.17. Notice of Events of Default. The Issuer agrees to give
the Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder and written notice of each default on the part of the Servicer
or the Transferor of its obligations under the Transfer and Servicing Agreement
immediately after obtaining knowledge of any such default.
Section 3.18. Further Instruments and Acts. Upon request of the
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
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ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes (except as to
rights of registration of transfer and exchange, substitution of mutilated,
destroyed, lost or stolen Notes, rights of Noteholders to receive payments of
principal thereof and interest thereon, Sections 3.03, 3.04, 3.05, 3.08, 3.10,
3.12 and 3.13, the rights, obligations and immunities of the Trustee hereunder
(including the rights of the Trustee under Section 6.07 and the obligations of
the Trustee under Section 4.02) and (vi) the rights of Noteholders as
beneficiaries hereof with respect to the property so deposited with the Trustee
payable to all or any of them for a period of one year after clauses (A), (B)
and (C) below have occurred), and the Trustee, on demand of and at the expense
of the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.05 and (ii) Notes for whose payment
money has theretofore been deposited in trust or segregated and held in trust by
the Issuer and thereafter repaid to the Issuer or discharged from such trust, as
provided in Section 3.03) have been delivered to the Trustee for cancellation;
or
(2) all Notes not theretofore delivered to the Trustee for
cancellation:
(i) have become due and payable; or
(ii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the
expense, of the Issuer;
and the Issuer, in the case of (i) or (ii) above, has irrevocably
deposited or caused to be irrevocably deposited with the Trustee cash
or direct obligations of or obligations guaranteed by the United States
of America (which will mature prior to the date such amounts are
payable), in trust for such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such Notes not theretofore
delivered to the Trustee for cancellation when due to the Redemption
Date (if Notes shall have been called for redemption pursuant to
Section 10.01), as the case may be;
(B) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and
(C) the Issuer has delivered to the Trustee an Officer's Certificate,
an Opinion of Counsel and (if required by the TIA or the Trustee) an Independent
Certificate from a firm of certified public accountants, each meeting the
applicable requirements of Section 11.01(a) and each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
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Section 4.02. Application of Trust Money. All moneys deposited with the
Trustee pursuant to Section 4.01 hereof shall be held in trust and applied by
it, in accordance with the provisions of the Notes, the Transfer and Servicing
Agreement or this Indenture, to the payment, either directly or through any
Paying Agent, as the Trustee may determine, to the Holders of the particular
Notes for the payment or redemption of which such moneys have been deposited
with the Trustee, of all sums due and to become due thereon for principal and
interest; provided such moneys need not be segregated from other funds except to
the extent required herein or in the Transfer and Servicing Agreement or
required by law.
Section 4.03. Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Trustee to be held and applied according to Section
3.03, and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.
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ARTICLE V
REMEDIES
Section 5.01. Events of Default. "Event of Default", wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest on any Note when
the same becomes due and payable and such default shall continue for a
period of five days; or
(ii) default in the payment of the full amount of principal of
any Class on the Maturity Date for such Class; or
(iii) default in the observance or performance of any covenant
or agreement of the Issuer made in this Indenture (other than a
covenant or agreement, a default in the observance or performance of
which is elsewhere in this Section specifically dealt with), or any
representation or warranty of the Issuer made in this Indenture proving
to have been incorrect in any material respect as of the time when the
same shall have been made, and such default shall continue or not be
cured, or the circumstance or condition in respect of which such
representation or warranty was incorrect shall not have been eliminated
or otherwise cured, for a period of 30 days after there shall have been
given, by registered or certified mail, to the Issuer by the Trustee or
to the Issuer and the Trustee by the Holders of at least 25% of the
Outstanding Amount of the Investor Notes, a written notice specifying
such default or incorrect representation or warranty and requiring it
to be remedied and stating that such notice is a "Notice of Default"
hereunder; or
(iv) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or the
Transferor or any substantial part of the Trust Estate in an
involuntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for the Issuer or the Transferor or
for any substantial part of the Trust Estate, or ordering the
winding-up or liquidation of the Issuer's affairs, and such decree or
order shall remain unstayed and in effect for a period of 90
consecutive days; or
(v) the commencement by the Issuer or the Transferor of a
voluntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or the
consent by the Issuer or the Transferor to the entry of an order for
relief in an involuntary case under any such law, or the consent by the
Issuer to the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator, conservator or
similar official of the Issuer or the Transferor or for any substantial
part of the Trust Estate, or the making by the Issuer or the Transferor
of any general assignment for the benefit of creditors, or the failure
by the Issuer or the
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Transferor generally to pay, or admit in writing its inability to pay,
its debts as such debts become due, or the taking of action by the
Issuer or the Transferor in furtherance of any of the foregoing.
The Issuer shall deliver to the Trustee, within five days after the
occurrence thereof, written notice in the form of an Officer's Certificate of
any event which with the giving of notice and the lapse of time would become an
Event of Default under clause (iii) or clause (iv), its status and what action
the Issuer is taking or proposes to take with respect thereto.
Section 5.02. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default described in Section 5.01(iv) or Section 5.01(v) occurs, then
the Notes shall without any action on the part of the Trustee or any Noteholder
automatically become due and payable. If any other Event of Default should occur
and be continuing, then and in every such case the Trustee may, or if directed
by the Holders of Notes representing not less than a majority of the Outstanding
Amount of the Investor Notes shall, declare all the Notes to be immediately due
and payable, by a notice in writing to the Issuer (and to the Trustee if
declared by Noteholders), and upon any such declaration the unpaid principal
amount of the Notes, together with accrued and unpaid interest thereon through
the date of acceleration, shall become immediately due and payable.
At any time after the Notes have been accelerated, but before a
judgment or decree for payment of the money due has been obtained by the Trustee
as hereinafter in this Article V provided, the Holders of Notes representing not
less than a majority of the Outstanding Amount of the Investor Notes, by written
notice to the Issuer and the Trustee, may rescind and annul such declaration and
its consequences if:
(i) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay
(A) all payments of principal of and interest on all Notes and
all other amounts that would then be due hereunder or upon such Notes
if the Event of Default giving rise to such acceleration had not
occurred; and
(B) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee. The Issuer covenants that if (i) default is made in the payment of any
interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) default is made in the payment of
the principal of any Class of Notes on the Maturity Date of such Class when the
same becomes due and payable, the Issuer will, upon demand of the
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Trustee, pay to it, for the benefit of the Holders of the Notes, the whole
amount then due and payable on such Notes for principal and interest, with
interest upon the overdue principal, and, to the extent payment at such rate of
interest shall be legally enforceable, upon overdue installments of interest, at
the applicable Note Interest Rate borne by the respective Classes of Notes, and
in addition thereto will pay 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.
(a) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
may institute a Proceeding for the collection of the sums so due and unpaid, and
may prosecute such Proceeding to judgment or final decree, and may enforce the
same against the Issuer or other obligor upon such Notes and collect in the
manner provided by law out of the property of the Issuer or other obligor upon
such Notes, wherever situated, the moneys adjudged or decreed to be payable.
(b) If an Event of Default occurs and is continuing, the Trustee may,
as more particularly provided in Section 5.04, in its discretion, proceed to
protect and enforce its rights and the rights of the Noteholders, by such
appropriate Proceedings as the Trustee shall deem most effective to protect and
enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy or legal or equitable right vested
in the Trustee by this Indenture or by law.
(c) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Trustee, irrespective of whether the principal of any
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by
intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and interest owing and unpaid in respect of the Notes and
to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee,
and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee, except as a
result of negligence or bad faith) and of the Noteholders allowed in
such Proceedings;
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(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Trustee on their behalf; and
(iv) file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the
Trustee or the Holders of Notes allowed in any judicial proceedings
relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of payments directly to such Noteholders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of negligence or bad
faith.
(d) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or
similar Person.
(e) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by the Trustee without the possession
of any of the Notes or the production thereof in any trial or other Proceedings
relative thereto, and any such action or Proceedings instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the benefit of the Holders of the Notes as
provided herein.
(f) In any Proceedings brought by the Trustee (and also any Proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
Holders of the Notes, and it shall not be necessary to make any Noteholder a
party to any such Proceedings.
Section 5.04. Remedies; Priorities. (a) If an Event of Default shall
have occurred and be continuing, the Trustee may do one or more of the following
(subject to Section 5.05):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer and any other obligor upon such Notes moneys adjudged
due;
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(ii) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust
Estate;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the rights
and remedies of the Trustee and the Holders of the Notes; and
(iv) in the event that all the Notes have been declared due
and payable pursuant to Section 5.02, sell the Trust Estate or any
portion thereof or rights or interest therein, at one or more public or
private sales called and conducted in any manner permitted by law;
provided, however, that the Trustee may not sell or otherwise liquidate the
Trust Estate following an Event of Default, other than an Event of Default
described in Section 5.01(i) or (ii) unless (A) the Holders of 100% of the
Outstanding Amount of the Notes consent thereto, (B) the Trustee determines that
the proceeds of such sale or liquidation distributable to the Noteholders are
sufficient to discharge in full all amounts then due and unpaid upon such Notes
for principal and interest or (C) the Trustee determines that the Trust Estate
will not continue to provide sufficient funds for the payment of principal of
and interest on the Notes as they would have become due if the Notes had not
been declared due and payable, and the Trustee obtains the consent of Holders of
at least 66-2/3% of the Outstanding Amount of the Investor Notes. In determining
such sufficiency or insufficiency with respect to clause (B) and (C), the
Trustee may, but need not, obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose.
(b) If the Trustee collects any money or property pursuant to this
Article V following the acceleration of the maturities of the Notes pursuant to
Section 5.02 (so long as such declaration shall not have been rescinded or
annulled), it shall pay out the money or property (other than the Excluded
Amounts, unpaid Servicing Fees, which may be retained by the Servicer free and
clear of the lien of this Indenture) in the following order:
FIRST: to the Trustee, subject to a limit of $250,000 each
year and which $250,000 limit shall be renewed each year, for all
amounts due and owing pursuant to Section 6.07;
SECOND: to Holders of the Class A-1 Notes, Class A-2 Notes and
Class A-3 Notes for amounts due and unpaid on the Class A Notes for
interest, ratably among the Class A Notes, without preference or
priority of any kind, according to the amounts due and payable on the
Class A Notes for interest, to the extent permitted by applicable law;
THIRD: to Holders of the Class A-1 Notes, Class A-2 Notes and
Class A-3 Notes, ratably among Class A Notes, without preference or
priority of any kind, for principal until the Class A-1 Principal
Balance, the Class A-2 Principal Balance and the Class A-3 Principal
Balance have been reduced to zero;
FOURTH: to Holders of the Class B Notes for amounts due and
unpaid on the Class B Notes for interest, to the extent permitted by
applicable law;
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FIFTH: to Holders of the Class B Notes for principal until the
Class B Principal Balance has been reduced to zero;
SIXTH: to Holders of the Class C Notes for amounts due and
unpaid on the Class C Notes for interest, to the extent permitted by
applicable law;
SEVENTH: to Holders of the Class C Notes for principal until
the Class C Principal Balance has been reduced to zero;
EIGHTH: to Holders of the Class D Notes for amounts due and
unpaid on the Class D Notes for interest, to the extent permitted by
applicable law;
NINTH: to Holders of the Class D Notes for principal until the
Class D Principal Balance has been reduced to zero;
TENTH: to Holders of the Class E Notes for amounts due and
unpaid on the Class E Notes for interest (if any), to the extent
permitted by applicable law;
ELEVENTH: to Holders of the Class E Notes for principal until
the Class E Principal Balance has been reduced to zero;
TWELFTH: to the Class F Interest for principal until the Class
F Principal Balance has been reduced to zero;
THIRTEENTH: to the Trustee for any and all amounts due and
owing pursuant to Section 6.07 but not paid pursuant to priority FIRST
above; and
FINALLY: to the Issuer.
The Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section. At least 15 days before such record date,
the Issuer shall mail to each Noteholder and the Trustee a notice that states
the record date, the payment date and the amount to be paid.
Section 5.05. Optional Preservation of the Contracts. If the Notes have
been declared to be due and payable under Section 5.02 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Trustee may, but need not, elect to maintain possession of the
Trust Estate. It is the desire of the parties hereto and the Noteholders that
there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Trustee shall take such desire into account when
determining whether or not to maintain possession of the Trust Estate. In
determining whether to maintain possession of the Trust Estate, the Trustee may,
but need not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Estate for such purpose.
Section 5.06. Limitation of Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
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(i) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding
Amount of the Investor Notes have made written request to the Trustee
to institute such Proceeding in respect of such Event of Default in its
own name as Trustee hereunder;
(iii) a Holder or Holders have offered to the Trustee an
indemnity against the costs, expenses and liabilities to be incurred in
complying with such request in form and substance satisfactory to the
Trustee;
(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
Proceedings; and
(v) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Investor
Notes, the Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
Section 5.07. Unconditional Rights of Noteholders to Receive Principal
and Interest. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
Section 5.08. Restoration of Rights and Remedies. If the Trustee or any
Noteholder has instituted any Proceeding to enforce any right or remedy under
this Indenture and such Proceeding has been discontinued or abandoned for any
reason or has been determined adversely to the Trustee or to such Noteholder,
then and in every such case the Issuer, the Trustee and the Noteholders shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Noteholders shall continue as though no such
Proceeding had been instituted.
Section 5.09. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Trustee or to the Noteholders is intended to
be exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative
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and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.10. Delay or Omission Not a Waiver. No delay or omission of
the Trustee or any Holder of any Note to exercise any right or remedy accruing
upon any Default or Event of Default shall impair any such right or remedy or
constitute a waiver of any such Default or Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the Trustee
or to the Noteholders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Noteholders, as the case may be.
Section 5.11. Control by Noteholders. The Holders of a majority of the
Outstanding Amount of the Investor Notes shall have the right to direct the
time, method and place of conducting any Proceeding for any remedy available to
the Trustee with respect to the Notes or exercising any trust or power conferred
on the Trustee; provided that
(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
(ii) subject to the express terms of Section 5.04, any
direction to the Trustee to sell or liquidate the Trust Estate shall be
by the Holders of Notes representing not less than 66 2/3% of the
Outstanding Amount of the Notes;
(iii) if the conditions set forth in Section 5.05 have been
satisfied and the Trustee elects to retain the Trust Estate pursuant to
such Section, then any direction to the Trustee by Holders of Notes
representing less than 66 2/3% of the Outstanding Amount of the Notes
to sell or liquidate the Trust Estate shall be of no force and effect;
and
(iv) the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.01, the Trustee need not take any
action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
Section 5.12. Waiver of Past Default. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02, the
Holders of Notes of not less than a majority of the Outstanding Amount of the
Investor Notes may waive any past Default or Event of Default and its
consequences except a Default (a) in payment of principal of or interest on any
of the Notes or (b) in respect of a covenant or provision hereof which cannot be
modified or amended without the consent of the Holder of each Note. In the case
of any such waiver, the Issuer, the Trustee and the Holders of the Notes shall
be restored to their former positions and rights hereunder, respectively;
provided that no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to
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have been cured and not to have occurred, for every purpose of this Indenture;
provided that no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereto.
Section 5.13. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; provided that the provisions of this Section shall not
apply to (a) any suit instituted by the Trustee, (b) any suit instituted by any
Noteholder, or group of Noteholders, in each case holding in the aggregate more
than 10% of the Outstanding Amount of the Investor Notes or (c) any suit
instituted by any Noteholder for the enforcement of the payment of principal of
or interest on any Note on or after the respective due dates expressed in such
Note and in this Indenture (or, in the case of redemption, on or after the
Redemption Date).
Section 5.14. Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
Section 5.15. Action on Notes. The Trustee's right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of
the Trustee or the Noteholders shall be impaired by the recovery of any judgment
by the Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Trust Estate or upon any of the assets of the
Issuer. Any money or property collected by the Trustee shall be applied in
accordance with Section 5.04(b).
Section 5.16. Performance and Enforcement of Certain Obligations. (a)
Promptly following a request from the Trustee to do so and at the Transferor's
expense, the Issuer agrees to take all such lawful action as the Trustee may
request to compel or secure the performance and observance by the Transferor, in
its capacity as Transferor and as Servicer of its obligations to the Issuer
under or in connection with the Transfer and Servicing Agreement in accordance
with the terms thereof, and to exercise any and all rights, remedies, powers and
privileges lawfully available to the Issuer under or in connection with the
Transfer and Servicing Agreement to the extent and in the manner directed by the
Trustee, including the transmission of notices of default on the part of the
Transferor or in its capacity as Servicer thereunder and the institution of
legal or administrative actions or proceedings to compel or secure performance
by
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the Transferor of its obligations under the Transfer and Servicing Agreement,
both in its capacity as Transferor and as Servicer.
(b) If an Event of Default has occurred and is continuing, the Trustee
may, and, at the direction (which direction shall be in writing) of the Holders
of at least 66-2/3% of the Outstanding Amount of the Investor Notes shall,
exercise all rights, remedies, powers, privileges and claims of the Issuer
against the Transferor or under or in connection with the Transfer and Servicing
Agreement, including the right or power to take any action to compel or secure
performance or observance by the Transferor of its obligations to the Issuer
thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Transfer and Servicing Agreement, and any right of
the Issuer to take such action shall be suspended.
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ARTICLE VI
THE TRUSTEE
Section 6.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations (including, without limitation, to
exercise any discretionary powers granted by this Indenture) shall be
read into this Indenture against the Trustee; and
(ii) 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 pursuant to the requirements of this
Indenture; provided, however, the Trustee shall examine the
certificates and opinions to determine whether or not they conform on
their face to the requirements of this Indenture.
The Trustee shall not be required to determine, confirm or recalculate
the information contained in the Servicer's Certificate delivered to it pursuant
to the Transfer and Servicing Agreement.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of subsection
6.01(b);
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with the
direction of any requisite majority of Noteholders authorized to give
direction to the Trustee pursuant to this Indenture.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to subsections 6.01(a), (b) and (c);
(e) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Issuer.
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(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 Indenture
or the Transfer and Servicing Agreement.
(g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayments of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
Section 6.02. Rights of Trustee. (a) The Trustee may conclusively rely
on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officer's Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officer's Certificate or Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of, any
such agent, attorney, custodian or nominee appointed with due care by it
hereunder.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the Notes
shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent entitlement order, approval or other
paper or document.
(g) The Trustee shall not be charged with knowledge of any Event of
Default unless either (1) a Responsible Officer of the Trustee shall have actual
knowledge or (2) the Trustee shall have received notice thereof from the Issuer
or a Holder.
Section 6.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer or its affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Note
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Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Trustee, in its capacity as Trustee, must comply with Sections 6.11
and 6.12.
Section 6.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
the Trust Estate, this Indenture or the Notes, it shall not be accountable for
the Issuer's use of the proceeds from the Notes, and it shall not be responsible
for any statement of the Issuer in the Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Trustee's
certificate of authentication.
Section 6.05. Notice of Defaults. If a Default occurs and is continuing
and if it is actually known to a Responsible Officer of the Trustee, the Trustee
shall mail to each Noteholder notice of the Default within 90 days after it
occurs. Except in the case of a Default in payment of principal of or interest
on any Note (including payments pursuant to the mandatory redemption provisions
of such Note), the Trustee may withhold the notice if and so long as a committee
of its Responsible Officers in good faith determines that withholding the notice
is in the interests of Noteholders.
Section 6.06. Reports by Trustee to Holders. The Trustee shall, to the
extent provided to it by the Servicer pursuant to Section 5.06 of the Transfer
and Servicing Agreement, deliver to each Noteholder upon written request and at
the expense of such Noteholder, such information as may be required to enable
such holder to prepare its federal and state income tax returns. The Trustee
shall not be required to determine, confirm or recompute any such information
provided to it.
Section 6.07. Compensation and Indemnity. The Issuer shall pay to the
Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuer shall reimburse the Trustee for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The Issuer
shall indemnify and hold harmless the Trustee and its officers, directors,
employees and agents (retained by the Trustee in order to perform its duties
pursuant to this Indenture) against any and all loss, liability or expense
(including the fees of either in-house counsel or outside counsel, but not both)
incurred by it in connection with the administration of the Trust Estate and the
performance of its duties hereunder. The Trustee shall notify the Issuer
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Issuer shall not relieve the Issuer of its obligations hereunder
unless such loss, liability or expense could have been avoided with such prompt
notification and then only to the extent of such loss, expense or liability
which could have been so avoided. The Issuer shall defend, any claim against the
Trustee, the Trustee may have separate counsel and if it does, the Issuer shall
pay the fees and expenses of such counsel. The Issuer need not reimburse any
expense or indemnify against any loss, liability or expense incurred by the
Trustee through the Trustee's own willful misconduct, negligence or bad faith.
The Issuer's payment obligations to the Trustee pursuant to this
Section shall survive the discharge of this Indenture or the earlier resignation
or removal of the Trustee. When the
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Trustee incurs expenses after the occurrence of a Default specified in Section
5.01(iv) or (v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or similar law.
Notwithstanding anything herein to the contrary, the Trustee's right to
enforce any of the Issuer's payment obligations pursuant to this Section 6.07
shall be subject to the provisions of Section 11.17.
Section 6.08. Replacement of Trustee. No resignation or removal of the
Trustee and no appointment of a successor Trustee shall become effective until
the acceptance of appointment by the successor Trustee pursuant to this Section
6.08. The Trustee may resign at any time by so notifying the Issuer. The Holders
of a majority in Outstanding Amount of the Notes may remove the Trustee by so
notifying the Trustee in writing and may appoint a successor Trustee. The Issuer
shall remove the Trustee if:
(i) the Trustee fails to comply with Section 6.11;
(ii) the Trustee shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to the Trustee or all or substantially all of its
property, or a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings,
or for the winding-up or liquidation of its affairs, shall have been
entered against the Trustee; or the Trustee shall admit in writing its
inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations; or
(iii) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuer shall promptly appoint a successor
Trustee, which successor shall be reasonably acceptable to the Transferor.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Noteholders. The retiring Trustee shall promptly transfer all property held by
it as Trustee to the successor Trustee.
If a successor Trustee does not take office within 45 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of not less than a majority in Outstanding Amount of the Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
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If the Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Issuer's obligations under Section 6.07 shall continue for the
benefit of the retiring Trustee.
Section 6.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association without any further act shall be the successor Trustee provided that
such corporation or banking association shall be otherwise qualified and
eligible under Section 6.11.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have.
Section 6.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction, the
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons reasonably acceptable to the Issuer to act as a
co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust Estate, and to vest in such Person or Persons, in such
capacity and for the benefit of the Noteholders, such title to the 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
6.11 and no notice to Noteholders of the appointment of any co-trustee or
separate trustee shall be required under Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations shall
be
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exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VI. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Indenture on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 6.11. Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA Section 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition and have a long-term deposit rating
of at least A3 from Moody's or otherwise be acceptable to Moody's. The Trustee
shall comply with TIA Section 310(b), including the optional provision permitted
by the second sentence of TIA Section 310(b)(9); provided, however, that there
shall be excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities of the issuer are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
Section 6.12. Preferential Collection of Claims Against. The Trustee
shall comply with TIA Section 311(a), excluding any creditor relationship listed
in TIA Section 311(b). A Trustee who has resigned or been removed shall be
subject to TIA Section 311(a) to the extent indicated.
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ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer To Furnish Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Trustee (a)
not more than five days after the earlier of (i) each Record Date and (ii) three
months after the last Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Notes as of
such Record Date, (b) at such other times as the Trustee may request in writing,
within 30 days after receipt by the Issuer of any such request, a list of
similar form and content as of a date not more than 10 days prior to the time
such list is furnished; provided, however, that so long as the Trustee is the
Note Registrar, no such list shall be required to be furnished.
Section 7.02. Preservation of Information; Communications to
Noteholders. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Trustee as provided in
Section 7.01 and the names and addresses of Holders of Notes received by the
Trustee in its capacity as Note Registrar. The Trustee may destroy any list
furnished to it as provided in such Section 7.01 upon receipt of a new list so
furnished.
(b) Noteholders may communicate, pursuant to TIA Section 312(b), with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Trustee and the Note Registrar shall have the
protection of TIA Section 312(c).
Section 7.03. Reports by Issuer. (a) The Issuer shall:
(i) file with the Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the annual
reports and 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 Issuer may
be required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act;
(ii) file with the Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Trustee (and the Trustee shall transmit by
mail to all Noteholders described in TIA Section 313(c)) such summaries
of any information, documents and reports required to be filed by the
Issuer pursuant to clauses (i) and (ii) of this Section 7.03(a) as may
be required by rules and regulations prescribed from time to time by
the Commission.
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(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
Section 7.04. Reports by Trustee. If required by TIA Section 313(a),
within 60 days after each March 31 beginning with March 31, 2001, the Trustee
shall mail to each Noteholder as required by TIA Section 313(c) a brief report
dated as of such date that complies with TIA Section 313(a). The Trustee also
shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Trustee with the Commission and each stock exchange, if any, on
which the Notes are listed. The Issuer shall notify the Trustee in writing if
and when the Notes are listed on any stock exchange.
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ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Trustee pursuant to this Indenture. The Trustee shall apply
all such money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the
Trust Estate, the Trustee may take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of
appropriate Proceedings. Any such action shall be without prejudice to any right
to claim a Default or Event of Default under this Indenture and any right to
proceed thereafter as provided in Article V.
Section 8.02. Collection and Reserve Accounts. On or prior to the
Closing Date, the Issuer shall cause the Servicer to establish and maintain, in
the name of the Trustee, for the benefit of the Noteholders the Collection
Account as provided in Section 5.01(a)(i) of the Transfer and Servicing
Agreement and for the benefit of the Holders of the Investor Notes, the Reserve
Account as provided in Section 5.01(a)(ii) of the Transfer and Servicing
Agreement.
On each Payment Date and Redemption Date, the Trustee shall distribute
from the Collection Account funds in the amounts, for the purpose and in the
priority set forth in Section 5.04 of the Transfer and Servicing Agreement.
Section 8.03. General Provisions Regarding Accounts. (a) So long as no
Default or Event of Default shall have occurred and be continuing, all or a
portion of the funds in the Collection Account and Reserve Account shall be
invested in Eligible Investments and reinvested by the Trustee upon Issuer
Order, subject to the provisions of Section 5.01(b) of the Transfer and
Servicing Agreement (which Issuer Order may be upon direction of the Servicer).
All income or other gain from investments of moneys deposited in the Reserve
Account shall be deposited by the Trustee in the Collection Account, and any
loss resulting from such investments shall be charged to such account. The
Issuer will not direct the Trustee to make any investment of any funds or to
sell any investment held in any of the Reserve Account unless the security
interest granted and perfected in such account will continue to be perfected in
such investment or the proceeds of such sale.
(b) Subject to Section 6.01(c), the Trustee shall not in any way be
held liable by reason of any insufficiency in the Collection Account and Reserve
Account resulting from any loss on any Eligible Investment included therein
pursuant to the terms of the Basic Documents except for losses attributable to
the Trustee's failure to make payments on such Eligible Investments issued by
the Trustee, in its commercial capacity as principal obligor and not as trustee,
in accordance with their terms. In no event shall the Trustee be liable for the
selection of Eligible Investments or for investment losses incurred thereon
(except in the case of gross negligence of the Trustee). The Trustee shall have
no liability in respect of losses incurred as a result of the liquidation of any
Eligible Investment prior to its stated maturity or the failure of the
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Issuer to provide timely written investment direction (except in the case of
gross negligence of the Trustee).
(c) If (i) the Issuer shall have failed to give investment directions
for any funds on deposit in the Collection Account and Reserve Account to the
Trustee by 12:00 noon New York Time (or such other time as may be agreed in
writing by the Issuer and Trustee) on any Business Day; or (ii) a Default or
Event of Default shall have occurred and be continuing with respect to the Notes
but the Notes shall not have been declared due and payable pursuant to Section
5.02, or, if such Notes shall have been declared due and payable following an
Event of Default and amounts collected or receivable from the Trust Estate are
being applied in accordance with Section 5.05; then the Trustee shall, to the
fullest extent practicable, invest and reinvest funds in the Collection Account
and Reserve Account in Eligible Investments of the same type as the Trustee was
most recently directed to invest such funds and maturing prior to the succeeding
Payment Date in accordance with Section 5.01 of the Transfer and Servicing
Agreement.
Section 8.04. Release of Trust Estate. (a) Subject to the payment of
its fees and expenses pursuant to Section 6.07, the Trustee may, and when
required by the provisions of this Indenture shall, execute instruments to
release property from the lien of this Indenture, or convey the Trustee's
interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by the Trustee as provided in this Article VIII 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.
(b) The Trustee shall, at such time as there are no Notes Outstanding
and all sums due the Trustee pursuant to Section 6.07 have been paid, release
any remaining portion of the Trust Estate that secured the Notes from the lien
of this Indenture and release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Collection Account and Reserve Account. The
Trustee shall release property from the lien of this Indenture pursuant to this
Section 8.04(b) only upon receipt of an Issuer Request accompanied by an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA)
Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.01.
(c) Notwithstanding anything to the contrary in this Indenture or the
Transfer and Servicing Agreement, immediately prior to the release of any
portion of the Trust Estate or any funds on deposit in the Collection Account
and Reserve Account pursuant to this Indenture, the Trustee shall remit to the
Transferor for its own account any funds that, upon such release, would
otherwise be remitted to the Issuer.
Section 8.05. Opinion of Counsel. The Trustee shall receive at least
seven days' written notice when requested by the Issuer to take any action
pursuant to Section 8.04(a), accompanied by copies of any instruments involved,
and the Trustee shall also require, as a condition to such action, an Opinion of
Counsel, in form and substance reasonably satisfactory to the Trustee, stating
the legal effect of any such action, outlining the steps required to complete
the same, and concluding that all conditions precedent to the taking of such
action have been complied with and such action will not materially and adversely
impair the security for the Notes or the rights of the Noteholders in
contravention of the provisions of this Indenture; provided, however, that such
Opinion of Counsel shall not be required to express an opinion as to the fair
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value of the Trust Estate. The Trustee and counsel rendering any such opinion
may conclusively rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the Trustee in
connection with any such action.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with prior notice to the
Rating Agencies, the Issuer and the Trustee, when authorized by an Issuer Order,
at any time and from time to time, may enter into one or more indentures
supplemental hereto (which shall conform to the provisions of the TIA as in
force at the date of the execution thereof), in form reasonably satisfactory to
the Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Trustee any property subject or required to
be subjected to the lien of this Indenture, or to subject to the lien
of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; provided that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the
interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary, as evidenced by an
Opinion of Counsel, to effect the qualification of this Indenture under
the TIA or under any similar federal statute hereafter enacted and to
add to this Indenture such other provisions as may be expressly
required by the TIA.
The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
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(b) The Issuer and the Trustee, when authorized by an Issuer Order,
may, also without the consent of any of the Holders of the Notes but with prior
notice to the Rating Agencies, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholder.
Section 9.02. Supplemental Indentures with Consent of Noteholders. The
Issuer and the Trustee, when authorized by an Issuer Order, also may, with prior
notice to the Rating Agencies and with the consent of the Holders of not less
than a majority of the Outstanding Amount of the Notes, by Act of such Holders
delivered to the Issuer and the Trustee, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that no such supplemental indenture shall, without
the consent of the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal
of or interest on any Note, change the order of priority of payments to
be made on any Note or reduce the principal amount thereof, the
interest rate thereon or the Redemption Price with respect thereto,
change the provisions of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the 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 the provisions of this Indenture requiring the
application of funds available therefor, as provided in Article V, to
the payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption, on or
after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the
Investor Notes required to direct the Trustee to direct the Issuer to
sell or liquidate the Trust Estate pursuant to Section 5.04;
(v) modify any provision of this Section 9.02 except to
increase any percentage specified herein or to provide that certain
additional provisions of this Indenture or the Basic Documents cannot
be modified or waived without the consent of the Holder of each
Outstanding Note affected thereby;
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(vi) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest due on any Note on any Payment Date or the calculation of the
amount of principal to be paid on any Payment Date or the amount to be
paid to any Class on any Payment Date (including the calculation of any
of the individual components of such calculations); or
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien of this Indenture on any property at any time
subject hereto or deprive the Holder of any Note of the security
provided by the lien of this Indenture.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section, the Trustee shall mail to the
Holders of the Notes to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
Section 9.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Trustee shall be entitled to receive, and subject to
Sections 6.01 and 6.02, shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture that affects the Trustee's own
rights, duties, liabilities or immunities under this Indenture or otherwise.
Section 9.04. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Trustee, the Issuer and the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
Section 9.05. Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the TIA as then in effect so
long as this Indenture shall then be qualified under the TIA.
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Section 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Trustee shall, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Issuer or the Trustee shall so determine, new
Notes so modified as to conform, in the opinion of the Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
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ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption. On any Payment Date following any
Calculation Date as of which the Aggregate Contract Principal Balance is less
than ten percent 10% of the Initial Aggregate Contract Principal Balance, the
Servicer shall have the option to cause the redemption of the Notes by
depositing with the Trustee the sum of (i) the Outstanding Amount (after giving
effect to the payment of any principal on such Payment Date) of all Notes and
(ii) the Class A-1 Note Interest, Class A-2 Note Interest, Class A-3 Note
Interest, Class B Note Interest, Class C Note Interest, Class D Note Interest
and Class E Note Interest (if any) due on such Payment Date. Upon receipt of
such amounts and all amounts then owed to the Trustee, the Trustee shall (x)
make the final payment in full of the Outstanding Amount and all accrued and
unpaid interest to the Noteholders and (y) release any remaining Trust Estate to
the Issuer as determined by the Servicer and delivered in writing to the Trustee
20 days prior to the Redemption Date.
Section 10.02. Form of Redemption Notice. Notice of redemption under
Section 10.01 shall be given by the Trustee by first-class mail, postage
prepaid, mailed not less than ten and not more than 30 days prior to the
applicable Redemption Date to each Holder of Notes to be redeemed as of the
close of business on the Record Date preceding the applicable Redemption Date,
at such Holder's address appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or agency of
the Issuer to be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Trustee in the
name and at the expense of the Issuer. Failure to give notice of redemption, or
any defect therein, to any Holder of any Note shall not impair or affect the
validity of the redemption of any other Note.
Section 10.03. Notes Payable on Redemption Date. The Notes to be
redeemed shall, following notice of redemption as required by Section 10.02 (in
the case of redemption pursuant to Section 10.01), on the Redemption Date become
due and payable at the Redemption Price and (unless the Issuer shall default in
the payment of the Redemption Price) no interest shall accrue on the Redemption
Price for any period after the date to which accrued interest is calculated for
purposes of calculating the Redemption Price.
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ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions etc. (a) Upon any
application or request by the Issuer to the Trustee to take any action under any
provision of this Indenture, the Issuer shall furnish to the Trustee (i) an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with,
(ii) an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with and (iii) (if required by
the TIA) an Independent Certificate from a firm of certified public accountants
meeting the applicable requirements of this Section, except that, in the case of
any such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) Notwithstanding Section 2.09 or any other provision of this
Section, the Issuer may (A) collect, liquidate, sell or otherwise dispose of
Contracts and Financed Equipment as and to the extent permitted or required by
the Basic Documents, (B) accept or make deposits into the Collection Account,
(C) make cash payments out of the Collection Account and Reserve Account and (D)
redeem the Notes as and to the extent permitted or required by the Basic
Documents.
Section 11.02. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
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Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Transferor or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the
Transferor, the Issuer, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Trustee's right to rely upon the truth and accuracy of
any statement or opinion contained in any such document as provided in Article
VI.
Section 11.03. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Trustee, and, where it is hereby
expressly required, to the Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Noteholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.01)
conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any 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 action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done,
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omitted or suffered to be done by the Trustee or the Issuer in reliance thereon,
whether or not notation of such action is made upon such Note.
Section 11.04. Notices, etc. to Trustee, Issuer and Rating Agencies.
Any request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other documents provided or permitted by this Indenture to be
made upon, given or furnished to or filed with:
(a) the Trustee by any Noteholder or by the Issuer shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee and received at its Corporate Trust Office, or
(b) the Issuer by the Trustee or by any Noteholder shall be sufficient
for every purpose hereunder if in writing and mailed, first-class, postage
prepaid, to the Issuer addressed to: Advanta Equipment Receivables Series 2000-1
LLC, as Issuer, 639 Isbell Road Suite 390-1, Reno, Nevada 89509, Attention:
Treasury. The Issuer shall promptly transmit any notice received by it from the
Noteholders to the Trustee.
(c) the Rating Agencies by the Issuer or the Trustee shall be
sufficient for every purpose hereunder if in writing, personally delivered or
mailed by certified mail, return receipt requested to (i) in the case of Moody's
Investors Service, Inc., at the following address: 99 Church Street, 4th Floor,
New York, New York 10007, Attention of ABS Monitoring Department, and (ii) in
the case of Fitch IBCA, Inc., at the following address: One State Street Plaza,
New York, New York 10004, Attention of Tom Reese; or as to each of the
foregoing, at such other address as shall be designated by written notice to the
other parties.
Section 11.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders 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 Noteholder affected by such
event, at such Noteholder's address as it appears on the Note Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Noteholders is given
by mail, neither the failure to mail such notice nor any defect in any notice so
mailed to any particular Noteholder shall affect the sufficiency of such notice
with respect to other Noteholders, and any notice that is mailed in the manner
herein provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
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Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder and shall not under any circumstance constitute a Default or
Event of Default.
Section 11.06. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, to the
extent reasonably satisfactory to the Trustee, the Issuer may enter into any
agreement with any Holder of a Note providing for a method of payment, or notice
by the Trustee or any Paying Agent to such Holder, that is different from the
methods provided for in this Indenture for such payments or notices. The Issuer
will furnish to the Trustee a copy of each such agreement and the Trustee will
cause payments to be made and notices to be given in accordance with such
agreements.
Section 11.07. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the TIA,
such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties
on any person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
Section 11.08. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 11.09. Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not.
All covenants and agreements of the Trustee in this Indenture shall
bind its successors, co-trustees and agents of the Trustee.
Section 11.10. Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 11.11. Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
Section 11.12. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 11.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
60
<PAGE> 67
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS AND THE OBLIGATIONS, RIGHTS, AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 11.14. Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.15. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Trustee or any other counsel reasonably acceptable
to the Trustee) to the effect that such recording is necessary either for the
protection of the Noteholders or any other Person secured hereunder or for the
enforcement of any right or remedy granted to the Trustee under this Indenture.
Section 11.16. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer or the Trustee on the
Notes or under this Indenture or any certificate or other writing delivered in
connection herewith or therewith, against (i) the Trustee in its individual
capacity, (ii) any manager or member of the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Trustee in its
individual capacity, any manager or member of the Issuer, the Trustee or of any
successor or assign of the Trustee in its individual capacity, except as any
such Person may have expressly agreed (it being understood that the Trustee has
no such obligations in their individual capacity) and except that any such
partner, owner, beneficiary, manager or member shall be fully liable, to the
extent provided by applicable law, for any unpaid capital contribution.
Section 11.17. No Petition. The Trustee (in its capacity as Trustee),
by entering into this Indenture, and each Noteholder, by accepting a Note,
hereby covenant and agree that they will not at any time institute against the
Transferor or the Issuer, or voluntarily join in any institution against the
Transferor or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, this Indenture or any of the Basic Documents.
Section 11.18. Inspection. The Issuer agrees that, on 5 days prior
notice, it will permit any representative of the Trustee, during the Issuer's
normal business hours, to examine all the books of account, records, reports,
and other papers of the Issuer, to make copies and extracts therefrom, to cause
such books to be audited by Independent certified public accountants, and to
discuss the Issuer's affairs, finances and accounts with the Issuer's officers,
employees, and Independent certified public accountants, all at such reasonable
times and as often as may be reasonably requested. The Trustee shall, and shall
cause its representatives, to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable applications
for confidential treatment are unavailing) and except to the extent that the
Trustee may reasonably determine that such disclosure is consistent with its
obligations hereunder.
61
<PAGE> 68
Section 11.19. Restrictions on Transfer of Class F Interest. To the
fullest extent permitted by applicable law, the Class F Interest (or any
interest therein) may not be transferred by the initial Holder of the Class F
Interest to any Person.
Section 11.20. Rule 144A Information. In order to preserve the
exemption for resales and other transfers under Rule 144A under the Securities
Act, the Issuer shall provide to any Class E Noteholder and any prospective
purchaser or transferee designated by a Class E Noteholder, upon request of the
Class E Noteholder or prospective purchaser or transferee, the information
required by Rule 144A to enable resales of such Class E Notes to be made
pursuant to Rule 144A.
Section 11.21. Tax Treatment. Each Class A-1 Noteholder, Class A-2
Noteholder, Class A-3 Noteholder, Class B Noteholder, Class C Noteholder, Class
D Noteholder and following a transfer of the Class E Notes to a third party, the
Class E Noteholder, by acceptance of their Note, and each such holder of a
beneficial interest in a Class A-1 Note, Class A-2 Note, Class A-3 Note, Class B
Note, Class C Note, Class D Note and Class E Note, by the acquisition of a
beneficial interest therein, agree to treat the Class A-1 Notes, Class A-2
Notes, Class A-3 Notes, Class B Notes, Class C Notes, Class D Notes and Class E
Notes as indebtedness of the Transferor for applicable federal, state, and local
income and franchise tax law and for purposes of any other tax imposed on or
measured by income.
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<PAGE> 69
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized, all as of the day and year first above written.
ADVANTA EQUIPMENT RECEIVABLES
SERIES 2000-1 LLC
By: /s/ Mark Shapiro
----------------------------------
Name: Mark Shapiro
Title: Manager
BANKERS TRUST COMPANY
not in its individual capacity but solely
as Trustee,
By: /s/ Peter Becker
----------------------------------
Name: Peter Becker
Title: Assistant Vice President
63
<PAGE> 70
)
____________________ ) ss.:
)
BEFORE ME, the undersigned authority, a Notary Public in and for said
County and State, on this day personally appeared Peter Becker known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said New York banking
corporation and that he executed the same as the corporation for the purpose and
consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 29th day of March, 2000.
/s/ Laura Carlos
----------------------------
Notary Public
[Seal]
My commission expires:
June 16, 2001
64
<PAGE> 71
EXHIBIT A
LIST OF CONTRACTS
A-1
<PAGE> 72
EXHIBIT B
FORM OF TRANSFER AND SERVICING AGREEMENT
B-1
<PAGE> 73
EXHIBIT C
FORM OF DEPOSITORY AGREEMENT
C-1
<PAGE> 74
EXHIBIT D
FORM OF CLASS [A-1] [A-2] [A-3] [B] [C] [D] [E] NOTE
REGISTERED $_________________ *
No. ______
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO.___________
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]**
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF COVENANTS AND AGREES
THAT IT WILL NOT AT ANY TIME INSTITUTE AGAINST THE TRANSFEROR OR THE ISSUER, OR
JOIN IN ANY INSTITUTION AGAINST THE TRANSFEROR OR THE ISSUER, OF, ANY BANKRUPTCY
PROCEEDINGS UNDER ANY UNITED STATES FEDERAL OR STATE BANKRUPTCY OR SIMILAR LAW
IN CONNECTION WITH ANY OBLIGATIONS RELATING TO THE NOTES OR THE INDENTURE.
- --------
* Denominations of $1,000 and integral multiples thereof; provided, however,
that a single Note of any Class may be issued in any denominations.
** For Class A-1, Class A-2, Class A-3, Class B, Class C and Class D Notes
only.
D-1
<PAGE> 75
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
[THE HOLDER OF THIS CLASS [A-1, A-2, A-3, B, C, D or E] NOTE, BY
ACCEPTANCE OF THIS NOTE, AND EACH HOLDER OF A BENEFICIAL INTEREST IN THIS NOTE,
BY THE ACQUISITION OF A BENEFICIAL INTEREST THEREIN, AGREE TO TREAT THE CLASS
[A-1, A-2, A-3, B, C, D or E] NOTES AS INDEBTEDNESS OF ADVANTA EQUIPMENT
RECEIVABLES SERIES 2000-1 LLC FOR APPLICABLE FEDERAL, STATE, AND LOCAL INCOME
AND FRANCHISE TAX LAW AND FOR PURPOSES OF ANY OTHER TAX IMPOSED ON OR MEASURED
BY INCOME.]
D-2
<PAGE> 76
[ADVANTA EQUIPMENT RECEIVABLES SERIES 2000-1 LLC]
[CLASS A-1] [CLASS A-2] [CLASS A-3]
[CLASS B] [CLASS C] [CLASS D] [CLASS E]
ASSET BACKED NOTES
[Advanta Equipment Receivables Series 2000-1 LLC], a limited liability
company organized and existing under the laws of the State of Nevada (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
[__________], or registered assigns, the principal sum of [_________] DOLLARS
payable on each Payment Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $[INSERT INITIAL PRINCIPAL
AMOUNT OF NOTE] and the denominator of which is [$181,285,000 for Class A-1
Notes] [$63,269,000 for Class A-2 Notes] [$84,623,000 for Class A-3 Notes]
[$28,215,000 for Class B Notes] [$18,810,000 for Class C Notes] [$9,405,000 for
Class D Notes] [$23,512,000 for Class E Notes] by (ii) the aggregate amount, if
any, payable on such Payment Date under the terms of Section 5.04 of the
Transfer and Servicing Agreement in respect of principal on the [Class A-1]
[Class A-2] [Class A-3] [Class B] [Class C] [Class D] [Class E] Notes; provided,
however, the entire unpaid principal amount of this Note shall be due and
payable on the earlier of the [July 2002 Payment Date for the Class A-1] [May
2003 Payment Date for the Class A-2] [February 2007 Payment Date for the Class
A-3] [February 2007 Payment Date for the Class B] [February 2007 Payment Date
for the Class C] [February 2007 Payment Date for the Class D] [February 2007
Payment Date for the Class E] Notes and the Redemption Date, if any, pursuant to
Section 10.01 of the Indenture. The Issuer will pay interest on this Note at the
[Class A-1] [Class A-2] [Class A-3] [Class B] [Class C] [Class D] [Class E] Note
Interest Rate on each Payment Date until the principal of this Note is paid or
made available for payment, on the principal amount of this Note outstanding on
the preceding Payment Date after giving effect to all payments of principal made
on such preceding Payment Date (or in the case of the first Payment Date, on the
initial principal amount of this Note). Interest on this Note will accrue for
each Payment Date from and including the most recent Payment Date on which
interest has been paid to but excluding such Payment Date or, for the initial
Payment Date from ______ __, 2000 to but excluding such Payment Date. Interest
will be computed on the basis of a 360-day year of twelve 30-day months. Such
principal of and interest on this Note shall be paid in the manner specified on
the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
D-3
<PAGE> 77
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
ADVANTA EQUIPMENT RECEIVABLES
SERIES 2000-1 LLC,
By:__________________________
Name:
Title:
D-4
<PAGE> 78
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
__________________________________________________
BANKERS TRUST COMPANY
not in its individual capacity but
solely as Trustee,
By:_______________________________________________
Name:
Title:
D-5
<PAGE> 79
[REVERSE OF NOTE]
This Note is one of the [Class A-1] [Class A-2] [Class A-3] [Class B]
[Class C] [Class D] [Class E] which Class __ Notes are issued in the initial
principal amount of $__________ and are part of a duly authorized issue of Notes
of the Issuer, designated as its Equipment Receivables Asset-Backed Notes,
Series 2000-1 and including the Class A-1 Notes issued in the initial Class A-1
Principal Balance of $181,285,000, the initial Class A-2 Principal Balance of
$63,269,000, the initial Class A-3 Principal Balance of $84,623,000, the initial
Class B Principal Balance of $28,215,000, the initial Class C Principal Balance
of $18,810,000 and the initial Class D Principal Balance of $9,405,000 (herein
collectively called the "Notes"), all issued under an Indenture dated as of
March 1, 2000 (such indenture, as supplemented or amended, is herein called the
"Indenture"), between the Issuer and Bankers Trust Company, as trustee (the
"Trustee", which term includes any successor Trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights and obligations thereunder of the
Issuer, the Trustee and the Holders of the Notes. The Notes are subject to all
terms of the Indenture. All terms used in this Note that are defined in the
Indenture, as supplemented or amended, shall have the meanings assigned to them
in or pursuant to the Indenture, as so supplemented or amended.
The Notes are secured by the collateral pledged as security therefor as
provided in the Indenture. The Class E Notes are subordinated to the Class D
Notes, Class C Notes, Class B Notes and Class A Notes. The Class D Notes are
subordinated to the Class C Notes, the Class B Notes and the Class A Notes. The
Class C Notes are subordinated to the Class B Notes and the Class A Notes. The
Class B Notes are subordinated to the Class A Notes.
Principal of the Notes will be payable on each Payment Date in an
amount described on the face hereof. "Payment Date" means the 15th day of each
calendar month, or, if any such date is not a Business Day, the next succeeding
Business Day, commencing April 17, 2000.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the [ ] Payment Date [for
Class A-1] [ ] Payment Date [for Class A-2] [ ] Payment Date [for
Class A-3] [ ] Payment Date [for Class B] [ ] Payment Date [for
Class C] [ ] Payment Date [for Class D] [ ] Payment Date [for
Class E] [ ] and the Redemption Date, if any, pursuant to Section 10.01
of the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes shall be due and payable on the date on which an Event of
Default shall have occurred and be continuing and the Notes have become
immediately due and payable in the manner provided in Section 5.02 of the
Indenture. All principal payments on the Notes of a Class shall be made pro rata
to the Noteholders of such Class entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor Notes)
on the Note Register as of the close of business on each Record Date, except
that with respect to Notes registered on the Record Date in the name of the
nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by
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<PAGE> 80
wire transfer in immediately available funds to the account designated by such
nominee [and, for the Class E Notes, special payment provisions to be
described]. Such checks shall be mailed to the Person entitled thereto at the
address of such Person as it appears on the Note Register as of the applicable
Record Date without requiring that this Note be submitted for notation of
payment. Any reduction in the principal amount of this Note (or any one or more
Predecessor Notes) effected by any payments made on any Payment Date shall be
binding upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Payment Date, then the Trustee, in the name of and on behalf of
the Issuer, will notify the Person who was the Registered Holder hereof as of
the second Record Date preceding such Payment Date by notice mailed no later
than thirty days prior to such final Payment Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Trustee's principal Corporate Trust Office or at the office of the Trustee's
agent appointed for such purposes located in The City of New York.
As provided in the Indenture, the Notes may be redeemed in whole, but
not in part, at the option of the Servicer, on any Payment Date following any
Calculation Date as of which the Aggregate Contract Principal Balance is less
than ten percent of the Initial Aggregate Contract Principal Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by 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 a member firm of a national
securities exchange, and such other documents as the Trustee may require, and
thereupon one or more new Notes of authorized denominations and in the same
aggregate principal amount and same class will be issued to the designated
transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer or the Trustee on the Notes or under the Indenture or any
certificate or other writing delivered in connection therewith, against (i) the
Trustee in its individual capacity, (ii) any manager or member of the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Trustee in its individual capacity, any manager or member of the Issuer, the
Trustee or of any successor or assign of the Trustee in its individual capacity,
except as any such Person may have expressly agreed and except that any such
partner, owner, beneficiary, manager or member shall be fully liable, to the
extent provided by applicable law, for any unpaid capital contribution.
2
<PAGE> 81
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Transferor or the Issuer, or join in any institution
against the Transferor or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
Person in whose name this Note (as of the day of determination or as of such
other date as may be specified in the Indenture) is registered as the owner
hereof for all purposes, whether or not this Note be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one of more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Trustee to amend or waive certain terms and conditions set
forth in the Indenture without the consent of Holders of the Notes issued
thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holders of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
3
<PAGE> 82
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither the Trustee in its individual capacity,
any manager or member of the Issuer, nor any of their respective partners,
beneficiaries, agents, officers, directors, managers, members, employees or
successors or assigns shall be personally liable for, nor shall recourse be had
to any of them for, the payment of principal of or interest on, or performance
of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture. The Holder of this
Note by the acceptance hereof agrees that, except as expressly provided in the
Basic Documents in the case of an Event of Default under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Note.
4
<PAGE> 83
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
_______________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
____________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:__________________________ __________________________*
Signature Guaranteed:
* NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
<PAGE> 84
EXHIBIT E
FORM OF CLASS E NOTE TRANSFEREE CERTIFICATION
Bankers Trust Company, as Trustee
[Address]
[Name of Seller of
Specified Class E Notes]
Ladies and Gentlemen:
In connection with our proposed purchase of Class E Notes (the
"Notes") representing obligations of the Advanta Equipment Receivables Series
2000-1 LLC (the "Issuer"), the investor on whose behalf the undersigned is
executing this letter (the "Purchaser") represents, covenants and warrants that:
1. The Purchaser has received such information as the
Purchaser deems necessary in order to make its investment decision.
[2. [This paragraph may be used only connection with the
transfer from the Issuer to the first transferee.] The purchaser is either an
"Accredited Investor" as that term is defined in Regulation D promulgated under
the Securities Act of 1933, as amended (the "1933 Act") or is a "Qualified
Institutional Buyer" as that term is defined in Rule 144A under the Securities.
The Purchaser is purchasing the Notes for investment purposes and not with a
view to or for, the offer or sale in connection with a public distribution or in
any other manner that would violate the Securities Act or the securities or blue
sky laws of any state. The purchaser is aware that the Class E Notes are being
delivered to it in a transaction not involving any public offering and that this
Class E Note is a restricted security and cannot be reoffered, sold, assigned,
transferred, pledged, encumbered or otherwise disposed of in the absence of
registration under the Securities Act or unless such transaction is exempt from
or not subject to registration.]
[2. [This paragraph is to be used in any subsequent
transfers.] The purchaser is a "Qualified Institutional Buyer" as that term is
defined in Rule 144A under the Securities Act. The Purchaser is aware that the
sale to it is being made in reliance on Rule 144A under the Securities Act. The
Purchaser is acquiring the Notes for its own account or for the account of a
Qualified Institutional Buyer. The Purchaser is purchasing the Notes for
investment purposes and not with a view to, or for, the offer or sale in
connection with, a public distribution or in any other manner that would violate
the Securities Act or the securities or blue sky laws of any state.]
3. The Purchaser understands that the Notes have not been and
will not be registered under the Securities Act or under the securities or blue
sky laws of any state, and that (i) if it decides to resell, pledge or otherwise
transfer any Note, such Note may be resold, pledged or transferred without
registration only (A) to an entity which has delivered to Trustee, as Trustee, a
certification that it is a Qualified Institutional Buyer that purchases (1) for
its own account or (2) for the account of such a Qualified Institutional Buyer,
that is, in either case,
E-1
<PAGE> 85
aware that the resale, pledge or transfer is being made in reliance on Rule 144A
under the Securities Act or (B) in reliance upon an exemption from the
Securities Act if the transferee provides such documentation (which will include
an opinion of counsel) as the Issuer and the Purchaser may reasonably require to
confirm that the proposed transfer is exempt from the Securities Act and the
securities or blue sky laws of any applicable state; and (ii) it will, and each
subsequent holder will be required to, notify any purchaser of any Note from it
of the resale restrictions referred to in clause (i) above.
4. The Purchaser understands that each Note will, unless
otherwise agreed by the Issuer and the holder thereof, bear a legend to the
following effect:
THE CLASS E NOTES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS CLASS E NOTE NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CLASS E NOTE BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH CLASS E NOTES ONLY (A) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT OR (B) FOR SO LONG AS THE CLASS E NOTES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A.
THE HOLDER OF THIS CLASS E NOTE BY ITS ACCEPTANCE HEREOF
REPRESENTS AND WARRANTS, FOR THE BENEFIT OF THE ISSUER THAT SUCH PURCHASER IS
NOT (1) AN EMPLOYEE BENEFIT PLAN WHICH IS SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, (2) A PLAN OR OTHER ARRANGEMENT
(INCLUDING AN INDIVIDUAL RETIREMENT ACCOUNT OR KEOGH PLAN) WHICH IS SUBJECT TO
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR (3) AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" UNDER THE U.S. DEPARTMENT OF
LABOR'S PLAN ASSET REGULATION, 29 C.F.R. Section 2510.3-101 (1999), BY REASON OF
ANY SUCH PLAN'S INVESTMENT IN THE ENTITY.
5. The Purchaser is not purchasing and will not hold the Class
E Notes with plan assets of any employee benefit plan which is subject to the
Employee Retirement Income Security Act of 1974, as amended, any plan or other
arrangement (including an individual retirement account or Keogh plan) which is
subject to Section 4975 of the Internal Revenue Code of 1986, as amended, or any
entity whose underlying assets include "plan assets" under the
E-2
<PAGE> 86
U.S. Department of Labor's plan asset regulation, 29 C.F.R. Section 2510.3-101
(1999), by reason oF any such plan's investment in the entity.
6. Upon purchase, the Purchaser will be the beneficial owner
for United States federal income tax purposes of the Class E Notes and is, and
will remain for so long as it is the beneficial owner, a United States person as
defined in the section 7701 of the Internal Revenue Code. Under applicable law,
no taxes will be required to be withheld by any person with respect to any
payments to be made to the Purchaser in respect of an interest in the Class E
Notes.
7. You are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
E-3
<PAGE> 1
Exhibit 4.2
EXECUTION COPY
TRANSFER AND SERVICING AGREEMENT
between
ADVANTA EQUIPMENT RECEIVABLES SERIES 2000-1 LLC
Issuer
ADVANTA BANK CORP.
Transferor and Servicer
Dated as of March 1, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
DEFINITIONS
<S> <C>
Section 1.01. Definitions................................................................................ 1
Section 1.02. Other Definitional Provisions.............................................................. 20
Section 1.03. Calculations............................................................................... 21
ARTICLE II
CONVEYANCE OF CONTRACTS
Section 2.01. Transfer of Conveyed Assets................................................................ 21
Section 2.02. Closing.................................................................................... 21
Section 2.03. Books and Records.......................................................................... 22
Section 2.04. Grant of Security Interest................................................................. 22
ARTICLE III
THE CONTRACTS
Section 3.01. Representations and Warranties of Transferor............................................... 23
Section 3.02. Reacquisition by the Transferor Upon Breach................................................ 24
Section 3.03. Duties of Servicer......................................................................... 24
ARTICLE IV
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01. Duties of Servicer......................................................................... 25
Section 4.02. Collection of Contract Payments............................................................ 25
Section 4.03. Realization upon Contracts................................................................. 26
Section 4.04. Servicer Advances.......................................................................... 26
Section 4.05. Maintenance of Security Interests in Financed Equipment.................................... 26
Section 4.06. Covenants of Servicer...................................................................... 26
Section 4.07. Acquisition by Servicer of Contracts upon Breach........................................... 27
Section 4.08. Servicing Fee.............................................................................. 27
Section 4.09. Servicer's Certificate..................................................................... 27
Section 4.10. Annual Statement as to Compliance.......................................................... 27
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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<S> <C>
Section 4.11. Security Deposits.......................................................................... 28
ARTICLE V
DISTRIBUTIONS; ACCOUNTS; STATEMENTS TO NOTEHOLDERS
Section 5.01. Establishment of Trust Accounts............................................................ 28
Section 5.02. Collections................................................................................ 29
Section 5.03. Additional Deposits........................................................................ 30
Section 5.04. Distributions.............................................................................. 31
Section 5.05. Reserve Account............................................................................ 34
Section 5.06. Statement to Noteholders................................................................... 35
ARTICLE VI
THE TRANSFEROR
Section 6.01. Representations of Transferor.............................................................. 37
Section 6.02. Liability of Transferor; Indemnities....................................................... 38
Section 6.03. Merger or Consolidation of, or Assumption of
the Obligations of, Transferor............................................................. 39
Section 6.04. Limitation on Liability of Transferor and Others........................................... 39
Section 6.05. Transferor or Issuer May Own Notes......................................................... 39
Section 6.06. Tax Treatment.............................................................................. 39
ARTICLE VII
THE SERVICER
Section 7.01. Representations of Servicer................................................................ 40
Section 7.02. Indemnities of Servicer.................................................................... 41
Section 7.03. Merger or Consolidation of, or Assumption of
the Obligations of, Servicer............................................................... 42
Section 7.04. Limitation on Liability of Servicer and Others............................................. 43
Section 7.05. Advanta Bank Corp. Not To Resign as Servicer............................................... 43
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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<S> <C>
ARTICLE VIII
DEFAULT
Section 8.01. Servicer Default........................................................................... 44
Section 8.02. Appointment of Successor................................................................... 45
Section 8.03. Notification to Noteholders................................................................ 46
Section 8.04. Waiver of Past Defaults.................................................................... 46
ARTICLE IX
OPTIONAL ACQUISITION
Section 9.01. Optional Acquisition of All Contracts...................................................... 46
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment.................................................................................. 46
Section 10.02. Protection of Title to Trust Estate........................................................ 47
Section 10.03. Notices.................................................................................... 49
Section 10.04. Assignment................................................................................. 49
Section 10.05. Limitations on Rights of Others............................................................ 49
Section 10.06. Severability............................................................................... 49
Section 10.07. Separate Counterparts...................................................................... 49
Section 10.08. Headings................................................................................... 49
Section 10.09. Governing Law.............................................................................. 50
Section 10.10. Assignment to Trustee...................................................................... 50
Section 10.11. Nonpetition Covenants...................................................................... 50
Section 10.12. Limitation of Liability of Trustee......................................................... 50
</TABLE>
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<TABLE>
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SCHEDULE A - List of Contracts [Deemed Incorporated]................................... A-1
SCHEDULE B - Location of Contract Files................................................ B-1
SCHEDULE C - Servicer's Certificate.................................................... C-1
SCHEDULE D - Officers' Certificate..................................................... D-1
</TABLE>
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<PAGE> 6
TRANSFER AND SERVICING AGREEMENT dated as of March 1, 2000, between
ADVANTA EQUIPMENT RECEIVABLES SERIES 2000-1 LLC, a Nevada limited liability
company (the "Issuer") and ADVANTA BANK CORP., a Utah corporation (the
"Transferor" and the "Servicer").
WHEREAS Advanta Bank Corp. in the ordinary course of its business
originates and acquires equipment leases, loans and other financing
arrangements;
WHEREAS, the Issuer desires to acquire from Advanta Bank Corp. a
portfolio of such leases, loans and other equipment financing arrangements as
specified in the List of Contracts delivered to the Issuer in connection with
this Agreement and to acquire all of the Transferor's right, title and interest
in, to and under the Contracts except for the Residual Interest in the equipment
related to such Contracts which Residual Interest will be retained by the
Transferor;
WHEREAS, the Transferor has agreed to transfer the contracts, but not
any Residual Interest related to such Contracts, to the Issuer on the terms set
forth in this Agreement; and
WHEREAS, the Issuer has requested that Advanta Bank Corp. service the
Contracts, and Advanta Bank Corp. has agreed to service the Contracts on the
terms set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"Acquired Contract" means a Contract acquired as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
Section 4.07 or reacquired as of such time by the Transferor pursuant to Section
3.02.
"Advance Payment" means, with respect to any Contract, any Scheduled
Payment or a portion thereof made by or on behalf of an Obligor which does not
become due until a subsequent Collection Period. Advance Payments shall be
"Collections" with respect to the Collection Period to which such Advance
Payment relates. Advance Payments do not include Prepayment Amounts.
"Additional Principal" means, with respect to each Payment Date, (i)
the Class E Reallocated Interest, (ii) the Class F Reallocated Principal and
(iii) if as provided in Section 5.04(b)(xvi), the Class D Principal Balance, the
Class C Principal Balance, the Class B Principal Balance, the Class A Principal
Balance or the Class E Principal Balance is reduced to zero, then the Class D
Monthly Principal Payment Amount, Class C Monthly Principal Payment Amount,
Class B Monthly Principal Payment Amount, Class A Monthly Principal Payment
Amount and
<PAGE> 7
the Class E Monthly Principal Payment Amount, respectively, shall constitute
Additional Principal and be applied as stated in Section 5.04(b)(xvi).
"Affiliate" has the meaning assigned thereto in Section 1.01 of the
Indenture.
"Agreement" means this Transfer and Servicing Agreement, as the same
may be amended and supplemented from time to time.
"Aggregate Contract Principal Balance" means, as of any Calculation
Date, the sum of the Contract Principal Balances of all Contracts as of such
Calculation Date.
"Applicable Discount Rate" means 9.0%.
"Available Funds" means, for any Payment Date, (i) all Collections for
the immediately preceding Collection Period, (ii) Servicer Advances made to
cover payments due in the immediately preceding Collection Period, (iii) all
Prepayment Proceeds received by the Servicer for the immediately preceding
Collection Period, (iv) available earnings on the Collection Account and Reserve
Account and (v) all amounts transferred from the Reserve Account and deposited
into the Collection Account for such Payment Date but not including Excluded
Amounts and not including any Residual Receipts.
"Basic Documents" has the meaning assigned to such term in the
Indenture.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions or trust companies in New York, New York or Salt
Lake City, Utah, are authorized or obligated by law, regulation or executive
order to remain closed.
"Calculation Date" means for any Payment Date, the last day of the
immediately preceding Collection Period. Amounts calculated from Calculation
Date balances shall be calculated from such balances as of the close of business
on the Calculation Date.
"Class" means of the following classes of Notes: Class A-1, Class A-2,
Class A-3, Class B, Class C, Class D, Class E or the Class F Interest, as
applicable.
"Class A Monthly Principal Payment Amount" means, for any Payment Date,
the Class A Percentage of the Monthly Principal Amount.
"Class A Note Interest" means, for any Payment Date the sum of Class
A-1 Note Interest, the Class A-2 Note Interest and the Class A-3 Note Interest.
"Class A Overdue Principal" means for any Payment Date the aggregate
amount of the Class A Monthly Principal Payment Amount for all prior Payment
Dates less aggregate amount of principal paid on the Class A Notes prior to such
Payment Date not including amounts paid as Additional Principal.
"Class A Percentage" means a fraction, expressed as a percentage, equal
to (i) the sum of the Class A-1 initial principal balance of
2
<PAGE> 8
$181,285,000, the Class A-2 initial principal balance of $63,269,000 and the
Class A-3 initial principal balance of $84,623,000 divided by (ii) the Initial
Aggregate Contract Principal Balance and being approximately 70.0%.
"Class A-1 Note" means a Class A-1 Note issued pursuant to the
Indenture.
"Class A-1 Note Factor" means 1.0000000 as of the Closing Date, and as
of the close of business on the last day of a Collection Period thereafter means
a seven-digit decimal figure equal to the outstanding principal amount of the
Class A-1 Notes as of such date (after giving effect to payments in reduction of
the principal amount of the Class A-1 Notes on the immediately following Payment
Date) divided by the initial Class A-1 Principal Balance of $181,285,000.
"Class A-1 Note Interest" means with respect to any Payment Date, the
sum of (i) the product of (A) the Class A-1 Principal Balance immediately prior
to such Payment Date and, (B) one-twelfth of the Class A-1 Note Interest Rate
and (ii) the Class A-1 Overdue Interest for that Payment Date; provided that the
Class A-1 Note Interest for the first Payment Date will be 53.33% of the amount
calculated in (i) of this definition.
"Class A-1 Note Interest Rate" has the meaning assigned to such term in
the Indenture.
"Class A-1 Noteholder" means a holder of a Class A-1 Note.
"Class A-1 Overdue Interest" means, with respect to any Payment Date,
the sum of:
(i) the excess, if any, of any Class A-1 Note Interest due on such
Payment Date over the Class A-1 Note Interest paid on such
Payment Date; and
(ii) the product of (a) the amount of Class A-1 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 A-1 Note Interest Rate.
"Class A-1 Principal Balance" means, as of any date of determination,
an amount equal to the initial Class A-1 principal balance of
$181,285,000 less any principal payments previously made on
the Class A-1 Notes.
"Class A-2 Note" means a Class A-2 Note issued pursuant to the
Indenture.
"Class A-2 Note Factor" means 1.0000000 as of the Closing Date, and as
of the close of business on the last day of a Collection Period thereafter means
a seven-digit decimal figure equal to the outstanding principal amount of the
Class A-2 Notes as of such date (after giving effect to payments in reduction of
the principal amount of the Class A-2 Notes on the immediately following Payment
Date) divided by the initial Class A-2 Principal Balance of $63,269,000.
"Class A-2 Note Interest" means, with respect to any Payment Date, the
sum of (i) the product of (A) the Class A-2 Principal Balance immediately prior
to such Payment Date and (B) one-twelfth of the Class A-2 Note Interest Rate and
(ii) the Class A-2 Overdue Interest for that
3
<PAGE> 9
Payment Date; provided that the Class A-2 Note Interest for the first Payment
Date will be 53.33% of the amount calculated in (i) of this definition.
"Class A-2 Note Interest Rate" has the meaning assigned to such term in
the Indenture.
"Class A-2 Noteholder" means a holder of a Class A-2 Note.
"Class A-2 Overdue Interest" means, with respect to any Payment Date,
the sum of:
(i) the excess, if any, of any Class A-2 Note Interest due on such
Payment Date over the Class A-2 Note Interest paid on such Payment
Date; and
(ii) the product of (a) the amount of Class A-2 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 A-2 Note
Interest Rate.
"Class A-2 Principal Balance" means, as of any date of determination,
an amount equal to the initial Class A-2 principal balance of $63,269,000 less
any principal payments previously made on the Class A-2 Notes.
"Class A-3 Note" means a Class A-3 Note issued pursuant to the
Indenture.
"Class A-3 Note Factor" means 1.0000000 as of the Closing Date, and as
of the close of business on the last day of a Collection Period thereafter means
a seven-digit decimal figure equal to the outstanding principal amount of the
Class A-3 Notes as of such date (after giving effect to payments in reduction of
the principal amount of the Class A-3 Notes on the immediately following Payment
Date) divided by the initial Class A-3 Principal Balance of $84,623,000.
"Class A-3 Note Interest" means, with respect to any Payment Date, the
sum of (i) the product of (A) the Class A-3 Principal Balance immediately prior
to such Payment Date and (B) one-twelfth of the Class A-3 Note Interest Rate and
(ii) the Class A-3 Overdue Interest for that Payment Date; provided that the
Class A-3 Note Interest for the first Payment Date will be 53.33% of the amount
calculated in (i) of this definition.
"Class A-3 Note Interest Rate" has the meaning assigned to such term in
the Indenture.
"Class A-3 Noteholder" means a holder of a Class A-3 Note.
"Class A-3 Overdue Interest" means, with respect to any Payment Date,
the sum of:
(i) the excess, if any, of any Class A-3 Note Interest due on such
Payment Date over the Class A-3 Note Interest paid on such Payment
Date; and
(ii) the product of (a) the amount of Class A-3 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 A-3 Note
Interest Rate.
4
<PAGE> 10
"Class A-3 Principal Balance" means, as of any date of determination,
an amount equal to the initial Class A-3 Principal Balance of $84,623,000 less
any principal payments previously made on the Class A-3 Notes.
"Class B Monthly Principal Payment Amount" means, for any Payment Date,
the Class B Percentage of the Monthly Principal Amount.
"Class B Note" means a Class B Note issued pursuant to the Indenture.
"Class B Note Factor" means 1.0000000 as of the Closing Date, and as of
the close of business on the last day of a Collection Period thereafter means a
seven-digit decimal figure equal to the outstanding principal amount of the
Class B Notes as of such date (after giving effect to payments in reduction of
the principal amount of the Class B Notes on the immediately following Payment
Date) divided by the initial Class B Principal Balance of $28,215,000.
"Class B Note Interest" means, 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 Note Interest Rate and (ii)
the Class B Overdue Interest for that Payment Date; provided that the Class B
Note Interest for the first Payment Date will be 53.33% of the amount calculated
in (i) of this definition.
"Class B Note Interest Rate" has the meaning assigned to such term in
the Indenture.
"Class B Noteholder" means a holder of a Class B Note.
"Class B Overdue Interest" means, 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 Note Interest
Rate.
"Class B Overdue Principal" means for any Payment Date the aggregate
amount of the Class B Monthly Principal Payment Amount for all prior Payment
Dates less aggregate amount of principal paid on the Class B Notes prior to such
Payment Date not including amounts paid as Additional Principal.
"Class B Percentage" means a fraction, expressed as a percentage, equal
to (i) the initial Class B Principal Balance of $28,215,000 divided by (ii) the
Initial Aggregate Contact Principal Balance and being approximately 6.0%.
"Class B Principal Balance" means as of any date of determination an
amount equal to the initial Class B Principal Balance being $28,215,000 less any
principal payments previously made on the Class B Notes.
5
<PAGE> 11
"Class C Monthly Principal Payment Amount" means, for any Payment Date,
the Class C Percentage of the Monthly Principal Amount.
"Class C Note" means a Class C Note issued pursuant to the Indenture.
"Class C Note Factor" means 1.0000000 as of the Closing Date, and as of
the close of business on the last day of a Collection Period thereafter means a
seven-digit decimal figure equal to the outstanding principal amount of the
Class C Notes as of such date (after giving effect to payments in reduction of
the principal amount of the Class C Notes on the immediately following Payment
Date) divided by the initial Class C Principal Balance of $18,810,000.
"Class C Note Interest" means, 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 Note Interest Rate and (ii)
the Class C Overdue Interest for that Payment Date; provided that the Class C
Note Interest for the first Payment Date will be 53.33% of the amount calculated
in (i) of this definition.
"Class C Note Interest Rate" has the meaning assigned to such term in
the Indenture.
"Class C Noteholder" means a holder of a Class C Note.
"Class C Overdue Interest" means, 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 Note Interest
Rate.
"Class C Overdue Principal" means for any Payment Date the aggregate
amount of the Class C Monthly Principal Payment Amount for all prior Payment
Dates less aggregate amount of principal paid on the Class C Notes prior to such
Payment Date not including amounts paid as Additional Principal.
"Class C Percentage" means a fraction, expressed as a percentage, equal
to (i) the initial Class C Principal Balance of $18,810,000 divided by (ii) the
Initial Aggregate Contact Principal Balance and being approximately 4.0%.
"Class C Principal Balance" means as of any date, an amount equal to
the initial Class C principal balance being $18,810,000 less any principal
payments previously made on the Class C Notes.
"Class D Monthly Principal Payment Amount" means, for any Payment Date,
the Class D Percentage of the Monthly Principal Amount.
6
<PAGE> 12
"Class D Note" means a Class D Note issued pursuant to the Indenture.
"Class D Note Factor" means 1.0000000 as of the Closing Date, and as of
the close of business on the last day of a Collection Period thereafter means a
seven-digit decimal figure equal to the outstanding principal amount of the
Class D Notes as of such date (after giving effect to payments in reduction of
the principal amount of the Class D Notes on the immediately following Payment
Date) divided by the initial Class D Principal Balance of $9,405,000.
Class D Note Interest" means, with respect to any Payment Date, the sum
of (i) the product of (A) the Class D Principal Balance immediately prior to
such Payment Date and (B) one-twelfth of the Class D Note Interest Rate and (ii)
the Class D Overdue Interest for that Payment Date; provided that the Class D
Note Interest for the first Payment Date will be 53.33 % of the amount
calculated in (i) of this definition.
"Class D Note Interest Rate" has the meaning assigned to such term in
the Indenture.
"Class D Noteholder" means a holder of a Class D Note.
"Class D Overdue Interest" means with respect to any Payment Date,
the sum of:
(i) the excess, if any, of any Class D Note Interest due on such
Payment Date over the Class D Note Interest paid on such Payment Date;
and
(ii) the product of (a) the amount of Class D 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 D Note Interest
Rate.
"Class D Overdue Principal" means for any Payment Date the aggregate
amount of the Class D Monthly Principal Payment Amount for all prior Payment
Dates less aggregate amount of principal paid on the Class D Notes prior to such
Payment Date not including amounts paid as Additional Principal.
"Class D Percentage" means a fraction, expressed as a percentage, equal
of (i) the initial Class D Principal Balance divided by (ii) the Initial
Aggregate Contract Principal Balance and being approximately 2.0%.
"Class D Principal Balance" means, as of any date, an amount equal to
the initial Class D principal balance of $9,405,000 less any principal payments
previously made on the Class D Notes.
"Class E Monthly Principal Payment Amount" means , for any Payment
Date, the Class E Percentage of the Monthly Principal Amount.
"Class E Note" means a Class E Note described in the Indenture, whether
or not such note is then held by the Issuer or by another entity.
"Class E Noteholder" means a holder of a Class E Note.
7
<PAGE> 13
"Class E Note Factor" means 1.0000000 as of the Closing Date, and as of
the close of business on the last day of a Collection Period thereafter means a
seven-digit decimal figure equal to the outstanding principal amount of the
Class E Notes as of such date (after giving effect to payments in reduction of
the principal amount of the Class E Notes on the immediately following Payment
Date) divided by the initial Class E Principal Balance of $23,512,000.
"Class E Note Interest" means, with respect to any Payment Date, the
sum of (i) the product of (A) the Class E Principal Balance immediately prior to
such Payment Date and (B) one-twelfth of the Class E Note Interest Rate and (ii)
the Class E Overdue Interest for that Payment Date; provided that the Class E
Note Interest for the first Payment Date will be 53.33% of the amount calculated
in (i) of this definition; provided that, for any Payment Date which relates to
an Interest Period during which the Class E Notes do not bear interest, the
Class E Note Interest due shall be zero.
"Class E Note Interest Rate" has the meaning assigned to such term in
the Indenture.
"Class E Overdue Interest" means with respect to any Payment Date, the
sum of:
(i) the excess, if any, of any Class E Note Interest due on such
Payment Date over the Class E Note Interest paid on such Payment Date;
and
(ii) the product of (a) the amount of Class E 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 E Note Interest
Rate;
"Class E Overdue Principal" means for any Payment Date the aggregate
amount of the Class E Monthly Principal Payment Amount for all prior Payment
Dates less aggregate amount of principal paid on the Class E Notes prior to such
Payment Date not including amounts paid as Additional Principal.
"Class E Percentage" means a fraction, expressed as a percentage, equal
to (i) the initial Class E Principal Balance of $23,512,000 divided by (ii) the
Initial Aggregate Contact Principal Balance and being approximately 5.0%.
"Class E Principal Balance" means, as of any date of determination, an
amount equal to the initial Class E Principal Balance of $23,512,000 less any
principal payments previously made on the Class E Notes.
"Class E Reallocated Interest" means for any Payment Date related to an
Interest Period during which no interest accrued on the Class E Notes, an amount
equal to the Class E Note Interest calculated as if the Class E Notes had
accrued interest during that Interest Period.
"Class F Floor" means that the Class F Principal Balance is equal to or
less than 2% of the Initial Aggregate Contract Principal Balance.
8
<PAGE> 14
"Class F Interest" means the Class F Interest created under the terms
of the Indenture.
"Class F Monthly Principal Payment Amount" means, for any Payment Date,
the Class F Percentage of the Monthly Principal Amount.
"Class F Percentage" means a fraction , expressed as a percentage, of
the initial principal amount of the Class F Interest divided by (ii) the Initial
Aggregate Contract Principal Balance and being approximately 13.0%.
"Class F Principal Balance" means for any Payment Date an amount equal
to the Class F initial Principal Balance of $61,134,515.34 less the sum of the
Class F Monthly Principal Payment Amounts for all previous payment dates,
whether or not such amounts were paid.
"Class F Reallocated Principal" means for any Payment Date when the
Class F Principal Balance is equal to or less than the Class F Floor, an amount
equal to the Class F Monthly Principal Payment Amount for that Payment Date.
"Closing Date" means March 29, 2000.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 5.01.
"Collection Period" means, with respect to the first Payment Date, the
calendar month ending on and including March 31, 2000 and, with respect to each
subsequent Payment Date, the immediately preceding calendar month. Any amount
stated "as of the close of business on the last day of a Collection Period"
shall give effect to the following calculations as determined as of the end of
the day on such last day: (1) all applications of collections and (2) all
distributions to be made on the following Payment Date.
"Collections" means all payments and other amounts received by the
Servicer in respect of a Contract and the Related Property other than Residual
Receipts and other than Excluded Amounts. Collections include, but are not
limited to, Scheduled Payments, Prepayment Proceeds, Offset Amounts, Recoveries
and Insurance Proceeds. Collections do not include Excluded Amounts and do not
include Residual Receipts.
"Commission" means the Securities and Exchange Commission.
"Contract" means the leases and other contracts and agreements
contained on the List of Contracts.
"Contract Balance Remaining" means, for any Contract, as of any date,
the aggregate (undiscounted) amount of all unpaid Scheduled Payments due under
such Contract.
"Contract Principal Balance" means as of any date of calculation with
respect to a Contract, the present value of the Scheduled Payments to become due
with respect to such Contract on or after the date of calculation (excluding
Scheduled Payments previously due and unpaid), discounted at the same frequency
as the payment interval of the related Contract at the
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Applicable Discount Rate, except that a Defaulted Contract has a Contract
Principal Balance of $0. Contracts which have been prepaid or otherwise
terminated or released from the Trust Estate shall also have a Contract
Principal Balance of $0.
"Contract Files" means 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 microfiche form or on
the Servicer's computerized information system), if any, that
the Transferor or the Servicer keeps on file for the benefit
of the Transferor in accordance with the Transferor's or
Servicer's customary procedures; 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 Obligor as
debtor and the Transferor as secured party, if applicable.
"Conveyed Assets" has the meaning set forth in Section 2.01 of this
Agreement.
"Corporate Trust Office" has the meaning assigned to such term in the
Indenture.
"Credit and Collection Policy" means 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 Agreement.
"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
(calculated as of the date immediately before such Contract become a Defaulted
Contract) of all Contracts which become Defaulted Contracts during all prior
Collection Periods and including such Collection Period over (y) the aggregate
amount of all Recoveries collected by the Servicer with respect to those
Defaulted Contracts and the denominator of which is the Initial Aggregate
Contract Principal Balance.
"Cut-Off Date" means, with respect to the Contracts February 29, 2000.
"Debtor Relief Laws" means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments, readjustment of debt, marshalling of assets or similar debtor
relief laws of the United States or any state from time to time in effect,
affecting the rights of creditors generally.
"Defaulted Contract" means any Contract (i) that is a Delinquent
Contract with respect to which an Obligor 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
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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 Obligor in a bankruptcy proceeding.
"Delinquent Contract" means, 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" means, with respect to any Payment Date, the third
Business Day prior to such Payment Date.
"Eligible Deposit Account" means either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as any
of the securities of such depository institution shall have a credit rating from
each Rating Agency in one of its generic rating categories which signifies
investment grade.
"Eligible Institution" means (a) the corporate trust department of the
Trustee, so long as it is a paying agent under the Indenture and the obligations
of the Trustee are rated at least investment grade by the Rating Agencies, or
such other institution acceptable to the Rating Agencies, or (b) a depository
institution (excluding the Servicer or any of its Affiliates) organized under
the laws of the United States of America or any one of the states thereof or the
District of Columbia (or any domestic branch of a foreign bank) (i)(A) which has
either (1) a long-term unsecured debt rating in the highest rating category of
the Rating Agencies or (2) a short-term unsecured debt rating or a certificate
of deposit rating in the highest rating category of the Rating Agencies or any
other long-term, short-term or certificate of deposit rating acceptable to the
Rating Agencies and (B) whose deposits are insured by the FDIC or (ii)(A) the
parent of which has a long-term or short-term unsecured debt rating acceptable
to the Rating Agencies and (B) whose deposits are insured by the FDIC. If so
qualified, the Trustee may be considered an Eligible Institution for the
purposes of clause (b) of this definition.
"Eligible Investments" mean any instrument, security or security
entitlement denominated in United States dollars and not purchased at a premium
and 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;
(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 United States 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 "P-1" by Moody's and
"F1" by Fitch (if rated by Fitch);
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(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 "P-1" by Moody's and "F1" by Fitch
(if rated by Fitch);
(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 money market funds are rated at least "Aa1" by Moody's
and "AA" by Fitch (if rated by Fitch); 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 "P-1" by
Moody's and "F1" by Fitch (if rated by Fitch).
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.
"Excluded Amounts" means (i) any payments received from an Obligor in
connection with any insurance premiums or fees, or Taxes or other charges
imposed by any Governmental Authority, (ii) any indemnity payments made by an
Obligor pursuant to any Contract and (iii) all Late Fees if the Servicer has
made a Servicer Advance to cover the late payment, extension fees, and other
incidental charges (from whatever source) collected with respect to any
Contract.
"Eligible Contract" means a Contract which, as of the Closing Date or,
where indicated, the Cut-Off Date:
(i) (a) is with a Obligor 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 Obligor 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 or possessions;
(ii) has not had any of its terms, conditions or provisions modified or
waived other than in compliance with the Credit and Collection Policy;
(iii) the payments arising under the Contract constitute an account, a
general intangible or chattel paper which is evidenced by a Contract that
constitutes "chattel paper" within the meaning of Section 9-105(b) 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
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UCC (other than those which are in the form of a loan which may be evidence by a
promissory note);
(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) as of the Cut-Off Date, the Contract is not a Defaulted Contract;
(vii) as of the Cut-Off Date, the Contract is not more than 60 days
delinquent; provided, however, that a Contract can be up to 90 days delinquent
if the Contract Principal Balance of the Contract when aggregated with the
Contract Principal Balances of all Contracts which are between 61 and 90 days
delinquent is less than 2.50% of the Initial Aggregate Contract Principal
Balance;
(viii) as of the Cut-Off Date, the Contract is not a Defaulted
Contract;
(ix) the Contract, when aggregated with the sum of the Contract
Principal Balances of all other Contracts relating to a single Obligor or its
affiliates, is not greater than 1% of the Initial Aggregate Contract Principal
Balance;
(x) the Contract is not subject to any guaranty by the Transferor;
(xi) the Contract has not been restructured at any time when the
Contract was delinquent by more than 60 days;
(xii) the Contract is not a municipal contract;
(xiii) (other than a Contract which is a loan in form), (a) contains
"hell or high water" provisions requiring the related Obligor to assume all risk
of loss or malfunction of the related Equipment, (b) makes the related Obligor
absolutely and unconditionally liable for all payments required to be made
thereunder, (c) is a triple-net lease and (d) is not cancelable at the option of
the Obligor;
(xiv) creates a valid and enforceable security or ownership interest in
favor of the Transferor in the related Equipment, if any;
(xv) has only one set of original documentation;
(xvi) is free and clear of any lien, security interest, charge or
encumbrance, other than the claims arising pursuant to the Indenture, this
Agreement or which otherwise secure the Notes
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and obligations issued under the Indenture; provided, however, that nothing in
this clause (xvi) shall prevent or be deemed to prohibit Permitted Liens;
(xvii) 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 Financed Equipment, if
any, thereunder and of the benefits of any security granted thereunder;
(xviii) does not provide for the substitution, exchange, or addition of
any other items of Financed Equipment pursuant to such Contract which would
result in any reduction or extension of payments due thereunder;
(xix) by its terms is due and payable on or within 84 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;
(xx) is in substantially the form of one of the standard form contracts
that the Transferor uses or a form reviewed and accepted by the Transferor;
(xxi) (a) does not preclude the pledge, transfer or assignment thereof,
(b) does not require the consent of the Obligor to the pledge, assignment or
transfer thereof, and (c) does not contain a confidentiality provision that
purports to restrict the ability of the Trustee (or prior pledger or owner
thereof) to exercise its rights under the Basic Documents with respect thereto,
including, without limitation, its right to review the Contract;
(xxii) was originated or purchased by the Originator in the ordinary
course of its business, (b) approved and purchased or funded in the ordinary
course of the Originator's business and (c) if purchased from a broker or
vendor, has been re-underwritten by the Originator in the ordinary course of the
Originator's business and in compliance with its underwriting policies;
(xxiii) 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;
(xxiv) relates to Financed Equipment which is located in the United
States of America, its territories or possessions;
(xxv) it is not a consumer lease;
(xxvi) no adverse selection was used in selecting the Contract for
transfer to the Issuer;
(xxvii) the information with respect to the Contract contained on the
List of Contracts delivered to the Trustee is true and correct in all material
respects; and
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(xxviii) all filings necessary to evidence the conveyance or transfer
of the Contract to the Issuer have been made in all appropriate jurisdictions.
"Final Scheduled Payment Date" means the February 2007 Payment Date.
"Fitch" means Fitch IBCA, Inc.
"Financed Equipment" means all goods, equipment or other property which
secure the payment or performance of a Contract which were directly or
indirectly acquired with the proceeds of such Contract, or in the case of a
lease transaction, are leased by the Obligor in connection with such Contract.
"Governmental Authority" means the United States of America, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Holder" or "Noteholder" has the meaning assigned to such term in
Section 1.01 of the Indenture.
"Indenture" means the Indenture dated as of March 1, 2000 between the
Issuer and the Trustee, as the same may be amended and supplemented from time to
time.
"Initial Aggregate Contract Principal Balance" means the Aggregate
Contract Principal Balance as of the Cut-Off Date, which is $470,253,515.34.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, and such decree or order
shall remain unstayed and in effect for a period of 90 consecutive days; or (b)
the commencement by such Person of a voluntary case under any applicable Federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"Insurance Policy" means any insurance policy maintained by an Obligor
(or on an Obligor's behalf by the Servicer) covering physical damage to any
financed equipment relating to any Contract or the related Obligor's ability to
make Scheduled Payments pursuant to such Contract.
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"Insurance Proceeds" means all payments made to the Servicer under an
Insurance Policy in respect of or in lieu of any amount that has or may become
due pursuant to any Contract, including any such amount received in respect of
any Scheduled Payment.
"Interest Period," means the period from and including one Payment Date
to but excluding the next following Payment Date, provided that the first
Interest Period will be the period from and including the Closing Date to but
excluding the first Payment Date.
"Investment Earnings" means, with respect to any Payment Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts to be deposited into the Collection Account on
such Payment Date pursuant to Section 5.01(b).
"Issuer" means Advanta Equipment Receivables Series 2000-1 LLC and any
successors thereto.
"Late Fees" means any interest or other amounts assessed by Advanta
Bank Corp. and paid by an Obligor in excess of the Scheduled Payment due to the
delinquency of such Scheduled Payment.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind with respect to any Contract other than mechanics' liens
and any liens which attach to such Contract by operation of law as a result of
any act or omission by the related Obligor.
"List of Contracts" has the meaning assigned thereto in the Indenture.
"Monthly Delinquency Percentage" means, for any Payment Date, the
percentage equivalent of a fraction (a) the numerator of which is the aggregate
Contract Balance Remaining on 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 Principal Amount" means, with respect to any Payment Date, the
excess of (a) the Aggregate Contract Principal Balance as of the second
Calculation Date preceding such Payment Date, over (b) the Aggregate Contract
Principal Balance as of the Calculation Date immediately preceding such Payment
Date.
"Moody's" means Moody's Investors Service Inc.
"Nonrecoverable Advances" means, with respect to any Contract, a
Servicer Advance which the Servicer has determined it will be unable to recover,
in whole or in part, with respect to such Contract.
"Note Register" and "Note Registrar" have the meanings specified in
Section 2.04 of the Indenture.
"Notes" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E
Notes, collectively.
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"Notes of a Class" or "Class of Notes" means all Notes included in
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class B Notes, Class C Notes,
Class D Notes or Class E Notes, whichever is appropriate.
"Obligor" with respect to any Contract means any Person which is an
obligor, lessee or guarantor thereof; provided, that in no event shall Advanta
Bank Corp. or the Transferor be construed to be the Obligor with respect to any
Contract due to the application of Section 3.02 or Section 4.07, as applicable.
"Officers' Certificate" of any Person means a certificate on behalf of
such Person that is signed by a manager or by any Vice President or more senior
officer of such Person and states that the certifications set forth in such
certificate are based upon the results of a due inquiry into the matters in
question conducted by or under the supervision of the signing officer and that
the facts stated in such certifications are true and correct to the best of the
signing officer's knowledge.
"Offset Amount" means, in the event that (i) any Obligor requests that
a Security Deposit be applied as an offset against such Obligor's payment
obligations under a Contract or (ii) any Contract becomes a Defaulted Contract
and the Servicer demands that such Obligor remit to the Servicer an amount out
of the applicable Obligor's Security Deposit, an amount equal to the lesser of
(a) the amount of such Security Deposit and (b) the amount of all unpaid and
remaining Scheduled Payments as payment in respect of any unpaid Scheduled
Payments under the related Contract.
"Opinion of Counsel" means one or more written opinions of counsel who
may be an employee of or counsel to the Transferor or the Servicer, which
counsel shall be acceptable to the Trustee and/or the Rating Agencies, as
applicable.
"Outstanding" has the meaning assigned to such term in Section 1.01 of
the Indenture.
"Outstanding Amount" means the aggregate principal amount of all Notes,
or a Class of Notes, as applicable, Outstanding at the date of determination.
"Payment Date" means April 17, 2000 and the 15th day of each month
thereafter, or, if such day is not a Business Day, the next succeeding Business
Day.
"Permitted Lien" means any Lien for federal, state, municipal or other
local Taxes and other governmental charges, so long as either (x) such Taxes or
governmental charges are not at the time due and payable or (y) the Transferor
is then contesting the validity of any such Taxes or charges in good faith by
appropriate proceedings that have staged the enforcement thereof and there has
been set aside on the appropriate entity's books any reserve that is required
under generally accepted accounting principles with respect to such Taxes or
charges.
"Prepayment Amount" means with respect to any Contract including a
Contract which is reacquired by the Transferor under Section 3.02 or acquired by
the Servicer under Section 4.07 of this Agreement: (a) the Contract Principal
Balance of such Contract (without any deduction for any security deposit paid by
the related Obligor, unless such security deposit has been applied to the
Contract Principal Balance pursuant to the Credit and Collection Policy and
deposited into
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the Collection Account) as of the date of the prepayment of such Contract, 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.
"Prepayment Proceeds" means all payments received in prepayment of a
Contract and including the Prepayment Amounts paid by the Transferor to
reacquire Contracts under Section 3.02 of this Agreement or paid by the Servicer
to acquire Contracts under Section 4.07 of this Agreement.
"Rating Agencies" means Moody's and Fitch. If no such organization or
successor is in existence, "Rating Agency" shall be a nationally recognized
statistical rating organization or other comparable Person designated by the
Transferor, notice of which designation shall be given to the Trustee and the
Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have notified the Transferor, the Servicer, and the Trustee
in writing that such action will not result in a reduction or withdrawal of the
then current rating on any Class of Notes.
"Recoveries" means all amounts received or recovered by the Servicer to
be applied against amounts due on a Defaulted Contract; such amounts include,
but are not limited to (i) amounts received from the sale or other disposition
of the Financed Equipment or the sale of the Defaulted Contract, (ii) Insurance
Proceeds received as a result of the damage or destruction of the Financed
Equipment, or (iii) any other payments made by or on behalf of the defaulting
Obligor, including any amounts paid from a Security Deposit applied by the
Servicer as a Recovery.
"Required Reserve Amount" means the lesser of (i) $4,702,535.15 and
(ii) 100% of the sum of the principal balance of all Notes.
"Related Property" means all right, title and interest of the
Transferor in, to and under (a) the security interest in the Financed Equipment
granted to the Transferor, (b) the Contract Files, (c) any proceeds with respect
to the Contracts from claims on any physical damage, credit life or disability
insurance policies covering financed equipment or Obligors with respect to
Financed Equipment, as the case may be, and (d) the proceeds of any of the
foregoing.
"Reserve Account" means the account designated as such, established and
maintained pursuant to Section 5.01(a).
"Reserve Account Initial Deposit" means the initial deposit by the
Transferor on the Closing Date of $4,702,535.15.
"Residual Interest" means the ownership interest, if any, in the
Financed Equipment and the Residual Receipts including, without limitation, the
right to receive and retain Residual Receipts as owner thereof.
"Residual Receipts" means for any Contract on which all Scheduled
Payments have been made, with respect to any Collection Period, all residual
proceeds received by the Servicer, including, without limitation, proceeds of
the sale or re-lease of the Financed Equipment
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received by the Servicer in the event the related Obligor does not purchase the
Financed Equipment at the end of the related Contract, any amounts collected by
the Servicer as judgments against a Obligor or others related to the failure of
such Obligor to pay the purchase option price at the end of the contract or to
return the Financed Equipment, including any amounts relating to a Security
Deposit applied by the Servicer as Residual Receipts, plus any other amounts
which are received by the Servicer and applied against the booked residual value
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 Financed Equipment.
"Scheduled Payment" on a Contract means for any Contract, the stated
periodic payments (exclusive of any Excluded Amounts) set forth in the Contract
and due from the Obligor in the related Collection Period.
"Servicer" means Advanta Bank Corp., as the servicer of the Contracts,
and each successor to Advanta Bank Corp. (in the same capacity) pursuant to
Section 7.03 or 8.02.
"Servicer Advance" means the amount, if any, which the Servicer at its
option advances with respect to Overdue Payments, in accordance with Section
4.04 of this Agreement.
"Servicer Default" means an event specified as such in Section 8.01.
"Servicer's Certificate" means an Officers' Certificate of the Servicer
delivered pursuant to Section 4.09, substantially in the form of Schedule C or
in such other form that is acceptable to the Trustee and the Servicer.
"Servicing Fee" means the fee payable to the Servicer for services
rendered during the respective Collection Period, determined pursuant to Section
4.08.
"Servicing Fee Rate" means 1% per annum.
"Tax" with respect to any Person means each tax, assessment or other
governmental charge or levy imposed upon such Person, its income, any
transaction in which it engages, or any of its properties, franchises or assets.
"Three-Month Delinquency Percentage" means, for any Payment Date
commencing with the third Payment Date, the percentage equivalent of a fraction,
(a) the numerator of which is the sum of the Monthly Delinquency Percentage for
that payment date and for each of the two immediately preceding payment dates
and (b) the denominator of which is three.
"Transferor" means Advanta Bank Corp., a Utah corporation, and its
successors in interest to the extent permitted hereunder.
"Trigger Event" means the occurrence of one of the events described in
Section 5.07 of this Agreement.
"Trust Accounts" has the meaning assigned thereto in Section
5.01(a)(ii).
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"Trust Account Property" means the Trust Accounts, all monies,
instruments, securities, documents and other property held in or credited to any
Trust Account from time to time (whether in the form of deposit accounts,
physical property, book-entry securities, uncertificated securities, securities
entitlements or otherwise), including the Reserve Account Initial Deposit, and
all proceeds of the foregoing.
"Trust Estate" means all money, instruments, documents, securities,
general intangibles and other property that are subject or intended to be
subject to the lien and security interest of the Indenture for the benefit of
the Noteholders (including, without limitation, all property and interests
Granted (as defined in the Indenture) to the Trustee), including all proceeds
thereof.
"Trust Officer" means, in the case of the Trustee, any Officer within
the Corporate Trust Office of the Trustee assigned to administer the Trustee's
duties under the Basic Documents.
"Trustee" means Bankers Trust Company, in its capacity as trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"UCC" has the meaning assigned thereto in Section 1.01 of the
Indenture.
Section 1.02. Other Definitional Provisions. (a)Capitalized terms used
herein and not otherwise defined herein have the meanings assigned to them in
the Indenture.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made
or delivered pursuant hereto unless otherwise defined therein.
(b) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Agreement or in any such
certificate or other document, and accounting terms partly
defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting
terms in this Agreement or in any such certificate or other
document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the
definitions contained in this Agreement or in any such
certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of
this Agreement; Section, Schedule and Exhibit references
contained in this Agreement are references to Sections,
Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" shall mean
"including without limitation."
(d) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of
such terms.
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Section 1.03. Calculations. For all purposes of this Agreement,
interest on the Notes will be calculated on the basis of a year of 360 days and
twelve 30-day months.
ARTICLE II
CONVEYANCE OF CONTRACTS
Section 2.01. Transfer of Conveyed Assets. In consideration of the
Issuer's delivery to or upon the order of the Transferor cash and the increase
in the value of the Transferor's membership interest in the Issuer, the
sufficiency of which is hereby acknowledged, the Transferor does hereby sell,
transfer, assign, set over, contribute, quitclaim, and otherwise convey to the
Issuer, without recourse (subject to the obligations of the Transferor herein)
all right, title and interest of the Transferor in and to all the following,
whether now owned or hereafter acquired:
(a) the Contracts (except the right to the Residual Interest) and
all moneys (including accrued interest) due or to become due,
or received under the Contracts on or after the Cut-Off Date
except Excluded Amounts and except any amounts received as
Residual Receipts;
(b) the Trust Accounts and all monies, instruments, documents,
investment property and other property held in or credited
thereto;
(c) the Related Property;
(d) any proceeds with respect to the Contracts from claims on any
physical damage, credit life or disability insurance policies
covering financed equipment or Obligors with respect to
financed equipment;
(e) all accounts, general intangibles, instruments, chattel paper,
documents, money, letters of credit, advices of credit,
deposit accounts, certificates of deposit, investment property
and goods consisting of, arising from or related to any of the
foregoing; and
(f) the proceeds of any and all of the foregoing (collectively,
the "Conveyed Assets").
Section 2.02. Closing. The conveyance of the Contracts shall take
place at the offices of Orrick, Herrington & Sutcliffe LLP, 666 Fifth Avenue,
New York, New York 10103, on the Closing Date, simultaneously with the
issuance of the Notes. Upon the acceptance by the Transferor of the net
proceeds of the Notes, the ownership of each Contract transferred on such date
and the contents of the related Contract File is vested in the Issuer, subject
only to the lien of the Indenture. Notwithstanding the foregoing, the
assignment, transfer and conveyance set forth in Section 2.01 shall not
constitute and is not intended to result in the creation, or an assumption by
the Issuer of any obligation of the Transferor or any other Person in
connection with the Contracts or under any agreement or instrument relating the
reto, including any obligation to any
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Obligors or any Affiliate of or other Person to whom the Transferor may delegate
servicing duties or to insurers.
Section 2.03. Books and Records.
(a) In connection with the transfer, assignment, set-over and
conveyance set forth in Section 2.01, the Transferor agrees to record and file,
at its own expense, any financing statements (and continuation statements with
respect to such financing statements when applicable) required to be filed with
respect to the Contracts sold or to be sold by the Transferor hereunder, meeting
the requirements of applicable state law in such manner and in such
jurisdictions as are necessary under the applicable UCC to perfect the transfer
and assignment of the Contracts to the Issuer, and to deliver a file-stamped
copy of such financing statements or other evidence of such filings to the
Issuer on or prior to the Closing Date (excluding such continuation and similar
statements, which shall be delivered promptly after filing).
(b) In connection with the sales and conveyances hereunder, the
Transferor further agrees, at its own expense, on or prior to the Closing Date
with respect to the Contracts to indicate on its books and records (including
any computer files) that all of the Contracts have been sold to the Issuer
pursuant to this Agreement. The Transferor further agrees not to alter the
computer file designation referenced in this paragraph with respect to any
Contract during the term of this Agreement unless and until such Contract
becomes an Acquired Contract. The transfer of each Contract shall be reflected
on the Transferor's balance sheets and other financial statements prepared in
accordance with generally accepted accounting principles as a transfer of assets
by the Transferor to the Issuer. The Transferor shall be responsible for
maintaining, and shall maintain, a complete and accurate set of books and
records and computer files for each Contract which shall be clearly marked to
reflect the ownership of each Contract by the Issuer.
Section 2.04. Grant of Security Interest. It is the intent of the
parties hereto that the transfer of the Conveyed Assets by the Transferor to the
Issuer pursuant to this Agreement shall be an absolute assignment and not the
grant of a security interest. In the event that notwithstanding such intent the
Contracts are held to continue to be property of the Transferor, then (i) this
Agreement also shall be deemed to be and hereby is a security agreement within
the meaning of the UCC, and (ii) the conveyance by the Transferor provided for
in the Agreement shall be deemed to be and hereby is a grant by the Transferor
to the Issuer of a security interest in and to all of the Transferor's right,
title and interest whether now owned or hereafter acquired, in, to and under the
Conveyed Assets, to secure the obligations of the Transferor hereunder. The
Transferor and the Issuer shall, to the extent consistent with this Agreement,
take such actions (other than delivery of the original contracts) as may be
necessary to ensure that, if the conveyance of the Contracts and the Related
Property by the Transferor to the Issuer pursuant to this Agreement is not
deemed to be a sale, the security interest in the Conveyed Assets created
hereunder will be a perfected security interest of first priority under
applicable law and will be maintained as such throughout the term of this
Agreement. The Issuer shall have all of the rights of a secured creditor under
the UCC.
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ARTICLE III
THE CONTRACTS
Section 3.01. Representations and Warranties of Transferor. The
Transferor makes the following representations and warranties as to the
Contracts on which the Issuer is deemed to have relied in acquiring the
Contracts. Such representations and warranties speak as of the execution and
delivery of this agreement, but shall survive the transfer and assignment of the
Contracts to the Issuer and the pledge thereof to the Trustee pursuant to the
Indenture.
(a) Title. It is the intention of the Transferor that the transfer and
assignment herein contemplated constitute either (i) a sale of the
Contracts or (ii) a grant of a perfected security interest therein from
the Transferor to the Issuer and that the beneficial interest in and
title to such Contracts not be part of the debtor's estate in the event
a conservator or receiver is appointed for the Transferor. No Contract
has been sold, transferred, assigned or pledged by the Transferor to
any Person other than the Issuer. Immediately prior to the transfer and
assignment herein contemplated, the Transferor had good and marketable
title to each Contract, free and clear of all Liens and rights of
others and, immediately upon the transfer thereof, the Issuer shall
have good and marketable title to each such Contract, free and clear of
all Liens and rights of others or a first priority perfected security
interest therein; and the transfer has been perfected, by the filing of
appropriate financing statements pursuant to the UCC, under the UCC.
(b) All Actions Taken. All actions (other than delivering the original
Contract) necessary under the applicable UCC in any jurisdiction to be
taken (i) to give the Issuer a first priority perfected security
interest or ownership interest in the Contracts, and (ii) to give the
Trustee a first priority perfected security interest therein
(including, without limitation, UCC filings with the Nevada and Utah
Secretaries of State) have been taken.
(c) Location of Contract Files. The Contract Files are kept at the
location specified in Schedule B hereto.
(d) Eligible Contracts. Each of the Contracts is an Eligible Contract.
(e) No Consents Required. All approvals, authorizations, consents,
orders or other actions of any Person or of any Governmental Authority
required in connection with the execution and delivery by the
Transferor of this Agreement or any other Basic Document, the
performance by the Transferor of the transactions contemplated by this
Agreement or any other Basic Document and the fulfillment by the
Transferor of the terms hereof or thereof, have been obtained or have
been completed and are in full force and effect (other than approvals,
authorizations, consents, orders or other actions which if not obtained
or completed or in full force and effect would not have a material
adverse effect on the Transferor or the Issuer or upon the
collectibility of any Contract or upon the ability of the Transferor to
perform its obligations under this Agreement).
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Section 3.02. Reacquisition by the Transferor Upon Breach.
(a) The Transferor, the Servicer, or the Trustee, as the case may be,
shall inform the other parties to this Agreement, promptly, in writing, upon the
discovery of any breach of the Transferor's representations and warranties made
pursuant to Section 3.01. Unless any such breach shall have been cured by the
last day of the second month following the month of the discovery thereof by the
Transferor or receipt by the Transferor of written notice from the Trustee or
the Servicer of such breach, the Transferor shall be obligated to reacquire any
Receivable materially and adversely affected by any such breach as of such last
day (or, at the Transferor's option, as of the last day of the first month
following the month of the discovery).
In consideration of the reacquisition of the Receivable, the Transferor
shall remit the Prepayment Amount in the manner specified in Section 5.03. The
sole remedy of each of the Issuer, the Trustee and the Noteholders with respect
to a breach of representations and warranties pursuant to Section 3.01 and the
agreement contained in this Section shall be to require the Transferor to
reacquire Receivables pursuant to this Section, subject to the conditions
contained herein. The Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the reacquisition
of any Contract pursuant to this Section.
(b) The Issuer shall execute such documents and instruments of transfer
or assignment and take other actions as shall reasonably be requested by the
Servicer to evidence the conveyance of such Receivable pursuant to this Section
3.02.
Section 3.03. Duties of Servicer.
(a) Contract Files. The Servicer shall maintain such accurate and
complete accounts, records and computer systems pertaining to
each Contract File as shall enable itself and the Issuer to
comply with this Agreement. In performing its duties, the
Servicer shall act with reasonable care, using that degree of
skill and attention that the Servicer exercises with respect
to the contract files relating to all comparable contracts
that the Servicer services for itself or others. The Servicer
shall promptly report to the Issuer and the Trustee any
failure on its part to maintain its accounts, records and
computer systems as herein provided and promptly take
appropriate action to remedy any such failure. Nothing herein
shall be deemed to require an initial review or any periodic
review by the Issuer or the Trustee.
(b) Access to Records. The Servicer shall notify the Trustee of
any change in the location of its principal place of business
in writing not later than 90 days after any such change. The
Servicer shall make available to the Trustee, or duly
authorized representatives, attorneys or auditors, a list of
locations of the related accounts, records and computer
systems maintained by the Servicer at such times as the
Trustee shall instruct. The Trustee shall have access to such
accounts, records and computer systems, after reasonable
notice and during normal business hours.
(c) Safekeeping. The Servicer shall hold on behalf of the Issuer
(i) all file stamped copies of UCC financing statements
evidencing the security interest of Advanta
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Bank Corp. in Financed Equipment, and (ii) any and all
documents, that Advanta Bank Corp. or the Transferor shall
keep on file, in accordance with its customary procedures,
relating to a Contract, an Obligor or Financed Equipment, and
shall maintain such accurate and complete records pertaining
to each Contract as shall enable the Issuer to comply with
this Agreement. Upon instruction from the Trustee, the
Servicer shall release any such UCC filing or other document
to the Trustee, the Trustee's agent, or the Trustee's
designee, as the case may be, at such place or places as the
Trustee may designate, as soon as practicable.
ARTICLE IV
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01. Duties of Servicer. The Servicer, as agent for the Issuer
(to the extent provided herein), shall manage, service, administer and make
collections on the Contracts (other than Acquired Contracts) with reasonable
care, using that degree of skill and attention that the Servicer exercises with
respect to all comparable contracts that it services for itself or others. The
Servicer's duties shall include calculating, billing, collection and posting of
all payments, responding to inquiries of Obligors on such Contracts,
investigating delinquencies, reporting tax information to Obligors (to the
extent required under the related Contracts), accounting for collections, and
furnishing monthly and annual statements to the Trustee with respect to
distributions. Subject to the provisions of Section 4.02, the Servicer shall
follow its customary standards, policies and procedures in performing its duties
as Servicer. Without limiting the generality of the foregoing, the Servicer is,
when such release or discharge is otherwise permitted under the Basic Documents,
authorized and empowered to execute and deliver, on behalf of itself, the
Issuer, the Trustee and the Noteholders or any of them, any and all instruments
of satisfaction or cancellation, or partial or full release or discharge, and
all other comparable instruments, with respect to such Contracts or to the
Financed Equipment securing such Contracts. If the Servicer shall commence a
legal proceeding to enforce a Contract, the Issuer (in the case of a Contract
other than an Acquired Contract) shall thereupon be deemed to have automatically
assigned, solely for the purpose of collection, such Contract to the Servicer.
If in any enforcement suit or legal proceeding it shall be held that the
Servicer may not enforce a Contract on the ground that it shall not be a real
party in interest or a holder entitled to enforce such Contract, the Issuer
shall, at the Servicer's expense and direction, take steps to enforce such
Contract, including bringing suit in its name or the name of the Trustee or the
Noteholders. The Issuer shall upon the written request of the Servicer furnish
the Servicer with any powers of attorney and other documents reasonably
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
Section 4.02. Collection of Contract Payments. The Servicer shall make
reasonable efforts to collect all payments called for under the terms and
provisions of the Contracts as and when the same shall become due and shall
follow such collection procedures as it follows with respect to all comparable
Contracts that it services for itself or others. In connection therewith, the
Servicer may grant extensions, rebates or adjustments on a Contract; provided,
however, that if the Servicer extends the date for final payment by the Obligor
of any Contract beyond the date
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one month prior to the Final Scheduled Payment Date, it shall promptly acquire
the Contract from the Issuer in accordance with the terms of Section 4.07. The
Servicer shall not agree to any reduction of the underlying interest rate on any
Contract or, subject to the foregoing, of the amount of any Scheduled Payment on
a Contract. Notwithstanding anything in this Agreement to the contrary, any
Recoveries with respect to a Contract shall be paid to the Transferor, and any
Defaulted Contracts shall be assigned by the Trust to the Transferor, to the
extent, in either case, that the Contract Principal Balance of the Contract has
been distributed as part of the Principal Distribution Amount. The Servicer
shall not permit a prepayment by an Obligor at an amount less than the
Prepayment Amount.
Section 4.03. Realization upon Contracts. On behalf of the Issuer, the
Servicer shall use its customary servicing procedures, to repossess or otherwise
realize upon the Financed Equipment securing any Contract as to which the
Servicer shall have determined eventual payment in full is unlikely. The
Servicer shall follow such customary and usual practices and procedures as it
shall deem necessary or advisable in its servicing of comparable Contracts,
which may include selling the Financed Equipment at public or private sale. The
foregoing shall be subject to the provision that, in any case in which any item
of Financed Equipment shall have suffered damage, the Servicer shall not expend
funds in connection with the repair or the repossession of such Financed
Equipment unless it shall determine in its discretion that such repair and/or
repossession will increase the Recoveries by an amount greater than the amount
of such expenses.
Section 4.04. Servicer Advances. If an Obligor fails to remit its full
scheduled payment on any Contract by the Calculation Date in the month in which
the payment is due, then no later than one Business Day preceding the following
Payment Date, the Servicer may, but is not required, to make a Servicer Advance
for such overdue Scheduled Payment 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 4.05. Maintenance of Security Interests in Financed Equipment.
The Servicer shall, in accordance with its customary servicing procedures, take
such steps as are necessary to maintain perfection of the security interest in
the Financed Equipment related to each Contract if the original value of the
Financed Equipment was equal to or greater than $25,000. The Servicer is hereby
authorized to take such steps as are necessary to re-perfect such security
interest or to maintain such perfected security interest on behalf of the Issuer
and the Trustee in the event of the relocation of Financed Equipment, or for any
other reason.
Section 4.06. Covenants of Servicer. The Servicer shall not: (i)
release the financed equipment securing any Contract from the security interest
granted by such Contract in whole or in part except (A) in accordance with
Section 4.03 above or (B) in the event of payment in full (including a
prepayment) by the Obligor thereunder; (ii) impair the rights of the Issuer, the
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Trustee or the Noteholders in any Contract; or (iii) change the number of
Scheduled Payments due under a Contract except in accordance with the terms
thereof or the terms of Section 4.02.
Section 4.07. Acquisition by Servicer of Contracts upon Breach.
(a) The Servicer shall inform the Trustee and the Transferor promptly,
in writing, upon the discovery of any breach pursuant to Section 4.02,
4.05 or 4.06. Unless the breach shall have been cured by the last day
of the second month following such discovery (or, at the Transferor's
election, the last day of the first following month), the Servicer
shall acquire any Contract materially and adversely affected by such
breach. If the Servicer takes any action pursuant to Section 4.02 that
impairs the rights of the Issuer, the Trustee or the Noteholders in any
Contract or as otherwise provided in Section 4.02, the Servicer shall
acquire such Contract. In consideration of the acquisition of any such
Contract pursuant to either of the two preceding sentences, the
Servicer shall remit the Prepayment Amount in the manner specified in
Section 5.03. Subject to Section 7.02, the sole remedy of any of the
Issuer, Trustee and the Noteholders with respect to a breach pursuant
to Section 4.02, 4.05 or 4.06 shall be to require the Servicer to
acquire Contracts pursuant to this Section. The parties hereto intend
that the Servicer will not intentionally breach or cause a breach
pursuant to Section 4.02, 4.05 or 4.06 in order to provide direct or
indirect assurance to the Transferor, the Trustee or the Noteholders,
as applicable, against loss by reason of the bankruptcy or insolvency
(or other credit condition) of, or default by, the Obligor on, or the
uncollectibility of, any Contract.
(b) The Issuer shall execute such documents and instruments of transfer
or assignment and take other actions as shall reasonably be requested
by the Servicer to evidence the conveyance of such Contract pursuant to
this Section 4.07.
Section 4.08. Servicing Fee. On each Payment Date, the Servicer shall
be entitled to receive the Servicing Fee in respect of the immediately preceding
Collection Period equal to the product of (a) one-twelfth of the Servicing Fee
Rate and (b) the Aggregate Contract Principal Balance as of the first day of
such preceding Collection Period. The Servicer shall also be entitled to any
Excluded Amounts with respect to Contracts, collected (from whatever source) on
the Contracts, which Excluded Amounts shall be paid to the Servicer pursuant to
Section 5.07.
Section 4.09. Servicer's Certificate. On each Determination Date, the
Servicer shall deliver to the Trustee and the Issuer, a Servicer's Certificate
containing all information necessary to make the distributions pursuant to
Sections 5.04 and 5.05 for the Collection Period immediately preceding the date
of such Servicer's Certificate. The Trustee shall not be required to determine,
confirm or recalculate the information contained in the Servicer's Certificate.
Contracts to be acquired by the Servicer or to be reacquired by the Transferor
shall be identified by the Servicer by account number with respect to such
Contract as specified in Schedule A.
Section 4.10. Annual Statement as to Compliance. The Servicer will
deliver to the Issuer and the Trustee, not later than 90 days after the end of
each fiscal year, an Officer's Certificate, 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
Agreement has been made under such officer's supervision and (b) nothing has
come to such
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officer's attention to indicate that a Servicer Default (or an event which with
the giving of notice or passage of time, or both, would constitute a Servicer
Default) hereunder has occurred and is continuing on such last day of such
fiscal year or, if a Servicer Default or such other event has so occurred and is
continuing, specifying each such Servicer Default or such other event known to
such officer and the nature and status thereof, and the steps, if any, necessary
to remedy such Servicer Default or such other event.
Section 4.11. Security Deposits. The Issuer acknowledges that the
Security Deposits are held by the Issuer on behalf of the Obligors and the
Trustee. In the event that (i) any Obligor requests that a Security Deposit be
applied as an offset against such Obligor's payment obligations under a Contract
or (ii) any Contract becomes a Defaulted Contract, the Servicer shall deliver to
the Issuer written demand that the Issuer remit to the Servicer, on the next
Business Day, out of the applicable Obligors's Security Deposit an amount equal
to the Offset Amount as payment in respect of any unpaid Scheduled Payments
under the related Contract. The Servicer shall deposit any Offset Amount so
delivered to it into the Collection Account no later than the end of the
Collection Period in which the Offset Amount is applied. The Servicer shall not
be required to remit from its own funds any Offset Amounts not received from the
Issuer. The Servicer shall notify the Issuer in writing of any demand it
receives from an Obligor for refund of such Obligor'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
Obligor with respect to the Security Deposits. The Issuer shall indemnify and
hold harmless the Trustee and its officers, directors, agents and employees 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 Issuer's
misappropriation or misapplication of any Security Deposit received from an
Obligor. This right of indemnification shall survive the termination of this
Agreement and any earlier removal or resignation of the Trustee.
ARTICLE V
DISTRIBUTIONS; ACCOUNTS;
STATEMENTS TO NOTEHOLDERS
Section 5.01. Establishment of Trust Accounts.
(a) (i) The Servicer, for the benefit of the Noteholders,
shall establish and maintain in the name of the Trustee an Eligible
Deposit Account (the "Collection Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of the Noteholders.
(i) The Servicer, for the benefit of the Class A-1
Noteholders, the Class A-2 Noteholders, the Class A-3 Noteholders, the
Class B Noteholders, the Class C Noteholders, the Class D Noteholders
and the Class E Noteholders, shall establish and maintain in the name
of the Trustee an Eligible Deposit Account (the "Reserve Account"),
bearing a designation clearly indicating that the funds deposited
therein are
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held for the benefit of the Class A-1 Noteholders, the Class A-2
Noteholders, the Class A-3 Noteholders, the Class B Noteholders, the
Class C Noteholders, the Class D Noteholders and the Class E
Noteholders.
(ii) Funds on deposit in the Collection Account and the
Reserve Account (collectively the "Trust Accounts") shall be invested
by the Trustee in Eligible Investments selected by the Servicer;
provided, however, it is understood and agreed that the Trustee shall
not be liable for any loss arising from such investment in Eligible
Investments. All such Eligible Investments shall be held by the Trustee
for the benefit of the Noteholders; provided, however, that on each
Payment Date all investment earnings (net of losses and investment
expenses) on funds on deposit therein shall be deposited into the
Collection Account and shall be deemed to constitute a portion of the
Available Funds as directed in the Monthly Servicer Report. Other than
as permitted by the Rating Agencies, funds on deposit in the Trust
Accounts shall be invested in Eligible Investments that will mature so
that such funds will be available at the close of business on the
Business Day preceding the immediately following Payment Date;
provided, however, that funds on deposit in Trust Accounts may be
invested in Eligible Investments of the Trustee which may mature so
that such funds will be available on the Payment Date. Notwithstanding
the other provisions of this Agreement, the funds in the Collection
Account or the Reserve Account may be invested in Eligible Investments
that will not mature prior to the next Payment Date and are not to be
sold to meet any shortfalls if the Rating Agency Condition is satisfied
with respect to such investments. Funds deposited in a Trust Account on
a Business Day which immediately precedes a Payment Date upon the
maturity of any Eligible Investments are not required to be invested
overnight, but if so invested, such investments must meet the
conditions of the immediately preceding sentence.
(b) The Trustee shall possess all right, title and interest in
all monies, securities, instruments and other property on deposit from
time to time in or credited to the Trust Accounts and in all proceeds
thereof (including all income thereon) and all such monies, securities,
instruments and other property (together with all earnings, dividends,
distributions, income, issues, and profits relating thereto) shall be
part of the Trust Estate. The Trust Accounts shall be under the sole
dominion and control of the Trustee for the benefit of the Noteholders.
If, at any time, any of the Trust Accounts ceases to be an Eligible
Deposit Account, the Trustee (or the Servicer on its behalf) shall
within 10 Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency may consent) establish a
new Trust Account as an Eligible Deposit Account and shall transfer any
cash and/or any investments to such new Trust Account. So long as the
Trustee is an Eligible Institution, any Trust Account may be maintained
with it in an Eligible Deposit Account.
Section 5.02. Collections. (a) Except as otherwise provided in this
Agreement, the Servicer and the Issuer shall deposit to the Collection Account
any Collections including any Advance Payments received by any of them as soon
as practicable (and, in any event, within two Business Days of receipt and
identification thereof) after their respective receipt thereof. Notwithstanding
anything else in this Agreement to the contrary, for so long as Advanta Bank
Corp. or an Affiliate thereof remains the Servicer and (x) maintains a
short-term debt rating of
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A-1 by S&P, P-1 by Moody's and F1 by Fitch (if rated by Fitch) (or such other
rating above A-1, P-1 or F1 (if rated by Fitch), as the case may be), or (y) the
Servicer has provided to the Trustee a letter of credit with an institution that
maintains a short-term debt rating of P-1 by Moody's and which covers the
collection risk of the Servicer, the Servicer and the Issuer 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 Payment
Date following the Collection Period in which the deposits were to have been
made into the Collection Account.
(b) Notwithstanding the foregoing, the Trustee at the written direction
of the Servicer and/or the Servicer may deduct from amounts otherwise specified
for deposit to the Collection Account any amounts previously deposited by the
Trustee or the Servicer into the Collection Account but which are (i)
subsequently uncollectible as a result of dishonor of the instrument of payment
for or on behalf of the Obligor or (ii) later determined to have resulted from
mistaken deposits or which amounts were rebated to the Obligor.
(c) The Collection Account shall be under the sole dominion and control
of the Trustee for the benefit of the Noteholders; provided, however, that the
Trustee may conclusively 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 this Agreement and the Indenture. 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 for any amount
owed to it by the Servicer, the Obligors, the Trustee, or any Noteholder.
(d) The Trustee shall credit all net investment earnings on the
Collection Account, as collected, on a monthly basis to the Collection Account.
Section 5.03. Additional Deposits. The Servicer and the Transferor
shall deposit or cause to be deposited in the Collection Account the Prepayment
Proceeds received from the Transferor, the Servicer or the Obligors as set forth
in the immediately following sentence, and the Servicer shall deposit in the
Collection Account all amounts to be paid by the Transferor to reacquire
Contracts under Section 9.01 of this Agreement. The Servicer and the Transferor
will deposit the Prepayment Proceeds to the Collection Account as received,
unless the Servicer shall be permitted to make deposits monthly prior to each
Payment Date pursuant to Section 5.02, in which case such deposits shall be made
in accordance with such Section. The Servicer shall account for Prepayment
Proceeds paid by itself and the Transferor separately.
Section 5.04. Distributions.
(a) On or prior to each Determination Date, the Servicer shall
calculate all amounts required to determine the amounts to be paid as interest
and as principal on the notes and the amount, if any, to be deposited into the
Reserve Account.
(b) On the Payment Date, unless a Trigger Event has occurred and has
not been cured the Trustee (based solely on information contained in the
Servicer's Certificate) will be required
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to make the following payments from the Available Funds (including amounts
transferred from the Reserve Account on such Payment Date) then on deposit in
the Collection Account, in the following order of priority:
(i) from the Available Funds, the fees and expenses of the Trustee then
due and payable (including legal fees and expenses); provided that the amount of
fees and expenses of the Trustee which may be paid under this provision (i)
shall, unless a Servicer Default or an Event of Default (as defined in the
Indenture) has occurred, be limited to a cumulative $50,000 per 12-month period,
so that to the extent the fees and expenses of the Trustee are less than $50,000
(or such greater amount as then is applicable) in a 12-month period, the excess
shall be carried forward and added to the amount which could otherwise be paid
in the next 12-month period. If a Servicer Default or an Event of Default has
occurred, the amount which may be paid under this provision and under the FIRST
priority in Section 5.04(b) of the Indenture for Trustee's fees and expenses,
shall be limited to $250,000 each year provided that amount shall be renewed
each year;
(ii) from the Available Funds, to the Servicer, any Nonrecoverable
Advances;
(iii) from the Available Funds then remaining in the Collection Account
to the Servicer, the Servicing Fee then due;
(iv) from the Available Funds then remaining in the Collection Account,
to the Class A Noteholders, the Class A Note Interest for such Payment Date to
be applied pro rata based on interest due with respect to the Class A-1 Notes,
the Class A-2 Notes and the Class A-3 Notes;
(v) from the Available Funds then remaining in the Collection Account,
to the Class B Noteholders, the Class B Note Interest for such Payment Date;
(vi) from the Available Funds then remaining in the Collection Account,
to the Class C Noteholders, the Class C Note Interest for such Payment Date;
(vii) from the Available Funds then remaining in the Collection
Account, to the Class D Noteholders, the Class D Note Interest for such Payment
Date;
(viii) from the Available Funds then remaining in the Collection
Account, to the Class E Noteholders, the Class E Note Interest, if any for such
Payment Date; or if the Class E Notes did not bear interest during the Interest
Period preceding such Payment Date, an amount equal to the Class E Reallocated
Interest will be treated as Additional Principal and will be paid pro rata to
the holders of the Class A Notes, the Class B Notes, the Class C Notes and the
Class D Notes and, with respect to that amount allocated to the holders of the
Class A Notes will be paid sequentially to the Class A-1 Notes until the Class
A-1 Principal Balance is reduced to zero, then to the Class A-2 Notes until the
Class A-2 Principal Balance is reduced to zero and then to the Class A-3 Notes
until the Class A-3 Principal Balance is reduced to zero;
(ix) from the Available Funds then remaining in the Collection Account,
the Class A Monthly Principal Payment Amount plus any Class A Overdue Principal
shall be paid
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sequentially to the Class A Noteholders so that such monthly payments will be
used first to pay the Class A-1 Notes until the Class A-1 Principal Balance has
been reduced to zero, then to pay the Class A-2 Notes until the Class A-2
Principal Balance has been reduced to zero and then to pay the Class A-3 Notes
until the Class A-3 Principal Balance has been reduced to zero;
(x) from the Available Funds then remaining in the Collection Account,
until the Class B Principal Amount has been reduced to zero, the Class B Monthly
Principal Payment Amount plus Class B Overdue Principal shall be paid to the
Class B Noteholders;
(xi) from the Available Funds then remaining in the Collection Account,
until the Class C Principal Amount has been reduced to zero, the Class C Monthly
Principal Payment Amount plus Class C Overdue Principal shall be paid to the
Class C Noteholders;
(xii) from the Available Funds then remaining in the Collection
Account, until the Class D Principal Amount has been reduced to zero, the Class
D Monthly Principal Payment Amount plus Class D Overdue Principal shall be paid
to the Class D Noteholders;
(xiii) from the Available Funds then remaining in the Collection
Account, the Class E Monthly Principal Payment Amount plus Class E Overdue
Principal shall be paid to the Class E Noteholders;
(xiv) 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;
(xv) from the Available Funds then remaining in the Collection Account
until the Class F Principal Balance has been reduced to the Class F Floor, an
amount equal to the Class F Monthly Principal Payment Amount will be paid to the
Issuer as owner of the Class F Interest;
(xvi) if the Class F Principal Balance has been reduced to or below the
Class F Floor, then, from the Available Funds then remaining in the Collection
Account, an amount equal to the Class F Monthly Principal Payment Amount shall
be treated as Additional Principal and paid as follows: (i) to the Class D
Noteholders until the Class D Principal Balance is reduced to zero, (ii) then to
the Class C Noteholders until the Class C Principal Balance is reduced to zero,
(iii) then to the Class B Noteholders until the Class B Principal Balance is
reduced to zero, (iv) then to the Class A-1 Noteholders until the Class A-1
Principal Balance is reduced to zero, (v) then to the Class A-2 Noteholders
until the Class A-2 Principal Balance is reduced to zero, (vi) then to the Class
A-3 Noteholders until the Class A-3 Principal Balance is reduced to zero, (vii)
then to the Class E Noteholders until the Class E Principal Balance is reduced
to zero and (viii) finally to the holder of the Class F Interest; if the Class D
Principal Balance is reduced to zero, then the an amount equal to the Class D
Monthly Principal Payment Amount shall be treated as Additional Principal and
paid as follows: (i) to the Class C Noteholders until the Class C Principal
Balance is reduced to zero, (ii) then to the Class B Noteholders until the Class
B Principal Balance is reduced to zero, (iii) then to the Class A-1 Noteholders
until the Class A-1 Principal Balance is reduced to zero, (iv) then to the Class
A-2 Noteholders until the Class A-2 Principal Balance is reduced to zero, (v)
then to the Class A-3 Noteholders until the Class A-3 Principal Balance is
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<PAGE> 38
reduced to zero, (vi) then to the Class E Noteholders until the Class E
Principal Balance is reduced to zero and (vii) finally to the holder of the
Class F Interest; if the Class C Principal Balance is reduced to zero, then the
an amount equal to the Class C Monthly Principal Payment Amount shall be treated
as Additional Principal and paid as follows: (i) to the Class B Noteholders
until the Class B Principal Balance is reduced to zero, (ii) then to the Class
A-1 Noteholders until the Class A-1 Principal Balance is reduced to zero, (iii)
then to the Class A-2 Noteholders until the Class A-2 Principal Balance is
reduced to zero, (iv) then to the Class A-3 Noteholders until the Class A-3
Principal Balance is reduced to zero, (v) then to the Class E Noteholders until
the Class E Principal Balance is reduced to zero and (vi) finally to the holder
of the Class F Interest; if the Class B Principal Balance is reduced to zero,
then the an amount equal to the Class B Monthly Principal Payment Amount shall
be treated as Additional Principal and paid as follows: (i) to the Class A-1
Noteholders until the Class A-1 Principal Balance is reduced to zero, (ii) then
to the Class A-2 Noteholders until the Class A-2 Principal Balance is reduced to
zero, (iii) then to the Class A-3 Noteholders until the Class A-3 Principal
Balance is reduced to zero, (iv) then to the Class E Noteholders until the Class
E Principal Balance is reduced to zero and (v) finally to the holder of the
Class F Interest; if the Class A-1 Principal Balance, Class A-2 Principal
Balance and Class A-3 Principal Balance are reduced to zero, then the an amount
equal to the Class A Monthly Principal Payment Amount shall be treated as
Additional Principal and be paid as follows: (i) to the Class E Noteholders
until the Class E Principal Balance is reduced to zero and (v) finally to the
holder of the Class F Interest; and if the Class E Principal Balance is reduced
to zero, the Class E Monthly Principal Payment Amount shall be paid to the Class
F Interest until the Class F Principal Balance has been reduced to zero; and
(xvii) then to pay any remaining fees and expenses of the Trustee;
(xviii) then to the Issuer any remaining Available Funds on deposit in
the Collection Account.
(c) On the Payment Date, if a Trigger Event has occurred and has not
been cured, then the provisions of subsection (b) above shall be changed such
that the payments shall be made as provided in (i) through (viii) of such
provision (b), however, for so long as any Notes remain Outstanding or until the
Trigger Event is cured, the provisions beginning with (ix) shall no longer apply
and the remaining Available Funds will be paid as follows:
(i) from the Available Funds then remaining in the Collection Account,
to the Class A-1 Noteholders to pay principal until the Class A-1 Principal
Balance is reduced to zero, then to the Class A-2 Noteholders to pay principal
until the Class A-2 Principal Balance is reduced to zero, then to the Class A-3
Noteholders to pay principal until the Class A-3 Principal Balance is reduced to
zero, then to the Class B Noteholders to pay principal until the Class B
Principal Balance is reduced to zero, then to the Class C Noteholders to pay
principal until the Class C Principal Balance is reduced to zero, then to the
Class D Noteholders to pay principal until the Class D Principal Balance is
reduced to zero, then to the Class E Noteholders until the Class E Principal
Balance is reduced to zero, then to the Class F Interest to pay principal until
the Class F Principal Balance is reduced to zero;
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<PAGE> 39
(ii) then to pay any remaining fees and expenses of the Trustee; and
(iii) then to the Issuer any remaining Available Funds on deposit in
the Collection Account.
(d) All payments to Noteholders shall be made on each Payment Date to
each Noteholder of record on the related Record Date by check, or, if requested
in writing by such 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 Noteholder's pro rata
share of such payment.
Section 5.05. Reserve Account.
(a) On the Closing Date, the Transferor shall deposit the Reserve
Account Initial Deposit into the Reserve Account. The Servicer shall determine
the Required Reserve Amount for each Payment Date.
(b) If the amount on deposit in the Reserve Account on any Payment Date
(after giving effect to all deposits or withdrawals therefrom on such Payment
Date) is greater than the Required Reserve Amount for such Payment Date, the
Servicer shall instruct the Trustee to distribute the amount of such excess to
the Issuer. Amounts properly distributed to the Transferor pursuant to this
Section 5.05(b) shall be deemed released from the Trust and the security
interest therein granted to the Trustee, and the Transferor shall in no event
thereafter be required to refund any such distributed amounts.
(c) In the event that the sum of the distributions to be made pursuant
to subsections 5.04(b)(i) through (xiii) with respect to any Payment Date
exceeds the Available Funds otherwise available to be distributed in respect
thereof on such Payment Date, the Trustee shall withdraw from the Reserve
Account on such Payment Date, upon receipt of the instruction from the Servicer
pursuant to Section 5.04(b), to the extent of funds available therein, an amount
equal to such excess, and the Trustee shall use such amounts as Available Funds.
(d) If a Trigger Event occurs, then the Trustee, upon the direction of
the Servicer shall on the first Payment Date following the occurrence of the
Trigger Event, withdraw the full amount on deposit in the Reserve Account and
deposit such amount into the Collection Account to be used as Available Funds on
that Payment Date.
(e) Notwithstanding anything in this Section 5.05 to the contrary, if
an Event of Default under the Indenture occurs and the maturities of the Notes
are accelerated pursuant to Section 5.02 of the Indenture, amounts on deposit in
the Reserve Account shall be treated as money or property collected by the
Trustee and applied by the Trustee in the priority provided in Section 5.04(b)
of the Indenture.
Section 5.06. Statement to Noteholders. 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 5.04 (b) and, if applicable, Section
5.04(c) hereof, then on each Payment Date, the Trustee will forward to
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each Rating Agency, and mail to each Noteholder, a statement based solely on
such Servicer's Certificate, not later than such Payment Date, setting forth the
following information (per $1,000 of initial Class A-1 Principal Balance,
initial Class A-2 Principal Balance, initial Class A-3 Principal Balance,
initial Class B Principal Balance, initial Class C Principal Balance, initial
Class D Principal Balance and initial Class E Principal Balance (as the case may
be) as to (i) and (ii) below:
(i) The amount of such payment allocable to the Class A
Monthly Principal Payment Amount, Class B Monthly Principal Payment
Amount, Class C Monthly Principal Payment Amount, the Class D Monthly
Principal Payment Amount, the Class E Monthly Principal Payment Amount
and the Class F Monthly Principal Payment Amount, as applicable;
(ii) The amount of such payment allocable to such Class A-1
Note Interest, Class A-2 Note Interest, Class A-3 Note Interest, Class
B Note Interest, Class C Note Interest or Class D Note Interest and, if
any, the Class E Note Interest, as applicable;
(iii) The aggregate amount of fees and compensation received
by the Servicer and the Trustee for the related Collection Period;
(iv) The aggregate Class A-1 Principal Balance, Class A-2
Principal Balance, Class A-3 Principal Balance, Class B Principal
Balance, Class C Principal Balance and the Class D Principal Balance,
the Class E Principal Balance, as applicable, and the Class A-1 Note
Factor, Class A-2 Note Factor, Class A-3 Note Factor, Class B Note
Factor, Class C Note Factor, the Class D Note Factor and the Class E
Note Factor, 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
Contracts that became Defaulted Contracts during the related Collection
Period, calculated immediately prior to the time such Contracts became
Defaulted Contracts;
(vii) The amount on deposit in the Reserve Account;
(viii) 31-60, 61-90 and greater than 90 days delinquencies as
of the end of the related Collection Period;
(ix) Prepayment Amounts received during the related Collection
Period from the Transferor or the Servicer for contracts repurchased or
purchased as a result of the breach of representations and warranties;
and
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(x) The calculation as of such Payment Date of the Cumulative
Net Loss Percentage, the Three - Month Delinquency Percentage and the
Monthly Delinquency Percentage;
provided, however, the Trustee may deliver a copy of the Servicer's
Certificate to each Noteholder and Rating Agency in satisfaction of the
requirement set forth in this Section.
The Servicer and the Trustee shall furnish to each Noteholder, on
written 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 Noteholder and at the expense of such
requesting party all such reports or information to be provided by and in
accordance with such written applicable instructions and directions as the
Noteholder may reasonably require and as the Servicer and the Trustee may
reasonably be able to produce. A Noteholder may, by written notice to the
Trustee, waive receipt of any reports. The Trustee's obligation under this
provision shall only pertain to information provided by the Servicer to the
Trustee or otherwise in the Trustee's possession.
The Servicer shall, in addition, provide appropriate Federal income tax
information to the Trustee for use in providing information to Noteholders.
Section 5.07. Provisions Relating to Trigger Events. Each of the
following is a Trigger Event (each a "Trigger Event"):
(1) Advanta Bank Corp. or an affiliate is no longer the Servicer;
(2) the Three-Month Delinquency Percentage related to any Calculation
Date is greater than 10.50%;
(3) 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>
Period Loss Trigger Level Percentage
------ -----------------------------
<S> <C>
First Collection Period through the twelfth
Collection Period 4.50%
Thirteenth Collection Period through the
twenty-fourth Collection Period 6.00%
Twenty-fifth Collection Period and thereafter 7.25%
</TABLE>
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Notwithstanding the foregoing: (i) if the Trigger Event relating to the
Three-Month Delinquency Percentage has occurred, it may be cured if the
Three-Month Delinquency Percentage for any subsequent Collection Period is less
than or equal to 10.50% and (ii) if the Trigger Event relating to the Cumulative
Net Loss Percentage has occurred, it may be cured if the Cumulative Net Loss
Percentage, although it exceeds the "Loss Trigger Level Percentage" in a prior
Collection Period, is less than or equal to the "Loss Trigger Level Percentage"
in a subsequent Collection Period.
ARTICLE VI
THE TRANSFEROR
Section 6.01. Representations of Transferor. The Transferor makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Contracts. The representations speak as of the execution and
delivery of this Agreement and shall survive the transfer of the Contracts to
the Issuer and the pledge thereof to the Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Transferor is duly organized
and validly existing as a corporation in good standing under the laws
of the State of Utah with the power and authority to own its properties
and to conduct its business as such properties are currently owned and
such business is presently conducted, and had at all relevant times,
and has, the power, authority and legal right to acquire and own the
Contracts.
(b) Due Qualification. The Transferor is duly qualified to do business
as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
failure to so qualify or to obtain any such license or approval would
render any Contract unenforceable that would otherwise be enforceable
by the Transferor.
(c) Power and Authority. The Transferor has the power and authority to
execute and deliver this Agreement and to carry out its terms; the
Transferor has full power and authority to transfer and assign the
Contracts and other property to be transferred and assigned to and
deposited with the Issuer and the Transferor has duly authorized such
transfer and assignment to the Issuer by all necessary corporate
action; and each of the execution, delivery and performance of this
Agreement has been duly authorized by the Transferor by all necessary
corporate action.
(d) FDIC Insurance. The deposits of the Transferor are insured by the
Federal Deposit Insurance Corporation.
(e) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Transferor enforceable in accordance with its
terms, except to the extent that such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights
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generally, and the remedy of specific performance and injunctive relief
may be subject to certain equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(f) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not (i)
conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time) a default
under, the certificate of incorporation or by-laws of the Transferor,
or any indenture, agreement or other instrument to which the Transferor
is a party or by which it is bound; (ii) result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms
of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); or (iii) violate any law or, to the
best of the Transferor's knowledge, any order, rule or regulation
applicable to the Transferor of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Transferor or its
properties.
(g) No Proceedings. There are no proceedings or investigations pending,
or to the Transferor's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Transferor or its
properties: (i) asserting the invalidity of this Agreement, the
Indenture, the Notes or any of the other Basic Documents, (ii) seeking
to prevent the issuance of the Notes or the consummation of any of the
transactions contemplated by this Agreement, the Indenture or any of
the other Basic Documents; (iii) seeking any determination or ruling
that might materially and adversely affect the performance by the
Transferor of its obligations under, or the validity or enforceability
of, this Agreement, the Indenture, the Notes or any other of the Basic
Documents or (iv) which might adversely affect the Federal or state
income tax attributes of the Notes.
Section 6.02. Liability of Transferor; Indemnities. The Transferor
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Transferor under this Agreement.
(a) The Transferor shall indemnify, defend and hold harmless the
Issuer, the Trustee and their officers, directors and agents from and
against any taxes that may at any time be asserted against the Issuer
or the Trustee or their respective officers, directors, and agents with
respect to the transfer of the Contracts to the Issuer or the issuance
and original sale of the Notes, including any sales, gross receipts,
general corporation, tangible personal property, privilege or license
taxes and costs and expenses in defending against the same.
(b) The Transferor shall indemnify, defend and hold harmless the Issuer
and the Trustee and their officers, directors, and agents from and
against any loss, liability or expense incurred by reason of (i) the
Transferor's willful misfeasance, bad faith or negligence in the
performance of its duties under this Agreement, or by reason of
reckless disregard of its obligations and duties under this Agreement
and (ii) the Transferor's or the Issuer's violation or alleged
violation of Federal or state securities laws in connection with the
offering and sale of the Notes.
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<PAGE> 44
Indemnification under this Section shall survive the resignation or
removal of the Trustee and the termination of this Agreement and shall include
reasonable fees and expenses of counsel and expenses of litigation. If the
Transferor shall have made any indemnity payments pursuant to this Section 6.02
and the Person to or on behalf of whom such payments are made thereafter shall
collect any of such amounts from others, such Person shall promptly repay such
amounts collected from others to the Transferor, without interest.
Section 6.03. Merger or Consolidation of, or Assumption of the
Obligations of, Transferor. Any corporation (i) into which the Transferor may be
merged or consolidated, (ii) resulting from any merger, conversion, or
consolidation to which the Transferor shall be party, or (iii) succeeding to the
business of the Transferor substantially as a whole shall be the successor to
the Transferor 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 which 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 Transferor under this
Agreement and all other Basic Documents; provided, however, that immediately
after giving effect to such transaction, no representation or warranty made
pursuant to Section 6.01 shall have been breached.
Section 6.04. Limitation on Liability of Transferor and Others. The
Transferor and any director or officer or employee or agent of the Transferor
may rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Transferor shall not be under any obligation to appear
in, prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
Section 6.05. Transferor or Issuer May Own Notes. The Transferor or the
Issuer and any Affiliate thereof may in its individual or any other capacity
become the owner or pledgee of Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class B Notes, the Class C Notes or the Class D Notes with the
same rights as it would have if it were not the Transferor or Issuer or an
Affiliate thereof, except as expressly provided herein (including, without
limitation, the definition of "Outstanding" contained in the Indenture) or in
any Basic Document. The Transferor and the Issuer agree that they shall not
transfer any interest in Notes (including the Class E Notes) or the Class F
Interest or, its membership interest in the Issuer or any rights hereunder
without delivering an Opinion of Counsel that such transfer will not cause the
Issuer to be taxable as an association or publicly traded partnership treated as
a corporation for federal income tax purposes.
Section 6.06. Tax Treatment. The Transferor has structured this
Agreement, the Indenture and any related agreement with the intention that the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class B Notes,
the Class C Notes, the Class D Notes and, upon transfer to a party which is not
the Issuer, the Transferor or an Affiliate, the Class E Notes will qualify under
applicable federal, state, and local income and franchise tax law as
indebtedness of the Transferor secured by the Contracts and the Issuer shall be
disregarded as a separate entity for such purposes. The Transferor, the
Servicer, and the Issuer agree to treat and to take no action inconsistent with
the treatment of the Notes (or any beneficial interest therein) as such
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<PAGE> 45
indebtedness for purposes of federal, state, and local income and franchise tax
law and for purposes of any other tax imposed on or measured by income.
ARTICLE VII
THE SERVICER
Section 7.01. Representations of Servicer. The Servicer makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Contracts. The representations speak as of the execution and
delivery of the Agreement (or as of the date a Person (other than the Trustee)
becomes Servicer pursuant to Sections 7.03 and 8.02, in the case of a successor
to the Servicer) and shall survive the transfer of the Contracts to the Issuer
and the pledge thereof to the Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is a corporation duly
organized, validly existing and in good standing under the laws of the
state if Utah and has the corporate power and authority to own its
properties and to conduct the business in which it is currently
engaged, and had at all relevant times, and has, the power, authority
and legal right to acquire, own, transfer and service the Contracts.
(b) Power and Authority. The Servicer has the power and authority to
execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement have been duly
authorized by the Servicer by all necessary corporate action.
(c) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Servicer enforceable in accordance with its
terms, except that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and the
remedy of specific performance and injunctive relief may be subject to
certain equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(d) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof shall not
conflict with, result in any breach of any of the terms and provisions
of, nor constitute (with or without notice or lapse of time) a default
under, the certificate of incorporation or by-laws of the Servicer, or
any material indenture, agreement or other instrument to which the
Servicer is a party or by which it is bound; nor result in the creation
or imposition of any material Lien upon any of its properties pursuant
to the terms of any such indenture, agreement or other instrument
(other than this Agreement); nor violate any material law or, to the
best of the Servicer's knowledge, any material order, rule or
regulation applicable to the Servicer of any court or of any Federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its
properties.
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(e) No Proceedings. To the Servicer's best knowledge, there are no
proceedings or investigations pending, or threatened, before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its
properties: (i) asserting the invalidity of this Agreement, the
Indenture, the Notes or any of the other Basic Documents; (ii) seeking
to prevent the issuance of the Notes or the consummation of any of the
transactions contemplated by this Agreement, the Indenture or any of
the other Basic Documents; (iii) 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 Agreement, the Indenture, the Notes or any of the other Basic
Documents; or (iv) relating to the Servicer and which might adversely
affect the Federal or state income tax attributes of the Notes.
(f) No Consents Required. All approvals, authorizations, consents,
orders or other actions of any Person or of any Governmental Authority
required in connection with the execution and delivery by the Servicer
of this Agreement or any other Basic Document, the performance by the
Servicer of the transactions contemplated by this Agreement or any
other Basic Document and the fulfillment by the Servicer of the terms
hereof or thereof, have been obtained or have been completed and are in
full force and effect (other than approvals, authorizations, consents,
orders or other actions which if not obtained or completed or in full
force and effect would not have a material adverse effect on the
Servicer or the Issuer or upon the collectibility of any Contract or
upon the ability of the Servicer to perform its obligations under this
Agreement).
Section 7.02. Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.
(a) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Trustee, the Transferor and the Noteholders and any of the
officers, directors and agents of the Issuer, the Trustee and the
Transferor from and against any and all costs, expenses, losses,
damages, claims and liabilities, arising out of or resulting from the
use, ownership or operation by the Servicer or any Affiliate (other
than the Transferor) thereof of any Financed Equipment.
(b) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Trustee and the Transferor and their respective officers, directors
and agents from and against (i) any taxes that may at any time be
asserted against any such Person with respect to the transactions
contemplated herein, including any sales, gross receipts, general
corporation, tangible personal property, privilege or license taxes
(but, in the case of the Issuer or the Transferor, not including any
taxes asserted with respect to, and as of the date of, the transfer of
the Contracts to the Issuer or the issuance and original sale of the
Notes, or Federal or other income taxes arising out of distributions on
the Notes) and (ii) costs and expenses in defending against the same.
(c) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Trustee, the Transferor and the Noteholders and any of the
officers, directors and agents of the Issuer, the Trustee and the
Transferor from and against any and all costs, expenses,
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losses, claims, damages and liabilities to the extent that any such
cost, expense, loss, claim, damage or liability arose out of, or was
imposed upon any such Person through, the negligence, willful
misfeasance or bad faith of the Servicer in the performance of its
duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement or on account of the
failure of the Servicer to be qualified to do business as a foreign
corporation or to have obtained a license or approval in any
jurisdiction.
(d) The Servicer shall indemnify, defend and hold harmless the Trustee
and their respective officers, directors, employees and agents (which
are retained pursuant to the Indenture or this Agreement) from and
against all costs, expenses, losses, claims, damages and liabilities
arising out of or incurred in connection with the acceptance or
performance of the trusts and duties herein, in the case of the
Trustee, the Indenture, except to the extent that any such cost,
expense, loss, claim, damage or liability is otherwise reimbursed.
(e) The Servicer shall pay any and all taxes levied or assessed upon
all or any part of the Trust Estate, other than any taxes asserted with
respect to, and as of the date of, the transfer of the Contracts to the
Issuer or the Transferor or the issuance and original sale of the
Notes, or Federal or other income taxes arising out of distributions on
the Notes.
For purposes of this Section, in the event of the termination of the
rights and obligations of Advanta Bank Corp. (or any successor thereto pursuant
to Section 7.03) as Servicer pursuant to Section 8.01, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer (other than the Trustee)
pursuant to Section 8.02.
Indemnification under this Section shall survive the resignation or
removal of the Trustee or the termination of this Agreement. Indemnification
under this Section shall include reasonable fees and expenses of counsel and
expenses of litigation if the indemnitee prevails in any action for which
indemnification is sought. If the Servicer shall have made any indemnity
payments pursuant to this Section and the Person to or on behalf of whom such
payments are made thereafter collects any of such amounts from others, such
Person shall promptly repay such amounts to the Servicer, without interest.
Section 7.03. Merger or Consolidation of, 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. 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
Issuer and the Trustee.
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In addition to the provisions set forth in the preceding paragraph, if
the Servicer is Advanta Bank Corp. or an Affiliate thereof, the Servicer may
transfer all of its duties, obligations, rights and privileges as Servicer under
this Agreement to an Affiliate of Advanta Bank Corp. provided that (i) the then
Servicer shall give 30 days prior written notice of such change to the Trustee,
the Issuer 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 (ii) the
entity assuming the servicer position shall deliver to the Trustee written
evidence that the Rating Agency Condition has been satisfied. Upon the execution
and delivery to the Trustee of such written assumption and delivery of evidence
of the satisfaction of the Rating Agency Condition and delivery to the Trustee
of an Opinion of Counsel to the effect that all conditions precedent to such
assumption have been complied with and that such assumption is authorized and
permitted by this Agreement, the Affiliate of Advanta Bank Corp. shall become
the Servicer hereunder without any further act on the part of any of the parties
hereto and the entity serving as Servicer prior to such assumption shall be
relieved of all duties hereunder and shall cease to be the Servicer. Any
affiliate of Advanta Bank Corp. which becomes a Servicer under this paragraph
shall be required to have a tangible net worth of at least $20,000,000.
Section 7.04. 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 Issuer or any of the Noteholders, except as
provided in this Agreement, for any action taken or for refraining from the
taking of any action pursuant to this 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 the Trust Estate in accordance with this Agreement 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 Agreement and the rights and duties of the
parties hereto and the interests of the Trustee hereunder. In the event the
Servicer takes such action, the reasonably incurred legal expenses and costs of
such action and any liabilities resulting therefrom shall be expenses, costs and
liabilities of the Trust Estate, and the Servicer shall be entitled to be
reimbursed therefor in accordance with the terms hereof.
Section 7.05. Advanta Bank Corp. Not To Resign as Servicer. Except as
provided in Section 7.03, Advanta Bank Corp. shall not resign from the
obligations and duties hereby imposed on it as Servicer under this Agreement
except upon determination that the performance of its duties under this
Agreement shall no longer be permissible under applicable law (if it is also
determined that such determination may not be reversed). Notice of any such
determination permitting the resignation of Advanta Bank Corp. shall be
communicated to the Trustee at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee concurrently with or promptly
after such notice. No such resignation shall become effective until the Trustee
or a successor Servicer shall have assumed the responsibilities and obligations
of Advanta Bank Corp. in accordance with Section 8.02.
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ARTICLE VIII
DEFAULT
Section 8.01. Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer (i) to deliver to the Trustee for
deposit in any of the Trust Accounts any required payment or (ii) to
direct the Trustee to make any required distribution therefrom in
either case that shall continue unremedied for a period of five
Business Days after written notice of such failure is received by the
Servicer from the Trustee or after discovery of such failure by an
officer of the Servicer; or
(b) failure on the part of the Servicer duly to observe or to perform
in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement or any other Basic Document, which
failure shall (i) materially and adversely affect the rights of holders
of the investor notes and (ii) continues unremedied for a period of 60
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given (A) to the Servicer by
the Trustee or (B) to the Servicer, and to the Trustee by the Holders
of Notes evidencing not less than 25% of the Outstanding Amount of the
Notes entitled to vote; or
(c) an Insolvency Event occurs with respect to the Servicer;
then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Trustee, or the Holders of not less than 25% of the
Outstanding Amount of the Notes, by notice then given in writing to the Servicer
(and to the Trustee if given by the Noteholders) may terminate all the rights
and obligations (other than the obligations set forth in Section 7.02 hereof) of
the Servicer under this Agreement (a "Servicer Termination Event"). On or after
the receipt by the Servicer of such written notice, all authority and power of
the Servicer under this Agreement, whether with respect to the Notes or the
Contracts or otherwise, shall, without further action, pass to and be vested in
the Trustee or such successor Servicer as may be appointed under Section 8.02;
and, without limitation, the Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the predecessor Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Contracts and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer and the Trustee
in effecting the termination of the responsibilities and rights of the
predecessor Servicer under this Agreement, including the transfer to the
successor Servicer for administration by it of all cash amounts that shall at
the time be held by the predecessor Servicer for deposit, or shall thereafter be
received by it with respect to a Contract and the transfer to the successor
Servicer of the Contract Files. All reasonable costs and expenses (including
reasonable attorneys' fees) incurred in connection (x) with transferring the
computer or other records to the successor Servicer in the form requested and
(y) amending this Agreement to reflect such succession as Servicer pursuant to
this Section shall be paid by the predecessor Servicer upon presentation of
reasonable
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documentation of such costs and expenses. Upon receipt of notice in writing from
the majority Noteholders or the Servicer of the occurrence of a Servicer
Default, the Trustee shall give notice thereof to the Rating Agencies.
Section 8.02. Appointment of Successor.
(a) Upon the Servicer's receipt of notice of termination, pursuant to
Section 8.01 or the Servicer's resignation in accordance with the terms
of this Agreement, the predecessor Servicer shall continue to perform
its functions as Servicer under this Agreement, in the case of
termination, only until the date specified in such termination notice
or, if no such date is specified in a notice of termination, until
receipt of such notice and, in the case of resignation, until the
earlier of (x) the date 45 days from the delivery to the Trustee of
written notice of such resignation (or written confirmation of such
notice) in accordance with the terms of this Agreement and (y) the date
upon which the predecessor Servicer shall become unable to act as
Servicer, as specified in the notice of resignation and accompanying
Opinion of Counsel. In the event of the Servicer's termination
hereunder, the Issuer shall appoint a successor Servicer, or if the
Issuer fails to appoint a successor Servicer, the Trustee shall appoint
a successor Servicer, and the successor Servicer shall accept its
appointment by a written assumption in form acceptable to the Trustee
(such acceptance not to be unreasonably withheld). In the event that a
successor Servicer has not been appointed at the time when the
predecessor Servicer has ceased to act as Servicer in accordance with
this Section, pending the appointment of and acceptance by a successor
Servicer, the Trustee without further action shall automatically be
appointed and serve as the successor Servicer and the Trustee shall be
entitled to the Servicing Fee. Notwithstanding the above, the Trustee
shall, if it shall be legally unable so to act, appoint or petition a
court of competent jurisdiction to appoint, any established institution
who has demonstrated its capability to service the Contracts to the
satisfaction of the Trustee, as the successor to the Servicer under
this Agreement, having a net worth of not less than $20,000,000 and
whose regular business shall include the servicing of Contracts
comparable with the contracts, as the successor to the Servicer under
this Agreement.
The Trustee, acting in its capacity as successor Servicer, and any
successor Servicer appointed hereunder, shall have no responsibility or
obligation (i) for any breach by any predecessor Servicer of any of its
representations and warranties, or (ii) any acts or omissions of Advanta Bank
Corp. or any other servicer in office prior to its termination or resignation.
(b) Upon appointment, the successor Servicer (including the Trustee
acting as successor servicer) shall be the successor in all respects to
the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating
thereto placed on the predecessor Servicer and shall be entitled to the
Servicing Fee and Excluded Amounts to the extent it is to reimburse
amounts expended by the Servicer accruing or collected, as the case may
be, after the successor Servicer becomes the Servicer, as set forth
above, and all the rights granted to the predecessor Servicer by the
terms and provisions of this Agreement.
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(c) Subject to the Trustee's right to appoint a successor Servicer
pursuant to Section 8.02(a) after the Trustee has become the existing
Servicer pending the appointment of and acceptance by a successor
Servicer, the existing Servicer may not resign unless it is prohibited
from serving as such by law.
(d) Notwithstanding any other provision of this Agreement, neither the
Trustee nor any successor Servicer shall be deemed in default, breach
or violation of this Agreement as a result of the failure of Advanta
Bank Corp. or any Servicer (i) to cooperate with the Trustee or any
successor Servicer pursuant to Section 8.01, (ii) to deliver funds
required to be deposited to any Trust Account, or (iii) to deliver
files or records relative to the Contracts as may be requested by the
Trustee or successor Servicer.
Section 8.03. Notification to Noteholders. Upon any termination of, or
appointment of a successor to, the Servicer pursuant to this Article VIII, the
Trustee shall give prompt written notice thereof to the Noteholders and to the
Rating Agencies in the manner provided for in the Indenture.
Section 8.04. Waiver of Past Defaults. The Holders of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes may, on behalf
of all Noteholders, waive in writing any default by the Servicer in the
performance of its obligations hereunder and its consequences, except a default
in making any required deposits to or payments from any of the Trust Accounts in
accordance with this Agreement. Upon any such waiver of a past default, such
default shall cease to exist, and any Servicer Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereto.
ARTICLE IX
OPTIONAL ACQUISITION
Section 9.01. Optional Acquisition of All Contracts. On any Payment
Date following any Calculation Date as of which the Aggregate Contract Principal
Balance is less than 10% of the Initial Aggregate Contract Principal Balance,
the Servicer shall have the option to require the Transferor to reacquire all of
the Contracts and the Transferor agrees, that if the Servicer elects to cause
the redemption of the remaining Notes, that the Transferor will reacquire all of
the remaining Contracts at a price sufficient to provide to the Issuer funds
sufficient to pay the redemption price and accrued interest to the redemption
date. Any such redemption of the Notes shall be as provided in Section 10.01 of
the Indenture.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment. The Agreement may be amended by the
Transferor, the Servicer and the Issuer, with the consent of the Trustee, but
without the consent of any of the Noteholders, to cure any ambiguity, to correct
or supplement any provisions in this Agreement or
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for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of the Noteholders; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel delivered to the Trustee, adversely
affect in any material respect the interests of any Noteholder.
This Agreement may also be amended from time to time by the Transferor,
the Servicer and the Issuer, with the consent of the Trustee, the consent of the
Holders of Notes evidencing not less than a majority of the Outstanding Amount
of the Notes, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Noteholders; provided, however, that no such
amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Contracts or
distributions that shall be required to be made for the benefit of the
Noteholders or (b) reduce the aforesaid portion of the Outstanding Amount of the
Notes, the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all the outstanding Notes.
Prior to the execution of any such amendment or consent, the Servicer
shall furnish written notification of the substance of such amendment or consent
to each of the Rating Agencies. Promptly after the execution of any such
amendment or consent, the Servicer shall furnish written notification of the
substance of such amendment or consent to the Trustee.
It shall not be necessary for the consent of Noteholders pursuant to
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof.
Prior to the execution of any amendment to this Agreement the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement.
The Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's, as applicable, own rights, duties or immunities
under this Agreement or otherwise.
Section 10.02. Protection of Title to Trust Estate.
(a) The Transferor shall take all actions necessary (other than
delivery of the original Contracts), and the Issuer shall cooperate
with the Transferor, if applicable, to perfect, and maintain perfection
of, the interests of the Issuer and the Trustee in the Contracts. In
addition, without limiting the rights of the Trustee or the Issuer
specified in the immediately preceding sentence, the Transferor shall
execute and file and cause to be executed and filed such financing
statements and continuation statements, all in such manner and in such
places as may be required by law fully to perfect, maintain, and
protect the interest of the Issuer and the interest of the Trustee in
the Contracts and in the proceeds thereof. The Transferor shall deliver
(or cause to be delivered) to the Trustee file-stamped copies of, or
filing receipts for, any document filed as provided above, as soon as
available following such filing.
(b) The Transferor shall not change its name, identity or corporate
structure in any manner that would make any financing statement or
continuation statement filed in
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accordance with paragraph (a) above or otherwise seriously misleading
within the meaning of Section 9-402(7) of the UCC, unless it shall have
given the Trustee at least five days' prior written notice thereof and,
if applicable, shall have timely filed appropriate amendments to any
and all previously filed financing statements or continuation
statements (so that the interest of the Issuer or the Trustee is not
adversely affected).
(c) Each of the Transferor and the Servicer shall have an obligation to
give the Trustee at least 60 days' prior written notice of any
relocation of its principal executive office if, as a result of such
relocation, the applicable provisions of the UCC would require the
filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement and shall
promptly, if applicable, file any such amendment. The Servicer shall at
all times maintain each office from which it shall service Contracts,
and its principal executive office, within the United States of
America.
(d) The Servicer shall maintain accounts and records as to each
Contract accurately and in sufficient detail to permit (i) the reader
thereof to know at any time 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 Collection Account in respect of such Contract.
(e) The Servicer shall maintain its contract management system so that,
from and after the time of transfer under this Agreement of the
Contracts, the Servicer's contract management system (including any
backup archives) that refer to a Contract shall indicate clearly the
interest of the Issuer (which interest has been acquired from the
Transferor) and the Trustee in such Contract and that such Contract is
owned by or has been pledged to the Issuer and has been pledged to the
Trustee. Indication of the Issuer's interest (which interest has been
acquired from the Transferor) and the Trustee's interest in a Contract
shall be deleted from or modified on the Servicer's contract management
system when, and only when, the related Contract shall have been paid
in full or reacquired.
(f) If at any time the Transferor or the Servicer shall propose to
sell, grant a security interest in, or otherwise transfer any interest
in contracts comparable with the Contracts, to any prospective
purchaser, lender or other transferee, the Servicer shall give to such
prospective purchaser, lender or other transferee computer tapes,
records or printouts (including any restored from backup archives)
that, if they shall refer in any manner whatsoever to any Contract,
shall indicate clearly that such Contract has been transferred and is
owned by or has been pledged to the Issuer and has been pledged to the
Trustee.
(g) The Servicer shall permit the Trustee and its agents at any time
following reasonable notice and during normal business hours to
inspect, audit and make copies of and abstracts from the Servicer's
records regarding any Contract.
(h) Upon reasonable request, the Servicer shall furnish to the Trustee,
within five Business Days, a list of all Contracts (by contract number
and name of Obligor) then held by the Trustee, together with a
reconciliation of such list to the List of Contracts and to
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<PAGE> 54
each of the Servicer's Certificates furnished before such request
indicating Contracts removed from the lien of the Indenture.
(i) The Servicer shall deliver to the Trustee promptly after the
execution and delivery of this Agreement and of each amendment thereto,
an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all actions (other than delivering the original Contracts)
have been taken that are necessary fully to perfect the interests of
the Trustee in the Contracts, and reciting the details of such action
or referring to prior Opinions of Counsel in which such details are
given, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to perfect such interest.
Section 10.03. Notices. All demands, notices and communications upon or
to the Transferor, the Servicer, the Issuer, the Trustee or the Rating Agencies
under this Agreement shall be in writing, personally delivered or mailed by
certified mail, return receipt requested, and shall be deemed to have been duly
given upon receipt (a) in the case of the Transferor, to Advanta Bank Corp.,
11850 South Election Road, Draper, Utah 84020, (b) in the case of the Servicer,
to Advanta Bank Corp., 11850 South Election Road, Draper, Utah 84020, and (c)
the case of the Issuer, to Advanta Equipment Receivables Series 2000-1 LLC, 639
Isbell Road, Suite 390-1, Reno, Nevada 89509; and (d) in the case of the
Trustee, Corporate Trust Office or as to each of the foregoing, at such other
address as shall be designated by written notice to the other parties.
Section 10.04. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.04 and 7.03 and as provided
in the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Transferor or the Servicer.
Section 10.05. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Transferor, the Servicer, the
Issuer, the Trustee and the Noteholders, and nothing in this Agreement, whether
express or implied, shall be construed to give to any other Person any legal or
equitable right, remedy or claim in the Trust Estate or under or in respect of
this Agreement or any covenants, conditions or provisions contained herein.
Section 10.06. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 10.07. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 10.08. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
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Section 10.09. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS, REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.10. Assignment to Trustee. The Transferor hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to the Trustee pursuant to the Indenture for the
benefit of the Noteholders of all right, title and interest of the Issuer in, to
and under the Contracts and the other property constituting the Trust Estate
and/or the assignment of any or all of the Issuer's rights and obligations
hereunder to the Trustee.
Section 10.11. Nonpetition Covenants.
(a) Notwithstanding any prior termination of this Agreement, the
Servicer (in its capacity as Transferor or Servicer) and the Trustee
shall not at any time with respect to the Issuer, acquiesce, petition
or otherwise invoke or cause the Issuer to invoke the process of any
court or government authority for the purpose of commencing or
sustaining a case against the Issuer under any Federal or state
bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Issuer or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
Servicer, the Issuer and the Trustee shall not at any time with respect
to the Transferor, acquiesce, petition or otherwise invoke or cause the
Transferor to invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the
Transferor under any Federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Transferor or any
substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Transferor.
Section 10.12. Limitation of Liability of Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been acknowledged and accepted by Bankers Trust Company
not in its individual capacity but solely as Trustee, and in no event
shall Bankers Trust Company have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer.
[Signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Transfer and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
ADVANTA EQUIPMENT RECEIVABLES
SERIES 2000-1 LLC
By: /s/ Mark Shapiro
---------------------------------------------
Name: Mark Shapiro
Title: Manager
ADVANTA BANK CORP.,
Transferor and Servicer,
By: /s/ Mark Hales
---------------------------------------------
Name: Mark Hales
Title: President
Acknowledged and Accepted:
BANKERS TRUST COMPANY
not in its individual capacity
but solely as Trustee
By: /s/ Peter Becker
----------------------------
Name: Peter Becker
Title: Assistant Vice President
[Signature Page to Transfer and Servicing Agreement]
<PAGE> 57
SCHEDULE A
List of Contracts
(Deemed Incorporated)
A-1
<PAGE> 58
SCHEDULE B
Location of Contract Files
B-1
<PAGE> 59
SCHEDULE C
Servicer's Certificate
(to be provided)
C-1
<PAGE> 60
SCHEDULE D
Officer's Certificate
(to be provided)
D-1
<PAGE> 1
Exhibit 4.3
LIMITED LIABILITY COMPANY OPERATING
AGREEMENT
OF
ADVANTA EQUIPMENT RECEIVABLES
SERIES 2000-1 LLC
<PAGE> 2
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
ADVANTA EQUIPMENT RECEIVABLES
SERIES 2000-1 LLC
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS 1
1. Act 1
2. Additional Member 1
3. Admission Agreement 1
4. Affiliate 1
5. Articles of Organization 1
6. Asset-Backed Securities 1
7. Assets 2
8. Associate 2
9. Assignee 2
10. Benefit Plan Investor 2
11. Business Day 2
12. Capital Account 2
13. Capital Contribution 2
14. Code 2
15. Company 3
16. Company Liability 3
17. Company Property 3
18. Contract 3
19. Contributing Members 3
20. Disposition (Dispose) 3
21. Dissolution Event 3
22. Distribution 3
23. Effective Date 3
24. Equipment 4
25. GAAP Capital Account 4
26. Indenture 4
27. Independent Manager 4
28. Initial Capital Contribution 5
29. Initial Member 5
30. Insolvency Event 5
31. Interim Agreement 5
32. Majority-in-Interest 5
33. Management Right 5
34. Managers 5
</TABLE>
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35. Member 6
36. Membership Interest 6
37. Money 6
38. Net Losses 6
39. Net Profits 6
40. Non-Consolidatable Entity 6
41. Notice 6
42. Operating Agreement 7
43. Organization 7
44. Organization Expenses 7
45. Originating Unit 7
46. Person 7
47. Principal Office 7
48. Proceeding 7
49. Property 7
50. Receivables 8
51. Receivables Transfer Agreement 8
52. Related Agreements 8
53. Related Company 8
54. Resignation 8
55. Securitization Agreements 8
56. Sharing Ratio 8
57. Sole Member 8
58. Special Member 8
59. State 8
60. Substitute Member 8
61. Taxing Jurisdiction 9
62. Trust 9
63. Trustee 9
ARTICLE II FORMATION 9
1. Organization 9
2. Agreement 9
3. Name 9
4. Effective Date 10
5. Term 10
6. Resident Agent and Office 10
7. Principal Office 10
ARTICLE III NATURE OF BUSINESS 10
1. Purposes. 10
2. Limitations. 12
ARTICLE IV ACCOUNTING AND RECORDS 15
1. Records to be Maintained 15
2. Accounts 16
ARTICLE V NAME AND ADDRESS OF INITIAL MEMBER 16
ARTICLE VI RIGHTS AND DUTIES OF MEMBERS 16
1. Management Rights 16
</TABLE>
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2. Liability of Members 16
3. Indemnification 17
4. Representations and Warranties 17
5. Conflicts of Interest. 17
ARTICLE VII MANAGERS 18
1. Initial Managers 18
2. Independent Manager 18
3. Term of Office as Managers 19
4. Authority of Members to Bind the Company (General Powers) 19
5. Actions of the Managers 19
6. Compensation of Managers 19
7. Managers' Standard of Care and Indemnification 19
8. Removal of Managers 20
ARTICLE VIII CONTRIBUTIONS AND CAPITAL ACCOUNTS 20
1. Capital Contributions 20
2. Additional Contributions 20
ARTICLE IX TAXES 21
1. Elections 21
2. Taxes of Taxing Jurisdictions 21
3. Method of Accounting 21
ARTICLE X DISPOSITION OF MEMBERSHIP INTERESTS 21
1. Disposition 21
2. Dispositions Not in Compliance with this Article Void 22
ARTICLE XI ADMISSION OF ASSIGNEES AND ADDITIONAL MEMBERS 22
1. Rights of Assignees 22
2. Admission of Substitute Members 22
3. Admission of Additional Members 22
4. Forbidden Transfers and Assignments 23
ARTICLE XII DISSOLUTION AND WINDING UP 23
1. Dissolution 23
2. Effect of Dissolution 23
3. Distribution of Assets on Dissolution 23
4. Winding Up and Certificate of Dissolution 24
5. Resignation of Member 24
6. Continuation of Company 24
7. Special Members. 25
ARTICLE XIII AMENDMENT 25
1. Operating Agreement may be Modified 25
2. Amendment or Modification of Operating Agreement 25
ARTICLE XIV MISCELLANEOUS PROVISIONS 26
1. Entire Agreement 26
2. No Partnership Intended for Non-tax Purposes 26
3. Rights of Creditors and Third Parties Under
Operating Agreement 26
</TABLE>
EXHIBIT A INITIAL MEMBERS
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LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
ADVANTA EQUIPMENT RECEIVABLES
SERIES 2000-1 LLC
This Limited Liability Company Operating Agreement of Advanta Equipment
Receivable Series 2000-1 LLC, a Nevada limited liability company, is entered
into and shall be effective as of the Effective Date, by and among the Company
and the entity executing this Operating Agreement as the Initial Member.
ARTICLE I
DEFINITIONS
For purposes of this Operating Agreement (as defined below), unless the context
clearly indicates otherwise, the following terms shall have the following
meanings:
1. Act - The Nevada Limited Liability Company Act and all amendments
thereto.
2. Additional Member - A Member other than the Initial Member or a
Substitute Member who has acquired a Membership Interest from the Company.
3. Affiliate - 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.
4. Articles of Organization - The Articles of Organization of the
Company as properly adopted and amended from time to time by the Members and
filed with the Secretary of State.
5. Asset-Backed Securities - Shall have the meaning assigned to it in
Article III hereof.
6. Assets - Shall have the meaning assigned to it in Article III
hereof.
7. Associate - 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
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8. Assignee - A transferee of a Membership Interest who has not been
admitted as a Substitute Member.
9. Benefit Plan Investor - A Benefit Plan Investor shall mean (a) an
"employee benefit plan" within the meaning of 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, (b) a "plan" within the meaning of Section
4975(e)(1) of the Code that is subject to Section 4975 of the Code and (c) any
Person or Organization that is acting on behalf of or investing the assets of a
plan described in (a) or (b).
10. Business Day - Any day other than Saturday, Sunday or any legal
holiday observed in the State.
11. Capital Account - The account maintained for a Member or Assignee
determined in accordance with Article VIII.
12. Capital Contribution - Any contribution of Property, services or
the obligation to contribute Property or services made by or on behalf of a
Member or Assignee.
13. Code - The Internal Revenue Code of 1986, as amended from time to
time.
14. Company - Advanta Equipment Receivables Series 2000-1 LLC, a
limited liability company formed under the laws of the State of Nevada, and any
successor limited liability company.
15. Company Liability - Any enforceable debt or obligation for which
the Company is liable or which is secured by any Company Property.
16. Company Property - Any Property owned by the Company.
17. Contract - Each of the agreements whether in the form of a lease,
loan agreement, financing agreement or any other form of written contract or
agreement evidencing the obligations of the related obligor, including, as
applicable, schedules, supplements and amendments thereto, to make payments
related to the leasing, purchase or other financing of specified Equipment.
18. Disposition (Dispose) - Any sale, assignment, transfer, exchange,
mortgage, pledge, grant, hypothecation, or other transfer, absolute or as
security or encumbrance (including dispositions by operation of law).
19. Dissolution Event - An event, the occurrence of which will result
in the dissolution of the Company under Article XII.
20. Distribution - A transfer of Property to a Member on account of a
Membership Interest as described in Article XII.
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21. Effective Date - March___, 2000.
22. Equipment - The equipment leased, sold, or financed, as applicable,
to an obligor pursuant to any Contract.
23. GAAP Capital Account - The capital account maintained by the
Company for each of the Members in accordance with generally accepted accounting
principles.
24. Independent Manager- An Independent Manager 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, member, manager, officer,
employee, affiliate, associate, customer or supplier of, or any person that has
received any benefit (excluding, however, any compensation received by the
manager, in such person's capacity as a manager as required by Article III of
the Articles of Organization) in any form whatever from, or any person that has
provided any service (excluding, however, any service provided by the manager,
in such person's capacity as manager as required by Article III of the Articles
of Organization) in any form whatever to, Advanta Corp., Advanta Bank 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
Bank Corp., Advanta Business Services Corp., or any of their affiliates,
subsidiaries, parent entities or (ii) a stockholder, director, member, manager,
officer, employee, affiliate, associate, customer or supplier of, or any person
that has received any benefit (excluding, however, any compensation received by
the manager, in such person's capacity as manager as required by Article III of
the Articles of Organization) in any form whatever from, or any person that has
provided any service (excluding, however, any service provided by the manager,
in such person's capacity as manager as required by Article III of the Articles
of Organization) in any form whatever to, such beneficial owner or any of such
beneficial owner's affiliates or associates; provided, that, such Independent
Manager may act as a manager, director or officer of other special purpose
corporations or special purpose entities (an "SPE"). An Independent Manager may
not be a trustee in bankruptcy for any SPE or any Affiliate of a SPE.
25. Initial Capital Contribution - The Capital Contribution agreed to
be made by the Initial Member as described in Article VIII.
26. Initial Member - The person identified on Exhibit A attached hereto
and made a part hereof by this reference who has executed this Operating
Agreement.
27. Insolvency Event - With respect to any Person or Organization: (i)
the entry of a decree or order by a court, agency or supervisory authority
having jurisdiction in the premises for the appointment of a conservator,
receiver or liquidator for such Person or Organization, in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of such Person or
Organization's affairs,
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and the continuance of any such decree or order unstayed and in effect for a
period of 90 consecutive days; (ii) the consent by such member to the
appointment of a conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to such member or of or relating to substantially all
of such Person or Organization's property; or (iii) if such Person or
Organization shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of any applicable insolvency
or reorganization statute, make an assignment for the benefit of its creditors
or voluntarily suspend payment of its obligations.
28. Majority-in-Interest - Shall mean, except when otherwise required
by the Act, Members holding more than fifty percent (50%) of the Membership
Interest in the Company.
29. Management Right - Subject to Sections 4 and 5 of Article VII and
subject to Section 5 of Article X, the right of a Member to participate in the
management of the Company, including the rights to information and to consent or
approve actions of the Company.
30. Managers - Any Manager described in Article VII hereof.
31. Member - Initial Member, Substitute Member or Additional Member,
from the date of admission of the Independent Managers as Special Members, the
Special Members, and, unless the context expressly indicates to the contrary,
includes Assignees.
32. Membership Interest - The rights of a Member or, in the case of an
Assignee, the rights of the assigning Member in Distributions (liquidating or
otherwise) and allocations of the profits, losses, gains, deductions, and
credits of the Company.
33. Money - Cash or other legal tender of the United States, or any
obligation that is immediately reducible to legal tender without delay or
discount. Money shall be considered to have a fair market value equal to its
face amount.
34. Net Losses - The loss and deductions of the Company determined in
accordance with accounting principles consistently applied from year to year
employed under the method of accounting adopted by the Company.
35. Net Profits - The income and gains of the Company determined in
accordance with accounting principles consistently applied from year to year
employed under the method of accounting adopted by the Company.
36. Notice - Any notice required to be furnished pursuant to this
Operating Agreement. Such Notice shall be in writing. Notice to the Company
shall be considered given when mailed by first-class mail, postage prepaid, or
by registered mail, certified mail, Federal Express or other courier services or
telecopy, addressed to the Managers in care of the Company at the address of
Principal Office. Notice as to a Member shall be considered given when mailed by
first-class mail, postage prepaid, or by registered mail, certified mail,
Federal Express or other
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courier services or telecopy, addressed to the Member at the address reflected
in this Operating Agreement unless the Member has given the Company a Notice of
a different address.
37. Operating Agreement - This Limited Liability Company Operating
Agreement including all Admission Agreements and amendments adopted in
accordance with this Operating Agreement and the Act.
38. Organization - A Person other than a natural person. Organization
includes, without limitation, corporations (both non-profit and other
corporations), partnerships (both limited and general), joint ventures, limited
liability companies, and unincorporated associations, but the item does not
include joint tenancies and tenancies by the entirety.
39. Organization Expenses - Those expenses incurred in the organization
of the Company including the costs of preparation of this Operating Agreement
and the Articles of Organization.
40. Originating Unit - Advanta Bank Corp. or any other subsidiary of
Advanta Corp., or Advanta Business Services Corp., which originated or acquired
the Contracts to be conveyed to the Company.
41. Person - An individual, trust, estate, or any incorporated or
unincorporated organization permitted to be a member of a limited liability
company under the laws of the State of Nevada.
42. Principal Office - The office set forth in Article II, Section 7 of
this Operating Agreement.
43. Proceeding - Any administrative, judicial, or other adversary
proceeding, including, without limitation, litigation, arbitration,
administrative adjudication, mediation, and appeal or review of any of the
foregoing.
44. Property - Any property, real or personal, tangible or intangible,
including money and any legal or equitable interest in such property, but
excluding services and promises to perform services in the future.
45. Rating Agency Condition - means, with respect to any proposed
action, that each of the credit rating agencies then maintaining a rating on any
outstanding Asset-Backed Securities has delivered to the Company, written
confirmation that such action will not result in a reduction or withdrawal of
the then current rating assigned to the Asset-Backed Securities.
46. Receivables - Amounts to be paid by the obligors under the
contracts.
47. Resignation - The act by which a Manager ceases to be a Manager.
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48. Securitization Agreements - Shall have the meaning assigned to it
in Article III hereof.
49. Sharing Ratio - With respect to any Member, a fraction (expressed
as a percentage), the numerator of which is the total of the Member's initial
Capital Account and the denominator is the total of all initial Capital Accounts
of all Members and Assignees.
50. Sole Member - At any time when there is only one Member of the
Company, such sole Member.
51. Special Member - Shall have the meaning assigned to it in Article
XII hereof.
52. State - The State of Nevada.
53. Substitute Member - An Assignee who has been admitted to all of the
rights of membership pursuant to this Operating Agreement.
54. Taxing Jurisdiction - Any state, local, or foreign government that
collects tax, interest or penalties, however designated, on any Member's share
of the income or gain attributable to the Company.
55. Trustee - Shall have the meaning assigned to it in Article III
hereof.
ARTICLE II
FORMATION
1. Organization - The Initial Member hereby organizes the Company as a
Nevada limited liability company pursuant to the provisions of the Act.
2. Agreement - For and in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Members executing this
Operating Agreement hereby agree to the terms and conditions of this Operating
Agreement, as it may from time to time be amended according to its terms. It is
the express intention of the Members that this Operating Agreement shall be the
sole source of agreement of the parties, and, except to the extent a provision
of this Operating Agreement expressly incorporates federal income tax rules by
reference to sections of the Code or Regulations or is expressly prohibited or
ineffective under the Act, this Operating Agreement shall govern, even when
inconsistent with, or different than, the provisions of the Act or any other law
or rule. To the extent any provision of this Operating Agreement is prohibited
or ineffective under the Act, this Operating Agreement shall be considered
amended to the smallest degree possible in order to make this Operating
Agreement effective under the Act. In the event the Act is subsequently amended
or interpreted in such a way to make any provision of this
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Operating Agreement that was formerly invalid valid, such provision shall be
considered to be valid from the effective date of such interpretation or
amendment.
3. Name - The name of the Company is Advanta Equipment Receivables
Series 2000-1 LLC, and all business of the Company shall be conducted under that
name or under any other name, but in any case, only to the extent permitted by
applicable law.
4. Effective Date - This Operating Agreement shall become effective
upon the later to occur of (i) the effective date or (ii) the filing of the
Articles of Organization of Advanta Equipment Receivables Series 2000-1 LLC with
the Secretary of State of the State.
5. Term - The Company shall have perpetual duration as provided in the
Act.
6. Resident Agent and Office - The resident agent for the service of
process and the registered office shall be that Person or Organization and
location reflected in the Articles of Organization as filed in the office of the
Secretary of State of the State. The Managers may, from time to time, change the
resident agent or office through appropriate filings with the Secretary of State
of the State. In the event the resident agent ceases to act as such for any
reason or the registered office shall change, the Managers shall promptly
designate a replacement resident agent or file a notice of change of address as
the case may be. If the Managers shall fail to designate a replacement resident
agent or change of address of the registered office, any Member may designate a
replacement resident agent or file a notice of change of address.
7. Principal Office - The Principal Office of the Company shall be
located at 639 Isbell Road, Suite 390-1, Reno, NV 89509.
ARTICLE III
NATURE OF BUSINESS
1. Purposes. The business in which the Company may engage and
the powers which the Company may exercise are restricted exclusively to the
following:
(a) to acquire from Advanta Bank Corp. (i) financial contracts,
interests in and rights in or related to financial contracts, including but not
be limited to, the right to the receivables and other amounts due or to become
due under such contracts, and which contracts shall include, but not be limited
to, lease contracts, loans, accounts receivables, or installment sale or lease
contracts or promissory notes, arising out of or relating to, the purchase,
lease or financing of equipment, software, or goods, whether or not secured by
such equipment, software, or goods, security provided for the contracts
including but not limited to security interests in the equipment, software or
goods and proceeds from claims on insurance policies related thereto, and any
related rights, interests and property appurtenant 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");
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(b) 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;
(c) to enter into agreements including, but not limited to, transfer
and servicing agreements relating to the acquisition and servicing of the Assets
(each a "Transfer and Servicing Agreement") and to enter into other agreements
relating to the servicing of the Assets including agreements relating to the
subservicing of the Assets;
(d) to transfer or pledge Assets to one or more trusts, banks,
financial institutions, commercial paper issuers, insurance companies or similar
entities pursuant to a servicing agreement, indenture, master facility agreement
or other agreement (each a "Securitization Agreement"), to be entered into by,
among others, the Company and the trustee named therein (the "Trustee"); and
(e) to authorize, and cause the issuance of one series of notes or
other securities issued pursuant to the Securitization Agreement;
(f) to authorize, borrow, issue, sell and deliver one series of bonds,
notes or other evidences of indebtedness including any subordinated interests,
any of which may be in certificated or uncertificated form and which may include
multiple classes, secured or collateralized by one or more pools of Assets and
issued under a Securitization Agreement (collectively, the "Asset-Backed
Securities"), and to enter into agreements related to the sale and purchase of
the Asset-Backed Securities, provided that the Company shall have absolutely no
liability under any Asset-Backed Securities except to the extent of the Assets
and other interests and property securing or collateralizing such Asset-Backed
Securities and to enter into interest rate swaps, interest rate caps or other
hedging transactions;
(g) to acquire from the Trustee or to retain notes, certificates or
interests or other subordinate Asset-Backed Securities issued or created under
the Securitization Agreement pursuant to which the Company transferred or
pledged Assets;
(h) to hold and enjoy all of the rights and privileges of any notes,
certificates or other subordinate Asset-Backed Securities issued to the Company
under the related agreements;
(i) to perform its obligations under each Transfer and Servicing
Agreement and Securitization Agreement, or other agreement entered into by the
Company;
(j) to invest proceeds from any Assets, and any other income as
determined by the Managers, including investing in other Assets;
(k) to engage in any acts and activities and exercise any powers
permitted to limited liability companies 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.
2. Limitations.
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(a) So long as any Asset-Backed Security is outstanding, the
Company shall not, except to the extent permitted by the Securitization
Agreement or the Transfer and Servicing Agreement or in accordance with the
terms of the Securization Agreement or the Transfer and Servicing Agreement, do
any of the following:
(i) lend or advance any moneys to, or make an investment in,
any Person;
(ii) engage in any other action that bears on whether the
separate legal identity of the Company and any other entity will be respected;
(iii) hold itself out as being liable for the debts of any
other party or act other than in its name and through its duly authorized
Managers or agents;
(iv) except for the Asset-Backed Securities authorized
pursuant to Article III, incur any indebtedness, or assume or guaranty any
indebtedness of any other entity;
(v) consolidate or merge with or into any other entity or
convey or transfer its properties and assets substantially as an entirety to any
entity; or
(vi) without the affirmative vote of 100% of the Managers of
the Company (including an affirmative vote of each Independent Manager required
by Article III of the Articles of Organization and Article VII of this Operating
Agreement), make an assignment for the benefit of creditors, file a petition in
bankruptcy on behalf of itself, petition or apply to any tribunal for the
appointment of a custodian, receiver, liquidator, assignee, sequestrator,
trustee or any similar official for the Company or for a substantial part of the
Company's 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, with
respect to the Company, or otherwise seek any relief under any laws relating to
the relief from debts or the protection of debtors generally, or 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 Company or any substantial part of the Company's
property, or admit the Company's inability to pay its respective debts generally
as they become due or authorize, or take any action in furtherance of, any of
the foregoing to be done or taken on behalf of the Company or take any action in
furtherance of any of the foregoing.
(b) The Company shall conduct its affairs in accordance with the
following provisions:
(i) it shall not engage in any business or activity other than
as permitted by Article III hereof;
(ii) it shall maintain separate records, financial statements
and books of account from those of any other person; provided, however, that if
in addition to such separate financial statements, the Company's financial
statements are included as a part of the consolidated financial statements of
its parent entity, any of its affiliates and any other person, such consolidated
financial statements shall contain a footnote to the effect that the Company has
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assets and liabilities separate and apart from those of such person and those
separate assets and liabilities are shown on the separate financial statements
of the Company;
(iii) it shall not commingle the Company's assets with those
of any other person, and shall hold all of the Company's Assets in the Company's
name;
(iv) its Members shall hold meetings, as appropriate to
authorize all action on behalf of the Company and observe all other
organizational formalities of the Company;
(v) it shall not become involved in the day to day management
of any other person;
(vi) it shall operate so as not to be substantively
consolidated with any other person;
(vii) it shall maintain its assets separately from those of
any other person (including through the maintenance of a separate bank account);
(viii) it shall hold itself out as a separate entity from any
other person; it shall conduct business in its own name on its own stationary,
invoices and checks; and it shall correct any known misunderstanding regarding
its separate identity;
(ix) it shall conduct its business from an office separate
from any Member of the Company;
(x) it shall not act as the agent of any other person;
(xi) it shall pay its own liabilities and expenses (including
salaries of its employees) from its own funds, including fairly allocating
overhead expenses shared with an affiliate and paying for services performed by
any employee of an affiliate;
(xii) it shall not guarantee or become obligated for the debts
of any other entity or hold out its credit as being available to satisfy the
obligations of others;
(xiii) it shall allocate fairly and reasonably any overhead
for shared office space;
(xiv) other than the pledge of the property of the Company
pursuant to a Securitization Agreement or as otherwise permitted by the
Securitization Agreement, it shall not pledge or otherwise encumber its assets
for the benefit of any other entity or make any loans or advances to any entity;
(xv) it shall maintain adequate capital and a sufficient
number of employees in light of its contemplated business activities;
(xvi) except as permitted by the Transfer and Servicing
Agreement or the Securitization Agreement, it shall enter into transactions with
its affiliates only on commercially reasonable terms and on terms similar to
those of an arms-length transaction;
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(xvii) except as permitted by the Transfer and Servicing
Agreement or the Securitization Agreement, it shall not acquire the obligations
or securities of its affiliates or owners, including partners, members or
shareholders, as appropriate;
(xviii) except as permitted by the Transfer and Servicing
Agreement or the Securitization Agreement, it shall not make loans to any other
person or entity or buy or hold evidence of indebtedness issued by any other
person or entity (other than cash and investment-grade securities);
(xix) it shall not identify itself as a division of any other
person or entity; and
(xx) it shall not form, acquire or hold an interest in any
subsidiary.
ARTICLE IV
ACCOUNTING AND RECORDS
1. Records to be Maintained - The Company shall maintain the following
records at its registered office:
(a) A current list of the full name and last known business
address of each Member and each Manager, separately identifying the
Members and Managers (including the Independent Managers) in
alphabetical order;
(b) A copy of the Articles of Organization and all amendments
thereto, together with executed copies of any powers of attorney
pursuant to which the Articles of Organization have been executed;
(c) Copies of this Operating Agreement, including all
amendments thereto;
2. Accounts - The Managers shall maintain a record of the Capital
Account for each Member in accordance with Article VIII.
ARTICLE V
NAME AND ADDRESS OF INITIAL MEMBER
The name and address of the Initial Member is as reflected on Exhibit A
attached hereto and by this reference made a part hereof as if set forth fully
herein.
ARTICLE VI
RIGHTS AND DUTIES OF MEMBERS
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1. Management Rights - Subject to Articles III and VII hereof, all
Members (other than Assignees) who have not resigned shall be entitled to vote
on any matter submitted to a vote of the Members. Notwithstanding the foregoing,
the following actions require the unanimous consent of all Members:
a. any amendment to this Operating Agreement;
b. the admission of Assignees to Management Rights; and
c. the continuation of the Company after a Dissolution Event.
2. Liability of Members - Subject to Article XIV hereof, no Member
shall be liable as such for the liabilities of the Company or any obligations of
another Member. The failure of a limited liability company to observe any
formalities or requirements relating to the exercise of its powers or management
of its business or affairs under this Operating Agreement or the Act shall not
be grounds for imposing personal liability on the Members or Managers for
liabilities of the limited liability company.
3. Indemnification - The Company shall, subject to the second sentence
of this section, indemnify the Members, the Managers, and any agent of the
Members or the Managers for all costs, losses, liabilities, and damages paid or
accrued by such Member, such Manager or agent of such Member or such Manager in
connection with the business of the Company, as provided in the Articles of
Organization and to the fullest extent provided or allowed by the laws of the
State. Any amounts to be paid by the Company under this Article VI Section 3
shall be subordinated to the payment of any Asset-Backed Securities issued by
the Company and such indemnification shall not constitute a claim against the
Company in the event that cash flow in excess of amounts needed to pay the
Asset-Backed Securities is insufficient to make such indemnity payment.
4. Representations and Warranties - Each Member, and in the case of an
Organization, the Person(s) executing this Operating Agreement on behalf of the
Organization, hereby represents and warrants to the Company and each other
Member that: (a) it is duly organized, validly existing, and in good standing
under the laws of its state of organization and that it has full organizational
power to execute and agree to this Operating Agreement and to perform its
obligations hereunder; (b) it is acquiring its interest in the Company for its
own account as an investment and without an intent to distribute such interest;
and (c) it acknowledges that the interests have not been registered under the
Securities Act of 1933, as amended, or any state securities laws, and may not be
resold or transferred without appropriate registration or the availability of an
exemption from such requirements.
5. Conflicts of Interest.
(a) A Member shall be entitled to enter into transactions that may be
considered to be competitive with, or a business opportunity that may be
beneficial to, the Company, it being expressly understood that some of the
Members may enter into transactions that are similar to the transactions into
which the Company may enter. Notwithstanding the foregoing, Members shall
account to the Company and hold as trustee for it any property, profit, or
benefit derived by the Member, without the consent of the other Members, in the
conduct and winding up of the
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<PAGE> 17
Company business or from a use or appropriation by the Member of Company
property including information developed exclusively for the Company and
opportunities expressly offered to the Company.
(b) A Member does not violate a duty or obligation to the Company
merely because the Member's conduct furthers the Member's own interest. A Member
may lend money to and transact other business with the Company. The rights and
obligations of a Member who lends money to or transacts business with the
Company are the same as those of a person who is not a Member, subject to other
applicable law. No transaction with the Company shall be voidable solely because
a Member has a direct or indirect interest in the transaction if either the
transaction is fair to the Company or the disinterested Managers or
disinterested Members, in either case knowing the material facts of the
transaction and the Member's interest, authorize, approve, or ratify the
transaction.
ARTICLE VII
MANAGERS
1. Initial Managers - The ordinary and usual decisions concerning the
business affairs of the Company shall be made by the Board of Managers. There
shall initially be seven (7) Managers of the Company. The initial Managers shall
be the following individuals:
<TABLE>
<CAPTION>
Name Address
- ---- -------
<S> <C>
Francis B. Jacobs, II c/o Delaware Trust Capital Management
900 Market Street
Wilmington, DE 19801
Janice C. George 639 Isbell Road
Suite 390
Reno, NV 89509
John Paris 1020 Laurel Oak Road
Voorhees, NJ 08043
Michael Coco Welsch & Mckean Roads
P.O. Box 844
Spring House, PA 19477-0844
Mark Hales 11850 South Election Road
Draper, UT 84020
Kirk Weiler 11850 South Election Road
Draper, UT 84020
Mark Shapiro 1020 Laurel Oak Road
</TABLE>
17
<PAGE> 18
<TABLE>
<S> <C>
Voorhees, NJ 08043
</TABLE>
2. Independent Manager - At least two members of the Board of Managers
shall be an Independent Managers. Any vote needing the unanimous consent of the
Managers shall not be taken unless at least two Independent Managers exist. No
resignation or removal of an Independent Manger, and no appointment of a
successor Independent Manager, shall be effective until such successor (i) shall
have accepted his or her appointment as an Independent Manager by a written
instrument and (ii) shall have executed a counterpart to this Agreement. In the
event of a vacancy in the position of Independent Manager, the Member shall, as
soon as practical, appoint a successor Independent Manager. All right, power and
authority of the Independent Managers shall be limited to the extent necessary
to exercise those rights and perform those duties specifically set forth in this
Agreement. Except as provided in Section 7 of this Article VII, in exercising
their rights and performing their duties under this Agreement, any Independent
Manager shall have a fiduciary duty of loyalty and care similar to that of a
director of a business corporation under the Nevada Private Corporation Law. No
Independent Manager shall at any time serve as trustee in bankruptcy for any
Affiliate of the Company.
3. Term of Office as Managers - No Manager shall have any contractual
right to such position. Each Manager shall be elected annually.
4. Authority of Members to Bind the Company (General Powers) - The
Members hereby agree that only the Managers (acting, except as otherwise
provided herein, by majority vote) and authorized agents of the Company shall
have the authority to bind the Company. The Managers have the power, on behalf
of the Company, to do all things necessary or convenient to carry out the
business of the Company.
5. Actions of the Managers - Subject to the delegation of rights and
powers provided for herein, the Managers shall have the sole right to manage the
business of the Company and shall have all powers and rights necessary,
appropriate or advisable to effectuate and carry out the purposes and business
of the Company. No Member, by reason of its status as such, shall have any
authority to act for or bind the Company but shall have only the right to vote
on and approve the actions herein specified to be voted on or approved by the
Members.
6. Compensation of Managers - The Members hereby agree that they shall
pay all fees and expenses incurred by the Independent Managers in the discharge
of its duties under this Operating Agreement. The Managers shall be reimbursed
all reasonable expenses incurred in managing the Company. Except as otherwise
set forth herein under Section 3 of Article VI hereof, the Managers shall
receive no compensation.
7. Managers' Standard of Care and Indemnification - The Managers' duty
of care in the charge of the Managers' duties to the Company and the Members
shall be the same as a general partner's duty of care in the discharging of its
duties under applicable law. In addition, to the extent consistent with
applicable law, Managers shall take into account the interest of the Company's
creditors, as well as those of its Members
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<PAGE> 19
8. Removal of Managers - The Managers may be removed by the affirmative
vote of a Majority-In-Interest of the Members. A Majority-In-Interest of the
Members may elect new Managers, subject to Section 2 of this Article VII;
provided, however, that there shall be no change of Managers without the prior
confirmation from the rating agencies then rating the Asset-Backed Securities,
if any, that such change will not result in either a downgrade or a withdrawal
of any of the then current ratings of the outstanding Asset-Backed Securities,
if any; and provided, further, however, that after any change of Managers
pursuant to this section, at least two members of the Board of Managers shall be
an Independent Manager.
ARTICLE VIII
CONTRIBUTIONS AND CAPITAL ACCOUNTS
1. Capital Contributions - Each Initial Member shall make the Capital
Contribution described for that Member on Exhibit A at the time and on the terms
specified on Exhibit A. If no time for contribution is specified, the Capital
Contributions shall be made upon the filing of the Articles of Organization. The
value of the Capital Contributions shall be as set forth on Exhibit A. No
interest shall accrue on any Capital Contribution and no Member shall have the
right to withdraw or be repaid any Capital Contribution except as provided in
this Operating Agreement. Each Additional Member shall make the Initial Capital
Contribution described in the Admission Agreement. The value of the Additional
Member's Initial Capital Contribution and the time for making such contribution
shall be set forth in the Admission Agreement.
2. Additional Contributions - In addition to the Initial Capital
Contributions, the Managers may determine from time to time that additional
contributions are needed to enable the Company to conduct its business. Upon
making such a determination, the Managers shall give Notice to all Members in
writing at least two Business Days prior to the date on which such contribution
is due. Such Notice shall set forth the amount of additional contribution
needed, the purpose for which the contribution is needed, and the date by which
the Members should contribute. Each Member shall be entitled to contribute a
proportionate share of such additional contribution. No Member shall be
obligated to make any such additional contributions. In the event any one or
more Members do not make their additional contribution, the other members shall
be given the opportunity to make the contributions. Each Additional Member shall
make the Capital Contribution to which such Member has agreed, at the time or
times, and upon the terms to which the Managers and the Additional Member agree.
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<PAGE> 20
ARTICLE IX
TAXES
1. Elections - The Managers may make any tax elections for the Company
allowed under the Code or the tax laws of any state or other jurisdiction having
taxing jurisdiction over the Company.
2. Taxes of Taxing Jurisdictions - To the extent that the laws of any
Taxing Jurisdiction requires, each Member requested to do so by the Managers
will submit an agreement indicating that the Member will make timely income tax
payments to the Taxing Jurisdiction and that the Member accepts personal
jurisdiction of the Taxing Jurisdiction with regard to the collection of income
taxes attributable to the Member's income, and interest, and penalties assessed
on such income. If the Member fails to provide such agreement, the Company may
withhold and pay over to such Taxing Jurisdiction the amount of the penalty and
interest determined under the laws of the Taxing Jurisdiction with respect to
such income. Any such payments with respect to the income of a Member shall be
treated as a distribution to the Member. The Managers may, where permitted by
the rules of any Taxing Jurisdiction, file a composite, combined or aggregate
tax return reflecting the income of the Company and pay the tax, interest and
penalties of some or all of the Members on such income to the Taxing
Jurisdiction, in which case the Company shall inform the Members of the amount
of such tax, interest and penalties so paid.
3. Method of Accounting - The records of the Company shall be
maintained in accordance with the method of accounting selected by the Managers.
ARTICLE X
DISPOSITION OF MEMBERSHIP INTERESTS
1. Disposition - Any Member or Assignee may dispose of all or a portion
of the Member's or Assignee's Membership Interest upon compliance with this
Section 1. No Membership Interest shall be Disposed of:
(a) if such disposition, alone or when combined with other
transactions, would result in a termination of the Company within the
meaning of Section 708 of the Code;
(b) without an opinion of counsel satisfactory to the Managers
that such assignment is subject to an effective registration under, or
exempt from the registration requirements of, the applicable state and
federal securities laws;
(c) unless and until the Company receives from the Assignee
the information and agreements that the Managers may reasonably
require, including but not limited to any taxpayer identification
number and any agreement that may be required by any Taxing
Jurisdiction; and
(d) unless the Rating Agency Condition is satisfied.
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<PAGE> 21
2. Dispositions Not in Compliance with this Article Void - Any
attempted Disposition of a Membership Interest, or any part thereof, not in
compliance with this Article is null and void ab initio.
ARTICLE XI
ADMISSION OF ASSIGNEES AND ADDITIONAL MEMBERS
1. Rights of Assignees - The Assignee of a Membership Interest has no
Management Rights or right to participate in the management of the business and
affairs of the Company or to become a Member. The Assignee is only entitled to
receive the Distributions and return of capital, and to be allocated the Net
Profits and Net Losses attributable to the Membership Interest.
2. Admission of Substitute Members - An Assignee of a Membership
Interest shall be admitted as a Substitute Member and succeed to all the rights
of the Member who initially assigned the Membership Interest only with the
approval of all Members and upon execution of an Admission Agreement. The
Members may grant or withhold the approval of such admission for any Assignee or
Substitute Member in their sole and absolute discretion. If so admitted, the
Substitute Member has all the rights and powers and is subject to all the
restrictions and liabilities of the Member originally assigning the Membership
Interest (including Management Rights). The admission of a Substitute Member,
without more, shall not release the Member originally assigning the Membership
Interest from any liability to Company that may existed prior to the approval.
Before any Substitute Member is admitted, the Rating Agency Condition must be
satisfied.
3. Admission of Additional Members - The Managers may permit the
admission of Additional Members and determine the Capital Contributions of such
Members; provided, however, that (i) there may never be more than ninety-nine
(99) Members at any one time and (ii) prior to the admission of the Additional
Member the Rating Agency Condition is satisfied. Notwithstanding the foregoing,
no Benefit Plan Investor may be admitted as an Additional Member.
4. Forbidden Transfers and Assignments - A Membership Interest may not
be transferred or assigned to a or a Benefit Plan Investor.
ARTICLE XII
DISSOLUTION AND WINDING UP
1. Dissolution - The Company shall be dissolved and its affairs wound
up, upon (i) the unanimous written agreement of the Members; or (ii) the written
consent of the Sole Member, which agreement or consent, the Member(s) agree by
execution of this Operating Agreement shall require (among other matters
mutually agreed upon by the Members) and only become effective upon the
satisfaction of the following conditions: (a) the Managers, by unanimous written
consent of the Board of Managers (including the Independent Managers) shall
consent to and approve the dissolution of the Company pursuant to the terms set
forth in the
21
<PAGE> 22
unanimous written consent of the Members; and (b) so long as any of the Related
Agreements are outstanding at the time of dissolution, the related controlling
party (as set forth in each such Related Agreement) shall consent in writing to
and approve the dissolution of the Company pursuant to the terms set forth in
the unanimous written consent of the Members.
2. Effect of Dissolution - Upon dissolution, the Company shall cease
carrying on business as distinguished from the winding up of the Company
business, but the Company shall not be terminated, and shall continue until the
winding up of the affairs of the Company is completed and the certificate of
dissolution has been issued by the Secretary of State.
3. Distribution of Assets on Dissolution - Upon the winding up of the
Company, the Company Property shall be distributed:
(a) to creditors, including Members who are creditors, to the
extent permitted by law, in satisfaction of Company Liabilities;
(b) to Members in accordance with positive Capital Account
balances taking into account all Capital Account adjustments for the
year in which the liquidation occurs. Liquidation proceeds shall be
paid within 60 days of the end of the Company's taxable year or, if
later, within 90 days after the date of liquidation. Such distributions
shall be in cash or Property (which need not be distributed
proportionately) or partly in both, as determined by the Managers; and
(c) notwithstanding the foregoing, the Company Property may
not be liquidated without the consent of 100% of the holders of the
Asset-Backed Securities then outstanding.
4. Winding Up and Certificate of Dissolution - The winding up of the
Company shall be completed when all debts, liabilities, and obligations of the
Company have been paid and discharged or reasonably adequate provision therefor
has been made, and all of the remaining property and assets of the Company have
been distributed to the Members. Upon the completion of winding up of the
Company, a certificate of dissolution shall be delivered to the Secretary of
State of the State for filing. The certificate of dissolution shall set forth
the information required by the Act.
5. Resignation of Member. Each Member shall be prohibited from
resigning, withdrawing or dissociating as a Member of the Company.
Notwithstanding the foregoing, the resignation, withdrawal, dissociation or
bankruptcy of a Member or Members shall not cause such Member or Members to
cease to be a Member or Members of the Company and upon the occurrence of such
an event, the business of the Company shall continue without dissolution. Upon
the dissolution, resignation, withdrawal or dissociation of the last remaining
Member, the Managers may admit as an Additional Member any other person or
entity, as provided in Article XII, and take such other action as may be
necessary or desirable to continue the business of the Company.
6. Continuation of Company. Notwithstanding any other provision of this
Operating Agreement, the occurrence of an Insolvency Event with respect to the
Sole Member shall not cause the Sole Member to cease to be a member of the
Company and upon the occurrence of
22
<PAGE> 23
such an event, the business of the Company shall continue without dissolution.
Notwithstanding any other provision of the Operating Agreement, the Sole Member
waives any right that it might have under Section 86-491(3) of the Act to agree
in writing to dissolve the Company. In the event of the dissolution of the Sole
Member or the occurrence of any other event that causes the Sole Member to cease
to be a member of the Company, to the fullest extent permitted by law, the
[personal representative] of the Sole Member shall, immediately upon the
occurrence of such event, agree in writing to continue the Company and to the
admission of such [personal representative] or its nominee or designee as a
member of the Company effective as of the dissolution of the Sole Member or such
other event and the Company shall continue without dissolution.
7. Special Members. Upon the occurrence of any event that causes the
Sole Member to cease to be a member of the Company (other than (i) upon an
assignment by the Member of all of its limited liability company interest in the
Company and the admission of the transferee pursuant to Article XII or (ii) the
resignation of the Member and the admission of an Additional Member of the
Company pursuant to Article XII), each person acting as an Independent Manager
pursuant to Article VII shall by virtue of such person's signature on this
agreement, without any action of any Person and simultaneously with the Member
ceasing to be a member of the Company, automatically be admitted to the Company
as a special member (a "Special Member") and the Company shall continue without
dissolution. No Special Member may resign from the Company or transfer its
rights as Special Member unless (i) a successor Special Member has been admitted
to the Company as Special Member by executing a counterpart to this Agreement,
and (ii) such successor has also accepted its appointment as Independent Manager
pursuant to Article VII; provided, however, that the Special Members shall
automatically cease to be members of the Company upon the admission to the
Company of a Substitute Member. Each Special Member shall be a member of the
Company that has no interest in the profits, losses and capital of the Company
and has no right to receive any distributions of Company assets. Notwithstanding
the provisions of the Act, a Special Member shall not be required to make any
capital contributions to the Company and shall not receive a limited liability
company interest in the Company, but shall have the right to vote on and approve
the actions herein specified to be voted on or approved by the Members. A
Special Member, in its capacity as a Member, shall have no authority to act for
or bind the Company. In order to implement the admission to the Company of each
Special Member, each person acting as an Independent Manager pursuant to Article
VII shall execute a counterpart to this Agreement. Prior to its admission to the
Company as Special Member, each person acting as an Independent Manager pursuant
to Article VII shall not be a member of the Company.
ARTICLE XIII
AMENDMENT
1. Operating Agreement may be Modified - This Operating Agreement may
be modified as permitted in this Article XIII (as the same may from time to time
be amended). No Member or Manager shall have any vested rights in this Operating
Agreement which may not be modified through an amendment to this Operating
Agreement.
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<PAGE> 24
2. Restriction on Modification of Purposes - Nothing in the Articles of
Organization nor in this Agreement shall be deemed to allow Advanta Bank Corp.
to amend the Articles of Organization or this Agreement is such a way as to
change the purposes and powers of the Company as set forth in Article IV of the
Articles of Organization and in Article III Section 1 of this Agreement.
3. Amendment or Modification of Operating Agreement - This Operating
Agreement may be amended or modified from time to time only by a written
instrument adopted by the unanimous written consent of its Board of Managers and
executed by the unanimous consent of the Members; provided, however, that for so
long as any Asset-Backed Securities are outstanding, any amendment or
modification to Article III, Article VII(1) and (2), Article XI, Article XII or
this Article XIII shall require that the Rating Agency Condition be satisfied.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
1. Entire Agreement - This Operating Agreement represents the entire
agreement among all the Members and between the Members and the Company.
2. No Partnership Intended for Non-tax Purposes - The Members have
formed the Company under the Act, and expressly do not intend hereby to form a
partnership under either the Nevada Uniform Partnership Act nor the Nevada
Uniform Limited Partnership Act. The Members do not intend to be partners one to
another, or partners as to any third party. To the extent any Member, by word or
action, represents to another person that any other Member is a partner or that
the Company is a partnership, the Member making such wrongful representation
shall be liable to any other Member who incurs personal liability by reason of
such wrongful representation.
3. Rights of Creditors and Third Parties Under Operating Agreement -
Except and only to the extent provided herein or by applicable statute, no
creditor of the Company or any other third party shall have any rights under
this Operating Agreement or any agreement between the Company and any Member
with respect to any Capital Contribution or otherwise.
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<PAGE> 25
IN WITNESS WHEREOF, the undersigned have hereunto executed this Operating
Agreement as of the Effective Date.
ADVANTA BANK CORP.
By: /s/ Mark Hales
-----------------------------------------
Name: Mark Hales
Title: President
Agreed and Acknowledged:
Independent Manager
By: /s/ Francis B. Jacobs, II
------------------------------------------
Name: Francis B. Jacobs, II
Independent Manager
By: /s/ Janice C. George
------------------------------------------
Name: Janice C. George
Special Member
By: /s/ Francis B. Jacobs, II
------------------------------------------
Name: Francis B. Jacobs, II
Special Member
By: /s/ Janice C. George
------------------------------------------
Name: Janice C. George
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EXHIBIT A
INITIAL MEMBERS
<TABLE>
<CAPTION>
MEMBER MEMBERSHIP INTEREST INITIAL CAPITAL CONTRIBUTION
- ------ ------------------- ----------------------------
<S> <C> <C>
Advanta Bank Corp. 100% $100
</TABLE>
26
